Workplace Disharmony and Conflict Directly Costs Australian Businesses Upwards of $10.1 Billion a Year!

Workplace Disharmony And Conflict Directly Costs Australian Businesses Upwards Of $10.1 Billion A Year!

25% of employees have reported that conflict or the avoidance of conflict has resulted in sickness or avoidance of work.

Absenteeism and presenteeism account for an average of 3.2 days lost productivity per worker per year.

Just one team of four people, each earning $60,000/pa, working on a 6 month project that blows out due to interpersonal conflict and the lack of ability to work together could cost you upwards of $400,854! And that’s just one project!

This White Paper outlines the causes of conflict and more importantly how you can Anticipate, Prevent, Identify, Manage And Resolve It before it takes a major toll on your business

The Cost of Organisational Conflict

As a busy executive you’re concerned with getting results. You have multiple projects on the go and containing costs while delivering bottom line results is always on your mind.

Competition is fierce and you have to keep ahead of the pack. You’re constantly being asked to do more with less resources and find yourself working longer and longer to just keep your head above water.

You rely on your teams to get things done, but are increasingly frustrated with projects that blow out in both delivery times and budgets. And you find yourself spending 30 to 50% or more of your time sorting out “people issues” between your staff, peers or even superiors.

Over time you’ve noticed a number of behavioural symptoms in parts of your workforce including:

Low morale leading to excessive employee turnover Reduced collaboration Delayed and missed deadlines leading to reduced productivity Quality problems Increased absenteeism, sick leave and even presenteeism (where people turn up but don’t actually contribute) Passive/aggressive or even abusive behaviour Factions, cliques and general distrust in the workplace Increased customer complaints

You know that you need to do something, or things will just keep getting worse until they spiral out of control and you have a major crisis on your hands. And like it or not, you’ll be blamed!

Now you might be thinking, “Things aren’t that bad around here. I know we have some issues, and could improve productivity, but I’m not sure how to go about it…”

Whichever camp you fall into, one thing is clear.

Every organisation has some form of conflict between different individuals. Whether it’s minor or major, every organisation pays a price for mismanaging it.

How much?

A study in 2007 by Medibank Private (Australia’s largest private health insurer) found that workplace stress caused by interpersonal conflict cost the Australian economy a staggering $14.81 Billion a year with a direct cost to organisations of $10.1 billion.

Now you may be thinking, “This is a huge number, and there’s no way my organisation is a big contributor…” but here are some stark facts.

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25% of employees have reported that conflict or the avoidance of conflict has resulted in sickness or avoidance of work.

Absenteeism and presenteeism account for an average of 3.2 days lost productivity per worker per year.

Now you may think I’m plucking numbers out of the air, so at the end of this document I’ve detailed exactly how I came to this figure. And I’ve put in a worksheet so you can plug your own numbers in. I encourage you to do so, but be prepared… the answers may shock you.

Now before I go into the causes of conflict and what you can do to minimise it, I’d like to make one thing clear.

Not all conflict is bad.

A certain amount of healthy tension in a relationship leads to increased productivity. Defined as “Opposition”, it’s where two or more people disagree about an idea and engage in a healthy debate.

Such debates often generate new ideas and/or improved ways of doing things.

It’s only when a disagreement becomes personal and one or other party feels an attack that undermines their self-worth, that disagreement or “opposition” transitions to “conflict”.

In other words, we experience conflict when we feel our personal values are being attacked or violated in some way and we feel a sense of disempowerment. Conflict is always an emotional state which directly affects our ability to perform.

So why does conflict occur and what can you do to anticipate, prevent, identify, manage and resolve it?

Let’s start with the causes of conflict…

It all comes down to people.

Human beings are a skin bag of emotions. Everyone is different. We all have different value systems, behaviours and ways of getting our needs met.

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Your way is not necessarily my way. So while you may act in ways that you think are appropriate, I might find them anywhere from mildly irritating to deeply offensive. And of course the same applies the other way round. Which is where all the problems start.

The key to effective personal relationships is understanding people. Both yourself and the other person.

Once you understand your own motivation and value system you can get a handle on what triggers feelings of conflict within you.

