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Conflict Management Systems: A Methodology for Addressing the Cost of Conflict in the Workplace

What if we calculated the amount of time, energy, and resources wasted on unresolved conflicts in the workplace? We would need to include in our accounting productivity losses due to poor morale, gossip at the water cooler, distractions, absenteeism, employee attrition, stress related medical conditions, workman’s compensation, theft, sabotage, violence, and lawsuits. As well, we would have to add the heart-breaking costs associated with destroyed relationships and families breaking apart. We might even include the loss of public confidence an organization endures when it has been accused of having unsafe working conditions, illegal hiring practices, discrimination, or sexual harassment. In reality, it would be mind-boggling to calculate the costs associated with unresolved conflict in the workplace. Still, it is easy to see that the costs are staggering.

The Cost of Conflict

Conflicts inevitably arise between individuals in an organization, between organizational units, and between institutions. It is a part of our everyday life. Alarmingly, there are a number of studies that estimate that 30% to 40% of a managers daily activities are devoted to dealing with some form of conflict (Thomas and Schmit, 1976; Watson and Hoffman, 1996). Employees’ inability to effectively deal with anger and conflict in the workplace can result in a tremendous loss of productivity, not to mention the emotional impact to all the participants. Below is a partial list of disputes managers and employees alike may be subjected to in the workplace:

  • Unfair treatment [Risser, 1993]
  • Unequal treatment [Risser, 1993]
  • Emotional Abuse
  • Discrimination [Risser, 1993]
  • Sexual harassment [Cooper,1985)]
  • Angry individuals [McClure, 2000]
  • Dealing with resistant individuals
  • Resisting others (inability to saying no)
  • Navigating a high conflict environment
  • Navigating a low conflict environment
  • Feuding groups
  • Environments in transitions (i.e. changes)
  • Inability to ask for what one needs
  • Culturally diverse environment [Cox, 1994]
  • Physical attributes of the workplace (e.g. health and safety issues)
  • Unclear or undefined organizational directives
  • Violence or the threat of violence

Having to endure conflicts in the workplace without sufficient training, tools, outlets, or support, employees are destined to experience various degrees of work related discomfort. This distress can spiral out of control causing a range of consequences. At a minimum, the employee is in anguish over his/her predicament. In extreme cases, employees with no perceived viable outlet for their grievances may escalate their concerns to channels outside the company. Conceivably, a lawsuit may ensue. Below are some eye-opening statistics gathered by the Rand Corporation relative to workplace litigations (Brim, 2001).

  • $700,000: is the average jury award in wrongful termination
  • 80,000: number of discrimination charges filed annually with the Equal Opportunity Commission
  • $38,000: average claim paid on a sexual harassment case
  • 15,500: number of sexual harassment cases filed annually
  • 70: percent of jury trials in which employees win
  • 55: percent of claims in which damages are awarded
  • $6.4: the average amount, in millions, of punitive damages awarded in racial discrimination cases
  • $2.7: average amount, in millions, of punitive damages awarded in employment cases

Current Responses to Conflict in the Workplace

Many medium and large companies, unions, and government agencies have some form of dispute resolution, such as rights-based grievance procedures. This may include processes like review boards and arbitration. Some organizations are even beginning to see the value of interest-based interventions such as mediation. Unfortunately, these mechanisms are utilized well after disputes have already escalated out of control. Additionally, they rarely equip companies to deal directly with the day-to-day interpersonal disputes that cause a great deal of disruptions in the workplace. In any case, the key to controlling the cost associated with workplace conflicts is to address disputes early in their life cycle before they escalate beyond the organization’s ability to effectively intervene.

Unfortunately, organizations generally do not have initiatives to address the costs associated with conflict, especially early in its development. Businesses mostly choose to focus on traditional and more familiar avenues to cut costs in order to increase profitability. For example, a business may attempt to recoup the cost of conflict by negotiating better pricing structures with their suppliers, raising the price of products and services to their customers, or simply laying-off workers. Admittedly, these approaches do achieved short term and easily measurable results; however, they do not address the day-to-day cumulative costs of conflict, nor do they offer an ultimate resolution to the underlying problem.

