What is conflict?  Generally it is an ongoing disagreement between two or more stakeholders in a situation about needs, goals, philosophies, or priorities of a business or other venture.  These disagreements manifest themselves in many ways such as hostility, gossip, avoidance, verbal or physical abuse, lack of or aggressive communication, and other destructive behaviors.  Often the parties involved see no solution other than filing a grievance or law suit, quitting, or firing an employee.  These actions do not solve the problem, as the basis of the conflict may still exist, and often escalates among the remaining employees. 

  The cost of conflict can be measured in several ways among which are:  direct costs, productivity costs, opportunity costs, continuity costs and emotional costs. 

 Direct costs are the fees paid to lawyers, accountants, therapists, and other experts, whether in litigation or in anticipation or avoidance thereof.  Generally these costs are easy to calculate, as they are hard costs that detract from the bottom line.  Studies estimate that these hard costs amount to less than 20% of the total cost of conflict.

 Productivity costs detract just as much from the bottom line, but are much more difficult to quantify.  These costs result from the failure of employees to create and produce value to the enterprise.   Due to diminished capacity, the value of time devoted to the conflict that would otherwise be spent on productive endeavors, a portion of the employee’s time for which he or she is getting paid, is not devoted to the growth, innovation, or creation of new products or services.

 Opportunity costs are measured by what an employee could have done if he or she were not involved in ongoing conflict.  It is estimated that Fortune 500 senior HR executives spend 20% of their time on litigation, which is in addition to others in the organization researching, preparing for depositions and other discovery, and briefing executives and counsel.  The Rank Organization estimated that 30%-40% of a manager’s time is spent in dealing with conflict.  Were this time used to pursue new business opportunities, profits would improve with no additional time spent on the job, and at the employee’s existing salary.

 Continuity costs are the lost productive relationships between colleagues, labor and management, with clients or customers, or with the community.  These costs can be either direct or emotional; a valued employee may leave for a less stressful job or spend work time on searching for alternatives, emotionally withdraw from the other employees, or even seek retaliation against the alleged perpetrator.  It is estimated that the turnover costs for one employee are between 50% and 150% of annual salary.  Absenteeism, theft, sabotage, vandalism, lower job motivation, wasted time and lost work time are all manifestations of emotional costs, and all adversely affect the business.

 Finally, the emotional costs are staggering.  Increased pain, stress, health-related absences, disability and even death can result from unaddressed conflict.  The emotions of anger, blame, fear, injustice, vengeance and frustration gnaw at the employee until something explodes; either a medical or violent reaction is inevitable.  In addition to increased medical costs, the energy expended on fighting the conflict will never be recovered. 

 The ability to effectively manage conflict is crucial in the current work environment.  When conflict is addressed promptly, either through an in-house conflict program or through outside intervention, it can dramatically improve the bottom line.  By examining and acknowledging the hidden costs of conflict, business owners, CEOs and HR professionals can improve company profits with minimal expense and a much more content and productive workforce.

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/13/AR2010121303865.html

As I look out over the blizzard pounding DC today, the second major storm in less than a week, I am reminded how conflict is like a blizzard. It swirls around in a seemingly random way offering no apparent way out. It takes its toll on body and spirit. You go out and shovel, and by the time you are at the end of the path, you turn around and the beginning of the walk is recovered with snow. It’s a never- ending cycle. But it doesn’t have to be.

Sometimes taking a step back, and reassessing the situation can give you a new perspective. Instead of fighting the wind blowing the snow, can you maneuver so that the wind is at your back, or working with you? Conflict is not necessarily something to avoid – it is the catalyst for change. Gaining a perspective on conflict is the first step to resolution. CRS can help you see your conflict more clearly, and navigate through it. Is it time for you to take that step?

As Karolyn Vreeland Blume sees it, litigation is an unwelcome houseguest that stays for two years.

Blume, a practicing attorney for nearly 30 years, suggests an alternative: mediation.

Her firm, Conflict Resolution Services, offers mediation and arbitration for family businesses, estates, professional partnerships and workplace conflicts.

Studies estimate managers spend between 30 percent and 40 percent of their time on the job dealing with some form of conflict. This especially can be the case in family businesses and small companies that often do not have personnel departments to address workplace conflicts and provide behavior guidelines, Blume said.

Blume markets her services as a way for businesses to retain control of a potentially toxic situation. Mediation provides a solution that both parties can live with, instead of a verdict imposed by a court. Both parties are involved in suggesting possible solutions to the conflict.

And mediation typically takes less than two months.

“I think mediation is a win-win situation,” Blume said. “I saw there was a terrible waste of court time and human time.”

Blume’s services consist of an initial consultation, and then a series of joint mediation sessions that typically last several hours. Blume also meets separately with each party “in caucus,” to ferret out sensitive details that might hint at the underlying conflict.

“You have to listen to what’s said and what’s not said,” Blume said.

Blume deals frequently with small companies in which a supervisor and an employee do not get along. Firing either of the parties could result in a wrongful termination suit. She also has dealt with family businesses as they make the transition to a second or third generation, whose members want to take the company in a new direction.

Mediation often allows the parties to continue professional and personal relationships that would otherwise be destroyed by a protracted court battle.

Some of Blume’s clients approach her as a last resort before taking the issue to court, while others seek her out once they’ve found how time-consuming litigation can be.

Mediation can be less costly than a trial, particularly when one considers the lost productivity and stress that conflict incurs.

Nationally, between 70 percent to 80 percent of cases that choose mediation instead of trial end in mutual agreement, according to the American Bar Association. By constrast, between 5 and 10 percent of civil cases need to go to trial. That’s because, experts say, companies should risk a trial only when at least $1 million in assets or sales is at stake.

