Chapter 7 Third Party Conflict Resolution LEARNING OBJECTIVES: ‘= Know how and when to opt for mediation. ‘© Understand abitation method of confit resolution. ‘+ Explein Alternative Dispute Resolution procedure + Handle Managerial Dispute Resolution Third party resolution of conflict is an attempt by a selatively neutral person to help the parties resolve their differences. There are various types of third party conflict resolution. Three, namely, arbitration, inquisition and mediation, are the core type. The rest include fact- finding and alternative dispute resolution. Each of these types of third-party intervention solves disputes in specific ways. An arbitrator is a neutral third party who after hearing from both the Sides about the dispute determines a final, binding outcome. In the case of inquisition, inquisitors control all discussion about the Conflict. The inquisitor chooses which information to examine and how to examine it, and generally decides how the conflict resolution process will be handled. He has high control over decisions like [rbitration (1). Mediation process involves a neutral third party that ‘encourages interaction between the disputants but has no authority to force a solution upon them. In fact-finding, a neutral third party determines a reasonable solution to the dispute based upon the evidence presented by the parties, As in mediation, the parties are not bound to follow the recommendations of the fact finder.168 | Comorate Cont Management: Concapis and Sis 7.1 MEDIATION Mediation is a form of negotiation. As a neutral third party, mediator encourages interaction between the disputants. It has no decision. making power but has high control over the intervention process. The main purpose of the mediators is to manage the process and context of interaction between the disputing parties. However, the parties make the final decision about how to resolve their differences [1]. 37 Mediator’s key objective is to get the conflicting parties to look at the Problems objectively, instead of playing any blame game. It helps Parties in’ accepting one another's viewpoint as valid (without Necessarily agreeing) and tries to make one party to understand others viewpoints. The purpose is to try and find corimon ground. It requires sincerity rather than superficial compliance to solve the dispute. The goal of mediation isto find ways of communicating. with mutual trust and a genuine desire to set an example for others[2] The role of the mediator is to create an environment conducive to reaching an agreement by the disputants [3]. He is not an advocate for any particular form of settlement, only that a settlement: is reached and agreed to by all parties 4]‘Thied Party Confit Resolution eainion process focuses not only on the difereness that conti Mediation fn, But aso onthe comunon ground inerent Petwes) Ye wo cngparties. In fact effective mediation process TENS the disputing Forest of the partes to resalve the dispute, It fost &t Co tof the varying pnts of view tn the dispute DY unthon, Parties trust the lexdershi, ofthe mediatow, Me result is @ Pattie rela the confit that is bated on common good rather than ‘winners and losers [5] ante features of mediation process are 2s follow. Parties agree to mediate Mediator is selected. ‘Mediation session is scheduled. Mediation session is conducted If parties agree to settle, then case is closed Tfparien disagree ard deadlock is reached then arbiaton process follows. ‘The mediation ‘session can be described in the following manner ce Nediatr’s opening statement The mediator’s opening statonert js used to build rapport with the disputants 69 that the later i vee ta wll be open and candid{3). The opening statomer Gees with the infodcton of the pastes involved the PeBinss for mediation incading mediator, Mediate then Process eT ene disputants that they agreed to meet{7] and Comme etgoals for the mediation that is forthe partis 10 ANd states Ue Sat will be fair avi workable in the long run, ane Stans the very high succes safe in reaching an AEfeo7 opianihe parties work together in good faith(s). Mediator when Wain the simple terms, the rule and procedures of mediation [9]. Diepulents’ opening statements The mediator job to NAP caepitants tel thei story. Besides asking clanfying question disp aeglators ‘should echo” commegiagges SUBSATSS the ete in order to fully understand what was said and © aaneraene parties to correct misstatements 6]. These open allow on atlow parties 10 listen for “wants vs. needs” AS * saul common purpose is developed further 9) TDascusron stage This stage begins with direct, exchange Discussion parties, The factual information shared, may. etpral in narrowing areas of confit {3}. The mediator helptip the partis to “reframe” the issues, Refrming les 2 eying an image of rest. The parties must discov # 1 tly acceptable definition of the Hague that will allowCorporate Confict Managerrent: Concepts and Skits them to co-operate[10]. While the mediator attempts to reduce the number of dispute issues, at the same time an attempt is made to broaden these issues by probing for underlying areas of conflict [9] Caucus After some period