This report will discuss the different processed for Alternative Dispute Resolution (ADR) and the advantages and disadvantages of each type. Types of ADR
This form of ADR is give and take. The parties involved engage in discussions in order to come to terms with each other (Bagley & Savage, 2010). Negotiations can either take place to ensure future relations are positive – this is referred to transactional negotiation. The other form of negotiations is dispute negotiations. This form of negotiations addresses past events that may have lead up to discord between the parties involved. A manager can prepare for negotiations by coming to the negotiation table with an open mind and willingness to hear the opposing party. Also, the manager should know the facts surrounding the dispute and look at any past negotiation the organization may have participated in similar to the dispute and the resolution.
The advantage of negotiations sometimes allows for parties to walk away from the negotiation with both parties a winner. This type of negotiation is referred to a integrative negotiation were both parties work out an agreement that both parties can receive more than originally agreed and the relationship can be preserved (Bagley & Savage, 2010). If both parties have an equal interest, the negotiation can turn bitter, because neither party is willing to give up more than they are willing to gain. This type of negotiation is referred to as distributive negotiations (Bagley & Savage, 2010). Neither party in this type of negotiation comes out as a winner, because typically the business relationship is lost.
Mediation is conducted between the disputing parties and a third-party that is there to assist the parties in reaching a mutually satisfactory resolution (Bagley & Savage, 2010). In mediation, the mediator does not reach the resolution; the parties in the mediation in reach a resolution and agree to abide to it. Mediation allows for parties to reach resolutions that are agreeable to both and preserve relationships that may fall apart if the parties involved have to go undergo formal litigation. A manager can prepare for this type of ADR, by entering the mediation with a clear understanding of what the organization is looking to gain or willing to lose with the mediation. This will require the manager to speak with leadership, present the facts as they are known and get come to a reasonable solution.
The advantage of mediation is that mediation often happens quickly and inexpensively. Companies can save money with mediation and can most times resolve disputes without going into formal litigation. A disadvantage of mediation is that the resolution is not binding. Either party can choose to pursue formal litigation at any time after the mediation. Another disadvantage of mediation is that parties do not have their legal rights protected in mediation. Mediation can also be disadvantageous to a party, if both parties do not have the same bargaining power. Mediation procedures can be enforced with both parties has a representative present that has the authority to settle the dispute. The terms of agreement should also be in writing.
Arbitration is the most formal ADR process. In a binding arbitration both parties using arbitration enter into a binding agreement and both parties are bound by the arbitrator’s decision (Bagley & Savage, 2010). A manager should be prepared for this type of arbitration by entering into the arbitration with a reasonable and fair offer. In this type of arbitration the parties will bring a proposal to the arbitrator and the arbitrator will choose one of the proposals. If a party brings an unreasonable offer to the arbitration, that party will more than likely lose.
In a nonbinding arbitration, the arbitrator will hear both sides of the argument and examine the evidence (Bagley & Savage, 2010) if an agreement cannot be reached, this type of arbitration can be used as a baseline for what a court may decide (Bagley & Savage, 2010). The advantage of a binding arbitration is that both parties are bound by the arbitrator’s decision and both parties are legally bound to that decision. Another advantage is that parties can select an arbitrator that is familiar with their industry or particular dispute. The disadvantage of arbitration is that arbitrators are not required to apply rules of evidence or procedure and also the decision of the arbitrator cannot be appealed.
Bagley, C., & Savage, D. (2010). Managers and the legal environment: Strategies for the 21st century. (6 ed.). Mason, OH: South-Western Cengage Learning.