Poor conflict management costs business billions


From an unhappy customer to a disgruntled director, business can have the challenge of conflict come from any direction – a challenge that is not always adequately faced-up to.

According to the research by the Centre for Effective Dispute Resolution (CEDR), Europe's biggest alternative dispute resolution body, it is how you approach conflict that makes the difference.

In the UK alone, the CEDR calculates, conflict costs business £33 billion every year.

The cost of business disputes comprises not only amounts paid in legal fees but also the damage incurred by business as a consequence of those disputes – in fact the cost of this damage (£27bn) far outweighs the legal fees (£6bn).

By way of comparison, if this sum were a country it would have the world's 57th biggest economy. That's three times the amount that California makes each year from the TV, Movies and Entertainment business and almost as large as the £36 billion budget for the National Health Service.

Over and above the headline economic cost, eight out of 10 disputes have a significant impact on the smooth running of business. In a case that is a million pounds in value, a company will consume an average of over three years of managers' time trying to sort it out.

The problem is compounded because many managers do not feel comfortable addressing conflict. Indeed fewer than four out of 10 managers surveyed by the CEDR (only 37 per cent), feel trained to cope with business conflict.

Half of mangers would rather attend an event at which they knew no-one than tell a client a home truth and seven out of 10 would rather send back a bottle of wine in a restaurant than confront a boss's underperformance directly

Over a third of managers would rather parachute jump for the first time than address a problem with their team at work, and just under a third would rather shave their head for charity.

Almost one in 10 (eight per cent) even said they would rather eat 'bush tucker' bugs for a week than confront a problem.

Given the potential of conflict to damage a company's reputation, impact morale, damage business relationships, lose customers, increase staff turnover and impact the bottom line, this lack of preparedness among managers in dealing with disputes is something that concerns Karl Mackie, Chief Executive of CEDR.

"Conflict is part of working life but it is how we deal with it that is important," he said.

"Effective management of conflict can reduce the amount of time and money spent in trying to sort out a problem, reduce the damage it could cause to those involved and enable decision makers to make smarter choices earlier on. It is time that business woke up to the wastage that lack of proper conflict management causes."