Addressing the costs associated with conflict is a viable and effective methodology for cutting costs and saving untold sums of money. Conceivably, organizations could realize their cost-cutting goals through the implementation of an integrated approach to managing conflict constructively.

Ultimately, the aggregate costs associated with conflict can be profitably addressed through a well thought out integrated approach to workplace disputes. This can be called a Conflict Management System (CMS), and is the subject of this article.

How To Address Conflict in the Workplace: The Conflict Management System

The premise of Conflict Management Systems is the following: the cost of resolving conflict is negligible relative to the cost of leaving conflicts unresolved. A Conflict Management System is strategically tailored and customized to support the needs of an organization based on this operational premise. Still, a well-designed Conflict Management System consists of three interrelated components that are essential to its success.

  • Training: raising employee conflict awareness which reduces the negative impact of conflict in the workplace.
  • Neutral Third-Party Intervention: provides professional resources early in the conflict cycle to help constructively resolve the dispute before it cycles out of control.
  • Supportive Infrastructure: Internal procedures and processes developed to support an organizations’ ability to constructively manage and minimize the harmful effects of conflict in the workplace.

Component One: Training

Conflict is everywhere. In fact, it is a natural part of interacting with others. Quite often, conflict arises out of opposing goals, values, and needs. A great percentage of these everyday types of conflicts are constructive, though it truly depends on how the participants interpret and choose to deal with the conflict. Outcomes can be positive or negative. On the opposite end of the spectrum, there are disputes that originate out of prejudice, ignorance, cultural traditions, and/or misplaced aggression. Conflict of this type can be very disruptive as well as destructive. Certainly, an operational objective of the training component of a Conflict Management System is to reduce the frequency of destructive conflict. However, it is not the objective of the training component to eliminate disputes in the workplace, as much of conflict is a healthy precursor to positive change. The purpose of CMS training is to provide employees greater self-awareness in dealing effectively with all types of conflict situations.

Implementing a well thought-out training program to address the harmful effects of conflict in the workplace is analogous to performing Preventative Medicine. For example, it is a sound practice to exercise regularly and eat a quality diet as one strives to deter illness in pursuit of a healthier and happier life. Likewise, raising self-awareness relative to conflict minimizes its harmful effects and reframes most forms of conflict in a productive light. In doing so, training becomes proactive and serves a preventative role in eliminating the disease of unproductive conflict. Self-aware employees are more apt to usefully attend to issues early in the conflict cycle before they spiral out of control. Thus, the incidence of unproductive conflict will decrease, and correspondingly, productivity will begin to rise. The result is a propensity for a healthier organization.

The following training opportunities will raise the awareness of how individuals relate to conflict. While this is not a complete list of training courses that can be useful in the workplace, it is a good start. A well-designed CMS is customized to meet the needs of the environment for which it is intended. Therefore, the training courses chosen, as well as who is designated to take a given course is at the discretion of the organization.

Conflict Awareness Training

Simply, the emotional energy required to suppress conflict takes mental and physical energy away from productive work. Conflict awareness training increases the participants’ understanding of the nature of conflict, therefore, reducing it’s frequency and negative impact.

How individuals cope with conflict can be classified into five conflict modes: Avoiding, Competing, Accommodating, Compromising, and Collaborating (Cloke and Goldsmith, 2000). Through a series of processes available in training, employees gain an awareness of the conflict mode that dominates their own behavior. Once this is understood, employees can begin to identify the experiences that trigger destructive conflict for them, and personally intervene before it cycles out of control. Additionally, anger and conflict can be broken down into 8 distinct types (McClure, 2000). Employees can learn to distinguish between the different conflict types and can become skilled at managing themselves in order to maximize positive outcomes.

Communications Training

Understanding the basic behavioral skills associated with effective communication proficiencies is essential to a preventative approach to dealing with conflict. Communication skills include being respectful of others, constructive articulation, effective listening, suspension of judgment, and awareness of one’s body language (Decker, 1988). Communications training offers participants the opportunity to learn how to become effective in utilizing these essential skills.

