The Hidden Cost of Unresolved Workplace Conflict: An In-Depth Look at the Impact on Teams and Organizations
Introduction:
Workplace conflict is inevitable — people have different perspectives, personalities, and working styles. However, when conflict goes unresolved, it’s not only uncomfortable; it can cost an organization much more than is initially apparent.[1] The impact of unresolved workplace conflict goes beyond the obvious tension between employees. It infiltrates team dynamics, hinders productivity, and drains resources. In this article, we’ll explore the hidden costs of unresolved conflict in the workplace and why addressing it promptly is crucial for long-term success.[2]
1. Decreased Productivity:
Unresolved conflict often leads to a noticeable dip in productivity. Employees caught in the midst of conflict, or even those who witness it, may become distracted, disengaged, or demotivated.[3] According to a CPP Global Human Capital Report, 85% of employees at all levels experience conflict, and nearly 49% report that it negatively affects their productivity.
When colleagues disagree and the issue is left unresolved, it consumes mental and emotional energy that should be focused on tasks at hand. It’s not just the individuals directly involved that suffer; the entire team’s output can be affected. Tasks get delayed, projects are stalled, and important deadlines are missed—all due to the lingering undercurrent of unresolved conflict.
2. Impact on Employee Engagement and Morale:
Conflict left unresolved often leads to decreased employee engagement, which is the foundation of strong organizational culture.[4] In the absence of conflict resolution, employees may begin to feel disconnected, disengaged, or undervalued. Gallup reports that actively disengaged employees cost organizations between $450 billion to $550 billion annually.
Tension in the workplace erodes trust and goodwill. Employees who feel uncomfortable, unheard, or unsupported may be less motivated to put forth their best effort. Over time, this leads to lower morale, with employees spending more time focusing on interpersonal issues than contributing to team goals.
3. Increased Turnover and Attrition:
Unresolved conflict can also lead to a high employee turnover rate.[5] A study by The Center for American Progress found that the cost of losing an employee can range from 33% to 200% of their annual salary—depending on the position. Employees who experience ongoing conflict without resolution are far more likely to leave the organization in search of a healthier work environment.
In addition to the financial costs associated with turnover, the disruption caused by employees leaving the team creates a ripple effect. New hires must be trained, relationships must be reestablished, and productivity takes another hit while the team adjusts to the changes.
4. Deterioration of Workplace Culture:
Workplace culture is the underlying force that drives organizational success. A culture of collaboration, trust, and open communication encourages innovation and problem-solving. However, unresolved conflict contributes to the decline of this culture.[6]
A lack of conflict resolution creates a toxic environment where communication breaks down, trust diminishes, and people avoid engaging with one another. This results in silos where departments and individuals work in isolation rather than in unison, ultimately stifling creativity and collaboration.
5. Increased Stress and Health Problems:
Unresolved conflict in the workplace doesn’t just affect productivity—it can take a significant toll on employee well-being. Constant stress from unresolved issues can contribute to physical and emotional health problems, such as anxiety, depression, burnout, and chronic illness.
Research by The American Institute of Stress reveals that workplace stress costs U.S. businesses over $300 billion annually in the form of healthcare costs, absenteeism, and lost productivity. Employees in high-conflict environments are at a higher risk for these stress-related health issues, which in turn can lead to absenteeism, lower engagement, and additional strain on the organization’s resources.
6. Escalation of the Conflict:
The longer conflict remains unresolved, the more likely it is to escalate. What begins as a minor disagreement can snowball into a significant problem that affects the entire team or department.[7] A report from The Mediation Group suggests that unresolved conflict often leads to more aggressive behaviors, higher levels of resentment, and increased defensiveness, all of which deepen the divide between employees.
Conflict that is allowed to escalate without intervention often requires more resources to resolve in the future—whether it be through mediation, training, or even legal interventions. The longer the issue is allowed to fester, the higher the stakes become, and the greater the costs for the organization.
7. Legal and Liability Costs:
In extreme cases, unresolved conflict can lead to legal issues for the organization. Employees who feel their concerns have not been addressed may seek legal recourse for workplace discrimination, harassment, or other violations. Legal costs—whether related to discrimination lawsuits, wrongful termination, or harassment claims—can be extremely high.
