top of page

Effective conflict resolution strategies that can help you manage the cost of workplace conflict

Do you know how much workplace conflict is costing you and your business? Workplace conflicts cost your business both money and time. 

65% of workplace performance issues are caused by workplace conflict rather than lack of skill or motivation. Based on Queensland Government research, workplace conflict is a significant cause of absenteeism and staff turnover.[1] This can annually cost a medium-sized business $2 million!

More than the money, workplace conflict also cost your business time. According to another research, 30-50% of a typical manager’s time is spent dealing with conflicts, and HR can spend up to 20% of their time in litigation activities. [2]

Workplace conflict is a normal occurrence in any organisation. When properly managed, it can have a positive impact on your business. However, unmanaged conflicts always result in adverse outcomes. And in the long run, it can be detrimental to you, your team and your business.

In this article, we’ll help you manage the cost of workplace conflict through simple but effective conflict resolution strategies.

1. What causes workplace conflict?

The initial step is to look at the root cause. Create a root-cause analysis. A root-cause analysis is a common and often-used business strategy to:

a. Know what happened

b. Know why it happened

c. Know what to do to reduce it from happening again

Generally, there are two types of workplace conflict [3]:

  1. When people’s ideas, decisions or actions relating directly to the job are in opposition.

  2. When two people just don’t get along (personality clash).

According to Queensland Government research, here are the common causes of workplace conflict [4]: 

  • a breached agreement

  • skills deficits

  • a lack of information or misunderstanding

  • conflicting interests or values

  • discrimination or harassment

  • mental illness

  • personality style

  • scarce resources

  • organisational problems

  • bad (corrupt or fraudulent) intent

Now you know the common causes; the next step is to recognise the signs of conflict. Catching the signs earlier can better resolve the conflict before it turns into a dispute. However, not all forms of conflict are visible. Symptoms of conflict may include[6]:

  • lack of employee motivation - an employee might stop participating in team meetings or volunteering to take on new tasks

  • a change in behaviour - employees might become more reserved, less engaged or even hostile

  • decreased productivity - you might notice less output from your staff, or that they take longer than usual to do their work

  • absenteeism - your employees might start coming to work late or taking more time off than usual.

Are you now ready to create your root cause analysis? Here’s a simple 5-step root cause analysis: Step 1: Define the problem

  • What do you see happening?

  • What are the specific symptoms?

Step 2: Collect the data

  • What proof do you have that the problem exists?

  • How long has the problem existed?

  • What is the impact of the problem?

Step 3: Identify Possible Causal Factors

  • What sequence of events leads to the problem?

  • What conditions allow the problem to occur?

  • What other problems surround the occurrence of the central problem?

Step 4: Identify the root cause

  • Why does the causal factor exist?

  • What is the real reason the problem occurred?

Step 5: Recommend and Implement Solutions

  • What can you do to prevent the problem from happening again?

  • How will the solution be implemented?

  • Who will be responsible for it?

  • What are the risks of implementing the solution?

2. Conflict resolution strategies

Developing conflict resolution strategies can help your organisation avoid unnecessary conflict and prevent unavoidable conflict from escalating to dispute. Based on the practical dispute resolution guide by the Fair Work Ombudsman, they recommend the following when handling workplace conflicts[5]:

  • quick — the issues should be resolved quickly rather than allowing them to escalate through inaction

  • fair — all relevant parties should be consulted so that all sides of the story are taken into account

  • handled sensitively — disputes should, where possible, be resolved in a confidential way to minimise the impact on other employees

  • transparent — the procedure should be clear to every employee

In creating a psychologically safe workplace, consider these conflict resolution strategies. [6]

1. Encourage open communication

Encourage employees to communicate their problems openly, honestly and respectfully. Managers need to know how to prepare for these conversations, what to say, listen, and explore ways to resolve the issue.

2. Manage change

Many disputes occur when there has been a change in the workplace. Change can have a significant impact on employees, especially if it was unexpected. It can leave them uncertain or even anxious or afraid about what the change will mean for them, leading to misunderstandings and disputes. Good communication and a consultative approach can help to minimise conflict.

3. Put things into writing

Having written contracts of employment and clear workplace policies make entitlements and rules clear for everybody.

This could save you time and money that might otherwise be spent sorting out misunderstandings, resolving disputes or even defending claims in a tribunal or court.

4. Train managers and employees on how to resolve disputes

Make sure your managers understand your dispute resolution process.

People will be influenced by their background, experience and communication skills when resolving disputes. However, you can help managers work at best practice by providing training and coaching on:

  • establishing the key facts and issues

  • listening

  • encouraging open dialogue

  • focusing on the employee’s specific needs

  • guiding a discussion to find ways to resolve the dispute.

Dispute resolution shouldn’t interfere with day-to-day work. While the process is underway, employees should continue to comply with the employer’s directions and perform safe and appropriate work.

5. Create a simple dispute resolution process.

A good dispute resolution process promotes fairness. If people feel fairly treated, they are more likely to be engaged in their work and motivated to contribute. 

6. Proactively manage complaints

Dealing with complaints may seem time-consuming and frustrating, but knowing about the issues that upset your employees can have significant benefits for your business.

It lets you fix problems before they escalate and better protect your business from risk. For example, in dealing with a complaint, you might identify that a policy isn’t as straightforward as it should be. This allows you to fix it and potentially avoid future disputes.

3. Benefits of effective and efficient conflict management

As we mentioned earlier, conflict is a normal occurrence in any organisation. It is given, but the outcomes are based on choices. To give you an idea, here are some of the consequences when you choose to ignore workplace conflict [7]...

  • Absenteeism. Unscheduled absences drive up employers’ costs through benefits outlays the use of replacement workers, higher stress levels among employees, and decreased overall employee performance.

  • Turnover. When employees mistrust management or perceive the organisation as acting unfairly, turnover may increase. This can lead to recruiting and training expenses for new hires and the costs attributable to slippage of performance until new employees become fully proficient in their jobs.

  • Unionism. When employees perceive their employers as unfair, they are more inclined to seek outside resources such as a union to help protect them and negotiate on their behalf on employment, compensation, and benefits.

  • Litigation. An employee who cannot resolve a workplace conflict may seek outside legal help, which can cause an organisation to mount a costly defence or agree to an expensive settlement. Lawsuits resolved in an employee’s favour can result in significant financial penalties for the employer and can even produce criminal sanctions.

When workplace conflict is effectively and efficiently dealt with, every workplace can enjoy some of these benefits [8]...

  • greater employee productivity through increased job satisfaction

  • improved employee retention

  • reduced stress for managers and employees

  • better relationships with employees

  • reducing the costs that come from resolving disputes externally (such as legal fees associated with dealing with claims made by employees against the employer).

  • enhanced workplace communication, team functioning and effectiveness

  • development of conflict resolution skills

How are you making a difference within your business on a daily basis to manage workplace conflicts within your organisation? Are you the type of leader that turn these situations into team-building experiences or a leader that might not address these situations at all? 

Learn more about creating a psychologically safe workplace here. 

Don’t forget to follow us on our social media pages. 



bottom of page