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Alternate Dispute Resolution: A Solution for Unresolved Customer Complaints

What do you do when you have a dispute with a customer? This is not the same as a complaint. A dispute is a complaint that has not been resolved to the satisfaction of the complainant. Maybe the issue has been escalated internally and you've been unable to agree a resolution. Maybe you've just been incompetent in handling the complaint. Whatever the reason, the customer still isn't happy and you have a dispute on your hands.

Good ADR provides a quick, economical, non-intimidating and relatively informal alternative to the courts.

What's the next step? Ask a lawyer, and the most likely suggestion will be to take the matter to court. Whilst that might be appropriate in some cases, legal action can be very costly relative to the quantum of the matter in dispute. Not only that, but legal process also can be painfully slow and extremely stressful for the participants. So, many businesses-and customers for that matter-are now opting for alternative dispute resolution (ADR) instead. There is a growing number of ADR service providers. Some are industry-specific (e.g. industry Ombudsmen), others operate across sectors; some are not-for-profit providers, others are in it to make a dollar; some operate face-to-face whilst others operate remotely, enabled by technology.

Fair and Reasonable

ADR is about finding acceptable resolutions to problems with the least possible fuss for all concerned. Good ADR provides a quick, economical, non-intimidating and relatively informal alternative to the courts. A key ingredient is that it should strive for and deliver solutions that are acceptable to the parties. Those solutions don't need to be perfect. They need only to be fair and reasonable in the circumstances and be seen as so by the parties in dispute.

Whilst there are several national bodies that have published sound advice on good practice, or even so-called best-practice ADR (e.g. the American Arbitration Association in the USA and NADRAC in Australia), the International Organization for Standardization, in its ISO 10003:2007 Standard, provides a relatively new, international perspective on ADR excellence. Having examined a number of alternative national protocols, ISO 10003, on balance and in my opinion, offers the best advice for ADR practitioners and ADR service organizations. Its advice is based on these 11 Guiding Principles:

Consent to participate. Participation of complainants in dispute resolution offered by an organization should be voluntary.
Accessibility. The dispute-resolution process should be easy to find and use.
Suitability. The type of dispute-resolution method offered to parties to a dispute and the potential remedies available to a complainant should be suitable to the nature of the dispute.
Fairness. The organization should engage in dispute resolution with the intent of fairly and honestly resolving the dispute with the complainant.
Competence. Organization personnel, providers and dispute resolvers should have the personal attributes, skills, training and experience necessary to discharge their responsibilities in a satisfactory manner.
Timeliness. Dispute resolution should be delivered as expeditiously as feasible, given the nature of the dispute and of the process used.
Confidentiality. Personally identifiable information should be kept confidential and protected, unless disclosure is required by law, or consent for disclosure is obtained from the person concerned.
Transparency. Sufficient information about the dispute-resolution process, the provider and its performance should be disclosed to complainants, organizations and the public.
Legality. The dispute-resolution process should be operated in accordance with applicable law and the agreement of the parties.
Capacity. Sufficient resources should be made available and committed to dispute resolution, and managed effectively and efficiently.
Continual improvement. Increased effectiveness and efficiency of the dispute-resolution process should be a permanent objective.
As implied in these Guiding Principles, and especially by the Suitability principle, there is no single generic, cookie-cutter, model of best practice ADR. Best practice is always context-specific. It must emerge from consideration of a number of context-specific variables including but not limited to the factual complexity of the issue in dispute, legal considerations, the quantum of the dispute, cost and time constraints, the availability and skills of suitable ADR practitioners, the cultures of the disputants, the need for confidentiality and the technologies available to the disputants and neutrals.

Most western ADR service providers employ well-established ADR processes such as negotiation, conciliation, arbitration and mediation. However, an alternative approach promotes Indigenous forms of ADR, which call for the rejuvenation and reclamation of ways in which disputes have been historically resolved according to the culture and custom of the Indigenous parties involved.

Enabling Technology

In mainstream ADR, the potential of technology has been recognized in online dispute resolution (ODR). Here are some examples.

SquareTrade, eBay's preferred ODR service provider, helps resolve disputes between auction bidders and sellers. Disputes run the gamut from non-delivery of goods or services, misrepresentation, improper selling practices, unhonoured guarantees or warranties, unsatisfactory services, credit and billing problems, and unfulfilled contracts. SquareTrade's ODR service is entirely web-based. Disputing parties can either attempt resolution by using SquareTrade's Direct Negotiation tool or use remote mediators. As soon as a case is filed with SquareTrade, the party in question is notified of the dispute and given the opportunity to respond. When the response is received, the dispute goes into Direct Negotiation promptly and automatically. If a need should arise for mediation assistance, a mediator can be requested at any time. Disputes are typically resolved in about 10 to 14 days. Any eBay user can use SquareTrade providing they have an email address for the other party.

In mainstream ADR, the potential of technology has been recognized in online dispute resolution (ODR).

SAVIOMM, which stands for Synchronous Audio Visual Immediate Mediation Method, enables mediations to take place on line, in real time, with all participants in direct audio and video connection with all other participants. All American Disputes Resolution Online (AADROL) is offering this service. No special software or training is needed; disputants need access to a computer, web cam and broadband internet connection. Clients are able to obtain same day mediation services, from trained and experienced mediators at the click of a button and without leaving their offices or even making a phone call.

Automated negotiation is a form of ODR that does not have an exact analogue in the offline world. It involves a process of "blind bidding" where parties submit successive settlement offers and a computer algorithm automatically notifies them when a settlement is reached. Typically the process involves three to five rounds of "bidding" where one party makes a demand and the other makes an offer. If the offer is larger than the demand, the dispute settles immediately. If not, the bidding proceeds to another round. When the amounts for demand and offer are sufficiently close, for example, 20% apart, the case settles for the arithmetic mean of the two figures. The key attribute of automated negotiation is that it is fully robotic and software driven. No human agency is involved.

In sum, alternative dispute resolution offers a quicker, lower-cost, and less formal route to dispute resolution than the courts, bringing benefits to both sides of a dispute. Conventional ADR methodologies such as conciliation, arbitration, negotiation and mediation are now increasingly facilitated by technology, meaning that anyone having access to a computer can get their dispute resolved with the minimum of drama, and surely that is what is really important.

Francis Buttle heads up Francis Buttle & Associates and is adjunct visiting professor of management (Marketing and CRM) at Macquarie Graduate School of Management, Sydney. He is author of the book Customer Relationship Management: Concepts and Technologies, now in its second edition.

by Francis Buttle - September 25 2009

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