Workplace conflict and its effect on profitabilty


Conflict by itself is not necessarily dysfunctional. Functional conflict is at times needed to improve organisational systems and may need to be deliberately orchestrated. However, when unplanned and unmediated it becomes dysfunctional and has dire consequences on the health of any organisation regarding profitability – and the employees as well, both physically and psychologically.

Conflict, according to the Dana Mediation Institute: “Is a condition between people who are task-interdependent and wherein one or both feel angry and find fault with the other; and use behaviour that causes a business problem”. Such conflicts are inevitable once we have people from different backgrounds, race, religion, sex, personalities and behaviour coming together and expected to work together on forming a shared vision in achieving a common goal.

We will be having a conversation on the negative effect of unresolved workplace conflict, dysfunctional conflict, on profitability. This will not be about resolving it, which will be for another conversation, but rather nurturing the awareness of it. To be able to solve a problem is to first be aware and acknowledge that there is a problem, and that is what this conversation will be about – the triggers and behaviour in workplace conflict which have consequential negative effects on profitability.

Triggers and/or Behaviour in Workplace Conflict

Employees are task-interdependent, and once they have different personalities, behaviour and communication styles there are likely to be blips, clashes and crises. Depending on the trigger, these can be ignored if they are just blip; but they have to be mediated if they develop into clashes – by using preventive mediation, self-mediation, managerial mediation or executive mediation. Once it has the potential of becoming a crisis or develops into one, then the services of an expert mediator will have to be employed.

If there is no task-interdependence between two people in the workplace, then there is not likely to be a conflict to be worried about. Assuming a company has consultancy and transport subsidiaries located at different locations and there is no collaboration or linkage between them, but two people (friends) in the two subsidiaries are angry at each other and find fault with each other for whatever reason with behaviour that looks like a conflict.

This is not likely to cause a business problem, and stricto sensuis not a workplace conflict situation since the situation does not meet conditions in the Dana Mediation Institute’s definition of conflict. Therefore the key words needed for me to recognise a potential workplace conflict situation that should be of concern and cured is the existence of a ‘task-interdependent’ relationship. It may of course be a conflict, but not a workplace conflict.

To be able to recognise and appropriately situate conflict in the workplace, to quote Dan Dana “Daily brushing and flossing should not be confused with professional dentistry” – hence, daily disagreements or misunderstandings between two interdependent people in the workplace should not be confused with workplace conflict until it degenerates into the observable behaviour of a fight-mode by way of threats, shouting and hostile gestures; and to the extent of getting others to take sides. There are also below the water iceberg issues of the parties being in flight-mode by way of avoiding each other, withholding information and not returning work-related messages between themselves. This should also be of concern as a workplace conflict situation.

We need to be able to recognise these wrong reflexes of ‘Distancing’ or ‘walk-aways’ and ‘Coercion’ or ‘power-plays’ between employees who are in task-interdependent relationships, either intra-departmental or inter-departmental, which could result in a large scale organisation-wide crisis if not mediated.

Disciplinary situations such as breaking rules and regulations, absenteeism, lateness to work are not in themselves conflict situations – unless that behaviour is affecting a task-interdependency with another person who is showing wrong reflexes which will result in a business problem. If Ama’s output is Kofi’s input and Ama’s lateness is causing Kofi not to be working effectively and hence he starts having a loud verbal confrontation with Ama, then it has the potential of causing a business problem. In effect, there is a causation between the lateness and workplace conflict between Ama and Kofi that has to be mediated; but the lateness itself by Ama is a disciplinary issue that has to be dealt with under the organisation’s normal disciplinary procedures.

The negative behaviour from unmediated workplace conflict will eventually have a negative effect on the organisation’s bottom line with respect to profitability.

