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Send  Share  RSS  Twitter  12 Sep 2012

MANAGEMENT: Mediation Cuts Cost Of Conflict


Recent Western Cape Business News

MEDIATION is set to soon become compulsory in civil and commercial disputes before the South African courts. This will have a significant impact on our civil justice system, legal practice and companies’ governance strategies, as the current cost of conflict to organisations that do not practice mediation, is very high.

This is according to Barney Jordaan, founder and head of the Africa Centre for Dispute Settlement (ACDS) at University of Stellenbosch Business School (USB). The USB hosted the recent International Association of Conflict Management’s (IACM) annual conference, held for the first time on African soil.

As chair of the local organising committee of the IACM conference, Jordaan says that one of the hot topics at this year’s conference was the impact that proposed new mediation rules will have on the South African legal and business spheres. He believes this will impact significantly on corporate practices and their legal strategies, as well as on the legal profession generally.

While we have a long tradition of mediation in labour-related disputes, we lag behind in the arena of mediation in civil and commercial legal disputes both in the context of the rest of Africa and many parts of the developed world. One concern is that the training offered to local mediators should strive to meet the exacting standards applicable in countries that are more advanced in civil and commercial mediation.”

According to a survey conducted with 5 000 employees in various countries in Europe and the Americas by OPP - an international business psychology consultancy, jointly with the UK-based Chartered Institute of Personnel and Development (CIPD) - employees spend between 0.9 hours and 3.3 hours a week dealing with badly managed conflict, amounting to roughly 5% of their weekly working hours. Another study conducted in the UK by the Centre for Effective Dispute Resolution found that 80% of disputes have a significant impact on the smooth runnng of a business. Jordaan explains that even though mediation is being promoted as a better way of resolving business and work-related disputes, there are high costs to companies who do not manage organisational conflict effectively.

The average amount of time spent in dealing with badly managed conflict is not valued and does not contribute to achieving operational targets. High costs of badly managed conflict include employee disgruntlement, client dissatisfaction and a negative company reputation. Most of these costs are hidden and difficult to qualify, however, visible consequences in cases of reduced motivation of staff leading to lower quality products, services or mistakes that can even threaten clients’ lives can become apparent.”

Jordaan explains that mediation is a favoured form of dispute resolution when compared with litigation because it is more cost-effective and quicker.

The end result of mediation, in the vast majority of cases, is an agreement between the disputing parties about how they want to resolve their differences. Parties are therefore more in control of the outcome, meaning that they decide for themselves what would be in their best interests, rather than allowing an external party such as an arbitrator or judge to decide. Around 80% of disputes that are referred to mediation are, in fact, settled,” Jordaan says.

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