Dispute Resolution Program Heads Off Employee Conflicts

No company likes to throw away $1 million. However, that’s exactly how much money Brown & Root Inc, a Houston-based engineering, construction and maintenance company was spending each year in legal and court fees litigating disputes involving employees. To make matters worse, the company was spending this money on only 2% of its 35,000 employees who seemed unable to resolve their conflicts without litigation.

After considering a new tactic for nearly four years, Brown & Root implemented a dispute resolution program in June 1993. Whenever workers feel they need to resolve a dispute, the program allows them to choose one or all of four options: Open-door policy, conference, mediation or arbitration. “We wanted to give our employees several ports of entry to lodge a complaint if they wanted to,” says Ralph Morales, manager of employee relations and administrator of Brown & Root’s Dispute Resolution Program.

Because management surveyed employees extensively about what such a program should look like before they put it into place, there were few problems once it was implemented. Says Morales: “Only two employees had any problem with it.”

Open door policy. Although the company had maintained an informal open-door policy for many years, the new program emphasized that employees can take any problems to management at any level in the organization. Employees are encouraged to start at the lowest possible level, but they may take them as far up the chain of command as they need to, including the CEO.

In addition, the company added an employee hotline and a legal consultation program. Through the employee hotline, advisers offer free, expert and confidential advice and also provide information on how workers can solve problems informally within the company or through the other external options such as mediation or arbitration through the American Arbitration Association (AAA).

Employees also may request a legal consultation with the attorney of their choice when their dispute involves a legally protected right. “We can say it’s a fair system, but to make it fair, we said, how much more fair can it be if an employee has a legal concern about an employment problem, and we’re telling them that we’ll pay for them to go see a lawyer if they want advice,” explains Morales. “We wanted to level the playing field.” Legal consultations are paid for much like benefits under the company’s medical plan. Employees pay a deductible of $25 and a copayment of 10% of the balance, and Brown & Root pays the remaining 90% with a maximum annual benefit of $2,500 per employee. So far, only 14 employees have used this option.

Conference. Workers also may request a conference with a company representative and someone from the dispute resolution program to discuss the conflict and choose a process for resolving it. From there, the employee decides whether to loop back to the chain of command option, try an informal mediation process or to proceed with mediation or arbitration.

Mediation. Through the mediation process, employees resolve their disputes by talking through their conflict with a neutral third party, called a mediator, who helps each party come to an agreement based upon their interests and needs. Mediation is a nonbinding process that helps each side by opening up the lines of communication and helps them recognize their options. All mediators used by Brown & Root are employed by the AAA.

Arbitration. Like the mediation process, all arbitration proceedings are conducted by an AAA arbitrator. Employees are encouraged to resolve their conflicts before reaching this option; however, the company fully participates once this option has been selected. Arbitration is a binding process, through which employees can win monetary awards just like in a courtroom, although there is no jury.

“The first thing that people always think about is to implement something like this because it will save you money,” says Morales. Although the financial burden of litigation was a growing concern to the organization, a primary impetus for the program was to preserve the company’s relationships with its employees. “We’re not in the litigation business,” explains Morales. “So whatever we could do to minimize that, we wanted to do.”

Since the program was implemented, about 500 employees have used one or more of the program’s options. About 80% of their disputes have been resolved in fewer than four weeks. The majority of those conflicts have been resolved in fewer than two weeks. In an organization the size of a city, Brown & Root needed an alternative to litigation. “Any time you get people together, there are going to be disputes, and you just have to understand that you have to have a conflict management system in place to handle those,” says Morales. “We just don’t think that the courthouse is the place for it.”