Mandatory and binding arbitration: Effects on employee attitudes and recruiting results

Abstract

This paper reports the results of two studies undertaken in the same Fortune 500 company as it adopted an Alternative Dispute Resolution (ADR) program. Study 1 assessed employees' perceptions of fairness, trust, and turnover intentions regarding ADR options. Compared with other options for ADR, a program consisting of mandatory mediation followed by mandatory and binding arbitration (MMBA) resulted in signifi cantly lower levels of procedural fairness perception, organizational trust, and intentions to stay with the fi rm. Contrary to previous research, no signifi cant effects were found related to respondents' demographic characteristics and their reactions to ADR program characteristics. In Study 2, job-applicant fl ow data were evaluated and compared by corporate region to determine the effects of an MMBA program installed in one region. Results revealed no signifi cant effects related to the MMBA program on the organization's ability to recruit and ultimately fi ll key positions. As in Study 1, no signifi cant effects were found in Study 2 for the demographic characteristics of applicant race/ethnicity, gender, or age on applicant recruitment decisions. Although Study 2 results indicated job candidates are unaffected by the existence of an MMBA program, given Study 1's results, practitioners should be cautious about implementing such a program for current employees.

The trickle-down effects of perceived trustworthiness on subordinate performance.

“…As managers make decisions that have consequences for those at lower levels in the organization (Mayer & Gavin, 2005), one of the most effective ways to establish a trusting relationship is to have these decision processes take the shape of a shared experience rather than a top-down only approach. Indeed, research shows that if decision-making is controlling rather than shared, trust between parties cannot be established (Bernardin, Richey, & Castro, 2011). Moreover, in a relationship with a higher-level authority, fairness issues are very salient to lower-level parties, and as such trust between parties has been shown to develop the most by justice-related actions (Colquitt et al, 2007).…”

At What Level (and in Whom) We Trust

“…As with the leader referent, distributive, procedural, and interactional justice has been linked to trust in organizations (Cohen-Charash & Spector, 2001;Khazanchi & Masterson, 2011;Li & Cropanzano, 2009). Organizational justice systems that do not allow voice and require mandatory and binding arbitration have been found to lower trust (Bernardin, Richey, & Castro, 2011). Interestingly, employees at different organizational levels may focus on different forms of justice.…”

Leader trustworthy behavior and organizational trust: the role of the immediate manager for cultivating trust

“…For example, Searle et al () found that the HR policies and practices enacted by an organization send signals regarding the trustworthiness of the organization. In other research the organizations' justice system (Bernardin, Richey, & Castro, ) and characteristics of on‐going change (Kiefer, ), have been linked to lower levels of trust while perceptions of value congruence have been found to positively influence employee trust in the organization (Edwards & Cable, ). Such macro considerations feature strongly in theoretical models of organizational trust, such as the framework of trust repair presented by Gillespie and Dietz ().…”