1 EMPL 3270 Tutorial Summary Week 2: TechnoGen versus the United Nations • • • • • Situation: → This new substance can only be found in the Pakistani Prune, which grows on trees in certain parts of Pakistan. The trees are in a deserted and remote part of the country, making them highly inaccessible for easy harvesting. There seems to be some combination of the trees themselves and the quality of the agricultural and weather conditions that only allow the trees to thrive in this area. → The output from the entire harvest of Pakistani Prunes is being controlled by the Ministry of Agriculture, which will sell the batch to the highest bidder. Dr Sanchez: a research scientist employed by the United Nations Standing Committee on World Hunger → Part needed: It has been estimated that the powder from the pits of an entire harvest would be sufficient to produce enough soil additive to reclaim land that would support a population of 20,000 people. → Intention of use: Preliminary studies around the world indicate that the use of this substance in drought areas would effectively allow currently fallow and drought-‐parched land in that area to grow crops. → Finances: You have been authorized by the United Nations Committee to spend up to $ 2 million to obtain the prunes. Dr Kim Wilson: You are Dr. Kim Wilson of TechnoGen of San Jose, California. Your firm is a world leader in the development of genetic engineering processes, biomedical technology and the creation of "new" products for the agricultural and health sciences. → Part needed: This pulp "mash" is then bio-‐chemically treated and subject to several genetic engineering processes. It has been estimated that the mash extract of an entire harvest would be sufficient to produce enough compound to treat more than 20,000 high-‐cholesterol-‐risk people. → Intention of use: people could take the product and significantly reduce their blood cholesterol levels AND cholesterol buildup in their bodies simply by diet alone, and without any change in their current exercise program. → Finances: You have been authorized by TechnoGen to spend up to $5 million to obtain the prunes. Time Pressure: Both teams are at least 5 years away from solving the problem of how to create the conditions to grow fruit-‐ bearing trees in other parts of the world, and at least 10 years away from being able to create a synthetic powder in the laboratory. Trees must have a dormant year in between the years they produce fruit. Trying to convince one another why they deserve the prune contract Findings • Very positional to start off-‐ arguing over the issues rather then seeing potential to generate novel solutions → Emphasis on Technogen using the product to assist people with cholesterol levels that could be resolved through other means (self inflicted disease) , whilst United nations would use the product to resolve world hunger through crop growth → Statements were issue rather then problem oriented. • Reciprocity-‐ both were very competitive, cautious in revealing information to the other → Both opened with an initially low offer well below their budgets • Once information sharing became more flowing (through drip feeding information) became know that different parts of the fruit were needed • Generated a novel solution through shifting toward a more cooperative interest based approach • Perception of one another influenced expectations of how the negotiation script would unfold-‐ one of the strategy factors is expectations of the others strategy, which both believed would be to contend → “As a world government organization, they probably have a lot of money to throw around if they want to!” → “You know that Dr. Wilson's company is one of the biggest biotech firms in the U.S.-‐-‐you heard that Wall Street sent the stock soaring about two years ago. As a result, Kim Wilson probably has a lot of money to throw around.” • Technogen had more power in that they had a higher allocated budget, however they did not know the budget of the other party unless this information was shared by them-‐ highlights the importance in not being overgenerous in information sharing. 2 3 Week 3: Petrol Price Negotiation • • • • • • There are only two petrol stations in town, yours and another one at the other end of town Most of your customers, however, are not so loyal. They pay pretty close attention to petrol prices and always go to the station that is selling petrol for less Both Franchisees so they can’t change the price at which petrol is bought. Both must give 7 days notice to the Department of Fair Trading for a price change hence can’t change prices quickly. This therefore means that you and the other station are stuck with a price for at least a week If one station is selling petrol for a lower price than the other during that week, it gets a lot more business. The owner of the higher-‐priced station would then dearly love to reduce the price but cannot do so for a week. If both stations are selling at the same price customers return to making a fifty-‐fifty choice between the two stations. The first number in each pair refers to the profits that you would receive, the second (in italics) indicates the profits that the other station would receive. Findings • My team member took a very competitive distributive approach initially charging the cut price for three rounds-‐ he was forcing a contend issue choice strategy staying firm on the issue • Whilst I attempted to indicate flexibility and a cooperative integrative approach through charging the full price-‐ his contending meant I was