Workplace disputes are inevitable, which makes effective dispute resolution strategies essential. Employees raise grievances. Consumers file lawsuits. Strategic partners threaten to walk away—or turn to competitors. Too often, these conflicts escalate straight to the courtroom.
That path comes at a cost. Litigation consumes time, drains resources, and can irreparably damage long-standing relationships with suppliers, customers, employees, and shareholders.
Increasingly, organizations are turning to dispute system design (DSD) to resolve conflicts more efficiently and at far lower cost. At its core, DSD is the deliberate design and implementation of systems for addressing the disputes that arise within and between organizations—before they spiral out of control.
Most DSD approaches follow four familiar steps:
- Diagnosis: identifying recurring disputes and their root causes
- Design: selecting appropriate processes to address those disputes
- Implementation: putting the system into practice
- Evaluation: assessing outcomes and refining the system over time
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The Influence of a 3rd Party Neutral on Alternative Dispute Resolution (ADR) Processes
To see how DSD works in practice, consider a large highway construction project involving government agencies, contractors, and subcontractors. Early in the project, the primary contractor discovers unanticipated soil conditions that significantly increase both costs and completion time. The contractor demands additional compensation. The government agency rejects the claim, arguing that the contractor should have anticipated the soil conditions when submitting the original bid.
In the past, disputes like this often brought projects to a standstill for years while parties battled in court.
To avoid that outcome, the U.S. construction industry developed a DSD-style institution known as the Dispute Review Board (DRB).
Here’s how it works. At the outset of a large, potentially contentious project, the key parties establish a DRB composed of three neutral experts. The board meets regularly—sometimes with the parties present—to stay informed about the project’s progress. Members review reports, receive key documents, and learn about emerging issues before they become full-blown disputes.
This ongoing involvement gives the DRB a powerful preventive function. Only if direct negotiation fails is a conflict formally brought before the board.
Nonbinding Decisions and the Power of Process
When a dispute reaches the DRB, its members are already well acquainted with the project and the parties involved. That familiarity allows them to issue timely, informed recommendations—typically on a nonbinding basis.
Any party remains free to pursue litigation or binding arbitration. Yet in practice, disputants often accept and comply with the DRB’s recommendations. Why? Because the board has earned credibility through consistent engagement, neutrality, and procedural fairness.
This dynamic illustrates a broader lesson of dispute system design: institutional processes can shape bargaining behavior. When parties trust the process—and the people administering it—they are far more likely to accept outcomes, even unfavorable ones.
Applying Dispute System Design Beyond Construction
While DRBs emerged in construction, the logic of DSD applies far more broadly. A similar system could be created for any complex joint venture, such as a collaboration between an inventor and a manufacturer developing a new product.
More generally, organizations can apply dispute system design to manage workplace disputes of all kinds—employee grievances, contractual disagreements, or cross-functional conflicts—so long as the system is thoughtfully tailored to the people, relationships, and risks involved.
Done well, DSD doesn’t just resolve disputes more efficiently. It helps organizations preserve relationships, reduce uncertainty, and keep attention focused where it belongs: on getting work done.
What is your favorite dispute resolution strategy? Share how you have handled conflict in the comments.
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Claim your FREE copy: Dispute Resolution
Discover how to improve your dispute resolution skills in this free report, Dispute Resolution: Working Together Toward Conflict Resolution on the Job and at Home, from Harvard Law School.
Adapted from “Keep It Out of Court: Resolving Differences In-House,” by Frank E.A. Sander (professor, Harvard Law School) and Robert C. Bordone (professor, Harvard Law School), first published in the Negotiation newsletter, July 2005.
Originally published in 2011.
