How to Mediate Conflict Between Employees for a Healthier Workplace in 2026

Conflict is unavoidable in the workplace. If you’ve led long enough, you must’ve encountered two great employees, one small spark, and suddenly the whole team feels like it’s walking on eggshells.

This guide is about how to mediate conflict between employees in a way that protects trust, keeps work moving, and improves culture over time. Who should read this? Leaders who want a repeatable result when conflicts arise in the workplace. 

The Real Price of Unresolved Conflict in the Workplace.

When people hear “conflict”, they often picture raised voices and awkward meetings. In reality, most workplace conflict is quieter than that.  It looks like slow handovers, passive resistance, duplicated work, and “You know what? I’ll just do it myself” behaviour.

Research shows that an estimated £28.5 billion per year is spent on workplace conflicts. This is averaging £1,000 per employee per year. Conflicts also hit energy and retention.

In the same study, those who reported conflict were more likely to feel exhausted and under pressure, and were twice as likely to say they might quit. Another thing to note is that conflict eats time. It has an average cost of 4.34 hours per week. It could be one of your most expensive resources.

THE COST:

The Simple Formula

1. Annual Conflict Cost = Employees × Hours Lost to conflict  Per Week × Hourly Cost × 52
2. Hourly Cost = Annual Salary ÷ 2,080 hours (full-time year). Then add 25–35% for employer costs (taxes, benefits, pension).

Example: £40,000 salary ÷ 2,080 ≈ £19/hour
Add 30% overhead → ≈ £25/hour real cost

3. Employees: These are the directly involved Employees

          Example: 2 employees arguing regularly
→ Employees = 2

4. Hours Lost to Conflict Per Week: Below are realistic benchmarks

• Minor tension: 1 hour/week
• Department tension:2-3 hours/week
• Escalated conflict: 3–4 hours/week

5. 52: This is the weekly time lost. To convert weekly loss into annual impact, you multiply by 52 weeks(a year)

Example	Calculation	Annual Cost
Minor tension	2 ×1×25×52	£2600
Department tension	2×3×25×52	£7800
Escalated Conflict(leadership conflict)	5×4×25×52	£26,000

NOTE: The table above used 2 employees as an example for the first and second, and 5 employees for the third example. If more employees are involved, the cost eventually goes up. 

The Workplace Mediation Ladder for Every Leader

Most advice says “meditate early.” That’s true, but leaders also need a structure for deciding when to step in and when mediation is the wrong tool. 

Think of conflict resolution like a fire alarm system:

• Sometimes you just need to open a window (a quick conversation).
• Sometimes you need a fire extinguisher (facilitated workplace mediation).
• And sometimes you need the fire brigade (formal investigation, arbitration, or legal routes).

Médiation Ladder

Use this ladder to decide how to mediate conflict between employees without guesswork.

1.  Informal reset (light structure)

Use when: Tension is new, the stakes are low, and both employees still talk to each other.

What you do:

• Speak to each person clearly
• Bring them together for short reset conversations
• Follow-ups.

2. Facilitated conversation (internal mediator or HR-led mediation)

Use when: the conflict keeps resurfacing, and communication has broken down.

What you do:

• Set ground rules
• Agree on written actions
• Hold a structured meeting

3. External workplace mediation

Use when: the conflict is between senior leaders, and internal attempts failed. What you do: 

• Bring in a professional mediator
• Focus on restoring working relationships.

4. Formal process (investigation/grievance/discipline)

Use when: there are allegations of misconduct, harassment and power imbalance.

What you do:

• Define what policy has been allegedly breached. 
• Tell both parties that the matter is moving to a formal process
• Assign an impartial investigator 

The “should I step in?” checklist

Before you decide how to mediate conflict between employees, ask:

1. Is work being impacted now? (missed deadlines, customer risk, team avoidance)
2. Is this recurring? (same topic, same people, same pattern)
3. Is there a power imbalance? (seniority, performance ratings)
4. Does this require fact-finding? ( discrimination, threats, safety issues)
5. Are they able to agree on solutions? (Do they have the authority to change the situation?)
6. Has everything failed?
7. Is this about broken communication?

If you answer “yes” to any of these, you should consider mediation. 

How to mediate conflict between employees: Step-by-step Process

Below is a practical process you can adopt for mediating conflict in the workplace: 

1. Meet Separately First: Talk to each person alone.
2. Set Clear Ground Rule
3.  Let Each Person Speak
4. Find the Real Issue
5. Agree on Small Changes: Keep solutions practical.
6. Write It Down
7. Follow Up

If you’re building stronger systems around recognition, feedback, and clear expectations (the things that prevent conflict before it starts), you might like what Perkflow is building.  

Finding the Systemic Causes Behind Repeated Conflict

Here’s a hard truth: many “employee vs employee” conflicts are really system vs human problems wearing a disguise. 

If you have to constantly mediate conflicts between employees in the same teams, it’s rarely because your people are difficult. It could more likely mean the workplace is sending mixed signals.

Below are common system-level causes that quietly feed conflict:

1. Misaligned Incentives: Conflict increases when rewards and expectations don’t match.
2. Role Ambiguity: Conflict grows when ownership is unclear
3. Leadership Inconsistency: Leaders set the standard, whether they mean to or not.

Did Mediation Work?

Conflicts not only create tension, it drains time, slow execution, and increase errors. That’s why, when we calculated the cost of conflict earlier, one of the biggest bills was hours lost to distraction.

So after mediation, the real question becomes: did performance come back?? This is because if the output did not recover, the conflict is still alive. It has just gone quiet.

Below is an easy scorecard leaders can use to measure whether mediation actually worked, using performance as the anchor.

1) Confirm if the team’s output improved. 

For example: Did the deadline get missed or met? 

2)  Make sure the conversation ended with actions, not just apologies

Example: Did they keep up with each end of the agreement? 

If you want to close performance gaps before they turn into conflict, it’s worth exploring Perkflow’s insights on building a stronger feedback culture and improving structure 

Clear expectations today reduce the number of conflicts you’ll need to mediate tomorrow.

Final word

If you remember one thing, make it this: Learning how to mediate conflict between employees is not just about having better conversations. It’s about protecting performance. 

The evidence is clear that conflict is widespread, costly, and linked to pressure, exhaustion, and quitting risk. That’s why workplace mediation can’t be a vague moment.  

 If you’re building a healthier workplace where goals are clear, performance is backed with fair recognition. The kind of environment that reduces the conflicts you have to mediate. Check out Perkflow

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