conceding, whilst my intention was collaboration and a clear cut compromise • I adopted a tit-‐for-‐tat strategy, and became reciprocal in my actions-‐ in the double profit round I cut my prices to signal that I too could contend and show firmness • Adopted the strategy of the 4 F’s: friendly, firm, forgiving and facilitating • He then proceeded to raise prices for three rounds whilst I held firm on the cut price, then realizing his changed motivation to achieve demands to motivation to achieve agreement, I was forgiving proceeding to charge full price, so that we both mutually benefited from profits (a more cooperative approach) • Prisoners Dilemma: both teams would be mutually better of to continuously charge the full price, however due to lack of information exchange (which was prohibited), competitive tendencies and lack of trust this did not occur 4 Week 4: Indicating cooperation • • • • • Have just dismissed a worker after proper warning for misconduct (absenteeism and failure to attend a training course) after 5 years service Union official adamant that the dismissal will not stand, Management was adamant that it would-‐ hit a deadlock [sent letters to one another stating this] Management prepared to make the employee redundant rather then dismissed and pay them up to 3 weeks pay-‐ which was paid out on a recent redundancy Feel that if you concede on the dismissal point you may appear weak, and end up with the worker still in employment Union has obtained 10 weeks pay in other circumstances with other companies (2 weeks for each year of service) Findings • Both started with a contending issue strategy standing firm on their arguments and being unwilling to compromise • Some negotiations within class moved toward a creative compromise which involved collaborating and problem solving to come up with a novel solution (some suggested swaying more toward the managements redundancy offer of 3 weeks, but offering a written reference for the employee-‐ questionable in terms of ethics however) • Linking concessions: since you reduced their demand on the amount of redundancy pay, we are willing to pay a lump sum payment of $500 to assist with job relocation. • Making narrow concessions give the perception that you are close to your resistance point-‐ did this earlier on to give this perception and close the negotiation in my favour 5 Week 5: The BestBooks Negotiation The nation's greatest best-‐selling author, Paige Turner, is looking to change publishers and is entertaining the idea of signing a contract with Bestbooks. • Paige’s Agent: → Signing bonuses are so common you shouldn’t have to negotiate for them (in fact, Paige has already decided how to spend this money -‐-‐ that is why the advance is also important → Basically, Paige wants to only write 2 books for Bestbooks in order to have the freedom to leverage publishers against each other in the future. → Paige finds book promotion to be a boring, redundant task -‐-‐-‐ good books do not need promotion, and Paige is a great writer! • Best Books: → Recently authors have started to act like sports stars and have been trying to leverage publishers against each other by changing publishers frequently. Bestbooks has resigned itself to this trend and would rather sign new, high profile writers than try to sign writers to several books (of course in the unlikely event that you could sign Paige to more, that is fine)-‐ indicates an area of potential flexibility and concession making → To not give a signing bonus would be an insult (as the signing bonus is standard practice in the industry), so you prefer to resist an advance [don’t want to give both] → Finally, the strictly monetary issues (royalties, signing bonus) come straight from company profits and with the increased competitiveness in the publishing business you need to be as stingy as you can-‐ suggests pressure to pursue a contending strategy on these issues Factors in order of importance for Paige’s Agent 1. High Royalty fee 6000 2. High advance payment for next new books 6000 3. High contract signing bonus 5000 4. High number of countries to distribute 4000 5. High number of print runs 3500 6. Low number of books 3000 7. High time frame for writing each book 3000 8. Low number of promotions weeks of the book 500 Factors in order of importance for Best Books 1. Low royalties feed 6000 2. High number of countries for distribution 6000 3. Low contract signing bonus 5000 4. Low Advance for next new books 4000 5. High number of print runs for the book 3500 6. High number of weeks on promotion 3000 7. Low time frame for writing each book 3000 8. High number of books 600 • Findings • “Signing bonuses are so common you shouldn’t have to negotiate for them (in fact, Paige has already decided how to spend this money -‐-‐ that is why the advance is also important)”-‐ the desires of audiences to the negotiation or constituencies can add an additional layer of pressure. • “It is imperative that you negotiate a good deal for Bestbooks; the last senior representative was released for being too generous when signing on new authors.” Influence of constituencies • In the differentiation phase of understanding one another took an integrative approach in attempting to understand the underlying issues motivating each party by going through the points and stating our position on them (if higher or lower were preferred and why) • Identified areas of common interest in which both parties had the same opinion (e.g. both wanted a high number of countries to distribute the book and a high number of