Effect on Profitability

Conflict in the workplace may on the face of it seem to be just between two people, and hence their problem to resolve. What may seem to be a blip can escalate to a clash, and eventually a crisis situation will be imminent, at great cost to the organisation. I will be using the working environment of a typical bank branch to illustrate the negative impact of workplace conflict that leads to reduction of profits by way of the following:

  • Poor Customer Service and Loss of Business

In a typical bank branch, the tellers and front office are supported by operations and the back office to deliver service to customers. In a situation when an operations staff who is to make sure cheques above the teller’s limit are duly authorised by the branch manager to be paid by the teller delays the process unnecessarily because the teller and operations staff have a conflict, it has a tendency to create long queues in the banking hall, customer agitation and poor service delivery. If this consistently happens and remains undetected by the branch manager, so the cause of the long queues remains unresolved, some customers will stop conducting business with that particular bank to do business elsewhere if they operate other bank accounts.

  • Wasted time in resolving the conflict

If the branch manager detects the conflict by observing wrong reflexes between the two parties and decides to mediate, this conversation is most likely to be done within working hours. The manager’s time as well as that of the two parties will have to be used in this conflict resolution process – without directly serving customers or doing what they are each supposed to be doing. Though the time used to resolve the conflict will eventually be worth it from the manager’s point of view, it is a waste of productive time that could have been put to better use if there was no conflict.

  • Opportunity Cost in Resolving the Conflict

A customer calls the branch manager to come for a deposit of GH¢500,000 – but at the same time the manager needs to immediately deal with the conflict to resolve the service delivery issue before the day starts.  Instead of going out for marketing to get the deposit, he decides to mediate the conflict. The opportunity cost of staying to mediate the conflict is the deposit of GH¢500,000

  • Loss of investment in skilled employees

The branch manager was unable to detect the conflict and it kept affecting the tellers’ work and performance appraisal, which led to the teller being put on a Personal Improvement Plan (PIP). The teller, with over ten years’ banking experience and investment in training of the bank’s new software, resigns because she finds it unfair and stressful. At this point, the bank will have lost all the investment made in such a skilled staff-member, and there is also going to be the added cost of recruiting a replacement staff.

  • Health cost

The teller decides not to say anything on causes of the delays in the banking hall, since the operations staff is related to the managing director, for fear of losing her job. This situation is likely to be emotionally traumatic on the teller when she is being reprimanded and interrogated with queries about the delays in paying cheques and long queues. It becomes a stressful situation that affects the teller’s health. She starts thus starts attending hospital – for which the bank is of course paying.

  • Sabotage

The operations staff is obviously sabotaging the teller’s work without thinking of the negative effect on branch performance as a whole. Service delivery has suffered, customers and deposits are lost.

  • Interdepartmental conflict

At this point, the other tellers have decided to side with their colleague – and the operations staff are also in solidarity with their colleague. Now the front office and back office are on a warpath. A conflict that started between just two people was not detected to be resolved, and has turned into a branch-crisis situation.

  • No teamwork and Innovation

The front and back office staff are supposed to be working together to provide a seamless service for customers of the branch and meeting branch business targets.  The interdepartmental conflict situation will definitely affect the teamwork and innovation expected in improving branch performance.

  • Increase in operational risk

Once the branch staff, front and back office, are in conflict with no teamwork, there will not be cooperation and collaboration in getting the job done. Mistakes made by the front office will not be detected and vice versa. Call-over of the previous day’s work by the operations staff of the tellers’ work will not be done with the needed due diligence, which will lead to operational risks for the branch. Errors and possible fraud will go undetected and eventually affect the bottom line.


Once people of diverse background are recruited to work together, there is bound to be conflict between them in the workplace. Such conflict – unmediated by way of preventive mediation, self-mediation, managerial or executive mediation – has the tendency of resulting in an organisation-wide crisis at great cost to the organisation and eventually to profitability.

Cognition of conflict situations, recognition of the emotional response and subsequent behaviour that is likely to cause a business problem is a leadership competence that an organisation should deliberately build capacity and invest in. Clearly, workplace conflicts should not be left unresolved.

The author holds a DBA in Leadership & Organisational Change. He is an Organisation Development Practioner and a Licenced Management Consultant. Currently, he is a Mediation and ADR student with Gamey & Gamey (Email: [email protected])

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