And the same applies to people you interact with. Once you get a perspective on their values, motivations and behaviours, you can see where they’re coming from and be able to engage in healthy discussions without risking they move into conflict scenarios.

And should things start to get personal (and you or they feel attacked), how to step back and stop the conflict progressing to the point of no return where relationships get damaged.

Unfortunately we’re not born with a manual and the traditional educational system doesn’t teach us how to deal with others effectively so we all get our needs met.

Which is where many psychometric tools come in.

Designed to help you determine “your type”, these tools try to give you insights into your personality and how you are likely to interpret the world around you.

You may well be familiar with some of them including Myers Briggs and DISC. Great tools in their space, but they’re either too complex for most people to understand the results or too simplistic to be meaningful.

And none of them take into account one simple fact. How you behave under “normal” circumstances – i.e. when things are going well is very different to how you might behave when you move into a “conflict” scenario.

In other words your behaviour can change radically when under stress caused by conflict and it’s your ability to

a) understand when this is happening to you b) recognise when it’s happening with someone else c) deal with it appropriately that will help prevent escalation and damage to the relationship.

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Which is where Relationship Awareness Theory can give you new insights into your behaviour both under “normal” circumstances i.e. when things are going well, as well as when you experience conflict.

Relationship Awareness Theory is a model developed by psychologist Elias H. Porter Ph.D., a leading psychologist who worked alongside other luminaries in his field including Carl Rogers and Abraham Maslow.

Relationship Awareness Theory is founded on four key assumptions:

a) Behaviour is Driven by Motivation for Self-Worth.

We act in the way we do because we want to feel good about ourselves – our behaviour is simply a vehicle to help us satisfy an underlying value, need or goal. And when we feel a core value, need or desire is being undermined or undervalued, we start to feel threatened and potentially move into conflict to protect ourselves and our feelings of self-worth.

b) Motivation Changes in Conflict.

We tend to behave differently depending on whether things are going well or when we feel we are faced with conflict or opposition.

Porter postulated that conflict occurs in three distinct and progressive stages.

Stage One: We focus on ourselves, the problem and the other person.

Stage Two: We focus on ourselves and the problem (we’re no longer concerned with how the other person is feeling).

Stage Three: We focus on ourselves and how we can protect ourselves.

c) Personal Filters Influence Perception.

We naturally tend to perceive the behaviour of others from our own perspective. For example someone who is very concerned with justice and fairness will have a heightened or distorted awareness of the "unfair" behaviour of others. And the so called “unfair” person may think the former too rigid and unyielding – potentially leading to disagreement or conflict.

d) Personal Weakness are Overdone Strengths.

A personal "weakness" is simply the overdoing or misapplying a personal "strength". For example the ability to see all sides of an argument and take into account everyone's views before making a decision might generally be considered to be a strength, but could also be

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seen as a weakness if it paralysed decision making or prevented you from acting decisively in a crisis.

So what does this really mean?

Put simply, we all create unique sets of “internal filters” or a “Motivational Value System” through which we understand and interpret what goes on around us. This Value System is expressed externally in the form of the behaviours and styles that we prefer to use to achieve our goals – in Dr Porter’s terminology, our Value Relating Style.

There are three major motivational value systems and four combinations leading to a total of seven motivational styles. Each is described using colour (Red, Blue, Green) or a combination of colours Red-Blue, Red-Green, Blue-Green or a combination of all of them, the Hub.

While each of us is unique in our expression of these styles, here are the broad categories.

See which one you identify with the most…

Red (Assertive): You are particularly concerned with the achievement of goals when interacting with others – "task-people"

Blue (Nurturing): When relating to others you place the enhancement of the welfare of others at the top of your priorities – "people-people"

Green (Analytical): When dealing with others you’re primarily concerned with the achievement of meaningful order through analysis and self- sufficiency – "data-people"

Red-Blue (Assertive You strive for the protection, growth and welfare of people around Nurturing): you through personal leadership and task accomplishment.

Red-Green (Judicious You’re concerned about intelligent assertiveness, justice, order, Competing): fairness and leadership in competition.

Blue-Green (Cautious You’re concerned about developing and affirming self-sufficiency in Supportive): both yourself and others around you. You’re thoughtful and helpful with regard to equity and justice for all.

