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Conflict Resolution Management
Author: Barry Allen
Unlike arbitration where a third-party imposes decisions on the disputing parties, mediation permits each side to retain control of the outcome while consenting only to being assisted in managing the conflict resolution. It is much more akin to a negotiation than to arbitration or litigation and more often than either it can deliver on the desired goals, for employee and employer alike.
International FieldWorks, Inc. is introducing for the first time anywhere a service that marries the best of workplace conflict management (mediation) with the latest in technological advances for delivering remote, yet face-to-face meetings (digital videoconferencing) ... ... at stake is millions of dollars in penalties and judgments, indeed the very profitability of hundreds of corporations like your own.
The trends are clear.
The American workplace is more litigious, more vitriolic, more violent and more costly to operate than ever — and it threatens to become even more so.
Consider these alarming trends from recent studies and surveys:
As if the trend were not worrisome enough, downsizing and the Americans with Disabilities Act of 1990 added sharply to job-related lawsuits.
As the General Motors lawsuit illustrates, civil courts increasingly are used for retribution, rather than to compensate for actual harm. As if this isn't bad enough, consider:
If the bad news is that today's workforce is more emboldened and embittered than ever, the worse news is that this may be just the tip of the iceberg. It is estimated that 90% of harassment cases are never reported, meaning there is the potential for a nine-fold increase in these cases alone.
In a recent Supreme Court case, an employer was ordered to pay $1,019,465, only $11,559 of which was compensatory. The court found that the employer had wrongly terminated the employee before establishing cause for his dismissal.
Administrative investigation and litigation of employment disputes can take years during which the view of parties and witnesses can become colored, even polarized by months of simmering conflict. With this souring mood, low and no-cost remedies such as reinstatement, can be impossible to implement. Emotions and economic damages that may not have even existed at the beginning of the process can arise and take on importance far out of proportion to the original problem.
Compounding the predicament, litigation cannot insure a reasoned, intelligent or fair decision, particularly involving technical issues. Juries may not understand or may ignore technical presentations and other complexities.
The lack of an adequate conflict management system can jettison the resolution of these issues right into the courtroom. You lose control and costs and other detrimental factors can attach like barnacles as the dispute grows far beyond its original size and scope.
Monetary losses are mounting:
"Even when the employer prevails… he or she has usually spent $50,000 or more in attorney's fees, in addition to the organization's time and resources." The authors of Alternative Dispute Resolution in the Workplace
The average jury verdict for wrongful termination cases is more than $600,000. Companies lose twice as many cases as they win. And by the time they lose, they also have lost control of how much it will cost them.
Consider a case that began as a workplace dispute involving a $55,000-a-year employee, then escalated to a $500,000 complaint, then finally became a $28 million court judgment against the employer.
But even when employers win, they can lose.
In a special verdict, an employer was not held liable for sexual harassment or for harassment based on race or national origin, as alleged. Nor was the employer guilty of discrimination against the plaintiff based on her sex, race or national origin, as she claimed. Furthermore, the employer prevailed on his contention that the employee failed to establish she had a disability.
Notwithstanding these findings, the jury still found the employer liable for sexual violence, aided and abetted by a supervisor, discrimination against employee (based on her back injury, ankle surgery or lifting restriction) and termination in retaliation for her complaints. She was awarded $93,000 in compensatory damages.
But a case need not reach the courthouse to cost a lot.
In only six years, monetary benefits paid in EEOC sexual harassment cases vaulted from $7.1 million to $49.5 million. In a concurrent five-year period, monetary benefits in EEOC ADA cases increased from $200,000 to $162 million.
Similarly, a routine employment dispute, involving no more than $5,000 in lost wages and benefits, easily can cost several times more to resolve, no matter who prevails. Defending a lawsuit that goes to trial typically costs at least $100,000. It can cost $20,000 to defend even frivolous cases. The Rand Corporation found legal fees alone to be more than $80,000 in typical wrongful termination cases. The average award in litigated employment practices liability cases is more than $250,000, and in about 15% of all cases it is more than $1 million.
Time is money, and it’s lost too:
Escalating workplace disputes are the thieves of time. Unlike money, time cannot be replaced. Squandered time, lost productivity, missed opportunities are all unrecoverable. It takes an average of two years for the EEOC to investigate most claims.
Civil court proceedings take from two to five years to reach trial. The average time for a federal agency to close a discrimination complaint in 1995 was 305 days. If the case involved a hearing and an appeal, the average processing time is 801 days.
Fortune 500 senior executives spend 20% of their time in litigation activities, while typical corporate managers spend up to 30% of their time dealing with conflict.
Small business owners, perhaps more than others, cannot invest time and energy to be the confessor for all their employees. There comes a point where dealing with those distracts the entrepreneur from business.