print runs)-‐ took an integrative approach to discover this and created a mutually beneficial solution on this point • Tried to avoid getting stuck in a competitive orientation of disputing each issue on a point-‐by-‐point basis and tried to negotiate fluidly, parking issues, and tying together packages of offers • Linking concessions were used: Best Books stated “Since you have reduced your demand on the royalties fee, I am willing to concede on the advance and raise that” (Best books raised the advanced payment as it was of less importance to them (4000) then the royalties fee (6000) • Packaging concessions were used, Paige’s agent stated “If you will decrease the number of books required [low importance to Best books], I will increase the weeks for promotion [something of high importance to Best Books and low priority to Paige]” • Need to consider the implementation of the agreement and the future of the parties relationship-‐ will have an ongoing agreement, thus can’t be completely value claiming and competitive ignore value creating and being collaborative as beneficial for the future relationship 6 7 Week 7 and 8: Eurotechnologies [approaches to negotiation, constituency negotiations, emotions and communication] • • • • • • • • • • Relocating the research and development team from the executive Munich offices to the more remote Wasserburg facility where a lot of the manufacturing and other R & D team work The road to the facility is poor, the facility itself is in a bad condition with no air conditioning and a poor quality cafeteria. ETI is known for its high level technical advancements and premium products Duplication of equipment due to the division even to the point of Wasserburg employees contracting to work to competitors that the R & D department could do Overhead rate is 30-‐40% higher then other competitors R & D personnel proposed a 20% salary cut which would be a 183,375 euro reduction However 6,500,000 euros was needed by management to remain competitive Possible areas of concession to ease the move for both parties: cafeteria food service, renovation of laboratory facilities, assistance in relocation, scholarly interaction, cash incentives to move Management group: As the management group for Eurotechnologies, Inc., you are interested in saving the company and you recognize that the loss of the majority of your Research and Development staff would be a crippling blow to the firm. → Want to close the Munich facility and move all the employees over to the Wasserburg plant which they own-‐ lease the Munich offices → You must close the Munich facilities in their current highly expensive form; that is an inevitable fact. → If some other form of a Munich facility is needed and cost effective, you may consider such a proposal. → If moving everyone to Wasserburg becomes the only viable plan, you are prepared to consider some of the concessions that appear below. Cost savings are a primary factor, so don't concede to do more than is absolutely necessary. → Any solution that saves the company, reduces overhead significantly, and keeps the majority of key employees on board are acceptable if your group can agree to it. Research team: 6 who sent a letter to the president → Decreased intellectual simulation in the environment-‐ have industry contacts in Munich, loss of competitive edge-‐ “essential to your individual personal growth and to the long-‐run excellence of the company” → Major concerns are about relocation of families, changing of schools, loss of social connections → Want an alternative to relocation to maintain competitiveness-‐ “You are interested in saving the company.” → Will move to Wasserburg if it is the only option, but only if management are accommodating on the aforementioned areas for concessions. Findings: • The Munich employees consider themselves “a cut above the manufacturing and technical service employees” clearly an issue of imbalance and division between the two groups • Generate novel solutions such as instituting training and team building exercises to bring together the staff of the two locations so as to increase productivity through workplace satisfaction-‐ a different means. • The research team had the stronger BATNA in that their prestige in the industry meant they could seek employment elsewhere if their needs were not met in negotiation-‐ leveraged this to their effect creating a power imbalance “Your mass defection from the firm would surely end its existence. “ • The management team had the weaker BATNA as if the agreement wasn’t reached on how to incorporate the R & D staff into the move, if they left they would lose employees critical to their differentiating value proposition as technical expertise leaders. • Separation within the constituency: suggestion that solidarity is not as firm as the research team believes as “5. Some members of the Research and Development group, particularly Pederson and Hoffmann, may not really be willing to leave the company” due to potential for career advancement and financial responsibilities. • Initially the opposing team employed the hard bargaining tactic of good cop, bad cop • Pressure in that negotiations can set a precedent for future workplace relations disputes, and overall workplace morale-‐ don’t want to favour one group of employees over others and further the division. • Emotional issue in that it involves issues regarding relocation of family members 8 9 Week 9 and 10: Negotiating a collective agreement-‐ Newton School Dispute [Employment Relations negotiations and constituency