Leader’s Guide to Conflict Management

Every effective leader must learn to manage conflict. Bruce Edwards, an attorney and mediator with ten years’ experience in alternative dis- pute resolution, suggests four prin- ciples that can help.

Be proactive. Implement mediation and arbitration clauses in contracts with employees, vendors, and customers. Develop in-house systems for resolving disputes.

Conduct training. Acquaint your legal, HR, and manage- ment staff with ADR processes. Shift the paradigm to, “If a dispute ends in litigation, we have failed.”

Defend your values. A commit- ment to ADR doesn’t mean your organization is unwilling to fight aggressively when necessary; it ensures that you will have the resources to commit to the appropriate battles.

Act quickly. Respond to conflicts as soon as they arise. Tackling problems early on usually prevents them tiom escalating, allowing the parties to rebuild their working relationship.

sions, the negotiators developed a series of recommendations, includ- ing sterilization (as opposed to mass hunting) of wolves. “It was a large-scale, all-inclusive discussion of values and public policy,” says Moore. Several federal agencies, including EPA, are now using sim- ilar broad-based forums to develop cheaper, smarter, and more effec- tive regulations for industry.

The Last Frontier

T h e next breakthrough in alter- native dispute resolution will be to use professional facilitators or trained staff (rather than lawyers) to help negotiate mergers, start- ups, and joint ventures. For in- stance, Syncrude has extended its partnering philosophy to its strate- gic alliance with a large engineer- ing design firm. The corporate partners used a simple agreement of less than ten pages as the basis for several multimillion-dollar refinery construction projects.

“Part of good management is cre- ating the right workplace environ- ment, where people have a degree of independence to act and can act proactively to solve problems,” says Bruce Edwards, a mediator with JAMS/Endispute, an alternative dis- pute resolution service with 34 U.S. offices. Early and less adversarial interventions also promote a faster and deeper healing of wounds, he

notes. “The real benefit ofADR is the opportunity to vent,” says Edwards. “Just getting the parties to talk face to face about how a prob- lem arose, what the misunderstand- ing was, and where to go from there is an important psychological component to settling msputes.”

And aside firom maintaining better relationships with employees, ven- dors, customers, and the commu- nity, the new models of conflict resolution recognize a truth that imposed settlements do not. Says Edwards, “People, not contracts, make a project successful.”

Boom Tirnes Ahead

for Housing urrent social and economic C trends can create tremendous

growth for the housing, finance, and real estate industries-provid- ing an engine to power the U.S. economy through the end of the century and beyond. Sixty-five percent of U.S. households own their homes. But if all those who want to buy a house could afford to, home ownership would rise to 88 percent, according to a study

Fall 1000 51

commissioned by Fannie Mae, the federally chartered mortgage- finance company. “Perhaps no other aspiration in American life is so widely shared, across regions, classes and age groups,” says Fan- nie Mae CEO James A. Johnson.

The enforcement ofantidiscrimination laws. The integrity of the home finance system relies on equal stan-

Even if home ownership is not in the cards for all who want it, John- son says a full 75 percent of all households can po- tentially achieve that goal-with powerful benefits to society and the economy. New home construction is the country’s seventh biggest industry, em-

ness to sacrifice in order to own a home.These five forces are likely to bring the greatest surge of own-

of interest fluctuation and reces- sion.The change in the nature of home lending has created virtually w h i t e d capital for home buyers.

