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Copyright Academy of Management Apr 2000

[Headnote]

We contrast two hybrid dispute resolution procedures (arbitration-mediation and mediation-arbitration) that involve using mediation and arbitration in different sequences. The former's strengths stem from lowering disputant expectations and enhancing cooperative behaviors during the mediation phase. The latter procedure likely will be less costly and time consuming, enhance fairness judgments, and produce greater compliance to arbitrated decisions. We argue that the greatest benefit from arbitration-mediation is that it should encourage disputants to settle differences themselves.

The intervention of a third party-a person, government agency, or other institution-often can facilitate conflict resolution between disputing parties (Conlon & Sullivan, 1999; Kressel & Pruitt, 1989; Purdy & Gray, 1994). For example, formal third-party procedures often are used for public sector labor-management disputes, where dispute resolution system designers want to avoid strikes. Other contexts in which third parties intervene include intraorganizational disputes; small claims business disputes; and consumer complaint disputes, such as in the securities industry (cf. Kressel & Pruitt, 1989; Lewicki, Litterer, Minton, & Saunders, 1994; Podd, 1997). Although differences exist among these third parties and the contexts in which they serve, all fulfill similar roles and, thus, are more alike than different. This reflects the "generic view" of conflict resolution (Levinger & Rubin, 1994; Pruitt & Carnevale, 1993).

Our purpose here is to compare and evaluate hybrid third-party dispute resolution procedures. By hybrid we mean procedures that combine elements of mediation and arbitration. We believe such hybrid forms hold great promise for managing conflicts, although such procedures have been undertheorized conceptually. We analyze two procedures: the well-known mediation-arbitration procedure and the novel arbitration-mediation procedure. We first briefly define each and then identify criteria for evaluating them. Next, we consider why disputants might prefer one type of hybrid procedure, and, finally, using these criteria, we consider the consequences of choosing one type of hybrid procedure for disputant behaviors, expectations, and outcomes. Throughout this discussion, we develop testable research propositions. We anticipate that such an analysis will prove valuable both to researchers and policy makers seeking to design their third-party systems.

DISTINCTIONS BETWEEN MEDIATION AND ARBITRATION

Our hybrid procedures reflect different combinations of two well-established third-party procedures: mediation and interest arbitration. Mediation is a procedure whereby a third party assists disputants in achieving a voluntary settlement (i.e., the mediator cannot impose a settlement on the disputants). Interest arbitration (or, more simply, arbitration) is a procedure whereby a third party holds a hearing, at which time the disputants state their positions on the issues, call witnesses, and offer supporting evidence for their respective positions. After evaluating the evidence and considering other relevant factors (e.g., legal constraints and economic conditions), the third party issues a binding settlement (Elkouri, Elkouri, Goggin, & Volz, 1997). Note that in the field of industrial relations, interest arbitration often is used to determine the terms of a new collective bargaining agreement, and it stands in contrast to grievance arbitration, which deals with the interpretation of an existing collective bargaining agreement. (We do not consider grievance arbitration in this note.) Both mediation and arbitration can be evaluated according to the criteria of decision control and process control, as described by Thibaut and Walker (1975, 1978) and elaborated upon by Elangovan (1995). Thibaut and Walker define these terms as follows: Decision control is measured by the degree to which any one of the participants may unilaterally determine the outcome of the dispute. For example, when a third-party decisionmaker alone may order a resolution to be imposed, the decisionmaker has total decision control. Control over the process refers to control over the development and selection of information that will constitute the basis for resolving the dispute. Participants given authority to conduct an investigation and to plan the presentation of evidence may be said to exercise considerable process control (1978: 546). Mediation and adversarial arbitration both afford the disputants high process control, for disputants have ample opportunity to present information as they attempt to influence the perceptions of the third party. However, the two procedures differ in terms of decision control. Disputants have high decision control in mediation (they may reject any settlement suggested by the mediator) but low decision control in arbitration (they must accept an arbitration ruling). Both mediation and arbitration offer several strengths. Mediation offers the possibility of discovering underlying issues and promoting integrative agreements (McEwen & Maiman, 1984; McGrath, 1966). It produces a high settlement rate (typically 60 to 80 percent, although settlement is not guaranteed) and high compliance rates (Hoh, 1984; Kochan, 1979; Kressel & Pruitt, 1989). Mediation also is a face-saving procedure: each side can make concessions to the other without appearing weak. Finally, disputants often see mediation procedures as fair (Karambayya & Brett, 1989; Pierce, Pruitt, & Czaja, 1993; Ross, Conlon, & Lind, 1990). The greatest benefit of binding arbitration is that it always produces a settlement. Moreover, the threat of arbitration often motivates parties to settle voluntarily, because the parties give up decision control once they arbitrate (Farber & Katz, 1979). The procedure may produce speedy settlements relative to other third-party procedures, such as adjudication. Finally, arbitration allows representatives to "save face" with constituents, because they can blame the arbitrator if the imposed settlement is unsatisfactory (Marmo, 1995; Rose & Manuel, 1996).