Purple (Flexible Cohering – This is a combination of the three major styles. You’re flexible and The Hub): are concerned for the welfare of the group, individual members and want to belong.

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Now I don’t know which of these styles you personally relate to, but say for example you’re a Red Assertive type who works with a team consisting of Green Analytical, Blue Nurturing and Purple Hub types.

I’m sure you can immediately see the potential for conflict. You just want to get things done. Damn the torpedos – full speed ahead - let’s get on with it. You’re interested in the big picture and may not be that interested in details. You certainly don’t suffer fools and anyone who dithers frustrates you.

But imagine the effect you have on Green Analytical types who want to take their time analysing, delving into detail, dotting all the i’s and crossing the t’s. Don’t take their need for order and data into account and you’ll first alienate them and more than likely have a number of fights.

The Blue’s in your team hate the ruckus and want everyone to get along. They think your behaviour borders on (or is) abusive and at the extreme, simply won’t cooperate with you.

And while the Hubs get on with everyone, you get frustrated by their inability to make simple decisions without needing to involve everyone else.

The irony with all this is each team member has their own personal strengths. Strengths that are vital in providing diversity in the team. Imagine if everyone was a Hub or analytical or just wanted to get along. No decisions would ever be made and nothing would get done!

However, taken to extremes each strength becomes a weakness in other eyes.

Assertiveness can become domineering. Analysis can become paralysis. Concern for the welfare of an individual can lead to not asserting yourself when necessary, accepting bad behaviour or poor performance as you don’t want to offend or upset the individual concerned.

And Hubs can get so caught up in looking at “options”, that they never make a decision to actually implement something.

All in all, a recipe for disaster. And it’s an extremely common scenario in many, many teams.

But it doesn’t have to be this way!

Imagine having a system where you could rapidly and accurately identify both your own and your team members’ personal strengths and motivational styles.

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Being able to understand and relate to people in ways that they feel most comfortable, allowing them to give of their best. You would reduce or eliminate needless conflict, encourage healthy “opposition” without it escalating and get a more productive workforce.

And the benefits don’t stop there. You’d have better relationships with your customers by understanding their motivational styles, strengths and weaknesses.

With the Strengths Deployment Inventory all this is and more is possible.

Solidly based on Elias Porter’s Relationship Awareness Theory, the Strengths Deployment Inventory (SDI) is a psychometric tool which helps you determine your Motivational Value System and Conflict Sequence. It is a self-assessment tool that provides an understanding of what drives you and what drives others. An understanding that empowers you to communicate in a way that achieves results.

Unlike many psychometric tools which try and put people into a box and define their “personality type”, SDI is a “whole of life” inventory which helps you understand how you apply your strengths within your relationships. It shows you the unique way you prefer to interact with people in your life, be it at work or home.

The SDI helps us get the most productive value from all our relationships, both personal and professional. Good relationships create measurable financial value, customer and brand loyalty, efficient teamwork, profitable referral business, clarity of expectations and individual empowerment.

And when things go wrong, the SDI provides insights into how they went wrong and more importantly, what you can do about it.

Arguably, two of SDI’s greatest strengths are the ease of administering the tool and the common sense, easy to understand and remember results.

How does it work?

SDI helps you to go deeper into your understanding of people by looking at motivation or purpose. It goes behind your behaviours to gain an understanding of why you’re doing it. And every “why” is unique to an individual.

Knowing the motivation or “why” behind every behaviour is the key to understanding yourself and others. Once you know what’s important to people you can more accurately interpret their actions and words and choose better ways to communicate. Ways that resonate with their thinking style and value system.

A lot conflict comes from different perceptions of strengths. Strengths when overdone or misapplied can be perceived as weaknesses by other people.

Remember our example of the Reds, Blues and Greens above…

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Say I’m flexible, but at times my flexibility prevents me from making a decision and that frustrates you.

I may be principled, but those principles could get misapplied to (in your eyes) an insignificant issue. You then think I’m rigid or unyielding. It’s these sorts of situations that can lead to the door of conflict. However it’s up to us whether we walk through the door or not.

Gaining a better understanding of individual styles gives us choices in how we respond.

Coming back to core or motivational value system, remember, we all want to maintain a sense of self-worth. Therefore our behaviours are designed to keep us feeling good.

