group project negotiation.pdf
TRANSCRIPT
7/23/2019 Group project Negotiation.pdf
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Mechanics Corporation
‘the biggest reorganization’
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Introduction & Setting the Scene 1/2Case
Cross-cultural negotiation between a US company and the employees of the Swiss branch regarding a
restructuring plan that will eliminate 90% of employees’ facilities.Company
Mechanics Corporation is a US headquartered company manufacturing machine tools for thepackaging industry. The average selling price of their standard product is around 500,000 CHF. TheSwiss branch counts 500 employees for 3 BUSD total sales, and worldwide the corporation counts35.000 employees with a total sale of 25 BUSD.
Economic environment
The packaging industry is getting into a downturn in 2012. The industry is cyclical and thisphenomenon is well known for the corporation, but the level of the this downturn is reaching records.No new orders are coming and new shipments are not expected to occur before the year 2012. Working environment
Tensions are increasing as the rumors of a restructuring are being heard. Medias already talk aboutcompetitors based in Europe who are closing down factories due to the rapid decline. Most of thefactory workers are not occupied at work. A first plan of “Reduced Working Hours” had already been
implemented several months before, so that regular factory staff do not work more than 50% ofnormal hours.
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Announcement
July 1st 2012, all the employees of the company are called to an assembly. The intent of restructuring is
announced and all employees of the branch will be impacted either by a loss of their job, or by aredefinition of their job description. The management announces that they are open to discussion andthat they are willing to open the negotiation with the employees, represented by their representatives.
Parties going to be involved in the negotiation:
Employees of Mechanics Industries - 500 employees.
Employee Representatives - 10 persons (our client): The representatives are the persons whonegotiate directly on the table with the management, and they are representing the interests of all theemployees.
Trade Union - 4 persons: they are the advisors to the employees and their representatives.
Local US management* (expats based in Switzerland)
Corporate management (based in the USA) Local Government – economic branch of the state: the final agreement must be affirmed by them.
* The employee representatives and the Local US management will be
the only parties to take place in the face to face negotiation.
Introduction & Setting the Scene 2/2
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Negotiation Preparation: Culture*
Swiss / French Local Employees• Harmony vs. Constraint: consensus for
Swiss, strikes for French.
• Hierarchy: need for instructions and
importance of status & titles
• Communication: respect to the older /senior for Swiss and importance of non-
verbal signs for French
• Swiss are competitive with outside world
but cooperative inside.
• Swiss:
single focus/fixed /past-future:efficient, careful planning, caring aboutlong-term and sustainability. French have
a relaxed attitude towards time.
• Swiss: conservative, process oriented
American Management• Control: everything to be planned
• Equality: little micromanagement, flat
management structures
• Address issues openly, face conflictdirectly. Informal communication style.
• Compete for personal remuneration and
organizational rewards
• Single foc
us/fixed /present: tend to focus
on short-term results and one task at atime
• Flexibility and freedom to innovate,adaptability, not being constrained
Take advantage of the US time sensitivity: promise quick close if our conditions are
accepted, threaten to delay the process if negotiation isn’t going in the right way
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Negotiation Preparation: Information to learn
What’s wrong with the industry? Why this company? Why us? Why now?
How many of us “at risk”? What is the timeline and notice period ?
What are the selection criteria? Who is the decision maker? Has it happened before?
What specific role(s) and/or function(s),to keep? How can we save more jobs?
What are legal rights of Swiss employees? What negotiation leverage do I have?
What are the payment criteria (service profile, level, function)?
What other remedies are available?
Extras package: keeping benefits as health insurance / school for kids / housing
Outplacement agency (CV review, interview practice)
Trainings, re-education, MBA at Thunderbird
Yearly bonus and other financial payments (shares, dividends) What support in finding new job? Networking, job certificates and references
What is the total company’s budget for this reorganization?
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Negotiation Preparation:Relationships - How it is Now
More specifically :
No clarity regarding which jobs will be saved, generatingdoubts and rumors.
High level of secrecy : smaller number of employees
involved in strategic decisions Timeline for redundancies finally communicated after
months of speculations
General slow-down in the industry further feedingemployee’s anxiety (I.E Daily news of the issue are not
clear) Employees are still suspicious on role and genuine
interest of Labor Union and Employee Representatives.
Employees are resentful towards Local Management
Employee Representatives and Labor Union are united
• General negative atmosphere of anxiety and stress for the past 6 months.
• Uncertainty and lack of transparency regarding reorganization
• Lack of trust among all parties
Local
Management
Employees Employee
Represent.
Limited Trust
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Negotiation Preparation:Relationships – Where we want it to be
More specifically:
General Respect of employees (treat them like individual humans not numbers)from all
parties Employees’ Representatives raise priorities with employees and commits to defend them
Local Management commits that employees’ interests will be taken into consideration
Local Management commits to all employees that they will be treated equally
Granting of good compensation packages : Responsibility from Local Management vis a
vis employees Reduce level of rumors generated by employees with increased trust in employee
representatives
• More transparency and trust between all parties
•Reach a point where Employees have the feeling they were heard
• Increase and Prove Accountability of Employee representatives
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Negotiation Preparation: Closing the GAP
Decrease uncertainty and transparency:
Give Feedback to Employees of the Progress of negotiation
Increase Accountability:
Involve and consult employees in decisions when options arise
Leverage on Trade Unions’ experience
Increase Trust :
When Milestone is reach have local management communicate it toall employees
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Negotiation Preparation: Interests - Employees
• Job cuts due to relocation of operations to China, Italy, India , and Malaysia
– Of 500 jobs, 425 layoffs are anticipated. Employees want to reduce the number of layoffs.
