Conflict in organizations is not a problem. Poorly managed conflict is. Conflict managed well is a proactive investment in the future of the organization and in the employees involved. Conflict managed ineffectively is a reactive drain of human and financial capital.

7 Ways Your Company Is Wasting Money on Conflict

Unresolved, avoided, ineffectively managed, or destructive workplace conflict is expensive, both in financial and human terms:

1. Lost Work Time. Several studies over the last decade suggest that a typical manager spends between 25% and 40% of her time dealing with employee conflict. In a study I conducted in 2000, college and university managers' time on conflict ranged from 40% to 50% of work hours. Lost work time accrues for the employees involved in the dispute, their supervisors, sometimes their peers, and human resource staff.
2. Attrition and Related Costs. Research reported in the late 1990s showed that workplace conflict left unresolved for too long leads to employee attrition or the use of valuable work time searching for alternative employment. Employee turnover that had its genesis in unresolved conflict is leads to expenditures for severance, recruitment, training and development for replacement staff, and the loss of productivity during that period.
3. Absenteeism and Increased Health Care Costs. The Journal of Occupational and Environmental Medicine has reported that health care costs are nearly 50% greater for workers who report high levels of stress. Stress as a reason for absenteeism increased 316% between 1995 and 1999. Stress is a known byproduct of unhealthy workplace conflict.
4. More Grievances and Complaints. Between 1992 and 1998, annual monetary benefits for EEOC sexual harassment cases increased from $12.7 to $34.5 million. Annual monetary benefits for EEOC-handled ADA cases increased from $200,000 to $49.1 million during the same period.
5. Increased Legal Fees. A 2005 Fulbright & Jaworski survey on litigation trends in the U.S. concluded that almost 9 out of 10 American companies are involved in some type of litigation and that one of the most prevalent messages to corporate counsel is "control costs."
6. Theft and Sabotage. Unhappy employees can and do damage company equipment and steal from inventory. More insidiously, covert sabotage results from the daily little acts of omission from an employee that doesn't feel heard or valued.
7. Damage to Company Reputation. When conflict goes public, the loss can be measurable in terms of lower earnings, diminished market share, or decreased traffic.

5 Ways Your Company Can Transform Conflict into Opportunity

Well-managed conflict contributes to creativity, strategic initiative, more effective systems and communication, stronger workplace relationships and a greater commitment to the organization. Good employees stay on board and better decisions lead to greater corporate health. What can you do to create such transformation? Address the root causes of unhealthy workplace conflict:

1. Help Employees Learn How to Access Good Interpersonal Skill. All the skill training in the world won't help your employees during conflict if they don't know how to access those skills when they're in the heat of the moment. The new trend in conflict resolution training is a blend of interactive, classroom-style training with follow-up coaching to help employees really use what they learned.
2. Prepare Managers to Offer More Effective Help. Many managers address conflict by imposing a solution, chastising, lecturing, re-organizing the department in question, or trying to help parties work it out without really having good insider mediation skills. Make an investment in your managers' education as in-house mediators with substantive skills to address the kinds of complex conflicts that create long-term problems.
3. Clean Up Problematic Organizational Systems. System problems can masquerade as interpersonal conflicts. As I work with parties to peel back the layers of a conflict, it's not uncommon to uncover ways the organization's systems are pressing upon one or more of the individuals involved and directly influencing their behavior negatively. Such system problems may be invisible until the overt conflict begins, so wise workplaces consider conflict a possible symptom of something bigger; conflict consultants can help.
4. Create Effective Conflict Management Systems. The informal system of organizational culture and formal intervention systems can have a profound influence on whether or not conflict unfolds in a healthy or destructive way. While the increasing commitment to Alternative Dispute Resolution (ADR) in the workplace is a positive step, it's often used too late in a conflict, confuses mediation and arbitration, or imposes a process on an unwitting or ill-informed employee. Effective conflict resolution systems, even in very small organizations, create opportunities for conflict to be identified and addressed early and constructively. Such effective processes emphasize joint problem-solving early in the dispute and the use of mediation before grievances or litigation harden the conflict.
5. Make an Organizational Commitment to Taking the Time. A downside of the fast pace of today's workplace is that such ways of working get in the way of effective conflict management. Engaging conflict constructively requires focused time and attention. It's time well-spent---an investment on the front end saves time and emotional energy on unresolved conflict later.

Imagine what your organization could do with extra employee time and extra funds found through better-managed conflict, the ability to transform conflict from a vexxing problem to creative opportunity, and a workplace environment that retains great employees.