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Bahria University, Islamabad Campus.


Article Analysis: Cost of Conflict

Submitted to: Salma Atif Submitted by: M-Nine Group
Bilal Tariq Ch. Junaid Wasif Iqra Saeed Maryam Essam (01-120102-016) ...(01-120102-017) (01-120102-024) .(01-220102-022)

Class/Section: MBA 3(A) Institution: Bahria University, Islamabad Campus. Date: 29th November, 2011

Bahria University, Islamabad Department of Management Sciences.

to colleagues and teams. and expectations. 2003. (1998). They may be opportunities for creativity. needs. and improvement. Ravi. How much is conflict costing your organization? Mental Health / Stress "Unresolved conflict represents the largest reducible cost in many businesses. Measuring the Financial Cost of Organizational Conflict. (Tangri. yet it remains largely unrecognized. Some of the results of unresolved conflict in the workplace include: y y y y y y y y y y y y y Stress. or expectations. . These conflicts can be an asset to the organization. MTI Publications and Slaikev. R. The Cost of Conflict Conflict is defined as a difference of wants. and Hasson." (WarrenShepel." (Dana.) "The number of employees seeking help for work-related conflict has increased from 23 percent in 1999 to close to 30 percent in 2001. needs. conflicts will occur.Bahria University. Workplace Trends Linked to Mental Health Crisis in Canada. Take a look at some of the facts and figures below. collaboration. The workplace is filled with people who have differences of wants. Jossey-Bass) "Employees in high pressure/low control situations or high effort/low reward situations have much greater risks to their physical and mental well being. Stress Costs . K. Controlling the Cost of Conflict. So. to clients. frustration. and to the business as a whole. It's how we deal with those conflicts or what happens when they aren't resolved. Islamabad Campus. 2002) Bahria University. of course. But conflict can also be costly to an organization.Stress Cures: How to recover productivity lost to stress. Daniel (1999). The trouble isn't necessarily the fact that conflict exists. The impact of conflict in the workplace can be devastating . Islamabad Department of Management the parties involved. and anxiety Loss of sleep Strained relationships Grievances and litigation Presenteeism Employee turnover Loss of productivity Increased client complaints Absenteeism Sabotage Injury and accidents Disability claims Sick leave These symptoms of unresolved conflict are a significant cost factor in organizations.

" (Roffey Park [online]. (Busch.7 days of work. survey reveals. 52% have experienced harassment. harassment and conflict at work.L. . Failure to manage change heightens stress." (Roffey Park [online]. sabotage." (WarrenShepel [online]. Without Just Cause: An Employer's Practical Guide on Wrongful Discharge. 17/03) "In the case of harassment. R II. " (Kleiman. 7/05) "According to a nationwide study. study finds. National Post Mar. 1998) In the United States an average of 2 years are required for the Equal Employment Opportunity Commission to investigate most claims. Carol. 05) "Sexual harassment is associated with more conflict in work teams.The Solution: Designing Effective Conflict Management Systems. National Post Mar. Health & Wellness Research Database. (WarrenShepel [online]. Jan. (MacBriade-King. A 2005 UK survey by Roffey Park found that "78% of managers are suffering from work-related stress. 2005) Grievances/Litigation "The number of employees seeking help for harassment has almost tripled from 1999 to 2001.Workplace tiffs boosting demand for mediators. 2005) "The math isn't complicated.2 days of work.Workplace tiffs boosting demand for mediators. 1997) Bahria University. (WarrenShepel [online]. survey reveals. the number of employees seeking help almost tripled between 1999 and 2001. Health & Wellness Research Database. J." (Bureau of National Affairs. wheras employees whose managers are rates as "non-sensitive" miss approximately 6. K. Harrassment bad for bottom line. The Conundrum: Conflict .Health & Wellness Research Database. 46% have seen an increase in conflict at work. 17/03) A 2005 UK survey of managers by Roffey Park found that "52% have experienced harassment. less cohesion and less success in meeting financial goals. Islamabad Campus. Robin. harassment and conflict at work.1999) An estimated 16% of employees feel that poor interpersonal relations are a source of stress at work. the average jury verdict in wrongful termination cases is over $600 00 and companies lose 64% of the cases. A complaint that escalates to a lawsuit can easily cost $50 000 to $100 000 and take three to five years to settle. The Conference Board of Canada. Robin.7 billion. Solutions for the stressed-out worker. 05) "The total value of lost work time due to stress is estimated to be $1.. employee theft."(Taylor. Jan. not to mention the cost of employee turnover (estimated to be as much as 75% to 150% of base salary) and it is understandable why companies are paying attention. Failure to manage change heightens stress. It doesn't stop there. The Ottawa Citizen: Wednesday Sept.Bahria University. Rep. 2005) "Employees who rate their managers as "sensitive" miss an estimated 3. (Taylor. Add absenteeism. and Bachmann. 16 Preventative L. Islamabad Department of Management Sciences.

