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Conflict Resolution Management

Author: Barry Allen
Contributed by International Fieldworks Inc.

 

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 PROBLEM

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:

  • 62% of employees surveyed said they are more willing to sue over employment discrimination than five years earlier.

  • In 1998 there were nearly 24,000 employment civil rights lawsuits in federal courts, compared to just 16,000 in 1994.

  • The 1991 Civic Rights Act opened the door to punitive damages, and to the right to jury trials in employment discrimination lawsuits.

  • Punitive damages can outstrip compensatory damages 10 to one, such as in the $4.9 billion award against General Motors, $4.8 billion in punitive damages.

  • Plaintiffs have won 43% of verdicts in jury trials compared to 22% when heard by a judge.

  • U.S. companies spend $20 billion a year on litigation - not including settlements and judgments.

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:

  • 78% of employees surveyed believe some or all employers engage in hiring or promotion discrimination.

  • Employment litigation in federal courts increased 400 percent in 20 years.

  • In California, punitive damages average $300,000 compared to $50,000 in other states.

  • Entrepreneur Magazine: "Most jurors are unsympathetic to employers."

  • While the federal civil court caseload increased 125% in 20 years, employee discrimination case filing increased 2,166%.

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.

  • Inadequate conflict management is costly.

  • Workplace disputes are the most common complaints received by the ACLU, about 50,000 per year.

  • Conflict in the workplace is inevitable. It is rooted in many causes: manipulation, backstabbing, lying, sabotage, one-upmanship and threats. Conflict that spirals out of control can poison the workplace atmosphere, lead to polarizing disputes and spill over into months of costly EEOC and court proceedings. All of that before a monetary judgment is determined.

  • Inadequate conflict management means an inability to control the process - the loss of control over costs, time and the eventual outcome.

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:

  • In 1976 one study estimated that up to 30% of a manager's time was spent dealing with conflict.

  • Twenty years later another study found 42% of a manager's time is spent resolving 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:

Morale

  • Unresolved conflicts adversely affect employee and management morale. Each side becomes disillusioned with the other and with its inability to affect the other's point of view. Time better spent on productive tasks is diverted to discussion of problems with peers.

  • Being uninvolved in determining how their complaints are handled exacerbates employees' feelings of estrangement. The longer the dispute festers, the more positions harden.

  • Morale is directly related to how employees feel about the stigma attached to their conflict, and to whether they feel remedies are fair and appropriate.

  • Inevitably poor morale shows up in lower productivity and disruptions in the workplace.

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.

Stress

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.

  • The turnover costs for an employee is from 75% to 150% annual salary.

  • Managerial replacement costs can equal 33% to 100% of a new manager's first-year salary.

  • Moreover, training costs can equal 10% and learning curve costs can be 50% of the annual salary. So, for a manager making $50,000 a year, turnover cost can be as high as $75,000.

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.

THE SOLUTION

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.

  • In 1999 in Los Angeles County, 94% of EEOC cases handled by mediation were settled compared to only 4% of cases that did not go to mediation. The average benefits paid was $8,843 in mediation cases, versus $14,872 in non-mediation cases.

  • A GAO study found mediation particularly useful, leading to resolution in a high percentage of cases. But mediation is working just as well in the private sector too.

  • It also works for all parties in a dispute: 90% of mediation users believe the process is fair, compared to 41% of participants in traditional EEO processes.

  • In the most comprehensive survey to date, Cornell University found use of Alternative Dispute Resolution growing among 1,000 of the largest U.S. corporations - and 88% use mediation.

What does all this mean to you?

  • For starters, it means cost cutting, improved relationships and dramatically shortened processes dealing with workforce disputes. But that's not all.

  • Unlike litigation, mediation resolves conflicts without further escalating tensions. This is invaluable to employers who want to maintain good employee relationships, and vice versa.

  • Since 95% of cases are settled out of court anyway (many on the eve of trial), it makes sense to settle as early as possible before costs and emotions escalate.

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:

  1. It is important for top management to commit to establishing and maintaining a program.

  2. It is important for employee involvement in developing ADR programs.

  3. It is an advantage to intervene early in disputes to focus on underlying interests rather than hardened positions.

  4. It is necessary to balance settling and closing cases against the need for fairness to all.

  5. ADR programs can help improve managers' understanding of the roots of conflict, such as policies or decisions that lead to complaints and systemic concerns that had not otherwise been apparent.

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:

  • Brown and Root cut outside litigation costs 80%

  • Motorola 75% in six years.

  • NCR 50% in nine years plus reduced pending lawsuits from 263 to 28.

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:

  • 71% of cases mediated through the U.S. Postal Service Redress program were settled.

  • The Air Force cut the time to resolve EEO cases from 329 days to just 136.

  • At Walter Reed Army Medical Center EEO complaints decreased 17%; grievances and appeals dropped by almost 80% and disciplinary and adverse actions decreased by 55%.

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.

Mediation 

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

  • Confidentiality is maintained

  • No negative publicity is received

  • Employees return quickly to the job without stigma

  • Employees are allowed to tell their story and to be heard

  • An appropriate corrective action is achieved

  • Employee morale is maintained

  • Litigation costs are reduced

  • Management is aided in identifying and addressing workplace problems

  • Workplace disruption of lawsuits is reduced

  • Unionization is discouraged

  • The company's public relations profile is enhanced

  • Meaningful employee participation is provided

  • Credibility of the decision-making process is improved

  • Justice and fairness is ensured in the workplace

  • Fast and effective resolution of issues is provided

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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