The Many Costs of Conflict
by Stewart Levine

Why So Expensive?

What we think of as the usual way of resolving conflicts does not foster resolution! Unfortunately the operative premise that someone will win, and someone will lose produces all losers, no matter who thinks they won. The dispute resolution machinery often fuels the fire of conflict, and impedes resolution.

Worse, while engaged in the conflict resolution process, your productive activity, what your life is really about, is diluted. Most conflict resolution conversations do not foster resolutions that address the underlying sources of conflict - breakdowns in relationship. The processes are not concerned with getting people back to an optimal state of productivity.

The current thinking paradigm embodies struggle, control, and a survival of the fittest mentality. It is based on dialectic, right/wrong, either/or patterns that originated in Aristotelian logic. Even though we live in a densely populated, rapidly changing technological world that cries out for systems that foster collaboration, individuals and institutions tenaciously cling to old habits. What's missing are the bedrock ethics and values that were taught by the educational community and religious institutions and were fostered in extended families. These values have become clouded in our modern, mobile, sound-bite techno-society.

Because family structures and religious institutions have become so fragmented, we no longer rely on them to provide the education of core values. Many people seek external standards that will tell them what to do. People often have little grounding in collaborative skills because real partnership flows from within the "conventional" relationships that community, family, and religious institutions have traditionally demanded and fostered. Many people have no role models and sadly, in many instances, don't know how to treat each other from within a common covenant.

Noted futurist Alvin Toffler, author of Future Shock, The Third Wave, and Powershift, says: "The place we need really imaginative new ideas is in conflict theory. That's true with respect to war and peace, but also it's true domestically. The real weakness throughout the country is the lack of conflict resolution methods other than litigation and guns."

Toffler is on the right track. Our current crisis is caused by both the aspects of today's conflict resolution system and the way that it is administered, such as:

  • Increase in the body of statutory and case law reflecting the growing numbers of lawyers, and complex transactions requiring regulation.

  • Commercialization of the legal tradition fostered by competition and advertising.

  • Growing reliance on counselors and therapists who care for our internal conflict and feed our conflict-avoidance mentality.

  • Breakdown of trust and the inability to assess the value of, or need for, specific actions that therapists or lawyers take (evidenced by growing malpractice claims).

  • Attorneys' conflict of interest because their practice of hourly billing results in a devotion to process, not results.

  • The growth of the contingent fee and a class of cases in which there is nothing to lose by taking a chance.

  • The legal, economic, and emotional minefields of the litigation process.

  • The myth of finding truth and justice in a courtroom, a myth that has been perpetuated by the role models celebrated on TV.

These reasons are symptoms. They evidence a breakdown in the covenants of trust between people who are members of the same "community." They point to a lack of communication. People are focusing on themselves. They are concerned about their "rights" and "entitlements" without thinking about their responsibilities toward others. This all flows from the win/lose systems and practices that are in place.

Many people are looking for guideposts and rules that will tell them how to treat each other. This requires new practices and new ways of thinking. The best way that I know to get people interested in new habits of thinking and doing is to examine the real cost of doing things the present way. As we review all the costs of conflict, imagine how much more you might accomplish if you could harness the resources expended - the money, time, and energy used in the "battle" that is traditional conflict resolution. Imagine using those resources to focus on the outcomes you want for the future instead of rehashing the past.

The Cost of Conflict

The cost of conflict is composed of the following:

  • Direct Cost : Fees of lawyers and other professionals;

  • Productivity Cost: Value of lost time, diminished capacity and the opportunity cost of what those involved would otherwise be producing;

  • Continuity Cost: Loss of ongoing relationships including the "community" they embody;

  • Emotional Cost: The pain of focusing on and being held hostage by our emotions.

It's important to identify the costs of our current paradigm and examine some tangible examples. Recognizing the cost, I hope, will motivate change.

1. Direct Costs

Because of an inability to face conflicts, many people spend money they can't afford on professional gladiators hired to do their bidding. A divorce between two people whose only asset is their home can transform that residence into legal fees. The process brings out the worst in people who thought enough of each other to marry, but now can't even sit down and talk.

