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Understanding Alternative Dispute Resolution

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making the lives of HR professionals and business

Alternative Dispute Resolution (ADR) has been around for a long time. In its simplest form, ADR is a negotiation between parties to come to a mutually beneficial outcome.

As you can imagine, negotiation has probably been around ever since humans evolved into social creatures. These social, or communal structures, carry with them a need for effective dispute resolution skills and processes in order to preserve order and relationships.

The Objectives

1. Preserve the relationship.
As stated above, one of the key objectives of any dispute resolution process is the preservation of the relationship between the individuals or groups involved in the dispute.

This is important if the two parties must continue to interact on an ongoing basis. In an employer/employee relationship, this may be the most important objective. If further contact is not necessary, this may be a less important goal.

We as managers can always ignore conflict or deal with it arbitrarily. However, we should always be aware of the quality of our decisions and the outcomes. For example, there are certain processes and rituals that are performed on a regular basis, that by their very nature create a conflictive relationship.

One of these rituals is the annual performance review. This is where managers sit down with their subordinates, and tell them how well (or not so well) they performed over the past review period. By the very nature of the process, there is potential for conflict. This potential is found in the root cause of conflict; differing perceptions on roles, values and information as well as a power imbalance. Good managers are aware of the potential for conflict, and minimize the opportunity through the use of conflict management tools.

2. Fairness.
There is also a moral objective in resolving conflict. The moral objective includes a quest for fairness. This is sometimes difficult, due to the potential for power imbalances between the parties. The potential power imbalance may create a situation where one party can impose their views, values and preferred outcomes on the other party. The potential for a power imbalance creates a need for a process that allows for mutual gains outcomes. This point is important from a management perspective. If we require our employees to agree to the use of an internal (and private) mediation/arbitration of disputes that arise from the employment relationship, then we have an obligation to ensure fairness.

The definition of conflict carries with it a connotation of the importance of power and fairness. Conflict is present whenever one party takes a position, which is incompatible with the other party’s position. The party with the most power would always win, even if the outcome were immoral, or unfair. Examples of unfair and immoral outcomes are not hard to find, whether we look to world history, or the bully in the playground.

The process and structure of ADR, then, should have fairness as one of it’s objectives. Fairness will depend on the value of the resolution placed on it by the norms of the disputing parties and society.

3. Clarification of the issues.
Dispute resolution process should facilitate clarification on the issues around the dispute. In order to craft an outcome of the highest quality, it is necessary to clarify the issues in order to reduce or eliminate misinformation and misinterpretation between the parties. Each party should be allowed to talk free from interruption or evaluation. The ability of the process to facilitate the free flow of information will affect the quality of the outcome.

For example, if we as managers are faced with an employee who is chronically late, we could decide to discipline them in accordance with company policy. This choice may not lead to the best outcome, however. Another choice may be to engage the employee in a discussion on why they are always late. We need to be aware that the situation may involve an embarrassing personal problem. Only through non-evaluative open discussion will the true cause be found, and the lateness issue properly addressed.

4. Creativity.
The alternative dispute resolution process should have as one of its objectives, the ability to craft a creative solution. As pointed out in number three, when you expose the true issues by exploring and clarifying, you will be able to craft a solution that is truly creative, fair and preserves the relationship.

Creativity is influenced by the quality of the information available. You cannot be creative if you don’t have colors on your pallet. Without colors on your pallet, you will tend to imagine outcomes that may not be based on reality.

Using our lateness example, it is easy for us to imagine the reasons for a person being consistently late. We may take our initial perceptions and internalize them as being a direct threat to us personally. A better (though not easier) approach is to clarify the issues and be creative at finding a solution.

Conflict promotes creativity, either to gain competitive advantage, or to preserve the relationship. The presence of conflict implies the presence of a relationship, the intensity of which may stimulate creativity.

5. Participation.
Building on what has been discussed so far, I hope it is plain to see that we are creating a process that allows, and in fact, institutionalizes participation by the parties in a dispute. The participation should be comprehensive, open, honest, creative and perhaps voluntary. By participating, the parties will have ownership of the outcome. Through ownership of the outcome, they will be more likely (and dedicated) to implementing the outcome.

Therefore, our late employee, will be more likely to abide by a creative solution, partly based on their input, than one that is unilaterally imposed by their manager.

6. Mutual Satisfaction.
Participation in the outcome (decision), leads us to our next objective of an ADR system. This objective is to create and promote mutual satisfaction with the decision (resolution). Given all of the points above, you can see (and hopefully feel) that we are building momentum. It is all well and fine to have participation, fairness, clarification and creativity in problem (dispute) solving, but if both parties aren’t satisfied with the outcome, then we still have a conflict.

If after we listen to the reasons why our employee is late, and we clarify our point of view, and theirs, and they suggest some creative ways to solve the problem, we then simply impose our unilateral solution, the individual will not be as committed to the fix.

7. Dignity.
Any dispute resolution process should allow the parties to maintain their dignity through the use of due process. Due process will allow the parties to be heard and have their points of view acknowledged. Due process allows for the venting of positions in a non-evaluative climate. Venting should not be allowed to become disrespectful, however. The process of venting, or getting it off one’s chest, can have a therapeutic result. Pent up emotions are harmful and the act of declaring positions may be helpful for moving towards a resolution.

Dignity is also preserved through the participation of the disputants in creating the resolution. Through the fulfillment of the above objectives we allow all parties to save face and walk away satisfied with the outcome.

8. Cost Effective.
The final goal of a dispute resolution process should be cost effectiveness. Cost effectiveness results in a more efficient process and higher quality outcome that the parties are more committed to. Other cost savings could be realized through reduced employee turnover, higher quality managers and higher quality decisions.

In a corporate setting, the avoidance of one lawsuit may be worth the time, effort and cost in designing and implementing an internal ADR system.


If Alternative Dispute Resolution Systems are built with the above objectives in mind, the system will be of high value and result in cost savings. The value of the system will be illustrated by the value of the outcomes, and the preservation of relationships.

Of course the overall goal should be to minimize the use of, and need for, the ADR system. I feel that by training managers on the importance of the above objectives, we will inadvertently create better managers who have the communication skills, and dispute resolution knowledge needed to identify and effectively deal with situations before they escalate into disputes. We end up with a value adding system, higher quality managers, and better decisions and outcomes based on mutual gains.


This article was provided by is a website committed to making the lives of HR professionals and business managers easier. offers eight communities to address the specialties within human resources, including a section on Conflict and Dispute Resolution in our Labor Relations community. Within each community, users can access articles and research, find vendors/consultants, buy products or services and join discussion groups to learn from their peers.


Bob Delaney

Bob Delaney's outgoing and consistently positive attitude tends to irritate non-morning people, especially before their coffee. As well as being a Knowledge Manager at, Bob is an Academic Instructor at a local college where he teaches in the Post-graduate Diploma Program in Human Resources Management. His academic credentials are… MORE >

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