CASE STUDY: The costs of corporate conflict with communities.
How much does multi party conflict cost?How much does it cost Australian corporations (and the public sector) when they become engaged in conflict with a number of community groups and stakeholders?
Dr Jane Elix
What are the benefits of using multi-party conflict management processes, and how much do they cost?
There are no clear answers to these questions in Australia, but in the US it has been estimated that companies spend $300 billion per year on litigation involving environmental claims, product liability suits, class action suits, medical malpractice suits and disability claims.
Flow-on costs include the lack of time and resources that can be put into new product development; stressed managers and employees who are unable to work to their full potential; and increased costs of products.
This figure does not account for the loss of opportunities and investment funds when new initiatives and products are dropped in response to community or stakeholder opposition.
Community conflict can also have a big impact on government decision making. Governments are loathe to make decisions which are likely to result in community backlash and negative media coverage. Many decisions need Ministerial sign-off, and these senior political people are always alert to the impacts of conflict on the ballot box.
There is no magic bullet
When companies or public sector organisations in crisis approach conflict management experts they often expect that they will be offered a “magic bullet” – a strategy or action that will make the community opposition see reason, and stop giving them grief.
In reality, we find that community conflict, regularly involving a number of stakeholders, has usually built up over a period of time, and that there is no one way to bring about greater trust, respect, and better relations.
Instead, we tend to recommend that our clients undertake a multi-layered strategy, working in a range of ways to improve communication, build up relationships with key individuals and organisations, and develop a better public profile. Community and stakeholder groups generally respond well to actions, although the words – the communication – is very influential. Members of the public want to see large organisations really making changes to the way that they carry out their business and engage with the stakeholders and communities.
This real-life Case Study about a multi-party conflict has been prepared with the cooperation of the Company concerned, but all identifying details have been removed to respect commercial considerations.
Click here to download case study.