Negotiation Training

At the heart of preventative conflict management is an individual’s ability to competently ask for what he or she wants. Learning and utilizing principled negotiation skills raises the probability of both parties getting what each desires–ultimately resulting in a win/win agreement.

Manager Awareness

Many managers feel they ought to be able to handle workplace disputes without the intervention of others. This may be due to their own beliefs or their experience of organizationally–imposed norms that suggest asking for help will be construed by others as an admission they lack the skills or the confidence to manage the situation successfully. In reality, an effective manager knows when to ask for assistance for the purpose of determining the best course of action in problem solving. Manager Awareness Training outlines the dynamics of conflict and the tactical alternatives associated with resolving various types of disputes. It provides the manager the confidence to make informed decisions as well as the permission to utilize neutral third-party intervention resources such as conflict coaching, conciliation services, conflict resolution, and facilitation sessions.

Additional instruction may be required depending on the organization’s needs. These trainings may include the following: Stay Out of Court Awareness (Risser, 1993), Diversity Awareness, Sexual Harassment Awareness, and Effective Hiring Practices.

Component Two: Neutral Third-Party Interventions

To continue the healthy living analogy begun in the Training section, someone displaying symptoms such as severe headaches, loss of appetite, nausea and chills, may consider staying home from work for a couple of days to recover. On the surface, the illness may appear like the common flu requiring only bed rest for several days. However, should the symptoms persist for longer than is typical for the flu, it would be prudent for the individual to consider professional treatment from his or her family doctor or a specialist. Not doing so could be risky. What if the symptoms are indicative of some more serious illness such as cancer? Before the illness becomes devastating and potentially fatal, early detection and treatment is always more beneficial, and therefore, highly recommended.

Understanding this, a well-conceived Conflict Management System provides qualified assistance early in the conflict cycle to those experiencing acute, distressing, and/or disruptive struggles. Intervention should be utilized before an incident escalates to potentially devastating or fatal outcomes. Therefore, CMS Neutral Third-Party Interventions are made available in the form of Conflict Coaching, Conciliation Services, Conflict Resolution Sessions, and/or Facilitation Services.

Conflict Coaching

Conflict Coaches work on a one-to-one basis individualizing interventions to meet the specific needs of the employee seeking assistance. The objective is to work with the employee to develop methods of dealing more effectively with workplace conflicts. Conflict Coaching can be both preventative and reactive. It is preventative much like training raises the conflict awareness of the employee pursuing conflict competency. It is reactive in that amid a “conflict crisis” a coach could be called in, much like a paramedic, to help an individual deal with an immediate crisis.


As part of an effective Conflict Management system, conciliation is a deliberate process used to reach agreement or restore trust, friendship, or goodwill. A trained conciliator acts as a go-between to resolve disputes between two parties (a party being an individual or a group). The parties do not resolve their conflict face-to-face, but rely on a skilled conciliator to help negotiate an interest-based resolution.

Neutral Conflict Resolving Sessions

All parties participate in the same room during a Neutral Conflict Resolving Sessions. The parties must be willing participants and agreeable to confront their issues head-on for this intervention to be successful. When these conditions are present, the disputing parties are generally prepared to work out a solution. These sessions are facilitated by a professionally trained Peacemaker specifically skilled in the art of dispute resolution. Specific techniques are used by the Resolver to maximize the potential for a mutually satisfactory solution. These solutions can be put into an agreement signed by all parties to serve as a roadmap towards ultimate resolution of the dispute. A wonderful byproduct of Neutral Conflict Resolving Sessions are durable agreements. These agreements generally last over time since they were creatively crafted openly and freely by the disputants with the assistance of the Conflict Resolver.


Skilled facilitators can be utilized in a number of different settings to resolve issues. For example, a facilitator may do team building with a feuding executive team in an attempt get beyond their personal issues. Perhaps there are a number of stakeholder groups in an organization with conflicting points of view that need to be aired in a public forum. Also, Professional Facilitators utilize a specialized set of dialogue skills designed to promote a safe environment within which all stakeholders are encouraged to speak openly and freely. Dialogue sessions have the net effect of raising awareness of all who participate. In doing so, a greater propensity for understanding between stakeholders enhances the probability of resolving current and future conflicts.

