United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Civil Service, Committee on

Government Reform and Oversight,

House of Representatives

August 1997 ALTERNATIVE DISPUTE

RESOLUTION

Employers’ Experiences

With ADR in the

Workplace

GAO/GGD-97-157

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-274297 

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.1

 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

1

Federal Employee Redress: An Opportunity for Reform (GAO/T-GGD-96-42, Nov. 29, 1995).

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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,2

 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.

2

We sent a questionnaire to a nationally representative sample of businesses with more than 100

employees according to reports filed with EEOC in 1992. Survey results were reported in Employment

Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution

(GAO/HEHS-95-150, July 5, 1995).

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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

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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.

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• 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.3

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.4

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

3

When ACUS was abolished, the Federal Mediation and Conciliation Service (FMCS), which shared

responsibility with ACUS for helping agencies develop ADR policies, assumed sponsorship of the

Federal ADR Network (FAN), an interagency group that provides assistance to agencies in designing

ADR systems, obtaining resources, or acquiring neutrals. In addition, FMCS assumed responsibility for

ACUS’ ADR research and clearinghouse activities.

4

In discussing the availability of ADR to federal employees, this report does not include procedures

available under collective bargaining process.

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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.

Scope and

Methodology

To provide information on private sector companies’ and federal agencies’

reasons for using ADR, the types of ADR these organizations have made

available through procedures other than those under collective bargaining

agreements, the extent to which they have put these processes in place,

and the results they may have achieved, we spoke with experts and

practitioners knowledgeable about the use of ADR in the private and

federal sectors, and reviewed the literature about ADR and information

available from past reports and surveys.

To illustrate private and federal sector organizations’ experiences in

planning and implementing ADR processes, 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

lessening costs, and the lessons they reported having learned, we

judgmentally selected for study five private sector companies and five

federal agencies that had some experience with ADR. These organizations

reflected a range of ADR practices; had ADR processes in place a sufficient

length of time to provide information about use, outcome, and lessons

learned; and had at least some use or outcome data available. In the

private sector, we studied Brown & Root, Inc.; Hughes Electronics

Corporation; the Polaroid Corporation; Rockwell International

Corporation; and TRW Inc. In the federal sector, we studied the

Department of Agriculture, the Department of the Air Force, the Postal

Service,5

 the Department of State, and the Walter Reed Army Medical

Center. We also studied the Seattle Federal Executive Board’s Interagency

ADR Consortium, a “shared neutrals” program, which provides for the

sharing of ADR resources among federal agencies in the Seattle area. In

5

In this report we included the Postal Service under the grouping of “federal agencies,” even though it

is an independent governmental establishment. We have done so because the Postal Service is bound

by most of the same discrimination complaint processes that apply to most federal agencies. A Postal

Service worker who alleges discrimination can take two courses of action concurrently: (1) the

employee can file a discrimination complaint under the federal employee discrimination complaint

process, and also (2) file a grievance through procedures covered by the union’s collective bargaining

agreement. Although both courses of action are available to Postal Service workers, this report deals

only with the ADR processes that the Postal Service has made available to workers who file

discrimination complaints under the federal employee discrimination complaint process.

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doing these studies, we obtained information about the organizations

either on-site or from telephone interviews with responsible officials, from

material and data they provided, and from published information.

There are limitations to the information we present in this report. First, the

case illustrations and the observations that we are reporting only illustrate

ADR approaches that have been put into practice and are not intended to be

considered “best practices.” Second, organizations identified through

literature searches and leads from experts in the field are more likely than

not to have reported successful outcomes. Third, the participation of the

private sector companies in our study was voluntary, and the companies

reserved the right to withhold proprietary information; this limited our

ability to analyze their programs with the assurance that we had obtained

all relevant data. Fourth, the views we obtained were those of agency and

company management and not of employees. Finally, we did not verify the

data that were provided to us.

We conducted our review between July 1996 and April 1997 in accordance

with generally accepted government auditing standards. We sent copies of

a draft of this report to the Chairman, EEOC; the Director, FMCS; and the

Director, Office of Personnel Management (OPM) for review and comment.

In addition, we asked cognizant officials from each case illustration

organization to review and comment on a draft of the case illustration

describing their respective organization’s ADR experiences. Their

comments are presented at the end of this letter. Details of our objectives,

scope, and methodology appear in appendix I.

Organizations Turned

to ADR for Several

Reported Reasons

According to the ADR literature as well as experts and practitioners in the

private and federal sectors, organizations turned to ADR as a means of

avoiding more formal dispute resolution processes. Many private sector

firms turned to ADR to supplement their traditional ways of handling

disputes (e.g., through the chain of command) with the intent of reducing

the number of litigations. For federal organizations, ADR offered a way to

avoid the burdens associated with both the administrative redress system

and litigation by federal employees.6

 Additionally, the use of ADR in the

private and federal sectors was spurred in the early 1990s by a dramatic

increase in the number of discrimination complaints, along with the costs,

time, and frustration involved in attempting to resolve them. Several new

laws and regulatory changes made companies and agencies even more

6

For further discussion, see Civil Service Reform: Redress System Implications of the Omnibus Civil

Service Reform Act of 1996 (GAO/T-GGD-96-160, July 16, 1996).

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likely to develop ADR processes. Moreover, in some quarters—such as

EEOC—a recognition emerged that the interest-based approach that is the

basis for some ADR techniques can be a constructive alternative to

adversarial, position-based processes.

Organizations Turned to

ADR to Avoid the Time and

Costs Involved in

Resolving Workplace

Disputes

Private and federal organizations alike turned to ADR to reduce their

involvement in costly and time-consuming processes: lawsuits

and—especially in the federal sector—formal administrative redress

procedures. In 1995, we reported that private employers were adopting

ADR approaches because of their concerns about the costs—in time,

money, and good employee relationships—of dealing with

employment-related lawsuits and discrimination complaints.7

 Among the

five private companies we studied as case illustrations, four cited

significant litigation costs as a reason for developing their ADR processes.

One of the companies—Brown & Root—turned to ADR after spending over

$400,000 to defend itself in a discrimination suit. Although the company

prevailed in the case, an official referred to it as “the case nobody won,”

because of the human and financial costs it involved. (See app. II.)

Among federal agencies, the primary reason officials reported for making

ADR processes available has been to avoid the costs—especially those

involving time and organizational efficiency—associated with the redress

system.8

 For example, according to EEOC data, the average length of time it

took for federal agencies to close a discrimination complaint in fiscal year

1995 was 305 days. For cases that involved both a hearing and a later

appeal to EEOC, the average processing time was 801 days.9

 As we stated in

our November 1995 testimony, the prospect of having to deal with the

lengthy and complex dispute resolution system can have a broader impact:

it can affect the willingness of federal managers to deal with conduct and

performance issues.

7

Employment Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution

(GAO/HEHS-95-150, July 5, 1995).

8

Individual federal agencies do not bear all of the costs of redress. They do not pay for the services of

EEOC and MSPB administrative judges or the cost of Justice Department defense services. In addition,

agencies do not generally pay the costs of court judgments or settlements resulting from

discrimination lawsuits; these costs are generally paid from the Judgment Fund, which provides a

permanent indefinite appropriation to pay such costs. The Postal Service is an exception; it is required

to use its own funds to pay judgment and settlement costs resulting from lawsuits.

9

EEOC reported that for cases closed in fiscal year 1995 that involved a hearing, the average

processing time was 572 days. The average processing time for a subsequent appeal to EEOC was 229

days in fiscal year 1995.

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Interest in ADR Grew With

the Rising Tide of

Discrimination Complaints

In both the private and federal sectors, the time and cost pressures that

helped spur the use of ADR increased when the number of discrimination

complaints rose sharply in the early 1990s. In the private sector, the

number of discrimination complaints filed with EEOC10 grew by 43 percent

between fiscal years 1991 and 1994—from 63,898 to 91,189—before

beginning to decline. In the federal sector, the increase in the number of

discrimination complaints filed with federal agencies11 was also

substantial, rising by 55 percent between fiscal years 1991 and 1995—from

17,696 to 27,472.12 In December 1994, the Commission on the Future of

Worker-Management Relations reported that the rise in complaints lodged

with administrative agencies and the increase in employment litigation had

led employers, employee groups, and lawmakers to seek alternatives.13

The increase in discrimination complaints in the early 1990s can be

attributed to several factors, according to EEOC, dispute resolution experts,

and officials of organizations that we studied. They said that downsizing

efforts resulted in a surge of complaints in both the private and federal

sectors. In addition, the Americans with Disabilities Act of 1990

established new grounds for employment-related complaints by the

disabled. (Federal workers had gained similar protections under the

Rehabilitation Act of 1973.) Further, the Civil Rights Act of 1991 allows for

the award of compensatory damages of up to $300,000 to employees in

cases where the employer has engaged in unlawful intentional

discrimination. While monetary damages had previously been available to

private sector complainants, under the Civil Rights Act of 1991 federal as

well as private sector workers can be awarded compensatory damages,

and private sector workers can also receive punitive damages in certain

10The EEOC investigates complaints filed by private sector employees against employers. Before a

private sector worker can take an unresolved matter to court, he or she must obtain a “right-to-sue

letter” from EEOC or a similar state or local agency.

11A federal employee files a discrimination complaint with his or her agency, which investigates the

complaint in accordance with regulations promulgated by EEOC. EEOC adjudicates an unresolved

complaint at the request of an employee.

12The number of private sector complaints declined by 14.5 percent between fiscal years 1994 and

1996, while the increase in federal sector complaints has continued unabated. (Fiscal year 1996 data on

federal sector complaints were not available at the time of our study.) EEOC attributes the abatement

in private sector complaints partly to its 1995 policy of screening and prioritizing complaints by private

sector employees. Although EEOC has not yet introduced a similar policy with regard to federal

employees’ discrimination complaints, it is studying ways to streamline the complaint process.

13The Commission of the Future of Worker-Management Relations (commonly known as the Dunlop

Commission after its chairman, former Secretary of Labor John T. Dunlop) was established by the

President in May 1993 and asked to investigate several issues. One of these issues involved what could

be done to enable employers and employees to resolve workplace problems themselves, rather than

turn to state and federal courts and government regulatory bodies. In December 1994, the Commission

completed its tasks and issued its final report.

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circumstances. The act also provided for jury trials; according to the

literature we reviewed, in jury trials, a plaintiff has a greater chance of

prevailing and receiving a higher award than in a hearing before a judge

alone. At each of the five federal agencies we studied as case illustrations,

officials said the increase in complaints at their agencies was driven partly

by the availability of monetary awards in addition to the previously

available forms of relief. Officials at four federal agencies said it was

typical for a complainant to request compensatory damages, regardless of

the severity of the allegation.

Recent Laws and

Regulatory Changes

Encouraged ADR Use

New legislative and regulatory developments in the 1990s have supported

the use of ADR in resolving workplace disputes. The Americans with

Disabilities Act of 1990 encouraged the use of ADR where appropriate; and

the Civil Rights Act of 1991 encouraged the use of ADR in EEO complaints

lodged by workers in the private and federal sectors alike. Other examples

include the Administrative Dispute Resolution Act of 1990, which required

federal agencies to develop policies to address the use of ADR, and the Civil

Justice Reform Act of 1990, which encouraged federal courts to use ADR in

managing their caseloads. In addition to these statutory encouragements,

regulatory features came into being as well. For example, EEOC issued

regulations in 1992 that encouraged the use of ADR in the federal

discrimination complaint process.14 And in 1995, EEOC established a policy

encouraging the use of ADR for dealing with discrimination complaints by

private sector employees.

Some Have Pointed Out

the Value of Interest-Based

Dispute Resolution

Another factor in the widening adoption of ADR practices has been a

recognition that traditional methods of dispute resolution do not always

get at the real or underlying issues involved between disputants and that

methods that focus on the disputants’ interests may have advantages.

Traditional methods of dispute resolution—lawsuits in the private sector,

formal administrative redress procedures in the federal sector—are

predominately position-based. Simply stated, each disputant stakes out a

position—such as a complaint of discrimination or a defense against a

complaint—and hopes to win the case. But interest-based dispute

resolution, which is the basis for some ADR techniques, focuses on

determining the disputants’ underlying interests and working to resolve

14In June 1997, after we concluded our field work, EEOC’s Washington Field Office announced a

program of mandatory mediation in federal employee cases that are suitable for a hearing before an

administrative judge. The program was expected to get under way in July 1997. Mediation will be

conducted by mediators from EEOC and volunteers from the D.C. Bar Labor and Employment section.

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their conflict at a more basic level, perhaps even bringing about a change

in the work environment in which their conflicts developed.

EEOC, among others, has noted the potential value of the interest-based

approach to dispute resolution in reducing the number of formal

discrimination complaints. Reflecting on the high number of

discrimination complaints among federal employees, an EEOC study

recently concluded that “. . . there may be a sizable number of disputes in

the 1614 process [so named for the regulations governing the process—29

C.F.R. Part 1614] which may not involve discrimination issues at all. They

reflect, rather, basic communications problems in the workplace. Such

issues may be brought into the EEO process as a result of a perception that

there is no other forum available to air general workplace concerns. There

is little question that these types of issues would be especially conducive

to resolution through an interest-based approach.”15

The Types and Extent

of ADR Available in

the Private and

Federal Sectors Vary

ADR, a term that covers various techniques that many organizations have

used to avoid or reduce the burden of more traditional dispute resolution

processes, can include a variety of approaches, usually involving

intervention or facilitation by a neutral third party. We identified five main

ADR methods available to many private sector employees and, in some

instances, to federal employees: ombudsmen, mediation, peer panels,

management review and dispute resolution boards, and arbitration. The

extent to which ADR has been made available in the private sector has been

greater than in the federal sector; so has the variety of ADR methods

generally made available to employees.

ADR Covers a Range of

Methods From the Less

Formal to the More Formal

The ADR methods we identified in our research cover a range of

approaches. (These approaches are briefly defined in table 1.) At one end

of the range are relatively informal processes in which a neutral party,

such as an ombudsman or mediator, assists the disputants in crafting

mutually acceptable solutions that satisfy their respective interests.16 At

the other end are more formal processes—such as peer panels,

15ADR Study, U.S. Equal Employment Opportunity Commission, Office of Federal Operations,

Oct. 1996.

16Facilitation is another technique used in the early stages of a dispute, according to OPM officials. A

facilitator attempts to improve the communication process between the parties but typically does not

become as involved as a mediator would be in the substantive issues. In addition, FMCS officials said

another method that is becoming more widely used in the early stages of a dispute is early neutral

evaluation, in which a neutral provides a nonbinding evaluation that gives the parties a more objective

assessment of their positions.

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management review boards, and arbitration—in which a neutral body or

person may rule on the merits of the parties’ positions and impose a

solution. The less formal processes tend to be employed at the earlier

stages of disputes, before disputants’ positions have solidified; the more

formal processes tend to come into play at the later stages of disputes,

often just before the point at which grievants must decide whether or not

to take their cases to adjudicatory forums—court in the private sector,

MSPB or EEOC in the federal sector.

Table 1: Predominant ADR Methods

Definitions of Predominant ADR Methods

Method Definition

Ombudsman A neutral third party designated by an organization to assist a complainant in resolving a conflict. An

ombudsman provides confidential counseling, develops factual information, and attempts conciliation

between disputing parties. The power of the ombudsman lies in his or her ability to persuade the parties to

accept his or her recommendations. Ombudsmen are also called advisors.

Mediation A process in which a trained neutral third party helps disputants negotiate a mutually agreeable settlement.

The mediator has no authority and does not render a decision but may suggest some substantive options to

encourage the parties to expand the range of possible resolutions under consideration. Any decision must be

reached by the parties themselves.

Peer Review A panel of employees (or employees and managers) who review evidence and listen to the parties’ arguments

to decide an issue in dispute. Peer review panel members are trained in the handling of sensitive issues. The

panel’s decision may or may not be binding on the parties.

Management Review

Boards

Similar to peer review, a panel of managers who review evidence and listen to the parties’ arguments to

decide an issue in dispute. Board members are trained in the handling of sensitive issues. The decision of the

board may or may not be binding on the parties. Also called dispute resolution boards.

Arbitration An adjudicatory process in which a neutral third party is empowered to decide disputed issues after hearing

evidence and arguments from the parties. The arbitrator’s decision may be binding on the parties either

through agreement or operation of law. Arbitration may be voluntary (i.e., where the parties agree to use it), or

it may be mandatory and the exclusive means available for handling certain disputes.

Source: Adapted by GAO from materials developed by OPM and ACUS.

For a fuller discussion of how these processes worked at the private firms

and federal agencies that we looked at in detail, see the case illustrations

(apps. II through XI). Table 2 shows the ADR processes used at each of

these organizations.