However when we experience conflict, something inside us changes. Depending on the seriousness of the conflict, our behaviours change as we feel more and more threatened. While our primary goal is to go back to a feeling of self-worth, we all have different ways of doing so.

Some of you will initially rise to the challenge, then fight off the opposition and finally feel as if you’re fighting for your life!

Others will immediately accommodate the needs of the other party, give in and let them have their way and end up feeling completely defeated.

And the rest will be prudently cautious, initially withdraw to assess the situation, and if that doesn’t work try to escape and finally retreat completely.

SDI’s primary inventory maps out your motivational style when you’re feeling good about yourself as well as a three stage mapping of how you’re likely to respond in the three stages of conflict.

One of biggest benefits of SDI is you can also map out motivational and conflict styles for each team member and superimpose them on the one diagram. So you can immediately see how members will interact with each other and the issues they may face.

Let me illustrate with an example...

John and Nancy have done the SDI as well as a Portrait of Personal Strengths inventory.

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Looking at the triangle, each person’s “normal” behavioural state is represented by the “dot” at the beginning of the arrow.

The arrow head represents the position they move into when in conflict.

John, in the Red wants to get stuff done, while Nancy in the Blue wants to help people. They both have different sets of strengths.

When John and Nancy get into conflict, Nancy in first stage Blue is likely to accommodate, to smooth things over and say “it’s not that big a deal – let’s just move on”. Whereas John is more likely to get really laser focused on the issue, want to withdraw and spend some time by himself thinking about the issue.

And if Nancy’s trying to smooth things over while John’s trying to be by himself, their two approaches to disagreement don’t match up.

If they want to ultimately resolve this, they’re going to have to show each other how to get back to a feeling of self-worth.

So if Nancy’s attempting to accommodate John, she needs to show him how the solution she’s suggesting helps him back to a feeling of confidence, drive and competitiveness.

And if John’s trying to help Nancy find a solution to feeling good about herself, he needs to show her how his possible solution helps her go back to being able to care for other people in a principled way.

So both need to show the other a pathway back to the place where they feel good about themselves.

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Where individuals often get stuck is they want others to accept their own path back rather than rather than considering what the other person needs.

So John in the Green wants to get back to Red, so what he ends up doing is explaining to Nancy all the red assertive, results oriented benefits of solving the problem.

But that’s not Nancy’s path back. Nancy in conflict would try and get John to see her point in Blue and that’s not John’s path.

Each party needs to be able to communicate in the other’s “language”, not just “shout louder” in our own. Behavioural flexibility is the key to communication.

And of course things become more complicated when we get into group situations.

Assume John’s in a conflict with Randy.

When John experiences conflict his first response is to withdraw to think and assess the situation as shown in in his stage one Green.

But Randy is in the Red area in stage one. So his response is to say, “Let’s grab this issue, charge at it and address it head on, while John’s saying, “Whoa, slow down – I need to think”.

So now they’re actually having issues as to how to deal with the conflict rather than solving the root problem itself.

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But as soon as Randy learns that John needs some time to think, he can show John a path back to Red by allowing John’s process. And as John learns that Randy has a need to act immediately, he can also learn to speak Randy’s “language”.

A lot of conflict management is centred on dealing with people’s emotions. Remember, it only moves from “opposition” to “conflict” once someone’s self-worth gets threatened – an intrinsically emotional experience.

How could using SDI benefit your organisation?

Imagine for a moment a workplace where everyone gets along. Productivity is at its peak as your teams can engage in healthy discussion, have opposing ideas and be critically creative without getting into conflict.

And when conflict does occur, the parties realise what’s happening and nip it in the bud.

Okay, maybe that’s utopia. Put a bunch of human beings together and there’s always the possibility of disharmony as people may not get along primarily because they don’t understand each other’s value and motivational systems. In short they don’t gel with particular behaviours.

But once people have been through the SDI and Portraits of Personal Strengths inventories, they develop a far better understanding of not only their own motivations and behaviours, but those of the people around them as well.

This knowledge leads to better understanding and acceptance of differences. And people start to value these differences realising each person brings something important to the table with their particular strengths.

