The High Cost of Conflict to Businesses – Mediation as a Cost-cutting Tool

High Costs of Conflict - Most of us experience conflict in our lives; it is human nature to disagree. Businesses, of course, experience conflict as well – but unresolved conflict comes at a significant cost. A survey commissioned by CPP, Inc. indicates that employees around the world deal with conflict, on average, 2.1 hours a week, or one day a month. In the US, that number rises to 2.8 hours a week. Such conflict leads to loss of productivity, inefficiency and loss of morale. In addition, CCR International surmises that employee related conflict leads to both absenteeism and turnover – both at obvious financial cost to employers. According to researcher and psychologist Daniel Dana,  “[u]nresolved conflict represents the largest reducible cost in many businesses, yet it remains largely unrecognized.”

It is not only employee conflict that leads to significant costs; customer disputes, as well as disputes between businesses, can lead to financial losses. In many cases the use of mediation can minimize such losses.

 What is Mediation? - Mediation is a confidential dispute resolution process in which the parties take an active role in resolving their disputes. Unlike a judge, the mediator does not impose a particular solution, but rather facilitates the parties' own communication and helps them create a mutually acceptable agreement. Through a variety of techniques, a skilled mediator is able to defuse some of the tension inherent in any dispute so that the parties can communicate more effectively. In a facilitative mediation – the type of mediation which is the focus of this article -  the structure of the mediation is fairly simple. The parties begin by each explaining to the mediator what has happened between them, and how they would like to see the conflict resolved.  The mediation then proceeds with each party presenting his or her perspective regarding the dispute, during which time the other party is asked to listen openly. Following this, the mediator helps the parties create a list of issues to be addressed. Once these issues have been fully aired, the parties work together to generate options for resolution. In this "options" phase of the mediation, the parties are urged to be creative and open, and to refrain from judging the proposals. After reviewing and discussing the options, the parties then move into the negotiations phase of the mediation, during which they consider the various options and work towards resolution. A mediation may last from a few hours to several days, depending on the type of dispute.

 How Mediation Can Save Costs – In an employment dispute, early mediation can save costs by resolving a dispute before significant damage to a business occurs. In other words, by resolving a dispute early, an employer can minimize losses that result from absenteeism, loss of productivity, and employee turnover. In addition, in many cases, early mediation acts as a business saving intervention by preventing litigation costs that could be incurred down the road. Litigation can be lengthy –  it can last for years – and at $200 an hour (or more), legal costs can be staggering. Moreover, given the fact that litigation takes time away from business, an early resolution of a dispute through mediation could be a very significant cost saver.

Unresolved conflict can be debilitating to a business. So that you can remain focussed on the mission of your business, rather than mired in dispute, consider mediation the next time your business is faced with a conflict.