Employers’ Experiences With ADR In The Workplace (1997)

By
United States General Accounting Office GAO

June 11, 1997

August 12, 1997
The Honorable John L. Mica
Chairman, Subcommittee on Civil Service
Committee on Government Reform and Oversight
House of Representatives

Dear Mr. Chairman:

In testimony before your Subcommittee in late 1995, we stated that the administrative redress system for federal employees was inefficient, time consuming, and costly. A number of federal agencies have recognized these problems and, in recent years, have looked for some means of alternative dispute resolution (ADR) to help lessen the burdens associated with the redress system, which was designed to protect federal employees against arbitrary agency actions and prohibited personnel practices, such as discrimination or retaliation for whistleblowing. Based not only on the fact that Congress has endorsed ADR in the past, but also that individual agencies have taken ADR initiatives and the Equal Employment Opportunity Commission (EEOC) has encouraged its use, it is apparent that policymakers and agency managers have been considering the advantages of using ADR to resolve federal workplace disputes.

As part of the Subcommittee’s efforts to reform the redress system, you asked us to provide information on (1) private sector companies’ and federal agencies’ reasons for using ADR; (2) the types of ADR these organizations have made available to their employees through procedures other than those under collective bargaining agreements and the extent to which they have put these ADR processes in place; and (3) the results, if any, they have achieved by using ADR. You also requested that, for illustrative purposes, we select a small number of private companies and federal agencies and examine (1) their experiences in planning and implementing ADR processes; (2) the extent to which they evaluated their ADR processes and the extent to which they reported that these processes have been successful in resolving workplace disputes and in lessening the costs—in time and money—associated with formal redress processes and litigation; and (3) the lessons they reported learning in planning, implementing, and evaluating their ADR processes. Results in Brief

Many private companies and federal agencies have used ADR to avoid more formal dispute resolution processes: lawsuits and—especially in the federal sector—formal administrative redress procedures. One reason for the use of ADR, as reflected in the literature and reported by private and federal officials, was that traditional dispute resolution processes have been costly, in both time and money, and became especially so as the number of discrimination complaints rose sharply in the early 1990s. In addition, a number of new laws and regulatory changes in the 1990s encouraged organizations to use ADR in workplace disputes. Moreover, ADR often focuses on disputants’ underlying interests; and the EEOC, among others, has noted the potential advantages of techniques that focus on understanding the disputants’ underlying interests over techniques that focus on the validity of their positions (e.g., a complaint of discrimination or a defense against a complaint).

Through a broad examination of ADR use involving interviews with experts and practitioners, a review of the literature, and our earlier survey of the private sector, we identified five main ADR methods available to private sector employees and, in some instances, to federal employees: ombudsmen, mediation, peer panels, management review and dispute resolution boards, and arbitration. According to our survey, in 1994, about 52 percent of private companies reported having some type of ADR process in place for discrimination complaints; these companies reported that they generally instituted ADR organizationwide. In contrast, 31 percent of the 75 federal agencies responding to a 1994 EEOC survey made ADR available for discrimination complaints. By 1996, this percentage had increased to 49 percent, based on responses from 87 federal agencies to an October 1996 EEOC survey. But as our review of the literature, our interviews with experts and knowledgeable officials, and our case illustrations showed, ADR availability or use was not pervasive—or even necessarily widespread—within agencies that reported having some ADR capability.

Private companies responding to our survey generally reported employing a wider variety of ADR methods than did federal agencies. Of the private firms that reported using ADR, about 80 percent used mediation, about 39 percent used peer review panels, and about 19 percent used arbitration. EEOC’s surveys showed that most federal agencies that reported having ADR used only mediation.

No comprehensive data were available on ADR results in the private and federal sectors; but, as our broad examination of ADR use and our case illustrations showed, experts and officials at organizations using ADR generally considered it to be successful in resolving workplace disputes, thereby avoiding more formal dispute resolution processes. Comprehensive data were unavailable on the extent to which ADR has saved organizations time and money, largely because most ADR programs are relatively new, and because time and cost savings have not been widely tracked or evaluated. Experts and officials at organizations using ADR generally believed, however, that avoiding litigation or more formal redress processes produced savings.

The five companies and five federal agencies that we studied as case illustrations reported having varied but generally positive experiences with ADR (only one—the Department of Agriculture—found serious flaws in its ADR program). Officials at nine of these organizations reported that efforts had been made to involve employees in developing their ADR programs, to train key participants, and to make their ADR programs known and understandable throughout the organization. The fact that the companies were not subject to the rules that govern the federal employee administrative redress system, which provides for hearings before an administrative judge, allowed them to establish ADR practices—particularly in the area of arbitration—that are not found among federal agencies. The extent to which the companies established these practices varied from one company to the next.