of joint negotiations, the discussions often bog down, Parties: begin to restate their Positions repeatedly and all proposed solutions are rejected. At this point the mediator must gain a better understanding of the impzsse and provide’ the parties with an atmosphere that is conducive to exploring new ideas without the threat of their immediste rejection. The environment should be such that it is Possible to put forth solution without having to make an immediste decision about adapting them. The mediator calls for a caucus [11]. Caucusing is a common tactic used by the mediator. Caucus is a private meeting between the mediator and the parties. The Purpose of the caucus is to obtain information and insights that the mediator believes cannot be acquired through joint egotiation[11]. In the private meeting thé mediator will explore areas of compromise. The mediation is looking for Position shifts and other options for solutions 3]. For caucus to work effectively, the parties need to view the mediator as their advocate from the other side. Reachine agreement If the mediator has done his job properly, the final rounds of joint negotiation will have a collaborative rather than a competitive tone. The parties will understand the issues, which have been reduced in scope and number during, ‘mediation process. They will work in good faith to reach a resolution to the conflict that is acceptable and workable [9] ‘The mediator’s job at this stage is to keep the parties focused (on the real issues and to facilitate the changing negotiation [6] Pride Model for Mediation Tricks used in Mediation-Bagshaw developed the PRIDE model for mediation [2] are as follows, Pause Before launching into a verbal tirade, consider what your motives are. Try to see the other person as a potential ally. If vou just want the other person to feel bad, this will only lead to defensiveness and deepen the conflict. Report Say specifically what is happening. Be as objective as possible. Avoid generalizations such as “You always ...” Avoid guessing at the other's motives, or accusing them of bad. faith. Describe their behaviour.‘Third Party Confit Resolution + Impact Describe the effects of their behaviour on you ("I feel when you ..”). + Diflerent Describe what you want to be different. Make sure your request is reasonable, ie. within the power of the other person fo meet «End benefit Spell out the positive consequences /benetits of the change you request, ‘the strength of the mediation process is in its focus on the agreements between partes rather than just their differences, Tt has ie foundation in the willingness of the parties to reach settlement. It promotes the search for common ground within the issues focusing Pre basic human needs inherent inthe dispute. Itis build upon the ‘must the other parties have, developed in the mediators. Hammering oer the final —details..of. the agrezment can be fairly easy oF problematic, depending on the degree of differences thet still exst Bich and every mediation does not conclude with the settlement. The hope, however, is that digputanis are in a better position to resolve thr differences after the mediation than they were before it{6] 72 ARBITRATION ‘An apbitrator is a neutral third party and is chosen by the concemed parties His task is to listen to the cause of the problem. The Phartered Institute of Arbitrators describes arbitration as a procedure for the settlement of disputes, under which the parties agree to be bound by Iie decision of an arbitrator whose decision i, in general, final and legally binding on both parties. Tt adds thet: Asa dispute resolution procedure arbitretion is the only means of dispute resolution, which is an iterative to litigation because an arbitrator's award is final binding ay enforceable summarily in the Courts(12}. The Royal Institution of Chartered Surveyors RICS(13] in its advice an dispute resolution fives the following explanations: Arbtmtion is a prOcedure whereby fro parties in a dispute agree to be bound by the decision of a third pany acting as an-arbitrator. Tl involves independent expert aeferminations, Tt is a process whereby the parties to 2 dispute agree te be bound by the decision of a third party that has expert Ibrowledge of the subject matter in dispute. Therefore, the arbitrator's Aecsion ss final and binding upon both the partners but he has low Control over the processes of interaction betweenethe disputing partners unlike mediation.170 | Corporate Confict Management: Concepts and Skills Executives engage in this strategy by following previously agreed upon rules of due process, listening, to arguments from the disputing employees and making a binding decision. Unionized employees apply arbitration as the final stage of grievances, but it is also becoming more common in non-union conficts{I}. The vast majority of unsettled stockbroker/customer disputes are resolved through arbitration. The use of arbitration as a means of alternative dispute resolution is generally viewed as an efficient manner of resolving the dispute before an impartial panel of arbitrators, As an alternative to the courts, arbitration has been considered preferable as a