Organisations need to think upstream to better manage difficult conversations and interpersonal conflicts. Developing practical judgement capabilities before a complaint lands – a concept known as “being wise to the room” – is a great place to start.

Ask an experienced HR practitioner to think of a workplace matter that became far bigger than it needed to be and they’re unlikely to struggle for an example.

Perhaps it arrived as a complaint about exclusion, but when you started pulling the threads apart, the story had begun months earlier with a manager making decisions in a small circle because, according to them, “it was quicker”.

Perhaps it became a performance matter, but underneath it sat two people working from completely different assumptions about what “good” looked like.

Perhaps an employee had become convinced their manager was targeting them, while the manager had become equally convinced the employee was resistant, difficult or disengaged.

By the time HR became involved, each interaction had been interpreted through everything that had come before it. None of that makes the eventual complaint illegitimate. Nor does it mean the issue should necessarily have stayed informal. Sometimes escalation is exactly what is required.

Many workplace problems have a long pre-history.

Long before there is a grievance, investigation, psychosocial concern or formal performance process, there’s usually a period in which people are trying to work out what is going on around them. They’re reading behavioural cues, making assumptions about intent, noticing changes in tone, reacting to what’s said and what’s not said, deciding whether to raise something, let it go, push harder, withdraw, document, ask a question or speak to somebody else.

In other words, they are exercising judgement.

We spend a great deal of time developing people to communicate better, manage performance, resolve conflict and have difficult conversations. What we spend much less time developing is the capability that comes before all of those things: working out what kind of situation you’re actually walking into.

This requires developing practical workplace judgement skills. The simplest way to describe it is ‘being wise to the room’.

We know what it looks like when it is missing

The problem is not that people interpret others’ behaviour. It’s how quickly that interpretation becomes certainty.

Once that happens, behaviour starts to change. A manager who believes an employee is disengaged may involve them less. The employee experiences that as further exclusion and withdraws more. A colleague who believes someone is undermining them becomes more defensive. The other person experiences that defensiveness as hostility and pushes harder. What began as an uncertain reading of a situation can become a self-reinforcing dynamic.

By the time HR is brought in, everybody has evidence to back up their perspective.

You’re rarely dealing only with the original event. You’re dealing with the meaning attached to it, the behaviour that followed, the reaction to that behaviour and the story that has formed around the whole thing.

HR knows this territory intimately. What we’ve been less explicit about is the capability that helps people navigate it before it reaches us.

Reading the room is only the beginning

Most people understand the idea of “reading the room”. We notice who has gone quiet, who is dominating, whose ideas are being picked up, where the energy shifts, who appears uncomfortable, who is speaking carefully and who is not speaking at all.

But reading the room is only observation. Being wise to the room is what happens next.

It’s being able to notice without rushing to label. To distinguish what you’ve observed from what you think it means. To understand that hierarchy, history, personality, workload, culture, change and power may all be influencing what you’re seeing. To test your first explanation rather than becoming wedded to it.

Being wise to the room doesn’t mean endlessly withholding judgement. It means making better judgement.

Sometimes the right response is another question. Sometimes it’s a clear conversation about expectations. Sometimes it’s management action. Sometimes it’s HR advice. Sometimes it’s an immediate formal response.

“You’re rarely dealing only with the original event. You’re dealing with the meaning attached to it, the behaviour that followed, the reaction to that behaviour and the story that has formed around the whole thing.”

The capability we need to coach for knowing the difference.

That may sound obvious, but much of our leadership development begins after this decision has already been made. We teach people how to conduct a difficult conversation, but not necessarily how to determine whether this is a difficult-conversation problem.

A manager can follow a conversation framework perfectly and still make the situation worse if they’ve misunderstood what is actually happening. That is the gap.

How to avoid things snowballing

AHRI’s own research has shown the growing organisational consequences of workplace relationship issues and psychosocial risk. In its 2025 research, 38 per cent of employers reported an increase in claims or complaints relating to psychosocial hazards, while only 28 per cent were investing specifically in leadership and management capability to improve psychosocial health.

The organisational challenge is not simply to manage complaints well once they become formal. It’s to build workforce capability that can reduce avoidable complaints and psychosocial risk before issues escalate.

Another useful way to think about this is snowballing.

A workplace issue rarely becomes serious because of one isolated moment. More often, it gathers weight. A comment. An assumption. A delayed conversation. A poorly handled response. Someone withdrawing. A second incident that now confirms the first interpretation.

Then HR receives the snowball. This is why practical workplace judgement matters. It may sit underneath several capabilities we already recognise: communication, emotional intelligence, conflict management, leadership, decision-making and psychosocial-risk management.

But it’s not quite the same as any of them.

It’s the capability that helps a person decide which of those capabilities the situation requires.

The cost sits downstream too

There are commercial consequences to all of this.

Research commissioned by Acas estimated that workplace conflict costs UK organisations around £28.5 billion each year – more than £1,000 for every employee and just under £3,000 for each person involved in conflict. Those costs don’t only sit in formal disputes. They accumulate through reduced productivity, sickness absence, resignations, dismissals and the management time required as issues progress.

Importantly, the research found that costs are relatively low in the early stages of conflict and rise substantially as situations become more entrenched and formalised.

