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Print Post Approved 255003/03417 Volume 6 Number 1

New developments in ADR

Designing a dispute system

across an entire industry
Colin McKenzie
DIRECTOR, CMNZ LTD

In mid-2002 managers from a NZ Assessment report is about to be

primary industry (the industry has not presented to industry leaders and we do
been identified due to the existing stage not want to compromise this process.
of the process) talked to me about the
impact of disputes in the industry. They Concept of dispute
talked about high costs, time delays, systems design
declining credibility, poor relationships, The subject of dispute systems design
lack of durable outcomes and the (DSD) was popularised in the book
reduced ability of the industry to Getting Disputes Resolved by Ury,
achieve its goals. Brett and Goldberg.1 The authors
My initial thought was, ‘I know describe three primary strategies for
something about applying dispute resolving disputes:
systems design (DSD) theory to (1) determining who is more powerful
organisations. But what about its — for example employees going on
application across an entire industry? strike, using coercive or threatening
How do we start? Who do we talk to? tactics, civil disobedience or other
What approach should I take?’ adversarial processes;
This article discusses our (the Conflict (2) determining who is right — for
Management New Zealand (CMNZ) example, going to court, tribunals,
design team’s) response and the process case law, precedent or arbitration;
we have been through over the last eight and
months. We cannot provide any actual (3) reconciling differing interests or
results in this article as the Conflict stakeholder needs — for example,
negotiation, mediation or
conciliation.
Figure 1 Overview of dispute resolution methods To engage industry stakeholders
Increased cost in a discussion around these ideas,
we developed a dispute resolution
Increased time continuum, as shown in figure 1, which
we sent to stakeholders as part of our
Interest based strategies Rights based strategies Power based strategies initial mailout.
To minimise the dispute costs in the
Ne ation

Par ion

r re g
w
tion

Me ion
tion

bud ng
an

tion

ion

ke

test

ce
rin

atio
vie

Stri

len
i
sm

industry, more attention was needed on

d
iat

liat

gat

Pro
tne

ilita

dia

itra
n
rs

gisl

Vio
got

ctfi

Liti
nci
nve

reconciling interests as a precursor to

Arb
Fac
Pee

e le
l fa
Om
Co
Co

using a rights or power approach.

utra

ang
Ch

This does not mean that focusing on

Ne

interests is always better than rights or

Increased control by the parties over process and results
power; it simply means such a focus is
Increased satisfaction and durability of agreements likely to reduce transaction costs,
achieve greater satisfaction with

16 .................................................................................................................................................................................................................... vol ❻ no ❶ April 2003

 ADR Bulletin

outcomes, put less strain on stakeholder Figure 2 CMNZ approach to interviews

relationships and result in fewer
disputes. Causes/Why Approach
In developing our thinking about
DSD in the industry we realised the
industry needed to develop its own
decision processes that would enable Focus on court, familiarity Consider alternative
with court processes methods to court
stakeholders to make good choices
about how to resolve disputes.
Stakeholders needed to know what
method best suited each dispute, when
CMNZ Methodology
to use it, how to apply it and what
(example)
resources were available to support
them. Problem Action

Our starting assumptions High costs of disputes

We thought it was important to Stakeholders use low cost
methods where appropriate
articulate and test our assumptions
Current Gap
with the industry. We developed the situation
Future
following draft assumptions and
principles.
• We can only act as facilitators;
industry stakeholders need to drive
the design process and control the Conflict assessment within the industry which are giving
outcome. We started with the old saying, ‘let rise to conflict?
• It is essential to be inclusive rather the diagnosis determine the method’, 2. What are the causes behind these
than exclusive. All those people and hence our first step was to initiate problems?
responsible for the final decisions or a conflict assessment. The conflict 3. What general strategies would you
affected by the decisions should be assessment was an information recommend to deal with these
included as early as possible. gathering exercise that attempted to problems?
• Participation, openness and feedback mirror the concerns of the various 4. What action could we (the
would guide the design process. parties in the industry in terms of: facilitators) take to help the industry
• The design team should be separate • what issues were important and move forward?
from anyone called in to mediate or why; All interviews were confidential.
manage any conflict in the industry. • whether it was appropriate to proceed We found this simple format, as
• Changing an ‘industry culture’ is a to the next stage in designing a new outlined in figure 2, quite powerful. In
long term project, looking at beliefs dispute resolution system; and an industry where ‘time is money’ and
and values as well as strategies and • under what conditions would delays mean lost opportunities, it is
behaviours. stakeholders agree to participate. inevitable that people often go straight
• Managing the negative effects of The assessment was not a from identifying a problem to taking
conflict, rather than eliminating comprehensive analysis of conflict in the action to fix it. In many situations this
conflict, would help the industry industry, but a snapshot on how conflict jump from the problem to the so called
meet its priorities and goals. is currently affecting the industry. We ‘solution’ is appropriate and will result
• The program should enable industry saw it as a starting point in a much in the desired outcomes. However, in a
stakeholders to make good choices longer process of change and ongoing complex primary industry, if we jump
about which dispute resolution industry dialogue. too quickly from the problem to the
method is needed, rather than replace action, we may just deal with the
one method with another. Our methods symptoms and not the real cause.
• There needs to be emphasis on In early November 2002 we sent a To provide a sounding board for
conflict prevention, as well as questionnaire to approximately 100 us as facilitators we set up a small
management. people throughout the industry and task group comprising of an industry
• The process design is a 38 responded after a follow up letter representative, a lawyer, a natural
developmental and iterative program and phone call. To gain a more in-depth resource consultant and conflict
in which stakeholders can develop understanding of the issues and management specialists. This became
skills and experience managing concerns, we interviewed 20 people incredibly valuable in brainstorming our
conflict. representing all the primary stakeholder process and testing understandings.
• Questions over fundamental values groups. Our interviews were structured To provide a mentoring role, a
will inevitably arise; we need to plan around four questions. specialist in designing large dispute
for these rather than avoid them. 1. What are the problems you see systems, Cathy Costantino, co-author

