Workplace conflict: estimating the cost to employers

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Catriona Smith, Head of research, analysis and insight

Catriona is an analyst with 20 years' experience in the public sector. She joined Acas in July 2019 as head of research, analysis and insight.

Conflict at work manifests itself in many forms. Its impacts can be hidden – for example, through presenteeism or unexplained resignations – as well as very visible – notably, when an employee submits an early conciliation (EC) notification or an employment tribunal (ET) claim. 

Until now, we have had no systematic and transparent way of calculating the cost of these different forms of conflict. However, thanks to Professor Richard Saundry, Professor Peter Urwin and data kindly shared by the CIPD, we now have a much clearer picture.   

The headline statistic in their report 'Estimating the costs of workplace conflict' is startling: "conflict costs the UK £28.5 billion a year". But this isn’t the whole story and before I discuss the findings in a little more detail, let me explain how this estimate was calculated.   

How is workplace conflict measured?

The approach adopted to defining and estimating conflict is data-driven and aims to be both transparent and pragmatic. We use self-reported measures from employees, who perceive negative impacts on their performance and working lives, as well as official statistics. 

We estimate the 'usual' or average annual cost of conflict in UK workplaces, which negatively impacts productivity each year. All the sources used predate the first coronavirus (COVID-19) lockdown in March 2020, so our figures are not skewed by events associated with the pandemic.

We measure conflict at 4 stages, broadly reflecting the levels of potential escalation:

  1. Individuals who report isolated incidents of conflict or ongoing difficult relationships, and estimate the costs of resignation, absence and reduced productivity.
  2. Costs incurred by organisations in attempting to resolve issues through informal discussion – either between the individuals themselves or with line managers, HR practitioners and/or employee representatives. 
  3. The use and cost of workplace mediation or more formalised mechanisms including disciplinary and grievance procedures.
  4. The extent of extra-organisational conflict, including that which results in Acas early conciliation (EC) notifications, and in some cases, employment tribunal (ET) claims.

What does this tell us?

As I said, overall we estimate that the cost of workplace conflict to UK organisations is in the region of £28.5 billion, which is the equivalent of more than £1,000 for each employee. Close to 10 million people experience conflict at work each year, with more than half reporting stress, anxiety or depression as a result. It is also estimated just under 900,000 took time off work, nearly half a million resigned and over 300,000 employees were dismissed.

These estimates also start to uncover ways in which conflict can be tackled in organisations. Costs in the early stages of conflict are relatively low but start to mount if employees continue to work while ill and/or take time off work through sickness absence. The use of formal processes provides an important framework for resolving conflict inside the organisation, although inevitably pushes costs higher. However, the largest proportion of the costs are connected to the ending of the employment relationship, either through resignation or dismissal. 

Analysis also shows 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. Indeed, where conflict resulted in formal procedures, costs were more than 3 times those associated with informal resolution.

Our findings have significant implications for how we manage and resolve conflict at work. Colleagues and fellow researchers will be picking up on these in more detail in the weeks and months to come. 

Read 'Estimating the costs of workplace conflict'.