Conflict Costs

(Source: American Management Association Study)

Conflict
DEFINITION:
An antagonistic state or action involving divergent ideas, interests, or persons; a mental struggle resulting from incompatible or opposing needs, drives, wishes, or external or internal demands.
The American Management Association s identifies the following as the principal causes of conflict within organizations.

Principal Causes of Conflict in Organizations:

• Misunderstandings

• Personality clashes

• Lack of cooperation

• Frustration and irritability

• Substandard performance

• Differences over work method

• Responsibility issues

• Authority issues

• Value and goal differences

• Non-compliance with rules and policies

• Competition for limited resources

No matter what your job may be, you face conflict on a regular basis. And con­flicts not only waste your time — they are also expensive to your organization.

Costs of Conflict to the Organization in Dollars:

Let’s estimate the costs of conflict for a medium-sized company with 00 managers:

• 100 managers x $40,000 average annual salary = $4,000,000

• 25% of the managers’ time spent on conflict = $1,000,000


And this only accounts for management time. In order to come up with a truly accurate conflict cost, you’d have to factor in the other costs:

• Wasted employee time

• Increased turnover rates

• Mistakes, poor decisions

• Missed business opportunities

• Adversely affected profits, service

• High stress, illness

Reduced employee stress Reduced labor turnover

• Individual peak performance Increased productivity and efficiency

• Increased morale and cooperation

• Maximized profit and service potential


Mastering conflict resolution techniques offers important personal benefits:

• You’ll gain cooperation from all types of people at work

• You’ll influence others for win-win outcomes.

• You’ll be better able to set your own priorities and say no when necessary.

• You’ll find yourself getting more respect and acknowledgment for what you do.

• You’ll improve your performance and productivity.

• All this will increase your promotability and allow you to operate with greater integrity and ethics.