Resolving Intra-Organization Conflicts

A look at using mediation/arbitration techniques for

resolving intra-organization disputes.
Jeffrey Schieberl, JD

Intra-organization disputes are certainly not a new phenomenon. However, the manner in which
some organizations are resolving them represents both a marked departure from how such
disputes have been traditionally addressed and certainly a novel application of some established
mediation/arbitration techniques. It is widely acknowledged that intra-organization disputes can
negatively impact an organization in significant ways. These disputes can reduce productivity,
harm morale, and diminish an organization’s stated goal of hiring and retaining the best qualified
and most competent employees. Often used in litigation, mediation/arbitration techniques are
increasingly being utilized by organizations to manage the challenges presented by intra-
organizational disputes. This article provides an overview of some of these mediation/arbitration
techniques.

Disputes in the Workplace

The very nature of many business activities breeds disputes. In many instances an employee will
avoid actual or perceived conflict until the situation seems to be unmanageable. Something akin
to an obsession as to how to resolve the conflict may lead to an inability to focus upon one’s job
duties and responsibilities. Such an impasse certainly negatively impacts productivity and can
increase absenteeism as well as employee turnover.

Business organizations increasingly rely upon established, but modified dispute resolution
techniques to provide a structured approach to identify and resolve workplace conflicts that have
become disputes. Sandra Gleason notes that conflict between employees is oftentimes the result
of social interaction. Workplace interdependence and such things as job frustration, personality
characteristics, differences in culture, race, values, gender, personal preferences, and social status
can cause conflicts.[1]

One study that focused upon sources of interpersonal conflicts in the workplace found
approximately 62 percent of the primary issues that result in “conflict between subordinates and
supervisors” derived from issues such as goal conflict, rejection of employee input, vague task
assignments, performance evaluations, work scheduling, and workloads. The same study found
that approximately 61 percent of the primary issues that generated “conflict between co-workers”
concerned personalities, workload allocation, goal conflicts and ethics concerns. [2] An
employee who is in conflict with a supervisor is generally inclined to discuss the conflict with
the supervisor. However, an employee who is in conflict with a co-worker is more likely to avoid
the co-worker and not address the conflict.
For example, at Company A, Mary Smith, an accounts payable clerk, has the responsibility of
reviewing and reimbursing John Brown, a sales representative. Brown must provide Smith with
properly documented reasonable business expenses he incurs on behalf of the company. Ms.
Smith recently did not reimburse Mr. Brown for all of the business expenses that he had
incurred. She took the position that he had not properly documented some of the expenses for
which he was seeking reimbursement. Mr. Brown became angry at her refusal to reimburse him
for all his incurred business expenses and confronted her in the presence of some of her co-
workers. After the unpleasant experience and in an effort to avoid any further unpleasant
experiences, Smith routinely reimbursed Brown for any and all of his business expenses
submitted. Reimbursement was provided regardless of whether or not the submittals were
properly documented.

In this example, Company A may be reimbursing John Brown for business expenses that are not
properly documented, perhaps not even incurred. Hurt and embarrassed by the confrontation
with Brown, Mary Smith may be less effective in her job of reviewing expense report submittals
and inclined to allow John Brown to engage in conduct that violates company policy. If the
company had an intra-organization dispute resolution policy that encouraged or required the
resolution of disputes such as that between Smith and Brown, the avoidance strategy adopted by
Ms. Smith could be replaced by a cost effective application of mediation or arbitration
techniques that would resolve the conflict.

Alternative Dispute Resolution (ADR)

In a Harvard Business Review article regarding alternative dispute resolution, Todd Carver and
Albert Vondra explore the application of mediation and arbitration techniques to inter-
organization disputes. They state that “Back in the 1980’s experts and executives alike heralded
alternative dispute resolution (ADR) as a sensible cost-effective way to keep corporations out of
court and away from the kind of litigation that devastates winners almost as much as losers.” The
way to resolve inter-organizational disputes had traditionally been to litigate. The authors go on
to point out “…but the great hopes for ADR faded quickly.” [3]

It is interesting that what some argue has been less than a success in resolving “inter-
organization” disputes in a cost-effective manner is viewed as a significant success in resolving
“intra-organization” disputes in a cost-effective manner. Unfortunately, ADR far too often
simply replicates the litigation process. ADR is cost-effective because it generally takes less time
to resolve disputes than does traditional litigation. Arbitration is often characterized as an
adjudicated procedure that allows the parties to put forth formal legal arguments and engage in
discovery such as interrogatories and depositions in an effort to develop factual evidence. There
are costs associated with such efforts.

