Save Time, Save Stress, Save Money – Make Mediation Work For You

February 11th, 2017

Save Time, Save Stress, Save Money – Make Mediation Work For You

This was the very apt title for the recent Civil Mediation Council conference on workplace mediation. The conference was very well attended with a range of speakers from organisations who had implemented mediation schemes, to converted sceptics, purchasers and practitioners.

There were some interesting statistics on the use of mediation and the barriers to it. In addition there were suggestions of how employers can do more to encourage the use of mediation and the benefits of offering mediation regardless of the outcome.

The Barriers

Surveys suggest that the main barriers to mediation are:-

42% Cost

47% Lack of a clear business case.

To us this says that mediation providers need to work a lot harder to be clear on the costs of conflict against the costs of mediation, explain the benefits and to make a very strong business case.

Cost of conflict v cost of mediation

The costs of conflict are often not quantified but they are well understood and can be substantial. If conflict remains unresolved then there will be an impact on health and well-being, loss of motivation and engagement and increased absence. Research by the Health and Safety Executive indicated that a significant cause of stress is due to poor workplace relationships and conflict between individuals and stress accounts for 15 million of the 131 million days lost due to absence.

Workplace disagreements are expensive; last year, the average award for unfair dismissal claims was £13,851 with the highest award being £1,762,130. The average cost of defending a claim is said to be £8,500 and the average settlement is £5,400. And that’s even before you factor in the cost of management time, sickness absence, lost productivity and damage to reputation. Five years ago, the Centre for Dispute Resolution, a not-for-profit organisation, estimated the total annual cost to the country at £33 billion.

The costs associated with formal disciplinary and grievance processes will vary widely but these could easily run into 4-5 days of management time plus HR support and costs associated with the involvement of witnesses. These costs could quickly run into a few thousand, considerably more if matters become protracted.

The cost of recruiting new staff including loss of productivity while a new recruit settles in, management and HR time and other costs has recently been calculated to be over £30,000.

ACAS figures suggest that the average cost of an internal mediation is £700 and an external mediator is unlikely to cost over £1,000. East Lancashire Primary Care Trust claimed direct cost savings of £213,753 in the first 18 months of implementing an internal mediation scheme. This was calculated by comparing the cost of a typical  mediation with the cost of management, staff and union time taken up by formal processes, including employment tribunals, plus the cost of settlements, legal advice and any related sickness absence.

ACAS recent figures suggest that mediation costs a little over half the amount of a formal process, rather than a fifth, as the earlier figure suggests.

There is some debate about what success means in terms of mediation but most practitioners and commentators report success rates of over 90%.

Finally, 80% of employees are reported to have experienced some form of conflict in the last year.

So how much is it worth spending to avoid or limit these substantial costs? If you could spend £1,000 for a 90% chance of success in avoiding or limiting the potential of £4,000 for formal processes, £30k for recruitment or £8,500 for defending a Tribunal claim, that has to be good business sense. On any basis the cost of mediation is considerably cheaper and more likely to succeed than the alternative mechanisms available and the cost saving if successful is clearly worth the investment.

The benefits of offering mediation and encouraging employees to take part.

Even though success rates are very high, there can be no quarantee of success or any particular outcome. However skilled the mediator, it is ultimately up to the parties concerned to agree some sort of settlement or come to some form of resolution themselves.

However, even if a mediation does not result in some form of sustained settlement there is still a benefit. There will always be some learning and it will be an advantage to be able to evidence that mediation has been offered and attempts made to resolve matters if an employment claim does ultimately proceed.

A request to take part in mediation could be seen as “a reasonable management instruction”. No one is suggesting that a refusal could be a disciplinary matter, particularly as the voluntary nature of mediation is an important principle. However, a refusal could be used as part of the evidence of the reasonableness of the employers response and an unreasonable refusal may count against an employee who then later tries to claim constructive dismissal.

As far as managers are concerned, I do believe that managers have a responsibility to attempt to resolve matters so have a management responsibility to mediate in the vast majority of cases; this comes with the territory.

So the next time there is conflict in your organisation consider saving time, money and stress and mediating!

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