" (Barnes-Slater. at p 58. Many such employees" retire on the job" (ie. LawMemo.[online] MGH Consulting. Work-Life Conflict in Canada in the New Millenium: A status Report. 1990. [online] Mediate. [online] The Dana Measure of Financial Cost of Organizational Conflict. and secondary morale effects on managers. Such employees tend to have lower commitment. "Corporations that have developed collaborative conflict management systems report significant litigation cost savings: Brown and Root reported and 80% reduction in outside litigation costs. recruiting and retraining a successor (retraining is estimated to cost 1. peers and subordinates.T.Bahria University.5 times the employee's annual salary). The Price Tag of Turnover. Work-Life Conflict in Canada in the New Millenium: A status Report. John. Synthia and Ford. 2003) The turnover costs for an employee is anywhere between 75% and 150% of the annual salary. playing computer games. 2003] "The rate of 'presenteesim' is estimated to be as much as three time higher than absenteeism. 2005) Loss of Productivity/Wasted Time "Tension and stress reduce motivation and disturb concentration. Health & Wellness Research Database. the lower productivity of a new worker. July 2000) Presenteeism "Another set of problems may occur when employees with high intent to turnover do not leave the organization. be more dissatisfied with their jobs and reduce morale in the area in which they work. 2001) "No matter what the cause. including the costs of losing an experienced worker.if unhealthy conflict goes unresolved for too website. Islamabad Campus. Islamabad Department of Management Sciences. (Phillips. ." (Duxbury & Higgins. Dan. finding reasons to get out of the area) reduces an average work week to fewer Bahria University. turnover has a number of undesirable implications for 2005) Employee loss / turnover "Chronic unresolved conflict acts as a decisive factor in at least 50% of departures. Personnel Journal. John. Workplace Conflict: Facts and Figures. team members are likely to leave the company or use valuable time to search for alternatives."(WarrenShepel [online]. Dec. with the possible exception of staff reductions due to downsizing and restructuring. Motorola reported a 75% reduction over a period of six years." (Duxbury & Higgins. 1990) "A team-member's commitment to the team and the team mission can decrease if intra-team conflict remains unresolved. such as discussing the dispute. A loss of simple productivity of 25% (doing things other than work related activities. NCR reported a 50% reduction and a drop of pending lawsuits from 263 in 1984 to 28 in 1993" (Ford..Measuring Conflict: Both The Hidden Costs and the Benefits of Cofnlict Management Interventions. . D." (Dana. Do not do their share of the work) which causes workload problems for others in their area. Conflict accounts for up to 90% of involuntary departures.