quicker and less expensive means of resolving problems. Since arbitration has less formal rules of procedure and evidence, it is designed to avoid getting bogged down in procedural or technical problems so as to be able to focus on the facts and issues in dispute [14] Arbitration is preferred if the parties to a dispute cannot reach an agreement with mediation process (within 10 days or longer, if agreed), or if the mediator determines that it is not useful to continue, mediation is terminated and the parties move to arbitration. The‘Third Party Contict Resolution disputing parties have to select an arbitrator from among the available members of Dispute Resolution Committee. If they fail to make a selection then an arbitrator is appointed. During arbitration, a single arbitrator hears arguments, issues and awards, which'she or he considers just and reasonable. The award of an arbitrator is final and binding, subject only to limited rights of appeal or review as prescribed by applicable law [15]. ‘The basic features of arbitration process are as follows. Selection/appointment of an arbitrator. Both parties to submit (in written) the copies of documents, list of documents, list of witness, anticipatory evidences, etc. “Analysis of the facts. Fixing of date, location and time for hearing by arbitrator. Hearing held and arbitrator deliberates. Award written and served. Managers, team leaders, executive, “and co-workers regularly intervene in disputes between employees and departments. Sometimes they adopt a mediator role; other times they serve as arbitrators [1]. However, research suggests that people in positions of authority usually adopt an inquisitional approach whereby they dominate the intervention process as well as making a binding decision[16]. The inquisitional approach to third party conflict resolution is usually the least effective in organizational settings. Which third party intervention is most appropriate in organizations depends on the situation. 7.3 ALTERNATIVE DISPUTE RESOLUTION (ADR) ‘ADR is a third party dispute resolution process that includes @ number of processes like negotiation, conciliation and mediation followed by arbitration. ADR combines third party dispute resolution in an orderly sequence. The common denominator methods is that they are faster, less formalistic, cheaper and often less adversarial than 2 court trial “ADR typically begins with a meeting between the employee and employer to clarify and negotiates their differences. If this fails,-a ‘mediator is brought in to help the parties reach a mutvally agreeable solution. If mediation fails, the parties submit their case to an arbitrator. ‘The atbitrator’s decision may be-«ither binding or voluntarily accepted by the employer” [1]. Ripeness is crucial for [ADR processes to work effectively. ADR is used in cases where ‘conflicts seem to become ready (some say “ripe”) for reso.ation. This172 | Corporate Contict Management: Concepts and Skis is used when the conflict reaches a hurting stalemate—a situation where it becomes clear that neither side can win; yet, they are being substantially hurt by continuing the struggle(17]. It is preferred te law suits and direct litigation because—ADR is, generally faster and less expensive. It involves direct participation by the disputants, rather than being run by lawyers and judges. Its outcome gives more satisfaction to the people concerned as well as their compliance [3] ADR processes are based on an integrative approach. It generates less escalation and ill-will between parties. In fact, participating in an ADR process will often ultimately improve, rather than worsen, the relationship between the disputing parties. {4]. There are also some possible drawbacks and criticisms of pursuing altematives to court based adjudication, as 7.4 MANAGERIAL DISPUTE RESOLUTION Dispute resolution constitutes an important managerial responsibility and activity, and has a crucial impact on the well being of the organization. Managers often serve as third parties to a conflict resolution process. The process involves intervening in disputes between their subordinates, and groups or departments for which they are responsible(18]. Disputes can arise between subordinates concerning job performance, property and personal rights, usurpation. of responsibility, company policy and discrimination [18] Managers use different types of- intervention strategies to solve the disputes. The strategies can be described in terms of the degree of outcome control and the degree of process control wielded by the third party (e.g. mediation being high on process control but low on“Third Party Confit Rasotation | 173 outcome control while an adversarial intervention that is, litigation and arbitration are high on outcome control but low on process control). The manager can intervene as judges (arbitrators), inquisitors, mediators, avoiders, delegators or providers of impetus. It can be inquisitorial intervention, providing impetus and adversarial intervention[16 & 19], acting as advisor, investigator -and restructurer|20], and, procedural marshal 21], ‘Manager as judge exerts high degree of control over the outcome