Workplace conflict costs employers £30bn a year, study finds

Staff turnover represents single biggest expense, as research also reveals nearly half a million workers resign every year over disputes

Workplace conflict is costing UK employers £28.5bn a year, a study has found, with experts warning an increase in remote working could make disputes between staff harder to manage.

The report, published by Acas, said the majority of the costs to companies following workplace conflict came from resignations, absences and presenteeism, which together cost around £14.7bn annually.

Staff turnover was the single largest expense to employers, with the total cost of ending employment relationships – either through resignation or dismissal – and replacing employees amounting to £2.6bn a year. Nearly half a million (485,800) employees resign each year as a result of conflict, it said.

In addition, 874,000 employees annually took sickness absences as a result of conflict, costing organisations around £2.2bn.

The use of formal processes also increased costs, particularly when a conflict led to a resignation or dismissal. The report said there were 1.7 million formal disciplinary cases in UK organisations per year, including 374,760 grievances. On average, each of these grievances costs £951 in management time.

In total, formal procedure, including grievances, disciplinary cases and disciplinary dismissals, costs businesses £12.8bn annually.

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Susan Clews, chief executive of Acas, warned that, on top of the financial costs to employers, poor conflict management could lead to staff stress, anxiety or depression and could impact workplace productivity. “There’s a clear benefit to everyone in handling problems as early as possible,” she said.

Clews added that, while the report was carried out before the start of the coronavirus outbreak, it revealed “potential for increased conflict as organisations try to adapt to changes after Covid-19”.

The report itself noted that a sustained shift to remote working and an increased use of automation created new people management challenges and placed “a premium on the skills needed to prevent, manage and resolve conflict”.

As part of its report, Acas analysed data from the CIPD’s 2019 workplace conflict survey, which found that while more than a third (35 per cent) of respondents had experienced either an isolated dispute or incident of conflict or an ongoing difficult relationship over the time period, just 5 per cent had taken part in some form of workplace mediation.

Of those who did go through mediation, nearly three-quarters (74 per cent) said their conflict was fully or largely resolved.

The Acas report also found the majority of employees who experienced conflict remained with the organisation, with just 5 per cent resigning as a result.

However, a higher proportion of respondents said they took time off for sickness absence (9 per cent) and more than half (56 per cent) reported stress, anxiety and/or depression.

The research said employers should invest in early resolution of conflicts, and put an emphasis on repairing employment relationships and creating multiple channels where employees can access support.

It added that formal procedures should be “the exception rather than the rule”, with the report citing that formal procedures were associated with high levels of resignation.

As well as using CIPD survey data, the report analysed figures from the government’s survey of employment tribunal applications to map the average annual cost of conflict in the workplace.