In the constantly evolving landscape of modern work environments, managing workplace litigation and dispute risk has become increasingly important for HR professionals and business leaders. In our recent survey, 100% of HR decision-makers in companies reported experiencing some form of workplace dispute in the last year, with 75% acknowledging that these disputes led to some level of litigation. Surprisingly, about 35% of those surveyed revealed that litigation costs exceeded $250k over the past year.
Despite the critical nature of these disputes, many organizations still handle them reactively, rather than proactively. The traditional models of managing workplace disputes—often relying on outdated policy manuals or one-size-fits-all online training—have not kept pace with the complex, nuanced nature of today's employment disputes, which range from harassment claims to wage and hour disputes.
Just like fraud prevention, managing litigation risk is not just about managing incidents but understanding identities.
All Disputes Have a Core
At the heart of every workplace dispute or litigation risk, there's an underlying human factor; it involves individuals or groups with distinct identities, perspectives, and motivations. Recognizing this can significantly shift how organizations approach dispute resolution and litigation prevention. Instead of solely focusing on the legal aspects of a dispute once it arises, companies can benefit immensely by understanding the people involved and the dynamics at play well before issues escalate.
For instance, incorporating continuous feedback mechanisms, fostering open lines of communication, and promoting a culture of respect and inclusion are just as critical as having robust legal and compliance frameworks. More so, these strategies help identify potential flashpoints early, allowing for preventative measures rather than reactive firefighting.
Understanding the Individual
In today’s diverse workforce, understanding an individual goes beyond just knowing their role and responsibilities. It involves appreciating their background, experiences, and expectations from the workplace. By doing so, organizations can foster a culture where disputes are less likely to arise and, when they do, are managed in a way that respects all parties involved.
Similar to how financial services firms have had to shift their focus from transactional analysis to identity understanding in fraud prevention, HR departments and company leaders should move towards an individual-focused approach in dispute avoidance and resolution.
This shift involves rigorous hiring processes, regular performance and satisfaction assessments, and creating opportunities for open dialogue across all levels of the organization. More importantly, it emphasizes the continuous assessment of the fit and alignment between employees' values and the company's culture.
Your Second Line of Defense
While understanding individuals and fostering a healthy work environment are your first lines of defense, it's also critical to have reactive measures in place. Just as financial services have mechanisms to flag and investigate suspicious transactions, companies need systems to quickly and effectively address disputes when they arise.
However, by prioritizing an understanding of individuals and organizational culture, the need for these reactive measures can be significantly reduced. Not to mention, when disputes do arise, the foundation of understanding and respect already built can make resolution smoother and more amicable for all parties involved.
Moving Forward
The pressure to create exceptional employee experiences and maintain a positive workplace culture is mounting. Companies are recognizing the importance of HR leadership in strategy discussions, similar to the rise of risk officers in the financial services industry.
Adapting to a model that emphasizes understanding individuals and preemptively managing employment disputes not only reduces litigation costs but also contributes to a more engaged, productive, and satisfied workforce. Investing in the right tools, like Relation Ops, and strategies that enable a deep understanding of your workforce's identity throughout their lifecycle with your company is not just good HR practice—it's smart business.