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 ADR Bulletin

Figure 3 Stages in designing a dispute resolution system

Go/No Go Go/No Go Go/No Go
Decision Decision Decision

Where the
Where the industry
industry is now wants to be

Exploring DSD options

Conflict assessment

consensus building

Process agreement

Implementation
Recommended
dispute design
Provisional

Convening

system
design
Evaluation

of Designing Conflict Management proceeding. Figure 3 is an overview of

Systems,2 was appointed from the US. the stages we are suggesting.
Our weekly conference call was essential The characteristics we believe are
to test theory and new ideas. important from Figure 3 are:
We initiated an international literature • a conflict assessment that sets the
review of large scale dispute system stage for an ongoing program;
design programs to establish best • a gap analysis of where the industry is
practice principles. today and where stakeholders want it
Finally, we tried, where possible, to to be;
use existing industry mechanisms to • multiple go/no go decision points that
provide feedback to stakeholders and allow the program to be flexible and
engage them in the process. still have a relevant mandate from the
decision authority;
Where we are today • a separate stage that focuses on the
We have now submitted an interim process agreement (with so many
report to the industry outlining what parties it is critical to get agreement
stakeholders have told us and what we on elements such as goals, functions,
recommend for going forward. The decision making, roles, dispute
proposal recommends a multi-stakeholder resolution and milestones); and
consensus building program over the next • an evaluation of the process of
12 to 14 months. The purpose is to build consensus building as well as the
ownership among industry stakeholders, outcomes.
empower industry representatives to
develop their own solutions to managing
disputes better, and provide the time and Some things we
place for stakeholders to tell their stories struggled with
and consider the options before making Starting the program
any commitments. Programs like this start when you talk
to the first person, not when you would
Stages of the design program like them to start. Ensuring your entry is
We are convinced by the value of a appropriate, well staged and sensitive to
conflict assessment. For people in the industry norms and cultural protocols is
industry there may be no surprises in a critical feature of building trust and
the results. However, a common credibility.
understanding of the existing problems,
the likely reasons they exist, along with Assumptions
commonalties and differences can It is easy to assume that a dispute
provide an important baseline for resolution design program is critical to

