What is Internal & External Conflict? (How Do They Impact Company Culture)


As a small-business owner, I know what it’s like to have my plate full. I need to manage my business, delegate tasks, and deliver quality services to clients. On top of that, I also deal with the occasional workplace conflict. Some of these disputes are easily sorted out, while some require a bit more work.

Despite its negative connotation, the word “conflict” isn’t always synonymous with “destructive” or “toxic.” Conflict can actually contribute to an individual’s intellectual, moral, and emotional growth. Some of these may be small, such as a minor disagreement over whose turn it is to clean the pantry. But there are also more serious conflicts, such as bullying and credit-grabbing, which could become toxic if prolonged. 

In this article, we’ll look at the two most common types of conflict in the workplace:Opens in a new tab. internal and external. Then, we’ll explore its effects on company culture. If you want to find out how conflicts can affect your business and employees, then keep on reading!

What is Internal Conflict?

Internal conflict is a struggle taking place within a person. This type of conflict is personal.  Usually, it happens when a person feels that their values or morals are being tested or compromised. These conflicts can also be caused by emotions, fears, desires, and illnesses.

For example, an employee might feel that they are at risk of being fired if they think their boss doesn’t particularly like them. In other cases, an employee might feel like an outcast within the workplace. These feelings may stem from issues of race,Opens in a new tab. age, gender, and religion.

Any situation where a person feels threatened, causing significant physical, emotional, or mental stress, would be classified as an internal conflict.

What is External Conflict?

On the other hand, external conflict occurs outside of the person. It’s conflict brought by other people or any outside forces. Some external conflicts stem from disagreeable co-workers or clients, miscommunication, or a problematic management style.

A common example would be a boss who likes to micromanage, thus putting too much stress on their team. In turn, this would cause tension between the supervisor and their employees. This tension could result in more conflicts if the individuals involved start taking out their frustrations on each other rather than discussing them calmly. And that’s the perfect recipe for a stressful work environment.

Whether internal or external, conflicts always originate from a perceived threat. This hazard then triggers a defensive or emotional response from an employee, which ultimately affects the company itself. Let’s take a look at some of the effects of internal and external conflicts in the workplace.

What are the Five Common Effects of Conflicts?

Workplace Stress

Any type of conflict is bound to make work — and even the workplace itself — stressful for everyone involved. 

Positive Stress

According to Jeremy Blain, CEO of PerformanceWorks International, “A little stress is ok and is often called a challenge, but when stress levels exceed your capacity to deal with the consequences effectively, mental and physical changes can occur.” 

Positive stress pushes your team to go beyond their limits and reach for greater heights. It can manifest in the form of friendly competition or exploring things out of your comfort zone.

Negative Stress

On the other hand, there’s negative stress. If you feel isolated or discriminated against at work, it would definitely be an unpleasant experience. You’ll end up feeling attacked, overthinking every little interaction, or avoiding going to work altogether. If you’ve got a bone to pick with your co-worker or boss, work might become stressful simply because of their presence.

It’s impossible to completely eliminate stress from the workplace, so don’t even waste your time thinking about it. But the key is in getting the balance right and addressing stress and conflicts that could be toxic.

Feeling stressed at work and at a loss for how to deal with it? Read up on ways to cope with stress in our article, How To Cope With Stress At Work: 5 Reasons For The Constant StressOpens in a new tab..

Mental Health Issues 

Since the pandemic began, there has been a strong emphasis on supporting employees’ wellness. But encouraging better mental health doesn’t start with support groups, seminars, and mental health apps — it begins within the workplace itself.

Workplace conflict can significantly impact an employee’s mental healthOpens in a new tab.. It can lead to anxiety and depression, especially if there’s bullying or any type of abuse involved. Constantly getting into a screaming match with a co-worker or being left out from the group could lead to serious mental health issues. Thus, it would be wise to address conflicts, both existing and potential, at work.

Business owners need to be aware of how their employees are doing. A little compassion goes a long way, especially in mental health matters. It’s important to foster a safe environment where everyone is free to speak about their mental and emotional states. It’s especially relevant, considering the stigma around mental health, which might make employees hesitant about opening up.

