The business case for mediation in the workplace
The cost of conflict
Impact on staff well-being
- In 2018 (1) the Chartered Institute of Personnel and Development (CIPD) found that stress and other mental health problems are the biggest cause of absence from work in the UK. Stress is the third biggest cause of long term absence. The estimated cost of absence for mental health per employee is between £1.2k and £1.5k per year, depending on sector.
- A 2015 survey (2) from the CIPD found that 43% of people who had been involved in conflict at work found it stressful. One in 20 reported going off sick. The report concluded: “Clearly the greatest impact of conflict is on employee well-being. From an ethical perspective of creating a healthy, positive environment, this is enough to warrant concerted efforts to find faster, more effective routes to conflict resolution.”
- The same survey found that 39% of people who had been involved in conflict felt it had reduced their motivation and 14% a drop in productivity. In 1 in 10 cases someone left their job. It concluded that these figures “mark conflict as an important business issue”.
- ACAS research (3) among 500 UK businesses in 2016 found that 81% of businesses who had experienced workplace conflict said it had a negative impact on performance and 75% said it wasted management time.
The cost of formal action
When employees resort to grievance or disciplinary procedures, Employment Tribunals (ET) or court, the costs to the employer quickly spiral in the form of management time, legal fees, any resulting award and potential reputational damage. The 2017 abolition of fees for employees wishing to lodge an ET claim means that a barrier to accessing this process has been removed, providing additional incentive for employers to resolve issues quickly.
A 2011 survey (4) on conflict management by the CIPD among more than 200 employers found that:
- the average number of HR and management days spent on a disciplinary and grievance case was 18 and 14 respectively.
- On average, respondents said that 85% of disciplinary and grievance cases were resolved internally – highlighting the opportunity to intervene earlier at less cost.
- One third of respondents used compromise agreements to settle an existing tribunal claim.
- The median total cost of compromise agreements (compensation, management time, legal fees) was £11,000.
In 2015 the CIPD reported (5) that smaller employers spend an average of 12 days of management time and larger ones 20 days dealing with an ET.
An effective alternative: the benefits of mediation
The CIPD’s research on the cost to employers of responding to ET claims, has led it to actively encourage the use of mediation to resolve disputes at an early, informal stage. Its use by all kinds of employers has been increasing in recent years, simply because:
- It works – around 80% of mediations end in agreement. ACAS research (6) in 2008 found that among small and medium sized enterprises (SMEs) who had used mediation, 82% said the issues had been either completely or partly resolved. This compares with 58% of cases handled through formal procedures (2).
- It’s quick – mediations can be arranged swiftly and most are completed in one day.
- It’s inexpensive, particularly when compared to the costs of defending an ET claim. Half of surveyed employers who used mediation cited the avoidance of the expense of defending ET claims as a main benefit (4).
- It’s informal, and less stressful than formal processes. 64% of employers who used mediation reported the elimination or reduction of stress for staff as a main benefit.
- It’s constructive, helping participants to focus on what they need and work out a mutually acceptable way forward.
- It’s lasting –the participants are committed to the solution that they have forged.
- It can repair working relationships. 80% of employers who used mediation reported this as a main benefit (3).
- Those who participate in mediation can learn from the process and apply it in future conflict situations.
Mediation also supports progressive employment policies that promote staff well-being, diversity & inclusion – all key concerns among younger sections of the workforce in particular who expect the best employers to deliver on these commitments. Furthermore, mediation embodies the cultural values of empathy, collaboration and learning that are increasingly encouraged by employers and demonstrates how these can deliver valuable business outcomes.
- CIPD/Mind. (2018) People managers’ guide to mental health
- CIPD. (2015) Getting under the skin of workplace conflict: Tracing the experiences of employees – Survey Report.
- ACAS. (2016) responses to questions on conflict management commissioned by ACAS and included in BDRC Business Opinion Omnibus Poll of 500 UK businesses in March 2016
- CIPD. (2011) Survey report on conflict management.
- CIPD. (2015) Conflict Management: A shift in direction? Research report.
- ACAS (2008). Knowledge and use of mediations in SMEs. Research Paper.