Workplace Conflict: Facts and Figures

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Employee attitudes and characteristics

In a 1990 survey:

• • 62% of respondents indicated that they would be more willing to take legal action regarding employment discrimination than they were five years ago.

• • 25% of respondents stated that they had experienced job bias.

• • 78% of respondents believe some, most or all employers engage in some kind of discrimination in hiring or promotion.

• 51% or respondents stated that all or most employers are guilty of discriminating practices.

Samborn, R (1990) “Many Americans Find Bias at Work.” National Law Journal, July 16, 1990, at p1.

In an informal study conducted with 6000 complainants at the Massachusetts Institute of Technology between 1973 and 1988, 75%

• • expressed concern about some kind of bad consequences.

• • feared loss of privacy.

• • say they do not wish to go to a third party, but feel that they lack the skills they need to change the situation effectively.

• • believe they lack sufficient evidence of the offensive behavior.
• just want the problem to stop.

Rowe, M. P. (1990) People who Feel Harassed Need a Complaint System with both Formal and Informal Options. Negotiation Journal, 1990a, 6(2), 164-165.

90% of harassment episodes are never officially reported.

Rutter, P. (1996) Understanding and Preventing Sexual Harassment: The Complete Guide. Bantam Books

Increasing complaints and litigation

The general federal civil caseload increased by 125% between 1970 and 1989. In contrast employment discrimination case filings recorded a 2,166% increase.

Federal Courts Study Committee, (1989) “Tentative Recommendations for Public Comment.” Proposed Long Range Plans for Federal Courts.

The EEOC reported a twenty-two percent increase in charges of employment discrimination from 1991 to 1993.

Bureau of National Affairs, Daily Labor Report, July 29,1994 at D20.

Increasing financial risk

From 1992 to 1993 awards from judges and juries in sexual harassment cases increased 98% to a record $25,2 million.

Stickler, K (1994) “For Job-Bias Suits, Ballooning Costs.” New York Times, Sunday, July 17, 1994, at p F11.

According to a nationwide study, the average jury verdict in wrongful termination cases is over $600,000 and companies lose 64% of the cases.

“Without Just Cause: An Employer’s Practical Guide on Wrongful Discharge,” (1988) Bureau of National Affairs.

Annual monetary benefits for sexual harassment cases handled by the EEOC between 1992 and 1998 have increased from $12,7 million to $34.5 million. These figures do not include monetary benefits obtained through litigation.

EEOC statistics at www.eeoc.gov/stats/harass.html

Annual monetary benefits for ADA cases handled by the EEOC between July 26, 1992 and 1998 have increased from $0.2million to $49,1 million. These figures do not include monetary benefits obtained through litigation.

EEOC statistics at www.eeoc.gov/stats/ada.html

Increasing organizational costs

The turnover costs for an employee is anywhere between 75% and 150% of the annual salary.

Phillips, D.T. (1990) “The Price Tag of Turnover.” Personnel Journal, Dec. 1990, at p 58.

Up to 30% of a typical managers time is spent dealing with conflict.

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

A more current study showed that 42% of a manager’s time is spent on reaching agreement with others when conflicts occur.

Watson, C and Hoffman, R (1996) ” Managers as Negotiators,” Leadership Quarterly 7 (1) 1996

Increasing litigation costs

According to the Rand Corporation, the average amount spent by companies in defending wrongful termination lawsuits from 1980 to 1986 was about $100,000 per case.

Risser, R (1993) “Stay out of Court: The Manager’s Guide to Preventing Employee’s Lawsuits,”
Prentice Hall.

“Even when the employer prevails on summary judgement, he has usually spent $50,000 or more in attorney’s fees, in addition to the organizations time and resources.”

McDermott, E with Berkeley, A (1996) “Alternative Dispute Resolution in the Workplace: Concepts and Techniques for Human Resource Executives and their Counsel.” Quorum Books, at pxviii

Increasing time spent

“It takes an average of two years for the EEOC to investigate most claims.”

Busch, R II “The Conundrum: Conflict- The Solution: Designing Effective Conflict Management Systems,” 16 Preventative L. Rep. Note 4 at 13 (1997)

“The median time between the date a lawsuit is filed and the commencement of a civil trail is 2.5 years.”

Busch, R II “The Conundrum: Conflict- The Solution: Designing Effective Conflict Management Systems,” 16 Preventative L. Rep. Note 4 at 13 (1997)

Fortune 500 Senior executives spend 20% of their time in litigation activities.

Stephen Rosenberg (1998) www.resolutionworks.org/cost_calculator.htm

Corporate responses to workplace conflict

A survey conducted by Price Waterhouse and Cornell’s PERC Institute on Conflict Resolution of over 530 corporations in the Fortune 1000 category revealed the following trends:

• • 90% of respondents view Alternative Dispute Resolution (ADR) as a critical cost-control technique.

• • 54% of respondents indicate that cost pressures directly affected their decision to use ADR.

• • 88% of respondents reported using mediation in the last three years.
• 23% of respondents use grievance procedures for non-union employment dispute resolution. (A decade ago only a small percentage used them.)

From: Lipsky, D and Seeber, R “The use of ADR in U.S. Corporations: Executive Summary”, 1997

Another study found that 50% or more of large employers had instituted some kind of grievance process for at least some nonunion employees.

Delaney, J, Lewin, D and Ichniowiski, C (1989) “Human Resource Policies and Practices in American Firms”.
Bureau of Labor-Management Relations, no.137.

Corporations that have developed collaborative conflict management systems report significant litigation cost savings:

• • Brown and Root reported an 80% reduction in outside litigation costs.

• • Motorola reported a 75% reduction over a period of six years.

• NCR reported a 50% reduction and a drop of pending lawsuits from 263 in 1984 to 28 in 1993.

Slaikeu, K. and Hasson, R (1998) “Controlling the Costs of Conflict: How to design a system for your Organization,” Jossey Bass, at p14 and 15.

Findings from a 1998 survey conducted with 100 Human Resource executives in the US revealed the following:

• • 86% have created written HR policy manuals

• • 63% have implemented training programs for managers and supervisors,
• 57% have developed employee grievance policies.

EPL Survey Report, Assurex International, the University of Miami and the American Mediation Institute, 1998.

Insurance Policies

“Intentional discrimination claims are not covered by an insurance policy.”

McDermott, E with Berkeley, A (1996) “Alternative Dispute Resolution in the Workplace: Concepts and Techniques for Human Resource Executives and their Counsel.” Quorum Books, at p 30.

Employment Practices Liability Insurance (EPLI) covers claims for discrimination or wrongful termination based on race, sex or disability. In a survey of 100 Human Resource executives, co-sponsored by Assurex International, the University of Miami and the American Mediation Institute, 48% indicated that they have purchased EPLI.

EPL Survey Report, Assurex International, the University of Miami and the American Mediation Institute, 1998.