The cost of managing conflict

Sep 30 2004 by Brian Amble Print This Article

Managing conflicts at work costs the average employer in Britain nearly 450 days of management time every year – equivalent to the time of full-time two managers, a new report claims.

A survey of almost 1,200 organisations employing nearly four million employees by the Chartered Institute of Personnel and Development (CIPD) has found that disciplinary and grievance cases and preparing for employment tribunals impose a huge workload for management.

And the figure of 450 days does not take into account the significant associated costs of mismanaged conflict at work, including lost productivity, sickness absence and higher than expected turnover of employees.

The survey is published on the eve of new Dispute Resolution Regulations, which come into force on October 1, that will mean that all employers and employees must follow a minimum three-step disciplinary and grievance procedure in the event of a workplace dispute.

But the survey shows that only four out of ten employers believe the new regulations will reduce the number of employment tribunals. They are also split on whether the new regulations will make tribunal hearings more (13 per cent) or less (15 per cent) complex.

Imogen Haslam, CIPD professional adviser and co-author of the report, said: “Conflict costs employers hundreds of hours of management time each year. It is encouraging that employers think the new regulations will cut the number of employment tribunals.

However, our survey shows that employers need to invest more in resolving disputes at the earliest possible stage, before they escalate and become subject to formal disciplinary and grievance procedures.”

On average, employers reported a net five per cent increase in employment applications in the last 12 months, meaning that each had to handle three tribunal applications, along with 30 formal disciplinary and nine grievance cases over the past year.

Respondents reported that disciplinary and grievance cases take up 10.5 days in management, HR staff and in-house lawyers time per case, while preparing for a tribunal hearing takes up 12.8 days in human resource, line management and in-house lawyers time.

“Too many employers are still relying on HR to manage conflict at work," Imogen Haslam said. "To make a real difference, these workplace problems must be nipped in the bud before they have to be dealt with using formal procedures. That means involving line managers much more.

"Training in conflict management and mediation is essential if line managers are to become more competent and confident in managing conflict. Only then will the waste of management time be reduced and more harmonious, more productive relationships at work develop,” she added.

But the survey reveals a distinct lack of dispute resolution skills among line managers – more than half of respondents rate their line managers as 'average' at resolving workplace disputes informally - and a growing trend towards relying on HR specialists to solve problems. More than six out of ten employers have increased the extent to which they use their HR departments to manage individual employment disputes.

Yet with employees becoming increasingly litigious and regulations – such as those to be introduced tomorrow - increasingly complex and onerous for employers, the increasing concentration of resolution expertise in the hands of HR specialists is not entirely surprising.

Indeed employers groups such as the Federation of Small Businesses have warned that the regulations will actually increase the risk of conflict because they formalise disputes at the earliest stage.

Nevertheless, the CIPD research suggests that only six out of ten employers train any of their employees in conflict management skills and nearly a third of these do not train their line managers.

Training in mediation skills is only carried out by one quarter of employees, with HR managers significantly more likely to be trained than their line management colleagues.

But employers that do provide mediation training for staff are likely to see significantly fewer disciplinary cases, averaging 22 cases per year compared to 49 cases per year among organisations that don’t provide such training.

Whether the new regulations will improve harmony in the workplace or simply create more work for lawyers is something that only time will tell.