Professor Peter Urwin, Professor of Applied Economics at the University of Westminster, has co-authored a new report with Richard Saundry from the University of Sheffield for The Advisory, Conciliation and Arbitration Service (Acas) about the cost of workplace conflict for employers.
Workplace expert Acas published their new report today which estimates that workplace conflict costs UK employers £28.5bn every year, an average of just over £1,000 per employee. This estimate is based on the total cost to organisations in handling workplace conflict that includes informal, formal and legal processes as well as the cost of sickness absences and resignations.
The report, co-authored by Professor Peter Urwin who led on the methods needed to estimate costs and benefits for the report, reveals that nearly half a million employees resign each year as a result of conflict and that handling disagreements and complaints early before employment relationships are damaged can help save businesses money. It estimates that 9.7 million employees experienced conflict in 2018/19, and annual costs to employers identified in the report include £11.9bn from resignations, £10.5bn from disciplinary dismissals and £2.2bn from sickness absences.
Workplace conflict can lead to staff stress, anxiety or depression which has a knock-on effect for productivity. The report identifies effective conflict management as critical in maximising productivity and efficiency in organisations.
It also suggests investing in effective and early resolution to repair employment relationships. This can include managers identifying problems early to help prevent unnecessary resignations or dismissals and employees engaging with their managers, HR or trade union reps.
The report authors highlight that conflict will be more likely as organisations adapt to a new normal following the coronavirus pandemic, as problems suppressed during the crisis will start to rise to the surface and will need effective responses from organisations.
Talking about the report, Professor Peter Urwin said: “This analysis is the first to take a transparent approach to estimate the costs to employers of workplace conflict – showing how this translates into impacts for employees and an overall cost to UK organisations of just under £30bn per annum. This transparency gives employers a better understanding of where costs arise and emphasises the importance of investment in core people skills of their managers.
“In the coming months and years, a more sustained shift to remote working and continuing structural adjustments, such as automation and the move to online, will create new management challenges. Organisations will need effective managers to navigate these, in a way that ensures continued achievement of performance goals and the wellbeing of employees.”
Susan Clews, Acas Chief Executive, added: “A failure by employers to deal with conflict early can be costly to businesses and our study estimates that these costs add up to nearly £30bn a year. Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity. There is a clear benefit to everyone in handling problems as early as possible”.
“While our main findings relate to just before the pandemic took hold, our report reveals potential for increased conflict as organisations try to adapt to new changes after COVID-19.”
Learn more about research by University of Westminster academics on the WestminsterResearch website.