"At the McGraw-Hill Companies, word came down from the chief executive officer: It was time to supplement the open-door policy with a formal, in-house alternative dispute resolution (ADR) program. He told attorneys in the legal department to develop something that settled disputes quickly, something good for morale.
After 6 months of work with consultants and meetings with employees and managers, as well as executives from JPMorgan Chase Bank, Cigna, JCPenney, and the KBR construction company—all of whom have ADR programs—McGraw-Hill unveiled its Fast and Impartial Resolution (FAIR) ADR program. The three-step program is voluntary and starts with bringing in a supervisor or an HR representative to resolve a dispute. If that doesn’t work, it moves to mediation with a third party. If mediation is fruitless, the third step is binding arbitration with a written decision. The company pays the costs of mediation and arbitration.
The FAIR program is typical of the programs many organizations are developing. Others incorporate multilevel, internal appeals procedures or waivers of jury trials. Such programs save employers time and money. According to JAMS/Endispute, based in Irvine, California, it takes up to 6 weeks from the time that company is contacted to the time mediation actually begins. The parties spend an average of 12.5 hours in the process, and problems are resolved in up to 90 percent of cases. Says David Gage, a professional mediator, “Mediation is really a teaching experience for people in the workplace. We sit down and we actually listen. We give everybody a chance to talk. We try to identify problems, and then we brainstorm for alternative solutions.” The Equal Employment Opportunity Commission has been promoting voluntary mediation of employment discrimination claims for years, and with good reason. Charges that go to mediation are disposed of in an average of 86 days—about half the time required for charges that are not mediated. In addition, the cost of settling an EEOC charge has increased by almost 79 percent since the early 1990s.
Houston-based Brown & Root has had about 1,100 ADR cases, with 17 going to arbitration. Roughly 75 percent of the cases are resolved within 2 months, as opposed to several years in the courts. In Irvine, California, American Savings Bank’s four-step program is enjoying similar success, reducing legal costs by more than 60 percent. The American Arbitration Association (AAA) (www.ADR.org), whose ADR programs cover more than 7 million U.S. employees, has found that 80 percent of disputes are resolved at the first step, just by people sitting down and talking to each other. Of those that aren’t, about 1,100 move to the next step, mediation, where a mediator helps both sides to agree. Only about 300 result in binding arbitration, but even in those cases, each side has veto power over the choice of an arbitrator. To control the costs of such cases, AAA offers the parties several options: limiting the number of arbitrators presiding on a case, offering expedited procedures, and even allowing for the entire process to be conducted over the Internet (to reduce travel costs).
On the other hand, compulsory arbitration agreements—in which employees sign agreements to arbitrate rather than litigate future disputes over alleged violations of employment law—are the subject of intense debate. Although arbitration offers significant benefits with respect to speed, cost, and the specialized expertise of arbitrators, some fear that it may unfairly favor employers. In the conclusion to this case, we will examine what a fair ADR program looks like."

What do you see as some key advantages and disadvantages of ADR programs?