Talk is cheap, litigation is expensive.
Workplace and business disputes are an inevitable aspect of commercial life. But, as Melissa Rimac reports, conflict shouldn't be seen as negative. She talks with experts who say dealing with problems can be constructive, with the process making relationships stronger, improving morale and increasing productivity.
Within government, academic, and business circles, there's a growing appreciation of alternative dispute resolution techniques, in providing a framework which is cost-effective, quick - and more likely to maintain the business relationship.
The costs of unresolved conflict are enormous - litigation can cripple business - each day of litigation can cost $2000-$4000 in legal fees alone. Then there's all the other costs which are much harder to quantify: high staff turnover, excessive absenteeism and people avoiding each other, lost productivity, and damage to reputation if clients get a whiff of the tension. Not to mention damages - which can amount to a small fortune In the interests of saving money, time and stress - it's best that problems get sorted out early; before people define their problem as a legal one and draw other people into the vortex of distrust and anger; where productivity, personal and corporate reputations and working relationships are sacrificed. Australia is part of a global trend towards mediation as an alternative to legislation or as a prelude to it, says Allen Tidwell from the Macquarie University Graduate School of Management. "Mandatory mediation is becoming a lot more common," he says. "Many international bodies such as the UN, WTO and APEC have mediation encoded into their charter and it's becoming standard at large international forums such as the Global Summit on Climate Control."
Within Australia, this move to mediation is gaining momentum. Recent amendments to the Workplace Relations Bill provide formal recognition of mediation as an alternative to the Industrial Relations Commission. Proposed changes to personal motor accident insurance also require the use of mediators rather than courts. Mediation is being used increasingly by human resources departments, by large corporations to solve workplace problems and by bodies such as the Legal Services Commission, which deals with complaints against legal practitioners. Alternative dispute resolution (ADR) techniques - which include mediation, are a cost and time-effective alternative to traditional litigation. Mediation is the confidential discussion of issues in a non-threatening environment, in the presence of a neutral, objective third party. A mediator's greatest asset is the ability to get people discussing the problem and then working to find a solution to meet the needs of all parties. The mediator facilitates the discussion by getting people to open up about their grievances and keeps the discussion on track and focused on the need for a positive change - rather than recriminations.
Mediation removes much of the stigma associated with conflict, because it's private and people become empowered by the opportunity to sort out their own problems. "Mediation allows people to maintain their dignity," says Bob Gaussen - director of Mediate Today, a pioneer of the industry in Australia. "Mediation appeals to a person's better nature," says Jon Graham, manager of mediation services at Relationships Australia. "Often you are called upon to help resolve what seems like a small issue - only to find deep undercurrents of dissatisfaction - people often feel a lot more comfortable in the presence of an outsider" Gaussen has worked extensively with large companies and government departments, brokering peace over such issues as employment contracts, unfair dismissal and redundancies, mergers and acquisition outcomes, discrimination and harassment - all of which typically end up as the subjects of litigation. He believes mediation can resolve problems for good and that the commercial relationship can be maintained or even enhanced.
"Mediation is very quick and ends up costing only a fraction of what litigation does," he says, citing a study by the Australian Institute of Company Directors which found that on average - mediation costs about 5 percent the cost of litigation. "Disputes which were tied up in the courts for months can be resolved through mediation within a few days." Furthermore, more than 70 percent of mediated agreements which have monetary settlements are paid in full, as compared to 34 percent for adjudications. In contrast to litigation, which is adversarial in its nature and seeks to attribute blame and loss, mediation is a voluntary, collaborative, solution-oriented process, where mutual needs can be accommodated and creative solutions found. Mediation gives people the opportunity to decide on the solution which suits them; they maintain control of the process and are active participants, rather than onlookers. Unlike litigation, there doesn't have to be a "loser". The prospect of people being able to continue their commercial relationship are maximised when problems are solved this way.
The beauty of mediation, says Allen Tidwell, is that it forces people to engage with each other rather than wind each other up. "Disputants maintain ownership and control of the process and don't become alienated from the source of the problem. Once lawyers get involved, it becomes an institutional problem which takes on a life of its own," he says. This momentum towards mediation is even being taken on board by the legal profession. Many large legal firms now have mediation facilities and in an effort to clear the backlog of cases, judges are increasingly incorporating mediation into legal proceedings by advocating that parties to a dispute attempt mediation first. In commercial law there is an increasing trend towards mandatory mediation. An example is the Franchise Code of Conduct, which enshrines in legislation the use of mediation as a first step in dispute resolution. This trend isn't entirely being driven from above, says Glen Barnwell, NSW regional director of the Australian Competition and Consumers Commission. "We were getting a huge number of complaints from businesses and from franchisees; as a response to this - the ACCC produced a reference document for businesses called Benchmark for Dispute Avoidance and Resolution," she says. "We believed it was really important for business people to be aware of their options, because the legal route was crippling many businesses."
The increasing use of non-litigious means of settling disputes can lessen the cost burden for government by taking the pressure off the need to extend the court system. "Company amalgamations are a real hot bed of dissent," says Gaussen. "People often have to reapply for their jobs, someone in the other company gets the promotion which they were promised and they have to learn to deal with an entirely new computer network in a hurry - they're baying for blood." One large merger that went very smoothly thanks to the incorporation of mediation techniques was that of Caltex and Mobil. "Mediation helped establish a new corporate culture, rather than a fusion of the previous cultures," says public affairs officer Debra Thompson. The company makes extensive use of mediation techniques in its human resources department and in peer review processes "having a mediator present enables the group to be a lot more objective, and it doesn't become a negative process". Commercial disputes especially lend themselves to mediation, problems such as corporate governance, regulatory issues, disputes over franchise, debt, and consumer and community issues can be resolved much more effectively with mediation, maintains Gaussen.
