Mediation as a management tool for resolving disputes

Mediation is a service aimed at helping parties who are in conflict to reach a solution. The future ISO standard ISO 10003, Quality management – Guidelines for dispute resolution external to organizations, addresses the mediation process. NEN, the national standards institute of The Netherlands, itself offers a mediation service.

by Steven van der Minne

Steven van der Minne is a mediator at the Netherlands Standardization Institute NEN, registered after a mediation course and successful examination at The Lime Tree Mediation and Training Network.

He helped to resolve a number of conflicts in the standards’ development area before setting up

the new mediation service at NEN, extending to conflicts involving published standards and issues relating to the eight ISO quality management principles.

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Web www.nen.nl

ISO is currently developing a suite of three standards that when used in combination will constitute a complete customer complaints management system.

The standards are:

–        ISO 10001, Quality management – Customer satisfaction – Guidelines for codes of conduct, currently at the stage of working draft,

–        ISO 10002: 2004, Quality management – Customer satisfaction – Guidelines for complaints handling in organizations, which was published in 2004 and reviewed in the September-October 2004 issue of ISO Management Systems (see, “ Complaints as free advice ”), and

–        ISO 10003, Quality management – Customer satisfaction – Guidelines for external customers dispute resolution, currently at committee draft stage.

The three standards provide an integrated framework for enhanced customer satisfaction through prevention of customer problems (ISO 10001), complaints handling (ISO 10002) and dispute resolution (ISO 10003).

What do when the customer is not satisfied with a product or service and the complaints handling process has not resulted in a satisfactory outcome either? The future ISO 10003 is the standard that gives guidelines for mediation by an external, independent “ third party ” if complaints cannot be resolved internally using ISO 10002. ISO 10003 provides guidance for various forms of dispute resolution, ranging from facilitating the negotiation process to a determinative and binding form of arbitration.

The future ISO 10003 gives guidelines for mediation by an external, independent ‘third party’

The standard developers are well aware of the fact that, in many countries, a court decision is the only legal basis for determinative dispute resolution. Therefore, this article concentrates on a form of dispute resolution where the disputing parties, assisted in the dispute resolution process by an independent party, determine the outcome by themselves – in other words, by mediation.

This mediation process is a tool that can help to solve conflicts in a broader sense, both in the field of standards’ development and in the field of conflicts involving the application of standards. To this end, the Netherlands’ Standardization Institute NEN (www.nen.nl) has set up a mediation service that began operating at the beginning of 2005.

Benefits of mediation

Since legal proceedings are money and time consuming, mediation may provide a solution in the short term that is inexpensive, confidential and that need not jeopardize the business relationship.

Mediation may provide a solution that is inexpensive, confidential and that need not jeopardize the business relationship

Anyone involved in a dispute typically wishes to resolve it as quickly as possible. Normal, businesslike relations between parties are much preferable to legal sparring. The latter often leads to a court decision and entails a great deal of time, energy, and money. Moreover, a court decision does not always offer a workable solution.

Therefore, more and more parties choose another form of conflict control: mediation.

What is mediation?

Mediation is defined as “ a facilitative process in which disputing parties engage the assistance of an impartial mediator who has no authority to make any decisions for them, but who uses certain procedures, techniques and skills to help them to resolve their dispute by negotiated agreement without adjucation(H.J. Brown and A.L. Marriott, ADR Principles and Practice, London 1999).

In almost every dispute, a solution can be found that is acceptable to all parties involved. The problem is that the parties involved in a dispute often do not see a solution. This can change with the help of a mediator.

The mediator does not take a position, but helps the parties to find a joint solution that everyone involved can live with. This is why an increasing number of both business and personal disputes are settled amicably by mediation. A major advantage is that the relationship between the parties is not necessarily damaged in the process, which can happen when the dispute is taken to court.

Mediation vs. legal action

What are the benefits of mediation, compared to a law suit?

Mediation is a fast and inexpensive alternative and the solution is built and accepted by the parties involved.

In mediation, there is room for creative solutions and the relationship between the parties may be preserved.

For example, in some countries, 10 % of the budget of building projects is earmarked for eventual law suits. Apart from the costs, these are time consuming and may take several years to complete. In contrast, the average mediation takes less than 20 hours within a period of three months. If only half of these law suits could be solved by means of mediation, the costs would be far less, the progress of the projects accelerated and the parties may continue doing business with each other.

Mediation is a fast and inexpensive alternative, compared to a law suit

Moreover, mediation is confidential, so the conflict is not dragged into the media, which may make the situation worse. There is no precedence as in a law suit, so the parties, if competent, are free to negotiate without the fear that making concessions or “giving in” on certain points will create future problems.

The procedure

There are two key characteristics for mediation: voluntariness and confidentiality.

Parties cannot be forced to participate in the mediation process. In addition, the participants agree to confidentiality before beginning.

At the start of the mediation process, the disputing parties and the mediator enter into an agreement to attempt to resolve the dispute by means of mediation. Mediation is an informal and flexible process. The parties are actively involved. The mediator stimulates them to express themselves, explain their situation, their worries, their needs and their interests. The parties decide by themselves how to work out their differences, without the mediator forcing the issue.

The mediator merely acts as a facilitator in their efforts to find a solution. The outcome attempts to achieve a “win-win” situation for everyone involved. The outcome is recorded in an agreement.