The rule of thumb used to be that if you had over $100,000 in dispute, litigation might be cost effective. Today that number is at least $1,000,000.

2. Productivity Cost

Time is a valuable, limited commodity. When people are focused on rehashing the past, they cannot create and produce value in the present. There are two aspects of this cost--direct loss and opportunity cost. The direct loss is the value of a person's time--what the person should be earning but is not being paid because he or she is engaged in the conflict. This would also include diminished capacity. The opportunity cost is the value the person might have produced if his or her energy was focused on future creation and innovation.

3. Continuity Cost

Continuity costs result from being stuck in the past - costs such as the loss of relationship and community. Gary was on a fast track management development Program. He was transferred to manage the branch office of a financial services Company. Unfortunately he could not get along with Brandy, the office manager.

Gary objected to the way Brandy completed reports, and the way she socialized with co-workers and clients. Even though she had been doing things her way for years, and even though Gary was made aware of the power she had in the local community, he was insistent on her following standard policy. He would not back off and they ended up in a nasty confrontation. Gary's youth forced him to test his power as "the boss."

Two years later both Gary and Brandy are gone. Brandy quit and went to work for the competition. It takes two people to do what Brandy accomplished, and they can't do it as well. Revenues for the office are down 10%. The cost: $230,000 per year.

4. Emotional Cost

Sometimes there are situations you can't let go of: a fight with a spouse, boss, co-worker, neighbor, friend, partner, or the person who ran into your car. The emotions of anger, fear, and blame grip you and force a reaction that saps your current productive capacity. Instead of going about your business, you are riveted on the injustice done to you and the untoward behavior of the perpetrator.

You are consumed with vengeance and a desire to punish the wrongdoer. You expend energy on your anger in addition to the loss you have already suffered. All of this energy will never be recovered.


Current attitudes and systems of conflict resolution foster conflict. Conflict is very expensive. It consists of the following, never to be recovered, costs:

  1. direct cost - professional fees;

  2. opportunity cost - what would otherwise be produced;

  3. continuity cost - the loss of relationships and "community";

  4. emotional cost - the pain of being held prisoner by emotions.


Think about the "expensive" conflicts in your own life. What was the direct cost? The cost of professionals? The opportunity cost? The emotional cost? The relationship cost? As you reflect on your situation, think about the different actions and results you might have had if you had taken a different tack. How might you do it differently next time? How would things be different?

Stewart Levine is the founder of ResolutionWorks. He spent ten years practicing law before becoming an award winning marketing executive at AT&T where he was recognized as a pioneer "intrapreneur." He uses his approach to form teams and joint ventures in a variety of situations. He has worked for American Express; Chevron; ConAgra; Deloitte & Touche; Honda; General Motors; Oracle; Safeco; University of San Francisco; U.S.Depts. of Agriculture and the Navy. His book "Getting to Resolution: Turning Conflict into Collaboration" (Berrett-Koehler 1998) was an Executive Book Club Selection; Featured by Executive Book Summaries; named one of the 30 Best Business Books of1998; endorsed by Dr. Stephen Covey and featured in "The Futurist" magazine. "The Book of Agreement" (Berrett-Koehler 1998) has been endorsed by many thought leaders including Alan Weiss, Mark Victor Hansen, Harrison Owen, Geoff Bellman, Jim Kouzes, and Robert Fritz. It has been called "more practical" than the classic "Getting to Yes." Visit for additional information.

The Book of Agreement: 10 Essential Elements for Getting the Results You Want
by Stewart Levine,

One of The Best Books of 2003
as rated by the editors of The CEO Refresher

See Creating Agreements for Results: The 10 Essential Elements
Managing by Agreement - The New "MBA"
by Stewart Levine.

Many more articles in Creative Leadership in The CEO Refresher Archives


Copyright 2004 by Stewart Levine. All rights reserved.

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