How Conflict Affects Employee Turnover
Summary: Here's something that might surprise you: most employee turnover isn't caused by bad pay or limited growth opportunities. It's conflict. And not the loud, dramatic kind you're probably picturing. I'm talking about the subtle, simmering tension that quietly eats away at your team until one day your best people hand in their resignation and you're left wondering what went wrong. In this article, I want to unpack how conflict really shows up in the workplace, why it drives people out the door, and what you can do to build a healthier environment that keeps your top talent around.
Employee Turnover Often Lingers Under the Surface
When thinking of the word "conflict," most of us picture something like the following:
In-your-face, mean-spirited attacks. The kind we typically see on workplace comedies or have heard horror stories about from our friends or family. While this can certainly happen, I have observed that conflict more often takes another form in many workplaces. This is what we would call latent conflict.
This is the kind of conflict that stays hidden and lingers beneath the surface, until one day, a good employee of 20 years leaves the company and no one knows why. Every day, stories like this happen in workplaces. Conflict is so sinister because contrary to popular belief, it rarely announces its presence. Instead, it takes the form of:
Guarded communication
A lack of collaboration
Passive aggressiveness
Absenteeism
Stonewalling
Avoiding difficult conversations
Sarcastic remarks
Mentally checking out
And eventually... high turnover
Thus, many leaders don't know what to look for until it's too late. As a result, retention takes a massive hit, and if you can't keep your best people, it won't be long until the organization suffers in many other areas.
Conflict and Employee Turnover
So before we go any further, it's important that we define conflict. We could think of it this way:
A difference of desires or opinions involving strong emotions.
This is important because we can't effectively deal with conflict if we aren't aware of its existence. As mentioned earlier, many people tend to see conflict as more explicit acts of aggression. However, since conflict rarely takes this form in the workplace, many leaders will miss all the warning signs of latent conflict and how it's affecting their people. Furthermore, when left to our own devices, most of us will follow a "no news is good news" or "if it ain't broke, don't fix it" approach. The result is artificial harmony: a state where an organization convinces themselves they have a friendly, harmonious environment while ignoring any contrary evidence. This lets the destructive effects of conflict continue to accumulate until people leave.
The numbers paint a troubling picture. According to research compiled by CPP Inc., 18% of employees leave their organizations specifically due to workplace conflict, while another 16% are terminated as a result of workplace disputes. Perhaps even more striking is what happens at the cultural level: a Columbia University study found that companies with poor workplace cultures experience an average turnover rate of 48.4%, compared to just 13.9% at companies with healthy cultures.
The financial toll is equally staggering. Employees spend an average of 2.8 hours per week resolving workplace disputes, which amounts to approximately $359 billion annually in lost productivity across U.S. businesses. Conflict-related turnover alone costs American businesses an estimated $1 trillion each year. When you factor in that replacing a skilled employee can cost anywhere from 50% to 200% of their annual salary, the business case for addressing conflict becomes impossible to ignore.
This brings us back to our definition. Wherever there exists a diversity of desires and opinions, there exists a capacity for conflict. In other words, wherever there are people. Thus, instead of merely addressing explicit outbursts, we need to take a step back and make sure we are cultivating an environment of psychological safety where people feel valued and heard. It's not just about what behaviors we don't allow (yelling, cursing, threats, etc.), but also what behaviors we are actively encouraging. Do we encourage people to speak up and share their opinions? Do we train our leaders to show recognition and acknowledge good work? Do we equip our teams with tools to have more respectful and productive conversations?
It's not about individual interventions, but immersing our team in a healthy environment.
Why Culture Has Such an Impact on Turnover
The workplace culture has a profound impact on retention for several reasons:
1. Generosity vs. Self-Preservation
Nature or nurture? That has been the age-old debate on what truly motivates human behavior. The truth is that it is probably a combination of both. In our modern hyper-individualistic society, we heavily push the ethic of personal responsibility, which is good. Individuals need to be accountable for their behavior. However, research has shown that our environment also plays a crucial role in this.
