Bates Wells convenes a regular Impact Counsels’ Forum for senior counsel working within impact investors, B Corps, and other purpose-driven businesses. The Forum discusses the ‘impact angles’ of the legal and practical issues faced by in-house legal teams.

Recently, the Forum explored how purpose-driven organisations can approach internal dispute resolution in ways that ensure purpose-driven values remain ingrained in the workplace, and manage legal risk. Inspired by the Forum discussion, we share our thoughts on this topic.

Setting foundations for the workforce relationship

Ben Wilmott, Head of Public Policy at the CIPD, opened the Forum meeting by outlining the tenets of a trust-based culture, which underpins purposefulness in organisations. For example, it is key that management is people-orientated, workers’ voices must be heard, and their views taken seriously, with staff members wanting to buy in to the organisation’s values.

As part of building this culture, the CIPD advocates a people-focused behavioural framework for management, which helps provide the foundation for constructive dispute management and for creating an environment that helps prevent conflict arising. This approach to people management also supports minimising stress, which is key when it comes to building a trust-based working culture. There are five key behaviours that managers need to display:

  1. Be open, fair and consistent in how workers are treated 
  2. Engage with conflict and people management issues, in an impartial manner, responding to early warning signs using informal and formal approaches
  3. Set clear roles and expectations, sharing knowledge, guidance and feedback, and working together to resolve issues in the team
  4. Build relationships with workers, show consideration and recognise them as individuals with lives outside of work
  5. Actively support people development

This approach to people management may require support from the legal and compliance team. For example, building interpersonal relationships may require the input of data privacy experts to support managers, if workers are encouraged to be more open with their managers.

From purpose to risk management and the role of in-house counsel

These behavioural foundations are not only important when it comes to protecting a business’s values. People-focused management and the effective management of workplace disputes also has a key role to play in managing legal risk. Therefore, in-house counsel have an important role to play alongside Human Resources (“HR”) in implementing the necessary behavioural foundations.

Key considerations include:

  • In-house counsel can play a critical role in supporting leaders at all levels to call out behaviour that undermines an organisation’s values.
  • In-house counsel must be aware of the organisational signs of conflict or toxic culture – good data, and collaborative data interrogation across business functions, can show where problems may arise.
  • People-focused management can reduce the risk of mistakes caused by high-stress environments and the associated potential liabilities; this can be recognised and highlighted by in-house counsel, as they advise on matters of risk management.
  • Effective formal procedures and policies, developed collaboratively with HR departments, can help create an ‘early warning’ system, to ensure that issues come to the attention of in-house counsel in good time.

Embedding mediation as a purpose-driven approach to resolving conflict

We propose that conflict resolution should be seen as strategic, rather than as a subset of people management. This is particularly so in the post-pandemic landscape, with 1.5m people in the UK resigning in the pandemic. A US-based study indicated that, during the first six months of the ‘Great Resignation’ (as this phenomenon has been dubbed), a toxic working culture was 10 times more likely than compensation to predict worker attrition. However, one of the strongest indicators of a healthy workplace culture is staff feeling that their voices can be heard in a meaningful way. Therefore, building the right culture, for constructively raising and managing grievances or issues with workplace culture, is essential.

Key considerations include:

  • Purpose-led organisations are more likely to be subject to employee activism, and scrutiny of culture and how they measure up to their stated values.
  • Grievance procedures, whilst necessary, are relatively crude – they are very formal and typically used at a stage when the working relationship has already broken down.
  • In contrast, mediation focuses on the future of a relationship. Mediation does not draw battle lines and helps participants to understand each other’s perspectives.
  • Mediation has a high success rate and can act as a potential rich data source, to help spot early signs of toxic culture issues.

Exploring best practice for managing the workplace relationship

The Forum discussed what organisations have been doing to manage their relationships with their workforce, and we have also been listening to our purpose-driven clients in order to understand what best practice might be emerging. For example:

  • Deemphasising formal grievance procedures and promoting mediation has helped one large business achieve a 90-100% mediation success rate.
  • Although embedding mediation takes time and may be more challenging in larger organisations, actively showcasing its successes can help to normalise this approach.
  • Building trigger points into other policies and processes (not just relating to disputes) can help to direct people to mediation early, when an issue arises.
  • Getting external legal advisors onboard with embedding a mediation-based approach may help bring this into the advice you receive on issues across the organisation.
  • Specific initiatives, such as weekly, anonymous morale scoring, can help the organisation identify problems early on and provide data that helps the organisation to be transparent about the need to talk, thereby opening discussion and enabling mediation.

If you’d like to know more about our approach to embedding mediation as a means to constructively manage the workforce relationship, please get in touch.