COMBINING MEDIATION AND ARBITRATION

Recognizing the strengths of each procedure, some scholars have advocated the adoption of alternative, hybrid, third-party procedures. Clearly, we cannot discuss all possible procedural combinations here. Instead, we focus on two different hybrid procedures in which both mediation and arbitration components are utilized fully: mediation-arbitration and arbitration-mediation. We focus on mediation-arbitration in part because it is the best-known hybrid procedure (Devinatz & Budd, 1997; Kagel & Kagel, 1972). We focus on arbitration-mediation because it involves combining the same two third-party procedures, albeit in a different temporal sequence.

Mediation-arbitration (hereafter med-arb) consists of two phases: (1) mediation, followed by (2) arbitration, if mediation fails to secure an agreement by a predetermined deadline. The same third party serves as both mediator and arbitrator (Kagel, 1976). The procedure is incremental: only if mediation fails to produce an agreement does the arbitration phase occur, which culminates with the third party imposing a binding settlement on the parties. This temporal arrangement is consistent with the suggestions of many scholars (e.g., Ury, Brett, Goldberg, 1988), who argue that dispute resolution procedures should be arranged in a "low-to-high-cost sequence" for the users (Ury et al., 1988: 62-63). Other writers also have suggested that mediation should precede arbitration (e.g., Starke & Notz, 1981).

One relatively new hybrid procedure is arbitration-mediation (hereafter arb-med). Briefly, arb-med consists of three phases. In phase one the third party holds an arbitration hearing. At the end of this phase, the third party makes a decision, which is placed in a sealed envelope and is not revealed to the parties. The second phase consists of mediation. The sealed envelope containing the third party's decision is displayed prominently during the mediation phase. Only if mediation fails to produce a voluntary agreement by a specified deadline do the parties enter the third phase, called the ruling phase. Here, the third party removes the ruling from the envelope and reveals the binding ruling to the disputants (Cobbledick, 1992; Sander, 1993). To ensure that the envelope contains the original ruling and not a later ruling (e.g., a ruling created after the mediation phase), the third party can ask a disputant from each side to sign the envelope across the seal at the beginning of mediation.

CONTRASTING THE TWO HYBRID PROCEDURES

What criteria should be used for evaluating the hybrid procedures? In order to compare med-- arb and arb-med systematically, we have organized our criteria (and our discussion) around the following temporal sequence. Briefly, we propose that the parties desire to maintain control over both the dispute resolution process and its outcomes. This desire affects disputants' procedural preferences and their resulting procedural choice (if any choice is available). We also examine the consequences of using a particular hybrid procedure for disputant expectations and behaviors, as well as immediate and long-term outcomes from using the procedure. This temporal sequence is a specific application of a general model offered by Pruitt and Carnevale (1993), and it serves as a framework to organize our propositions in a logical fashion.

As we examine preferences, expectations, and behaviors, we rely heavily upon Thibault and Walker's (1975) notions of process control and outcome (decision) control. We also incorporate findings from the decision-making literature, where appropriate.