Gaussen, who produced the hugely popular kit Resolving Small Business Disputes (for the Federal Department of Workplace Relations and Small Business), believes small business can save a lot of time, money and stress by incorporating mediation into business practice. "Industries, which involve lots of contractors and many variables such as the building industry are particularly prone to disputes and can benefit greatly from using mediation to iron out these problems early," he says. Gaussen says it has become standard practice throughout the NSW Public Service and large companies to allocate a "welfare officer" - a workmate with some training in mediation who can be a first port of call for distressed workers. Effective in-house mediation and grievance procedures, says Gaussen, are also useful for dealing with client complaints, and for quelling internal dissent before it becomes poisonous. "Even problems with banks and insurance companies can be dealt with very effectively by mediation," says Gaussen. Barnwell encourages businesses to use mediation techniques and philosophy to help produce a template for dealing with problems and a "culture of compliance" where disputes can be dealt with early.
Businesses should be encouraged to incorporate mediation into many aspects of their business practice. says Barnwell. "Processes such as mediation could be used to enhance the quality of the working arrangements between parties and to enhance team performance," she says." It's important in business to create a climate in which joint problem-solving is encouraged, before it becomes a dispute and to design contracts which give expression to a balanced working relationship, rather than winning a lawsuit" According to Robyn Gaspari, director of the Conflict Resolution Network Community Based Projects, there is a great deal that managers can do to help with the evolution of a conflict averse workplace. "Managers need to place greater emphasis on managing the people and not just the business," she says. "It's important that they learn to defuse tense situations before they become costly and people get hurt. Being seen as an effective problem solver gives managers increased respect. They are in a position to set a precedent of early intervention of problems. This is ultimately good for the business"
Managers can also help alleviate conflict by clearly publicising the expected standards of behavior in the workplace, be open in their communication with their staff, encourage co-operation, make sure that there are grievance and follow-up procedures in place. Rewarding both individuals and teams and encourage a good social relationships pays off, according to Gaspari. "What's important is not the conflict itself, but how it is handled," says Gaspari. "Dealing with conflict constructively gets issues out into the open where they can be dealt with rather than festering. Tackling a problem builds trust and rapport because people are talking to each other in a more open and honest way and will understand each other a lot better."
The processes of mediation is about addressing the cause of the problem and changing the way people have been behaving, (usually a communication breakdown) rather than just dealing with the symptoms. Long-term success requires people learning to change the way that they have been interacting, and feeling confident about dealing with problems before they explode into tears, temper tantrums or deathly silences. "Mediation is an opportunity to turn away from the past, re-define relationships - and take control of their future. People feel an amazing sense of achievement when they have solved their own problems," says Gaussen. "In contrast to litigation, it's common for both parties to feel good about the process and the outcome. Mediated agreements make it tougher for people to walk away from their own stated commitments." Gaussen's statement is backed up by empirical evidence which confirms that mediated agreements enjoy much higher rates of compliance. Becoming skilled in conflict resolution and mediation has many personal and professional advantages. As well as learning how to manage conflict and other stressful situations, it teaches people to be more cooperative, to communicate and work better together.
Graham believes mediation skills are particularly useful for people who spend a lot of time in meetings. "It teaches people to identify issues, effective listening and good time management skills," he says. He believes managers and business people of all persuasions can benefit from these skills. These "preferred behaviors" are becoming increasingly esteemed within the business community and a trend is emerging for executive and managerial position advertisements to specify this requirement. "Mediation isn't a panacea for all ills," stresses Graham, "proper evaluation of the problem is essential." Conflict resolution and mediation only has a chance if both parties genuinely want change and a solution to the problem. Where the most important aspect of a dispute is a point of law or justice, or protection of a parties rights then mediation is not appropriate, says Tidwell. Cases involving abuse, harassment and blatant breaches of the law are beyond the scope of mediation, he says. There is a danger that the party with the least bargaining power or lesser resources is pressured into accepting a solution. Sometimes mediators are unaware of new developments in the law and disputants who are unfamiliar with their rights may give away more than they should, warns the ACCC.
However parties always have the option of pursuing legal proceedings if they aren't satisfied with the outcome of a mediation. "Usually, there's a tangible sense of relief and satisfaction after a successful mediation," says Gaussen. "People become very empowered by solving their own problems."
Perhaps the day will come when people will say "See you in mediation", rather than the potentially destructive threat "See you in court".
These organisations run well regarded courses in conflict resolution and mediation. Mediate Today (02) 9223 2255. Relationships Australia (02) 9327 1222. Conflict Resolution Network (02) 9419 8012
Strategies to defuse tense situations
Some basic pointers and attitudes suggested by Robyn Gaspari of CRN
* Don't make assumptions, or act upon these. Do a reality check and determine the real problem
* Become a more active listener - ask questions to clarify meaning and motives.
* Learn to respond rather than react to a problem/tension. Manage and control your responses - maintain ownership, remain an active part of decision making regarding where situation is heading.
* Become more self-aware and more aware of others. Know what "presses your buttons " - and theirs.
* Be assertive - Learn to express and maintain ownership of you thoughts and needs without criticizing or blaming others. Clearly describe how you would like things to change.
* Develop empathy - the ability to appreciate the other person's position on the issue and the reason for them feeling like they do. This doesn't mean that you have to agree with them.
* Keep emotions in check - deal with them in appropriate context
* Be very careful with your language : don't use "loaded" language which blames, is critical and is likely to make the other party defensive
* Separate the issue or offending behavior from the person.
* Define issues/requests in terms of "I need" rather than "I want"
* Set up a time and place for dealing with problems which is suitable to both parties.
* Encourage others to co-operate, structure discussion so they don't "lose face."
* Develop options for a mutually beneficial outcome together
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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