Understand Why Alternative Dispute Resolution Is Important For Business Success

Businesses thrive based on the collaborative efforts of various teams and departments with different projects, management styles, and other factors. Inevitably, even the best teams disagree from time to time. Regardless of whether your team is present in person or working remotely, conflicts can arise. This is where dispute management techniques can help your organization to save time and money that is spent when conflicts are not effectively managed. 

There is no doubt that conflicts cost organizations hunderds of millions of dollars per year. Picincu estimates that conflicts cost American companies more than $300 billion per year.1  These cost take on a variety of forms from diminished work performance and low employee morale to loss of revenue and the negative impact conflict has on employees’ mental health. 

What Is Dispute Resolution?

Whenever a conflict arises in a business of any sort, dispute resolution is used to help address it. The term dispute resolution refers to companies' specific methods and approaches to resolve disputes. 

It includes various dispute resolution methods and approaches, ranging from prevention to tribunals and court processes.

Disputes can be between:

    • Individuals (e.g., dispute over a shared space)

    • Teams (e.g., the deadline for a project)

    • Companies (e.g., an employee disagrees with an employer)

These parties try to deal with the situation and resolve them through various options, including:

    • Addressing it on their own (employees try to resolve the issues)

    • Managers and human resource professionals employ dispute resolution techniques

    • Involving a third party (e.g., contract with a private mediator)

    • Use a government-provided process (e.g., a mediation service by government, ombudsman, or tribunal)

At times it may be appropriate to resolve the dispute through the formal court system, especially when other options have been exhausted.

Types Of Dispute Resolution Approcoaches

There are four basic types of dispute resolution methods that a business can consider. First, however, you need to recognize the dispute and implement the right resolution strategy. Here's an overview of dispute resolution approaches.

1. Negotiation

A negotiation is any time two or more people have to come to an agreement or to make a decision. The authors of Getting to Yes define negotiation as ““back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed.”2

Negotiations happen more frequently than many of us realize. Each time your team is making a decision, that is a negotiation. Whenever you are working with another company to complete a project, that involves a great deal of negotiation. 

2. Mediation

In mediation, a neutral third party aims to help the parties at a dispute, agree independently through mediation. Instead of imposing a solution on the disputants, a professional mediator works with both sides and explores their common interests to help them establish peace.

It is beneficial for disputants to come to terms through mediation as it allows them to vent their feelings and discover their issues. The mediator might have to work with the parties together or separately to help them to craft a sustainable solution.

3. Arbitration

Arbitration involves a neutral third party who provides a solution to the disputants.  The arbitrator hears each party's arguments and considers relevant evidence. After that, the arbitrator renders a decision in favour of one party or the next. 

Like mediation, this process is more cost-effective than litigation. Also similar to mediation, arbitration is generally a voluntary process. Arbitration is often less formal than a court system and allows the parties some flexibility around how the process is structured. The process was developed as a binding process but can als be non-binding. 

4. Litigation

People are more familiar with this type of dispute resolution. Civil litigation is usually carried out in front of a judge and sometimes a jury, where a defendant stands against a plaintiff.

The evidence is presented before the judge or the jury responsible for evaluating them and making a ruling. Public records hold the information that is exchanged during these hearings and trials.

The primary role in litigation lies with the lawyers, who often can come up with a settlement agreement in the period before trial where they discover and prepare the case.

Why Dispute Resolution Is Important

Dispute resolution is significant for any organization since a dispute can be expensive, damaging, and time-consuming. In addition, it can negatively affect communities, individuals, government, organizations, and the economy. For example, in the United States employment disputes alone cost around $440 million per annum. 

How an organization handles or resolves a conflict affects employees' confidence in the company, its services, and ethics.  Hence, if you can prevent and resolve disputes at an early stage effectively, you can save your business a great deal of time and money. 

Business Benefits Of Alternative Dispute Resolution (ADR)

There are several benefits of implementing dispute resolution in your company:

    • Cost-effective: ADR techniques like prevention, mediation and arbitration are more cost-effective than litigation. That is because dispute resolution is preferred to be kept outside of the courtroom at its early stages. So, you wouldn't have to pay court fees or any related costs when you go through arbitration or mediation.

    • Flexibility: ADR gives you the flexibility to decide the terms of the agreement, meet on the date and place that you prefer, etc. Moreover, both parties can determine how to move the process forward.

    • Time-effective: If you choose to settle the dispute through a traditional litigation strategy, it will take many months or even years to complete. ADR allows the parties to come to resoluions more efficiently than in traditional court processes. These efficiencies allow businesses to move forward with operations after the issue has been resolved. 

    • Confidentiality: Unlike litigation, when you choose ADR, you can make your way through complex issues without fear of tarnishing your brand or reputation. Agreements made in negotiation, mediation and arbitration can remain confidential between the parties versus the public nature of litigation.

    • Successful Outcomes: Alternative dispute resolution is tremendously successful, according to the report of the U.S. Department of Justice dispute resolution helped resolve 71 percent of all business disputes in 2015. This does not guarantee success, but it does increase the likelihood getting an outcome that both parties will be satisfied with. 

Conclusion

Disputes are a unique as the parties involved with the disputes.Be mindful of the strategies you implement to resolve those disputes and the potential impact on your organization.   

Having the assistance of an experienced professional to help with your conflict resolution needs can save your organization time and money.  Consider building your organization’s conflict resolution capacity through alternative dispute resolution training.