PROCEDURAL PREFERENCE

An important first question concerns disputant preferences for med-arb or arb-med. If offered a choice of procedures (e.g., a "multi-door courthouse"; see Olczak, Grosch, & Duffy, 1991), will disputants prefer one hybrid procedure over another? If so, why? Such questions are important for three reasons. First, if they do not prefer a particular procedure, the parties may avoid using it, which may have implications for dispute resolution system functioning (e.g., staff and resources may be invested in procedures that few disputants want or use). Second, the parties may behave differently when using a procedure they do not favor relative to one they prefer, affecting both processes (e.g., the amount of information revealed) and outcomes (whether a voluntary settlement is reached). Third, the parties' preferences may be related to justice beliefs, which, in turn, may affect compliance rates with imposed decisions; disputants may be less likely to comply with decisions that were reached using seemingly unfair procedures.

Building upon the Thibaut and Walker (1975, 1978) theory of procedure, as well as the work of Deutsch (1973), we believe that for "interestbased disputes" (rather than, say, disputes over 11 matters of principle"), disputants are primarily motivated by self-interest (Pillutla & Murnighan, 1999). The consequences of this self-interest motive for procedural preference are numerous and multifaceted. First, disputants seek to retain decision control because it gives them veto power over any third-party proposal that provides unacceptable outcomes (thereby protecting their self-interests). Participants generally view a procedure as fairer if they retain decision control, although they may be willing to relinquish decision control if they are unable to settle the dispute themselves (Heuer & Penrod, 1986; Lind & Tyler, 1988). This suggests a preference for dispute settlement during the mediation rather than arbitration phase of hybrid procedures.

Second, to the extent that process control has implications for favorable outcomes, disputants seek to maintain process control. Research demonstrates that disputants usually prefer such procedures as mediation, where they retain substantial amounts of process control (Pierce et al., 1993).

Third, disputants avoid situations where outcomes cannot be determined in advance ("uncertain" situations) or where the probability of obtaining a favorable outcome is low ("risky" situations; see Knight, 1921). Arbitration creates such a situation, where parties cannot determine in advance which evidence will be most compelling to the third party. To reduce such uncertainty, each party may exaggerate its demands and reduce its level of concession making (a phenomenon known as the chilling effect), hoping that the arbitrator will "split the difference" and give them a modestly favorable settlement (Notz & Starke, 1987). The parties also may employ impression management techniques (Jordan & Roloff, 1997) designed to convince the third party of the virtue of their respective positions (Wall, 1991).

What are the implications of these processes for procedural preference among the two hybrid procedures? With med-arb the parties retain decision control during the mediation phase. The parties exercise process control by engaging in impression management during mediation; they also exercise process control by presenting additional evidence and formal arguments during any subsequent adversarial type of arbitration hearing. It is only at the end of the process that they relinquish decision control. Thus, with med-arb the parties retain process and decision control longer and have greater opportunity to reduce the uncertainty associated with receiving an arbitrator's binding decision.

In contrast, with arb-med the parties have only one chance to influence the third-party's binding decision-at the initial arbitration hearing. Thus, although the parties technically retain decision and process control throughout the subsequent mediation phase, they must also recognize that a binding decision has been rendered already (only not yet "served") and that any further impression management attempts will be ineffectual. The early forfeiture of decision control, thus, is salient throughout the mediation phase of arb-med. Further, since the ruling is displayed prominently in the sealed envelope, the uncertainty of the outcomes contained in that ruling also is made more salient. Therefore, if our assumptions are correct-that disputants seek favorable outcomes and seek to avoid uncertain situations-we predict that, if given a choice between these two hybrid procedures, disputants will prefer med-arb. Proposition 1: Disputants prefer using the med-arb procedure over the arbmed- procedure.

Of course, procedural designers and theorists must consider factors other than disputant preference. Disputants may prefer a procedure that maximizes the likelihood of a favorable outcome, but such a procedure may not be in the best interest of policy makers. For example, a public sector union may be able to best achieve favorable outcomes through conventional arbitration, yet the state legislature may want a procedure that lowers disputant expectations so that the parties will seek voluntary settlements. Policy makers also may want to promote integrative agreements, which may not be likely with conventional arbitration.

We next consider the implications of hybrid procedural design for disputant expectations and behaviors.

