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HR Magazine, January 2004 - Jury of their Peers

By Margaret M. Clark  1/1/2004
 
HR Magazine, January 2004

Vol. 49, No. 1

Giving employees a say in resolving each other's workplace disputes can pay big cultural dividends.

Some 30 Eastman Kodak Co. managers and employees recently gathered in a company conference room for training. Their goal: to one day serve as panelists in Kodak’s peer/management dispute resolution process.

One by one, they voiced their reasons for volunteering for this role. Although most had never met, their answers expressed a common and inspiring desire to make a difference in their workplace.

Stephanie Adair, who’d been with the company for 22 years, wanted to help employees and supervisors work out their differences on equal footing.

Paul Dangler, a product development manager with 27 years of service, liked what he knew about the process and wanted to help make it work. Mary Jane Emigh, who has worked at Kodak for four years, said peer/management review was a great resource and she wanted to be part of the process.

Some of the trainees identified themselves as leaders, good listeners or problem solvers—even as aspiring human resource professionals. Others admitted a desire to heal their own workplace wounds by making things better for someone else.

Kodak officials say that every group of panelist trainees—now totaling about 700 individuals—has expressed similar reasons for getting involved in the program, which the company rolled out in March 2002.

Harnessing and boosting the constructive energy displayed by trainees such as these is a big advantage of successful peer review programs, say advocates. They claim that merely involving employees as partners in the dispute resolution process pays big dividends in terms of strengthening an organization’s workplace culture.

The potential for that kind of payoff is no small potatoes for the Rochester, N.Y.-based photographic goods and services giant that is working to reduce its workforce by 4,500 to 6,000 jobs—6 percent to 9 percent of its 2002 worldwide employment base—and establish itself in the digital marketplace.

But experts also caution that peer review systems aren’t for everyone. For example, they aren’t a cure-all for weak or flawed cultures. For peer review to be successful, companies must already have in place the kind of environment that lends itself to such a participatory process. And, experts caution, successful programs require substantial buy-in—especially from managers, who must be shown that they stand to gain even if they lose an appeal before a peer review panel.

Pros and Cons

In their book Emerging Systems for Managing Workplace Conflict (John Wiley & Sons, 2003), Cornell University professors David B. Lipsky and Ronald L. Seeber, and Phoenix-based dispute resolution professional Richard D. Fincher, set forth several of the potential benefits of successful peer review programs, which include:

  • Employees generally find resolutions that are handed down by peers to be credible and acceptable.

  • The model is practical and cost-effective.

  • Peer review allows employee disputes to be resolved internally—not in court or before other external tribunals.

Resolving disputes internally pays dividends beyond avoiding legal expenses, say experts.

“The benefit of using peer review rather than some external decision maker is that the peer review panel is well-versed in the company culture and how the company operates,” says Ann Reesman, general counsel of the Equal Employment Advisory Council, a Washington, D.C., employer organization. “This can be very useful in making judgment calls in cases such as whether a company policy is followed properly.”

The advantages of peer review, however, may not bear out in every environment, and there are possible downsides to the approach that employers must consider.

According to Lipsky and his co-authors, some peer review detractors argue that the increased complexity of workplace disputes does not lend itself to resolution by employee/management panels. For this and other reasons, employees may not find peer panels to be credible decision makers. And the authors cite practical challenges as well: Employee turnover necessitates constant training of new panelists and the system requires costly staff resources to administer.

Michael E. Dickstein, a San Francisco-based mediator, alternative dispute resolution (ADR) educator and co-chair of the Association for Conflict Resolution’s Workplace Section, is a peer review fan. Nevertheless, he acknowledges that some employers might shy away from the process because program design, startup and ongoing training can be expensive—especially given the costs of running the program and of lost work time for those involved in the process.

But for some organizations, the fear of losing a measure of control may be the biggest deterrent to adopting peer review, says Dickstein. Some employers may be threatened by the fact that the process diffuses a company’s decision-making authority by giving employees the power to render decisions in workplace disputes.

But that is exactly the point, argue advocates.

Dickstein says peer review procedures “give employees the sense that they have some control of what’s going on and some sense of redress. Employees become more responsible when you give them some sense of responsibility.”

Harvey Caras uses similar language to describe the primary benefit of peer review. Such programs, he says, send “a very clear message to employees that not only does management want to ensure fair treatment, but it has the confidence and trust in employees to turn over a very high level of decision making to them.”

