Report: Workplace conflict is costing the Northern Ireland economy up to £1billion per year

A recent report commissioned by the Labour Relations Agency (LRA) has revealed that almost 300,000 employees (37% of the workforce) experience conflict in the workplace, costing the local economy up to £1billion per year.

The LRA report - ‘Estimating the Costs of Workplace Conflict in Northern Ireland’ - also highlights that more than 14,000 people in Northern Ireland leave or quit their jobs because of conflict at work, with the cost of replacing them totalling £439m in recruitment and training expenditure.

The academic study, which was carried out by the University of Westminster on behalf of the LRA, considered the impact of management time, grievance procedures, sick pay, backfill, mediation and negative productivity in reaching its findings.

The publication of the LRA report is supported by policy brief from ReWAGE, the work & employment expert advisory group, which shows that organisations in NI are spending an estimated £49.1million per year defending employment tribunal claims.

The ReWAGE brief, ‘Managerial Capability: Minimising the Costs of Workplace Conflict in Northern Ireland’, also estimates that each year there are over 12,000 disciplinary dismissals across the NI workforce. With each dismissal costing an average of £30,814 per person, the total economic impact is estimated at £296m.

The authors of the reports, Professor Richard Saundry and Professor Peter Urwin also found 9% of those involved in workplace conflict ended up on sick leave, with that figure rising to 13% in the public sector.

Professor Richard Saundry, University of Westminster, said: “Overall, ending the employment relationship costs employers in Northen Ireland just over £647m every year, which is more than three-quarters of the total annual cost of conflict. The key to minimising the negative impacts of workplace conflict (for employees and employers) is to address and resolve issues before they undermine the employment relationship.”

Don Leeson, chief executive of the LRA, added: “These findings clearly demonstrate that workplace conflict is a critical and costly issue for organisations which aim to maximise productivity and efficiency. Managing conflict is also time-consuming and if handled ineffectively it erodes organisational culture which has much wider implications.

“However, with early and constructive managerial intervention, performance issues are less likely to escalate, and unnecessary resignations can be avoided. There’s so much can be gained by prioritising our people and ensuring good employment relations are at the heart of an organisation’s strategy and focus.”

The key recommendations to drive change are:

Moving from process, procedure and compliance towards early and informal resolution

Ensuring effective management of workplace conflict is at the core of organisational strategy and central to increasing productivity and improving employee wellbeing

Developing management skills to prevent, contain and resolve conflict

Promoting Government initiatives to enhance managerial capability eg LRA’s Certificate in Effective Line Management.

With workplace conflict mostly taking place behind closed doors, the LRA report also addressed the issue of ineffective management or support. One in five of those who experience conflict do nothing about it, while two thirds of those who resign because of being involved in conflict do so without raising or discussing it with their line manager.

The research was funded by the LRA and Acas.