Do We Need Processes of Dispute Settlement in Managing Today? : The Engaging Issues

EFFECTIVE EXECUTIVE OCT.2009

STAYING ON TOP ALWAYS

Do We Need Processes of Dispute Settlement in Managing Today? : The Engaging Issues

-- Chris Rowley, Hee-Dong Yang, Sora Kang, Sun-Dong Kwon

Three main types of dispute resolution processes have been distinguished and outlined. However, in practice the dividing line between dispute resolution processes is less robust, rather it is thin and hence, easily blurs.

In the post-2006 global `credit crunch' and economic downturn situation with its commensurate impacts on business and employment, it may seem to many that managers can more easily and blithely assert their prerogative and take hardline `take it or leave it' positions in negotiations and while dealing with staff. Hence, there is no need for ways to resolve disagreements and disputes as they will not occur. In any case, it may be argued by some people that with enough time and goodwill, all disagreements and disputes can be settled and resolved.

However, the above situation and scenario may not always occur. If neither side can walk away, as is often the case with the high costs to both sides that would be incurred, the disagreement or dispute needs to be resolved. Therefore, dispute settlement and its processes can be seen as anassisted continuation of negotiation and related to conflict – they are an intervention process and adjunct to collective bargaining (Rowley, 2002a; 2002b). From a unitary perspective, dispute settlement may be viewed as irrelevant (Rowley, 2001a; 2001b). However, one inherent outcome of managing people from a pluralist (or radical) perspective, is conflict (Rowley, 2002c). Of course, there can be a range of conflict types, but here we are more concerned with the more formal and visible forms. Once this type of conflict, leading to a dispute, occurs, some sort of settlement and resolution will be needed.

If informal and internal ways to settle disputes fail, there is a stalemate or an impasse is reached; then resorting to varied forms of more formal processes may be usefully considered. Again, such processes can be internal, or externally, facilitated and also range from ad hoc to more permanent systems and from voluntary to prescribed and compulsory, even as parts of procedural agreements. However, while some disputes can be handled by law or labor courts, others require assistance from intervention by a neutral, third party in processes such as conciliation, mediation and arbitration.

Indeed, there can be publicly supported and funded systems of dispute resolution. These supports vary between, and have a long history across, countries, sectors/industries and times, with varied preference for certain types and levels of voluntary vis-à-vis compulsory elements over time and juncture (i.e., wartime) of each type.

In the UK, for example, there was an early 19^th century system of compulsory and binding arbitration. The 1896 Conciliation Act then allowed government appointed arbitration (voluntary, except during wartime) to settle disputes. From 1919 onwardsthe Industrial Relations Court has been used by government to refer disputes to, if both sides agreed. Renamed the Industrial Advisory Board in 1971, this body was replaced by the Central Arbitration Committee (CAC) in 1976. The independent, government-funded, Advisory, Conciliation and Arbitration Service (ACAS) can appoint arbitrators or refer matters to the CAC. ACAS remains the UK's main provider of dispute settlement assistance of the types in its name. Similar ideas of state-encouraged dispute resolution systems can be found in other parts of the world, for example, from the US, to Australia and Switzerland and Ireland.

Varied Intervention Types

The main types of dispute settlement process can be seen on a spectrum, ranging from conciliation at one end, with mediation in the middle and arbitration at the other end. These can be seen diagrammatically in Exhibit I. While each of these types of intervention involves neutral, mutually accepted third parties, but who these are, what they do and the type and `strength' of intervention, discretion, and so on, all vary, as shown in Exhibit I.

Conciliation

Conciliation is a process that involves independent, neutral third parties acting as messengers and interpreters in identifying causes of differences and the relative significance and importance (from `easily traded' to `deal breakers') of issues and positions of both parties in order to help develop ideas and mutually acceptable solutions. Agreement to any possible solutions remains the parties' own joint decision as conciliators do not, per se, impose or recommend solutions. Provision of conciliation may be from private or public facilities. In the UK, the best-known supplier is ACAS. Conciliation is undertaken by its full-time staff, almost all civil servants. This UK system is voluntary and arises via the parties' requests, procedural agreements or ACAS volunteering its services, in disputes.