of the conflict but not the process by which it is resolved. “He can allow both sides to present whatever facts, evidence or arguments they desiré and then decide the outcome of the conflict. He has the power to enforce that decision on the disputants. Manager as inquisitor exerts high degrees of control over the process as well as, (on the outcome of conflict resolution. He directs the presentation of evidence, asks questions, acts as referees, and calls for evidence not willingly offered. Manager as mediator exerts high degrees of control over the process of conflict resolution, but not its outcome. A mediator may separate the parties, interview them and bring them back together. As mediator, the manager may separate the parties and ferry proposals back and forth between them to help them forge their own solution. In other words, they act as avoiders, delegators and the providers of impetus tactic. These roles have low degrees of control over either the process or the outcome. As avoiders they prefer to find ways to ignore the conflict or minimize its importance. As delegators they recognize that the conflict exists, but try to return responsibility for its solution to the disputants or get someone else to accept it. By providing impetus tactic (also known as the kick-in-the- pants style) he delegates the conflict back to the parties with a threat “Either you resolve this or the manager will resolve the problem”. This is a solution that obviously nobody will like The intervention strategy options “range from a very limited intervention to a completely controlled intervention. It is critical for managers to select suitable intervention strategy for solving the conflicts. If managed properly, it can enhance organizational performance by challenging status quo, fostering creativity and innovative problem-solving, promoting periodic evaluations of unit goals and activities, and leading to improved organizational policies and operations [22 & 23]. Elangovan proposed a decision-tree model for selecting an intervention strategy. that is contingent on situational factors such as importance of dispute, time pressures, disputant maturity, etc. [24 & 25] Proven studies showed that managers were found to use the inquisitorial style most often followed by the judging and “providing impetus” styles. They prefered to. use strategies that controlled174 | Corporate Confit Managemert: Concepts and Skils ‘outcomes when (1) there were time pressures, (2) the disputants were ot likely to work together in the future, and (3) the settlement had broad implications for the resolution of other disputes 26]. While resolving disputes of third party, managers use certain criteria. They include ensuring faimess towards disputants, getting at the facts, maximizing the probability that the dispute will be resolved, reducing the probability of a similar conflict arising in the future, and speeding up the resolution, etc.(27]. Sometimes they: attach greater importance to certain criteria based on their perception of the dispute [28 & 29] or their background, eg. professional training and experience [20] While selecting the intervention strategy, the objective of intervention should be on efficiency (quick solution of the problem); effectiveness (optimal solution to be selected); satisfaction (of disputants- regarding the outcome); and fairness (outcome to be perceived as just by the disputants). If the focus is on quick solution then managers should use inquisitorial style; in the case of optimal solution, the managerial style choice is between inguisitor and judge. However, if the solution is determined on the issues, then the inquisitorial style is more appropriate. On the other hand, if a manager has little concer with controlling the conflict-resolving Process, then the strategic choice should probably be to act like a judge (261 Selection of intervention strategy depends on how thé managers interpret and understand the dispute. In this context, itis important to understand the role of various cognitive biases and heuristics, e.g. framing effects, availability biases, and scripts and schemas, in managerial third party intervention in disputes between subordinates [32 Framing effects This refers to presentation of information concerning potential outcomes in terms of gains or in terms of loss(31]. For example, suppose dengue fever is spreading in northern India and it is expected to kill over 600 people. Now two plans for combating the disease exist. If plan A is adopted, 200 people will be saved. If plan B is adopted, the chances are one in three, all 600 people will be saved but two in three, no one will be saved. Which plan do you choose? (Here, the plans are made in terms of gains). Now, consider the same situation but where plans are made in terms of loss. If plan C is. chosen, 400 people will defintely die: if plan D is chosen, the chances are, one in three, no one will die, but two in three, all 600 will die. Which option is likely to be chosen? It was observed that people choose plan. A in the first example and plan D in the second example[31]. Plan D is just another way of stating the outcomes of plan’B, and plan C is