Conflict in an organization affects more than just the workers who can't agree. Everybody in the workplace feels the effects of workplace conflict.
The Greek philosopher Heraclitus was onto something when he professed, "The only thing constant is change." Resistance to change can bring about conflict, but conflict also is inevitable when an organization includes diverse people with individual work habits, styles and personalities. Unresolved conflict often produces negative results, regardless of whether the conflict is between two individuals, between staff and leadership or among workplace teams.
TL;DR (Too Long; Didn't Read)
Conflict at work makes employees feel insecure and this can negatively affect their productivity and the way they deal with customers.
Employees Stop Working or Stay Home
Unresolved conflict threatens the psychological safety of employees, management and the organization. Paul Santagata, Head of Industry at Google, spearheaded the industry leader's research on high-performing teams, and discovered that psychological safety is a trait that individuals in these teams share. Psychological safety in the workplace means that you feel comfortable taking risks for your team's success, and that you don't feel that you will be disciplined or berated for taking those risks.
Where workplace conflict exists, people are typically in a defensive mode and feel the need to protect themselves for fear that they will be disciplined or punished for their actions. On an individual level, workplace conflict can result in the absence of psychological safety. The absence of psychological safety then can result in poor performance and job dissatisfaction. For the organization, the effects may be absenteeism, diminished productivity and lack of employee engagement.
Customers Receive a Poor Service and May Look Elsewhere
Workplace conflict can ultimately cause the organization's customer base to crumble. Employees who are at odds with each other may spend more time creating ways to fight back or argue their point instead of focusing on the quality of their work. Poor quality – whether it's a service or product – is guaranteed to send customers to a competitor. In addition, customers who sense conflict may leave with the impression that the company isn't a good place to work. That kind of impression might call into question the organization's principles. Is the organization not a good place to work because the managers are ineffective or because they engage in shady business practices?
Conflict Destroys the Company Reputation
Questions about management and their business practices may be warranted if word on the street is that an organization and its employees are continually engaged in conflict. Companies that are unsuccessful at resolving workplace conflict or that turn a blind eye when conflict exists are putting the organization's reputation at risk. An organization with a poor reputation is unable to recruit talented and motivated job candidates, and current employees likely won't dispel industry gossip by showing how proud they are to be a part of the organization.
Disputes Eat Into the Bottom Line
Workplace conflict can be expensive to resolve and costlier to ignore. When conflict rises to the point that employees or groups of employees are seeking legal remedies, hiring lawyers to represent the company's interests and practices can be an unanticipated expense that has a serious effect on the organization's financial standing. And it's not just lawyers' fees that add up. Settling claims to avoid costly litigation can take a significant portion of the organization's profits. The distraction and loss of productivity on the part of employees who do the legwork to support the legal case (for example, researchers, administrative staff and executives) result in expenses that are difficult to quantify, but definitely impact the company's bottom line. If the company is already losing business, productivity and talent, the effects can be devastating. For publicly held companies, these costs and damage to the company's reputation can cause stock prices to plummet.