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The Cost Of Workplace Conflict: How Mediation Saves Companies Money

Updated: 5 days ago

While many organizations focus on productivity, revenue, and retention, workplace conflict is one hidden drain on all three. From ongoing tension between coworkers to communication breakdowns during change, unresolved conflict quietly chips away at employee morale, performance, and even company finances.


At Nada Johnson Consulting & Counselling Services (NJCCS), Nada provides compassionate and results-driven workplace mediation that supports both team well-being and organizational success. Through guided, neutral conversations, mediation offers a cost-effective way to prevent turnover, reduce absenteeism, and improve productivity, all by addressing conflict before it escalates.




Why Workplace Conflict Is So Costly

✔ Lost productivity – Employees spend hours ruminating, avoiding, or navigating conflict instead of focusing on their work.

➡ According to CPP Inc., U.S. employees spend an average of 2.8 hours per week dealing with conflict, amounting to roughly $359 billion in paid hours annually. (Source: CPP Global Human Capital Report, 2008)


✔ High turnover – Conflict left unaddressed is a leading reason employees leave, especially top performers.

➡ The Society for Human Resource Management (SHRM) notes that replacement costs can be up to 200% of an employee’s salary. (Source: SHRM, 2016)


✔ Increased sick days – Stress from a toxic environment contributes to burnout, absenteeism, and mental health issues.

➡ The American Institute of Stress reports that workplace stress causes about 1 million workers to miss work each day. (Source: The American Institute of Stress, 2022)


✔ Legal risks – Escalated disputes can lead to formal complaints or litigation if not handled early.


✔ Team breakdowns – Collaboration suffers when trust and communication erode.



5 Ways Mediation Saves Companies Money

✅ 1. Prevents Expensive Turnover

Replacing an employee can cost up to 200% of their salary (SHRM, 2016). Mediation addresses underlying issues early, helping retain valued staff.


✅ 2. Reduces Absenteeism & Burnout

When employees feel heard and supported, they’re less likely to take stress-related leaves. Mediation restores psychological safety.

➡ Mental Health America notes that disengaged, burnt-out employees cost businesses up to $500 billion annually in lost productivity. (Source: Mental Health America, 2021)


✅ 3. Resolves Conflicts Without HR Escalation

Mediation offers a neutral space outside of formal HR processes, allowing faster resolution and fewer bureaucratic costs.


✅ 4. Restores Team Productivity

With conflict resolved, teams spend less time in tension and more time collaborating effectively, raising overall output.

➡ According to the same CPP study, 25% of employees said avoiding conflict led to sickness or absence, directly impacting team outcomes.


✅ 5. Minimizes Legal Exposure

Early mediation reduces the risk of harassment claims, wrongful dismissal suits, or union grievances, protecting both reputation and budget.

➡ The average cost to defend an employment lawsuit is $125,000. (Source: Hiscox Guide to Employee Lawsuits, 2017)



Mediation Is An Investment In Workplace Health

Unresolved conflict doesn’t just disappear, it compounds. Mediation is a proactive step that turns tension into transformation. At NJCCS, Nada provides structured, compassionate mediation to help teams move forward with clarity, mutual respect, and renewed motivation.


💼 When you invest in mediation, you’re investing in your people and your profit.💼




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Sources

CPP, Inc. (2008). Workplace conflict and how businesses can harness it to thrive. https://www.cpp.com/pdfs/CPP_Global_Human_Capital_Report_Workplace_Conflict.pdf



The American Institute of Stress. (2022). Workplace stress. https://www.stress.org/workplace-stress


Mental Health America. (2021). Mind the workplace 2021 report. https://www.mhanational.org/research-reports/2021-mind-workplace-report


Hiscox. (2017). Hiscox guide to employee lawsuits. https://www.hiscox.com/documents/2017-Hiscox-Guide-to-Employee-Lawsuits.pdf

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