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Table 2: ADR Techniques Used by Selected Private Companies and Federal Agencies

Organization Ombudsman Mediation Peer Panel

Management

Review Board Arbitration

Private Sector

Brown & Root • • •f

Hughes Electronics • a • •f

Polaroid • • • • •g

Rockwell • •f

TRW • • •g

Federal agencies

Agriculture •b •c c

Air Force •

Postal Service • d

State • • e

Walter Reed Army Medical Center •

Legend:

•indicates use of a technique by an organization.

aMediation is used infrequently at Hughes; no written policy requires it.

bMediation is a recent initiative at Agriculture.

cIn February 1997, an internal task force recommended that Agriculture discontinue its Dispute

Resolution Boards and adopt voluntary binding arbitration to deal with discrimination case

backlogs. Boards were discontinued in April 1997.

dBinding arbitration was used in discrimination cases in a pilot project (North Florida) but was

later discontinued.

eA board process was used on a trial basis but was later discontinued.

f

Employees are required, as a condition of employment, to use arbitration in lieu of litigation to

settle workplace disputes. Arbitration is binding on the firm and the employee.

gArbitration is not required as a condition of employment, but employees are expected to use

arbitration before taking a matter to court, and the firm’s policy is, if necessary, to seek a court

order compelling the employee to do so. Arbitration is binding on the company but not on the

employee.

Source: Information provided by the organizations included in the table.

ADR Was More Widespread

in the Private Sector and

More Varied

Overall, ADR has been more widely available among private sector firms

than among federal agencies. In addition, ADR has been more widely

available within private firms that have it than within federal agencies that

Page 13 GAO/GGD-97-157 ADR In the Workplace
B-274297 

have it. In 1994, according to a survey we did,17 about 52 percent of private

firms had some type of ADR process in place for discrimination

complaints.18 In contrast, in the federal sector, a 1994 EEOC survey19

showed that about 31 percent of the 75 federal agencies responding to the

survey had made ADR processes available for discrimination complaints.

For the years after 1994, no data were available on the scope of private

sector use of ADR in the workplace, but based on discussions with experts

at the American Arbitration Association, the CPR Center for Dispute

Resolution, and the Equal Employment Advisory Council, use of ADR in the

private sector has increased since 1994. The most recent data on the use of

ADR in the federal sector are from EEOC’s 1996 survey. Based on responses

of 87 federal agencies to that survey, the percentage of federal agencies

making ADR available had risen to 49.20 We found, however, that in using

percentages to compare the availability of ADR in the private and public

sectors, a significant difference should be kept in mind. According to our

July 1995 report, private firms using ADR generally made it available

organizationwide. 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 federal agencies that reported having some ADR

capability.

Private firms also reported that they made available a wider variety of ADR

techniques than those reported by federal agencies. For example, our

July 1995 report showed that of the private firms using ADR in 1994, about

80 percent used mediation, about 39 percent used peer review panels, and

about 19 percent used arbitration. But according to both EEOC’s 1994 and

1996 surveys, most federal agencies using ADR made only one technique

available: mediation.

17Employment Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution

(GAO/HEHS-95-150, July 5, 1995).

18This figure includes the use of mediation, peer review, and arbitration. The survey did not include

questions relating to the use of ombudsmen or management review boards. However, because very

few of the survey respondents included these techniques in response to a survey question asking if any

other dispute resolution methods were used, we believe that the estimate of private sector ADR use

would be only marginally higher to account for companies with an ombudsman or management review

board as their only ADR technique. In addition, this figure does not include the use of negotiation and

fact-finding, which were widely practiced in the private sector. Under the Administrative Dispute

Resolution Act of 1996, “settlement negotiations” are no longer considered an ADR technique because

(1) they do not use a neutral third party and (2) Congress wanted to clarify that standard negotiations

did not fulfill the intent of the act, according to a former ACUS official.

19Cited in ADR Study, U.S. Equal Employment Opportunity Commission, Office of Federal Operations,

Oct. 1996.

20ADR Study, U.S. Equal Employment Opportunity Commission, Office of Federal Operations, Oct.

1996.

Page 14 GAO/GGD-97-157 ADR In the Workplace
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The availability of ADR techniques among our case illustrations was

consistent with the findings of previous reports and surveys. As shown in

table 2, the private firms we studied generally used a wider variety of ADR

techniques than did the federal agencies. The private firms we studied had

from two to five ADR methods in place, while the federal agencies generally

had only one. The private firms we studied applied ADR to all types of

workplace disputes; all but one of the federal agencies we studied—Walter

Reed Army Medical Center—tended to limit the application of ADR to

claims of discrimination.

Comprehensive Data

Were Lacking, but

ADR Programs Were

Perceived as

Beneficial

No comprehensive evaluative data were available on ADR results in the

private and federal sectors, but the information we gathered in our broad

examination of ADR was largely positive, as was the additional information

we gathered in our case illustrations. The experiences of the specific

organizations we studied was consistent with the findings of earlier

reports, surveys, and literature. Although these organizations varied in the

extent to which they had evaluated their ADR programs, officials at all of

them generally believed these programs had been beneficial in resolving

workplace disputes.

Most of the organizations we studied had data to show that their ADR

processes, especially mediation, resolved a high proportion of disputes,

thereby helping them avoid formal redress processes and litigation.

Objective data were not generally available on the time and cost savings

achieved by avoiding formal redress and litigation, nor on how the costs of

dispute resolution involving ADR compared with the costs of more

traditional methods. For the most part, however, managers believed that

avoiding formal redress and litigation saved their organizations time and

money. The organizations also reported that user satisfaction—another

indicator of effectiveness or the lack of it—was generally high, with the

exception of supervisors who participated in the Department of

Agriculture’s dispute resolution boards.

ADR—Especially

Mediation—Appeared to

Be Useful in Resolving

Disputes

To the extent data were available at the organizations we studied,

mediation, peer panels, management review and dispute resolution

boards,21 and arbitration all appeared to be useful in resolving workplace

disputes, thereby avoiding more formal dispute resolution processes.22

21Officials at Agriculture found Dispute Resolution Boards were helpful with the discrimination

complaint inventory. The boards were criticized, however, as being labor intensive and expensive and

not dealing with the underlying issues in disputes. (See app. VII.)

22A case was considered resolved if it was either settled or dropped.

Page 15 GAO/GGD-97-157 ADR In the Workplace
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Mediation appeared particularly useful. Table 3, which includes all of the

organizations we examined that offered mediation, shows that mediation

led to a high percentage of resolutions (at least 59 percent) in all but one.

Table 3: Experiences of Private

Companies and Federal Agencies That

Used Mediation Organization Time frame involved

Cases

mediated

Cases

resolved

Percent

resolved

Private Sectora

Brown & Root June 1993 to Dec. 1996 155 140 90

TRW Jan. 1995 to Sept. 1996 27 16 59

Federal agencies

Air Force Oct. 1995 to Sept. 1996 1,982b 1,455b 73

Postal Service,

North Florida

Oct. 1994 to Dec. 1996

188 139 74

Postal Service,

Southern California

Oct. 1988 to June 1992,

Oct. 1993 to June 1994,

and

Oct. 1994 to Sept. 1996 1,714 1,605 94

State May 1995 to Dec. 1996 8 3 38

Walter Reed Army

Medical Center

Oct. 1994 to Sept. 1996

160 108 68

aPolaroid routinely offered mediation but did not provide data.

bPredominately mediation but includes other early stage ADR techniques.

Source: Data provided by the organizations studied.

The Seattle Interagency ADR Consortium is not included in table 3 because

it is neither a company nor a federal agency. The Consortium reported

resolving 153 of 171 cases (89 percent) mediated between May 1993 and

February 1997. Overall, the reported resolution rates for the Seattle

Interagency ADR Consortium and the private and federal organizations

using mediation were similar to rates reported in the literature and in past

studies. The Justice Center of Atlanta, for example, reported a resolution

rate of about 70 percent among the more than 50,000 cases it has mediated

since 1977.23 The private sector organizations we studied applied

mediation to a variety of workplace disputes, but whether the resolution

rates varied with the nature of the dispute was unknown. Among the

federal agencies we studied, only one—Walter Reed Army Medical

Center—applied mediation to a variety of workplace disputes. At Walter

Reed’s ADR Center, the resolution rate varied with the nature of the

23The Justice Center of Atlanta is a private, nonprofit organization recognized as one of the leading

institutions in the United States for the practice and teaching of mediation.

Page 16 GAO/GGD-97-157 ADR In the Workplace
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dispute: 83 percent for disputes that the center classified as

“communication” cases, 67 percent for EEO cases, and 43 percent for cases

involving disciplinary actions. The other three agencies using mediation

generally used this technique almost exclusively in cases of alleged

discrimination.24

Among three of the four federal agencies we studied with experience in

mediation, the limited data available suggested that mediation was more

useful than the traditional processes for resolving discrimination

complaints. For example, data from the Postal Service’s Southern

California EEO Processing Center showed that from fiscal year 1988 to

fiscal year 1996, about 94 percent of the informal cases that were mediated

were settled, compared with 57 percent of those that went through

traditional counseling.

Peer panels and management review boards also contributed to bringing

cases to closure at the organizations we examined. Moreover, in the four

private firms, where employees receiving unfavorable decisions through

the peer or management review process could take their complaints to

arbitration, relatively few did. (See Hughes Electronics and Polaroid case

illustrations, apps. III and IV.) The one federal agency we studied that used

a board process to resolve formal discrimination

complaints—Agriculture—collected data on results during a pilot study

and found that of the 32 cases heard, 23 (72 percent) were settled on the

day of the hearing.

Arbitration has not traditionally been one of the procedures made

available to federal employees seeking redress outside the terms of

collective bargain agreements. But, according to the ADR Counsel at the

Federal Mediation and Conciliation Service, the laws and regulations

governing matters appealable to EEOC and MSPB do not prohibit its use. The

Administrative Dispute Resolution Acts of 1990 and 1996 allow federal

agencies to use arbitration if all the parties consent to its use, so long as

the agency does not require any participant to consent to arbitration as a

condition of entering into a contract or obtaining a benefit (e.g.,

24Contacting the EEO office and consulting with a counselor is the first step in the federal

discrimination complaint process and is commonly referred to as an “informal” complaint. The

counselor is to explore the nature of the issue, determine whether the basis for the issue is covered

under EEO regulations, conduct a limited inquiry, and attempt to facilitate a resolution. If a resolution

cannot be reached, the employee can file a “formal” written complaint with the agency.

Page 17 GAO/GGD-97-157 ADR In the Workplace
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employment).25 The 1996 act also requires that before using binding

arbitration, the agency consult with the Department of Justice on its

appropriateness. The act also requires that the arbitrator interpret and

apply relevant statutory and regulatory requirements, legal procedures,

and policy directives.

More widely available in the private sector than in the federal sector,

arbitration was available to employees outside the collective bargaining

process at all five companies we studied.26 All five companies reported

that arbitration helped them avoid or reduce the amount of

employment-related litigation. Moreover, at Rockwell, the company’s

Assistant General Counsel said he believed that in many cases the mere

availability of arbitration made it easier for the company and former or

current employees to resolve disputes without resorting to either

arbitration or litigation. Similarly, TRW and Brown & Root officials told us

that having an arbitration program opened the door to settlements; at

Brown & Root, 43 of 74 arbitration requests between June 1993 and

December 1996 were either settled or dropped without an arbitration

decision.

Although Comprehensive

Data Were Lacking, ADR

Was Perceived to Have

Saved Time and Money

Comprehensive evaluative data on the extent to which ADR has saved time

and money by avoiding formal redress or litigation in the federal and

private sectors were not available, largely because (1) most ADR programs

are relatively new and (2) time and cost savings have not been widely

tracked or evaluated. Moreover, according to the CPR Institute for Dispute

Resolution, there is no central source of information on ADR cost savings

and benefits (or even the typical costs of litigation) in the private sector.27

An official of the American Arbitration Association said that information

about ADR cost savings and benefits in the private sector is limited because

companies are not always forthcoming with proprietary data and because

many companies’ ADR programs are relatively new. Similarly, there is no

25At the time of our review, Agriculture was considering the recommendation of an agency study to

incorporate voluntary binding arbitration into its dispute resolution program on an interim basis to

deal with its backlog of discrimination cases. Also, under authority contained in legislation exempting

it from most federal personnel laws, the Federal Aviation Administration has established a

three-member panel to hear appeals made by its nonbargaining unit employees of adverse personnel

actions previously appealed to MSPB. The panel is composed of a management representative, an

employee representative, and an arbitrator.

26At Brown & Root, Hughes Electronics, and Rockwell, use of arbitration in lieu of litigation is a

condition of employment (see apps. II, III, and V). At Polaroid and TRW, arbitration is not mandatory,

but employees are expected to use arbitration before taking a matter to court, and the firm will, if

necessary, seek a court order compelling the employee to do so (see apps. IV and VI).

27ADR Cost Savings and Benefits Studies, CPR Institute for Dispute Resolution, 1994.

Page 18 GAO/GGD-97-157 ADR In the Workplace
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central source of information on ADR cost savings and benefits in the

federal sector. Before ACUS was abolished in October 1995, it reported on

the status of federal government ADR initiatives, stating that “there are few

measurable data documenting hard savings or substantive impact. This is

true in part because many programs are still quite new; however,

developing this type of information has proven difficult even for

established programs.”28

Likewise among the five private firms and five federal agencies we studied,

data generally were not available on the time and cost savings achieved by

avoiding redress and litigation through ADR, nor on how the costs of

dispute resolution involving ADR compared with the costs of more

traditional methods. Nevertheless, managers said they generally believed

that by avoiding redress and litigation, ADR saved their organizations time

and money.

Regarding time saved by the speedier resolution of disputes, data from two

of the federal agencies we studied indicated that the use of ADR had

decreased the time it had normally taken to resolve discrimination

complaints by between 36 and 52 percent. (See case illustrations for

Agriculture and Air Force, apps. VII and VIII.) Data from two other

agencies indicated that ADR processes, by resolving discrimination

complaints in their early stages, had reduced the number of formal

complaints filed as well as the time required for seeing them through to

resolution. (See case illustrations for Postal Service and Walter Reed,

apps. IX and XI.)

Regarding cost savings, objective information was sparse. Among the

private companies we studied, Brown & Root provided the most extensive

information. (See app. II.) In the first 3 years in which it used ADR, Brown

& Root reported that the overall cost of dealing with workplace disputes

(including the annual cost of the ADR program itself) was less than half of

what the company had been accustomed to spending on legal fees for

employment-related litigation.

Cost savings among federal agencies were as difficult to determine as

those among private firms. No federal agency quantified with precision

cost savings from ADR. The primary reason may be reflected in the

experience of Agriculture, the only federal agency in our study that

evaluated costs. Agriculture’s pilot evaluation team, which attempted to

28Toward Improved Agency Dispute Resolution: Implementing the ADR Act, Administrative

Conference of the United States, Feb. 1995.

Page 19 GAO/GGD-97-157 ADR In the Workplace
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compare the costs of Agriculture’s Dispute Resolution Boards with the

traditional dispute resolution process for EEO complaints, found that it

could not do so with any precision because of the lack of detailed records.

(See app. VII.) The team reported that estimates of complaint processing

costs under traditional procedures were inconsistent and that there were

no data with which to track the costs of cases processed by the boards.

With this caveat, the team reported “it seems fairly certain” that EEO

complaint-processing costs using boards were less than those under the

traditional process. However, when settlement costs were considered, it

was unclear whether boards were less costly because board-facilitated

settlements were more costly than settlements and decisions in a

comparison group of cases handled by the traditional process. The team

said that creating an accurate recordkeeping system would be critical to

the operation of the boards as well as to the EEO complaint system as a

whole.

Reported User Satisfaction

Generally Was High at the

Organizations We Studied

Comprehensive data on user satisfaction with ADR was not available for

the private or federal sectors. Among the organizations we studied,

five—Brown & Root, Hughes Electronics, Postal Service, Agriculture, and

Walter Reed—had surveyed their ADR program users. Brown & Root

reported that users were satisfied with its procedures while Hughes did

not provide the results of its surveys. (See apps. II and III.) Two of the

three federal agencies also reported generally high user satisfaction, but

Agriculture reported significant disparities among the parties to disputes.

The Postal Service’s survey approach was unique in that it compared

satisfaction rates among mediation users (in this case, at its North Florida

pilot) with those among participants in the traditional EEO process (at

other Postal Service locations). The Postal Service surveys found, for

example, that 90 percent of the mediation users believed that the process

was fair, compared with 41 percent of the participants in the traditional

EEO process. Further, 72 percent of mediation users were satisfied with the

outcomes of their disputes, compared with 40 percent of the participants

in the traditional process. (See app. IX.)

Unlike the Postal Service surveys, Walter Reed’s surveys were not

comparative. Further, only employee participants in the program were

surveyed. Of the survey respondents, 90 percent rated the overall

performance of the ADR program and of the mediators themselves from

good to excellent, 73 percent indicated that they would use the program

Page 20 GAO/GGD-97-157 ADR In the Workplace
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again, and 72 percent indicated that they would recommend the program

to others. (See app. XI.)

Agriculture’s surveys and focus groups involving participants in its Dispute

Resolution Board process revealed that supervisors who had been charged

with discrimination had less favorable opinions of the process than did

employees and resolving officials.29 For example, 42 percent of the

supervisors did not believe the process to be fair, compared with

17 percent of the employees and 15 percent of the resolving officials.