This in turn helps you and your people to better anticipate areas of conflict and more often prevent them from occurring. And when conflict does start, identify the symptoms quickly and take steps to manage and resolve it.

People want to be happy at work. That’s when they produce the most. So you owe it to yourself and your employees to create an environment where this is possible.

And SDI can do just that!

Who else uses SDI to help them improve performance?

Over 40 years, SDI has been used around the world by thousands of organisations ranging from Fortune 500 companies down to small businesses.

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Our clients range from Senior Line Managers who want to improve organisational performance, Learning & Development Managers and Leadership Development and Conflict Resolution consultants.

Here is a partial list of industries that use SDI as an integral part of their leadership development and team building activities.

Air Travel Hospitality Auto/Transportation Insurance Banking & Finance Manufacturing Communications Military Consulting and Business Services Social Services/Non-profit Consumer Products Spiritual Education Technology Energy & Utilities Government Healthcare

In Australia & New Zealand our client list includes:

Adobe Systems Qantas ASK Learning Suncorp Australian Defence State Emergency Services Australian Antarctic Division Skills Tasmania Aurora Energy Department of Police and BT Financial Group Emergency Management Department of Health Disability University of Technology Sydney & Aging NSW University of Western Sydney Hydro Tasmania Foodstuffs – New Zealand Hornsby Shire Council Enterprise North Shore – New Monash University Zealand National Australia Bank EMA– New Zealand Pacific National Briscoes Group Limited – New People & Strategy Management Zealand Consultants Australian Red Cross

This is what some of our clients have to say about the SDI suite of tools and our support:

Andrew Barney is the Manager of the MBA Program for New Zealand’s largest university.

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“SDI has proved to be very reliable in its results, is easy to use and my students love it...”

“I have been using SDI in my leadership development and mediation practice for at least 23 years.

I found the tool so effective, I actually created a validation study for SDI as part of my Master’s thesis so have a deep understanding of the tool, how it works and how and where to best apply it.

I believe SDI is one of the best instruments in its class. While it is easy to use and understand, don’t be fooled into thinking it’s simplistic because it’s not.

Once you have a thorough understanding of how SDI displays its results, you realise it’s a very nuanced tool when compared with other well-known instruments.

My application of SDI spreads from coaching senior corporate executives to having students discover and work to their strengths as well as providing an excellent framework for mediation.

I’m currently the MBA program director for New Zealand’s largest university. My students are generally executives from a range of organisations, who all love SDI and the insights it provides.

SDI has proved to be very reliable in its results, is easy to use and my students love it.

In fact, many of these students have embraced SDI into their own organisations.

Before taking on the role at Massey University, I was heavily involved in mediation activities.

I found SDI to be really useful in breaking the ice between people who don’t like each other and where there is a lot of conflict.

I’m not claiming that SDI always solves the problem, however, at the very least; it helps to move the situation out of stagnation into taking the first step to resolve the conflict.

There have been situations where I’ve used SDI to help people not only understand themselves but the other party’s motivation. Often the penny would drop and the conflict was resolved to everyone’s satisfaction.

I love working with Lea Symonds of Personal Strengths Australia. I like her as a person as well as the way she runs the business. The organisation does a very good job supporting us in using and applying the tool. Andrew Barney, Manager MBA Program Massey University.

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Callan McDonnell is an Executive Manager at the Learning Campus with Commercial Insurer Suncorp Australia

“We’ve seen a marked improvement in team dynamics, engagement and productivity”

At Suncorp Australia, we use SDI to help our teams increase self-awareness, and play to their strengths going forward.

The SDI is a motivationally and behaviourally based instrument.

Compared to other tools, SDI doesn’t try to put people into a box. It is one of the only tools I know of that helps participants understand their motivation and behavioural patterns when times are good as well as what happens when in conflict. In short, it creates a ‘shared language’ for everyone involved, giving individuals choices as to how they want to communicate with one another.

One of SDI’s powerful attributes is it’s easy to complete and participants are not faced with 150 plus questions. But perhaps the best attribute is how easy it is for participants to understand the results.

Utilising a visual graphical representation, participants easily remember their own profiles and understand some of the behavioural patterns of other team member’s profiles.

This gives team members a greater ability to handle themselves and others when conflict arises in a team situation (as it invariably does).