Internal versus External Third-Party Interveners

An organization experiencing conflict may decide to utilize internal or external interveners, or even a combination of the two. There are advantages and disadvantages to both. The advantage to using internal interveners is their familiarity with the organization’s dynamics, core business, culture, and personnel. The disadvantage is the potential perceived lack of confidentiality and assurance that the internal intervener is acting in a non-partial and neutral fashion because of their connection with the organization. This can greatly inhibit the effective use of an internal intervener. Correspondingly, an external intervener can be completely neutral resulting in greater appearance of trust and credibility. However, the external intervener may lack familiarity with the organization.

Component Three: Supportive Infrastructure

A good medical doctor works collaboratively with patients to check vital signs, recommend needed tests, evaluate the results, make recommendations, and explore alternative treatments. The ultimate goal is the overall health and well-being of the patient. Likewise, the Supportive Infrastructure of the Conflict Management System includes the mechanisms to support, evaluate, and manage the CMS. It is the structure that allows the smooth integration of the three CMS components: Training, Neutral Third-Party Interventions, and Supportive Infrastructure. In short, a Supportive Infrastructure is essential to the success of the CMS.

The attributes of a Supportive Infrastructure include:

Support from Upper Management:

Organizational leaders must clearly articulate and model the values and virtues of the CMS. In doing so, buy-in for the CMS throughout the entire organization is maximized ensuring a higher probability of program success.


Cost Centers must allocate sufficient dollars to support managers and employees in freely utilizing CMS services.

Values in Alignment with the Organization

A well thought-out strategic plan, including values, philosophy and principles which is clearly parallel to the mission of the organization. Additionally, Human Resources policies and practices should be in alignment with the objectives of the CMS.


Like those who use an EAP (Employee Assistance Program), users of the CMS must be able to utilize all parts of the CMS without impunity. If employees do not feel safe in using the CMS, they will be less likely to effectively take advantage of the valuable CMS resources; specifically neutral third-party intervention professionals.

Administrative Center

This group is responsible for the administration of the program, including resource distribution and tracking of those resources. To use the program, employees confidentially contact this group to request assistance. Trained CMS Administrative Center individuals allocate the resources (i.e. Training or Third-Party Intervention). Additionally, the Administrative Center works with the Conflict Competency Committee to maximize system-wide best practices.

Conflict Competency Committee

This is a Stakeholder Group that meets at regular intervals (i.e., once a quarter) to evaluate the progress and competency of the CMS. Committee members are empowered to allocate resources and make improvement recommendations. Data from the Conflict Competency Committee is also funneled to the Feedback System.

Feedback System

The Feedback System collects on-going information about what has been done as well as what has been learned. This data is analyzed in such a way as to impact future decisions and actions. A good Feedback System values continuous improvements as well as results. Additionally, the feedback system should be able to detect the possibility of systemic problems that are causing organizational pain and suffering. By doing so, appropriate steps can be taken to remedy the problems identified by the System.

Return on Investment(ROI)

A ROI component is essential. Organizations need to have the ability to measure the impact of the CMS on productivity. Data collected by the Administrative Center, Conflict Competency Committee and the Feedback System are compared with agreed-upon financial data in order to track productivity over time.


The word must get out. Employees need to be informed of the CMS services available to them and any changes to the program that take place. Suggested avenues to accomplish this are presentations at staff meetings, having a noticeable presence on the internal organizational website (intranet), the development and circulation of an informational CMS brochure, and regular In-Services (mini-seminars) detailing the CMS to the staff.

Incentives: A reward system that encourages employees to follow certain “norms” as they relate to effectively handling of conflict in the workplace need to be built into the organization’s performance management system.

When the three components of the Conflict Management System – Training, Third Party Intervention and a Supportive Infrastructure – are functioning as an integrated whole, the benefits of the entire program will be enhanced. Destructive conflict will diminish, productive conflict will flourish, and the costs associated with conflict will decrease measurably.