negotiaitons] Contract between the Newton School District and the Newton Teachers Association has now expired Contract was not able to be finalized before the opening day of school so the Teachers Association agreed not to pull a strike for the benefit of the community-‐ and to operate on a day-‐to-‐day basis without a contract • Decrease in enrollment and income from local taxes and state and federal aid mean that cost have increased leading to a 3.95% budgetary short if the current agreement and it’s clauses were maintained • Board wants a 3 year contract to maintain stability • Teachers association wants a 1 year contract to maintain flexibility • Already done: the Board and the Association have negotiated an in-‐principle agreement on a salary increase of 2% per annum • Board of Educations: reduce costs and avoid a strike Position ranked in order of importance: 1. Reduction in staff: wants to control the process also with authority on lay offs, however with voice mechanisms for the teachers 2. Work load: increase pupil/teacher ratio, longer work day, removal of prep time, reduction of break by 25 minutes and emergency assignments and general obligations 3. Evaluation of teachers should be a management activity, with the association only providing advisory assistance, wants content of evaluations to be confidential with little information released and unannounced visitations 4. Benefits: minimizing expenditure on accumulated sick leave, bereavement leave, civic duty leave and childbirth leave • Teacher’s association: maintain benefits secured previously Positions ranked in order of importance 1. Evaluation of teachers: want influence in the design and execution of these programs, access to the content of evaluations, opportunity to challenge 2. Reduction in staff: minimal and selective reductions, using teachers to fill admin positions and teachers on leave Also, representation in layoff decisions, maximization of forewarning to affected teachers, and a procedure permitting challenge 3. Work load: wants to keep ratio at 32:1 but willing to give concessions in some classes to exchange concessions on other priority issues. The bargaining team is willing to make such proposals in exchange for concessions on other priority issues. In general, the teachers are willing to make certain concessions on workload, provided that assignments are not made arbitrarily by the Board and that any increases are kept to a minimum and are distributed equitably 4. Benefits: preferences on accumulated sick leave, bereavement leave, civic duty and childbirth leave are flexibility and can be tied to other concessions. • • Findings: • Additional pressures of audiences to negotiation, such as community pressure groups and the parents in this case who have been putting “pressure on both the teachers and the board to keep the schools operating” can engender a sense of competitiveness → Both sides wish to “conclude an agreement to avert a strike” → This could be a point of commonality the two teams could assert in the differentiation phase • Came to a clear cut compromise over the length of the contract and met in the middle at 2 years • Teachers have a stronger BATNA in that they can call a strike need be if an agreement is not reached → “You represent 95 percent of the teachers in the Newtown system. Information available to you indicates that a majority of the membership prefers to conclude an agreement but is willing, if necessary, to engage in a strike action.” → This is a source of power in negotiaitons. • If a agreement was not reached and the teachers were to call a strike, this is not a favourable BATNA for the board of education, as further financial expenses would be incurred • Initially we were quite narrow minded and positional, working on an isolated point to point basis • Despite proceeding to work in quite a collaborative negotiation, there was a lot of negotiation over the final point of benefits including bereavement leave and civic duty leave → Both were of little value to both party but demonstrated the tendency for parties to want to maintain face on the final point of debate and secure a concession. • Negotiation doesn’t occur in a vacuum: → “However, it has certain demands that it feels are justified and reasonable in light of the increased cost of living and recent gains received by Teachers' Associations in neighboring communities.” → “In light of the fact that teachers in most surrounding communities receive payment for unused sick leave upon severance, the Newtown membership feels it too is entitled to such benefits. → • Differing order of priorities-‐ would be revealed if information sharing was encouraged through a interest based collaborative approach to negotiation-‐ where underlying interests and motivations between behaviour are revealed 10 • • “Using teachers to fill administrative positions that are currently vacant and using laid-‐off teachers to fill vacancies created by teachers on both long and short-‐term leave.” – could be a creative solution that generates benefit for both parties through affording the teachers job security and reducing hiring and recruitment costs for the board “The Board has been informed privately that if it cannot succeed in preventing a strike and finalizing a contract at minimal cost, the community may withdraw its support of the Board and ask for your resignation.” → Can lead to firmness at the bargaining table, not only as a tactic, but also in order to avoid loss of face with the constituents 11
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