( website. Islamabad Campus. Workplace Health System. 17/03) "Fortune 500 Senior Executives spend 20% of their time in litigation related activities. date unknown) Other consequences of increased conflict-related stresses include greater incidence of substance abuse. Leadership Quarterly 7(1).6 billion. Cramby River Consultants. back problems. K and Schmidt. 1998) "Over 65% of performance problems result from strained relationships between employees. Dan. [online] The Dana Measure of Financial Cost of Organizational Conflict. Managers as Negotiators. Bahria University. job control." (Taylor." (Dana. R. The Many Costs of Conflict. The Case for Comprehensive Workplace health Promotion: Making "Cents" of a Good Idea. Workplace Health System. (Thomas." (Levine. cancers. not from deficits in individual employee's skill or motivation.. (Health Canada.. Stewart. no. 2000). (The Health Communication Unit [online].) A 1996 study demonstrated that 42% of a manager's time is spent on conflict related negotiations. C & Hoffman. Managers as Negotiators. Best Advice on Stress Risk Management in the Workplace. than 20 hours.)" (Cram. the greater the likelihood of reporting more than 10 days off as a result of ill health.[online] The Cost of Conflict in the Workplace. W. heart problems. National Post Mar. Academy of Management Journal.. and MacWilliams.3. Leadership Quarterly 7 (1) 1996. Canadian Fitness and Lifestyle Research Institute. Islamabad Department of Management Sciences.) Absenteeism In a study of 50 000 Canadian employees nationwide Health Canada found that "the greater the number of sources of stress reported in the social environment at work. 1998) "Employees who report the following sources of stress are more likely than others to be absent for six or more days. mental health problems. R. June 1976. date unknown) 42% of a Manager's Time is spent addressing conflict in the workplace. Robin. James A.. Mediate.interpersonal relations. C and Hoffman.Workplace tiffs boosting demand for mediators. .Bahria University. 1996) "I've had CEOs and senior vice presidents tell me they can spend up to 70% of their time on conflict. 2001) Up to 30% of a typical managers time is spent dealing with conflict. no. greater incidence of workplace injury and much higher incidence of interpersonal conflict. (Watson.1998) The cost of employee absence alone [in Canada] is approximately $8.. and management practices" (Health Canada. A survey of managerial interests with respect to conflict. Richard K..3."(Health Canada.

Islamabad Campus.Bahria University. [online]. Islamabad Department of Management Sciences. Bullied workers suffer 'battle stress". [online] The Dana Measure of Financial Cost of Organizational Conflict. Bibbings. mediate. Journal of the Institution of Occupational Safety and Health. National Institute of Occupational Safety and Health. Vol. BBC News Online. It follows logically. Roger. Julian. therefore. The Case for Comprehensive Workplace health Promotion: Making "Cents" of a Good Idea.) "Workplace stress and work-related conflict are among the top eight reasons why employees request counseling assistance. 04) Sabotage "Studies reveal a direct correlation between prevalence of employee conflict and the amount of damage and theft of inventory and equipment. Tuesday Aug. The Cost of Job Stress. 2002) "Job stress is a key driver of health care costs. Workplace Trends Linked to Mental Health Crisis in Canada. seven days per year more sick leave than others. covert sabotage of work processes and of management's efforts usually occurs when employees are angry at their employer. Upper Workplace Violence / Bullying Bahria University. and Low Back. Mary. date unknown. . Exploring the links between stress and accidents in the workplace: a literature review. "Bullied employees take.depression and high stress were found to have the greatest impact on worker health care costs. According to the Journal of Occupational Environmental Medicine. smoking or high blood pressure. that stress must also contribute to accident causation. increasing these costs more than obesity. Dan. And." (Dana."(Corbitt Clark. 2001) Physical Injury / Accidents "There is increasing evidence that psychosocial factors relating to the job and work environment play a role in the development of work-related musculoskeletal disorder of the upper extremity and back.9-20) Disability Costs ".." (Knight. these cost were 46% higher for workers who felt they were under a lot of stress." (Warren Shepel.. July 1992) "It is accepted and proven that errors lead to accidents and that stress can lead to errors. health care expenditures are nearly 50 percent greater for workers reporting high levels of stress. 6(2) December 2002 p.. In fact. on average." (Nguyen. Lieu." (Musculoskeletal Disorders and Workplace Factors: A Critical Review of Epidemiologic Evidence for Work-Related musculoskeletal Disorders of the Neck." (The Health Communication Unit [online].

