Alternative Dispute Resolution or ADR for short is, as the name suggests, a process within an organization designed to find solutions to conflicts. The alternative in the term stems from the fact that the procedure is an alternative to Equal Employment Opportunity (EEO) complaints and grievances.
It provides a safe space for employees to discuss their work concerns in a non-hostile, informal approach to find reasonable options available to them.
You can think of the ADR department in an organization as somewhat akin to peacekeepers. They ensure to resolve conflicts between parties amicably and minimize disruption of workflow. Let’s look at how the whole process unfolds.
Which Disputes Can Be Settled by Alternative Dispute Resolution?
A large variety of civil disputes can be dealt with through Alternative Dispute Resolution (ADR), be it between individuals or organizations. Here are some of the most common ones:
Family and Divorce
For the sake of this article, we will be discussing ADR in terms of business and employment only.
Stages of ADR
ADR usually passes through four stages before a decision is made.
1. Open-Door Policy
The first method of resolving conflicts is usually by agreeing to a settlement between the individual and the organization. This involves taking the complaints to the immediate supervisor, the first “open door” and then upgrading to the manager at higher levels of human resource management if the conflict remains unresolved.
However, the downside to this policy is that it is only helpful if the managers are willing to listen and help resolve issues.
2. Peer Review
A more preferable method for resolution is to rely on a panel composed of organization representatives at the same level as the concerned party. This gives it a higher rate of fair judgment and a better understanding of the involved parties
If the peer review fails to reach a settlement that satisfies both parties, then an outsider neutral party is called in to help mediate matters. However, the mediator cannot force a decision and can only offer advice.
The third party or mediator can assist in two ways- one way is through facilitative mediation where they assist both parties to negotiate their settlements. While the other way is through evaluative mediation where mediators offer a solution that is acceptable to both parties.
When all else fails, a professional arbitrator is called in. Arbitration is a legal technique where one or multiple arbitrators are given the responsibility to settle disputes between both parties. The decisions that are made by the arbitrators are legally binding to both parties. However, in non-binding arbitrations, the decision may be challenged by both parties in court.
Arbitrators are usually retired Judges or veteran employment Lawyers.
A settlement conference is quite similar to arbitration. Here an impartial judge or settlement officer helps discuss and negotiate the settlement after a thorough evaluation that involves both parties.
The settlement conference can be chosen by both parties voluntarily. But in some cases, a court mandate may be passed out before an official trial.
Advantages Of Arbitration
Arbitration enjoys the perks of mediation while avoiding the costs and time in litigation. There are many limitations that can be drawn by both parties. These include evidence to be presented, testifying witnesses as well as discovery and other issues regarding the case. This in turn provides more control over the case as opposed to court litigation.
Furthermore, monetary limits and costs as well as the time and place of hearing can be decided in an arbitration. This minimizes the negative impact on the organization's stakeholders and both parties involved in the conflict. Furthermore, the issue is resolved early on with a minimum loss of time and money.
Mediation vs Arbitration
Among the methods mentioned, most people confused mediation and arbitration the most given their nature of involving an outsider to resolve conflicts.
In a mediation, the settlement reached is not final nor is it legally binding unlike in the case of arbitration. Moreover, any statements made during mediation cannot be used as evidence in the event of a disagreeable settlement. Whereas, arbitration is similar to a “mini court” where rules of evidence apply and is presented in front of a panel of three arbitrators.
Given the structured hearing format of arbitration, the more amicable negotiation process of mediation that allows both parties to clear the air may be a better proposition.
Benefits of ADR
Although ADR principles vary widely depending on the country and even state, there are numerous benefits that cannot be ignored. Hence, they are still applicable and the go-to solution for resolving conflicts within an organization.
Saves costs compared to formal litigation
Less strict proceedings
A more amicable atmosphere that allows for free conversations
Fewer delays and time-saving
Ensures confidentiality and privacy
Parties can choose arbitrators
Absence of a jury of peers
Greater control of both parties during the proceedings
Parties can present documentation in favor of the award
Informal investigations are permissible
Higher likelihood of a win-win situation for both parties leading to a better outcome.
Suffice it to say, Alternate Dispute Resolution is a better alternative to settling disputes over taking matters to court where you can expect long delays and a higher chance of an unfavorable outcome. Furthermore, ADR also complies with the existing legal system within the common jurisdiction so it is a legally sound process.