• November 2018

Using mediation for workplace conflict saves time and money

The simple truth is this: mediation works. It saves an organization time and money, and it is not something that should only happen when a formal Equal Employment Opportunity Commission or other complaint or lawsuit has been filed. Indeed, studies have shown time and again that the closer to the origin of the conflict or dispute matters can be addressed, the higher chances there are to save both time and money and the better the chance to arrive at a resolution that everyone can live with.

Many of you may question whether an employment related charge will ever be filed against your organization. As of 2014, U.S. companies had at least an 11.7 percent chance of having an employment related charge filed against them. For those with a business presence outside of South Dakota the percentage increases, dramatically in some states - 40 percent in California, 47 percent in Nevada and for some reason a whopping 66 percent in New Mexico.

And when that employment related charge goes "legal," the cost goes up. The cost of conflict to an organization is high, both from a monetary standpoint and time the organization spends in dealing with it. Defending an employment-related lawsuit can easily exceed $100,000 in legal defense costs alone. A 2010 RAND Institute study estimated an average cost to defend of $150,000. While employment practices coverage (commonly referred to as "EPL" coverage) is fairly common these days, many cases (an estimated 81 percent by some sources) result in no payment by the insurance carrier. In other words, it is the employer's deductible/retention money that is the first to go towards resolution or defense costs under many policies. The time spent by HR and other upper management in dealing with the matter can be staggering and have significant impact on the overall productivity of the organization. The average duration of an employment matter has been estimated to be 275 days.

The good news is that the vast majority of organizations recognize the cost-control effectiveness of alternative dispute resolution – a number on the rise since 1997, according to a study by Cornell University and Price Waterhouse. Nearly 90 percent of organizations responding to the 1997 study reported having used mediation as a means of resolving conflict in the prior three years. In addition to saving time and money, organizations have learned that allowing parties to resolve disputes themselves, with the assistance of a mediator, preserves good working relationships, results in more satisfactory settlements, and was all-in-all a more satisfactory process to the participants.

Trained HR professionals can, do and should mediate disputes in the workplace. Workplace dispute mediation is expected by the Society of Human Resource Managers and other professional trade organizations. Hardly a day goes by in many organizations where an HR professional does not handle personality conflicts between employees, issues involving poor (or no) communication, strong emotions, misunderstandings, employee leave, and benefit and pay issues. Many organizations have dispute resolution policies which govern when, how and who is to handle internal workplace conflict. In the absence of such a written policy there will still be times when an outside mediator should be hired by the organization to attempt to resolve the dispute.

When should an outside mediator be brought in? Perhaps most fundamentally when one of the participants to the mediation objects to HR handling the resolution of the dispute. Mediation is a voluntary process between the participants and when one participant refuses to allow HR to mediate, then it is time to see if an outside mediator would be a viable alternative. Some of this can be avoided through proper wording of a dispute resolution policy giving HR the first opportunity to resolve the dispute. Another situation would be when HR cannot be balanced, or neutral, due to an obvious conflict of interest, or when HR's impartiality is called into question on the particular matter at issue. Perhaps most importantly are those situations which have triggered the organization's legal duty to investigate the complaint, or when the complaint/ dispute is between the employee and the organization as opposed to a dispute between two or more employees. In those situations, the organization is better off enlisting the services of an outside neutral mediator to work towards an amicable resolution of the conflict.

Every organization regardless of size should consider mediation as a means to resolve workplace conflict before it enters the realm of the legal world. The organization's bottom line will benefit as a result.


Michael S. McKnight is a Partner at Boyce Law Firm, L.L.P. He is an AV Preeminent rated lawyer, a 2016 inductee in to the National Academy of Distinguished Neutrals and has developed an active and growing practice as a mediator of all types of disputes. McKnight has been named Sioux Falls Best Lawyers Employment Law in 2014, 2015, 2016, 2017 and 2018 and recognized by Great Plains Super Lawyers. He is also an Arbitrator - American Arbitration Association (AAA) and on the AAA approved mediator list.

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