For business disputes, mediation is relatively new to the Lehigh Valley, Blume said. It’s also relatively new in the world of law. Blume said when she attended law school in the 1970s, mediation was not offered as a course.

“It was all adversarial,” said Blume, who wants to use her business to educate the public about mediation.

Blume, 53, was born and raised in Manhattan. She moved to Allentown after completing her law degree at Villanova University in 1977.

She officially started Conflict Resolution Services in 2004, but she has been practicing mediation part-time for many years. She served as counsel for PPL, the Allentown utility, and worked as a senior law clerk for the U.S. District Court’s Eastern District of Pennsylvania. She also had her own private law practice for 15 years.

She is an adjunct professor in business law at Cedar Crest College, and in 1990 was the first female president of the Bar Association of Lehigh County.

Not every mediation case has worked out. But Blume said her clients have nothing to lose because the contents of the mediation sessions and her professional notes cannot be subpoenaed at a trial.

Blume sees her current job as providing a safe environment for people to air grievances to reach a peaceful resolution. She frequently meets at the Bar Association’s office in Allentown to provide a neutral setting for parties embroiled in a conflict. She said the first mediation session is frequently quite tense because both parties take the opportunity to “vent.”

“There are times when my head starts to spin and I think, ‘Why did I get into this line of work?’” Blume said. “But it always ends. I’ve never had a case where people leave as angry as they arrived.”

It’s 1 a.m. Tuesday and your neighbor’s dog is still barking.

Or, you’re driving to work frustrated and furious that you have to share an office with the most obnoxious person on the face of the earth.

Or, your 13-year-old daughter wants to “hang out” at the mall; you forbid it, and she is screaming through the house upsetting the rest of the family.

Sound familiar? These are among the dozens of conflict situations we face every day. Conflict is a part of life. It cannot be avoided, nor should it be. Innovative ideas are often born of conflict. But when conflict is allowed to continue or escalate without being addressed, the costs to individuals, families and society are significant.

What is conflict? Generally it is an ongoing disagreement between two or more stakeholders in a situation about needs, goals, philosophies or priorities. These disagreements manifest themselves in many ways such as hostility, physical illness, gossip, avoidance, sabotage, verbal or physical abuse, destruction of property, lack of or aggressive communication and other detrimental behaviors. Often the parties involved see no alternative.

Today, Oct. 20, is National Conflict Resolution Day, established to increase public awareness of conflict resolution and its many benefits. Through constructive problem solving, parties can often create a plan which will protect the interests of all concerned, and resolve the problem. The solutions are only limited by the creativity of those concerned — there are no rules, only resolutions. The parties themselves arrive at a win-win solution.

For example, perhaps the dog could be let out earlier in the evening, or the non-dog owner’s son could earn some money by walking the dog when the owner is not home, or the parties could jointly fence in the dog’s back yard so he could go outside during the day. There are dozens of other possibilities that might be agreeable to all concerned.

“An experienced mediator meets with the parties to assist in resolving the issues between them,” [Karolyn Vreeland Blume] said. “Mediation is not binding; therefore, if the parties do not reach an agreement, the process ends and litigation may follow. While many people are reluctant to engage in mediation because of the perceived lack of control over the process, the opposite is true.”

Mediation, however, is much faster and often resolves disputes in a month or less. It’s far less expensive than litigation. Proceedings are confidential and cannot be used later against either party. It is possible to take as much time as necessary to resolve the issues, and issues that may not be subject to judicial determination, such as other personnel or administrative concerns, can be resolved through mediation.

Q: I am a business owner involved in continuing conflict with a valued employee, and this conflict is having an adverse effect on my business. I do not want to fire him, but we cannot continue this way. Is there anything I can do?

A: Many businesses experience conflict with employees, managers, partners, shareholders and suppliers, among others. In the past, these disputes were most often handled through litigation.

According to Karolyn Vreeland Blume, a local attorney and owner of Conflict Resolution Services, alternative dispute resolution – such as mediation and arbitration — is quickly becoming the vehicle of choice for addressing business disputes.

“An experienced mediator meets with the parties to assist in resolving the issues between them,” Vreeland Blume said. “Mediation is not binding; therefore, if the parties do not reach an agreement, the process ends and litigation may follow. While many people are reluctant to engage in mediation because of the perceived lack of control over the process, the opposite is true.”

Mediators come from various backgrounds. Some are lawyers; others are business people, psychologists — it can be anyone who has taken training in the discipline.

Pennsylvania does not require certification for mediators. If you’re thinking of hiring a mediator, ask how many hours that person has studied, how many cases he or she has heard and in what fields they have experience.

Litigation is lengthy, usually in excess of two years after filing. It’s expensive, because each step of the legal process leads to the next, and once begun is almost impossible to stop. It’s open to the public and press. There is a limited amount of judicial time devoted to any particular case. And the ultimate decision is made by a judge who has no real stake in the outcome. The court, not the parties, controls the timing of all aspects of the case, from discovery through trial.

Mediation, however, is much faster and often resolves disputes in a month or less. It’s far less expensive than litigation. Proceedings are confidential and cannot be used later against either party. It is possible to take as much time as necessary to resolve the issues, and issues that may not be subject to judicial determination, such as other personnel or administrative concerns, can be resolved through mediation.

Most importantly, decisions are made by the people who understand the nature of the business and its problems and have a vested interest in the outcome. They are not constrained by what the law requires but rather can construct a settlement based on what is best for the profitability of the business.

The advantages of mediation represent significant savings to businesses in time, money, and stress. A recent study showed that resolution is reached in 85 percent of mediations. Rather than thinking litigation as a first step, consider alternative dispute resolution for business conflicts.