Source: C.E.D.R
Date: Tuesday, June 13, 2006

Research by C.E.D.R shows the damage UK business inflicts on itself through poor conflict management

Comparable amounts:

• Gross Domestic Product – If the cost of conflict to British business were a country it would have the world’s 57th biggest economy (out of 180 countries)
• Entertainment – three times the amount that California makes each year from the TV, Movies and Entertainment business
• Government spending – over half the total budget for the National Health Service last year

Results of a study into the true amount business wastes on conflict each year were recently announced at the CBI. From an unhappy customer to a disgruntled director, business can have the challenge of conflict come from any direction – a challenge that is not always adequately faced-up to. According to the research by CEDR and CMS Cameron McKenna, it is how you approach conflict that makes the difference and the UK is failing to manage its conflicts adequately.

Key conclusions from the research were:

• British business conflict costs £33 billion a year
• 80 percent of disputes have a significant impact on the smooth running of business
• In a case that is a million pounds in value a company will consume an average of over 3 years of managers time trying to sort it out
• Over a third of managers would rather parachute jump for the first time (35%) than address a problem with their team at work, and just under a third would rather shave their head for charity (27%). Some even said they would rather eat ‘bush tucker’ bugs for a week (8%)
• Many managers do not feel comfortable addressing conflict. Half (49%) would rather attend an event at which they knew no one than tell a client a home truth and over two thirds (69%) would rather send back a bottle of wine in a restaurant than confront a boss’s underperformance directly

Few managers, only 37%, feel trained to cope with business conflict. The lack of confidence in managers feeling prepared to deal with disputes is worrying given that the significant consequences of conflict include the following business headaches:

• Damage to company reputation
• Exposure in the public domain
• Effects on company morale
• Effects on personal reputation
• Damaged business relationships
• Lost customers
• Increased staff turnover
• Failure to meet targets

There were nine possible adverse consequences of business disputes, and the research surveyed the extent to which each may have been significant in the over 300 separate business disputes referred to above.

The nine possible consequences we identified were:

• Effects on company reputation
• Exposure in the public domain
• Effects on company morale
• Effects on personal reputation
• Damaged business relationships
• Lost customers
• Increased staff turnover
• Failure to meet targets
• Missed opportunities

Damaged business relationships and public exposure were the two most commonly cited adverse consequences of business disputes, but since different disputes have different characteristics it is not therefore surprising that no single consequence dominated.

Managers prioritisation of conflict
In the research, Managers were asked to rate against each other the following tasks that either involved conflict or were unpleasant:

• Giving a speech in public
• First parachute jump
• Sing in public
• Tell a colleague about poor hygiene
• Tell a neighbour to cut down a hedge
• Give blood
• Swim the channel
• Eat ‘bush tucker’ for a week
• Sack a popular employee
• Tell a boss to work harder
• Tell a client they are out of line
• Send back wine in a restaurant
• Shave own head for charity
• Go to an event where you know no one
• Tell own team they are not performing