Measuring The Cost Of Organizational Conflict, continued
Factor 4: Restructuring
Often, design of workflow is altered in an attempt to reduce
the amount of interaction required between employees in
conflict.
Unfortunately, the restructured work is usually
less efficient than the original design, which would have
been satisfactory if the conflicting employees had been able
to work together. As with Factor 2 above, it is impossible
to precisely calculate the resulting inefficiency, but your
subjective assessment will give a reasonable estimate.
Again,
be sure to enter a conservative (low side) figure on your
worksheet. Guideline: 10% of the combined salaries of
employees whose relationship was restructured for the time
the restructuring is in effect.
Example: Estimate $8000 if
four employees, each of whom is paid $40,000 annually, were
reassigned to different task groups for a six month period,
i.e., (($40,000 X 4)/10)/2).
Rationale: The financial value
of employees (i.e., "human resources") to an employer for
performing specified work is, by definition, roughly
equivalent to their salaries. If that work must later be
restructured to control interpersonal conflict, the
redesigned work relationship is probably not the most
efficient allocation of the human resources.
Factor 5: Sabotage/theft/damage
Studies reveal a direct correlation between prevalence of
employee conflict and the amount of damage and theft of
inventory and equipment. And, covert sabotage of work
processes and of management´s efforts usually occurs when
employees are angry at their employer.
Much of the cost
incurred by this factor is hidden from management´s view,
excused as "accidental" or "inadvertent" errors. This cost
is almost certainly greater than you may realize. Again,
enter a conservative figure on the worksheet. Guideline:
10% of the acquisition cost of equipment, tools, and
supplies that conflicted employees use in performing their
jobs.
Example: $2500, if an operator of a $20,000 machine
in a manufacturing environment is angry toward his/her
supervisor ($2000 for careless operation and maintenance of
the machine, plus $500 for unnecessary scrap and waste of raw materials).
Factor 6: Lowered job motivation
From time to time, most employees experience erosion of job
motivation due to the stress of trying to get along with a
"difficult person." As a baseline figure, use the productivity
that would have occurred had no conflict occurred.
Then,
estimate a percentage decline of that productivity. Multiply
that percentage times the dollar value of the total
compensation of the person(s) affected to derive a figure for Factor 6.
For example, let´s say that the productivity of three employees
was eroded by 20% for a period of three months. Using figures
similar to those above, the three employees´ total compensation
was 3 X $60,000, or $180,000.
Since one-fourth of this amount
($45,000) was earned during the three month period, the
conflict cost the organization $9000.
Factor 7: Lost work time
Absenteeism has been shown to correlate with job stress,
especially the stress associated with anger toward co-workers.
This stress, combined with disregard for how one´s absence
impacts others, leads to employees´ choosing to take time off
sometimes excused as a "sick day."
And, medical science has
determined that nearly every physical illness and injury, from
viral infections to cancer to workplace accidents, are partially
"psychogenic." That is, they are caused in part by
psychological or emotional conditions. The portion of lost work
time that has resulted from your targeted conflict is largely
hidden from your direct view, with the possible exception of
your own absences.
Still, you can arrive at an estimate by
prorating daily or monthly compensation. Again, be sure to
enter a conservative estimate on your worksheet. Guideline:
10% of annual salaries of employees in conflict.
Example:
$18,000 if all six members of a department, each of whom is
paid $25,000 annually, are in ongoing conflict with their
supervisor, who is paid $30,000, throughout the year
($25,000 X 6) divided by 10 + $30,000 divided 10.
Factor 8: Health costs
As mentioned under Factor 7, illnesses and injuries requiring
medical attention are partially psychogenic, and conflict
contributes to their psychogenesis. Since the rate of claims
affects the premium paid by an employer to its insurer,
insurance is an indirect cost of workplace conflict.
Estimate
the percentage of the psychogenic component of medical problems
that have occurred while your targeted conflict has gone on,
and multiply this percentage times the premium increase imposed
by your organization´s insurer.
Admittedly, this psychogenic
component is difficult to ascertain, and you may not be privy
to the insurance costs of your employer. So, enter a
conservative figure based on your knowledge of these matters.
A shortcut is to enter 10% of the number you have entered for
Factor 6, "lowered job motivation," since the stress that
results in reduced productivity is also related to our physical health.