Workplace conflict costs employers nearly £30 billion a year

14 May 2021

New analysis published by Acas estimates that workplace conflict costs UK employers an average of just over £1000 for every employee, adding up to £28.5 billion every year.

This estimate includes informal, formal and legal processes (with disciplinary dismissals costing £10.5 billion), as well as the cost of sickness absences (£2.2 billion) and resignations (£11.9 billion).

Acas’s report, Estimating the Costs of Workplace Conflict (available at https://www.acas.org.uk/estimating-the-costs-of-workplace-conflict-report) estimates that 9.7 million employees experienced conflict in 2018/19.

Nearly half a million employees resign each year as a result of conflict and Acas argues that handling disagreements and complaints early, before employment relationships are damaged, can help save businesses money.

Acas Chief Executive Susan Clews said: "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. 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”.

The report’s authors, Professor Richard Saundry of the University of Sheffield Management School and Professor Peter Urwin of the Centre for Employment Research, University of Westminster suggest three main messages to take from the research.

First, “conflict competence” is an essential ingredient in good management and it has a positive impact on organisational effectiveness and performance.

Second, there is a critical time to intervene. This is before conflict reaches formal workplace procedures, since at this point there is a greater likelihood of resignations, presenteeism and sickness absence.

And, third, while conflict can be very bad and damaging to people and a business, it can also be creative. Conflict that asks questions and challenges prevailing ways of doings things, does give us the opportunity to create fairer and more inclusive workplaces in the future.

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

Disputes in the workplace are not uncommon, and many employers may not have realised how much of an impact they can have on their business financially.

Acas’ findings may mean that employers now find it necessary to consider acting much earlier to save money — perhaps even by creating and promoting policies that help avoid the most common disputes within an organisation.