Conflict management in companies

What is conflict management? How can conflicts be recognized and managed? And what does all this have to do with business simulations?

Author: Daniele Kilian

Published on:

Categorie: HR Info

7 Min. Reading time:
Excerpt from a book in which conflict is defined

Conflict management in companies: Solving conflicts in the workplace and strengthening teams

In today’s world of diversity and change, conflicts are inevitable, especially in a dynamic environment like the workplace. Whether it’s disagreements between team members, discrepancies between departments or major organizational challenges, conflicts can develop in a variety of ways.

Emerging conflicts are an indicator of resistance or diverging needs and expectations within the company. Conflicts are completely normal and should always be seen as an opportunity. Recognized early on and resolved constructively, conflicts in the workplace can have a positive impact on a company. Conflicts serve as a mirror that shows the company where there is a need for change. They can be a wake-up call that forces those involved to actively deal with the conflict and find solutions.

This process can lead to new approaches that optimize collaboration and strengthen the team. The constructive handling of conflicts helps to ensure that cooperation within the company functions on a new, improved level.

In einem Meeting wird intensiv diskutiert

Conflicts only become dangerous when they are ignored and escalate. The consequences are a drop in productivity, low employee satisfaction and a poor working atmosphere, which can result in major financial losses.

Companies that aim for healthy development and productive collaboration must therefore deal with conflicts. Proactive and preventive conflict management within the company helps to create a healthy working environment in which employees can work well together. That contains, that employees are being trained in this area. Because traines employees are able to recognize, understand and solve conflicts in a constructive way. This also means that employees are developed in this area. After all, trained employees are better able to recognize and understand conflicts and resolve them constructively.

But what exactly is conflict management? How can conflicts be recognized and managed? And what does all this have to do with business simulations?

What actually is a conflict?

A conflict is a situation in which two or more people have different interests, opinions, needs or goals and this leads to tension. Conflicts occur at various levels, whether between individuals, teams, departments or even at an organizational level.

Conflicts can take many forms, from open disputes and misunderstandings to unresolved differences of opinion. They are part of human coexistence and occur particularly in environments with different personalities, working styles and goals, and therefore frequently in companies. This can lead to high costs.

Auszug aus einem Buch, in dem Konflikt definiert wird

What are conflict costs?

Conflict costs in the company are financial and non-financial expenses that arise from the occurrence and inadequate management of conflicts in the workplace. These costs can be significant and have a strong impact on company performance:

Reduced productivity: Employees who are involved in conflicts concentrate less on their tasks, which can lead to a loss of time and a lower quality of work. Employee motivation also suffers. A poor working atmosphere has a negative impact on employee commitment. Projects are often handled poorly.

High level of sickness: Unresolved conflicts cause stress and dissatisfaction. This can have an impact on employees’ physical and mental health. The result is more frequent sick leave.

Fluctuation: Conflicts in the workplace can lead to employees leaving the company. The cost of recruiting and training new employees and the loss of expertise are significant conflict costs.

Legal consequences: Serious conflicts can even end in legal disputes. This incurs costs for lawyers, court proceedings and possible compensation payments.

Conflict costs are quickly underestimated. A well-known study* conducted by auditing firm KPMG in 2009 shows just how serious conflict costs actually are: Projects that fail due to conflicts cause costs of at least €50,000 per year in every second company; in one in ten even more than €500,000. 10 to 15 % of working time in every company is spent on conflict resolution. For managers, the figure is as high as 30 to 50 %. Absences due to workplace anxiety and bullying cost companies around €30 billion a year. This makes it clear that effective conflict management also has a strong economic relevance.

How do you recognize conflicts?

Recognizing conflicts in the company at an early stage is crucial. Only then the responsible parties can intervene in good time and find constructive solutions. To do this, they must be sensitive to the first signs and indicators of conflict:

Disrupted communication: If communication between team members or departments is disrupted, for example due to misunderstandings, unclear information or verbal disputes, this can indicate conflicts.

Changing team dynamics: Sudden changes in team dynamics, such as increased tension, group formation or isolation of certain members, can be signs of hidden conflicts.

Drop in performance: Conflict can have a negative impact on individual or team performance. Declining productivity, reduced quality of work or missed deadlines could indicate underlying conflicts.

Complaints: If employees are increasingly complaining about problems, these concerns should be taken seriously as they could indicate existing conflicts.

Tense situations: Increased tension, unusually frequent confrontations or visible dissatisfaction may indicate internal conflict.

Changed behavior: A sudden change in employee behavior, such as withdrawal, aggressiveness or increased absence, may indicate that they are struggling with conflict.

It is important to be alert to these signals and promote a culture of open communication where employees can openly share their concerns. In this way, emerging conflicts can be quickly identified and resolved. Conflict prevention is therefore already part of good conflict management.

Methods for conflict management

There are various methods of conflict management that can be used depending on the nature and intensity of the conflict and the people and situations involved.

Mediation: A neutral third party, a mediator, helps the conflicting parties to understand and communicate their differences and find solutions. Mediation is well suited to conflicts where impartial intervention is required.

Conflict coaching: A coach helps the people involved to reflect on their own perspectives and find ways to better deal with the conflict. This is particularly effective for conflicts on an individual level.

Negotiation: In conflicts where different interests or needs clash, negotiation is intended to help find compromises that are acceptable to all in a joint creative process.

Arbitration: A neutral third party, the arbitrator or arbitration committee, decides on a dispute . This is particularly helpful in conflicts where a quick and binding decision is required.

Conflict resolution training: Training can help employees to recognize, understand and constructively manage conflicts. This is particularly preventative and promotes conflict competence throughout the company.

The application of a particular method depends heavily on the nature of the conflict, the people involved, the corporate culture and other contextual factors. It is important to select the appropriate method to ensure a sustainable solution. Sometimes a combination of different methods may be required to effectively manage the conflict.

And what does all this have to do with the MARGA business simulation?

Dealing with conflicts in the workplace can be challenging. That’s why companies should consciously take the time to develop their employees not only professionally, but also in important soft skills. After all, trained employees are better able to recognize and understand conflicts and resolve them constructively.

In the MARGA business game, participants make decisions together as a team. They are confronted with situations that they also encounter in everyday working life. This includes intensive discussions about the strategy and the measures to be derived from it. Participants train to represent their own opinions, respond to their team members and find compromises. Conflicts, disagreements and failures in competition are also part of this. Overcoming these situations together strengthens skills such as critical thinking and conflict resolution.

MARGA participants are always accompanied by qualified trainers who provide feedback, support in conflict situations and encourage joint reflection. We also offer the topics “Working in a team” and “Conflict management” online as webinars or face-to-face workshops. In this way, we give the teams additional impetus and tips that can support them in their teamwork.

Mit Dominosteinen wird eine Brücke gebaut, die zwei Spielfiguren miteinander verbindet

In organizations, the effective management of conflicts is critical to fostering a healthy work environment, improved collaboration and long-term success. Conflict is inevitable, but its early detection and constructive management are critical. Conflict management requires not only the willingness and ability to prevent and resolve conflict, but also the creation of a corporate culture that promotes the constructive handling of conflict.



*KPMG (ed.), Alexander Insam/Uwe Achterholt/Andreas Reimann, Conflict cost study – The costs of friction losses in industrial companies

Project by PricewaterhouseCoopers AG & European University Viadrina Frankfurt (Oder), Gläßer/Hammes/Kirchhoff, Conflict management as an instrument of value-oriented corporate management (2016)

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