As a manager, you can assist your employees by:

  • Modeling healthy behaviors
  • Constantly checking in with them and how they’re doing
  • Offering flexibility and being inclusive
  • Communicating openly
  • Raising awareness about mental health
  • Mediating conflicts between employees
  • Listening to employee concerns
  • Providing emotional and mental health support
  • Offering direct access to mental health professionals or resources
  • Encouraging your employees to speak up

Decreased Productivity

How people feel about themselves and others in the workplace greatly affects productivityOpens in a new tab.. If an employee doesn’t feel valued or is harboring resentment towards someone at work, then how are they supposed to perform at their best?

Workplace conflict is bad for business, as it can lead to downturns in productivity and increasesOpens in a new tab. in absences and leaves. Again, it’s the perceived threat that conflicts pose that might lead an employee to become unmotivated. As Gauri Das, an HR professional, emphasizes, “The most effective way to attract and support competent and productive employees is to ensure a healthy and safe work environment for everyone.”

Fortunately, there are activities you can do not only to boost productivity but also to strengthen team relationships. These initiatives could potentially resolve conflicts and even prevent them. Need ideas for your next team gathering? Get some inspiration from our article, Team Building Activities to Improve Your Remote Team ProductivityOpens in a new tab.!

Dissatisfied Clients

Workplace conflicts, be it internal or external, can cause stress. In turn, this burden can impact everyone’s mental health. When mental health issues arise, it can cause employees to feel unmotivated, and thus, decrease their productivity.

And what happens when productivity decreases and you start churning out subpar outputs? You guessed it, clients become dissatisfied.

That’s bad news. Because when it comes to any business, the last thing you want is to deliver a product or service that your client abhors. Word of mouth gets around fast, and people will trust firsthand experiences more than any marketing tactic or advertisement.

Dealing with rude customers is also a form of external conflict. This could become the cause of stress for an employee. The conflict then serves as the impetus for an entire domino effect of struggling with mental health issues, then lacking motivation, and finally, delivering low-quality outputs.

It might all boil down to the fact that employees are not equipped with the skills to deal with rude clientsOpens in a new tab.. Jason L. from Tactical Communications states, “Conflicts occur in all workplaces and in all aspects of human interaction. Some people are very skilled at dealing with conflict situations whilst others find conflict stressful and debilitating.”

Especially if you’re handling a client-facing team, putting the following mechanisms in place is crucial: 

  • Mental health and emotional support
  • Open communication amongst team members
  • Resources for handling disrespectful customers

Employee Resignation

In extreme cases, conflict could escalate to the point of no return. Employees might choose to resign, especially if they deem that the workplace has become too toxic for them to tolerate or try to work something out.

Losing employees is detrimental to your business. It adds more stress to the remaining staff who have to pick up the slack, not to mention the costs of employee turnover. 

If conflict is the reason for resignation, simply offering incentives or a raise might not cut it. You need to get to the root of the issue. Try addressing these conflicts through a team meeting (if it involves the entire team) or by speaking directly with the people involved.

What Causes Internal & External Conflict?

There are many potential causes for internal and external conflicts. Here are some of the most common ones:

Managerial Conflicts

This occurs when the employees have qualms with management and how the business is being run. It might come from expectations being either unclear or unrealistic. Moreover, a manager imposing an unreasonable amount of workload could likely lead to harbored resentment. More work takes employees away from their days offOpens in a new tab. and other responsibilities. 

Differences in Personality and Values

When employees feel that they’re being forced to compromise their values or that their creative input isn’t welcome, it could cause them to feel resentful. It’s especially present in diverse workplaces in which employees have different backgrounds, temperaments, and preferences. We have written an article, How Can You Avoid Conflicts When Working With A Diverse TeamOpens in a new tab., to assist you in navigating the diverse workplace culture.

Poor Workplace Communication

Often, conflicts are a result of misunderstandings or miscommunication. It might also be due to poor anger management, such as resorting to verbal fights rather than calmly talking a problem out.

Lack of Accountability

When something goes wrong, people may start pointing fingers at each other. That lack of accountability can permeate through the entire company and cause successive conflicts until the issue is resolved.

How are Internal & External Conflicts Resolved?

