New research has shown the cost of failing to deal with workplace conflict effectively, costing businesses over £1000 per employee. 

Research published by Advisory, Conciliation and Arbitration Service (Acas) has explored the many ways workplace conflict can cost businesses billions per year.

Utilising data from 2018-2019, the study found that an estimated 9.7 million employees had experienced workplace conflict within the one year timeframe.

This led to adverse impacts for employees – including higher rates of mental illness such as depression or anxiety (56 per cent), a decrease in motivation (40 per cent) and an increased rate of sickness absence (9 per cent).

With many of these employees continuing to work, this also caused a rise in presenteeism – costing employers between £590 million and £2.3 billion.

In addition to this, the research also stated that workplace conflict was responsible for almost half a million people (485,000 employees) resigning each year.

This leads to higher costs overall, with replacing employees costing employers around £15 billion. Recruiting new employees costs £2.6 billion annually and lost output whilst the new worker gets up to speed amounts to £12.2 billion.

The research further found that workplace conflict is most likely to arise as a result of an ending of employment relationship through resignation or dismissal.

Due to this, the report recommends investing in effective and early resolution designed to build positive employment relationships which will have a “significant return”. In cases where workplace conflict led to formal procedures, the costs were more than triple the amount associated with informal resolution, showing the benefit of putting this framework in place early.

It also noted that organisations need to place much greater emphasis on repairing employment relationships in the event of conflict and taking action at early points to address issues of capability and poor performance.

In order to handle this in the most efficient way, the report states managers should be taught “core people skills” to deal with the conflict at hand by focussing on learning and avoiding blame.

Indicating that COVID-19 will likely bring more workplace conflict to the surface in the coming months, the report concludes that instating the correct policies will help to improve employment relationships overall.

Susan Clews, Acas Chief Executive, said:

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 £30 billion a year.

Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity. There’s a clear benefit to everyone in handling problems as early as possible.


*This research was obtained from Acas’ ‘Estimating the costs of workplace conflict’ report.