For example, we know that cortisol is a hormone that plays a significant role in stress response. While it has a good function, research published in Psychoneuroendocrinology found that empathy for pain was negatively correlated with the magnitude of cortisol stress response. In practical terms, when people experience elevated stress levels, they become less attuned to the experiences of others around them and more likely to become defensive and self-focused. You know one thing that is really good at increasing stress? You guessed it... conflict.
Once again, stress in and of itself is not bad from time to time. However, in a workplace with constant conflict, even if it is subtle, this slowly erodes collaboration and breeds mistrust, making it much easier for someone to choose another place to work.
2. Enemy Imagery
Sometimes organizations will bring me in to facilitate conversation between two employees experiencing significant conflict. Usually, this has been building for a while and the company has tried multiple interventions that just aren't working. What's interesting is that after hours of talking with all the parties involved, it usually boils down to a small, isolated incident such as one person not filling up the printer after using all the paper, or something trivial like that.
However, over time, if not dealt with properly, our brains have a tendency to personalize the issue. So rather than seeing that person as merely forgetful, we start seeing enemy images. Now, they are an inconsiderate or lazy person. Once that narrative starts, it becomes very difficult to rewrite the script. Finally, if an employee believes they work in an environment with "enemies," trust will always be compromised, and usually one or multiple people choose to leave.
3. Distance is Not the Cure
Ever wonder why large corporations continue to make decisions that so obviously alienate their customers or employees? This is due to something called abstraction. Put simply, this concept explains how the more physical distance people have from one another, the more prone they are to act without empathy towards each other. This is why it is so easy to respond to someone's email with rage. At that moment, we are seeing the computer or the message, and not the person behind it. Similarly, CEOs make decisions every day from spreadsheets without realizing that the decision does not consider the stakeholders involved.
This has profound implications for a workplace, including remote working policies and even the physical office setup. The more distance people have from each other, the less collaborative and kind they will be. This also increases the capacity for workplace gossip and conflict. In this kind of environment, combined with the absence of close workplace relationships, people may be tempted to look elsewhere for employment.
Healthy Conflict and Retention
While it may seem that I am against conflict of any sort, that is not the case. Conflict may be inevitable, but we can choose to engage it in a healthy or unhealthy way. In fact, healthy conflict can be one of the best antidotes for preventing the kinds of problems covered in this article. Healthy conflict looks like:
Spirited, respectful debate over ideas and concepts. Not interpersonal issues.
Thus, in light of what is best for the project, working relationship, or organization, we can have spirited back and forth, and no one will take it personally. This is important because it leverages the full diversity of all the ideas and perspectives of your team. No good idea is being left on the table, and even more importantly, people feel heard. Furthermore, it will build trust because the team sees that they can disagree and it won't damage the relationship. Embracing healthy conflict also means that real issues will get addressed quickly. The kinds of issues that could push good employees out the door.
Key Takeaways:
If I were to leave you with a few takeaways to greatly improve your retention, it would be this:
Create a workplace environment that is psychologically safe. This means building a culture where employees feel comfortable speaking up, sharing ideas, and even making mistakes without fear of punishment or ridicule.
Ditch the video calls and emails, and promote real human interactions as much as possible. Face-to-face communication builds connection and reduces the abstraction that leads to conflict.
Embrace healthy conflict and difficult conversations. Conflict resolution training can equip your team with the tools to navigate disagreements productively.
I realize this is sometimes easier said than done. That is where I come in. Sometimes we simply need a source of external accountability to walk alongside us, as well as give us an outside perspective. Leadership coaching can help you follow through on these kinds of action items, as well as give you real-time feedback on what's working and what is not. All the while, you will receive tools and best practices to become a more confident and effective leader.
If you are curious, go ahead and book a free 30-minute Discovery Call with me to get the process started!