just another way of stating the outcomes of‘Thies Party Confit Resolution | 175 plan A. Why do then people prefer plan A in the first example but plan D in the second? Because in the first example the emphasis is on lives saved, while in the second the emphasis is on lives lost. Two examples differ only on the basis of the presentation of information about potential outcomes in terms of gains and losses. Research indicates that most people are risk averse and they prefer avoiding unnecessary risks, It makes them select options that are made on potential gains (ives saved), that is, plan A. Jn contrast, those who are risk prone prefer to take risks than accepting probable losses. As a result, most choose plan D. Framing effect have been demonstrated in selection of intervention strategy by managers in dispute resolution. The framing of outcomes effect refers tordecision makers’ tendency to be tisk aversive in the domain of gains and risk seeking in the domain of losses [32] Managers, when faced with unpleasant external threat, prefer to take full control of the outcome[33]. IF the options are framed as a choice between losses, they prefer intervention strategies like inquisitorial or adversarial intervention ‘strategy [16]. When. options are presented in terms of gains, they prefer that the disputants are allowed to decide the outcome (eg. mediation). A managerial third party intervening in a dispute will be (a) risk-averse when the options are presented as a choice between a certain gain and a higher but uncertain gain; (b) risk-seeking when the options are presented as a choice between a certain loss and a higher but uncertain loss. To overcome the framing effect itis likely that intervening managers use high outcome control strategies such as inquisitorial or adversarial intervention [16] rather than select strategies that allow the disputants to decide the outcome (eg. mediation). Effects Due to Availability Individuals often assess the frequency of a class oF the probability of an event by ease with which the event or occurrence can be brought to:mind, i.e, the availability of the event in their cognition (34). This is one of the various biases and heuristics that affect judgment under ‘uncertainty. Reliance on availability, in turn, leads to biases stemming from the tetrievability of events, the ability to imagine events or contingencies, and illusory correlation when making decisions under uncertainty [34]. Retrievabilty of events refers to the ease with which events of occurrences can be remembered and recalled from memory [34]. When the events are readily available in'the memory, they can be easily retrieved and used. When the managerial third party is familiar with a certain intervention strategy (eg. mediation), hhe or she is: more likely to use that strategy when intervening in thedispute. The familiarity could be due to prior usage and practice or repeated observation (vicarious learning). The familiarity enhances the ease with which the third party can retrieve an intervention strategy and therefore, positively affects the frequency of its usage Similarly, the salience of an intervention strategy can also lead to on For example, a manager who has essful mediation of a dispute in the media is more likely to use the same or a similar strategy (mediation) when he/she has to intervene in a dispute. In other Words, salience enhances the retrievability of the intervention strategy in the cognition, which, in tum, increases its chances of being used ‘The second factor that would affect strategy selection in managerial third party intervention is illusory correlation. Illusory correlation refers to the tendency to overestimate the frequency of co-occurrence of two events or the strength of relationship between them based on the ease with which the two events can be readily associated with each other 34]. This tendency and the belief in the association exist even when there is nd scientific evidence or findings to associate the two events. If a manager has been exposed to or had used a certain intervention strategy in the past to intervene in a dispute, and the intervention was successful, then he/she might assume a correlation between the intervention strategy and success of intervention. This relationship could be illusory since the success of the intervention might have been a function of other factors besides’ the intervention, strategy. But such an illusory correlation will prompt the manager to use the same intervention strategy in the future. The probability of an Jntervention strategy being selected by a managerial third Party will be directly related to the past degree of success associated with its use, Scripts and Schemas Individuals often hold implicit theories of events, persons and causality that partially govern their daily decisions and actions. These implicit theories, labelled scripts (event schemas) and person schemas, govern information’ processing especially in familiar situations by setting in motion the appropriate behaviours [35]. Once the individual has decided, based on his/her perception of the stimuli from the situation, which script or schema to activate, the need