Written by MartinD on January 9, 2023

Conflict is costing SA companies billions and could stunt growth in 2023

In the wake of tighter budgets, and even potential layoffs, many businesses will be starting the year with restructured or entirely new teams. A big part of ensuring that they perform optimally will be identifying and de-escalating any workplace conflict. And, with the cost of workplace conflict approaching $13 billion per year in South Africa, South African decision makers should have conflict management very high on their agenda in the coming months, says a leading software development company. 

“While all business leaders are laser–focussed on how to prepare their company to ride out the uncertainties of 2023, finding ways to help your teams to work optimally can be just as important to the bottom line as managing budgets. We know that many teams have been reorganised ahead of the new year and this places management under new pressure as they navigate changed dynamics. Finding and identifying conflict points can save management time and focus and can save companies a good deal of money too,” says Martin Dippenaar, CEO of Global Kinetic.

Measuring the true costs of conflict in the workplace is not simple, but the UK public body that helps companies with conciliation and arbitration, Acas, published a report last year in which it estimates that workplace conflict costs UK employers £28.5bn every year. This amounts to an average of just over £1,000 for every employee, every year. In the US, meanwhile, the CPP Inc.( the publishers of the Myers-Briggs Assessment and the Thomas-Kilmann Conflict Mode Instrument), commissioned a study that found U.S. employees spent 2.8 hours per week dealing with conflict.

“It is not unreasonable to assume South African businesses suffer the same kind of disruption due to conflict, especially as we enter a downturn economy and more pressure is placed on workers at every level. With a simple extrapolation* we can see workplace conflict costing the country around $13 billion or about R223 billion, which is an astronomical amount. These costs always come as a surprise, but many people are not factoring in the many intangible costs of conflict which can add immeasurable pressure on team leaders and the business as a whole,” Dippenaar explains.

The hidden costs of conflict can be crippling

According to Dippenaar, the more obvious costs of conflict include: sick leave and absenteeism; higher staff turnover; intervention costs such as mediation and other conflict resolution; and eventually any legal costs that may be incurred.

However, he points out that there are also the less visible costs which include: a poor workplace experience; lower productivity; as well as the costs of poor customer service from a staff suffering with low morale.

Other more insidious (and possibly longer-term) effects include stress, burnout and an environment that will foment a culture of quiet quitting.   

“Generational complexities are certainly adding to the challenge for team leaders and can obviously also add to conflict. Honest and frank check-ins with your team are incredibly important, but in the daily pressure of putting delivery first, that is sometimes a luxury. This is when having the power of tech working in the background and alerting you to potential conflicts before they become major issues can really make all the difference,” Dippenaar says.

By the time you realise there is a problem it’s often too late

Based on work Global Kinetic has done, Dippenaar says that it can often take team leaders around six to eight weeks before they realise there is discord in a team.

“The difference between identifying and taking action at week two of a brewing discord and the usual week eight is significant. Early intervention can see teams back to optimal performance in as little as four weeks compared to weeks and even months of sub-optimal performance. What’s more the delays can cause irreversible damage which could end up with staff attrition and an environment of broken trust,” says Dippenaar.

Dippenaar explains that over and above the cost of replacing staff (which can amount to R100 000 per team member), the lost IP that leaves a company when staff leave will also have a lasting impact, especially to knowledge-based companies.

“The algorithms in our software are able to detect points of potential conflict between six weeks to two months before a human would and the early intervention offered by TeamFirst slashed our own staff turnover by 50 percent in the first year we used it. And, while there is no substitute for experienced conflict management run by trusted internal or external professionals, having software to uncover potential points of conflict before they escalate and taint the team dynamic is going to be a game changer in what is looking to be a very stressful year ahead,” Dippenaar says.

* Based on 2.8 hours of conflict a week and an average monthly salary of R25 000 with 10 million full-time and part-time employees.

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