The Hidden Cost of Unresolved Conflict

What does unresolved conflict actually cost you and how can mediation help?

When working with parties through the mediation process and untangling the issues which resulted in conflict, I often find that the “real” issues go much deeper than what the surface problem would suggest. This is true in most conflicts. The same can be said for work place related issues that are ignored and left to fester. Having and suppressing deep rooted causes of conflict often takes its toll on parties to the conflict both physically and financially. The same is true with work place conflicts that drag on without being resolved.

Mediation is a beneficial method solution technique, both for legal disputes and work related issues.  It helps to facilitate an environment where conflict dissipates and resolutions flourish.

It is common to see work related conflict carry on without appropriate acknowledgement and resolution. Many times this occurs because management believes the conflict is not significant or does not substantially effect the employer’s “bottom-line”.  More likely, the employer simply does have the necessary tools to identify or deal with employee conflicts. Every time an issue is ignored however, the odds of the business losing money rises.

When faced with negative work environments, employees often seek better opportunities. The loss of an employee caused by ignored and unresolved conflict is a significant financial set back. Dr. Dan Dana, from the Mediation Institute, explains this loss best in the following example:

“When looking at the loss of a single mid-level employee, a company can expect to lose money through the following  process:  1) employee’s annual salary:$80,000; 2) multiply by 1.4 (140%) as the investment you have in the employee:  $112,000;3) multiply by 1.5 (150%) as the cost of replacing the employee: $168,000; 4) multiply by .6 (60%) average role of conflict in voluntary terminations: $100,800. Now, multiply times the number of voluntary terminations in your organization annually. Say you have a 10% turnover rate in a company of 100 employees that’s 10 employees. 10 X $100,800 =$1,008,000. This conflict in the hypothetical organization of 100 employees is costing the organization over a million dollars a year! What other line-item loss in an essential corporate process would be treated so cavalierly by management?”

While this may exemplify large scale corporations, the same method can be applied to medium and small sized business. With this in mind, the benefits of addressing work related issues become very apparent.

It is important to take the time to work these issues out with conflicted employees. Methods of doing so could include employee training on work place cooperation, staff mediation meetings or small group meetings with particular employees who are experiencing problems with one another. Taking preventative measures as well as steps toward resolution, will save your business time and money in the long run.

(For more tips and ideas on how to utilize mediation in the work place, check out our previous post:”Using Mediation Inspired Tips in the Workplace.” )


About rauschmediation

Rausch Mediation & Arbitration Services
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