Chris Rowley is Professor of Human Resource Management at Cass Business School, City University and Director of the Centre for Research on Asian Management, (www.cass.city.ac.uk/cram/), editor of the leading journal Asia Pacific Business Review and series editor of `Working in Asia' and `Asian Studies'. Rowley is well known and highly regarded in the area, with visiting appointments at leading Asian universities and several journal editorial boards. He has given a range of talks and lectures to universities and companies internationally; has research and consultancy experience with unions, business and government; and his previous employment includes varied work in both the public and private sectors. Rowley researches in a range of areas, including international and comparative human resource management and Asia Pacific management and business. He publishes very regularly and widely, with over 280 articles, books and chapters and other contributions (www.cass.city.ac.uk/research/faculty.nsf/c.rowley). Hee-Dong Yang is an Associate Professor and Director of Management Research Center in the College of Business Administration at Ewha Women's University in Korea. He has a Phd from Case Western Reserve University in Management of Information Systems. Earlier, he previously was an Assistant Professor at the University of Massachusetts-Boston. His research interests include B2B transactions, mobile business, adoption of information technology, organizational impact of information technology, team mental model, and strategic use of information systems. His papers have appeared in Information and Management, Decision Support Systems, Journal of Strategic Information Systems, European Journal of Information Systems, International Journal of Human-Computer Studies, International Journal of Electronic Commerce, Journal of Information Technology Management, and Human Relations and also have been presented at many leading international conferences (ICIS, AMCIS, HICSS, Academy of Management, ASAC). Sora Kang is an assistant professor at Hoseo University. She has a Phd from Ewha Womans University in management information systems. Her current research interests are focused on information technology acceptance, organizational impact of information technology, and knowledge management in organization. Sun-Dong Kwon is an Associate Professor in the College of Business at Chungbuk National University in Korea. He has a Phd from Seoul National University in Management Information Systems. His research interests include: Supply Chain Managment, User Participation in Internet Community, and National Culture. His papers have been published in the British Journal of Management, Journal of MIS Research, Information Systems Review, Journal of Information Technology Application and Management, and A Journal of the Korean OR and MS Society.

Mediation

Mediation is a process that involves an independent, neutral third party assisting parties to resolve differences and come to some agreement and end the dispute. Mediation is more proactive than conciliation as mediators may now suggest their own ideas and proposals for a resolution. However, such solutions are non-binding on the parties. The parties may accept, reject or alter the ideas and proposals in solutions. In the UK, such mediators are drawn from an ACAS list, whose members are often academics.

Arbitration

Arbitration is the method and process of resolving disputes by referring them to an independent, neutral third party, with both the parties having agreed beforehand to abide by the arbitrator's decision for settlement. Basically, the arbitrator(s) hears the arguments of both sides and before deciding on the issue.

Arbitration is often criticized because of certain tendencies it may engender and encourage. One of these is the `flip-flop' effect, with decisions being awarded alternately to one side and then the other, each time when a dispute is referred for arbitration. This switching is irrespective of the merits of the particular case on a particular occasion and is an attempt to maintain the image of arbitrator neutrality and impartiality.

Another detrimental tendency is to `split the difference' in decisions, which encourages more intransigence and extreme positions in offers and demands from both sides and a seemingly even wider gap between the parties' positions. Therefore, only the lowest offers and highest demands from each side are given and tabled as both parties know that while these `extremes' will not be agreed, it may maximize the median and `real' result if the demands and offers are split in arbitration. Thus, the parties' `real' positions are not clearly set out by either side.

Some possible solutions to these issues of `splitting' decisions have been developed. One such example is the so-called `pendulum arbitration' which only allows arbitrators to choose between each side's final offers and demands in their entirety with the `splitting'. An additional benefit of such pendulum arbitration is that this method encourages less extreme positions in the parties' final offers and demands before they go to arbitration as neither side can afford the risk of being seen as `unreasonable' as this will not attract the arbitrators decision (ie., the `pendulum') their way. A further by-product of this moderating influence is that in turn this psychology can encourage voluntary dispute settlement as parties will be closer together in offers and demands before actually going for arbitration.

Yet, there are issues and problems with pendulum arbitration, not least that the decision implies that one side is totally `right' and the other side is totally `wrong' in a dispute in all the offers and demands. Critically, the system does not allow for classic negotiating, with its trade-offs and compromises over issues between parties. There is rarely a simple choice between offers and demands, but rather complex packages and also with conflicting views and evaluations of any data used and presented (Kennerly, 1994), as `the facts' often `do not speak for themselves'. In sum, "the `winner takes all' concept underlying pendulum arbitration is incompatible with the principles of compromise and flexibility underlying the negotiation process…" (Salamon, 2000:485).

Three main types of dispute resolution processes have been distinguished and outlined. However, in practice the dividing line between dispute resolution processes is less robust, rather it is thin and hence, easily blurs. For instance, the process of mediation may be similar to conciliation, or it may be more formal and similar to arbitration, except with no final binding award.

Issues for Management

There are several key, often conflicting, issues and considerations around the dispute settlement and its processes for management and business. See Exhibit II.

Nevertheless, despite these issues, the benefits of such processes in dispute settlement are obvious. After all, disagreements and disputes will need to be settled and resolved as amicably and agreeably as possible in some fashion.

Also, some amicable and 'see as fair' settlement is needed to avoid festering resentments and future disputes from erupting. Given this, dispute resolution will remain important for management.