Moreover, 53 percent of the supervisors were dissatisfied with the

outcomes of their disputes, compared with 25 percent of the employees

and 30 percent of the resolving officials. According to Agriculture officials,

supervisors felt the Dispute Resolution Board process undermined their

authority. They also said that a “settle at all costs” policy encouraged

employees to file complaints. A recent Agriculture report recommended

significant changes in Agriculture’s ADR program, including discontinuing

boards. Agriculture discontinued the boards in April 1997. (See app. VII.)

The Case Illustrations:

Varied but Generally

Positive Experiences

With ADR Were

Reported

As reflected in the case illustrations (see apps. II-XII), the companies and

federal agencies we studied took various approaches to planning and

implementing ADR. Most of them made efforts to involve employees in

developing their ADR programs, to train key participants, and to make their

ADR programs known and understandable throughout the organization.

Because the private firms were not subject to the rules that govern the

federal employee administrative redress system, some of them had

established ADR practices—particularly in the area of arbitration—that are

not found among federal agencies. These practices varied from one

company to the next. While most of the organizations we studied gave only

limited attention to formally evaluating their ADR programs, the common

thread among our case illustrations was a continuing use of ADR and a

perception that ADR was worthwhile. The lessons learned by these

organizations in planning, implementing, and evaluating their ADR

programs centered on how to ensure that the appropriate ADR methods

were used and that they fulfilled their potential.

29Under the Dispute Resolution Board process, a “resolving official” representing the department

would be present to negotiate a settlement with the employee.

Page 21 GAO/GGD-97-157 ADR In the Workplace
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Efforts to Involve

Employees and Train Key

Staff Were Widespread but

Varied

The organizations we studied varied in the ways in which they involved

their employees in planning their ADR programs as well as how they made

employees aware of these programs. The extent to which these

organizations involved and trained their employees related to whether

they were overhauling their dispute resolution systems or adding or

integrating into their existing systems a particular ADR technique. Although

nine of the organizations involved their employees in designing their ADR

programs, and all but Agriculture provided training to employees and

managers who would play key roles in the ADR process, some provided

greater opportunities for involvement or more widespread or extensive

training than others.

Officials at nine of the organizations we studied reported that measures

had been taken to make their ADR processes known and understandable to

employees. When Hughes Electronics, for example, initiated its dispute

resolution boards, it not only trained prospective board members in their

duties, but it trained executives and managers throughout the company in

conflict resolution techniques and introduced all employees to the new

program through brochures, newsletters, and supervisory guidance,

according to the Corporate Manager for Equal Employment Opportunity

and Workforce Diversity Programs. To introduce its pilot mediation

program, the Postal Service conducted two 1-week conferences for

managers, trained staff as mediators in each location, and developed a

video about the program. Walter Reed gave mediation training to its ADR

Center staff, which then conducted numerous briefings for employees. In

addition, Walter Reed’s commander issued a memorandum explaining the

ADR program and encouraging its use.

Organizations Took

Differing Approaches to

ADR

Of the five main ADR methods we identified, the most widely available

were mediation and arbitration. Seven of the organizations we studied

reported routinely making mediation available; the differing ways in which

they implemented their mediation programs illustrated a variety of

possible approaches. All five of the companies we studied offered

arbitration, which, as noted earlier, is generally unavailable to federal

employees outside the collective bargaining process. The arbitration

policies of the five companies illustrated some key differences between

their redress systems and those of the federal agencies we studied.

Mediation was the most widely used technique among the organizations

we studied. Most of the organizations reported using both internal and

external mediators. Among the private firms, for example, Brown & Root

Page 22 GAO/GGD-97-157 ADR In the Workplace
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and Polaroid reported they used their own employee volunteers as

mediators most of the time. However, employees at these companies could

ask for a mediator from an external source (such as the American

Arbitration Association). Among the federal agencies, the Air Force

selected mediators according to the issues involved—its practice is to

assign mediators to the kinds of cases in which they specialized—and gave

some consideration to the preference of the parties involved. The mediator

could be an EEO counselor trained in mediation or an external mediator

from another Air Force installation, another federal agency, a contractor,

or a “shared neutrals” program. A shared neutrals program, such as the

Seattle Interagency ADR Consortium (see app. XII) is a cooperative venture

in which federal agencies create a pool of mediators who are available to

agencies that do not have their own mediators or that want a mediator

from outside the agency.

Variation existed in the types of issues that were subject to mediation and

in the point at which an employee could elect to use it. Two of the three

private sector companies that reported they regularly used

mediation—Brown & Root and Polaroid—offered mediation for a wide

array of issues and at any point in the dispute resolution process. The

other company, TRW, usually offered external mediation as a step before

arbitration. Among the federal agencies, the Walter Reed Army Medical

Center was alone in having established mediation for a wide array of

disputes. The others generally reported confining the use of mediation to

discrimination and to a point very early in the discrimination complaint

process. This point occurred after an employee had contacted his or her

agency’s EEO office (the first step in the federal discrimination complaint

process) but before the employee had filed a formal complaint. Among the

agencies we studied, mediation was offered at this point as an alternative

to the counseling that is required by the regulations governing the

discrimination complaint process.

Just as federal employees are generally expected to exhaust the

administrative processes available to them before going to court,30

employees of the private companies we studied were expected by their

employers to use arbitration before initiating a lawsuit. In some ways,

arbitration is to the private sector what the administrative redress system

is to the federal sector: for example, both are adjudicatory in nature and

intended to provide due process, and both are meant to provide employees

with a means of being heard on issues that could be taken to court. But the

arbitration policies of the private firms we studied provided at least two

3029 C.F.R. Part 1614.

Page 23 GAO/GGD-97-157 ADR In the Workplace
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examples of ways in which this private sector dispute resolution method

can differ significantly from the federal government’s approach.

First, at three of the firms we studied—Brown & Root, Hughes

Electronics, and Rockwell—employees were required, as a condition of

employment, to use arbitration in lieu of litigation to settle disputes. (See

apps. II, III, and V.) At each of these three firms, the arbitrator’s decision

was binding on both the company and the employee. The employee’s

judicial recourse was limited to petitioning a court to review the

arbitration decision.31 In contrast, federal employees have recourse to the

administrative redress process and the courts. A discrimination

complainant who is dissatisfied with the available administrative remedies

may take his or her case to federal district court for a de novo32 trial.

Second, all five of the private companies we studied required their

employees to share in the costs of arbitration. In contrast, federal

employees do not share in the costs of the administrative redress

processes available to them.33 Officials at each of the firms we studied said

the requirement that employees share in the costs of arbitration was

intended to ensure the impartiality of arbitrators as well as to discourage

frivolous complaints. Sharing of arbitration costs by employees and

employers was one of the key quality standards for private arbitration

recommended by the Commission on the Future of Worker-Management

Relations.

So that they would not discourage legitimate complaints, four of the

private firms we studied charged employees only a nominal fee or capped

the employee’s share. Two companies imposed a nominal fee: Brown &

Root required employees to pay $50; Polaroid required them to pay $100.

The other three companies—Hughes, Rockwell, and TRW—required

employees to pay up to half of the arbitration costs. But TRW capped the

employee share at 2 days’ gross pay, and Hughes limited the employee

31EEOC opposes mandatory binding arbitration as a condition of employment because it views such

policies as interfering with individual protected rights under civil rights statutes. Employers with

mandatory binding arbitration, such as the companies we studied, believe that arbitration does not

impinge on the substantive rights of employees.

32In a de novo trial, a matter is tried anew as if it had not been heard before.

33In addition to sharing in arbitration costs, workers at the five private sector companies are

responsible for their attorney fees and the costs of discovery that they initiate. Similarly, federal

workers are responsible for their attorney fees, costs of discovery that they initiate, and related

expenses, such as for copying and mailing. Generally, employees can recover these expenses if they

are the prevailing party.

Page 24 GAO/GGD-97-157 ADR In the Workplace
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share to 2 weeks’ net pay in cases of hardship. Rockwell did not cap the

employee’s share.

Evaluation Was Generally

Not Extensive, but

Organizations Continued

Using ADR and Believed It

Was Worthwhile

Most of the organizations we studied gave only limited attention to

formally evaluating their ADR programs. Among the companies, the

evaluation efforts reported by Brown & Root were the most extensive,

including routine data gathering on program costs and benefits and

employee satisfaction as well as annual evaluations by persons outside the

firm (see app. II). Among the federal entities, the Postal Service had under

way an extensive evaluation by an outside consultant, and the Air Force

had an evaluation in the design stage. Agriculture had evaluated its

Dispute Resolution Boards in the pilot phase but not in the 3 years in

which the boards operated. More recently (between December 1996 and

February 1997), Agriculture’s Civil Rights Action Team conducted 12

“listening sessions” that included an opportunity to hear participants’

perceptions of the board process. This was not an evaluation per se, but

led to recommendations that resulted in discontinuing the boards (see

app. VII).

Although extensive evaluation has generally been lacking, the

organizations we studied, as discussed earlier, almost all had positive

perceptions of the results of their ADR programs. To the extent data were

available, they supported these perceptions, including the belief that ADR

lessened the costs—in time and money—associated with formal redress

processes and litigation. Brown & Root, as discussed earlier, reported that

in the first 3 years of ADR use, the overall cost of dealing with workplace

disputes (including the annual cost of the ADR program itself) was less than

half of what it had been just for legal fees to cover employment-related

litigation. Brown & Root also reported that the number of

employment-related lawsuits had been reduced to nearly zero, and the

number of cases filed with the EEOC or similar entities had been reduced

by half. While other organizations had only limited data, they said they

believed that early resolution of disputes and the avoidance of formal

redress and litigation not only saved time but avoided costs as well.

Perhaps the best indicator of the organizations’ belief in ADR was that all of

them continued to use some form of ADR.

The only instance among our case illustrations in which the operation of

an ADR program was found to be seriously flawed was at Agriculture,

where the report of the Civil Rights Action Team recommended that

dispute resolution boards be discontinued (see app. VII). The same report

Page 25 GAO/GGD-97-157 ADR In the Workplace
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recommended that Agriculture use more interest-based ADR techniques

outside the EEO process and that mediation and voluntary binding

arbitration be used.

Organizations Cited

Lessons About Making

ADR Work

The organizations we studied each cited lessons learned in planning,

implementing, and evaluating their ADR programs. These lessons were

varied, but many of them centered on ensuring that the appropriate ADR

methods were used and that they fulfilled their potential.

Six of the organizations reported emphasizing the need for visible support

of ADR by top management, citing the difficulty of marketing and sustaining

ADR efforts in its absence. Four of the organizations said they had learned

the importance of involving employees in the development of their ADR

programs. One reason was to ensure that the choice of ADR approaches

meshed with the organization’s culture; another was to establish trust in

the ADR process.

Six of the organizations said they learned that dispute resolution efforts

have a greater likelihood of success if they occur early in a dispute before

positions have solidified and underlying interests have been obscured.

Postal Service officials, for example, said their organization had this lesson

in mind when it adopted a policy of providing mediation of complaints

within approximately 2 weeks of a request for mediation services (see app.

IX). Agriculture, having found that its dispute resolution boards did not

deal with the underlying issues in workplace disputes, has begun giving

mediation training to its counselors and developing a conflict resolution

policy that encourages early intervention (see app. VII).

Two federal agencies—Walter Reed and Agriculture—said they learned

that special care must be given to balancing the desire to settle and close

cases against the need for fairness to employees and managers alike. For

example, at Walter Reed, where the ADR program received largely positive

responses in its employee participant surveys, the dispute resolution

officer said he had learned that some supervisors viewed settlements with

suspicion, feeling that settlements seemed to “give away the store.” As a

result, he said, resolving officials at Walter Reed have become more

judicious in making settlements. (See app. XI.)

Five organizations reported finding that ADR served a purpose merely by

giving employees an opportunity to be heard. Employees, they said, got

something worthwhile merely out of having their “day in court.” Further,

Page 26 GAO/GGD-97-157 ADR In the Workplace
B-274297 

four organizations also reported finding that by following the outcomes of

ADR processes, management became more aware of the causes of

workplace disputes, of the organizational policies or decisions that led to

complaints, and of systemic concerns that had not otherwise been

apparent. Brown & Root’s Associate General Counsel for Human

Resources, for example, said some of the mediation settlements and

arbitration awards alerted management to problems within the company,

and this brought about changes in its sexual harassment and drug testing

policies and procedures (see app. II).

Agency Comments We sent copies of a draft of this report to the Chairman, EEOC; the Director,

FMCS; and the Director, OPM for review and comment. In addition, we asked

cognizant officials from each case illustration organization to review and

comment on a draft of the case illustration describing their respective

organization’s ADR experiences. We received responses from all

organizations except Polaroid; their comments were of a technical or

clarifying nature. We considered the comments and made changes as

appropriate in finalizing this report.

We are sending copies of this report to the Ranking Minority Member of

this Subcommittee; to the Chairmen and Ranking Minority Members of the

House Committee on Government Reform and Oversight and the Senate

Committee on Governmental Affairs and its Subcommittee on

International Security, Proliferation, and Federal Services; and the

Directors of the Office of Personnel Management, the Federal Mediation

and Conciliation Service, and the Office of Management and Budget; the

Chairman of the Equal Employment Opportunity Commission; and other

interested parties. We will also make this report available to others upon

request.

Page 27 GAO/GGD-97-157 ADR In the Workplace
B-274297 

Major contributors to this report are listed in appendix XIII. Please contact

me at (202) 512-9039 if you or your staff have any questions concerning

this report.

Sincerely yours,

Michael Brostek

Associate Director, Federal Management

 and Employment Issues

Page 28 GAO/GGD-97-157 ADR In the Workplace
Page 29 GAO/GGD-97-157 ADR In the Workplace
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

34

Appendix II 

Case Illustration:

Brown & Root, Inc.

38

How the Processes Work 38

Experiences in Developing ADR Processes 39

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

40

Lessons Learned by the Organization 41

Appendix III 

Case Illustration:

Hughes Electronics

Corporation

42

How the Processes Work 42

Experiences in Developing ADR Processes 43

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

44

Lessons Learned by the Organization 44

Appendix IV 

Case Illustration:

Polaroid Corporation

46

How the Processes Work 46

Experiences in Developing ADR Processes 47

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

47

Lessons Learned by the Organization 48

Appendix V 

Case Illustration:

Rockwell

International

Corporation

49

How the Processes Work 49

Experiences in Developing ADR Processes 50

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

50

Lessons Learned by the Organization 51

Page 30 GAO/GGD-97-157 ADR In the Workplace
Contents

Appendix VI 

Case Illustration: TRW

Inc.

53

How the Processes Work 53

Experiences in Developing ADR Processes 54

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

55

Lessons Learned by the Organization 55

Appendix VII 

Case Illustration: U. S.

Department of

Agriculture

57

How the Process Works 57

Experiences in Developing the ADR Process 58

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

58

Lessons Learned by the Organization 59

Appendix VIII 

Case Illustration: U.S.

Air Force

61

How the Process Works 61

Experiences in Developing the ADR Process 61

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

63

Lessons Learned by the Organization 63

Appendix IX 

Case Illustration: U. S.

Postal Service

65

How the Process Works 65

Experiences in Developing the ADR Process 65

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

67

Lessons Learned by the Organization 67

Appendix X 

Case Illustration: U. S.

Department of State

69

How the Processes Work 69

Experiences in Developing ADR Processes 70

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

71

Lessons Learned by the Organization 72

Page 31 GAO/GGD-97-157 ADR In the Workplace
Contents

Appendix XI 

Case Illustration:

Walter Reed Army

Medical Center

73

How the Process Works 73

Experiences in Developing the ADR Process 73

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

74

Lessons Learned by the Organization 75

Appendix XII 

Case Illustration:

Seattle Interagency

ADR Consortium

77

How the Process Works 77

Experiences in Developing ADR Resources 78

Resolving Workplace Disputes and Lessening the Time and Costs

Associated With Redress and Litigation

79

Lessons Learned by the Organization 79

Appendix XIII 

Major Contributors to

This Report

81

Tables Table 1: Predominant ADR Methods 12

Table 2: ADR Techniques Used by Selected Private Companies

and Federal Agencies

13

Table 3: Experiences of Private Companies and Federal Agencies

That Used Mediation

16

Abbreviations

AAA American Arbitration Association

ADR alternative dispute resolution

ACUS Administrative Conference of the United States

EEAC Equal Employment Advisory Council

EEO equal employment opportunity

EEOC Equal Employment Opportunity Commission

FMCS Federal Mediation and Conciliation Service

MSPB Merit Systems Protection Board

OPM Office of Personnel Management

S/EEOCR U.S. Department of State Office of Equal Employment

Opportunity and Civil Rights

Page 32 GAO/GGD-97-157 ADR In the Workplace
Page 33 GAO/GGD-97-157 ADR In the Workplace
Appendix I 

Objectives, Scope, and Methodology

In his letter of July 1, 1996, the Chairman of the Subcommittee on Civil

Service, House Committee on Government Reform and Oversight, asked

us to assist the Subcommittee in its efforts to reform the administrative

redress system for federal employees by developing information about

federal and private sector experiences in using alternative dispute

resolution (ADR) processes to resolve workplace disputes. Specifically, he

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 ADR processes in place, and (3) the results, if any, they

have achieved by using ADR. In addition, he asked that we illustrate the

practices of selected federal agencies and private sector firms in using ADR

processes to resolve workplace disputes for employees not covered under

collective bargaining agreements by addressing the following questions.

