Workplace conflict costs UK employers £28.5 billion each year

Anyone who's been embroiled in a workplace dispute will tell you how stressful and time consuming the process is. And, if the matter isn't resolved and goes to a tribunal or court, these factors increase ten fold. Once you monetise the costs of dealing with these types of disputes, the figures escalate quickly and become really scary.

ACAS have published a report which indicates that the cost of conflict to UK organisations, pre-pandemic, was £28.5 billion - the equivalent of more than £1,000 for each employee. Close to 10 million people experienced conflict at work. Of these, over half suffer stress, anxiety or depression; just under 900,000 took time off work, nearly half a million resigned and more than 300,000 employees were dismissed. 

The report was written by academics and is based on data compiled in 2018/19. The authors argue that anecdotal reports and research suggest that conflict was suppressed during the height of the pandemic. They anticipate, that as working life returns to some form of new normality in 2021, it is likely that insecurity, rapid change and continuing economic pressures will lead to a re-surfacing of conflict between individuals. 

Most organisations will want to focus on building their business rather than dealing with workplace spats and the authors provide three important tips employers should take from this report.

1. Invest in early intervention 

This is referred to as 'conflict competence' and the report suggests that organisations that invest in effective and early resolution designed to repair the employment relationship may have a very significant return on their investment.  

If you intervene at an early stage, disputes can often be resolved informally through discussion between the individual and their line manager. If this is not possible or they are more serious, it may be necessary to involve other parties such as HR or representatives. But, this inevitably formalises the issue and it becomes more likely that there will be negative impacts in the form of presenteeism or possibly absence.

If the conflict is not resolved, semi-formal mechanisms such as mediation may be helpful. 

The report estimates that the average costs of conflict where employees did not engage with their managers, HR or union representatives were higher than where such discussions took place. Plus, where conflict spiralled into formal procedures, costs were more than three times those associated with informal resolution.

2. Intervene at the 'critical time'

This links back to point one. Organisations need to place much greater emphasis on repairing employment relationships and taking action at an early stage, particularly where the issues relate to capability and poor performance. 

The authors acknowledge that can be tempting for managers, who are often under extreme pressure to deliver operational objectives, to solve problems by firing employees or ‘managing them out’ of the organisation. But, the consequent costs of replacement and bringing new employees up to speed are often hidden or at least opaque. They argue that the scale of these costs means that it makes much more sense to develop sound recruitment and performance management strategies to avoid such problems in the first place.

3. Reframe conflict

This is an interesting one. The authors suggest that employers should focus on learning rather than blame and to improve behaviour rather than punish. 

Its analysis indicates that formal procedures are associated with high levels of resignation, dismissals and sickness absence. They argue that formal procedures should be the exception rather than the rule and that there will be 'rare occasions when swift and decisive action may be needed to establish clear red lines around unacceptable behaviours, for example bullying and harassment'. 

Our fixed price employment law service

We can help you resolve workplace disputes at an early stage. Often it's much more cost effective to take advice before a dispute snowballs and, one or both sides take fixed positions that aren't easy to dislodge.

We also provide training to help line managers spot issues early and have the confidence and skills to tackle them. You can find out more about our the training we offer here.

If you are interested in finding out about how we can support you with our fixed-fee annual retainer, or flexible discounted bank of hours service, please contact Gareth Finney: gareth.finney@irwinmitchell.com or 0778 317 0084.