The Potential Costs of Conflict in the Workplace

GHRS has successful managed hundreds of workplace conflicts. Conflicts may be costing you more than you realize.

Absenteeism & Turnover

Figures vary, but the turnover cost of one employee can be anywhere from 30% to 150% of the employees annual salary.

A more conservative estimate suggests that the cost of replacing an employee ranges from 29% to 46% of the person’s annual salary.

The Bureau of Labor Statistics use 30% as the base cost of replacing a worker and calculates the rate of turnover by dividing the number of employee separations during the month with the total number of employees at mid-month.

Absenteeism Rate = (Number of lost working days due to absence) x 100 (Number of employees) x (Number of Workdays) U.S. Department of Labor Formula

What is a healthy turnover rate?
34.09% for the bottom 10% of corporations 20.87% for the top 10% of corporations


The figure for defending a wrongful termination lawsuit in 2010 was $150, 000 per case. Risser, R “Stay out of Court: The Manager’s Guide to Preventing Employee’s Lawsuits,” Prentice Hall.

“Even when the employer prevails on summary judgment, he has usually spent $50,000 or more in attorney’s fees, in addition to the organizations time and resources.” McDermott, E Quorum Books.

CPP Inc.–publishers of the Myers-Briggs Assessment and the Thomas-Kilmann Conflict Mode Instrument found the following in a study they conducted:

Findings from the CPP study should be enough to spur any “wait and see” business owner into action. For example, 25 percent of employees said that avoiding conflict led to sickness or absence from work. Equally alarming, nearly 10 percent reported that workplace conflict led to project failure and more than one-third said that conflict resulted in someone leaving the company, either through firing or quitting. Those negatives translate into real financial losses for small businesses.

If a worker uses five sick days a year to avoid conflict, that’s a direct cost of over $700 to your business (calculated using hourly earnings of $35k per year), not to mention the cost of covering the employee’s missed work (e.g., overtime pay for another worker or hiring a temporary employee). Multiply that by 50 workers, or even 10, and you can immediately see the kind of money drain conflict creates. Replacing an employee will cost you 150 to 200 percent more than that employee’s salary and benefits. This means that losing even a mid-level employee making $30,000 a year could cost your company $70,000 or more to replace. In a small business conflict can become viral. In a larger company, the conflict may be contained to a workgroup. But in a small business, it’s everyone’s problem.

New Brunswick lawyer Kelly VanBuskirk’s doctoral research suggests that employees who do not have an alternative mechanism to resolve workplace conflicts are more likely to consider taking or actually take legal action.

“The reason people sue is often not rooted in money as much as the person does not feel they are being treated fairly. Many organizations have gaps in their ability to facilitate conflict resolution. These gaps include a lack of mediation process, gaps in managers’ competency to resolve conflict in a collaborative manner, and policies that promote social justice and fairness. As a result, the employee may come to the conclusion they have no choice but to look outside the workplace for a solution. However, if more employers focused on resolving conflict pro-actively from within their organizations they would be positioned to reduce their risk for costly and many times unnecessary lawsuits,” VanBuskirk, says.

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Would You Agree That...?:

  • All profit produced, all procedures implemented, and all systems developed are by people. Without people nothing happens.
  • People who make profits, people who are effective, don’t just happen by accident; they happen because someone planned for them to produce profits and be effective.
  • Successful companies and organizations have learned to make the most of human strengths, thus allowing common people to experience uncommon achievement.
  • The ability to manage one’s self always precedes the ability to manage others.
  • The most powerful source of education companies have available is the example of their managers and leaders.
  • The largest determinate between success and failure of new hires is the quality of supervision they receive.
  • Most people do not know how to increase their personal effectiveness unless encouraged and supported by someone else.
  • Educating, motivating, training, and developing people are a process, a process that never ends.
  • The ineffective leader is the most expensive item in today’s business world.
  • Good leaders, whether born or made, that turn good people in good organizations into great people in great organizations.
Go to this article in the Wall Street Journal to see support for the above.

What I Believe:

  • You are the Leader of your own existence.
  • You get more than one opportunity to succeed.
  • Everything in life is about Leadership—you are always selling and buying and you have to know this and develop the self-confidence to live who you truly are—to stand in your own value—you achieve success in all aspects of your life—with your spouse, with your family members, with people at work, and with people in your community.
  • Leadership is teaching about change—all change demands Leadership. All Leadership facilitates and implements change.
  • You must learn how to express “negative” or difficult emotions (anger, fear, vulnerability) in a positive way.
  • You must trust yourself, your intuition.
  • You need to know your own uniqueness’s and differences and appreciate and be curious about the differences in others.
  • You need to be curious about life and feedback, not defensive.
  • You need to share with the world—your gift, your thoughts, your ideas.
  • You must see the universe as being on your side, for you, not against you.
  • Self-confidence leads to Leadership. Leadership leads to business/career success. Business success leads to bottom-line profits.
  • When you truly believe this, it leads to constant improvement. But, you need to share. You need to constantly work at it. Once you “get there,” you can’t sit back. You need to coach and mentor another.
  • The best Leaders I know have a certain amount of toughness and firmness and a certain amount of empathy, but more important, they have an uncanny knack for when to use each and how much of each to use.
  • The best leaders I know have made a conscious decision to Lead and are comfortable with being a Leader. Leading is all about people and people are all about relationships.
  • No where do we get the message or the help on how to do the above—especially in a single-holistic place. If anything, we get part from church, another part from school, another part from family, and part from physical activity—at best this leaves us fragmented as Leaders. And these pieces may not have been the best teacher of effective Leadership.

Truths About People:

  • People want to love and be loved.
  • People want to be successful.
  • People want to and are built to accept diversity.
  • People want to Lead the people they love and are connected to.
  • People want to make the world better.
  • The best Leaders are people who know how to follow.
  • The best Leaders have self-awareness, self-knowledge, and self-acceptance and the same sensibilities about others.
  • People are good and a small, small percentage hate life, hate others, and, ultimately hate themselves.

If you agree, contact us for a free consultation!