There is a direct correlation between the length of time it takes to resolve a conflict and the expense of the resolution. Much of the cost of litigation comes well before the trial date. As time drags on there is increasing loss of productivity, profit, morale, legal expenses, settlement costs and the long-term effects of increased insurance premiums.
Productivity suffers from unresolved conflicts:
But even if managers spend only 20% of their time resolving disputes, that means the company is paying $12,000 a year out of a $60,000-a-year supervisor's salary on conflict resolution. Obviously higher paid executives' salaries can drive the "dispute resolution pay" to $50,000 a year and more.
Productivity suffers when managers, employees and their representatives spend time away from work while investigating, discussing and litigating complaints and appeals. It suffers again when the cumulative effect of these ongoing activities drain morale.
By failing to intervene in the early stages of a dispute, both parties are less likely to concentrate on the true underlying problem, and instead focus on the subsequent issues that grow out of the dispute.
Without Alternative Dispute Resolution programs in place it is easy to miss the true roots of conflict in an organization, such as organizational policies or decisions that lead to complaints and systemic concerns that may not be apparent.
Employees concerns need to be met:
Need to be heard
A substantial complaint by employees who suffer from workplace bullying is that they feel there is nowhere to turn for help. Managers are expected to diffuse and manage aggression. But often times bullying is engaged in by persons in positions of authority, leaving little recourse for the bullied employee.
Workplace bullies' behavior falls under the rubric of "low-level violence." It is commonly thought of as harassment, emotional abuse and targeted aggression and manifests as yelling, ridiculing, undermining, stalking, intimidating and the implied threat of physical attack. Bullying follows a pattern and is not isolated.
The result? One study showed that targets of rudeness, insensitivity and disrespect may wish to penalize their employer, rather than seek retaliation against the bully.
Conflict is inherently stressful and poorly managed stress affects health, resulting in employee medical claims, which in turn increase insurance premiums and benefit administration costs.
Conscious or unconscious hostility of employees in conflict can lead to willful destruction of equipment and work processes, resulting in further costs.
Several recent studies shed light on the consequences of workplace bullying. A 1998 Internet survey showed that the most prevalent effects were stress and anxiety (79%), depression (65%), exhaustion (64%), insecurity and self-doubt (59%), shame, embarrassment and guilt (58%), obsessive thinking and nightmares (58%), poor concentration (56%) and sleeplessness (53%).
Conflicts create expensive turnover:
Workplace conflict contributes significantly to turnover of employees.
One of the most expensive costs of poorly managed conflict management is the exodus of quality personnel who prefer to quit rather than work under a system in which they feel their complaints are not adequately or fairly addressed. A dehumanizing trend in the workplace that increasingly relies on technological solutions contributes to this feeling of dejection.
Replacement costs are substantial.
Government erodes “employment at will”
More than 25 federal laws and hundreds of state and local statutes affect almost every aspect of the workplace.
Consequently, like never before, employers are exposed to the threat of employee lawsuits for abusive practices and bias.
As government has increasingly imposed regulations on the workplace, employment practice insurance premiums have soared to about $300 million annually for coverage against lawsuits that can range from wrongful termination, sexual harassment, racial discrimination, gender discrimination and age discrimination.
More small and midsize companies also are becoming aware of the risk with the slow erosion of the "employment at will" doctrine that treats private employment as a relationship that can be terminated by the employer or the employee at any time without cause.
Public awareness has been heightened by high-profile cases of racial and gender discrimination multimillion dollar lawsuits against Texaco, Home Depot and now Chuck E's Pizza.
Understand the roots of conflict, resolve discrimination complaints early, reduce formal complaints and avoid lawsuits
Reverse the trend: Alternative Dispute Resolution
A counterbalancing is underway to the disturbing trend of the litigious workplace.
More than 60% of Fortune 500 corporations have pledged to use non-litigative, dispute resolution processes. And ten times as many legal disputes are now settled through creative dispute resolution than at trial. By 1998, more than 400 major companies had adopted employment dispute resolution plans compared to only 30 five years earlier.
Organizations have learned that Alternative Dispute Resolution (ADR) programs help managers understand the roots of conflict. Agencies report that these processes resolve discrimination complaints in early stages; reduce the number of formal complaints and the time spent on drawn out procedures.
Perhaps best of all, they avoid lawsuits.
Far and away the preferred ADR method in all types of disputes is mediation. Because it works.
What does all this mean to you?
Conflict Management to the rescue
Not only does a formal conflict management system diffuse disputes early on, but it can mitigate damage for cases that end up in court.
Courts have found certain workplace lawsuits are more difficult to win if an organization has a reasonable, fair and accessible dispute resolution procedure, and the complaining employee failed to use it, or the company responded promptly to his complaint.
Some courts even barred breach of contract claims when the employee fails to exhaust grievance procedures in the organization's handbook.