That, in and of itself, represents significant value to employers, says Caras, who is the president of Caras and Associates Inc., a Maryland-based consulting firm that for 18 years has specialized in helping companies—including Kodak and a long list of others—install and administer peer review systems.

Mary Harris, director of Kodak’s Resolution Support Services (RSS) program, a multi-step conflict resolution system that includes peer/management review, agrees that the problem-solving mechanisms offered by a company say a lot about that organization. Mandatory binding arbitration, for example, “sends a different message than the peer review message,” she says.

She adds that the residuals that peer review leaves behind in the culture lead to higher levels of employee satisfaction.

Organizations that can’t live comfortably with granting employees at least some decision-making authority are not good candidates for peer review. “There are organizations that still believe in the military type of hierarchy: the boss is the boss is the boss,” notes Susan W. Brecher, ADR consultant and director of the complaint handling curriculum for the extension division of Cornell University’s School of Industrial and Labor Relations. “You can’t have the peer review system in that environment.”

To be successful, an organization must already have a culture that is open to peer review, or be in the process of making a culture change, says Brecher. She adds that employees must be ready to approach the process positively; they must be fair and must not pervert peer review into a vendetta against management—a statement that underscores the importance of the constructive attitudes found in Kodak’s peer review trainees.

When employers embrace peer review, says Dickstein, they shift out of a hierarchical chain of command model. Within defined boundaries, he says, “Employees are running the company. I don’t think you can underestimate the diffusion-of-control issue; it really alters where it appears that control lies.”

For some of these same reasons, the peer review approach has been both sold and slammed as a union avoidance technique. But, if avoiding unionization is an employer’s only motivation for installing peer review, Caras says he counsels against it. “If you don’t believe that this is the right way to treat your employees, then you shouldn’t do it.”

Important Flexibility

Employers should not necessarily be scared off by the prospect of ceding some decision making authority, because they retain a great deal of flexibility and control when setting up their own particular peer review program.

In general, peer review uses a panel of employees and managers (employees make up at least the majority) who hear the facts of a dispute and make decisions regarding how it should be resolved. The panel serves, quite literally, as a jury of the employee’s peers.

Outside of this basic framework, however, many fundamental elements of a peer review program can be altered to suit an organization’s needs and culture. Some of the fundamental ways that programs can vary include:

Scope of the program. In the peer review model Caras offers, peer panels are not authorized to change company policies or work rules or to establish pay rates or benefits. They are tasked with answering only one question: “Was the company policy or practice applied properly and consistently in this case?”

From the outset, Caras asks clients to identify all the subjects they want excluded from the scope of peer decisionmaking. For example, Caras says his clients typically do not use peer review panels to handle charges of discrimination or harassment.

Some employment law attorneys agree that peer review is inappropriate for such claims. “Peer review is not used and cannot be used in things like discrimination cases,” says Brecher.

But Reesman disagrees. She says discrimination and harassment claims can go to peer review “if it’s a properly structured program.” But, she cautions, “doing it right involves training your panel members.”

Caras cautions that the more employers restrict the scope of peer review programs, the more they protect management’s rights—but the less useful and valuable the process becomes.

Finality of the process. In some companies, peer review panel decisions are advisory only. But programs can be designed to be final and binding on both the employee and the company, or on the company only.

What’s the best approach? The answer depends on a variety of factors, including company culture, the scope of issues covered by the process and what the employer is trying to accomplish.

At Kodak, decisions are binding on the company, but not on the employee. Employees who participate in the peer review process are free to pursue other remedies, but the company accepts the decision as final and pledges to implement it (a fact that seemed to stun Kodak’s recent panelist trainees).

Legally speaking, it may be possible to create a peer review process that is legally binding on both employees and employers. But it would have to afford the same kind of due process protections and legal remedies that characterize enforceable arbitration agreements, Reesman says.

However, even if making peer review decisions binding is legally permissible, it may not be an organization’s best bet, says Paul Salvatore, a partner in the New York office of the Proskauer Rose law firm. He thinks peer review works best when it is binding on neither the employee nor the company. “There are certain boundaries within which management should hold its cards,” he says.