HOW HYBRID PROCEDURES AFFECT DISPUTANT EXPECTATIONS AND BEHAVIORS Disputant Expectations Regarding Outcomes

We expect that the choice of med-arb or arbmed- will have important effects on disputant cognitions as the disputants seek favorable outcomes. A critical determinant of whether disputants agree depends on whether their outcome expectations create a positive "zone of agreement" or "settlement range" (Walton & McKersie, 1965). The zone of agreement is determined by the disputants` respective resistance points-- that is, the point beyond which each will resist making concessions. For example, suppose that a company is negotiating with its union, and management negotiators are unwilling to pay employees over $9.00 an hour (their resistance point). If employees are unwilling to work for less than $9.50 an hour (their resistance point), there is no overlapping zone of agreement, and an agreement will not occur unless one side changes its resistance point.

We believe that the arb-med procedure is more likely to change the resistance points of the disputants, leading to a greater probability that an overlapping zone of agreement will exist. Several arguments support this assertion. First, the characteristics discussed above that make arb-med a less preferred procedure-the prominence of the "threat" of an arbitration ruling (in the envelope) during the mediation phase, the reduced opportunity for outcome control through impression management, and so on-also work to lower disputants` outcome expectations. Lower outcome expectations should lead to an increased likelihood of a positive zone of agreement and, thus, should produce more cooperative behavior by the disputants.

Second, there is evidence that disputants in arbitration settings overestimate their probability of success (e.g., Neale & Bazerman, 1991), and the med-arb procedure does little to address this overconfidence. In fact, med-arb may heighten overconfidence, because disputants who do not settle in mediation can continue to direct impression management attempts toward the third party during arbitration and thereby continue to bolster their false estimate of prevailing in arbitration. In contrast, arb-med may cause disputants to actively consider the possibility of losing: because a ruling already has been rendered, the disputant must entertain the possibility that the ruling has been unfavorable. Disputants may estimate the probability of an unfavorable ruling and then adjust it during mediation, whenever the mediator offers positive or negative feedback regarding their positions. Proposition 2: Disputants have lower outcome expectations in arb-med than in med-arb.

Behaviors During the Mediation Phase

Cooperation. We expect hybrid procedures to influence cooperative behaviors differentially during mediation. If the arb-med procedure lowers outcome expectations, then it is likely that disputants in arb-med will behave more cooperatively with each other than they would in med-- arb. This proposition is supported by research on final offer arbitration (Coleman, Jennings, & McLaughlin, 1993; Feuille, 1975), where the arbitrator can only pick one side's proposal; the arbitrator is not permitted to fashion a different settlement. Pruitt (1981) has reported that many cases are resolved by the disputants after the arbitration hearing is held but before a decision is revealed to the parties. He suggests that "the uncertainty produced by the prospect of final offer arbitration looms largest at the last minute, when the arbitrator's award is at hand" (1981: 225).

Extension of this logic to the arb-med procedure suggests that, having completed the arbitration hearing and knowing that a decision has been reached (but not yet revealed), the parties should be experiencing great uncertainty. When combined with the disputants' desire for outcome control and lower outcome expectations (as discussed above), the uncertainty over what types of outcomes will be received should motivate the disputants to reduce such uncertainty by agreeing during the mediation phase.

The idea that uncertainty facilitates cooperation also is supported by findings in cognitive psychology. Shafir and Tversky (1992) have described a one-trial prisoner's dilemma game, where subjects were either aware or unaware of their opponent's choice to compete or cooperate. When subjects knew that their opponent had made a competitive choice, only 3 percent responded with a cooperative choice. When subjects knew that their opponent had made a cooperative choice, 16 percent responded with a cooperative choice. But, when subjects did not know if their opponent had competed or cooperated, 37 percent chose to cooperate. Shafir and Tversky (1992) explain their findings in terms of a disjunction effect, defined as follows: people prefer choice a over choice b when X occurs; they also prefer a over b when X does not occur, but they prefer b over a when it is uncertain whether or not X occurs (also see Tversky & Shafir, 1992). The arb-med procedure sets up similar dynamics for the disjunction effect. For example, if we substitute "a favorable arbitrator decision" for X, "compete" for a, and "cooperate" for b in the above description of the disjunction effect, we have a situation where greater numbers of disputants engage in cooperative behavior when they do not know if the arbitrators' decision will favor them or not. Proposition 3: During the mediation phase, disputants will engage in more cooperative behavior in arb-med than in med-arb. Revealing information. An important part of cooperation is revealing information. The revealing of more information is associated with a greater probability of achieving an integrative, high-quality agreement (Pruitt, 1981; Thompson, 1991, 1998). Information sharing often occurs during private caucuses with a mediator. Yet, disputants may be reluctant to reveal information if they fear that the third party might use that information when making a subsequent arbitration ruling (Fuller, 1962). This apparent loss of outcome control through exercising process control (revealing information in mediation) is an inherent difficulty of med-arb. For example, suppose that a union's bargaining position is that workers need thirteen paid holidays. If union leaders reveal to the mediator in a private caucus that they will accept ten holidays, then they may fear that the third-party might remember this fact and rule for ten holidays if arbitration becomes necessary. An arbitration ruling for ten holidays would confirm this fear, even if the third party based this decision on other criteria.