1. What were the experiences of the selected federal and private sector

employers in planning and implementing ADR processes?

2. To what extent did these employers evaluate their ADR processes and to

what extent did they believe that their ADR practices have been successful

in resolving workplace disputes and in lessening the costs—in time and

money—associated with formal redress procedures and litigation?

3. What lessons did the selected agencies and companies report that they

learned in planning, implementing, and evaluating their ADR processes?

Because of the Chairman’s interest in reforming the federal employee

redress system, we primarily focused on ADR use in the types of disputes

that federal employees can appeal to the Merit Systems Protection Board

(MSPB) or the Equal Employment Opportunity Commission (EEOC), and not

those generally grieved under collective bargaining procedures. For the

private sector, we developed information about ADR processes for

employees not covered under collective bargaining agreements.

To develop information about federal agencies’ and private sector

companies’ reasons for using ADR, the types of ADR they have made

available other than those under collective bargaining agreements, the

extent to which they have put these processes in place, and results derived

from using ADR, we reviewed available literature and spoke to experts in

the field. Among the experts with whom we spoke were officials from

MSPB, EEOC, the Office of Personnel Management (OPM), the Administrative

Page 34 GAO/GGD-97-157 ADR In the Workplace
Appendix I 

Objectives, Scope, and Methodology

Conference of the United States (ACUS), the National Academy of Public

Administration, the Federal Mediation and Conciliation Service (FMCS), the

American Arbitration Association (AAA), the CPR Center for Dispute

Resolution, and the Equal Employment Advisory Council (EEAC). To

develop information about the types of ADR processes offered by federal

employers and the extent to which these processes are offered, we used

the results of EEOC surveys of federal agencies that were reported in

February 1994 and October 1996.34 To develop information about the types

of ADR processes offered by private sector employers and the extent to

which these processes are offered, we used the results from one of our

surveys.35

In identifying the predominant ADR methods used in the private and federal

sectors, we applied definitions based on materials developed by OPM and

ACUS. Because ADR is an evolving field, there is some inconsistency among

practitioners in the terms they use to describe their ADR approaches. For

this reason, we occasionally grouped different organizations’ ADR

approaches under the same names, although the organizations themselves

called these approaches by different names. We discussed this practice

with each of the affected organizations and obtained their concurrence.

To illustrate private and federal sector organizations’ experiences in

planning and implementing ADR processes, 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

lessening costs, and the lessons they reported having learned, we

judgmentally selected for study five private sector companies and five

federal agencies that had had some experience with ADR. Because there is

no readily identifiable inventory of federal and private sector36 ADR users,

we used a variety of methods to identify candidates for case illustrations.

To identify federal agencies using ADR, we reviewed surveys of federal

agencies by EEOC and ACUS, reviewed literature about federal agencies

using ADR, reviewed information that federal agencies reported to EEOC,

and spoke to officials knowledgeable about ADR use in the federal

government, including officials from MSPB, EEOC, OPM, ACUS, and FMCS. To

identify private sector companies using ADR, we reviewed available

34EEO ADR Survey (Feb. 1994) and ADR Study (Oct. 1996), U.S. Equal Employment Opportunity

Commission, Office of Federal Operations.

35We sent a questionnaire to a nationally representative sample of businesses with more than 100

employees according to reports filed with EEOC in 1992. The results of this survey were reported in

Employment Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution

(GAO/HEHS-95-150, July 5, 1995).

36Our survey reporting the percentage of private sector employers using ADR did not include the

names of companies.

Page 35 GAO/GGD-97-157 ADR In the Workplace
Appendix I 

Objectives, Scope, and Methodology

literature and spoke to experts on the private sector’s use of ADR, including

officials from the AAA, CPR Center for Dispute Resolution, and EEAC.

We judgmentally selected agencies and companies (1) that reflected a

range of ADR practices; (2) that had ADR processes in place a sufficient

length of time to provide information about use, outcome, and lessons

learned; and (3) that had at least some use or outcome data available. The

federal agencies we selected were the Department of Agriculture, the

Department of the Air Force, the Postal Service, the Department of State,

and Walter Reed Army Medical Center. We included the Postal Service,

even though it is an independent governmental establishment, because it is

bound by most of the same rules governing the resolution of

discrimination complaints that apply to most other agencies. We also

studied the Seattle Federal Executive Board’s Interagency ADR

Consortium, a shared neutrals program in the Seattle, WA area, because it

is a cooperative interagency effort to make mediation services available at

little or no cost to users. In the private sector, we studied the following

large companies: Brown & Root, Inc; Hughes Electronics Corporation; the

Polaroid Corporation; Rockwell International Corporation; and TRW Inc.

Our final selection of companies was dependent on their willingness to

participate in the study. We obtained information about the organizations

either on-site or from telephone interviews with responsible agency and

company officials, material and data that they provided (e.g., policies,

procedures, employee handbooks, statistical information, and

evaluations), and published information.

There are five limitations to the information we present in this report.

First, the case illustrations and the observations that we are reporting are

not representative of a broader universe. They are intended only to

illustrate ADR approaches that have been put into practice and that have, to

some extent, reported demonstrable results. We do not intend that they be

considered “best practices.” Second, organizations—particularly private

sector companies—identified through literature searches and leads from

experts in the field, are more likely than not to have reported successful

outcomes. While it is possible that some private sector companies have

had poor experiences with ADR, these companies are less likely than others

to have made their experiences public or to have drawn attention to

themselves. Third, while federal agencies are required to cooperate with

us, the participation of the private sector companies in our study was

voluntary. Moreover, the companies reserved the right to withhold

proprietary information, which limited our ability to analyze their

programs with the assurance that we had obtained all relevant data.

Page 36 GAO/GGD-97-157 ADR In the Workplace
Appendix I 

Objectives, Scope, and Methodology

Fourth, the views we obtained were those of agency and company

management. We report the results of employee or ADR participant surveys

provided by some of the agencies and companies, but we did not directly

obtain the views of employees. Finally, we did not verify data that were

provided to us; some of the data provided was testimonial.

We did our work in Denver, CO; New York, NY; Seattle, WA; and

Washington, D.C. from July 1996 to April 1997 in accordance with

generally accepted government auditing standards.

Page 37 GAO/GGD-97-157 ADR In the Workplace
Appendix II 

Case Illustration: Brown & Root, Inc.

Brown & Root, Inc., headquartered in Houston, Texas, provides

construction, engineering, and maintenance services worldwide. Together,

its two business units employ about 27,000 people in the United States, all

of whom are covered by the company’s alternative dispute resolution

(ADR) program.37 The program, implemented in June 1993, includes an

ombudsman-like role, mediation, and arbitration as well as a toll-free

hotline for employee assistance.

How the Processes

Work

A Brown & Root employee unable to resolve a dispute through the chain

of command can contact the dispute resolution program administrator or

an ombudsman—at Brown & Root referred to as an advisor. The advisor

(or the program administrator) is to provide independent and confidential

assistance to the employee, which can include such things as simply

listening to the problem, answering questions, acting as a go-between,

getting the facts, coaching the employee on how to independently resolve

the problem, and providing referrals to other company resources. The

advisors are trained mediators and often provide informal mediation.

Should the dispute remain unresolved at this point, the employee can opt

for in-house mediation, provided by trained employee volunteers.

The next two steps—external mediation and arbitration—are generally

used only for issues involving statutorily protected rights. The employee

pays a $50 processing fee to take his or her dispute to external mediation

or arbitration; Brown & Root pays additional costs.

An unusual feature of Brown & Root’s dispute resolution program is its

Legal Consultation Plan that provides financial assistance to help

employees obtain their own attorneys to assist them in their employment

disputes. The employees pay a $25 deductible (for each dispute); the plan

then pays 90 percent of the attorney fees, up to a maximum benefit of

$2,500 annually.

According to Brown & Root’s dispute resolution program brochure, its

program is intended as the exclusive means for the final resolution of

employment disputes and is mandatory for all employees. The company

advised its employees in advance of the program implementation date of

June 1993, that by continuing or accepting employment with Brown &

Root after this date, they were agreeing to use the program, rather than the

court system, to resolve all employment-related claims against the

company. Company literature about the program further advises that if an

37Called the Brown & Root Dispute Resolution Program.

Page 38 GAO/GGD-97-157 ADR In the Workplace
Appendix II 

Case Illustration: Brown & Root, Inc.

employee were to file a lawsuit, Brown & Root would ask the court to

dismiss the case and refer it to the company’s dispute resolution program.38

Experiences in

Developing ADR

Processes

The impetus for looking for better ways to manage employee conflicts and

resolve employment disputes grew, in part, from “the lawsuit that nobody

won,” according to the Brown & Root’s Associate General Counsel for

Human Resources. In this case, the company paid over $400,000 in legal

fees to its outside counsel in successfully defending itself in a

discrimination suit. The Associate General Counsel said that because of

the tremendous financial and human cost of litigation, in the summer of

1992, Brown & Root assembled task forces to evaluate its dispute

resolution process. These task forces were composed of company

managers from the legal, employee relations, and operations functions as

well as outside experts and consultants. A conflict management consultant

interviewed nearly 300 employees about their views on the existing

dispute resolution process and on various alternatives. The program

design resulting from the task forces overhauled the company’s dispute

resolution system and provided for the installation of processes through

which employees could bring their workplace disputes. The program

design was approved in February 1993 and was implemented the following

June. A communications consulting firm assisted in the marketing effort

that included briefings, mailings, and brochures.

In implementing the program, Brown & Root established a full-time

program administration position39 to oversee the program and trained a

cadre of employees who had volunteered to serve, as a collateral duty, as

mediators and advisors. Between 125 and 150 employees received 40

hours of mediation training; about 75 of them received an additional 10

hours of advisor training. The company also provided a 1-day orientation

to between 30 and 40 human resource and training staff, who in turn

provided training to other company employees. In addition, Brown & Root

created two management training programs as part of the implementation

strategy: a half-day program on interpersonal conflict management and a

16 to 20-hour course on interorganizational conflict management. The rest

of Brown & Root’s employees were sent various pieces of literature to

educate them about the program.

38As of December 1996, Brown & Root had obtained court orders compelling arbitration in three cases.

39The program administrator reports to a policy committee made up of the general counsel, employee

relations vice president, and the senior U.S. operating officer in addition to other operating officers.

Page 39 GAO/GGD-97-157 ADR In the Workplace
Appendix II 

Case Illustration: Brown & Root, Inc.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Brown & Root routinely collects and analyzes data to evaluate the costs

and benefits of its dispute resolution program as well as employee

satisfaction. A key indicator of the program’s success is that of achieving

prompt resolution early in a dispute, according to the Associate General

Counsel for Human Resources. He said that, overall, between 80 and

90 percent of disputes are resolved in 2 months or less, mostly through the

advisor program. From June 1993 through December 1996, according to

information the company provided, about 88 percent of the 1,600 cases

handled were resolved without resorting to formal mediation or

arbitration. As of December 1996, 155 cases had been mediated, with a

resolution rate of 90 percent. Also as of December 1996, decisions had

been made on 31 of 74 arbitration requests, the remainder having been

settled or dropped. Arbitration is the lengthiest process, taking from 6 to

18 months from the filing of a complaint to the issuing of an arbitration

decision.

According to information provided by the company, in the dispute

resolution program’s first 3 years, the overall cost of dealing with

employment conflicts, including the total cost of the program (the

program’s current annual budget is about $500,000) is less than half of

what the company used to spend on legal fees for employment-related

litigations. Legal fees alone are down about 90 percent (for the first 3 years

of the program). Settlement costs have remained about the same since the

program’s inception, although there have been more settlements under the

new program. In addition to the operating costs of Brown & Root’s dispute

resolution program, the company invested about $250,000 in development

costs, including outside consultant fees, legal fees, and the cost of mailing

literature about the program.

Another indicator of the program’s success, according to the company’s

Associate General Counsel, is that the number of employment-related

lawsuits has been reduced to nearly zero, and the number of cases filed

with the Equal Employment Opportunity Commission or similar state

entities has been reduced by half.

Brown & Root employees appear to be satisfied with the program.

According to a speech by the Associate General Counsel, confidential

anonymous surveys of the users of the dispute resolution program

reported satisfaction with its procedures.

Page 40 GAO/GGD-97-157 ADR In the Workplace
Appendix II 

Case Illustration: Brown & Root, Inc.

Lessons Learned by

the Organization

According to the company’s Associate General Counsel for Human

Resources, Brown & Root has learned several lessons about what makes a

dispute resolution program effective. One lesson learned is that

management’s unwavering commitment and constant attention are

prerequisites to the growth of an effective program. Brown & Root said,

for example, that the general counsel’s active role and organizational

stature were crucial in launching the program and in maintaining its

success. Also, Brown & Root said it learned that the effectiveness of a

program is directly related to a company’s investment in training and to its

frequency of communication.

Also crucial to creating a program that will be widely accepted, in Brown

& Root’s experience, is ensuring the users’ involvement in designing the

program. The company said it learned that most employees prefer a

collaborative dispute resolution process to an adjudicatory one.

The company also said it learned that mediation settlements and

arbitration awards can alert management to problems within the

organization. Upward communication by the dispute resolution program

administrator has had a like effect.

Finally, Brown & Root said it learned the program has not been subjected

to overwhelming use by chronic complainers, and the legal consultation

plan has not been a financial burden. As of December 1996, 149 employees

had received about $169,000 under the legal consultation program.

Page 41 GAO/GGD-97-157 ADR In the Workplace
Appendix III 

Case Illustration: Hughes Electronics

Corporation

The Hughes Electronics Corporation, headquartered in Los Angeles, CA,

designs and produces high technology systems for military, scientific, and

commercial applications. The company’s various domestic business units

employ approximately 69,000 workers—about 84 percent of whom are not

covered under a collective bargaining agreement.40 In January 1993,

Hughes added to its dispute resolution system41 an ombudsman-like role, a

management review board, and an arbitration process for its employees

who are not covered under a collective bargaining agreement.42

How the Processes

Work

The first step for a Hughes employee who is unable to resolve a grievance

through the chain of command is to talk with an “executive advisor”

whose role is similar to that of an ombudsman. The advisor, whom the

employee chooses from a pool of senior executives, helps the employee

evaluate the grievance’s merits and attempts to facilitate resolution.

Failing resolution, the employee can have a hearing before a management

review board (called the Consensus Review Board) composed of three

managers outside the chain of management of both the employee and

management respondent.43 The board convenes within 60 days of the date

of a written complaint, meets with each party separately, and issues its

decision usually within 10 working days. The executive advisor may help

the employee prepare for the hearing and assist the employee during the

hearing. The board can order corrective action, such as rescinding a

discharge or modifying a performance rating, but it cannot alter company

policy or award monetary damages. Although the company is bound by the

board’s decision, the employee may request arbitration if dissatisfied.

Arbitration, the final step in Hughes’ dispute resolution process, is

mandatory for employees hired after January 1, 1993, who are required, as

a condition of employment, to sign an agreement to use binding arbitration

to resolve disputes not resolved through other processes. For employees

hired before January 1993, arbitration is optional. Whether mandatory or

elected, arbitration is binding on both the company and the employee.44 An

40As a result of the sale of its defense business and a reorganization expected to take place in the latter

part of 1997, Hughes Electronics will be divested of certain business units and retain about 15,000

employees.

41Called the Employee Problem Resolution Procedure.

42Some variance exists, across Hughes’ business units, in the specifics of the dispute resolution system.

43Management selects the board members from a pool of senior executives and managers.

44If an employee hired after January 1, 1993, bypasses binding arbitration and files a lawsuit, Hughes

will ask the court to dismiss the suit and compel use of the company processes.

Page 42 GAO/GGD-97-157 ADR In the Workplace
Appendix III 

Case Illustration: Hughes Electronics

Corporation

arbitrator can award remedies, including monetary damages, the same as a

court can. Arbitration costs are divided equally between the disputant and

the company. The cost-sharing arrangement for arbitration, as explained

by Hughes’ Corporate Manager for Equal Employment Opportunity and

Workforce Diversity Programs, was to let all parties to a dispute have a

stake in the process and to help avoid frivolous use of arbitration. In cases

of hardship, however, the company will limit the employee’s share to 2

weeks’ net pay.

Experiences in

Developing ADR

Processes

The rising costs of employment-related litigation served as the catalyst for

Hughes to change its program.45 According to the Corporate Manager for

Equal Employment Opportunity and Workforce Diversity Programs, the

company researched the “best practices” in dispute resolution used by

other companies. The company also conducted a “cultural audit” to find

out what types of complaints were being surfaced, what the issues were,

who was complaining, and what workplace values were prevalent.