Programs also should steer clear of giving advisory peer panels any opportunity to actively plead a case to management, Salvatore notes. Otherwise, the employer risks running afoul of the National Labor Relations Act’s (NLRA) prohibition against unlawful employer domination of a labor organization. When panels serve as neutral decision makers—as in the more typical model offered by Caras—there probably is no violation of the NLRA.

Is it mandatory? The decision to make peer review mandatory also should be based on the culture in the individual facility or office “on a case-by-case basis, strongly driven by HR’s gut sense of the dynamics on the ground,” says Salvatore.

From a legal perspective, if you make peer review mandatory, “you are essentially going to be bound by the result—unless you are setting it up in a purely advisory way,” says Salvatore.

“There just isn’t much law on peer review programs,” said Reesman, so it’s hard to know exactly how a mandatory peer review program, intended to be binding on both employer and employee, would fare under court scrutiny.

Whether or not it is legally permissible, Caras dislikes the idea of making peer review mandatory. “I’m totally against anything about this process being mandatory,” he says. “You don’t have to force people to use this and you don’t have to force them to give up any rights to do it.”

Managing Management

HR professionals should not expect to establish peer review—or any dispute resolution system—without the early and visible support of top management and the careful cultivation of middle and lower management.

Managers must be educated about the value of peer review beyond individual case outcomes and must be assured that they will not be punished if a peer panel reverses their decision, says Brecher.

Kodak did just that to pave the way for peer/management review, says Mary L. Burkhardt, vice president and director of global manufacturing sites. In senior leadership teamwork sessions, the program was presented as a resource not only to employees but also to company leaders, she says.

After experiencing the program firsthand, Don Franks—an operations manager at Kodak Park, the largest manufacturing plant in the world—sees it as a resource. “At first I wasn’t too thrilled about having my decision questioned, but, by the time I got to the panel, I was ready for help,” he says.

“It isn’t painful,” he adds. “It shouldn’t be threatening. It’s good for us. It’s good for the employee.”

The peer/management panel upheld Franks’ decision. And the employee had no problem with the outcome, he says, which may have been even more important. Without the procedure, he believes the employee would have “harbor[ed] that feeling that he wasn’t treated right.”

“Anybody that installs a peer review system has to understand that to have credibility, there are going to be times when panels are going to overrule management,” says Caras. “At least someone in management is not going to like it.” But, he adds, “the least important thing about this process are the decisions that are made by these panels. Most important are the ways you are treating these employees.”

To prove his point, Caras tells the following story: Once, while giving a speech about peer review, he was asked how managers feel when their decisions are overruled. One of Caras’ clients—the general manager of a manufacturing plant—was in the audience. The client stood up and said: “I love it when we get overruled. Losing gives us an opportunity to prove both that [employees] can trust us and that they didn’t have to go outside to protect themselves.”

And, the client added, “every time we get overruled, we learn something that helps us make this a better place to work.”

Even front-line managers accept peer review pretty easily, Caras says. The small percentage of managers who need convincing usually don’t understand how it works. Once you explain the process, “the light bulb goes on and they say ‘Fine, let’s do it.’ ”

Go Team!

Patrick Teora is one supervisor who took the plunge, signing up for Kodak’s peer review panelist training. “It is an interesting new process that was not available when I was an operator,” he says. So far, he’s sat on four panels. And he’s been pleasantly surprised with the results.

The peer and management panelists bring complementary experiences to the table, says Teora. “The best ‘grassroots’ questions came from the shop floor folks. The managers could ask more specific questions about documents and human resource procedures.”

Despite their differences, the panel members worked together well, he says, perhaps aided by the fact that no one took the task lightly. “A bunch of strangers came together,” he says. “By the end of the day we were a team.”

Employee panelist Dave LaManna made similar observations. LaManna has worked in distribution for Kodak for 34 years and has participated in two review panels. Peer/management review “seems like a fair and open process,” he says, and he feels good about being a part of it. He was impressed with how well both sides presented their cases, has found the process to be educational and suggests using it to his co-workers.

Teora also has found serving as a panelist to be an educational experience—even more so than he expected. When he steps back into his supervisor role he carries his experiences as a panelist with him.

“When I make a decision, I’m not always right,” he admits. “But I’m not crazy about somebody picking apart my decision.” So, he says, his desire to avoid ending up on the other side of the panel table now prompts him to exercise his supervisory authority a little more thoughtfully. 

Margaret M. Clark, J.D., SPHR, is senior legal editor for HR Magazine.

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