However, if an arbitration ruling already has been made and nothing revealed during mediation can influence that ruling, then there is no incentive for withholding information during mediation. Thus, arb-med should increase the probability that a disputant will reveal confidential information during private caucuses with a mediator, or even to the other disputant. Proposition 4: During the mediation phase, disputants will reveal more confidential information in arb-med than in med-arb.

Receptiveness to mediator suggestions. One strength of the arb-med procedure is that the threat of losing in arbitration is salient to the disputants, particularly if package final-offer arbitration is used. This awareness and fear of losing (loss aversion) should increase disputants' motivation to settle and make them more amenable to mediator suggestions. However, research also shows that motivation to settle alone does not increase the likelihood of settlement-disputants need specific guidance from their third party (Ross, 1990). If disputants are motivated to settle, then, when the third party provides specific guidance in the form of suggested settlements, the parties are likely to make greater concessions to move toward the suggested settlement point. The result of such movement is the greater likelihood of agreement. Researchers have observed that mediators frequently suggest settlements, so this is not an uncommon behavior (Baker & Ross, 1992; Kolb, 1983).

Proposition 5: Disputants will respond to mediator suggestions for settlement with more concessions in arb-med than in med-arb.

Proposition 6: Disputants will agree to specific mediator settlement proposals more frequently in arb-med than in med-arb.

There is, however, one circumstance in which these propositions may not hold. If final-offer arbitration is used in med-arb, the parties may already be aware of the prospect of losing in arbitration. The disputants may look to the thirdparty suggestions during the mediation phase as alternatives to losing in arbitration, and these suggestions may hold substantial weight. Thus, when final-offer arbitration is used, disputants may be responsive to mediator suggestions with either procedure.

IMMEDIATE AND LONG-TERM OUTCOMES

Next, we focus on how med-arb and arb-med may produce different outcomes- both long and short term. We distinguish between these two types of outcomes because it is possible that one hybrid procedure may promote immediate outcomes (e.g., the parties may be more likely to settle the dispute), but, if the parties feel pressured to settle, then that may have implications for long-term outcomes, such as being committed to abide by the agreement (see Kressel & Pruitt, 1989, for a discussion). We demonstrate that arb-med tends to have several relative advantages with regard to immediate outcomes; however, med-arb is more advantageous for long-term outcomes.

Immediate Outcomes

Settlement frequency. One goal of dispute resolution systems is to encourage voluntary settlements. This means that a settlement in the mediation phase, where the parties retain decision control, is preferable to a settlement in the arbitration phase, because the parties voluntarily have agreed to the settlement and because satisfaction and commitment tend to be high in such cases (Kressel & Pruitt, 1989). We propose that arb-med will produce a greater number of settlements in the mediation phase than will med-arb. Curry and Pecorino (1993) have noted that in arbitrations over salary disputes in professional baseball, the parties (who had previously exhausted negotiations) submitted sealed final-offer bids to the arbitrator. However, prior to receiving the arbitrator's decision, the parties frequently displayed a burst of negotiation activity, since they hoped to avoid an arbitrated settlement (also see Burgess & Marburger, 1993). The frequency of negotiated settlements that occur after an arbitration hearing but prior to learning of the arbitrator's ruling suggests that the separation of the arbitration phase and the ruling phase inherent in the arb-med procedure should facilitate voluntary agreements. Also, if the parties have lowered outcome expectations with arb-med (as described earlier), they might be motivated to avoid using arbitration-- particularly if final-offer arbitration is employed.

