Firm's strategic orientation shapes how it resolves workplace disputes: study
CHICAGO, Oct. 30 (Xinhua) -- Firms have increasingly looked to contain costs associated with employment conflicts or take workplace conflict out of the public eye, and this has been driven by a shift in the willingness to adopt and implement dispute resolution methods, primarily arbitration and mediation, according to a study posted on the website of the University of Illinois (UI) on Wednesday.
The researchers surveyed more than a third of the general counsels or high-ranking attorneys from Fortune 1,000 corporations about the strategic drivers for alternative dispute resolution usage, then augmented the responses with public data such as financial performance and firm size for each of the companies included in the sample.
They uncovered four latent strategic orientations, efficiency, satisfaction, sustainable resolutions or litigation avoidance, that drive firms' usage of alternative dispute resolution.
The researchers found firms that value efficiency are significantly more likely to use mediation than firms that place less emphasis on efficiency. Similarly, firms focused on enhancing satisfaction with dispute resolution outcomes are significantly more likely to use mediation than firms that attach less value to it, but a satisfaction orientation was also found to be significantly related to the frequency of arbitration usage.
On the other hand, litigation avoidance was not a significant driver of arbitration usage.
The researchers also found that a firm's sustained commitment to alternative dispute resolution predicted higher usage of both mediation and arbitration.
Much of the controversy around arbitration is that companies use it strategically to limit their exposure to lawsuits and other high-profile, high-cost disputes that have the potential to generate negative publicity.
"Since the 1970s, firms have tried to channel workplace conflict in such a way that it doesn't always end up litigated in court," said J. Ryan Lamare, a professor of labor and employment relations at UI. "Litigation is very expensive, there's a lot of uncertainty around the process, and it can be very damaging to relationships between employees and managers."
"Arbitration is a quasi-judicial process that is essentially a replication of the court system but is conducted by a private third-party arbitrator," he said. "The reason you might want to use arbitration over litigation would be that it's more efficient, cost-effective and informal."
The study has been published in the journal Industrial and Labor Relations Review.