Whenever conflict arises, you will need to take responsibility in its management and resolution. The ability to solve conflicts is one of the qualities that any leader MUST have in their tool belt. If you want to know what other qualities a leader should possess, then check out our article, 7 Leadership Qualities of All Great LeadersOpens in a new tab.!

The most straightforward way to approach conflict resolution is by conducting a team meeting to address any concerns and hash out any issues employees have with each other, the company, clients, or even with you.

It would be best to implement guidelines during said meeting, though, such as:

  • Do not interrupt when someone is speaking
  • Listen attentively
  • Express yourself in a calm, polite way
  • Keep an open mind
  • Contribute concrete, actionable solutions

Conflict resolution should not be intimidating. What’s important is getting everyone to speak their minds respectfully and listen to others empathetically.

Being able to communicate what you’re feeling without necessarily attacking or blaming anyone is necessary for conflict resolution. Doing so will put everyone in neither a defensive nor offensive state but rather create a safe space where feelings are validated and problems are solved. You can also get a mediator if needed.

Shifting to a positive attitude, communicating honestly and respectfully, and taking responsibility for your actions will help resolve the conflict and reach an agreeable solution. Once the conflict has been amicably resolved and a course of action has been decided, everyone must cooperate to restore their relationships.

Healthy Conflict Can Be Good

I’d like to reiterate that not all conflicts are negative. There are healthy conflictsOpens in a new tab. that are needed for a workplace to thrive and improve. Not only can conflict identify weaknesses in management practices, but it can also improve the communication and mediation skills of employees. 

Without any conflict, your team might become too complacent. And when a conflict does arise, they may be ill-equipped in dealing with it. That’s why managers need to have a keen eye to observe whether the conflict is motivating your team or crippling them. 

As stated by the Founder of The Eureka Project Barri Harris, “We are programmed from an early age to believe that to succeed in business we need to toughen up, develop a thick skin to criticism, push through conflict and, if necessary to push our ideas forward, to overpower or discredit others.”

Such tired practices and culture will become toxic. And that will severely impact your team and their performance. Thus, conflict resolution starts with understanding the source of the conflict and nipping it in the bud. But remember that the goal of conflict resolution is not merely to solve a problem. It’s building or restoring relationships and creating a work environment that is safe, productive, and welcoming.

Wondering how you can effectively manage conflict in the workplace? Here’s a detailed article we wrote on how to do just that: What is Conflict Management? (Types, Theories, And Strategies)Opens in a new tab..

Conflict resolution is also integral to the growth and success of a business. Guy Cavallini, Vice President of Industrial Equity Partners, said, “Continual learning and development at both a personal and business level are intertwined, and mutually supportive in this era of uncertainty and change. Combatting this challenge with knowledge and learning, by being open to new perspectives, involved, and attentive, may surprise us by how much better we can do. Investing in ourselves can create more value for ourselves and others, at a more significant level.”

Thus, conflicts should not be treated as breaking points or deal breakers for working relationships but rather as learning experiences. You’ve heard that conflicts make a relationship grow stronger. While mostly used in the context of romantic relationships, it also rings true for business and professional ones if, and only if, all parties are open to finding solutions.

The bottom line is that it’s not entirely necessary for everyone in the workplace to be friends. What’s important is that there’s a healthy level of respectOpens in a new tab., which will serve as the foundation of a healthy, safe, and productive workplace culture. And ultimately, it’s up to you — yes, you, as a business owner and team leader — to set the tone for healthy relationships within the team.

Related Questions

  1. What are the signs of unhealthy or toxic conflict?  Anything that negatively impacts your company culture should be considered an unhealthy conflict. If it’s neither contributing to your employees’ productivity nor making them more motivated to better their performance, then it’s not serving your business and should be addressed as soon as possible.
  2. What is a conflict mediator, and how do I know if I need one?  The conflict mediator is someone not personally involved in the conflict and thus can deliver an unbiased opinion. It’s their job to ensure that discussions about the conflict follow certain rules, such as no swearing or yelling.

You might need a conflict mediator if you feel the situation would be too much for you to handle. Often, this role is assumed by the human resources (HR) manager. 

But if the conflict involves even their department, it might be necessary to bring in a professional mediator to help. Most definitely, if you’re also part of the conflict, then a mediator’s presence is essential to come to a resolution.

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