Proposition 7: There will be more voluntary (mediated) settlements using arb-med than med-arb.

Settlement quality. The quality or value of settlements reached in the mediation phase should be higher with arb-med than med-arb. This idea flows from Proposition 4, which states that disputants reveal more confidential information in the mediation phase of arb-med. The revealing of information is associated with a greater probability of achieving an integrative, high-quality agreement (Thompson, 1991; Weingart, Thompson, Bazerman, & Carroll, 1990). Integrative settlements, by definition, provide greater total benefit (i.e., joint benefit to both parties) than do nonintegrative settlements, whether quality is defined in terms of joint payoffs or Pareto efficiency or creativity (cf. Tripp & Sondak, 1992). If the parties share more information, it follows then that the probability of achieving a high-quality mediated settlement is higher with the arb-med procedure.

Proposition 8: Mediated settlements are likely to be of higher quality in arb-med than in med-arb.

Speed and cost of settlement. Whereas Propositions 2 through 8 support the novel arb-med procedure, the remaining propositions bolster the better-known med-arb procedure. For example, med-arb can be expected to be less costly and to produce, on average, faster resolutions. This expectation stems from the nature of the two procedures. Arb-med has both an arbitration hearing phase and a mediation phase in every case. Only if the dispute is settled in mediation does the third phase, the ruling phase, become irrelevant. However, with med-arb neither the arbitration hearing nor the ruling phase is held if the dispute is settled in the mediation phase. Because a majority of cases are mediated successfully (Kressel & Pruitt, 1989), med-arb is likely to produce faster resolutions than arbmed-. Moreover, since many external third parties are paid a per them amount, med-arb also is likely to be less costly.

Proposition 9: On average, disputes will be resolved more quickly in the med-arb procedure than in the arbmed- procedure.

Proposition 10. The med-arb procedure will produce lower financial costs than the arb-med procedure.

Long-Term Outcomes

Justice beliefs. There are several reasons to propose that med-arb will lead to greater longterm perceptions of procedural and distributive justice. Researchers have shown that having an opportunity to present one's case (exercising process control) enhances one's beliefs about procedural fairness for both instrumental (outcome-related) and value-expressive reasons (cf. Folger & Cropanzano, 1996; Lind & Tyler, 1988). Such beliefs enhance the likelihood that the procedure will be used for future disputes. Clearly, under both procedures disputants have opportunities to exercise process control. However, we propose that, for instrumental reasons, disputants' perceptions of process control will be greater with med-arb. As we discussed earlier regarding impression management, the med-- arb procedure allows disputants two opportunities to present their case prior to the arbitrator making a decision, whereas arb-med only al-. lows one such opportunity. Therefore, although both procedures provide disputants with process control, we anticipate that disputant perceptions of such control will be greater with med-arb.

The treatment received by disputants from the third party also may influence their procedural justice perceptions. The parties may view a third party's request for a concession in the mediation phase of arb-med as more threatening and aggressive than the identical request in the mediation phase of med-arb. In arb-med the parties may view it as a harbinger of what will come if no agreement is reached. This may lead disputants to perceive that they were treated with less respect and dignity in the arb-med procedure. Notions of respect or "standing" play a central role in the interactional justice literature and in recent models of procedural justice, such as the group value model (e.g., Lind & Tyler, 1988).

Distributive justice judgments also are likely to be greater in med-arb. Regarding outcomes reached in mediation, disputants in arb-med may feel pressured to agree because of specific suggestions made by the third party, amplified by the threat of the arbitrated decision that already exists but is not revealed. Disputants may view any mediated agreement reached in arbmed- as "coerced," with a loss of outcome control; this violates Leventhal, Karuza, and Fry's (1980) justice criterion of bias suppression.

Arb-med may also negatively impact the perceived fairness of arbitrated outcomes. Because the outcome is determined prior to mediation, it is not sensitive to concessions, procedural developments (e.g., agreeing to refer a matter to a special committee), or relationship changes between the parties (e.g., agreeing to implement integrative "win-win" bargaining) that may have occurred during the mediation phase. This may lead disputants to believe that the arb-med procedure relies on less accurate information (because the arbitrator made his or her decision without the benefit of new information) or perhaps is a procedure that violates prevailing standards of ethicality (for the same reason). Both accuracy and ethicality have been considered important fairness-enhancing criteria (Leventhal et al., 1980). Thus, to the extent that arbmed- violates these normative expectations of what a procedure should be, we believe that disputants will view med-arb as more procedurally and distributively fair.