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 ADR Bulletin

the future of the industry. Many Relationships willingness to change. People use
stakeholders were not so convinced. It could be easy to carry out a conflict dispute resolution methods that are
Time delays are a very real concern assessment without any face to face familiar to them, often regardless of the
for them and, in their eyes, we were interviews. We think, in retrospect, that costs or the implications. People litigate
just another delay. We all have the early interviews were an important because they have done it in the past,
assumptions; that is not the problem. part of developing credibility, respect, they know the process and can guess
The problem is whether we are trust and rapport with key stakeholders the outcomes. A design program needs
prepared and open to test the and that a simple questionnaire would to understand why these methods are
assumptions we have. not have sufficed. These interviews used, not just the frequency or costs.
should also take place at the location We need to determine what motivates
Questionnaire design determined by the stakeholder. This people, the culture of the industry and
It is easy to come up with a few provides a rich understanding of their what changes they think are important.
questions and think you have a environment and a recognition of how Just telling people they should use
questionnaire. Fortunately, we sent the important they are to the success of any mediation more will change nothing.
questionnaire out to a professional assessment.
consultant, which helped immensely. Timing
However, we did not pilot the Terminology It could be argued that when an
questionnaire and so several questions Conflict management professionals organisation or industry is involved in
were either incorrectly interpreted or the have their own jargon that does not several highly contentious disputes it
results were difficult to use due to poor sit comfortably with stakeholders. may not be a good time to implement
layout and/or design. We also received Everything that goes out to the industry a dispute systems design.3 Our view is
criticism from several people that it was needs to be carefully worked over to different. Does this mean we wait until
too time consuming — although we ensure clarity and appropriateness. This there are no disputes? This time is
only had 12 questions and most were of is especially the case in developing a unlikely to occur. Does this mean we
the ‘tick the box’ format. In the future, dispute resolution design where there is wait until there is more case law to
we need to spend more time on design no obvious dispute and the goal can be provide further guidance? The legal
and layout that will reduce analysis hard to describe. People want to know mechanisms continue to change and
time. what the program is about, what you so case law continues to evolve.
are doing, what the outcome will be, Current disputes can make it harder
Interviews why they should be involved and what to access certain information and
It was difficult to justify two they will get out of it. These are engage certain parties and this may
interviewers at meetings that were questions that need to considered before create some barriers to implementing a
spread around the country. However, starting interviews. consensus building program. Existing
it is almost impossible to ask good disputes can also provide a very
questions, engage in constructive Roles powerful example of a system in crisis
dialogue and get all the essential points It was hard to convince stakeholders and the impetus for change. We see
recorded at the same time. In an that we were just the facilitators when no compelling reason why a design
industry where disputes are both we were employed as ‘experts’ in conflict program cannot be run in parallel
frequent and contentious, many management. The common response with the resolution of other disputes.
interviewees were uncomfortable was, ‘Well, you tell me’. We remain Surely this is implied by Ury, Brett and
with a tape recorder. We support the convinced that next to developing the Goldberg.4 All three strategies, as
idea of having two people to ensure relationships, the process itself is a outlined above, can run in parallel as no
the information is correct and to act critical aspect in getting started. This is method is the panacea for all disputes.
as a check on comprehension. being clear about your role and function.
Another tension is whether the Stakeholder involvement
Representation person/team doing the conflict We are convinced that everyone with
This was a difficult issue in the early assessment should be the same a stake in the decision or who could be
stages of the conflict assessment. The person/team that facilitates the design. To affected by the outcome needs to be
danger is that the design team can some this could be a conflict of interest. involved. But what if they don’t want
miss people out who should be We concluded that although these roles to? Sometimes we may spend so much
involved, involve the wrong people or may be best separated in theory, there time trying to influence ‘important’
identify the wrong issues. We found are overwhelming benefits in doing both. stakeholders that we forget about the
that asking everyone at the end of a interests of the majority.
meeting who else we should talk to The non-participants could be saying
and why was a valuable mechanism Key lessons to date that their interests are better served by
to check our list of stakeholders and The will to change remaining outside the program. This
make sure we were making the best It is easy to find evidence that could be an avenue to explore. What
decisions, given constraints on time supports the need for change. However, are the real alternatives and how much
and resources. this often tells us very little about the support is there for them?

(2003) 6(1) ADR .................................................................................................................................................................................................................................. 19

 ADR Bulletin

Perhaps the non-participants are need to be translated into something

saying they don’t want to be involved stakeholders can realise.
right now. This begs the question: In any industry where there are
is the design program totally open or conflicting demands on a finite
representative? In a large design, being resource, we have to start thinking
totally open may be difficult. Another about how to ‘create more value’ out
avenue may be to explore the of what we have without diminishing
conditions in a process agreement other values. Many primary industries
by which early non-participants can are well suited to explore negotiated
engage at a later stage. approaches to maximise the value of
Other reasons for non-participation the asset. In other words, those who
may involve power and/or status. This gain have the opportunity to
could be a risk to the program if the adequately compensate those who lose,
non-participants are the power brokers and both parties can be better off. ●
or the formal or informal decision
makers. In this case, there seems to be a Colin McKenzie is the director of Conflict
strong argument for discontinuing, as Management New Zealand Ltd which is a
the program could be marginalised or partner to Conflict Management Group in
any outcome will not be ratified. Boston where he worked as a consultant.
Colin has 20 years experience as a
Participation is not the product mediator and in teaching and training
We initially put so much emphasis on in conflict management. He can be
process and relationships that we forgot contacted at <colin@cmnz.co.nz> or visit
about the substance. What is the tangible the website at <www.cmnz.co.nz>.
product at the end? How will it help the
industry? Initially we said we are Endnotes
working towards an industry wide 1. Ury W, Brett J and Goldberg S
agreement — but an agreement to do Getting Disputes Resolved: Designing
what? We think this can be a danger. For Systems to Cut the Costs of Conflict
example, we began to see skill building, Jossey-Bass San Francisco 1988.
or better relationships, as a product. In 2. Costantino C and Merchant C
the eyes of a mediator such things may Designing Conflict Management
be fundamental, but in the eyes of a Systems: A Guide to Creating
stakeholder they may seen as a waste of Productive and Healthy Organizations
time that means more lost opportunities. Jossey-Bass San Francisco 1996.
It can be hard to get people motivated 3. Moore C and Woodrow P
by saying ‘your relationships will ‘Collaborative problem solving
improve’. This comes back to asking within organisations’ in Susskind L,
people what they want. The vision can McKearnan S and Thomas-Larmer J
provide the passion, and the passion The Consensus Building Handbook:
ultimately drives the commitment. If A Comprehensive Guide to Reaching
disputes are causing inefficiencies, a Agreement Sage Publications Thousand
loss of profit, the inability to achieve Oaks CA 1999 p 628.
business or industry goals, then these 4. In above note 1.

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ISSN 1440-4540 Print Post Approved PP 255003/03417 Cite as (2003) 6(1) ADR
This newsletter is intended to keep readers abreast of current developments in alternative dispute resolution. It is not, however, to be used or relied upon
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20 .................................................................................................................................................................................................................... vol ❻ no ❶ April 2003