As a result over the time we’ve used the SDI, we’ve seen a marked improvement in team dynamics, engagement and productivity.

At Suncorp we also use SDI’s “Portrait of Personal Strengths” inventory and find it an invaluable addition to our arsenal.

The Portrait of Personal Strengths helps team members understand why specific individuals put energy into some things and avoid others. It shows individuals that different personalities can coexist within a team environment and are in fact beneficial to achieving goals and outcomes.

Now tools are one thing, but it’s the support from Lea Symonds and her team from Personal Strengths Australia that makes all the difference to our success.

I can categorically say it’s a pleasure to do business with Lea.

Nothing is too difficult. They strike a good balance between informality and professionalism in their interaction with clients.

I’m very comfortable picking up the phone and talking to Lea whenever I feel I

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need help. She’s very generous in sharing her knowledge and experience.

I’ve used plenty of other instruments and rate SDI as a tool at a 9/10 for effectiveness in its class and give Personal Strengths 10/10 for their service. Callan McDonnell, Suncorp Australia

Debbie Riddell is a leadership development executive with Virgin Airlines, Australia

“SDI helps people understand and validate their own behaviour while understanding other people are different, but no less valuable”

I qualified as an accredited SDI facilitator back in 2000/01, and have used the tool ever since.

I mainly use SDI in team environments where individual team members struggle to communicate and understand each other. SDI “creates a common language” for the team, so misunderstandings, conflict and other team issues, pretty much cease to exist.

Over all these years, I’ve never had any negative feedback from anyone who’s undertaken the inventory. When presented with their results, attendees say, “Yeah, that’s exactly me”, “Yes, this really does sound like me”, “Oh… There are other people like me”, and “I never knew there were other people like me” etc.

In short, it helps people understand and validate their own behaviour while understanding other people are different, but no less valuable.

Personal Strengths Australia is great to do business with. They’re always friendly, approachable, professional and courteous. Nothing is ever too hard and they are very reliable and always do what they say they’ll do.

For example: if they say they call on Tuesday at 10.00am, you can be sure the phone rings at the agreed time. As an independent consultant where support from a vendor is crucial to my success, the support I get from Lea at Personal Strengths is invaluable.

Ongoing support and training is also vital.

When SDI introduced an online version of the instrument, I needed help to transition to it.

Once again, I got massive support from Vanessa at Personal Strengths Australia who was extremely helpful in guiding me through it. I had a lot of questions and I’m sure some of them must have sounded silly to Vanessa. She was very encouraging, answered the questions and I felt supported all the way.

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I certainly recommend SDI as a psychometric tool to anyone involved in team building, coaching and human resources. Debbie Riddell, Virgin Airlines, Australia

And finally, Pauline Gargan, an independent consultant with People & Teams

No other tool I know of offers these benefits!

I have been using SDI since the late 1990’s.

There are a number of things I really like about SDI, compared to other psychoanalytical tools.

The objective of SDI is, for the individual, to recognise their strengths, and to see how they can be used in the right context, at the right time and in the right amount.

SDI is not intimidating because it is purely based on the individual’s strengths. The “getting to know yourself” concept SDI promotes is very useful in my line of work. This is one of the main reasons I like the tool so much.

SDI is easily understood by everyone. You don’t need a psychology degree to understand how the tool works, and it is nonjudgmental and non- confrontational. I don’t think it goes over anyone’s head.

SDI doesn’t only cater for the corporate world. In fact I’ve had very good success in blue collar environments because it is simple in concept, but not simplistic. SDI comes with a guide that helps to quickly identify people’s personal strengths and how they serve us in the workplace.

SDI in my opinion is a great “ice breaker”. When people don’t know each other very well, SDI helps participants the get comfortable with each other. And because it focusses on strengths rather than weaknesses, people tend to open up more easily. This creates a very positive environment right from the start.

SDI is unique because it also offers a conflict sequence. i.e. What happens when an individual starts to feel threatened in a conflict situation and how they act to preserve their self-worth. None of the other tools in my “box of tricks” offer this feature.

I also use the SDI feedback edition, which I find very useful. This is a more complex tool and therefore debriefing participants is a bit more time consuming. But the tool offers great insights into how people see the individual and what they can do to improve their relationships.