Proposition 11: Disputants will report greater levels of procedural and distributive justice in med-arb than in arb-med.

Compliance with arbitrated outcomes. Finally, disputants' long-term compliance with third-party-imposed outcomes is a persistent problem. McEwen and Maiman (1984) have reported that typical compliance rates are about 80 percent for mediation, versus only 48 percent for adjudication in small claims court. Lind and Tyler state, "Even when decisions are supposed to be binding, as is the case in adjudication and arbitration procedures, the enforcement of the decision can be difficult in the face of active or even passive resistance" (1988: 81).

Anecdotal evidence from financial securities and automobile "lemon law" arbitration (e.g., Gold, 1988; Podd, 1997) also highlights that noncompliance with arbitrator decisions occurs. In

the labor-management field, noncompliance may take the form of attempting to achieve contract changes through the use of the grievance mechanism. For example, a union might flood the system with frivolous grievances dealing with one contract clause in an attempt to force the other side to renegotiate that clause. Alternatively, a union might turn to grievance arbitration. For example, one public sector teachers' union reportedly attempted to get smaller class sizes through arbitrating grievances dealing with class size under a "safe working conditions" contract clause, after the union had been unable to secure smaller classes when previously negotiating its contract (State of California, Department of Youth Authority and California State Employees Association, 1987).

We expect fewer arbitrated outcomes to occur in arb-med than in med-arb, but we also expect that disputant compliance may be more problematic. Disputants may view the decision imposed in arb-med as not reflecting the "new understanding" reached in the mediation phase. Earlier we discussed how one key element of arb-med is that the third party's ruling cannot be updated by any new information or insight discovered in the mediation phase. This raises the possibility that arbitrated decisions in the arbmed- procedure could include obvious oversights or flaws that an arbitrated decision in med-arb could avoid. Such flawed outcomes might lead disputants to have a lower level of commitment to imposed settlements in arb-med.

In addition, several authors have noted that both procedural and distributive fairness judgments are important determinants of decisions to comply with third-party decisions (cf. Lind, Kulik, Ambrose, & de Vera Park, 1993; McEwen & Maiman, 1984). Pruitt, McGillicuddy, Welton, and Fry (1989) compared mediation with med-- arb in community dispute resolution centers and found that when disputants believe a procedure is fair, they are more likely to comply with the ruling or agreement resulting from that procedure. As we stated earlier, the early loss of decision control in the arb-med procedure may violate disputant expectations of what a fair procedure should be. If disputants see med-arb as a fairer procedure, they should be more likely to comply with an arbitration ruling from med-- arb than from arb-med. Proposition 12: Disputants will be more likely to comply with arbitration rulings issued in med-arb than in arbmed-.

DISCUSSION AND CONCLUSIONS: A CONTINGENCY APPROACH

Table 1 summarizes our propositions. As indicated in the table, arb-med's strengths lie primarily in its inherent motivational capacity. By appearing to threaten to reduce each party's decision control, the procedure should lower disputant expectations and produce uncertainty among the disputants. These dynamics should motivate the parties to maintain decision control. We predict that, in attempting to ensure that they do not relinquish decision control, the parties will be highly motivated to settle the dispute during the mediation phase and will demonstrate a variety of cooperative behaviors in that phase. As a result, arb-med should produce a greater number of settlements in the mediation phase settlements the disputants can take the credit for (e.g., a union negotiator can "sell" to his or her constituents) and will likely be more committed to. Med-arb, however, typically will be less costly and time consuming; lead to enhanced levels of procedural justice; and, should arbitrated decisions be imposed, lead to greater compliance with arbitrated decisions.

In summary, we see that the greatest benefit of the arb-med procedure is that it encourages disputants to settle their differences themselves (a short-term effect), whereas the greatest benefit of the med-arb procedure may be enhanced perceptions of fair treatment and greater compliance with arbitral rulings (long-term effects).

