Waking up to workplace conflict | Acas report claims disputes cost employers £1,000 per employee

Written by James Tamm on 14 May 2021

Whether you’re dealing with employees not turning up for work, poor performance or a complaint from an aggrieved colleague, a lot of time and energy goes into creating and maintaining a positive relationship with your employees. But although employee relations issues put pressure on organisations on a daily basis, the actual monetary cost of managing workplace conflict is rarely given much thought – until now.

According to a new Acas report, workplace conflict – an overarching term for any disagreement or dispute between employers and their employees – costs UK employers £28.5 billion every year. That’s roughly £1,000 per employee.

Breaking down the cost of workplace conflict

So where does this cost come from? Well, a lot of it is time. First, there’s the cost of trying to resolve matters informally, which can put a significant strain on managers, and after that, the additional time spent on any formal procedures.

Imagine there’s a fight that is witnessed by six people. You will need to speak to each of them, make a written record of what they say, collate all that information, and decide if there’s a case to answer. If there is, that means two disciplinary hearings – which could last an hour or two each – followed by the time taken to type up your notes, issue outcome letters, and manage any subsequent appeal.

Should things escalate, there’s the potential for legal processes. In our experience, the average case can require employers to commit around 20 hours of their own time; if that case were to proceed to a full hearing, this could easily rise to 60 to 80 hours when attendance at Tribunal as a witness is factored in. Naturally, this incurs further financial outlay, and that’s before you consider legal fees and, if things don’t go your way, any compensations and awards.

Of course, aside from the obvious disruption of having to deal with these situations, workplace conflict can also drain productivity and invite costs in other ways. According to Acas, of the 9.7 million employees who experienced conflict at work in 2018 to 2019, over half suffered stress, anxiety or depression as a result. Just under 900,000 took time off work, costing organisations £2.2 billion.

It’s well known that absenteeism can greatly affect a business’ bottom line in many ways; as well as the obvious cost of arranging cover, absences can incur indirect costs due to the impact on work quality, continuity, and other colleagues’ morale. However, according to Acas, presenteeism – where employers are at work in body but not in mind – potentially costs even more in lost productivity, estimated to be as much as £2.3 billion.

In this way, workplace conflict can be toxic. Even if it doesn’t result in absences, or resignation or dismissal (and according to Acas it often does, as nearly half a million employees resigned and more than 300,000 were dismissed), it can poison an organisation through its demotivating effects on employees.

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Lessons and questions for HR leaders

All of this paints a picture as to why not only HR leaders but also business leaders need to take employee relations seriously. Organisations spend huge amounts on driving efficiencies, productivity and engagement, but this is futile if the bucket is leaking more than you put in.

For employers, it also raises an interesting debate about where the problem lies. Is it the fault of managers not managing their teams and issues properly? The fault of HR for not developing and supporting managers well enough to be able to do so? Or a wider collective fault that we don’t take employee relations as seriously as we should – and invest in it like we should – setting HR and managers up to fail.

"We know that early intervention in conflict saves money, time and promotes better wellbeing: our new analysis provides employers with a new reality check. Of course, this analysis represents a snapshot and one taken before the dramatic upheaval to working lives caused by the coronavirus (COVID-19) pandemic. But I would argue that the crisis underlines the importance of waking up to conflict at work as an issue that should be considered from board level downwards."

Susan Clews
Acas Chief Executive

So what can organisations do about it?

With all of this in mind, Acas says “conflict competence” is an essential ingredient in good management. In our experience, there are a number of ways employers can prevent issues such as grievances and disciplinaries from damaging relationships and costing your business money.


Have policies and procedures in place (and use them)

Policies and procedures are an essential component of any organisation as they provide clarity for everyone. Your policies should make clear what you expect of your employees, what is and isn’t acceptable behaviour, and how you will respond to any violations. This should help to ensure consistency in approach, prevent procedural missteps and allegations unfair treatment, and give managers confidence to approach these situations.

By communicating your policies and sticking to them, you can help to prevent issues from escalating or dragging on longer than is necessary.


Deal with issues as soon as they arise

All too often, misconduct issues, performance concerns or employee grievances are left to fester. In fact, not dealing with problems when they first arise is perhaps the most common mistake I see employers make.

One of the key conclusions of Acas’ report is that “early intervention in conflict saves money, time and promotes better wellbeing”, and in our experience this is entirely true. Though it is easier to let things lie or brush them under the carpet, a problem with only snowball if left unattended, especially when it comes to employee relations. In addition, if you’re able to deal with a potential conflict issues before it ends up in some form of formal procedure, this is going to very beneficial to all parties involved.

Given it now only takes a disgruntled employee five minutes (and no cost) to bring a claim, I would encourage employers to be brave and assertive, and tackle problems early and thoroughly. If this isn’t happening right now, ask why and remove those barriers: is it a case of ‘won’t do’ or ‘can’t do’?


Don’t shy away from conflict

Linked to my last point, try to move away from seeing conflict as something wholly negative. As Acas says, “don’t shy away from conflict – it can also be creative”. Conflict is an opportunity to challenge the way things are done and do things better – the key is learning how to manage conflict effectively so that it can support, rather than hinder, organisational improvement.

According to Acas’ findings, “the average costs of conflict where employees did not engage with their managers, HR or union representatives were higher than where such discussions took place”. With this in mind, encourage employees to come to you in the first instance rather than sit on a problem – you can’t do anything to resolve the situation if you don’t know about it, and the employee and the business will likely suffer in the meantime.


Consider the long-term impact of COVID on conflict resolution

Workforce stability has never been more important; undoubtedly, employers that continue to manage employee relations well, despite external pressures, will be best placed to weather the storm and take advantage of the inevitable opportunities that will arise when the world returns to some form of ‘business as usual’.

According to Acas, while conflict was suppressed during the height of the pandemic, “it is likely that insecurity, rapid change and continuing economic pressures will lead to a re-surfacing of conflict between individuals” as working life returns to some form of normality. As such, it recommends moving away from policies that emphasise legal compliance towards policies that “seek to preserve employment where viable in the longer-term”. 

This is particularly important right now as problems supressed during coronavirus may soon rise to the surface, which could potentially destabilise your team. One such example is health and safety grievances; with a recent Honeywell survey revealing that staggering majority of the global workforce (68%) doesn’t feel completely safe in the workplace, employers should prepare for these sorts of disputes as the return to work begins.

Those organisations considering a more permanent move towards homeworking will also need to think long and hard about the possible impact on employee relations; do your managers have the skills needed to prevent, manage and resolve conflict remotely? If not, now is the time to invest in training.


Take advice at the earliest possible opportunity

Speaking to a professional can dramatically reduce the amount of time spent dealing with employee relations issues. It’s also a great way to reduce legal risk and improve outcomes.

At Ellis Whittam, we assign each of our clients a small team of dedicated, qualified Employment Law specialists, who will help you to identify the most efficient, pragmatic solution to your particular situation and guide you through the process every step of the way.

If you would like to know more about our fixed-fee Employment Law and HR support, or our HR training courses for managers, call 0345 226 8393 or request your free consultation using the button below.

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