A
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
39