Success Stories

Addressing the cost associated with conflict in the workplace in a systematic fashion is just beginning to gain acceptance in many circles. Below are some examples:

The National Bank of Canada
The National Bank of Canada instituted an Alternative Dispute Resolution pilot program. The Bank’s Employee Relations counselors received training on interest-based negotiation and conflict resolution skills. Instead of contacting public offices (i.e. government agencies, legal rights commissions, etc.), Bank employees with work complaints were provided direct contact to an Employee Relations counselor. Consequently, Conflict Resolution Sessions were offered early in the life cycle of the dispute, at the time the employee filed his or her complaint Additionally, the Employee Relations Department performed conflict awareness training and conflict management best practices presentations for bank managers and HR personnel. As a result, the number of disputes have been reduced by 50%, the legal cost have dropped by 85%, and the number of workplace dispute-related calls fell by 55%.

The United States Navy
The United States Navy’s Human Resources Office at Norfolk, Virginia created an Alternative Dispute Resolution Program supported by qualified neutral facilitators from various disciplines. The program offers the parties involved in a dispute the opportunity for an early, informal, and mutually satisfactory resolution. The Dispute Resolution Program Manager reports that the system generally costs less and uses fewer resources than traditional administrative or adjudicative processes (Guthrie, 2000).

The World Bank
The World Bank has adopted a Conflict Resolution System Network with an emphasis on informal and non-adversarial approaches to addressing disputes in the workplace. The network is a hybrid of services which offers Bank employees multiple options to address their complaints. The Conflict Resolution System Network is designed to be inclusive and effective for all staff regardless of levels, locations, gender, nationality, race, ethnicity, culture, and sexual orientation (SPIDR, 2001).


Productivity losses add up quickly when workplace conflict is not proactively and successfully managed. Over a number of days, months, and years, multiplied by the number of employees affected, the real dollars lost can be staggering. It is evident that there are tremendous advantages to preemptively dealing with conflict in the workplace before it escalates beyond an organization’s ability to resolve, or worse, even contain it.

A well-designed Conflict Management System can have a significant positive impact on the quality of life if its employees, as well as its bottom line. Specifically, addressing the cost of conflict in the workplace can have a transformative impact on the overall health and well-being of an organization.


Cloke, K. and Goldsmith, J. (2001). Understanding the Culture and Context of conflict: Resolving conflicts at work. San Francisco, CA: Jossey-Bass

Cooper, K. (1985). Stop it now. St. Louis, MO: Total Communication Press.

Cox, T. (1994). Cultural diversity in organizations: theory, research & practice. San Francisco: Berrett-Koehler Publishers.

Decker, Bert (1988). The art of communicating: achieving interpersonal impact in business. Los Altos, CA: Crisp Publications.

Brim, R. (2001). Firms, employees forsake court for win-win option: mediation. Knight Ridder Newspapers

Guthrie J. (2000) Help available for conflicts in the work place.

McClure, L. (2000). Anger and conflict in the workplace: spot the signs, avoid the trauma. Manassas Park, VA: Impact Publications.

Risser, R. (1993). Stay Out of Court: The Manager’s Guide to Preventing Employee Lawsuits. Englewood Cliffs, New Jersey: Prentice Hall.

Society for Professionals in Dispute Resolution (2001). Guidelines for the design of conflict management systems within organizations.

Thomas, K. and Schmidt, W. (June, 1976). A survey of managerial interests with rsepect to conflict. Academy of Management Journal.

Watson, C. and Hoffman, R. (1996). Managers as negotiators. Leadership Quarterly, 7 (1)


Rian Thomas

Rian Thomas is a Conflict Management Practitioner and Organizational Development Consultant working with organizations to improve productivity through minimizing the destructive and disruptive impact of unresolved conflict in the workplace. He specializes in team-building, conflict coaching, conciliation work, conflict resolution sessions (early mediation), and conflict awareness training. Rian earned a Masters… MORE >

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