ALTERNATIVE DISPUTE RESOLUTION

Why not just sue? Why would a manager consider alternative methods for resolving disputes when s\he has access to a judicial system provided by the government and financed through taxation? - Litigation is expensive - Litigation can turn business colleagues into bitter enemies - Legal battles take time Companies increasingly use out-of-court methods to resolve their disputes \ trials are not the only option when it comes to dispute resolution Companies save thousands of dollars through the use of alternative procedures

ALTERNATIVE DISPUTE RESOLUTION (ADR)

One of the earliest examples of ADR is King Solomon in the Bible (dispute over the maternity of an infant boy) In a world of scarce resources, imperfect information and miscommunication conflicts are inevitable Managers non-litigation options for the resolution of business disputes, i.e. Alternative Dispute Resolution methods are: Negotiation Mediation Arbitration As well as hybrids, such as med-arb, minitrials and summary jury trials

THINKING ABOUT ADR

To select the best alternative to litigation, managers must be aware of their own needs and constraints : Is the right decision is more important than quick resolution? Is time of the essence? Is public attention helpful to solve the conflict? Does the matter require confidentiality? Does the company need to preserve its relationship with the other party? What will be results of mutual resolution of the conflict? What is the goal?

NEGOTIATION
Everyone negotiates Negotiation is the give-and-take people engage in when coming to terms with each other Negotiation is a discussion between two or more disputants who are trying to work out a solution to their problem e.g. in car sale both parties would like to get the car and the cash; job descriptions may be misinterpreted; suppliers may demand more favorable terms; an employee may claim breach of contract when an expected promotion goes to someone else; a software developer might sue a customer who refused to pay the customized software.

NEGOTIATION/APPROCHES

Transactional negotiation forward looking with concern for desired relationships (e.g. between two firms involved in a Joint Venture both parties are looking to the future with positive expectations) Dispute negotiation backward looking to address past events that have caused disagreement (e.g. failure in delivery versus payment already made the parties are looking to the past and apportioning blame)

APPROACHES

Distributive or zero-sum negotiations (fixed

pie/resource/money) the only issue is distribution of a fixed pie The pie cannot be expanded the more for one necessarily means less for the other. E.g: The pie consists of the cash and the car (one persons loss is equal to other persons gain) Distributive bargaining , (, -. , , )

Integrative or variable-sum negotiations (growing

pie) mutual gains are possible as parties trade lowervalued resources for higher-valued ones (also called interest based bargaining) Disputants can almost always work together to "expand the pie" and create outcomes that benefit both sides E.g. the negotiation can be made integrative by offering a new paint the car or to remove the expensive stereo. The fresh coat can be highly valued

integrative bargaining , [] (, , )

There are often many interests behind any one position. If parties focus on identifying those interests, they will increase their ability to develop win-win solutions. The classic example of interest-based bargaining and creating joint value is that of a dispute between two little girls over an orange. Both girls take the position that they want the whole orange. Their mother serves as the moderator of the dispute and based on their positions, cuts the orange in half and gives each girl one half. This outcome represents a compromise. However, if the mother had asked each of the girls why she wanted the orange -what her interests were -- there could have been a different, win-win outcome. This is because one girl wanted to eat the meat of the orange, but the other just wanted the peel to use in baking some cookies. If their mother had known their interests, they could have both gotten all of what they wanted, rather than just half. (Exhibit)

PLANNING AND PREPARATION

'It is human nature to think wisely and act foolishly' Anatole France (1844-1924)
Before rushing ahead to the negotiation table, sit back for a while and consider these thought provoking negotiation approaches, perspectives and questions. A manager should do the following: Analyze the nature of the dispute (why they are at negotiating table); Specify goals and objectives; Outline the scope of the negotiation; (identify issues to be negotiated; determine reservation price, i.e. the price at which you are indifferent between the success and failure of the negotiation; consider alternatives/priorities; which alternatives you could offer and accept)

PLANNING AND PREPARATION

A negotiator should first establish his or her

BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT (BATNA). This is the outcome a

person will choose if the negotiation fails. Consequently, any settlement higher than ones BATNA is preferable to a failed negotiation Understand your opponent by asking questions \ what are the interests/priorities? Understand a particular negotiation situation and ask how important is your relationship with the other party, will the negotiation affect future negotiations, if so how?

Win-win, win-lose, and lose-lose are game theory terms that refer to the possible outcomes of a game or dispute involving two sides A "win" results when the outcome of a negotiation is better than expected, a "loss" when the outcome is worse than expected. Win-win outcomes occur when each side of a dispute feels they have won. Since both sides benefit from such a scenario, any resolutions to the conflict are likely to be accepted voluntarily. Win-lose situations result when only one side perceives the outcome as positive. Thus, win-lose outcomes are less likely to be accepted voluntarily. Lose-lose means that all parties end up being worse off. An example of this would be a budget-cutting negotiation in which all parties lose money. In some lose-lose situations, all parties understand that losses are unavoidable and that they will be evenly distributed. In such situations, lose-lose outcomes can be preferable to win-lose outcomes because the distribution is at least considered to be fair.