More recent Acas figures sharpen the point. In 2026, it estimated that UK employers spend around £2.36 billion each year managing formal disciplinary and grievance procedures, compared with approximately £250 million on informal resolution.

While these are UK figures and don’t neatly translate into an Australian context, the underlying pattern is relevant: the organisational cost tends to accumulate downstream.

That matters when we think about practical workplace judgement. A misread interaction doesn’t automatically produce a grievance, absence or resignation. But when workplace situations are repeatedly misinterpreted, avoided, mishandled or unnecessarily escalated, organisations start paying for the consequences in management time, productivity, employee-relations activity, absence, turnover and eventually formal process.

The economic argument for being wise to the room isn’t that every workplace difficulty can – or should – be resolved informally. It’s that organisations have a material interest in helping people recognise what they’re dealing with and respond well, while there’s still an opportunity to influence what happens next.

HR often becomes the sense-making function

People often come to HR asking for an answer when what they really need first is help making sense of the situation.

“What should I do about this employee?”

“Do I need to performance manage them?”

“Is this a psychosocial issue?”

The skilled HR practitioner rarely answers immediately. They ask more questions.

What happened before that?

What have you already tried?

Is this a pattern?

What else could be going on?

What outcome are you trying to achieve?

We do this almost instinctively because we know the presenting question may not be the real question. That’s practical workplace judgement in action.

The opportunity isn’t simply for HR to keep exercising that capability on behalf of everybody else. We need to become much more deliberate about building it in the organisation.

“A very simple question sits at the heart of all of this: What else could be true?”

Experience helps, but it’s not enough

We often assume people become better at this simply by spending more time at work. Sometimes they do.

Experience gives people a larger bank of patterns to draw on. They’ve seen poor performance, difficult behaviour, organisational politics, stressed teams, restructures, damaged relationships and managers who avoided something for too long.

But while experience can sharpen judgement, it also has the ability to harden assumptions.

“I have seen this before” can be valuable pattern recognition. It can also become a shortcut.

The manager who has previously dealt with a disengaged employee may see disengagement everywhere. The leader who’s been undermined before may become particularly alert to challenge. The HR practitioner who’s managed several bullying matters may recognise genuine warning signs earlier, but could also begin categorising situations too quickly.

Tenure does not automatically create wisdom. Yet we still rely heavily on experience to develop one of the capabilities that has the greatest influence over whether workplace situations are contained, clarified, resolved or escalated.

That is a fairly significant development gamble.

So what would we actually develop?

Someone who is wise to the room is able to hold a few things apart that workplaces routinely collapse together.

• They can separate observation from interpretation.
• They can distinguish impact from intent without pretending either is irrelevant.
• They can recognise power rather than treating every workplace interaction as though both parties have the same freedom to speak and act.
• They can tolerate ambiguity long enough to test a first conclusion.
• They can ask questions designed to discover, rather than confirm.
• And they can choose a response that is proportionate to what they actually know.

A very simple question sits at the heart of all of this: What else could be true?

The quality of our response depends on the quality of our interpretation.

That’s particularly important at a time when technology can help any of us turn an uncertain interpretation into a highly coherent narrative very quickly. AI can help someone organise their thoughts, identify possible explanations, draft a complaint or prepare for a difficult conversation. That can be extremely useful.

But coherence is not evidence.

One of the most valuable human capabilities may increasingly be knowing when to stop and ask: Have I understood this, or have I simply constructed a persuasive explanation for it?

The opportunity for HR is upstream

Most organisations already know how to respond once something has become formal. The bigger opportunity may be earlier.

• What would happen if we gave managers realistic, ambiguous situations and asked them not for the ‘right answer’, but what they noticed, what they inferred and what they would want to know next?
• What if we developed the judgement behind the difficult conversation rather than only the conversation itself?
• What if managers had somewhere to test a situation before deciding what it was?
• What if we treated practical workplace judgement as something that could be built through scenario practice, reflective case discussion, peer clinics, coaching and point-of-need support rather than something people were expected to absorb through osmosis?

This is where the idea of being wise to the room becomes more than a phrase. It becomes a capability proposition.

An organisation doesn’t need managers who diagnose everything themselves and never escalate. Nor does it need every piece of workplace friction arriving as an employee-relations matter.

It needs people who are better able to recognise what they are looking at, understand the limits of what they know and make sound decisions about what happens next.

If we are serious about reducing avoidable complaints, preventing issues from snowballing and managing psychosocial risk well, practical workplace judgement cannot remain something we hope people acquire with time.

We teach the conversation before we teach the judgement. We teach the process before we teach the sense-making.

We need people who can be wise to the room before the room becomes a case file. HR already knows this capability when it sees it. Perhaps we’ve simply not yet had a name for it.

🧰 HR’s career resource kit

• Course: Leading difficult conversations
• Article: How to assess if an employee complaint warrants an investigation
• Podcast: Stay up to date on the latest employee relations topics with AHRI’s podcast ER/IR Unpacked.
• Course: Workplace conflict resolution course

Catherine Heilemann is the founder of Heilemann Coaching & Consulting and creator of RoomWise™: Navigating Workplace Dynamics, a capability approach she developed to build practical workplace judgement – helping people recognise, interpret and respond to workplace dynamics before avoidable issues become entrenched or formal. Her work spans organisational change, leadership development and workplace capability.