The above description of relative strengths strongly suggests that policy designers and/or third parties should pursue a contingency approach to procedural selection based on the specific criteria, listed in Table 1, they want to maximize. This suggestion is similar to a contingency approach to procedural selection offered by Elangovan (1995, 1998). Building upon the work of Thibaut and Walker (1975), Elangovan has identified six decision attributes that influence how much process and outcome (decision) control should be granted to the disputing parties and to the third party. Briefly, these attributes can be organized according to the following questions: 1. How important is the dispute?

2. How important is it to resolve the dispute quickly? 3. Does the dispute concern the application of existing rules, or does it concern the alteration of existing rules?

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TABLE 1

4. Do the parties expect frequent work-related interaction?

5. Would the parties be committed to a settlement imposed by a third party?

6. Is the probability high that the parties would negotiate a settlement compatible with the larger organization or system? When med-arb and arb-med are considered in light of these attributes, the situations favoring each procedure become clearer. First, Elangovan suggests that third parties retain outcome control for important disputes. Third parties in both procedures retain outcome control. Yet, if the potential loss of outcome control is more salient with arb-med, and disputant acceptance of third-party proposals during mediation is greater (Proposition 6), then arb-med should be used with "important" disputes. Second, med-arb produces a faster settlement than arb-med and should be used when a quick settlement is desired (Proposition 9). Third, either hybrid procedure is adequate for developing or altering existing rules (e.g., labor-management contracts). Fourth, if the parties have an ongoing relationship, either procedure is satisfactory; however, med-arb may be preferred because of its relative advantage for long-term outcomes. For disputes where the parties do not have a long-term relationship, arb-med may be more satisfactory because it promotes information exchange, concession making, and a high frequency of settlements (Propositions 4, 5, and 7). Fifth, if the third party imposes a settlement, compliance may be greater if med-arb is used (Proposition 12), suggesting that med-arb be chosen if compliance is a concern. Finally, Elangovan's model suggests that if the parties can find a solution that is compatible with the larger system's goals, the third party should use a procedure that yields more process and outcome control to the parties. Such a procedure heightens disputant perceptions of procedural and distributive justice. Because med-arb appears to yield more control to the parties and enhances justice perceptions, med-arb is preferred under these conditions (Proposition 11). Thus, Elangovan's contingency approach offers additional guidance as to when one hybrid procedure is preferable.

It is apparent that no single procedure-even a single hybrid procedure-is optimal for all disputes. The set of propositions offered here suggests that third parties be given authority to determine which procedure should be used, based on the criteria the third party wishes to maximize. Thus, if long-term procedural justice and compliance are issues of great concern, the third party may choose to implement med-arb. However, if the third party believes that the parties have not been forthcoming with relevant negotiating information, or if the third party feels that obtaining a high-quality voluntary settlement is paramount, then the third party may prefer arb-med. Obviously, in this note we have described only the basics of each procedure and a few key situational variables that might be relevant for procedural choice. Many additional situational factors might influence the effectiveness of and satisfaction with each procedure. These range from the context in which the intervention occurs and the power differentials between disputants to the "style" with which a third party implements any specific procedure (e.g., Arnold & Carnevale, 1997). These factors cannot be considered here (for a review of such factors, see Pruitt & Carnevale, 1993). However, this note serves as a call for researchers and policy makers to consider these forms of hybrid third-party procedures.

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[Author Affiliation]

WILLIAM H. ROSS

University of Wisconsin at La Crosse

[Author Affiliation]

DONALD E. CONLON

Michigan State University

[Author Affiliation]

We presented an earlier version of this work at the annual meeting of the Academy of Management in San Diego, August 1998. We thank Elizabeth Wessman, Laura Jaryznski, and the anonymous reviewers for comments on earlier versions of this note.

[Author Affiliation]

William H. Ross is a professor of industrial relations at the University of Wisconsin at La Crosse. He received his Ph.D. in industrial-organizational psychology from the University of Illinois. His research interests include dispute resolution systems design, dispute mediation, procedural justice, and conflict management.

[Author Affiliation]

Donald E. Conlon is an associate professor of management at Michigan State University. He received his Ph.D. in organization behavior from the University of Illinois. His research interests include third-party intervention in conflicts, justice perceptions in a variety of contexts (e.g., downsizing, service encounters), intragroup conflict, and organizational decision making.