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The Costs of Workplace Conflict

Acas has today published a fascinating new report, Estimating the Costs of Workplace Conflict, ‘a new reality check’ for employers on the £28.5bn cost every year of workplace conflict – an average of just over £1,000 for every employee!

This humungous bill breaks down (approximately – there is some overlap in the numbers) as follows:

  • a) lower productivity as a result of presenteeism among those who are stressed/unhappy;  £590 million – £2.3 billion
  • b) sickness absence; £2.2 billion
  • c) cost of dismissing staff and replacing them; £13.1 billion
  • d) recruiting replacements for staff who resign; £2.6 billion
  • e) lost output as replacements get up to speed; £12.2 billion
  • f) workplace mediation; £140 million
  • g) management time dealing with informal discussions; £231 million
  • h) management time dealing with formal grievances;  £356 million
  • i) management time dealing with disciplinaries; £2 billion
  • j) management time dealing with potential/actual litigation; £282 million
  • k) legal fees; £264 million
  • l) compensation awarded against employers; £225 million

Key learnings and points to take away:

Invest time and money in early resolution of conflict and trying to repair relationships

If conflict is allowed to spiral into formal procedures costs mount quickly and there is a greater likelihood of presenteeism, sickness absence, resignation and/or dismissal which is very expensive comparatively.

Businesses need to get better at managing issues of capability and poor performance from the start

Managers need to be better trained so they have the people skills to do this. Focus on learning, not blame.

Expect a resurgence of conflict which has been suppressed during the pandemic

As working life returns to some form of new normality in 2021, it is likely that insecurity, rapid change/AI, a more sustained shift to remote working and continuing economic pressures will lead to a re-surfacing of conflict between individuals. Be prepared!

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