The mediator is independent and neutral: these are the two basic characteristics of a mediator. He or she has been trained in guiding the mediation process. The disputing parties may appoint their own mediator. They can also ask their national mediation institute or, in the case of the Netherlands, they can ask NEN for names

of registered mediators.

Often, below the overt cause of disputes lies an undercurrent of fears, worries, needs, and expectations

The mediator’s profile
Source : Netherlands Mediation Institute (NMI) – www.nmi-mediation.nl

• Services provided

A mediator assists as an independent expert in a process where two or more parties try to reach a joint solution to a dispute through negotiations

• Qualities

A mediator must be capable of conducting mediations independently. For this, the mediator must have sufficient experience, personal qualities, knowledge, personal interactive and other skills, and a professional attitude.

• Experience

The mediator must have sufficient life, social and work experience to be able to comprehend adequately the nature of the conflict dividing the parties.

• Personal qualities

The mediator should exhibit:

–        composure,

–        flexibility,

–        creativity,

–        positive attitude, and an

–        ability to handle stress and conflicts and to render these controllable.

• Knowledge

The mediators should have knowledge of:

–        patterns of communications between people who have a dispute with one another,

–        the concept of conflict mediation,

–        different negotiation methods, such as the Harvard (win-win) method,

–        and the conditions (with respect to the parties and the mediator himself/herself), which must be met before the mediation can begin.

• Abilities

The mediator should have the ability to:

–        make the areas of common interest and/or responsibilities transparent to the parties and to highlight the differences in their perceptions;

–        help the parties negotiate effectively and to overcome deadlocks;

–        determine and/or identify the agenda and/or the “hidden agenda”;

–        recognize abuse of the mediation;

–        recognize information which must be treated as confidential, even it this has not been explicitly identified as confidential;

–        ensure a balanced handling of the dispute in such a way that each party is given equal opportunity to participate in the mediation;

–        recognize when and when not to intervene in the negotiation process between the parties; and to

–        speed up the mediation process and to keep it going.

The NEN mediation process

At the beginning of 2005, NEN launched its own mediation service. Whereas ISO 10003 covers several forms of dispute resolution, but limits itself to customer relations, NEN concentrates on mediation and mediation in relation to all standardization issues.

For the standards’ development process, the NEN service may be extended to conciliation and advised negotiation, but not to any form of determinative, binding decisions. The key issue is to leave the decisions entirely to the parties.

The process starts with enabling the parties to explain their complaints, allegations, defenses, counter-arguments, etc. Often, below the overt cause of disputes lies an undercurrent of fears, worries, needs, and expectations. When the parties have managed to clarify and understand these underlying issues, they may formulate their interests and start negotiating.

In this process, NEN is neutral, independent and not responsible for the outcome of the negotiations.

In addition to ISO 10003, there are several links between standardization and mediation. For a start, both in standards’ development and in mediation, a standardization institute like NEN is neutral. NEN has no interest in the outcome of the negotiations. Furthermore, a national standards institute like NEN is independent in both contexts. It is not possible to be hired by one party to reach a decision if other parties have shown interest. Moreover, in both contexts, NEN is serving the process of consensus, facilitating a common perspective and focusing on the common ground.

Mediation and standardization

During the standards’ development process, many interests are at stake. Some of these interests may be conflicting. In most cases, a consensus is reached, but there may be more complicated conflicts below the surface. If parties stop communicating and block the process, it may come to a halt, whereas “ time-out ” with a mediator who helps the parties to rearrange their issues and to find common ground can allow the process to move forward.

Conflicts may also arise involving the application of standards

Conflicts may also arise involving the application of standards. For example, disputes relating to standards in the ISO 9000 family arise regularly. The eight ISO quality management principles (see ISO 9000 section on the ISO Web site: www.iso.org) may provide a basis for an agreement, depending on the practical application of these principles.

In the case of product standards, requirements may be interpreted in different ways, it may not be clear whether a party has met the requirements, there may be misunderstandings regarding the applicability of optional requirements or recommendations, etc. In most cases, parties sit down and discuss the business rationally.

However, with high stakes and pressure, emotions may engulf the issue, and the mediator may act like a fire fighter.

In some conflicts, negotiations are tough, even if parties manage to communicate in an appropriate way. Views on what should be done and how it is perceived compared to the “ benchmark ” can be so different that a solution is hard to find.

Between two parties, this is usually not the case, since they know the scope of the issue, but with parties representing larger interests, where the negotiating mandate is limited, there may be a need to find a common solution that suits the entire chain of suppliers and users.

The more stakeholders adhere, the easier it is to use the benchmark as a basis for a negotiating agreement. In such a case, a standardization project may provide a solution by means of a standard, although a less stringent level of standardization agreement such as a technical specification or an international workshop agreement is more likely.

Conditions and costs

Mediation can only succeed if the parties are willing to resolve the problem together and if they have the authority to enter into a settlement agreement. The costs of a mediation procedure consist of the fee of the mediator and assistants (if any), and the additional costs (e.g. meeting facilities, travel and overnight expenses).

Since mediators have no personal interest in the outcome, the fee will not depend upon a solution being reached. The parties to the dispute pay the costs on an equal basis, unless they agree otherwise. Furthermore, each party bears its own costs.