Here is what organizations report learning about the value of ADR programs:
Moreover, 72% of mediation users were satisfied with the outcome, compared to 40% of participants in traditional EEO processes. Study participants were satisfied because mediation gave them something they value in their day-to-day workplace - an improved perception of the employee-supervisor relationship. But the single greatest effect on participant employees and supervisors alike was they learned how to listen.
Perhaps most telling is that half of respondents reported mediation changed how they dealt with conflict with others, including 92% of supervisors, who "learned how to listen" and "understood the importance of allowing employees to vent." Supervisors often noted the process allowed them to get to "the root of the problem" or "what was really bothering" the employee.
ADR processes resolve complaints, save money
Agencies indicated that ADR processes, by resolving discrimination complaints in their early stages, had reduced the number of formal complaints that were filed, along with the necessity to spend time on the associated formal procedures.
Corporations that have developed collaborative conflict management systems report significant litigation cost savings:
A GAO study found mediation particularly useful, leading to resolution in a high percentage of cases in all but one of the organizations studied. For example:
Mediation works in the private sector too. Brown & Root reported the overall cost of dealing with employment conflicts, including the total cost of its ADR program, was less than half what the company used to spend on legal fees alone. Employment-related lawsuits were reduced to nearly zero, and cases filed with the EEO or similar agencies were reduced by half.
Time is money, and mediation saves it too - After implementing an ADR program, the U.S. Air Force reported the amount of time to resolve an EEO case declined by an average of 193 days. The average number of days to settle formal EEO complaints decreased from 329 to 136 between fiscal years 1992 and 1997.
The advantage from an employer's perspective is twofold: You save significant legal costs, but tremendous amounts of time.
"For many corporations, that's more important than money," according to Elizabeth J. du Fresne, head of the Labor Law Department.
Agencies indicated that ADR processes, by resolving discrimination complaints in their early stages, had reduced the number of formal complaints filed, along with the necessity to spend time on the associated formal procedures.
Creative dispute resolution not only short-circuits the expenditures of litigation, it can result in settlement much earlier in the dispute resolution process.
Mediation: The best and the preferred ADR
mediate (me´ de at´ ) v. 1. To resolve or settle differences by working with all the conflicting parties. 2. To bring about (a settlement, for example) by working with all the conflicting parties.
In pure mediation, the mediator avoids coercing the parties to arrive at a settlement.
Unlike arbitration where a third-party imposes decisions on the disputing parties, mediation permits each side to retain control of the outcome while consenting only to being assisted in managing the conflict resolution. It is much more akin to a negotiation than to arbitration or litigation.
Yet mediation still delivers on the desired goals of controlling costs, meeting legal mandates and effectively managing disputes.
It takes months to create an effective mediation program that draws on the expertise and input of HR managers, legal counsel and employee representatives. Using an experienced outside organization can benefit companies immediately by being able to educate managers in the EEOC's growing uses of ADR effectively and efficiently in the shortest amount of time.
Mediation works well for all types of employment disputes. In fact, it is often the most logical forum in which to manage workplace conflicts. Unlike litigation, mediation can resolve conflicts without further escalating the tensions. This is invaluable to an employer that wants to maintain a good relationship with the employee.
Mediation offers the greatest benefit early on. When used before management implements its own decision, mediation can head off a claim with the EEOC.
With sexual harassment, mediation allows the parties to air sensitive and often embarrassing, factual issues in a private forum.
Further, a neutral and mutually selected mediator brings credibility to the process that an HR manager may not. Heightened emotions are diffused and parties keep focused on resolution.
Mediation also allows the company to avoid protracted administrative and judicial processes that siphon off time, energy and money.
Principles of mediation are useful in resolving interpersonal conflict, employment relationships, business dealings and in establishing policy.
Creative dispute resolution can be an important part of an organizational philosophy that promotes looking for creative ways to resolve problems rather than relying on traditional procedures such as litigation.
One reason for mediation is its flexibility, the capacity to mold itself to meet the needs of the parties and their dispute. Selecting a process and modifying it to address the dispute is an art.
When there's a misunderstanding, people can talk with each other, not at each other. Matters are resolved and no money has changed hands.
Creative processes allow for more informal communication, reducing posturing and procedural rules. Innovation can short-circuit potential rising hostilities. Creativity allows each party to choose from a variety of mediators, including those with particular expertise.
The Benefits of Mediation
Facilitation - Making it Easier
At the heart of videoconferencing mediation is the concept of facilitation.
In short, using an outside professional can make it much easier to resolve disputes by providing mediation. And we make it easier for mediation to occur by delivering it via videoconferencing technology.
International FieldWorks, Inc. for example, employs cutting-edge videoconferencing technology to deliver the proven, conflict resolution skills of our extensive network of highly experienced, professional mediators, trained in transformational mediation.
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