assault. road rage).com/conflict/cost_e. 2000. Tehrani found that 36% of the men and 42% of the women reported having experienced bullying. recklessness. emotional and/or verbal abuse." (Warren Shepel.cfm Bahria University. Julian."(Knight. harassment. Best Advice on Stress Risk Management in the Workplace. Tehrani conducted a study of 165 professionals in the caring sector such as nurses and social workers. 2002) "Dr. BBC News Online. "There is a drastic increase in the severity of work-related issues with workplace violence and work-related conflict contributing the greatest increases. bullying. Bullied workers suffer 'battle stress".) Source: Centre for Conflict Resolution International (CCR) http://www.Bahria University. Tuesday Aug. 04) Community/Family Harm "Conflict is a good example of how harm can be produced in the workplace and of how this harm "spills over" into families and communities. Workplace Trends Linked to Mental Health Crisis in Canada." Such harm includes both inner-directed harm (suicidal behavior. agitated depression and abuse of alcohol. drugs) and outerdirected expressions (threatening behaviour. . Islamabad Department of Management Sciences. Islamabad Campus. pp 15-16. Dr. (Health Canada. domestic violence.conflictatwork.

. sabotage and employee turnover lead to legal cases. The consequences and cost of conflict are listed below: y y y y y y y y y y y Mental Health (stress/frustration/loss of sleep and anxiety) Grievances/Litigation Presenteeism Employee Turnover Loss of Productivity/ Wasted Time (increased client complaints) Absenteeism ( sick leave ) Sabotage Physical injury/Accidents Disability Costs Workplace Violence/Bullying (strained relationships) Community and Family Harm Mental Health and Stress problems occur where there are conflicts. Conflicts are common in organizations. which are mostly unresolved. collaboration and improvement within an organization. Bahria University.000 and takes 3-5 years to resolve. Most people have a negative view towards conflict however it plays a positive role in enhancing creativity. employee theft. who specialize in the conflict resolution of different organizations. Grievances/Litigation involves lawsuits which cost $50. Presenteeism is when employees are mentally absent at work. Employees feel stressed and mentally disturbed where there are situations of high pressure/low control and high effort/low reward. It is published by Centre for Conflict Resolution International (CCR).000-$100. Islamabad Department of Management Sciences. needs and expectations.Bahria University. Employees with high intention to quit but remain in the organization exercise low commitment and dissatisfaction towards their jobs which decreases the morale in the workplace and increases workload problems in organizations. Islamabad Campus. absenteeism. Summary This article highlights the cost and consequences that arise in organizations as a result of conflict. Issues of harassment. Effective and timely conflict management can help in saving costs of litigation. Conflict arises when there is a difference of wants. it is also referred to as retire on the job .

There is loss of productivity because the employees face mental and emotional problems as a result of bullying. Absenteeism is when employees don t report to work and take sick leave . Employee Loss/Employee Turnover is a direct result of conflicts in organizations.reported by employees are as follows: Interpersonal relations.Bahria University. Loss of Productivity/Wasted Time is caused when employees face tension and stress which leads to reduced motivation levels and disturbed concentration. Sabotage is the direct relationship between the employee conflicts. Bahria University. recruiting and retraining a new worker. Islamabad Campus.e. Physical Injury/Accidents occur due to the psycho-social factors relating to the job and stress in the work environment. Workplace Violence/Bullying has a dramatic effect on absenteeism and employee turnover. This is due to stress in the social environment at work. Islamabad Department of Management Sciences. Turnover costs include cost of losing an experienced worker. Community and Family Harm is a resultant factor of conflicts that spills over into families and communities. backache. damages and theft of inventory and equipment in organizations. This includes musculoskeletal disorder i. Strained relationships within organizations lead to performance problems rather than deficiency in employee skills and motivation level. The sources of stress . job control and management practices. Disability Costs is caused by the high stress and depression faced by employees that have a great impact on work health-care cost. .