Mediation

In an HR Focus article, Peter Philips considers reasons to mediate intra-organization disputes. He

cites a panel of 71 employment law practitioners and experts who at an Institute for Dispute
Resolution meeting prepared and released a report urging that mediation be utilized by business
organizations to resolve employment or intra-organization disputes. The panel’s conclusion was
that “When effectively communicated to employees and properly managed, a procedure of
mediating workplace claims can yield quick, inexpensive, and just resolutions in a confidential
and respectful manner.” [4]

An increasing number of business organizations are opting to resolve intra-organization disputes

by mediation. Cost is one factor. Mediation is far less costly than arbitration or litigation. Philips
references a study that found the median cost of intra-organization mediation was $2,750 while
the median cost of intra-organization arbitration was $11,800.[5] However, mediation cost
savings are not solely monetary.

Mediation generally requires significantly less time than does arbitration. Intra-organization
disputes are often emotionally charged. Mediation is regularly referred to as the least hostile and
most effective way to resolve intra-organization disputes. This claim is reflected in a 1998 study
by the Cornell/PERC Institute on Conflict Resolution that surveyed 600 of the Fortune 1000
companies and found that 87 percent of those companies responding had used mediation and that
63 percent of corporate counsels surveyed preferred mediation.[6]

Mediation is a cost effective measure that utilizes proven methods. The mediator serves as an
objective, neutral third party in the dispute resolution efforts. The mediator is not delegated the
authority to render a judgment or otherwise resolve the dispute. In general terms, the mediator
facilitates discussions between the parties that address their respective needs and concerns.

Established mediation techniques require all employees embroiled in a dispute be responsible for
making a meaningful contribution to the resolution of the dispute without addressing fault. The
employees must be coached and trained relative to using appropriate and effective language and
the requisite skills necessary to communicate clearly and to discover viable solutions. Such
training is generally provided by an experienced mediator.

Arbitration

Arbitration of disputes is somewhat different. The arbitrator is delegated the authority to render a
judgment or otherwise resolve the dispute. In some business organizations arbitration follows an
unsuccessful mediation. In other business organizations there may be no mediation effort, and
intra-organization disputes are resolved by relying solely upon arbitration techniques.

Arbitration of intra-organization disputes is generally a more formal process than mediation. The
outcome of arbitration can be binding upon one or both of the parties. Furthermore, there may be
no opportunity to appeal an arbitrator’s decision, including its merits. For these reasons as well
as others to be considered later, arbitration is often viewed as less attractive than is mediation as
a means for resolving intra-organization disputes.

Dispute Resolution Practices

In any event, a conflict must be understood to be a dispute before any appropriate resolution
measures can be implemented and the dispute resolved. Business organizations that have adopted
mediation/arbitration techniques for the resolution of intra-organization disputes generally
include an agreement to take part in dispute resolution practices in the event of disputes as
something akin to a condition of employment. These techniques are often referenced in the offer
of employment, and a new employee must acknowledge their understanding that intra-
organization disputes will be addressed by utilization of mediation/arbitration techniques and
agree to participate in all such efforts. Use of such dispute resolution techniques is also often
presented to existing employees as a condition of continuing employment.

Companies are more frequently providing training for employees relative to intra-organization
disputes. The training is comprised of two components. First, employees are trained how to
identify conflicts that are appropriate for mediation/arbitration. Such conflicts generally involve
ethical issues, violation of company policy, and/or conduct that interferes with one’s abilities to
meet one’s job duties and responsibilities. Second, employees are advised of the requisite
procedures to follow—i.e., whom to advise of the conflict.

Many employers are learning from sexual harassment cases that it is imperative that employees
have a clear understanding of conflict reporting procedures. Company policy may require that
the employee report the conflict to their immediate supervisor or manager. However, if the
conflict in question is between the employee and an immediate supervisor or manager, as can be
the case in sexual harassment policies, there must be alternatives.

http://gbr.pepperdine.edu/052/conflicts.html