Page 1/27 Towards a Strategic Approach to Organizational Conflict Management Ariel C. Avgar School of Labor and Employment Relations University of Illinois at Urbana-Champaign ACR Workplace Section Teleseminar Monday, August 31, 2015

Page 2/27 The Strategic Underpinnings of Conflict Management in U.S. Corporations: Evidence from a Survey of Fortune 1000 Companies David B. Lipsky Cornell University Ariel C. Avgar University of Illinois at Urbana-Champaign J. Ryan Lamare Penn State University

Page 3/27 Presentation Road Map  State of organizational conflict management: Evidence from Fortune 1000 firms  Traditional explanations for the rise of sophisticated conflict management practices and systems in organizations  The strategic underpinnings for the adoption of conflict management practices and systems  Summary and conclusions

Page 4/27 Motivation  The dramatic growth in the use of ADR by many U.S. employers, especially major corporations, over the past 40 years  ADR: The use of arbitration, mediation, and other dispute resolution techniques to resolve workplace conflict  Employers began to use ADR as an alternative to litigation and (sometimes) to collective bargaining  The recent emergence of so-called “integrated conflict management systems” in many U.S. organizations  The relative lack of empirical research on the drivers (especially from a strategic standpoint) of these organizational innovations

Page 5/27 * These options were only included in the 2011 study The Proportion of Corporations that Used the Technique at Least Once in the Previous Three Years Experience with Types of ADR among Fortune 1000 Companies, 1997 and 2011

Page 6/27 The Proportion of Corporations that Used Mediation at Least Once in this Type of Dispute in the Previous Three Years The Use of Mediation by Type of Dispute, 1997 and 2011

Page 7/27 The Proportion of Corporations that Used Arbitration at Least Once in this Type of Dispute in the Previous Three Years The Use of Arbitration by Type of Dispute, 1997 and 2011

Page 8/27 Proportion of EmployeesPercentage of Companies More than 75 percent19.0% Between 51 and 75 percent3.5% Between 26 and 50 percent3.5% Between 1 and 25 percent19.4% Zero43.3% Don’t know11.3% “What Proportion of Your Employees are Covered by ADR?” Resolving Employment Disputes

Page 9/27 Does Your Company Have an Office or “Function” Dedicated to Managing Your Dispute Resolution Program? Conflict Management System

Page 10/27 Existing Explanations for the Rise of New Conflict Management Practices  The new social contract in U.S. employment relations  The so-called “litigation explosion”  The decline of the labor movement  Globalization and increasing market competition  The deregulation of industry  The reorganization of work and the decline of hierarchy  The pace of technological change

Page 11/27 Principal Reasons Companies Use ADR, 2011

Page 12/27 Strategic Choice and the Study of Organizational Conflict Management  Most of the existing explanations view ADR and CMS as a reactive response to either external or internal pressures  Our study proposes a strategic lens through which to assess ADR and CMS adoption patterns  Firms, according to this argument, are adopting conflict management practices as a function of strategic choice and not as a mere reactive response to organizational and environmental pressures  In doing so, we build on the seminal industrial relations research on the strategic choices managers make in adopting and implementing organizational practices

Page 13/27 Strategic Choice and the Study of Organizational Conflict Management: Two Elements  Strategic Orientation—What are the anticipated benefits delivered to the organization through the adoption of conflict management practices?  Commitment to Conflict Management Practice—Once practices are in place, what proportion of the firm’s employees are afforded access to them?

Page 14/27 Strategic Choice and the Study of Organizational Conflict Management  Three dominant strategic orientations  Seeking gains in efficiency through the use of ADR (efficiency)  Avoiding litigation and reducing associated costs (litigation avoidance)  Retaining management control and improving internal relationships (sustainable resolutions)  Management commitment to ADR  Proportion of the workforce that is covered by ADR practices

Page 15/27 Proposed Endogenous ADR and CMS Antecedents Conflict Management Strategy Efficiency Litigation Avoidance Sustainable Resolutions Commitment to ADR Adoption of ADR and Conflict Management Systems

Page 16/27 Framework for the Study  Cornell conducted the first comprehensive survey of ADR practices used by Fortune 1000 corporations in 1997  The 1997 survey documented the following results:  The growing use of ADR, especially arbitration and mediation  The corporate preference for interest-based (rather than rights- based) methods of resolving disputes  The emergence of conflict management systems  Our new survey of the Fortune 1000 was conducted in  Designed in part to replicate the 1997 survey, and in part to capture new ADR developments adopted over the past 15 years  The new survey was cosponsored by Pepperdine, CPR, and Cornell

Page 17/27 Survey Design and Methodology  Our objective was to interview the general counsel (GC) of each corporation; if we could not interview the GC, we interviewed one of the GC’s top deputies  We succeeded in conducting interviews with top attorneys in 368 corporations; in the 1997 survey we conducted interviews in 606 corporations  In the current survey, 46 percent of the respondents were GCs and 54 percent were other attorneys in the GC’s office  The survey was administered by Cornell’s Survey Research Institute, and respondents had the choice of completing the survey by phone, by mail, or by web

Page 18/27 Testing the Model  We first test a firm’s portfolio of ADR practices using linear and ordinal regressions  We then test each of the individual ADR practices (arbitration, med-arb, fact-finding, peer review, in- house grievance system, early case assessment) and also the firm’s having a dispute resolution office or ombuds function, using logistic regressions  Finally, we interact our key independent variables (commitment to ADR and strategic orientations) and assess whether this interaction affects a firm’s portfolio of practices

Page 19/27 Total ADR Practices (Linear) Total ADR Practices (Ordinal) Conflict Management System (Logistic) Efficiency n.s. Litigation AvoidancePositive***Positive**Positive* Sustainable Resolution Positive*Positive**n.s. ADR Commitment Positive*** Regression Results

Page 20/27 Arbitration Fact- Finding (Logistic) Med-Arb (Logistic) Peer- Review (Logistic) In-House Grievance System (Logistic) Early Case Assessment (Logistic) Efficiency Orientation Negative*n.s. Positive*n.s. Litigations Avoidance Orientation Positive**n.s. Positive**n.s.Positive* Sustainable Resolution Orientation n.s. Positive** ADR Commitment n.s.Positive**Positive***Positive**Positive***n.s. Regression Results

Page 21/27 Interaction Terms

Page 22/27 Interaction Terms

Page 23/27 Interaction Terms

Page 24/27 Summary and Conclusions  Over the past 15 years, a growing number of major U.S. corporations – currently about 50 percent – have adopted ADR as their principal approach to resolving employment disputes  Many corporations have adopted a wider array of ADR techniques, including early neutral evaluation, early case assessment, and conflict coaching: they are using a growing portfolio of ADR techniques

Page 25/27 Summary and Conclusions  What factors have driven U.S. corporations to adopt and use ADR practices and conflict management systems?  Our results suggest that management’s strategic objectives and its commitment to ADR appear to be significant factors driving the corporate use of ADR practices and systems  Managerial conflict management strategy explains both variation in the total number of practices adopted and specific practices included in the portfolio

Page 26/27 Summary and Conclusions  We find strong support for a strategic choice model in the adoption of conflict management practices  Our findings suggest the need to expand the study of managerial conflict management strategies and their implications for organizational practices  Practitioners facilitating the adoption of ADR and CMS need to consider a firm’s strategic orientation  We also find that organizational commitment to ADR moderates the relationship between a firm’s conflict management strategy and adoption patterns