Trouble among employees? It can cost companies time and money

Kevin Boileau, CEO, BPI Consulting Group Inc.

As published in Scotsman Guide's Residential Edition, January 2006.

Unresolved conflict can cost a company a great deal of money. Among other things, it can lead to wasted time, lost employees, poor judgment, sabotage and theft, decreased motivation and lost work time because of stress or health issues.

Wasted time

Unresolved conflict can squander an enormous amount of company resources. Imagine that two people constantly conflict with each other in daily, hour-long meetings. They each earn an annual salary of $100,000 and work about 200 days a year. Let's assume they spend a half-hour arguing unproductively.

Assuming an eight-hour day, this conflict costs the company -- just in these meetings -- about $60 an hour. If you add up the costs of your company's unproductive, conflict-ridden meetings, the total could be considerable.

Lost employees

Companies invest a huge amount of time in hiring, training and retaining skilled employees, especially those at higher management levels. Many employees quit their jobs because of continuing, substantial interpersonal conflict. It may cost a company more money to lose key employees than to spend resources to resolve the underlying conflicts that lead to these departures.

When an employee quits, companies must consider lost productivity in addition to future recruiting fees, interview time, possible salary increases for replacement employees and training costs. It could cost $120,000 to replace an employee who makes $80,000 a year -- a 150-percent increase in costs.

Even if employees are not replaced and re-structuring occurs, employers still face substantial time and monetary costs associated with strategic reconfiguring.

Poor judgment

Making sound business judgments requires employees to know their facts. In much of the decision-making process, getting accurate information requires reliance on other employees. If there is an unresolved conflict between a decision-maker and an information source, the information presented could be distorted. This causes a judgment based on inaccurate data.

Additionally, if several team members make a joint decision, conflict can contaminate the decision-making process as parties fight for esteem and power. This can cause irrational decisions or stifle the process if decisions cannot be made or executed. Assuming performance-impairment approaches 75 percent of its optimum level, a projected maximum profit of $500,000 could be whittled down to $375,000 through unresolved conflict.

Sabotage and theft

Sometimes employees are angry at and resentful toward their employers or managers. When this occurs, errors in judgment can take place that could seem accidental but really are manifestations of resentment.

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