Additionally, according to an article coauthored by Hughes’ Vice President

for Workforce Diversity, employee focus groups and surveys showed that

employees considered the existing dispute resolution program too time

consuming and too management oriented and felt that it denied employees

the opportunity to tell their own stories.46 Hughes also used pilot tests to

gauge the likely success of various ADR techniques.

In implementing the program, Hughes trained prospective board members

in how to conduct hearings, assess the merits of parties’ arguments, and

render fair and impartial decisions. Hughes also trained executives and

managers throughout the company in conflict resolution techniques, and

educated employees—through brochures, supervisory guidance, and

newsletters—about the new program, according to the Corporate Manager

for Equal Employment Opportunity and Workforce Diversity Programs.

Hughes rolled out the new program in January 1993.

45David R. Barclay and William A. Carmell, “Benefits of a Resolution-Centered ADR Program,”

Corporate Counsel’s Guide: Alternative Dispute Resolution in the Employment Context, Business Laws

Inc., ch. 16 (Chesterland, Ohio: Dec. 1995). Mr. Barclay is Hughes’ Vice President for Workforce

Diversity; Mr. Carmell is a labor and employment attorney with experience in developing alternative

dispute resolution programs.

46Ibid.

Page 43 GAO/GGD-97-157 ADR In the Workplace
Appendix III 

Case Illustration: Hughes Electronics

Corporation

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

According to the Corporate Manager for Equal Employment Opportunity

and Workforce Diversity Programs, Hughes has not formally evaluated the

program but views the program as successful. Although there is no

empirical evidence to suggest that the dispute resolution system has

reduced overall costs associated with external complaints and litigation,

he cited some positive trends. One was the downward trend in the number

of complaints filed with the Equal Employment Opportunity Commission

and corresponding state agencies, which dropped from 154 in 1992 (the

year before the new program was implemented) to 29 in 1995, and to 45 in

1996. Another trend was a reduction in employment-related lawsuits,

which dropped from 54 in 1992 to 23 in 1995, and to 47 in 1996. He cited

incentive programs during downsizing and improved business conditions

as possible factors contributing to these trends.

Most cases are closed with the decision of the management review board.

From January 1993 through December 1996, of 80 management review

board hearings, 29 cases were decided in the employee’s favor.

Resolutions included rescinded disciplinary actions, terminations, and

layoffs as well as modifications to performance appraisals. Of the 51 cases

not decided in the employee’s favor, only 1 went to arbitration, with the

employee prevailing. The Corporate Manager for Equal Employment

Opportunity and Workforce Diversity Programs said one reason why

others may not have chosen to arbitrate their dispute is because they had

had their “day in court” before the management review board.

Hughes surveys employee attitudes about the company’s dispute

resolution process in two ways, according to the Corporate Manager for

Equal Employment Opportunity and Workforce Diversity Programs. One

way is in a written survey provided to all employees who use the

company’s dispute resolution program. The other way is periodic focus

groups of employees and managers. Although the official did not provide

the results of these processes, he said that Hughes has not received any

indication that its cost-sharing arrangement for binding arbitration

discouraged employees from pursuing their complaints.

Lessons Learned by

the Organization

Hughes has learned several lessons from its Employee Problem Resolution

Procedure. For example, according to the aforementioned article, the

review board hearing serves an important function just by giving an

employee the chance to tell his or her own story. Also, according to the

article, “Key to any such program is effective planning and implementation

by both in-house counsel and the human resources department in devising

Page 44 GAO/GGD-97-157 ADR In the Workplace
Appendix III 

Case Illustration: Hughes Electronics

Corporation

a process that is not simply adversarial, but focuses on resolution.” It is

also important, according to the Corporate Manager for Equal

Employment Opportunity and Workforce Diversity Programs, to obtain

employee input on how well the dispute resolution process is working in

order to add to the trust between management and employees.

Additionally, Hughes developed a greater understanding of the roots of

conflict and discovered the need to reexamine the role that human

resources personnel play in conflict resolution, according to the article

coauthored by Hughes’ Vice President for Workforce Diversity. The article

also stated that the company learned to focus on the underlying reasons

for reversals of company decisions, which has led to an in-depth

reexamination of the management decisions that led to specific employee

complaints.

Page 45 GAO/GGD-97-157 ADR In the Workplace
Appendix IV 

Case Illustration: Polaroid Corporation

The Polaroid Corporation, headquartered in Cambridge, MA, employs

6,500 nonunion workers in manufacturing imaging products. Polaroid has

long offered alternative dispute resolution (ADR) techniques as part of its

traditional dispute resolution process. Since the 1950s, Polaroid has

offered all grievants a hearing before a panel of three company officers;

and nonmanagerial employees have had access to arbitration. In

January 1995, Polaroid added mediation, peer panels, an ombudsman

program, and a program to help grievants take part in the dispute

resolution process.

How the Processes

Work

A Polaroid employee is encouraged to use mediation at any stage of a

grievance or appeal. The employee may choose from among 60 in-house

mediators or, if the employee prefers, an external mediator. If the matter is

not resolved earlier in the dispute resolution process, the employee can

request a hearing before a panel of three company officers or a peer

panel.47 Panel decisions are binding on the company, but a panel’s

prerogatives are limited. For example, a panel may order the reinstatement

of a wrongfully discharged employee, but it cannot order Polaroid to pay

damages to the employee. Arbitration is the final step for nonmanagerial

employees appealing disciplinary or discharge actions. An arbitrator may

award the employee the same remedies as a court, including monetary

damages. Although Polaroid expects its employees to use the company’s

dispute resolution processes, an employee who is unable to resolve a

grievance to his or her satisfaction through those processes can take the

matter to court.

Polaroid provides grievants with training about its dispute resolution

processes. In addition, the company’s four full-time ombudsmen hear

employee concerns, conduct investigations and inquiries, and help

employees decide on their course of action. Polaroid also provides

coaching and training for grievants and a company “grievance assistant”

can help grievants throughout the process by suggesting strategies,

preparing written statements, and developing oral presentations.

With one exception, Polaroid pays all ADR program costs. An employee

who takes his or her case to arbitration must pay $100 toward expenses. If

47For nonmanagerial employees, the peer panel is composed of three nonmanagerial and two

managerial-level employees. For managerial employees, the panel consists of three managerial-level

and two nonmanagerial employees. Under policy changes that had been proposed at the time of our

study, Polaroid would replace officer or peer panels with “appeal panels” composed of a variety of

managerial and nonmanagerial employees.

Page 46 GAO/GGD-97-157 ADR In the Workplace
Appendix IV 

Case Illustration: Polaroid Corporation

the employee prevails in an arbitration hearing, Polaroid refunds the $100

payment.

Experiences in

Developing ADR

Processes

Polaroid’s current dispute resolution program has its roots in a pilot that

began in October 1993 at its plant in New Bedford, MA at the suggestion of

a small group of plant employees. While the pilot was under way, a

Polaroid task force, assembled to redesign the company’s entire dispute

resolution program, researched the best practices of 22 companies,

obtained the views of various employee groups, and examined the results

of the New Bedford pilot. The task force’s proposals were critiqued by

focus groups drawn from all levels of company staff before being finalized

and put into practice in January 1995.

Polaroid established the Grievance Administration Office to oversee the

appeals processes and train employees, according to the Human

Resources Manager, Corporate Dispute Resolution. The company trained

selected employees as ombudsmen, mediators, peer panelists, and

grievance assistants. Peer panelists, for example, were given 2 days of

training on due process and the proper conduct of hearings; and grievance

assistants were given training in company policies, problem solving, and

conflict resolution, according to information provided by the company.

Supervisors received the same training as grievance assistants; Polaroid’s

rationale was that supervisors are the first line in preventing and resolving

disputes, according to the former Senior Corporate Counsel. Further,

Polaroid trained its human resource management staff in facilitating

conflict resolution. Finally, Polaroid educated its employees about the

company’s dispute processes, using video presentations, small meetings,

newsletters, and other printed materials.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Polaroid has not formally evaluated and does not track the costs of its ADR

processes, but management officials believe that the company’s ADR

processes have been successful in resolving disputes and avoiding the time

and expense associated with litigation.

Management officials noted that most cases in Polaroid’s dispute

resolution program are resolved before they reach the panel or arbitration

levels. They said that each year, only about 30 to 40 cases are heard by

peer or company officer panels (for the most part, grievants select peer

rather than company officer panels) while three or four cases go to

arbitration. Employees have prevailed in about one-third to one-half of the

Page 47 GAO/GGD-97-157 ADR In the Workplace
Appendix IV 

Case Illustration: Polaroid Corporation

panel hearings and in about one-fourth of arbitration hearings. The peer

panel and arbitration processes are not very time consuming, according to

Polaroid’s former Senior Corporate Counsel. She said peer panelists

generally spend several hours in preparing for and hearing a case; they

deliver their decisions in 7 to 10 days. An arbitration hearing usually takes

about a half day (although prehearing conferences add time to the

process) with a decision rendered within 30 days.

Also, according to Polaroid’s former Senior Corporate Counsel, no

employee has ever gone to court after losing an arbitration decision. She

attributes this success to the fact that grievants get “their day in court”

within Polaroid’s dispute resolution program.

Polaroid officials also spoke highly of the company’s experience with

mediation, which was used extensively in grievances associated with

downsizing. They told us that mediation techniques expedited the

grievance process and, at a minimum, made settlements more likely by

clarifying the issues.

There is some indication that employees generally have a favorable view

of the company’s dispute resolution processes. About two-thirds of the

employees Polaroid surveyed at its New Bedford plant indicated that the

pilot program as a whole was “somewhat” to “extremely” effective.

Although it revamped its dispute resolution system in 1995, Polaroid is

considering further revisions to decrease the resolution time for serious

cases—such as firings, which currently take 12 to 18 months—to a

maximum of 14 weeks. The policy under consideration would require

mediation to be used, reduce the number of grievance steps below the

panel and arbitration levels, and impose stricter process time deadlines.

Lessons Learned by

the Organization

Polaroid learned two important lessons, according to the former Senior

Corporate Counsel. The first was that most disputes could be resolved

through informal processes. The second lesson was that one outgrowth of

progressive dispute resolution processes is the enhancement of personnel

management. She said that since Polaroid provided the processes and the

climate for employees to raise issues and concerns, supervisors and

managers have become more accountable for adhering to company

policies. And because a cluster of grievances can indicate a problem in a

work unit or dissatisfaction with a company policy, the system helps keep

management aware of systemic or organizational concerns.

Page 48 GAO/GGD-97-157 ADR In the Workplace
Appendix V 

Case Illustration: Rockwell International

Corporation

Rockwell International Corporation, headquartered in Seal Beach, CA,

designs and builds automation, communications, semiconductor, and

automotive products worldwide.48 It has about 60,000 domestic

employees, 50,000 of whom are nonunion. In May 1993, Rockwell added

arbitration to its existing dispute resolution procedures for its nonunion

employees.49 Eight of Rockwell’s 12 business units offer peer panel review

as another ADR technique to be used before arbitration.

How the Processes

Work

A Rockwell employee who is unable to resolve a dispute through the

traditional chain of command can request a peer panel review in the eight

Rockwell business units that offer this technique. The panel, randomly

selected by computer, has five members, three of whom are from the same

payroll group as the disputant, and two of whom are managers. The panel

normally meets within 30 days of the request, evaluates the facts

presented, and usually decides the outcome of cases within 1 day. The

panel can overturn or modify a disciplinary or discharge action and can

award back pay, but it cannot award exemplary or punitive damages.

Although Rockwell is bound by the peer panel decision, an employee who

is dissatisfied with the decision can request arbitration.

Arbitration, the final step in Rockwell’s dispute resolution process, is

mandatory for employees hired after January 1, 1993, who are required to

sign a “Mutual Agreement To Arbitrate Claims” as a condition of

employment.50 For those hired before January 1993, signing the agreement

is voluntary, except that they cannot be promoted into management or

exercise company stock options unless they sign the agreement. Rockwell

did not implement the arbitration policy for all employees hired before

1993, reasoning that in California (where many Rockwell employees

reside), courts would require specific consideration for the arbitration

agreement to be binding and would not consider merely continued

employment to constitute such consideration.

Arbitrators can award remedies, including monetary, exemplary, and

punitive damages, just as a court can. The disputant and the company

share arbitration costs equally, although the arbitrator may award

48In December 1996, Rockwell’s aerospace and defense units were acquired by the Boeing Corporation.

This illustration discusses Rockwell’s dispute resolution processes before the acquisition.

49Rockwell’s ADR program is known as the Employee Issue Resolution Process.

50If an employee who has signed this agreement bypasses the company’s processes and files a lawsuit,

Rockwell will file a motion in court to compel arbitration.

Page 49 GAO/GGD-97-157 ADR In the Workplace
Appendix V 

Case Illustration: Rockwell International

Corporation

reasonable fees to the prevailing party.51 The arbitrator’s decision is final

and binding on both the company and the employee.

Experiences in

Developing ADR

Processes

In 1993, after the company spent over $1 million in attorney’s fees in

winning a lengthy case that alleged wrongful discharge and handicap

discrimination and having gained first-hand knowledge of the time and

expense that lawsuits can involve, Rockwell’s top executives decided to

incorporate arbitration into the company’s existing dispute resolution

process, according to the company’s Assistant General Counsel.

In implementing the arbitration program, Rockwell first asked its 950

highest paid executives to sign the Mutual Agreement to Arbitrate Claims,

reasoning, the Assistant General Counsel said, that it would not be fair to

ask employees to participate in a program from which top executives were

exempted. The arbitration program was then communicated to employees

through a letter explaining the program, an arbitration handbook

addressing questions employees would be likely to ask, and a video about

the arbitration process. The Assistant General Counsel said that it cost

between $18,000 to $23,000 for legal advice, developing and distributing

copies of videotapes, and printing and distributing booklets.

Rockwell then tasked its individual business units with updating their own

dispute resolution procedures to incorporate additional ADR approaches.

Based on the results of focus groups and other techniques, 8 of the 12

business units incorporated peer review panels, in addition to arbitration,

into their procedures.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Rockwell has not evaluated its ADR program but believes it has been

successful because, according to Rockwell’s Assistant General Counsel,

(1) the “Mutual Agreement To Arbitrate Claims” has not been challenged

in court; (2) the company has been able to avoid the costs of litigation and

outside counsel, as the company was represented by its own counsel in

the arbitrations; and (3) only one employee who signed the arbitration

agreement has filed a lawsuit against the company.52

51Rockwell’s Assistant General Counsel explained that arbitrators follow court rules in making such

awards and that judges are very reluctant to award attorney’s fees to companies unless the plaintiff’s

action was frivolous.

52At the time of our study, the company was filing a motion to dismiss and compel arbitration.

Page 50 GAO/GGD-97-157 ADR In the Workplace
Appendix V 

Case Illustration: Rockwell International

Corporation

The official also said he believes that there have been numerous instances

in which the arbitration agreement made it easier for Rockwell and a

former or current employee to resolve differences short of either

arbitration or litigation. He noted that from May 1993 (when the program

started) through June 1996, only two cases went to arbitration; the

company prevailed in the first one, while the employee received some

relief in the second case.53 A third case was pending arbitration at the time

of our study.

The Assistant General Counsel also pointed out the effectiveness of peer

panels in resolving disputes. Ten cases had been heard by a peer review

panel between May 1993 and June 1996, and while the company prevailed

in 9 of the 10 cases, none of them went on to arbitration.

Lessons Learned by

the Organization

Rockwell learned several lessons from its experiences, according to the

company’s Assistant General Counsel. One lesson learned was that

because many of Rockwell’s top corporate executives were involved in the

wrongful discharge/handicap discrimination case by testifying either at a

trial or at a deposition, they were keenly aware of the time and costs

involved in employment litigation. This led to a partnership and shared

vision among the top legal and human resource officials to exploring ways

to reduce such time and costs.

Another lesson the Assistant General Counsel said the company learned is

that for an arbitration process to be accepted, a good communications

process is needed on how the arbitration process works. Rockwell also

found it important for the communication to be frank. For example, while

Rockwell’s arbitration handbook explained that arbitration was a fair and

less expensive way to settle a dispute, it also explained that an employee

seeking to “hit the jackpot” would probably be disappointed because a

windfall award is less likely under arbitration than in a jury trial. The

handbook explained that an arbitrator’s award is more likely than a jury’s

to be based on the merits of a case rather than on extraneous or emotional

considerations.

A further lesson Rockwell learned involved the “Mutual Agreement To

Arbitrate Claims” that was made a condition of employment beginning in

1993, according to Rockwell’s Assistant General Counsel. He said there

was a “little” negative reaction from some management employees

because they would not be able to take advantage of employee stock

53Neither of these cases were in business units that offered peer review.