Greater afordability of most hous- ing stock. While the recent flatten- ing of home prices has hurt some investors and sellers, the slower growth of housing prices has opened the door to many new

buyers. In addition, new federally guaran- teed and privately in- sured mortgages are making low down- payment mortgages available to first-time buyers.

playing more than JamesA. Johnson four million workers The productivity pay- and generating tens of billions of dollars in wages and public rev- enues. Home ownershp is also the largest form of savings and capital accumulation for most families, especially in middle and lower income brackets. Five forces at work in the housing market are likely to radically expand the scope of home ownership in America. Johnson defines them as follows:

The transformation of mortgage financing3orn a depositor-based system to an investor-based system. Banks, S&Ls, and other mortgage lenders invariably sell their loans to the sec- ondary market, where large inter- national investors assume the risk

o$of technology. New technology is quickly automating one of the most paper-intensive businesses processes-originating and docu- menting a mortgage 1oan.That wrll reduce both the time and cost of processing home loans.

dards being applied to all.Yet 28 years after passage of the federal Fair Housing Act, discrimination persists.A 1992 study by the Fed- eral Reserve Bank of Boston showed that after accounting for differences in income, credit his- tory, and other financial factors, minorities were 60 percent more likely to be turned down for a loan than whtes of s d a r circumstance. Greater awareness-d new tech- nology-allows us to better track sales and lending practices and enforce laws barring all forms of discrimination.

The demographics ofgrowth. The United States is becoming older and more diverse. By the year 2000,30 percent of the population will be minorities, many of whom are immigrants. More people have come to this country in the past decade that at any time in the last 80 years, and both minorities and immigrants have shown tremen- dous resourcefulness and willing-

Five forces at work in the housing market are likely to radically expand

the scope of home ownership. a

ership since the post-World War I1 years, says Johnson. That will cre- ate healthier communities, im- proved infrastructure, and new avenues of capital accumulation for those who would not other- wise have them.

Johnson, who heads the nation’s largest financial firm (with $275 billion in assets) advocates a 10- point program to expand home ownership to the optimal 75 per- cent rate. Among the steps he pro- poses are increased education and credit-counseling efforts for aspir- ing home owners, additional tax incentives for first-time buyers, wider availability of low-down- payment loans, and expanded part- nerships with nonprofit groups like Habitat for Humanity and the

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Minorities and immigrants have

shown tremendous resourcefulness to own a home.

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Enterprise Foundation that focus on affordable housing. Already, says Johnson, the United States boasts “the greatest ownership of prop- erty, primarily homes, by the greatest percentage of people in

any society in human history.” Expanding that base, he adds, will expand “the prosperity and ulti- mately the stability of our society.”

The Self-Controlled Organization

8

very leader worries about a E calamity occurring on his or her watch. I t doesn’t take an Orange County-caliber meltdown; anything f?om brand name erosion to environmental liability to cur- rency exchange fluctuations can cripple an organization. So, given the nightmare possibilities, what keeps most executives awake at night? Topping the list is “cyber- crime”-failed security, unautho- rized access to dormation, or h u d occurring on the organization’s computer and cellular networks, according to a CEO roundtable hosted by Arthur Andersen.

“We see CEOs signing off on sys- tems that they don’t understand,” says MikeVillegas, computer risk management partner in Arthur Andersen’s Los Angeles office. “Systems have been created by Information Technology depart-

ments that meet every technical specification but are totally dis- connected fbm the business, or an understanding of business risks.”

But Arthur Andersen found that the real problem is the process most companies use to manage risk. Less than half of senior exec- utives are highly confident that their risk management systems are effective, and nearly 60 percent plan significant improvements to those systems withm the next three years, according to a study by Arthur Andersen and the Econo- mist Intelligence Unit. The survey of 3,000 organizations around the world reveals a basic paradox, says EIU editor B d Millar, who coau- thored the study with Arthur An- dersen’s James DeLoach Jr.: “To survive in fast-paced markets, there has to be greater employee em- powerment. But greater empow- erment can lead to loss of control.” The answer, they say, is a “self- controlled” enterprise in which all employees are engaged in the development, implementation, and monitoring of key processes, in- cluding risk management. No sys- tem imposed fiom above is flexible enough to anticipate changes rather than just react to them.

“The people who are most knowl- edgeable of the business process are the ones who should monitor its risk controls,’’ say the authors.They

Fall 1996 53