Conflicts are an inevitable and integral part of everyday business and private life. In the essence, they represent a disagreement between two or more subjects. This paper describes the causes of conflicts, their types, the stages through which conflict in the workplace goes and the most important positive and negative effects conflicts have on an organization. Although, according to traditional opinion, organizational conflicts are undesirable, with the advent of modern organizational theory, they are starting to be considered as completely normal and desirable phenomenon in every organization. Conflicts in the workplace can be functional and dysfunctional. The goal of conflict management is to encourage functional and suppress dysfunctional conflict. A functional conflict will increase the effectiveness of the organization and the dysfunctional one will decrease it. The most demanding task that human resource managers have when it comes to conflicts is conflict management. It is a complex process in which managers must be authoritative, objective and must understand the different personalities of the subjects of the conflict. Human resource managers must assess the potential extent of a conflict and use a specific conflict management style accordingly. The reason for this is that not all workplace conflicts are undesirable. Mild conflicts with moderate intensity create a positive working atmosphere and do not allow organizational stagnation. Therefore, when managing conflicts, managers should not assume the circumstances of the conflict, but should properly investigate the situation in which the conflict developed and, based on that, come up with a solution that will suit the subjects of the conflict and will not harm organization’s operations.