Research reveals gaps in management of disputes

Nearly two thirds of organisations donít educate staff on dispute avoidance

30% of companies donít learn from previous disputes

Over half (58%) of senior managers are concerned about the impact a dispute will have on employee morale

21% of disputes are with employees

Organisations need to improve the way they manage disputes, according to the latest research from law firm Nabarro. The findings suggest that many organisations do not have effective procedures and training in place to prevent disputes from arising or escalating.

The study shows clear scope for organisations to improve their risk management procedures. Whilst risk management has taken off as a discipline in recent years with the majority (78%) of companies now having a risk management policy in place, the research reveals that only one third of these policies cover dispute resolution. This is despite the fact that commercial disputes cost UK PLC an estimated 33 billion each year.

Organisations also need to ensure that there is an effective feedback loop in place. Less than a third of respondents (30%) update their policies in the light of lessons learnt from disputes. Adequate training is crucial, yet only 51% of companies have training programmes focused on dispute avoidance and management for senior managers and only 38% train other staff in this area.

Many of the factors said to cause disputes to escalate, such as poor communication, not being fully aware of the facts and poor case management, could be improved with better procedures and training. The research demonstrates the critical role played by front-line staff and the need to take the right steps at an early stage. It is therefore alarming that on average staff understand less than half (41%) of risk management policies. Case studies and clear language are good first steps for embedding messages.

Susan Gordon, Employment Dispute Resolution partner at Nabarro, comments: ìDisputes, in one form or another, are inevitable. It is therefore important to have an effective risk management policy in place to protect your organisation and employees. This should include clear, practical dispute management procedures, and comprehensive training for employees. Not only should this help to minimise the risk of disputes arising, but it should also provide a framework for dealing with them when they do occur. By feeding the lessons learnt back into your risk management policy, the time and costs involved in settling a dispute can be minimised. It is worrying that so many organisations seem to simply rely on having a policy in place with the implementation and training ñ so vital to success ñ potentially overlooked.

ìEducation and internal communications are crucial for improving the understanding of risk management procedures. The research reveals that front-line staff are critical in halting potential disputes before they erupt, but respondents admit that they often lack the knowledge or skills to resolve them effectively.î

Despite clear inadequacies in many risk management policies, the study shows that disputes are a major cause for concern for senior management. Top of their list of concerns, ahead even of the cost of potential damages, is damage to an organisationís reputation (89%). Eight out of ten respondents worry about the time taken up by disputes and over half (58%) are concerned about the impact that a dispute could have on employee morale.

The most common types of dispute are with customers (34% of all disputes), followed by employees (21%) and suppliers (15%). Worryingly, almost half of all respondents (44%) actually blame ineffective risk management procedures for causing disputes.

Susan Gordon continued: ìDisputes with employees, whether claims by the employee (such as unfair dismissal or discrimination) or litigation against a former employee such as for breach of restrictive covenants, not only divert attention from the core business, but can also have a very destabilising effect on other employees.î