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Entrepreneurial Trends in Mediation Within the Commercial Sector

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Entrepreneurial Trends in Mediation Within the Commercial Sector

Other Briefs

29th August 2022

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As is known throughout the world, mediation - as a dispute-resolution forum - offers the benefits of being a quick, cheap, private and confidential process. The principles of mediation allow for the process to be more client-focused as well.
 
In South Africa, it has become common practice for workplace and commercial disputes to be resolved amicably. This is mainly because of recent changes to the applicable law, which stipulates that it is mandatory to consider mediation before commencing litigation.
 
As a case study on the influence of alternative dispute resolution (ADR) in business, I look to the experiences of Mitchell Kapor whose company went public in 1982 before being acquired by IBM in 1995 for 3.5-billion dollars. Mitchell Kapor is the co-founder of Lotus Development and is responsible for the creation of Lotus 1-2-3, a spreadsheet software. In the book Founders At Work – Stories of StartUps, he explains why he believes in alternative dispute resolution as a more appropriate forum to resolve disputes. 
 
In his interview for the book, when asked what mistakes he made in managing his business, he spoke about his lack of understanding people management, and not building a good management structure. He also believed his cultural biases that influenced his entrepreneurial skills held him back from hiring the right people. His main focus was to develop products and be creative. He wanted his company to reflect his personality and interests; the same way Microsoft reflects Bill Gates and Apple, Steve Jobs.
 
He, however, added that he firmly believed in and had a desire to set aside the capitalistic culture in his business and, instead, make treating people well the prominent culture of his business model. When disputes arose within his company, he ensured that they invested in alternative dispute resolution (ADR) and conflict-management approaches to improve employee relations and to resolve work-life issues, with one of the outcomes of this being an improvement in their corporate value of collaboration. As a result, the company never had any employment-related discrimination lawsuits. It also improved employee relations by forming a diversity committee that included LGBTQ plus representations. Kapor reflected that the success of his company was built on listening to the employees, and the use of ADR approaches gave them the platform to be employee-centred. 
 
What he noted from the decline of his company, after he had relinquished his control, was that his successor did not uphold the values of collaboration or putting the employees in decision-making seats when it came to representing the best practices for their divisions – which ultimately led to the dismantling of all that he had built up. In his interview, he stated that one of his regrets was engaging in lawsuits against competitors – because it was the traditional way – which incurred great costs both in terms of resources and revenue. He stated that the underhanded way of doing business, as we know it, to build profits and eliminate competition destroys relationships and results in distrust.
 
Now, just over four decades after the creation of Lotus Development and the Covid-19 pandemic, businesses in South Africa and around the world embrace the benefits of keeping their disputes in-house. The South African civil justice system has also shown its support in making mediation a mandatory consideration for dispute resolution through Rule 41A of the Uniform Court of Rules. In recent case law, the court addressed the implementation of Rule 41A and the benefits of mediation. The court found that “Rule 41A encourages mediation through a mild-mannered approach, with only a cost sanction at the end of litigation and an aborting of the process if there is abuse”.
 
Nowadays when disputes arise, entrepreneurs and business leaders prefer a more collaborative approach to understanding the tensions and conflict within their work environment, thus, saving costs in a struggling economy, protecting their brand reputation, and not disrupting the flow of work productivity. Using the collaborative approach affords them the opportunity to understand the needs, concerns and perspectives of their employees by listening to what makes them unhappy, while developing company practices and procedures to address employee wellness.
 
The workplace as it stands is evolving into a hybrid domain of in-person and online interactions, which have an impact on employee retention and employee workplace satisfaction. To boost morale, companies must be innovative in engaging with their employees and at the same time retain good quality staff.
  
The emerging trend is for business leaders to develop communication skills, and to transform their approach to resolving disputes so that it addresses the mental health challenges faced by employees who struggle to cope within the workplace amid the effects of the nationwide lockdown.
 
Entrepreneurs are creative by nature and transforming the workplace from a place of contention to one of collaboration and understanding has become mainstream. We are seeing that companies and organisations are increasingly engaging in discussions of creating policies that address diversity, equality and inclusion, therefore, difficult or uncomfortable conversations about implementing these policies are bound to create tensions. This is where the dispute-resolution process of mediation comes into play as the most appropriate tool to open doors of direct communication with disgruntled employees and amongst contract staff.  Moreover, offering their services as a mediator to facilitate these conversations opens up another channel allowing mediators to create workflow for themselves.

Written by Veerash Srikison, Director at Fair Practice

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