Page 51 GAO/GGD-97-157 ADR In the Workplace
Appendix V 

Case Illustration: Rockwell International

Corporation

options without signing the “Mutual Agreement To Arbitrate Claims.” But,

Rockwell learned, the provision could be made acceptable to employees if

the company made sure that it was applied fairly and ethically by

(1) ensuring that the program did not take away from employees any of

their substantive rights; (2) including the company’s top executives in the

program; and (3) providing employees with consideration for signing the

agreement, instead of merely imposing the requirement as a condition of

employment.

Page 52 GAO/GGD-97-157 ADR In the Workplace
Appendix VI 

Case Illustration: TRW Inc.

TRW Inc., headquartered in Cleveland, OH, provides products and services

for the space, automotive, and defense markets worldwide. More than

90 percent of its 33,000 U.S. employees are not covered under collective

bargaining agreements. In January 1995, TRW adopted a companywide ADR

program for these workers. The company made arbitration available

companywide.54 Some TRW business units offer mediation and peer

review in addition to traditional dispute resolution procedures. TRW also

operates a “hotline” to provide employees an independent and confidential

source of advice and assistance.

How the Processes

Work

While arbitration is a companywide policy, TRW’s approximately 60

business units have the prerogative to develop their own dispute

resolution processes, according to the company’s Senior Corporate

Counsel for Labor and Employment. Some business units, including TRW’s

Systems Integration Group (SIG), include ADR techniques along with

arbitration in the dispute resolution continuum. Under SIG’s procedures,

employees can choose a hearing before a peer panel or mediation before

taking a matter to arbitration.

In most instances, a SIG employee first submits his or her dispute for

management review, which includes internal mediation conducted by

human resources staff. If the matter is not resolved or dropped, the

employee can elect to have a hearing before a five-member peer review

panel55 that may be followed by external mediation, or bypass the panel

and request external mediation. A peer review panel’s decision is binding

on the company, although its remedies are limited to actual damages; for

example, it can order that a wrongfully discharged employee be reinstated

with back pay but cannot award damages. Before a SIG grievant who is

dissatisfied with a peer panel’s decision can take the matter to arbitration,

the dispute must be submitted for external mediation. Arbitration is the

final step at SIG as well as at all other TRW business units. Arbitrators may

award remedies just as a court would do.

With one exception, TRW pays all dispute resolution costs. Its share of

arbitration costs depends on the outcome of the case. An employee who

chooses to go to arbitration and does not prevail is liable for half the cost

54TRW provides for two forms of arbitration. One model is the single arbitrator; the other is a panel

selected by the employee and management and may also include an arbitrator. Most TRW business

units have adopted the single arbitrator model.

55The panel, called the Appeals Committee at SIG, is composed of five members selected from a pool

of employees nominated by other employees. The grievant selects three panelists and management

selects two.

Page 53 GAO/GGD-97-157 ADR In the Workplace
Appendix VI 

Case Illustration: TRW Inc.

of arbitration but not more than 2-days’ base pay.56 TRW expects its

employees to use the company’s dispute resolution processes before

litigating a matter. If an employee bypasses TRW’s processes and files suit,

the company will petition the court to compel the use of company

arbitration.

Experiences in

Developing ADR

Processes

According to TRW’s Senior Corporate Counsel for Labor and Employment,

company downsizing efforts in the early 1990s and a general proliferation

of employment-related lawsuits led to much employment litigation. She

said that Human Resource and Legal Department staff believed that ADR

could help resolve cases more quickly and less expensively. Consequently,

TRW required that its business units adopt arbitration to supplement

existing grievance procedures.

Before putting its arbitration program into effect in January 1995, TRW

trained key staff and marketed the program throughout the company,

according to the Senior Corporate Counsel for Labor and Employment.

She said that TRW contracted with a law firm for a 2-day program to give

human resource management staff (1) an overview of mediation and

arbitration and (2) instruction on how to conduct discovery, prepare a

brief, interview witnesses, and take depositions. The marketing initiative,

which began in the summer of 1994, included group meetings in field units,

video presentations, and articles in company newspapers. The company

also sent literature on the arbitration program to all employees. She also

said that before the program went into effect, TRW obtained employee

feedback through focus groups and surveys. SIG supplemented the parent

company’s initiatives with its “Dispute Resolution Process Guide”—a

step-by-step description of, and questions and answers about, the dispute

resolution processes at SIG.

Besides the costs of training staff and marketing the program (which the

company did not track), the start-up process required the near full-time

efforts of three staff from the human resources, communication, and legal

offices for about 6 months.

56The extent to which employees share in arbitration costs was under review by the company at the

time of our study, according to the TRW’s Senior Corporate Counsel for Labor and Employment.

Page 54 GAO/GGD-97-157 ADR In the Workplace
Appendix VI 

Case Illustration: TRW Inc.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Although TRW has not formally evaluated its arbitration program, the

company’s Senior Counsel for Labor and Employment said that the

program has succeeded in resolving disputes and avoiding the time and

expense associated with litigation. Information she provided showed that

from January 1995 to September 1996, companywide, 40 grievants

requested arbitration. Of these disputes, 27 had been submitted to

mediation; 16 (59 percent) of them were resolved. Of the 13 cases not

mediated, two were arbitrated; the entire process took 4 to 5 months. The

other cases were pending.57

According to the Senior Counsel, there has been a significant drop in

discrimination and other employment litigation, although some of this

decrease is due to the company’s improved economic condition since 1994

and the end of downsizing. She also noted that existence of the arbitration

program redirected some court cases to TRW’s dispute resolution forum.

She explained that five employees had bypassed TRW’s arbitration process

and filed lawsuits. After TRW informed the plaintiffs’ attorneys about the

arbitration program, four of the five plaintiffs withdrew their suits to first

seek resolution through arbitration. The fifth plaintiff agreed to arbitration

after TRW filed a motion in federal district court to dismiss or stay a

lawsuit, pending arbitration. In addition, several employees who filed

lawsuits before the arbitration program went into effect subsequently

requested binding arbitration as an alternative to the judicial process.

TRW’s Senior Counsel further noted the fact that since only two cases had

been arbitrated in the program’s first 21 months, this showed the

effectiveness of mediation and other dispute resolution measures.

TRW’s Counsel’s Office surveyed human resources staff in mid 1996 about

their perception of the arbitration program. Among the staff’s responses

was that employees seemed willing to use ADR because a third party is

involved in the process. They also said that more concerted efforts are

made at each step to reach an acceptable solution. Further, the staff said

the process seems to have reduced the number of “frivolous” lawsuits.

Lessons Learned by

the Organization

TRW has learned several lessons, according to the company’s Senior

Counsel for Labor and Employment: (1) that, contrary to expectations, the

establishment of the arbitration program did not result in an

overwhelming number of complaints; (2) that most grievants simply want

57Data on ADR use by all of TRW’s individual business units was not available. However, between

January 1995 and November 1996, 15 cases were filed at SIG in which the grievant had the option of

going to peer review or directly to external mediation. Of the 15 cases filed, 13 were resolved (12

through mediation).

Page 55 GAO/GGD-97-157 ADR In the Workplace
Appendix VI 

Case Illustration: TRW Inc.

to “have their day in court” to tell their story to a third party; and (3) that

an employee’s request for arbitration often opens the door to settlement,

whether through mediation or other settlement discussion. Finally,

responses by TRW human resources staff to a company survey indicated

that having the program keeps management “on their toes” as far as

documenting and addressing issues as they occur.

Page 56 GAO/GGD-97-157 ADR In the Workplace
Appendix VII 

Case Illustration: U. S. Department of

Agriculture

The U. S. Department of Agriculture, headquartered in Washington, D.C.,

manages agriculture, food safety, nutrition, natural resources, community

development, and scientific research programs. Agriculture and its 16

agencies employ about 108,000 people. In 1993, Agriculture provided

mediation training to its full-time equal employment opportunity (EEO)

counselors.58 In January 1994, it established Dispute Resolution Boards to

handle the rapidly growing volume of EEO complaints.59 In 1996,

Agriculture announced a policy requiring its agencies to develop conflict

resolution programs outside the EEO complaint process that used

alternative dispute resolution (ADR) techniques like mediation, to intervene

early in disputes to prevent them from becoming formal EEO complaints.

This case illustration discusses the operation of Dispute Resolution

Boards.

How the Process

Works

The Dispute Resolution Boards operated in an adjudicatory-like fashion as

an initial step in the formal EEO complaint process. The three-member

boards required 1 day for preparation and 1 day for the hearing or

conference, which had two phases: fact-finding60 and resolution or

settlement. During fact-finding, the board heard sworn testimony from

both the employee and the supervisor and obtained other evidence.

Following deliberations, the board met jointly and separately with the

parties to facilitate resolution and offered them an assessment of (1) the

strengths and weaknesses of their respective positions and (2) which party

would likely prevail if the case proceeded further in the process. If

resolution resulted, the parties signed a written settlement. If there was no

resolution, information developed during fact-finding became part of the

investigation record.

Because the board lacked resolution authority, an agency official with

authority to enter into settlement agreements—called a resolving

official—participated in the proceedings. According to Agriculture’s

Washington Regional Service Center Director, the resolving official was

authorized under verbal Agriculture policy to commit the department to

monetary settlements up to $2,500, in addition to back pay and attorneys’

fees, without higher-level approval.

58The 40-hour training was provided by the Justice Center of Atlanta.

59As a result of the recommendation of an internal Agriculture evaluation (see p. 60), boards were

discontinued in April 1997.

60Regulations governing the EEO complaint process require the parties to cooperate during

fact-finding.

Page 57 GAO/GGD-97-157 ADR In the Workplace
Appendix VII 

Case Illustration: U. S. Department of

Agriculture

Experiences in

Developing the ADR

Process

The significant increase in EEO complaints, the inability to process them in

a timely manner, and a burgeoning complaint backlog prompted

Agriculture’s then Assistant Secretary for Administration to adopt the

board concept to save time and money by reducing the number of cases

going through the entire complaint process.61

In April 1993, a task force of EEO and employee relations staff began

planning how the boards would operate. Agriculture conducted a pilot

from September 1993 to December 1993 with board members selected

from EEO and human resource staff for “their good common sense and

basic understanding of the complaint process and dispute resolution,”

according to Agriculture’s evaluation of the pilot. Diversity was also a

selection factor. According to agency officials, based on the pilot,

Agriculture decided that a board would have three members rather than

one because a three-person board would (1) more fully develop the record

and identify issues requiring further investigation, (2) be viewed as more

credible by the parties, and (3) allow for diversity among the members. In

January 1994, a board was established in the Washington Regional Service

Center. The officials also said that because of resource constraints, boards

operated in only four of the six regional service centers before being

discontinued in April 1997 and had been used in only about 12 to

15 percent of the EEO cases.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Agriculture evaluated the results of the 3-month pilot, comparing 48 cases

going through the board process to 41 cases handled by the traditional EEO

complaint process. Evaluation results showed that of the 48 pilot cases, 16

were withdrawn, dismissed, or settled prior to the day of the hearing. Of

the 32 remaining cases, 23 settled on the day of the hearing. Another 8

settled after the day of the hearing. The one case not resolved continued to

be handled by the traditional process. Board cases were resolved in less

time than the traditional process, requiring an average of 152 days from

filing of the complaint until closure (including 46 days from the time a case

was assigned to a board to closure); the comparison group averaged 238

days.62

The evaluation team reported that while it could not compare costs of the

board and traditional processes with any precision because exact records

of time and cost were not maintained, “it seems fairly certain” that EEO

61The history of Agriculture’s Dispute Resolution Boards was discussed in USDA Dispute Resolution

Board Pilot Project Evaluation, May 1994.

62Ibid.

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Appendix VII 

Case Illustration: U. S. Department of

Agriculture

complaint processing costs using boards were less than the costs under

the traditional process. However, when settlement costs were considered,

it was unclear whether boards were less costly because board-facilitated

settlements (averaging $19,737) were more costly than settlements and

decisions in the comparison group (averaging $4,665).63

Generally, employees and resolving officials had more favorable opinions

about boards than did the supervisors, according to the evaluation. Of

respondents to the evaluation team’s survey, 42 percent of the supervisors

were dissatisfied with the board process compared with 17 percent of the

employees and 25 percent of the resolving officials. Forty-two percent of

the supervisors said the process was unfair, compared with 17 percent of

the employees and 15 percent of the resolving officials. In addition,

53 percent of the supervisors were dissatisfied with the outcomes

compared with 25 percent of the employees and 30 percent of the

resolving officials.

Lessons Learned by

the Organization

Based on the evaluation, Agriculture learned that while boards had been

helpful in dealing with the complaint inventory, they were labor intensive

and expensive and did not deal with the underlying issues in disputes. This

is the reason why Agriculture has begun training counselors in mediation

and developed a conflict resolution policy encouraging its agencies to

intervene early in disputes, according to the former Deputy Director of the

Office of Civil Rights and Enforcement.

Another lesson learned relates to the politics of settlement. Officials said

that in the beginning, there was a push to settle and close cases. They said

that the settlement policy discouraged supervisors and affected their

attitude toward the board process because they perceived that their

authority was being undermined. At the same time, the settlement policy

may have encouraged employees to file complaints. Agriculture has since

stated that in making settlements, officials should ensure that appropriate

weight is given to the merits of a case. Additionally, some Agriculture

officials said that they believe the prospect of receiving a cash settlement

may have motivated some employees to file complaints, and the

expectation of receiving cash may have impeded resolution.

The above lessons were reinforced by the Civil Rights Action Team that

studied how Agriculture treated both customers and employees. In its

63Includes cash settlements, compensatory damages, back pay and attorneys’ fees, and the monetary

value of noncash settlements such as training, travel, and tuition.

Page 59 GAO/GGD-97-157 ADR In the Workplace
Appendix VII 

Case Illustration: U. S. Department of

Agriculture

February 28, 1997, report,64 the team recommended sweeping changes to

how Agriculture resolves workplace disputes, including using more

interest-based ADR techniques outside the EEO process to resolve

complaints and their underlying issues at the lowest possible level. To deal

with the EEO case backlog, the team recommended using mediation and

voluntary binding arbitration. The team also recommended discontinuing

boards. The Executive Assistant to the Deputy Director of Agriculture’s

Office of Civil Rights said that criticism of the boards was not about their

design but about how they implemented the agency’s settlement policy.

In addition to recommending that Agriculture abandon a “settle at all

costs” policy, the team said that the performance of EEO counselors and

other Agriculture personnel with dispute resolution responsibilities should

not be assessed exclusively or primarily on their settlement or resolution

rates. Further, the team recommended that all Agriculture employees

receive civil rights training and that managers receive training to enhance

their “people skills.”

The Secretary of Agriculture has accepted the team’s findings. An

implementation team was established to draft new settlement and conflict

management policies as well as to set up a conflict management program.

Agriculture said that the team is expected to complete its work by the end

of the summer 1997.

64Civil Rights at the United States Department of Agriculture: A Report by the Civil Rights Action

Team.

Page 60 GAO/GGD-97-157 ADR In the Workplace
Appendix VIII 

Case Illustration: U.S. Air Force

The U.S. Air Force, with facilities worldwide, employed more than 571,000

personnel in fiscal year 1996, including about 183,000 civilians. In the Air

Force, the alternative dispute resolution (ADR) method that is emphasized

is mediation, which has been used in personnel issues since 1990,

particularly in civilian employee equal employment opportunity (EEO)

cases. The Air Force has trained its EEO counselors in mediation to foster

its use.

How the Process

Works

Civilian employees who believe they have been discriminated against can

contact an EEO counselor who, if unable to resolve a particular matter, may

suggest mediation.65 Both parties—employee and supervisor—must agree

to mediation, which can occur at any point in the dispute. The Air Force’s

goal is to provide mediation within 4 weeks of a request for its use,

according to the deputy dispute resolution specialist.

A mediator is selected depending on the issues involved (the Air Force

prefers to match a mediator to a case with issues in which he or she

specializes) and, to a limited extent, on the preferences of the parties. The

mediator could be the counselor whom the employee initially contacted;

another counselor not involved in the case; or an external mediator from

another Air Force installation, the Department of Defense’s shared

neutrals program, another federal agency, or a contract mediator. In

addition to the disputants, the mediator must arrange for an Air Force

official, who is authorized to agree to settlement terms, to directly

participate in, or at least be kept informed of, the mediation proceedings

in order to approve any proposed settlement terms. If a matter is resolved,

the parties sign a settlement agreement, which is subject to a higher-level

review before becoming final.

Experiences in

Developing the ADR

Process

Air Force officials said workplace ADR efforts began in 1990, when the Air

Force started providing mediation training to grievance examiners and

complaint investigators. A more structured ADR program was established

in January 1993 when the Secretary of the Air Force, in a memorandum,

called for using ADR in appropriate cases, designated the Deputy General

Counsel as the Air Force Dispute Resolution Specialist and, among other

things, required (1) development of an ADR implementation plan, and

(2) an annual progress report.

65Kirtland Air Force Base is an exception. The base’s Mediation Center, established in December 1993,

is separate from all formal processes and handles disputes ranging from grievances under collective

bargaining agreements to EEO complaints.