Most of the organizations we studied gave only limited attention to evaluating the results of their ADR programs and the time or cost savings these programs may have generated. All 10 organizations gathered at least some data on dispute resolution rates, although these data were not generally conclusive. To the extent that data were available, mediation, peer panels, management review boards, and arbitration (which is generally not available to federal employees outside of the collective bargaining process) all appeared to contribute to the resolution of workplace disputes. Mediation appeared to be particularly useful, leading to resolution in a high percentage of cases in all but one of the organizations we studied.

Data were limited regarding time and cost savings. None of the companies and only two of the agencies reported data on the amount of time saved by the use of ADR. The two federal agencies indicated that using ADR had cut about one-third to one-half the time it had normally taken to resolve discrimination complaints. (Two other agencies indicated that ADR processes, by resolving discrimination complaints in their early stages, had reduced the number of formal complaints that were filed, along with the necessity to spend time on the associated formal procedures.) Cost savings were difficult to establish. Only one company and one federal agency had performed evaluations that produced data regarding cost savings. The company reported that with ADR in place, the overall cost of dealing with employment conflicts, including the total cost of the ADR program, was now less than half of what the company used to spend on legal fees for employment-related lawsuits. The agency that had gathered data on cost savings found that, when the cost of settlements was factored in, it was unclear whether its ADR process was less costly than the traditional equal employment opportunity (EEO) complaint process.

The lessons that the organizations we studied reported learning in planning, implementing, and evaluating their ADR programs varied, but many of them centered on ensuring that the appropriate ADR methods were adopted and that they fulfilled their potential. Some of the lessons organizations reported learning were the importance of top management commitment in establishing and maintaining a program, the importance of involving employees in the development of their ADR programs, the advantage of intervening in the early stages of disputes so as to focus more on underlying interests than on hardened positions, the necessity to balance the desire to settle and close cases against the need for fairness to all concerned, and the fact that ADR programs could help improve managers’ understanding of the roots of conflict in their organizations. Background Federal employees have long had substantial workplace protections through an administrative redress system that was designed to safeguard them against arbitrary agency actions and prohibited personnel practices, such as discrimination or retaliation for whistleblowing. But the redress system—especially insofar as it affects workplace disputes involving claims of discrimination—has been criticized by federal managers, as well as by employee representatives, as adversarial, inefficient, time consuming, and costly.

For executive branch employees, the first opportunity for redress is within their own agencies. For matters that are not resolved at the agency level, or not handled solely under the terms of collective bargaining agreements, three independent federal bodies process employee complaints and appeals.

EEOC adjudicates employee complaints of discrimination, which generally are investigated first by the agencies for which the employees work;
the Merit Systems Protection Board (MSPB) adjudicates, among other things, employee appeals of firings or suspensions of more than 14 days; and
the Office of Special Counsel investigates employee complaints of prohibited personnel practices—in particular, retaliation for whistleblowing.

In some cases, a single complaint may be handled by more than one of these agencies, adding to the time and costs involved in its resolution. Finally, the law allows for further review of these agencies’ decisions in the federal courts.

The Administrative Dispute Resolution Act of 1990, which required federal agencies to develop ADR policies, charged the Administrative Conference of the United States (ACUS) with (1) assisting agencies in developing ADR policies and (2) compiling information on agencies’ use of ADR. The act sunset in September 1995, and ACUS was abolished in October 1995. The Administrative Dispute Resolution Act of 1996 permanently reauthorized the 1990 act and charged the President with naming a successor to ACUS to facilitate and encourage agency use of ADR. As of July 1997, no successor had been designated.

The term ADR covers a variety of dispute resolution techniques, usually involving intervention or facilitation by a neutral third party. ADR methods—arbitration and mediation in particular—date back to the early 1900s. Originally, ADR was used mostly to resolve disputes involving employees who were covered by collective bargaining agreements. More recently, organizations began applying ADR methods to disputes involving other employees as well.

Although ADR has been used as a tool—especially in resolving disputes that arise from miscommunication, personality conflicts, or alleged discrimination—many experts and practitioners cautioned that ADR is not appropriate in all cases. Inappropriate situations, they said, include incidents of violence or cases of severe sexual harassment. Under the Administrative Dispute Resolution Act, ADR is also considered inappropriate when authoritative resolution of a matter is required for precedential value, the matter in dispute has significant government policy implications, or it is important to produce a full public record of the proceedings.