for conscious processing of information is reduced and replaced by automatic processing of information. Although the use of these implicit theories facilitates and quickens information processing and behavioural responses, they also impede the processing of new or conflicting information since such: information is largely ignoredThird Party Cofiic! Resolution | 177 while following the script or schema. If the intervening manager has a certain script for handling disputes, then this script would be activated and the intervention strategy stored in the script would be used. It is possible that the manager has more than one dispute handling script in which case the selection of an intervention strategy would depend on which script is activated. The activation of any particular script thus depends on the stimuli perceived by the intervening manager. Research findings by Sheppard and his associates reveal that third parties tend to adopt certain frames (eg. right- wrong frame) to make sense of disputes which, in turn, influenced their intervention strategy selection [36]. The managers might have schemas about the disputants, which might prompt a certain intervention strategy to be used. For. example, a manager who perceives his subordinates as fitting the “immature prototype” might use.an autocratic intervention strategy (high on outcome and process control). Depending on which schema is activated, the manager might choose a certain intervention strategy to deal with the dispute. A manager’s attribution of the underlying causes of a dispute would also influence how he/she intervenes in the dispute. This is known as implicit theory of causality. For example, a manager who always perceives the dispute to be caused by structural problems (external to the disputants) might decide that the best way to resolve the dispute would be to fix the structural problem [20] play the restructurer’s role, and unilaterally decide on the outcome by implementing a change in the system (high outcome-control intervention). On the other hand, if he attributes the dispute to the interaction problems between the disputants then the manager may try to improve the relationship between the two people by acting as a mediator and. letting the two disputants resolve the dispute on their own (high on process control but low on outcome control). So, in effect the theories Of attribution held by the manager will significantly influence the selection of an intervention strategy. The probability of an intervention strategy being selected by a managerial third party will be directly related to the activation of his scripts, schemas and attributions relevant to that strategy. These biases and heuristics do not act in isolation; there are different individual and situation-related variables that influence strategy selection and settlement decisions. For example, the importance of the dispute and time pressure[26] and supervisory experience [37] would influence selection of an intervention strategy. It is perhaps more accurate to contend that these cognitive biases and heuristics interact with other key variables do affect managerial third party intervention178 | Corporate Contict Management: Concepts and Skis we ‘SUMMARY There are various types of third party conflict resolution. Four methods are described here. They are mediation, arbitration, allemaiive dispute resskicn, ‘and managerial dispute resolution. Mediation is a third parly core resoktion Brocess where the mediaio: encourages the discussion btwoen two conficting patios. He creates an ennroament cenducive to reaching an agreement by the isputants. The mediator: owever. has no control over the decision making Conducted by a meciaior the mediation process ollows a sel. peter, Arbitration is third party conflet resolution. It is also known vs athersaral Confict resolution method and is an alternative to litgalion. The role ol the arbitrator isto listen to both sides’ pent of view and award the fine! decsion The arbitrator's decision is nal and is binding and enforceable summacly in the Couns. Alteratve Dispute Resolution (ADR) is a third pany dispute revolatin Process that includes a ‘number of processes like negotiation, conciliation ‘mediation backed by arbitration. iis fdlowed in an orderly sequence, Managers often serve as third partes to a confiet resolution process. The maneyer nos intervene as judges (arberaon), inuisitors, mediators, avoiders, Selegstors or Providers of impotus. I. cnicai for managers 10 select sultable iorenion strategy for solving the corficis. The selaction of intervention staleyies are influenced by cognitive biases and heuristics, QUESTIONS 1. Distinguish between mediation and negotiation. Discuss how mediation is conducted rbitration is otherwise known as adversarial conflict resolution.” Explain How does Alternative Dispute Resolution process differ from other methods of conflict resolution? Discuss In managerial dispute resolution method, the selection of intervention strategies are influenced by cognitive biases and heuristics. Critically analyze this statement. REFERENCES [1] McShane, $.t. and MA. 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