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Appendix VIII 

Case Illustration: U.S. Air Force

In planning the program, General Counsel staff canvassed the public and

private sector legal communities about best practices and program

successes, according to a memorandum prepared by the Air Force’s

General Counsel describing the status of the Air Force’s ADR initiatives. An

ADR Working Group determined that the ADR program should emphasize

stakeholder education and awareness by briefing those most affected by

disputes, including EEO and senior military and civilian personnel.

In implementing the program, the Air Force continued training EEO

counselors in mediation; at the time of our study, over 1,000 Air Force

personnel (most of whom had dealt with employment disputes) had been

trained, according to the General Counsel’s memorandum. The training

course is a 24-hour program.66 To help less experienced mediators further

develop their skills and to promote ADR use, the Air Force established the

Mediator Mentoring Program, under which trained but inexperienced

mediators apprentice with highly skilled and experienced mediators.

A major marketing initiative began in 1996 with plans to brief key staff at

all major commands. Efforts have included on-site multimedia briefings

and briefings via satellite to more than 20 Air Force installations. Further,

the Office of the General Counsel has publicized ADR efforts through its

newsletter ADR News!.

The Air Force has been developing ADR guidance and information

resources. At the time of our study, the handbook Air Force Mediation

Handbook: Mediating Civilian Personnel Workplace Disputes was in final

drafting stages. In developing the handbook, the Air Force used input from

EEO counselors and personnel specialists. The Air Force is also developing

an Internet site called The ADR Source, which will offer information about

ADR programs in the Air Force, at other federal agencies, and in the private

sector. These and other efforts are being underwritten by a budget that in

fiscal year 1997 is $400,000.

66Training providers have included the Justice Center of Atlanta and the Federal Mediation and

Conciliation Service as well as other contractors.

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Appendix VIII 

Case Illustration: U.S. Air Force

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

An evaluation of the Air Force’s program, as it relates to the resolution of

EEO complaints, is expected to be completed by late 1997, according to Air

Force officials.67 Preliminary data show that the Air Force ADR program is

successful in resolving workplace disputes and in lessening the time and

costs associated with redress, according to the memorandum from the Air

Force General Counsel. The extent to which costs are saved is a subject of

the ongoing evaluation. However, the General Counsel said that resolving

EEO disputes at the earliest possible time and at the lowest organizational

levels helps keep both tangible and intangible costs (e.g., diversion of

resources from mission accomplishment and morale problems) low.

In fiscal year 1996, the Air Force reported using ADR in 1,807 EEO cases,

resolving 1,339 (74 percent) of them. It also reported that the amount of

time it takes to resolve cases has declined. The average number of days to

settle formal EEO complaints decreased from 329 to 136 between fiscal

years 1992 and 1995. The General Counsel said that this is explained, in

part, by the use of ADR. During this period, the average time to close formal

complaints (including through a settlement) declined from 401 to 201 days.

The Air Force also reported significant time savings in resolving informal

EEO complaints.

Lessons Learned by

the Organization

In her memorandum, the Air Force General Counsel said that the ADR

program has achieved important results in a relatively short period of time

because of (1) strong support from senior management, (2) the fact that at

least one employee has worked full-time on implementing ADR initiatives,

(3) training and awareness briefings, and (4) financial support for ADR

initiatives.

The Air Force learned additional lessons from a survey of Air Force

personnel who reported using ADR techniques to resolve personnel

disputes.68 Among the lessons learned was that early use of ADR enhances

the potential for resolving the dispute in a way that satisfies the parties’

underlying interests, whereas when time drags on without a resolution,

people tend to “dig in their heels” and fight for their position. Another

lesson was that mediation helps overcome disputes arising from poor

communication, which is at the root of many disputes. Mediators also

67An evaluation of the Kirtland Air Force Base Mediation Center was in final review at the time of our

study. Preliminary data show the center resolved 51 of 72 (71 percent) cases mediated between

December 1993 and October 1996. In addition, 90 percent of users responding to a survey between

December 1993 and July 1995 reported they were satisfied with the services.

68These lessons are documented in Air Force ADR Program (FY 94-96); Lessons Learned by Using ADR

to Resolve Civilian Workplace Disputes, in draft at the time of our study.

Page 63 GAO/GGD-97-157 ADR In the Workplace
Appendix VIII 

Case Illustration: U.S. Air Force

reported learning the importance of preparation, including explaining the

mediation process to the parties; becoming generally familiar with the

nature of the dispute; encouraging the disputants to review the facts of the

dispute before mediation begins; and coordinating with appropriate

officials (e.g., one authorized to agree to settlement terms). They also

learned that not every case is appropriate for mediation, such as cases

involving “chronic complainers” and those in which complainants have an

inflated sense of what they might be entitled to receive. However, Air

Force officials emphasized that even in such cases, if mediation might be

helpful, it should be tried. The officials told us that other cases that are not

appropriate for mediation are those involving fraud or those that are the

subject of an Inspector General investigation. Further, the mediators

reported that written agreements build trust, cooperation, and

understanding.

Finally, Air Force officials noted that providing mediation training to the

Air Force’s EEO counselors was worthwhile. Although not all counselors

became skilled in or comfortable with the mediation process, the training

helped many of them do a better job of resolving EEO matters, whether

they used mediation or more traditional counseling methods.

Page 64 GAO/GGD-97-157 ADR In the Workplace
Appendix IX 

Case Illustration: U. S. Postal Service

The U. S. Postal Service, an independent governmental establishment

headquartered in Washington, D.C., is the nation’s largest civilian

employer with more than 800,000 workers. Although most employees are

covered under collective bargaining agreements under which they can file

equal employment opportunity (EEO)-related grievances, they can

simultaneously file complaints under the EEO complaint system for federal

employees. Mediation was introduced in 1986 in the EEO complaint

program in Santa Ana, now within the Postal Services’ Southern California

EEO Processing Center. In 1994, the Postal Service piloted a

headquarters-sponsored EEO complaint mediation program69 in its North

Florida District. At the time of our study, there were 20 pilot mediation

sites.

How the Process

Works

Postal Service workers who believe that they have been discriminated

against can contact the EEO office where they receive information about

mediation and a form to make a request. Mediation is offered in lieu of the

customary counseling in the informal phase of an EEO complaint. If a

senior complaint processing specialist approves mediation, it is to be

scheduled within approximately 2 weeks of the request. The Postal Service

representative at mediation is to have settlement authority or have access

to an official with that authority. If the parties achieve resolution, they are

to sign a settlement agreement.

The source of the mediators varies by location. The Southern California

EEO Processing Center uses EEO counselors trained in mediation. The

North Florida District uses contract mediators. Other locations, if they do

not use internal mediators, obtain mediators from a shared neutrals

program or contractor.

Experiences in

Developing the ADR

Process

A variety of factors led to the Postal Service’s growing use of mediation,

according to Postal Service officials. The grass roots program in Santa Ana

was suggested by an EEO specialist experienced in mediation. In 1992,

General Counsel and human resources staff at Postal Service headquarters

began developing an agencywide alternative dispute resolution (ADR)

policy in voluntary compliance with the Administrative Dispute Resolution

Act of 1990 and to take advantage of federal employee EEO complaint

system regulations encouraging ADR use. The first pilot under the

agencywide initiative was in the North Florida District, its selection

69The Postal Service’s program is known as REDRESS (Resolve Employment Disputes, Reach

Equitable Solutions Swiftly).

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Appendix IX 

Case Illustration: U. S. Postal Service

spurred by a need to comply with a consent decree resulting from a

lawsuit.70 The Postal Service expanded EEO complaint mediation to other

sites because of the high number of complaints and the sense that many

complaints are rooted in personality conflicts that should be resolved in

some other forum, according to the Manager, EEO Compliance and

Appeals.

In developing the agencywide ADR policy, the General Counsel and human

resources staff at headquarters researched ADR practices at large firms and

consulted with dispute resolution experts, according to Postal Service

officials. The officials said that the Postal Service contracted with a

marketing firm to conduct focus groups to obtain supervisor and

rank-and-file employee perceptions of the EEO complaint process and what

could be done to improve it. On the basis of their research, focus group

results, and other input, the Postal Service decided to use outside

mediators in North Florida provided under contract by the Justice Center

of Atlanta, to lend more credibility to the process. Before implementing

this first pilot, the Postal Service obtained feedback from supervisors and

union representatives.

Officials told us that support for expanding the ADR program came from

the Postal Service’s quality improvement program known as “Customer

Perfect,” which provided top-level policy endorsement, funding, and

publicity. Under this program, they said that the Postal Service has

provided conflict management and ADR training to about 1,100 managers

and supervisors. It also held two week-long conferences to help managers

from the cities with pilot programs design an ADR program and develop an

implementation plan. Further, it trained staff as mediators in each

location, developed a video and brochure about the program, and provided

on-site program development assistance. Headquarters program staff have

conducted numerous briefings at locations across the nation. The Postal

Service has also worked with the unions to get their support.

Finally, the Postal Service’s program implementation plans include a

comprehensive evaluation of user satisfaction and cost effectiveness of

mediation at the pilot locations. The evaluation is being conducted by an

assistant professor at Indiana University’s School of Public and

Environmental Affairs as a research project at no cost; the Postal Service

is paying for administrative support.

70Under the terms of the consent decree, which sunset in October 1996, the Postal Service had offered

binding arbitration.

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Appendix IX 

Case Illustration: U. S. Postal Service

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

As of June 1997, the Postal Service’s evaluation was still under way.

However, data reported from North Florida and Southern California show

that mediation resolved a higher proportion of complaints in the informal

stage than did the traditional process. Resolution rates were 74 percent

(139 of 188 cases between October 1994 and December 1996) in North

Florida and 94 percent (1,605 of 1,714 cases between October 1988 and

September 1996) in Southern California. In the Southern California EEO

Processing Center, for example, only 57 percent of cases that went

through traditional counseling were resolved. In the North Florida

program’s first year, the “flow-through” rate (the rate of informal

complaints becoming formal complaints) dropped from 43 to 22 percent,

according to the ADR Counsel.

Postal Service surveys of employees and supervisors in North Florida who

had used mediation and of those in a comparison group (in other

locations) who had used the traditional process showed user satisfaction

with mediation far exceeded user satisfaction with the traditional process.

For example, 90 percent of mediation users said the process was fair

compared with 41 percent of the comparison group. Seventy-two percent

of the mediation users were satisfied with the outcomes compared with

40 percent of the comparison group.

Mediation was not very time consuming. In the Southern California EEO

Processing Center, the typical mediation required about 90 minutes; cases

in North Florida averaged 197 minutes.

Lessons Learned by

the Organization

Foremost among the lessons the Postal Service learned is the importance

of top-level support in establishing and sustaining a program, according to

Postal Service officials. For example, the Southern California program,

established with the support of the human resources director, saw the use

of mediation in informal cases decline from 58 percent in fiscal years 1989

through 1992 to about 10 percent following management changes resulting

from restructuring in 1992.

Postal officials said that keys to a program’s growth are demonstrable

results and early successes. The ongoing evaluation should be particularly

helpful in this regard. Because starting a mediation program requires a

Postal Service district to pay start-up costs, officials said they learned that

some managers need convincing data to decide whether mediation is a

worthwhile investment.

Page 67 GAO/GGD-97-157 ADR In the Workplace
Appendix IX 

Case Illustration: U. S. Postal Service

Officials said they also learned that the user-friendly dispute resolution

program increased the number of informal complaints. However, based on

North Florida’s experience, a lower proportion of informal complaints

turned into formal complaints, and the overall number of formal

complaints declined. Postal Service officials attribute this reduction to

employees’ (especially supervisors) having developed conflict

management competencies after having gone through mediation, some on

several occasions. Officials also said that it is important to intervene

promptly in a dispute while the issue is fresh in the disputants’ minds and

their positions have not hardened.

Page 68 GAO/GGD-97-157 ADR In the Workplace
Appendix X 

Case Illustration: U. S. Department of State

The Department of State, headquartered in Washington, D.C., advises the

President in formulating and executing foreign policy. State’s

approximately 13,000 U.S.-based employees are classified either as foreign

service (58 percent) or civil service (42 percent). In 1989, State

implemented a legislative mandate that created the Ombudsman for Civil

Service Employees to address concerns about the treatment of its civil

service employees in relation to its foreign service employees. In

May 1995, State launched a pilot mediation program to deal with equal

employment opportunity (EEO) complaints. State also tested dispute

resolution boards in EEO complaints in 1995 and 1996. Further, in

June 1997, State developed procedures for mediating grievances.

How the Processes

Work

A State employee can choose from several channels when seeking

assistance to resolve a workplace dispute, including the Ombudsman for

Civil Service Employees, the Office of Equal Employment Opportunity and

Civil Rights (S/EEOCR), and the grievance office.

The Ombudsman for Civil Service Employees reports directly to the

Secretary of State and is to provide (1) advice on how programs and

policies affect the interests of civil service employees and (2) counseling

to employees on career and work-related matters. The ombudsman’s office

is to assist individual employees by providing confidential counseling on

workplace issues, such as answers to their questions about employee

rights. Although rarely a party to dispute resolution, the ombudsman is to

outline approaches for employees dealing with conflict and resolving

disputes.

S/EEOCR has used mediation and dispute resolution boards to deal with EEO

complaints. It uses mediation in the informal phase of an EEO complaint.

Employees are provided information about mediation by counselors and

when they visit the S/EEOCR office. Participating in mediation is voluntary

for the employee but mandatory for management. In addition to the

employee and the supervisor, a management representative with the

authority to approve a settlement is party to the mediation. During the

pilot, State has used internal mediators and mediators from a Washington,

D.C.-based shared neutrals program. If the matter is resolved, the parties

sign an agreement that is reviewed and monitored by S/EEOCR.

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Appendix X 

Case Illustration: U. S. Department of State

In 1995 and 1996, S/EEOCR used dispute resolution boards71 on a trial basis

to resolve formal complaints. The three-member board operated in an

adjudicatory-like fashion. While the board had no resolution authority, it

offered the parties an assessment of (1) the strengths and weaknesses of

their respective positions and (2) which party would likely prevail if the

case proceeded further in the process. If a resolution resulted, the parties

signed a written settlement. If there was no resolution, information that

was developed during the fact-finding phase became part of the

investigation record.

Under procedures developed in June 1997, an employee visiting the

grievance office may be offered mediation. If mediation is opted for,

grievance office staff will contact State’s dispute resolution specialist to

obtain the services of a mediator.

Experiences in

Developing ADR

Processes

For advice on implementing the ombudsman mandate, the Office of the

Ombudsman said it contacted the Ombudsman Association and federal

agencies with an ombudsman. The ombudsman (a collateral responsibility

for a senior executive) has a full-time assistant (a mid-level civil service

employee) who has received mediation training. State publicized the

ombudsman’s office by issuing an announcement when the first

ombudsman was appointed. At the outset, the ombudsman’s office said it

held approximately 30 meetings with U.S.-based employees to learn their

concerns. The ombudsman’s office has continued to get a sense of

employee concerns through its participation in task forces and working

groups, according to the ombudsman’s assistant. Publicity has also been

provided through the Department of State magazine and through

departmental notices and bulletin board postings.

In late 1994, State appointed its first dispute resolution specialist; and the

current dispute resolution specialist said that he works closely with the

Office of the Ombudsman and S/EEOCR, among others. In early 1995, State

established the Alternative Dispute Resolution (ADR) Working Group, with

representatives from several department bureaus. The working group

invites employee representatives to its monthly meetings. Also, in

March 1995, a group of State employees received mediation training at the

Foreign Service Institute; as of July 1997, the dispute resolution specialist

said that there was a roster of 15 foreign and civil service employees from

which State could draw for mediation services. Additionally, State said

71Board members were from the Department of Agriculture. See app. VII for further discussion on the

operation of dispute resolution boards at the Department of Agriculture.

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Appendix X 

Case Illustration: U. S. Department of State

that the Foreign Service Institute enhanced the mediation module in its

negotiations art and skills course.

According to the Associate Director, S/EEOCR, State initiated the pilot

mediation program in May 1995 to (1) deal with the EEO case backlog,

(2) find a more cost-effective way to resolve EEO-related disputes in the

early stages, and (3) provide an alternative forum for employees who do

not want to file EEO complaints. He said that the mediation program has

been publicized in State’s magazine and in a department notice.

The Associate Director, S/EEOCR, said that State’s use of dispute resolution

boards occurred when it accepted an offer from the Department of

Agriculture for six trial board hearings without charge, with the

understanding that State would pay Agriculture between $3,000 to $4,000

plus court reporter fees for each case beyond the trial period. He said that

State opted not to use the Agriculture-operated boards beyond the trial

period.

The dispute resolution specialist told us that State’s more recent initiative

to mediate grievances came about as a result of the efforts of the ADR

Working Group and himself.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

The ombudsman does not keep records of counseling outcomes, believing

that this would undermine confidentiality, according to the ombudsman’s

assistant. However, she estimates that an average of three to five civil

service employees visit the office weekly (in addition to phone inquiries)

and, based on feedback she has received from them, believes that their

needs have been met. Although the ombudsman is generally not involved

in resolving workplace disputes, State believes that his availability to

address employee concerns prior to their filing a formal action has helped

reduce the EEO caseload.

