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s SME’ s throughout the UK look to the year ahead, strategy in place, goals set and budget prepared, it’ s unlikely they will give much thought to the financial implications of failing to manage conflict and disputes.
Disputes in the commercial world are often unavoidable but how many SME’ s will devote valuable resources including people, time and money to dealing with them by the traditional litigation method?
The 2016 mediation audit, undertaken by the Centre for Effective Dispute Resolution( CEDR) in London, estimated that mediation will save businesses around £ 2.8 billion this year in management time, relationships, productivity and legal fees.
It’ s not hard to see how these figures are calculated since commercial cases can take years to reach court and it’ s not just the time that is costly; as the CEDR audit highlighted, it’ s the collateral damage that drains businesses at a time when resources are vital.
Traditionally the winner in litigation gets their costs paid, but even in this scenario it only means the lawyers’ costs the business will never recover the hours of work spent by personnel preparing witness statements, bundles of documents, copies of correspondence, attending meetings with lawyers,..... the list goes on.
The reality is, crucially for businesses, that mediation is significantly cheaper than traditional court action.
A commercial case listed for two days in the High Court could easily be expected to cost £ 75,000 £ 100,000, whereas mediating the same case will cost around £ 5,000.
In one of my recent commercial mediations, the parties estimated the total costs in running the case, including a ten day High Court trial, to be around £ 2.5m, whilst the maximum value of the claim was £ 1.5m. Unsurprisingly, a day’ s mediation and several followup meetings resolved the case.
Internal disputes are another area where businesses can make significant savings by using mediationbased methods to resolve conflict.
In 2015 the CBI reported that £ 33billion and 20 per cent of managers’ time was spent by UK businesses on workplace conflict. Whilst it ' s hard for small business owners to grasp figures of this magnitude, most of us can see examples of it every day and can imagine how the cost escalates exponentially.
Take, for example, a minor dispute between two members of staff. It begins with feathers being ruffled because one isn ' t perceived by the other to be pulling her weight she often takes Mondays off and her colleague has to take up the slack when she ' s not there. Tension builds and work starts to suffer – ' why should I work hard when she doesn ' t care?', ' why should I correct the mistakes she ' s made?'.
And then it becomes an issue that has to be discussed at management meetings because it ' s been noticed.
Soon it appears on the agenda at every meeting and takes up valuable time that should be spent discussing the finances and strategy of the company.
Before long the tension has built to such an extent that it affects other members of staff and the atmosphere ' s so bad that others take the occasional Monday off too.
And so it goes on until someone makes a formal complaint, lodges a grievance and the HR manager is called in to conduct a formal investigation.
Ultimately it ends up in an Employment Tribunal. In a small organisation the conflict permeates all levels and the damage to the business is incalculable.
Sound familiar? Of course it does those CBI statistics come from somewhere.
People think of mediation as only being relevant when a dispute has arisen, but the
real savings for businesses are made when a practive approach is taken to conflict and mediation principles are embedded in the culture of an organisation, from the boardroom to the staff canteen. The key is prevention rather than cure.
This means training people to spot signs of conflict at an early stage and deal with issues sooner rather than later when they have festered; it means at board level directors learning the skills needed to manage conflict in their own meetings; at employee level it means including clauses in contracts so that staff will resort to mediation as a first rather than a last resort; and between businesses or with customers it means including clauses contracts so that mediation is attempted early to avoid costly litigation.
The Better Way was set up to address these exact issues and to help businesses approach conflict in a practical, costeffective and innovative way.
For more information please visit www. thebetterwayto. com www. businessfirstonline. co. uk
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