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Now a tool is only as good as the support from the supplier.

Lea Symonds and her team at Personal Strengths Australia are always available to help.

I happily give Personal Strengths top marks as an organisation. Their customer service, willingness to help and reliability is excellent. Pauline Gargan, People & Teams

Your Next Steps…

You need to decide. Decide whether you’re happy with the status quo in your organisation. Whether you’re getting peak performance from your people, who love coming to work in a harmonious, productive environment.

If this is the case, congratulations and all the best for your future.

However, if you have that nagging feeling things aren’t that rosy as you hear rumblings of discontent, notice passive-aggressive behaviour or downright hostility in your workplace, you need to decide. Decide right now that you’ll change something and take action towards fixing the issues.

Talk to us about how utilising the SDI suite of tools could help you increase team work, productivity and create real bottom line improvement in your business, quickly and efficiently.

Call Personal Strengths Australia now on +61 3 6231 4226 or email: [email protected] for a confidential discussion so we can get the ball rolling.

Lea Symonds, Managing Director, Personal Strengths Australia.

P.S. I promised you a worksheet detailing how just one team of four people, each earning $60,000/pa, working on a 6 month project that blows out due to interpersonal conflict and the lack of ability to work together could cost you upwards of $400,854.

I’ve included this below with a blank version so you can plug your own numbers in. I encourage you to do so, but be aware, you may be shocked at the results!

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The Cost Of Organisational Conflict - Worksheet

Let me show you how I calculated this!

I’ve taken 8 factors into account – each with its attendant cost:

1. Wasted time 2. Opportunity cost of wasted time 3. Reduced decision quality 4. Lost employees 5. Restructuring 6. Sabotage / theft / damage 7. Lowered job motivation 8. Lost work time

Plugging in numbers from our example leads to:

Cost Factor $

Wasted time: $42,000

Opportunity cost of wasted time: $21,000

Reduced decision quality: $180,000

Lost employees: $75,600

Restructuring: $12,000

Sabotage / theft / damage: $0

Lowered job motivation: $16,800

Lost work time: $3048

Total Cost of Conflict: $350,448

SDI - Personal Strengths Aust/NZ - 19 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Let’s break these down:

Cost Factor 1: Wasted Time: $42,000

4 Number of people affected by the conflict $$ x $60,000 Average salary of each employee $240,000 + 40% Supplemental cost of fringe benefits $336,000 x 50% Portion of year the conflict continued $168,000 x 25% Time engaged in or distracted by conflict $42,000

Cost factor 2: Opportunity cost of wasted time: $21,000

Return on investment in labour is 150% to 500% of the cost of labour.

So, the cost of an hour wasted by conflict is much more than the labour cost of that hour.

$42,000 Cost of wasted Time $$ x 50% ROI in Labour (After subtracting the actual $21,000 cost of labour)

Cost factor 3: Reduced decision quality: $180,000

Conflict degrades decision quality in two ways:

Every solo decision-maker requires information from others to make the best decision. When information providers are in conflict with the decision-maker, the information supplied is inevitably distorted.

When two or more people share responsibility for a decision, conflict between them causes decisions to result from their power contest, not from their objective judgment of what is best for the company.

The Impact is immeasurable, but often huge and can result in business failure when executive decisions are affected.

What would have happened had a different decision been made is inherently unknowable.

SDI - Personal Strengths Aust/NZ - 20 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

The average dollar-impact of decisions made by managers is 75% to 200% of their annual salary.

4 Number of people affected by the conflict x $60,000 Average salary of each employee $240,000 x 1 Number of affected decisions made by each person during the period of conflict x 75% Dollar impact of those decisions $180,000

Cost factor 4: Lost employees: $75,600

$60,000 Annual salary of employee who resigned + 40% Supplemental cost of fringe benefits $84,000 x 1.5 Cost of replacing that employee $126,000 x 0.6 Average role of conflict in voluntary $75,600 termination

Cost factor 5: Restructuring due to conflict: $12,000

Redesign of work procedures Variation from known best practices Reassignment of personnel Promotion” to remove a “problem person” Other restructuring?

Guideline: 10% of the combined salaries of employees whose task relationships were restructured for the time the restructuring is in effect.