According to the Associate Director, S/EEOCR, mediation has been used in

only about 3 percent of State’s EEO cases. Between May 1995 and

December 1996, mediation was used in nine cases, achieving closure in

three of them (one case was still in process at the time). He attributed this

low utilization to complainants’ aversion to the process as well as State’s

failure to give ADR higher priority.

Of the five cases heard by boards, State reported that two were resolved.

Although State discontinued using the Agriculture-operated boards, it may

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Appendix X 

Case Illustration: U. S. Department of State

consider adopting boards using State staff as board members, according to

the Associate Director, S/EEOCR, because a board (1) facilitates

communication between the parties, (2) costs about the same as an EEO

investigation, and (3) produces an immediate investigation report.

Lessons Learned by

the Organization

State has learned numerous lessons in implementing its ADR initiatives.

The ombudsman’s assistant said that the fact that the ombudsman’s office

initially set modest goals for achieving organizational change avoided

inflated expectations of what the ombudsman’s office could do to deal

with workplace conflict and discontent. She said that the downside to that

strategy, however, was that the ombudsman’s accomplishments may not

have been recognized in the first few years. She also said that outreach

efforts and the program’s confidentiality feature, however, helped

overcome initial employee skepticism.

Another lesson, the Associate Director, S/EEOCR noted, was that a program

can stagnate when there is a lapse in program leadership, which occurred

when the dispute resolution specialist position remained unfilled between

January and August 1996.

More lessons have come out of the mediation pilot. The Associate

Director, S/EEOCR said he came to understand complainants’ aversion to

mediation. He said they do not want to confront their supervisors but want

an investigation and hearing to vindicate their position. Also, complainants

avoid mediation because they want an advocate and mistakenly believe

S/EEOCR will be their advocate. He also said outside mediators carry more

credibility than internal mediators and that the shared neutrals program is

not only a source of mediators but a way of matching a mediator’s

experiences and demographics to that of the parties and the issues.

Further, he said he learned mediation training alone does not equip a

person to mediate EEO cases. The position also requires a person with the

right temperament and an understanding of EEO issues.

A February 1996 State briefing memorandum discussed other lessons

about mediation. One lesson was a recognition of the need to remove

management from direct involvement in the mediation process and instead

appoint management representatives who have been briefed on ADR.

Another lesson was to exclude as possibilities for mediation any cases that

set precedent or involve large monetary settlements, significant

investigation, a violation of criminal law, or issues dealing with security.

Page 72 GAO/GGD-97-157 ADR In the Workplace
Appendix XI 

Case Illustration: Walter Reed Army Medical

Center

The Walter Reed Army Medical Center, in Washington, D.C., providing

medical services to active and retired military personnel and their

dependents, has approximately 3,900 civilian employees, about a third of

whom are covered under collective bargaining agreements. In

October 1994, Walter Reed established the Alternative Dispute Resolution

(ADR) Center to achieve quick resolutions of workplace disputes and to

avoid more costly redress channels mostly by using mediation. Its services

are available to all employees, except those employees who are covered

under a collective bargaining agreement must obtain written approval

from their union.

How the Process

Works

A Walter Reed employee visits (or is referred to) the ADR Center—a

separate unit within Walter Reed’s personnel office—where the dispute

resolution officer is to determine whether a matter is appropriate for the

center to handle. Besides the employee and supervisor (who must

participate), the parties to mediation usually include a senior manager

(called a resolving official) with the authority to commit Walter Reed to

the terms of a settlement agreement. If a resolution is reached, the parties

sign a settlement agreement.

Experiences in

Developing the ADR

Process

According to Walter Reed officials, the ADR Center was established at a

time when EEO cases were at an all time high, workplace tensions were

high, the workforce was discontented, and Walter Reed’s image was

suffering. The base commander, civilian personnel officer, EEO officer, and

the Diversity Council developed the ADR Center in response to these

conditions.

In the 6-month period before opening the ADR Center, the civilian

personnel officer said she researched ADR principles and practices, studied

ADR programs at other organizations, consulted with an outside expert, and

examined the culture of conflict within Walter Reed. She said that as a

result of the study, Walter Reed established the ADR Center as a separate

branch of the civilian personnel office to intervene early in a given dispute

before the employee sought assistance from the EEO office, believing that

many disputes resulted from poor communications or other interpersonal

problems. Another reason for locating the ADR Center within the civilian

personnel office was because of the importance of expertise in personnel

rules and regulations when dealing with workplace disputes.

Page 73 GAO/GGD-97-157 ADR In the Workplace
Appendix XI 

Case Illustration: Walter Reed Army Medical

Center

Walter Reed originally assigned three persons to the ADR Center and

trained them in mediation.72 To publicize the program, the base

commander issued a memorandum to all employees; a later memorandum

from the U.S. Army Medical Command also endorsed the use of ADR. To

further acquaint employees with the program, the center conducted over

1,000 1-hour briefings. In addition, because Walter Reed believes that most

disputes can be prevented or quickly resolved if employees have the right

kind of skills, the ADR Center arranged for about 160 staff to receive

one-half to 1 day of training in conflict resolution. The training materials

included workbooks and videotapes.

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

Although there has been no formal evaluation of Walter Reed’s ADR

program, the ADR Center officials presented indicators that they said they

believed show the program to be successful. Of the 160 cases that went

through the Center’s ADR processes in its first 2 years of operation, 108

(67.5 percent) were resolved. The typical mediation required no more than

two sessions and a total of from 4 to 6 hours. Because the center operated

outside the EEO complaint process, cases dealt with issues other than

those the Center classified as EEO. The cases that were most frequently

dealt with were ones that the Center called “communication” issues

(36 percent), disciplinary actions (23 percent), and performance appraisals

(16 percent). Only 15 percent of the cases dealt with EEO issues. The ADR

Center resolved two-thirds of the EEO cases. It was most successful in

resolving communication cases (83 percent) and least successful in cases

involving disciplinary actions (43 percent). Settlement agreements often

involved handshakes, apologies, training, or other reasonable relief the

employees requested.

Walter Reed’s Office of Internal Review and Audit Compliance reported

that the number of EEO complaints, grievances and appeals, and

disciplinary and adverse actions dropped substantially in the ADR Center’s

first 2 years of operation (fiscal years 1995 and 1996), compared with the 2

years before the center opened (fiscal years 1993 and 1994). EEO

complaints decreased 47 percent from 76 to 40, grievances and appeals

dropped almost 80 percent from 147 to 30, and disciplinary and adverse

actions decreased 55 percent from 369 to 165. In addition, informal EEO

complaints dropped from 204 in fiscal years 1993 and 1994 to 25 in fiscal

years 1995 and 1996. There was, however, some disagreement among

Walter Reed officials about the extent to which Center efforts contributed

to these reductions.

72The ADR Center was authorized two staff at the time of our study.

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Appendix XI 

Case Illustration: Walter Reed Army Medical

Center

The decline in formal redress cases reduced the workload of the civilian

personnel and EEO offices, which was able to meet its responsibilities even

though it was being downsized, according to the Office of Internal Review

and Audit Compliance. Precise cost savings created by avoiding formal

redress were not available, but the dispute resolution officer said that for

each EEO investigation avoided, Walter Reed saves between $2,000 and

$3,000 that the Defense Department charges for an investigation, plus

court reporter costs. Walter Reed’s Chief of Internal Review and Audit

Compliance reported that ADR has resulted in better and cheaper ways of

resolving disputes, but he did not quantify savings. He also reported that

the ADR Center’s personnel costs for fiscal years 1995 and 1996 were about

$344,000. According to Walter Reed’s dispute resolution officer, the

investment in training (mostly provided by contractors) totaled about

$36,000.

Employee satisfaction with the ADR services was high, according to ADR

Center surveys of first-year users. Of the respondents, 90 percent rated the

overall performance of the ADR program and the performance of mediators

from good to excellent, 73 percent reported that they would use the

program again, and 72 percent reported that they would recommend the

program to others. Seventy percent of the respondents reported that their

working relationships and environment had improved.

Lessons Learned by

the Organization

Walter Reed officials said that one important lesson they learned is that it

is necessary to understand the culture of conflict within an organization in

order to establish an appropriate ADR program. Another important lesson

is that the support of top management is essential to a program’s success.

The dispute resolution officer said Walter Reed’s ADR program was

established in large measure with the strong support of the former base

commander. Despite this support, he found that Center staff have had to

constantly nurture the program through continuous marketing and

education efforts.

The dispute resolution officer also said he learned that merely giving an

employee an opportunity to tell his or her side of the story—whether or

not the employee prevails—can give the employee some measure of

satisfaction. He also said that although employee satisfaction with the ADR

services was high, he had learned that some managers viewed settlements

with suspicion, believing that settlements undermined their authority and

seemed to “give away the store.” He said that, as a result, resolving

officials have become more judicious in making settlements.

Page 75 GAO/GGD-97-157 ADR In the Workplace
Appendix XI 

Case Illustration: Walter Reed Army Medical

Center

One further lesson Walter Reed officials said they learned is that by

establishing the ADR Center, they opened a less formal channel for

employees to seek assistance before an issue erupts. They said Center

staff have been able to get to the underlying issues and direct employees

to the most appropriate resource, such as cases in which the underlying

source of the employee’s problem is outside the workplace.

Page 76 GAO/GGD-97-157 ADR In the Workplace
Appendix XII 

Case Illustration: Seattle Interagency ADR

Consortium

The Seattle Federal Executive Board’s73 Interagency Alternative Dispute

Resolution (ADR) Consortium is a “shared neutrals” program that began

providing services in April 1993. The interagency group, comprised mostly

of volunteer federal employees, offers low- or no-cost mediation services

to more than 25 participating federal agencies in the Seattle, WA, area.74

The consortium uses the comediation model (two mediators working in

tandem on each case) to deal with various types of employment-related

disputes, including discrimination complaints, interpersonal conflicts, and

grievances filed by collective bargaining unit members.

How the Process

Works

The consortium offers agencies access to mediation services without

necessarily having to invest in training their own mediators or purchasing

mediation services. The consortium also fills agencies’ needs for external

mediators. Agencies generally participate in the consortium by

contributing volunteer employees to be trained as mediators, although this

is not a requirement. There is no cost to an agency unless it contributes

personnel to the pool. In such case, costs to the agency are for mediation

training ($650 per mediator) and for the amount of time the employee

spends in training and performing consortium-sponsored mediation. There

is no charge to agencies for mediation services, but agencies have paid

mediators’ travel expenses. As of July 1997, the consortium had a pool of

78 mediators who provided their services as a collateral duty.

Consortium mediation services are arranged by a person chosen by the

participating agency to be the contact between the agency and the

consortium. This person functions as a gatekeeper, determining whether

the consortium’s mediation process is appropriate to a specific dispute. A

request for services then goes to the consortium. When the request for

mediation services has been accepted, a designated consortium member

first considers the nature of the dispute and the characteristics of the

disputants (e.g., race and gender), and then selects two members of the

consortium’s mediation pool best suited for the mediation team. The

disputants (an employee and his or her supervisor or peer) then agree on a

mutually acceptable site and time for the mediation to take place. When

appropriate, an official of the disputants’ agency, identified during the

intake process, who has authority to approve the terms of a resolution is

present at the mediation.

73Federal Executive Boards are comprised of the top executives of federal agencies represented in a

federal region to provide closer coordination among the agencies.

74The consortium has expanded to include the governments of the City of Seattle, King County, and the

Port of Seattle.

Page 77 GAO/GGD-97-157 ADR In the Workplace
Appendix XII 

Case Illustration: Seattle Interagency ADR

Consortium

Mediation generally takes about 3-1/2 to 5 hours, during which time either

party may end the mediation if dissatisfied with the process. If a

settlement is reached, the parties sign a settlement agreement. If there is

no agreement, the employee can pursue the matter through the

conventional redress channels. Whether or not there is a settlement, the

disputants are asked to complete an evaluation of the mediation. The

mediators themselves also evaluate the process.

Experiences in

Developing ADR

Resources

The idea for establishing the consortium belonged to two federal

employees who, in November 1992, had recently completed mediation

training and believed that mediation was a useful alternative to formal

redress processes. They proposed the idea to the Seattle Federal

Executive Board in January 1993, which approved it in March 1993. One of

the reasons for establishing the mediator pool was to make available to

agencies a cadre of mediators with the diverse backgrounds appropriate to

a wide variety of situations. The price of contributing to this pool would be

small compared with that of developing similar capabilities at multiple

agencies.

The consortium chose the comediation model for two main reasons. One

reason was that new mediators could be trained by having them work

side-by-side with more experienced, certified mediators. The other reason

was that the consortium would be better able to respond to the diversity of

issues and disputants.

The consortium’s mediator training program is extensive, consisting of

classroom training, role playing, and on-the-job experience. The training,

administered by a local county dispute resolution center, consists of 40

hours of classroom training, a written 10-hour take-home test, and

observation of at least 6 mediations. In addition, each trainee conducts a

mock mediation that is judged by the training provider’s certified

mediators. The successful trainee then apprentices as a comediator with a

certified mediator. The apprenticeship consists of about 10 comediations,

each of which is critiqued by the certified mediator. At the

apprenticeship’s conclusion, the training provider evaluates the critiques

and determines whether the apprentice should be certified at the

journeyman level. In addition to formal training, there are monthly

in-service meetings.

Page 78 GAO/GGD-97-157 ADR In the Workplace
Appendix XII 

Case Illustration: Seattle Interagency ADR

Consortium

Resolving Workplace

Disputes and

Lessening the Time

and Costs Associated

With Redress and

Litigation

According to a consortium cochairman, the consortium has filled the need

of the 25 participating federal agencies in the Seattle area by providing

high quality mediation services for nearly any kind of situation at low cost.

The consortium’s results have not been formally evaluated; however, the

consortium cochairman said he believed that the high resolution rate has

helped participating agencies avoid the time and costs of redress and

litigation.

Between May 1993 and February 1997, the consortium mediated 171 cases,

settling 153 (89 percent) of them. Data on the nature of settlements were

being analyzed at the time of our study, according to the consortium

member responsible for the effort.

User satisfaction with the process and with the mediators is also high,

according to the consortium’s surveys of users. Of evaluations received

from 75 users (survey results were not broken out by successful and

unsuccessful mediations), 84 percent reported that their overall level of

satisfaction with the mediation process was good to excellent, while

73 percent of the respondents who reached agreement said that their level

of satisfaction with the agreement was good to excellent.

Lessons Learned by

the Organization

The cochairman attributes the consortium’s success to the training,

development, and evaluation process for the volunteer mediators and to

the evaluations completed after each mediation. The post mediation

evaluations have been valuable in making improvements to the program,

according to the cochairman. Some of the improvements include

scheduling for longer and multiple sessions and having more caucuses

between individual parties and mediators. A major change was made as

well in the intake process, which at first was managed by the training

provider. Because the employees of the training provider were not familiar

with government agencies, early mediations did not always include an

agency representative with the authority to approve the terms of a

resolution. As a result, consortium mediators with an understanding of

government organizational structures now handle the intake process.

Another lesson learned, according to the consortium cochairman, was that

some benefits derive even in cases not resolved through the consortium

mediation. In these cases, issues in dispute often become clarified, which

may help bring about later resolution.

Page 79 GAO/GGD-97-157 ADR In the Workplace
Appendix XII 

Case Illustration: Seattle Interagency ADR

Consortium

The cochairman said that there have also been lessons learned about

trends in agencies’ use of consortium mediation services. Initially, the

consortium’s mediation services were underutilized. However, through

marketing efforts and as consortium successes became known by

word-of-mouth, use of the consortium’s services has increased to a point

at which the pool of volunteer mediators is now being used to its limits.

Still, the cochairman believes, more federal agencies in the Seattle area

could be participating. Some of these agencies, he learned, are reluctant to

expose their operations to mediators from outside the agency. The

cochairman said he believes that outreach geared to individual agencies is

needed to encourage them to participate in the consortium.

Page 80 GAO/GGD-97-157 ADR In the Workplace
Appendix XIII 

Major Contributors to This Report

General Government

Division

Stephen E. Altman, Assistant Director, Federal Management and

Workforce Issues

Anthony P. Lofaro, Evaluator-in-Charge

Geraldine C. Beard, Senior Evaluator

Denver Regional

Office

Michael L. Gorin, Evaluator

Pamela K. Tumler, Communications Analyst

Other

Acknowledgements

In addition to the above individuals, the contributions of the following GAO

staff are acknowledged: Gary V. Lawson and Brenda J. Lindsey, General

Government Division, for their assistance in developing information about

federal agency ADR use; Robert D. Sampson, Health and Human Services

Division, for providing information about private sector ADR use; James M.

Rebbe, Office of General Counsel, for legal assistance; William Trancucci,

General Government Division, and Rudolfo G. Payan, Denver Regional

Office, for their assistance in ensuring the accuracy of the information

reported; and Lessie M. Burke, General Government Division, for editing

assistance.

(410038) Page 81 GAO/GGD-97-157 ADR In the Workplace
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