Posted on 05 December 2010.
Where there are issues of unresolved conflict in the workplace, organisations
run the high risk of losing valuable employees. Constructive, healthy working
environments are a fundamental necessity to the satisfaction of employees.
The cost it takes to replace an existing employee can run in the hundreds
of thousands. There is the cost of training new staff, paying recruitment
agencies, and interviewing time. Furthermore, time and productivity is
lost as the new recruits get accustomed to a new organisational culture,
leadership style, work ethics, and ‘feel’ of their new workplace. This cost
can vary depending on the size of the organisation and the position of the
employee, but Raytheon Corporation estimates their cost is 150 per cent
of a fully burdened employee.
‘Chronic, unresolved conflict acts as a decisive factor in at least 50% of
departures. Conflict accounts for up to 90% of involuntary departures,
with the possible exception of staff reductions due to downsizing and
restructuring’ (Dana, Daniel, Conflict Resolution, 2001, p. 22).
Companies lose out of the investment made in training their employees
only to have them leave as a result of conflict that can easily be avoided
through an effective conflict management system.
‘No matter what the cause, turnover has a number of undesirable
implications for organisations, including the costs of losing an experienced
worker, recruiting, and re-training a successor (retraining is estimated
to cost 1.5 times the employee’s annual salary), the lower productivity
of a new worker and secondary morale effects on managers, peers and
subordinates’ (Duxbury and Higgins, Work—Life Conflict in Canada in
the New Millennium: A Status Report, 2003).
‘The turnover costs for an employee is anywhere between 75% and 150%
of the annual salary’ (Phillips, D.T., ‘The Price Tag of Turnover’, Personnel
Journal, Dec. 1990, p. 58).