4 Number of people affected by the conflict x $60,000 Average salary of each employee $240,000 x 0.5 Portion of year conflict continued $120,000 x 10% Dollar impact of restructuring $12,000

SDI - Personal Strengths Aust/NZ - 21 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Cost factor 6: Sabotage / theft / damage

Theft, sabotage, and vandalism are only partially caused by unmanaged conflict. (Other causes include dishonesty, desperate financial need, social alienation.) Losses are greater than managers realise.

Guideline: 10% of the acquisition cost of equipment, tools, and supplies that conflicted employees use or have access to in performing their jobs.

As we don’t know what equipment is being used, we’ll leave this blank for our illustration.

Cost factor 7: Lowered job motivation: $16,800

Chronic conflict erodes your employees’ enthusiasm for producing at the best of their ability.

4 Number of people affected by the conflict $$ x $60,000 Average salary of each employee $240,000 x 1.4 Supplemental cost of fringe benefits $336,000 x 50% Portion of year the conflict continued $168,000 x 10% Percentage of erosion of job motivation and $16,800 productivity

Cost factor 8: Lost work time: $3048

4 Number of people affected by the conflict $$ x $60,000 Average salary of each employee $240,000 x 1.4 Supplemental cost of fringe benefits $336,000 / 880 Number of work days per year (220) × number of people $381 Value of productivity per day of work per employee x 8 Number of days lost $3048

SDI - Personal Strengths Aust/NZ - 22 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Your Turn:

Estimate your own numbers using the formula above and see what conflict could be costing your organisation:

Cost Factor 1: Wasted Time: $______

Number of people affected by the conflict $$ x Average salary of each employee + 40% Supplemental cost of fringe benefits x 50% Portion of year the conflict continued x 25% Time engaged in or distracted by conflict

Cost factor 2: Opportunity cost of wasted time: $______

Cost of wasted Time $$ x 50% ROI in Labour (After subtracting the actual cost of labour)

Cost factor 3: Reduced decision quality: $______

Number of people affected by the conflict x Average salary of each employee x Number of affected decisions made by each person during the period of conflict x 75% Dollar impact of those decisions

SDI - Personal Strengths Aust/NZ - 23 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Cost factor 4: Lost employees: $______

Annual salary of employee who resigned + 40% Supplemental cost of fringe benefits x 1.5 Cost of replacing that employee x 0.6 Average role of conflict in voluntary termination

Cost factor 5: Restructuring due to conflict: $______

Number of people affected by the conflict x Average salary of each employee x 0.5 Portion of year conflict continued x 10% Dollar impact of restructuring

Cost factor 6: Sabotage / theft / damage: $______

Cost factor 7: Lowered job motivation: $______

Number of people affected by the conflict $$ x Average salary of each employee x 1.4 Supplemental cost of fringe benefits x 50% Portion of year the conflict continued x 10% Percentage of erosion of job motivation and productivity

SDI - Personal Strengths Aust/NZ - 24 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Cost factor 8: Lost work time: $______

Number of people affected by the conflict $$ x Average salary of each employee x 1.4 Supplemental cost of fringe benefits / 880 Number of work days per year (220) × number of people Value of productivity per day of work per employee x 8 Number of days lost

Place each individual result into the spaces below and add them up.

Cost Factor $

Wasted time:

Opportunity cost of wasted time:

Reduced decision quality:

Lost employees:

Restructuring:

Sabotage / theft / damage:

Lowered job motivation:

Lost work time:

Total Cost of Conflict:

Your Next Steps…

Depending on the numbers you came up with above, you need to decide whether you’re happy with the status quo in your organisation or you need to fix the underlying issues that cause conflict and loss of productivity.

SDI - Personal Strengths Aust/NZ - 25 - Ph: +61 3 6231 4226 E: [email protected] The Cost of Organisational Conflict

Talk to us about how utilising the SDI suite of tools could help you increase team work, productivity and create real bottom line improvement in your business, quickly and efficiently.

Call Personal Strengths Australia now on +61 3 6231 4226 or email: [email protected] for a confidential discussion so we can get the ball rolling.

SDI - Personal Strengths Aust/NZ - 26 - Ph: +61 3 6231 4226 E: [email protected]