Organizations that fail to address conflict appropriately may also face penalties from regulatory bodies, further increasing costs.[8] The Society for Human Resource Management (SHRM) reports that the average cost of a workplace harassment claim can exceed $100,000—a cost that is entirely avoidable with proactive conflict management strategies.
8. Decreased Innovation and Creativity:
Innovation thrives in environments where individuals feel safe to share their ideas and challenge the status quo. However, unresolved conflict stifles creativity.[9] When teams are entrenched in personal disputes, the focus shifts away from brainstorming, problem-solving, and pushing boundaries.
The impact is felt most strongly in industries that depend on collaboration, problem-solving, and creative thinking to stay competitive. When employees are distracted or unable to collaborate due to unresolved conflict, the organization risks falling behind its competitors, losing out on valuable opportunities, and ultimately hindering long-term growth.
9. Strain on Leadership:
Leadership is key in addressing and resolving workplace conflict. However, unresolved conflict can take a heavy toll on managers and leaders who are forced to spend a disproportionate amount of time dealing with interpersonal issues.[10] Rather than focusing on strategy, business development, and team performance, leaders often find themselves acting as mediators or addressing conflicts that should have been resolved earlier.
This leads to burnout for leaders, who are tasked with maintaining team performance while also managing internal conflicts. In turn, the lack of leadership focus can further amplify organizational issues.
Conclusion:
The hidden costs of unresolved workplace conflict are far-reaching and can have long-lasting effects on an organization’s health and success. Decreased productivity, poor employee morale, higher turnover, strained workplace culture, and rising healthcare costs are just a few of the significant consequences.
By investing in effective conflict resolution strategies, organizations can create a healthier, more productive environment where employees feel heard, respected, and supported. This leads to improved teamwork, greater innovation, and higher employee satisfaction—all contributing to a stronger, more sustainable organization.
Call to Action:
To prevent the hidden costs of unresolved conflict in your workplace, consider implementing regular training on conflict management, fostering open communication, and developing a clear conflict resolution policy. Addressing conflict early on is essential to ensuring your workplace thrives and your team stays engaged, productive, and motivated.
For personalized conflict resolution strategies tailored to your team, contact us at contact@sweetinstitute.com. Let’s work together to turn conflict into an opportunity for growth and transformation!
[1] Ayoko, Oluremi B., Victor J. Callan, and Charmine EJ Härtel. "Workplace conflict, bullying, and counterproductive behaviors." The International Journal of Organizational Analysis 11.4 (2003): 283-301.
[2] Phulpoto, Kamran, et al. "Impact of Workplace Conflict on Job Satisfaction and Employee Performance." Technology (IJARET) 12.1 (2021): 609-616.
[3] Irwan, Irwan. "Workplace Conflict: Its Impact on Employee Motivation and Productivity." Paradoks: Jurnal Ilmu Ekonomi 7.4 (2024): 481-494.
[4] Weakliem, David L., and Stephen J. Frenkel. "Morale and workplace performance." Work and occupations 33.3 (2006): 335-361.
[5] Jalees, Tariq, et al. "Emotional Dynamics in Workplace Conflict and Employee Turnover." International Journal of Social Science & Entrepreneurship 3.3 (2023): 272-294.
[6] J. Cole, Raymond, Amy Oliver, and Aiste Blaviesciunaite. "The changing nature of workplace culture." Facilities 32.13/14 (2014): 786-800.
[7] Zapf, Dieter, and Claudia Gross. "Conflict escalation and coping with workplace bullying: A replication and extension." European journal of work and organizational psychology 10.4 (2001): 497-522.
[8] Freres, Martin. "Financial Costs of Workplace Conflict." Journal of the International Ombudsman Association 6.2 (2013).
[9] Win, Khin Lae Lae. "INNOVATION THROUGH CONFLICT IN DIVERSITY WORKPLACE: CONFLICT IMPACT FACTORS."
[10] Doucet, Olivier, Jean Poitras, and Denis Chênevert. "The impacts of leadership on workplace conflicts." International Journal of Conflict Management 20.4 (2009): 340-354.