STRATEGY
The basic lesson of a game theory is look forward and reason back
Alice Bugsu

Quiet Fink
()

Prisoners Dilemma Both committed a dastardly deed Possible outcomes Finking is the dominant strategy

Quiet Fink

A 1 yr B 1 yr

A 8 yr B free

A free B 8 yrs

A5 yrs B 5 yrs

In other situations, though, lose-lose outcomes occur when win-win outcomes might have been possible. The classic example of this is called the prisoner's dilemma in which two prisoners must decide whether to confess to a crime. Neither prisoner knows what the other will do. The best outcome for prisoner A occurs if s/he confesses, while prisoner B keeps quiet. In this case, the prisoner who confesses and implicates the other is rewarded by being set free, and the other (who stayed quiet) receives the maximum sentence, as s/he didn't cooperate with the police, yet they have enough evidence to convict. (This is a win-lose outcome.) The same goes for prisoner B. But if both prisoners confess (trying to take advantage of their partner), they each serve the maximum sentence (a loselose outcome). If neither confesses, they both serve a reduced sentence (a win-win outcome, although the win is not as big as the one they would have received in the winlose scenario).

Description One person acts in an aggressive and pushy way, making unreasonable demands and requiring compliance. The other person then acts in a kind and friendly way, asking nicely and getting compliance. The good guy may apologize for the bad guy, or plead for compliance because the bad guy is being horrible to the good guy too. You can even do it as one person: be unpleasant and then apologize (you are under such stress) and ask nicely for what you want. Example

NEGOTIATION TACTICS - Good guy/bad guy

A husband and wife go out to buy some hi-fi speakers. He acts in an aggressive and dominant way, complaining about the price and the sales person's 'condescending' manner. She takes the sales person aside and apologizes for her husband and whispers a price at which she thinks he will buy.

BARRIERS TO RESOLUTION

Negotiations encounter the following barriers to the successful resolution of disputes: Strategic barriers are those obstacles one party intentionally places before the other (e.g. secrecy and deception may lead to lack of trust, refusing to compromise, a party may refuse to reveal what issues are important, or mislead opponents, etc) Structural barriers arise from the existing frameworks and institutions within which manager operates (unequal info between parties, conflict of interest between principals employed for negotiation, restricted communication between negotiators, political constraints, etc)

BARRIERS TO RESOLUTION

Psychological barriers are the most difficult to understand and remedy. They include: Reactive devaluation in which one party discounts proposals simply because the proposal came from an opponent; Divergent construals i.e. differing perceptions of the same event (e.g. bias in favor of the other side: IsraeliPalestinian case); Psychological dissonance (lack of consistency) such as inability to reject ones mistaken evaluation or announcement; Optimistic overconfidence in ones own position; Loss aversion, i.e. being risk seeking after suffering losses and risk averse after enjoying gains

MEDIATION
Mediator - When the parties agree to try to reach solution themselves, but with the assistance of a neutral third party who helps them find a mutually satisfactory solution A mediators role is to suggest ways to resolve the dispute fairly and guide the parties toward resolution; Unlike a judge, a mediator cannot enforce a solution, parties must come to a resolution themselves and then agree; Once agreement is reached, parties may formalize the arrangement with contracts, public statements, or letters of understanding

QUALIFICATION CRITERIA FOR MEDIATORS

Understand the negotiating process and the role of advocacy; Earn trust and maintain acceptability; Convert parties positions into needs and interests; Screen out non-mediable issues; Help parties invent creative options; Help parties identify principles and criteria that will guide their decision making; Help parties assess their alternatives; Help parties make their own informed choices; Help parties assess whether their agreement can be implemented

ARBITRATION

Is the resolution of a dispute by an independent, skilled and knowledgeable third party called an arbitrator Unlike mediation, arbitration usually results in a binding decision that is enforceable in court Like mediation arbitration is quick, less costly and usually private

ARBITRATION PROCESS
Essentially like a trial with three process: 1. Pre-hearing - the parties submit supporting documents, statements and briefs; 2. Hearing the parties are basically at a trial; 3. Post-hearing the arbitrator makes a decision after considering all the evidence presented in pre-hearing and hearing (Exhibit) Case 4.2.

HYBRIDS
A. MED-ARB the parties enter mediation with the commitment to submit to binding arbitration if mediation fails to resolve the conflict. The same person serves as mediator and arbitrator B. MINI-TRIAL usually lawyers conduct discover for few weeks. The top mgt of the two businesses hears the lawyers from each side present their case in a trial format. The presentations are moderated by a neutral third party, often an attorney or a judge C. SUMMARY JURY TRIAL parties put their cases before a real jury which renders a nonbinding decision. The result is often the basis for a negotiated settlement. d. OTHERS ombudsperson An appointed official whose duty is to investigate complaints, generally on behalf of individuals such as consumers or taxpayers, against institutions such as companies and government departments. A designated internal mediator in an organization whose duty is to assist members with conflict resolution and other problems and to serve as independent consultant to recommend changes to policies or procedures to improve organization effectiveness and efficiency.

Azerbaijan The ombudsman of the Republic of Azerbaijan is Elmira Suleymanova. She was elected by the Parliament of the to the Position of the Commissioner for Human Rights (Ombudsman) of the Republic of Azerbaijan on 2 July 2002. Elmira Suleymanova was born on 17 July, 1937 in Baku, Azerbaijan. She is a graduate of the faculty of chemistry at the Baku State University. She holds a degree of Ph.D., doctor of Chemistry (1980), professor (1982).From 1980, she was one of the leaders of womens movement in Azerbaijan. Elmira Suleymanova has received numerous awards for the defense of Human Rights.