Mediation In The Boardroom

The management of conflict at work probably represents the biggest unrecognised area for cost savings and market differentiation for organisations today. There is a proven business case for managing conflict at work. To date though, suppliers of mediation services have had limited success in persuading executives to fully engage adopting mediation and conflict resolution strategies. There are a few reasons for this.

First, it can be easy to ignore, avoid or simply put off dealing with conflict. It is one of those matters that require a large amount of energy and effort to deal with. It is often much more convenient to do something else. Secondly, acknowledging that conflict is present can be seen as recognition of failure. Few people, particularly senior managers want to be associated with failure. Third, some problems can go away quickly if you throw money at them. This is far easier to do in the private sector and probably explains why the public sector accounts for around 75% of the revenue related to the workplace mediation market. It also probably demonstrates why three quarters of disputes going to Employment Tribunals are linked to the private sector. Fourth, is a lack of understanding in the board room about how the impact of conflict affects the bottom line. Examples include a decrease in productivity, employee engagement, employee attraction and health & well-being. There is also likely to be an increase in sickness and absence rates, customer complaints, employee turnover and legal fees. On this last point, recent figures indicate the cost of legal fees continue to rise with the average company spending £5.8m on legal fees every year.

Employment Tribunal statistics for 2009/10 highlight a 56% increase in claims year on year. Three of the main increase claim areas are redundancy, breach of contract and unfair dismissal. Dealing with the effects of disputes takes valuable time of team members often meaning that they have to postpone working on value-add areas.

Tension exists at board level too. It can be a prerequisite that part of the criteria for becoming a board room member is that individuals aren’t backward in coming forward. The added dimension about conflict in the boardroom is that it can spill over to affect various parts of the organisation. For example, if team members get wind of the fact that their boss is engaged in conflict with a colleague it can mean that they take sides with their leader. In extreme cases, silos may develop as whole functions may refuse to collaborate with each other out of a sense of loyalty.

The mediation process

Mediation is a tool that increasing numbers of organisations are using to help resolve disputes. In mediation, a neutral, independent third party facilitates a process to help parties find a solution to problem. Some advantages of mediation are that:

• It’s quick – Most mediation sessions last around one day compared to 12 days to managing a case that is going to an Employment Tribunal
• It saves money – issues can be settled quickly and can avoid further direct and/or indirect costs
• It doesn’t stop you litigating – your statutory rights are not affected by participating in mediation
• It’s not soft and fluffy – mediation is hard work and can focus on pragmatic and commercial solutions

The mediation process is voluntary, confidential and without prejudice. The mediator is neutral and impartial.

Mediation has both operational and strategic dimensions. At the operational level mediation can help get parties talking again. At a strategic level, mediation can help identify organisational learning needs and reduce business risk. An example of this latter aspect can be seen as part of the costs of some of the strikes that have hit the UK recently. As well as the direct costs flowing from the disruption of a strike, an organisation may loose corporate customers forever and associated goodwill. Conflict represents a significant risk for organisations.

Mediation in the boardroom – the benefits

Operational Level

• Solves disputes
• Gives line managers their time back
• Improves customer service
• Reduces absence
• Improves team work
• Gets people talking again

Strategic level

• Helps organisational learning
• Helps form succession planning
• Improves productivity savings
• Increases the likelihood of achieving organisation objectives
• Enhances competitiveness
• Improves employee engagement
• Improves organisational health and well-being
• Can be linked to operational and financial reviews
• Compelling business case for corporate and social responsibility
• Reduces business risk

Case study

Pursar Technologies is a FTSE 250 global business. A dispute developed between its marketing director, customer service director and chief technology officer. The background to the dispute was that the customer service director sent an email to the chief executive with a proposal on direction for the company. The marketing director and chief technology officer were copied in. The marketing director replied to everyone in the email asking the customer service director to explain why he had proposed an idea about how the company should be adjusting its marketing strategy without discussing it with him first. The situation was made worse when the chief technology officer indicated that he would adopt a third marketing strategy. There was a big fall out. The chief executive decided to let the three of them sort it out. They couldn’t and eventually stopped talking to each other. They also stopped making joint visits to customers and collaborating on organisational initiatives.

Customers began to be negatively impacted and the sales pipeline started to slow down. Three months later the chief executive realised that something needed to be done about it. He engaged the services of a mediator. The mediator was locked in a room with the three executives for three hours. When the parties emerged they had agreed to put the dispute behind them. Apologies had been exchanged and it was back to business as usual. The chief executive was astonished. He was amazed that three months of stand off could be settled with a three hour conversation. He also realised that the organisation had paid a huge price for pontificating over a dispute that could have been nipped in the bud as soon as the original email had been sent.

Mediation can, therefore be a like a double edged sword. On one side it can be used to help get senior executives talking again. On another level it can be used to help build organisational capability, reduce organisational risk and increase competitive advantage.

Mediation in any organisation is unlikely to be highly successful unless members of the board understand its benefits and are willing to engage in mediation themselves when trouble strikes.

I end this article as I started. The management of conflict probably represents the biggest unrecognised area for organisational cost savings and market differentiation for organisations today.

                       

Clive Lewis

Clive Lewis OBE DL is one of the UK's leading dispute resolution specialists. He is an accredited commercial mediator specialising in helping to solve complex one on one, team, organisational, multi-party and collective disputes. He has mediated hundreds of disputes. He was an advisor to the Department for Business and… MORE >