A recent report Estimating the Costs of Workplace Conflict in Northern Ireland 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 of £851m.

The analysis forms the basis of a new report from work and employment expert group, ReWAGE, which focuses on the impact of workplace conflict in Northern Ireland. Managerial Capability - Minimising the Costs of Workplace Conflict in Northern Ireland compares the relative costs of resolving conflict early through informal discussion and mediation, and situations where those discussions either fail or do not take place, resulting in dismissal or resignation.

It concludes that early intervention is crucial to effective workplace conflict management – both in minimising costs to the organisation and also reducing the mental health impact on employees – and that managers need training to intervene effectively.

Overall, data from the government’s Workplace Employment Relations Study (WERS 2011) estimates that there are 1.54 dismissals for every 100 employees per annum.

This figure translates to 12,076 disciplinary dismissals every year in Northern Ireland. In addition, those workers dismissed will normally need to be replaced, the same costs are incurred as when a worker resigns – an average of £30,614.

The annual cost of disciplinary dismissals alone in Northern Ireland is estimated at £296m.

Author of the paper, Professor Richard Saundry, University of Westminster, says:

“Overall, ending the employment relationship costs employers in Northen Ireland just over £647m every year, 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.”

Training for line managers in dealing with conflict situations is also vital – where managers lack the skills or confidence to nip issues in the bud they can quickly escalate. Conversely, mismanagement can make matters worse – 2019 CIPD survey data found that 1 in 3 of those involved in conflict felt that the actions of their line manager had made the problem worse.

Recommendations in the paper:

1. Northern Ireland employers need to move their focus away from process, procedure and compliance towards encouraging early and informal resolution.

2. The effective management of workplace conflict should be seen as a core element of organisational strategy and central to increasing productivity and improving employee wellbeing in Northern Ireland.

3. Employers in Northern Ireland should prioritise the development of the fundamental management skills needed to prevent, contain and resolve conflict at work.

4. Government in Northern Ireland can also play a key role in highlighting the importance of managerial capability and promoting initiatives such as the LRA’s Certificate in Effective Line Management Practice.

Don Leeson, Chief Executive of the LRA says:

“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 calculation of £851m is now likely to be an under-estimate given the 2022 data source for the analysis and recent increased operational costs for firms in Northern Ireland. The current figure may now be as high as £1billion.

This policy brief was authored for ReWAGE by Professor Richard Saundry and was based on research undertaken with Professor Peter Urwin at the University of Westminster. The research was funded by the Labour Relations Agency and Acas.