• Content of Compensation packages
– Payment of full salaries for two years.
– Job placement services.
– Job training assistance for transition to new jobs.
• Timing of layoffs – Slow the process down. The longer they are employed, the better
• Allowances for special cases such as: those close to retirement. single parents,
couples working for the same company.
• Structure of the new organization – Employees remaining with the organization in Switzerland need assurances of their role in
the restructured organization. (General manager, directors, goals, projects, future?)
– Use the uncertainty for Engineers who will be staying on to buy time in the negotiation forthe benefit of other employees.
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Negotiation Preparation: Interests - Management
• Job cuts:
– Cut majority positions to reduce expense and financial loss.
• Timing of Layoffs
– Bring operations to a close as soon as possible since it is losing money.
– Transfer of knowledge must take place during the restructuring so the timing is “ASAP.”
– Management believes 6 months is reasonable.
• Content of Compensation packages – Respect the restructuring budget given by the corporation - can be flexible within $40M.
– Ideally, under-utilize the budget given.
– Ensure the government will give final approval with no complications. (“fair enough” )
• Allowance for special cases:
– Other than early retirement packages, there is no allowance for special cases.
• Structure of the new organization – It is not an issue for employees being laid off. Management will discuss the on-going
structure of the organization with the engineers who will agree to stay.
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Negotiation Preparation: Goals Settings
Issues Comments Offers & Options (from employees perspective)
Job cuts 425 cuts out of 500. 75
employees will be part ofthe remaining structure.
Save the maximum of jobs on site in the R&D activities
and relocate people in different roles within HQ or otheroperations worldwide.
Compensationpackage
Should cover the loss ofrevenue over theunemployed period of
employees.
Adapt and/or tailor compensation package according to:age, years of experience in the company, grade/title/position, family situation (kids & partner working or not).
Timing of layoffs
(closure ofoperation in CH)
Management mentioned
a spread over 24 months.
Negotiate a delay in layoffs to buy time to look for a newposition vs. management’s expectation which is early
closure to save costs.
Specific cases Retirement, couples working together in the
company.
Compensation package to be looked at separately (seesection on compensation package).
Structure of neworganization
General manager,directors, goals, projects,
future?
What are the structures and/or positions? How will vacancies be filled and what are the requirements and/or
selection criteria's? How many roles will be newly created?How will the remaining structure operate?
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Negotiation Preparation: Value Creating Options
• Voluntary leaves
– Immediate savings for company
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Negotiation Preparation: BATNAEmployees Management
BATNAs - Save some jobs (e.g. retain engineers) by
explaining the necessity in order to support
the R&D center post restructuring andprovide a descent leave package and re-employment aid;
- Identify opportunities within HQ or new
product development in Switzerland
Quick resolution of issues and obtain agreement
from employees representative on terms of
restructuring based on defined packages (bothmonetary and non-monetary) that’ll compensate for
job losses due to closure of operations.
Ways to
improveBATNAs
- Leverage support from trade union to
understand employees’ rights;- Facilitate knowledge and/or ideas sharing
amongst employees (whether they are
made redundant or not) and leverage the
information to our advantage
N/A
Ways to
test and/or to worsenBATNAs
N/A - Threaten to strike and/or not to train & transfer
know how to China, India, Italy & Malaysia- Find another job quickly and leave company prior
to closure of operations;
- Employ passive aggressive behavior (e.g. be
uncooperative, unproductive, inefficient and deliver
poor quality of work) during transition period.
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Negotiation Preparation: Other Alternatives
• Improvement of employees leverage in the negotiation & sharing this
leverage with management – Make management aware and/or realize that talent, efficiency and transfer of know how
during the transition period is critical to the business and that an enhanced compensationpackage will be required to retain and/or to keep key employees motivated for them to want to stay to support the company until the end.
–
Make the management understand that employees have the control of the resources, andthat they could use this power if they are not satisfied with the negotiation
• Alternatives for the employee in case of negotiation failure – If no opportunities within HQ, proactively look for a new job;
– In case of unfavorable negotiations, leverage the state’s guaranteed unemployment
benefits (70-80% of salary for maximum period of 2 years) until a new job is found.
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Milestones of NegotiationStep Date Management Offer Employees Offers Comments
1 July 10th
2012
*10 MUSD + 75 jobs
saved
80 MUSD + 200 jobs
2 July 12th2012
13 MUSD + 100 jobs 30 MUSD + 150 jobs
3 July 15th2012
13 MUSD + 100 jobs 30 MUSD + 150 jobs
4 July 17th2012
13 MUSD + 100 jobs 30 MUSD + 100 jobs On view of the negotiationprocess blocked, employee rep.organize employee assembly and vote. The strike is considered asan option.
5 July 18th2012
20 MUSD + 100 jobs 30 MUSD + 100 jobs Management is made aware ofthe issue. They organize ameeting with all employees.
6 July 18th2012
20 MUSD + 100 jobs Employees vote ACCEPTANCE
* Total envelope
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Negotiation Review: De-brief & Conclusions
• Baris, can you please highlight a couple of personal learnings
from this process• Are we happy with outcome of negotiation?
• What have we learned during this process (reflections fromclass concepts, etc)?
• Everyone will comment / add based on your key points
• THANK YOU!
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THANK YOU
Baris AlevJason Yap
Irina
Pamina
Sharon Saxelby