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Mediation and business: can an alternative method of resolving disputes improve business environment in Ukraine?

30/ 10/ 2019

Oksana Sedashova

PhD, Business Trainer, Psychologist, Expert in Intellectual and Creative Development of Personality.

Manager of Projects and Programs, and Lecturer of BSK – KROK Business School, Leader of BSK Creativity Research Center.

Viktoriia Polishchuk

Lecturer of BSK – KROK Business SchoolWorks for МВА, Master of GBM, Мini МВА programsauthor of courses “Legal Environment of Running Business”, “International Law” etcLecturer of Master’s Programs “Master in Mediation and Conflict Management”. Leader of BSK Entrepreneurship Research Lab.

A competitive advantage of the 21st century business is largely determined by the approaches and competencies possessed by the management and staff of a particular company, including both Soft and Hard Skills, and also depends on being optimistic about striving against competition. According to GATR Journals 2019, currently, the number of entrepreneurs amongst the total population keeps growing. Thus, Singapore has 7.2% of entrepreneurs, the USA have 11.5% of entrepreneurs, Thailand has 4.1%, South Korea has 4.0%, and Malaysia has 2.1% [1, p. 44]. All of this indicates that entrepreneurs play an active role in development of countries, and therefore, further development of entrepreneurship requires creating and developing innovative and efficient methods of managing business.

One of such new methods of managing business is mediation which helps parties to resolve conflicts with a limited amount of finance and time consumed. The Swiss researcher Pascal Gemperli states that the average European expenses and the time it takes to deliver a court judgment are 9,179 euros in 566 days, while the average mediation procedure costs 3,371 euros and takes 43 days only [2]. Of course, mediation is not always the appropriate method for all types of conflicts, but the potential remains high enough. Business mediation may be applied in a company, between companies, and between companies and the environment thereof.

The advantages of business mediation are confidentiality, lower expenses, speed and promptness of decision-making. In addition, the advantages of mediation include preservation of information, because the mediation format keeps a matter in dispute within a closed loop between the parties which ensures the value of confidentiality. Mediation allows avoiding the risk of a court judgment found unfair by one of the parties, so as the parties can decide on their own limits of “compromise” that they will make to reach an agreement with regard to performance of the contract.

The parties to mediation are not opponents, but thought partners which in principle changes the paradigm of conflict resolution. In business environment, mediation contributes to strengthening relationships and even creates new methods of cooperation between partners. And this is a quite different dimension of conflict resolution when at least one party has a “win-win” orientation.

In order to apply mediation in practice, Ukrainian business representatives need to develop a number of skills that will help them to see the possibilities of optimal problem solving, offering the ways to change the existing procedure of business management.

The ability to manage business involves the capabilities, abilities, and skills of an entrepreneur to run business, in particular, to solve problems, with maximum efficiency and minimum or no expenses. Entrepreneurial activity involves creating value by combining unique resources to take advantage of opportunities. It is both the ability to build strategies and the ability to manage risks and to reasonably make decisions that influence the result. All of this is related to development of emotional intelligence in both the manager and the employees of an entity. The ability of a manager to identify emotions, to manage their emotions (reactions), and to influence employees helps business in planning, organizing, and coordinating its efforts to improve competitiveness, to efficiently solve problems (including conflict-related situations), and to ensure sustainable development of an enterprise.

Well developed Soft Skills will allow a manager to be ready to apply the mediation practices: ability to solve problems in their entirety, to apply critical (analytical) and creative thinking, sustainable accomplished emotional intelligence, ability to professionally communicate and negotiate, to think strategically, to make predictions and reasonable decisions, cognitive skills — the ability to listen to information and to process it in a good-quality manner, to skillfully ask questions, and to organize team interaction. More often than not, when trying to find alternative, less expensive methods of resolving disputes, leaders lack creative thinking to see various ways of achieving the best result.

Template limitative thinking such as “Nobody else has done it”, “Doing it this way is unacceptable”, etc. do not allow a manager to think with divergence and probability, looking for and creating completely new ways of getting out of a difficult situation. A manager who shows flexible and creative thinking can see such ways and will even encourage employees to look for new solutions. Special thinking skills jointly with deep understanding of mediation principles and mechanisms indicate the manager’s readiness for mediation, and it will be relevant to involve an additional party (a professional mediator), because there is no need to convince anyone that mediation is the most efficient and the cheapest method of alternative conflict resolution. Thus, the readiness of business leaders to apply mediation in commercial matters is the result of their personal development, living in the day-to-day realities of uncertain, complex, unstable, and ambiguous modern times.

In order to make mediation a common phenomenon in society and a top-priority option for resolving conflicts in business environment, it is necessary to enhance the conduct of certain events in Ukraine. It requires arranging roundtable discussions, awareness-raising and training events that will help business to become familiar with this method of resolving disputes. Lawyers and attorneys should also be informed of mediation as an alternative method of resolving disputes. However, the legal community should not be afraid of offering mediation services to their clients, substantiating that mediation can be a cost-efficient and fast method of resolving a dispute. At the same time, mediation should be promoted as an efficient alternative method of resolving disputes concurrently with legislative changes. It is necessary to adopt a law on mediation that will define the main rules of mediating clear to all mediation participants. Considering the experience of other countries, Ukraine should experiment with using pilot projects in the field of mediation and subsequently revise all Ukrainian laws.

The main advantages of extensive use of mediation for Ukrainian business will be overall improvement of business environment and investment raising for various sectors of economy which should elevate the position of Ukraine in the World Bank’s Doing Business Ranking.

References

1) Business Strategy as a Mediation of Management Capabilities and Entrepreneurial Orientation in Business Performance [electronic medium] / GATR Journals. – Access mode: https://www.academia.edu/38666210/Business_Strategy_as_a_Mediation_of_Management_Capabilities_and_Entrepreneurial_Orientation_in_Business_Performance

2) Conflict mediation: a real benefit for your business [electronic medium] / Pascal Gemperli. – Access mode: https://www.academia.edu/36789615/Conflict_mediation_a_real_benefit_for_your_business

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