Diploma in Construction Project Management Negotiation Skills Negotiation Skills Case Study Negotiation Skills Case Study Negotiation Skills - Case Study Ava is a project manager working on a project for a large corporation. She has a number of teams she is currently managing. One team is based in Dublin, Ireland, and the other is based in New Delhi, India. The Dublin team is looking after technical writing for the project while the New Delhi team are programmers. The project is quite complex and both teams must work closely together to ensure its success. Ava has noticed however that the required communication procedures are not being followed. Some team members in Dublin are talking directly to team members in New Delhi. This has caused some issues. Ava receives an email from a representative of the team in New Delhi saying that they have heard that working conditions (hours and pay) are much better in Dublin than in New Delhi. In Dublin, programmers in similar position would only work 7 hours a day compared to their 9 hour days, breaks are longer and the rate of pay is nearly three times what they are getting paid. This has started to cause problems as the programmers have said that they wish to discuss their working conditions and rates of pay. If they do not get what they want, they may decide to withdraw their services. Since the project is at a crucial point Ava is in a difficult position. The first thing she decides to do is hold an emergency meeting with management to make them aware of the issues. During this meeting, she puts forward what has happened and why. She outlines what the programmers have said and what the overall effect this would have on the project. Having reviewed the contracts of all employees she also notes that there is a clause in the contract of the staff based in Dublin that outlines the communication structure and specifically that staff from both teams should not communicate directly but must follow the communication path outlined. Fitzwilliam Institute Group 2 Negotiation Skills Case Study It is apparent that there has been a breach of contract by one or more staff; however, one issue that arises is that the programmers in New Delhi are not part of the company, they are a team of contractors and were employed under a different contract which Ava was not aware of until now. The team is one of the best programmers available and had been booked a number of months in advance to ensure their availability. Ava is faced with the following challenges: Challenge Severity Action Team in India withdrawing services High, could disrupt project Meeting to re-negotiate terms Breach of contract by employee in Dublin Medium, but needs to be addressed Disciplinary meeting to discuss this and the implications of it Cost of negotiation If not tackled could be high Devise a plan to minimise expenditure but ensure that other party in India are happy and will continue working Review of contracts post project At the moment not a priority but needs to be done Post project review is essential Fitzwilliam Institute Group 3 Negotiation Skills Case Study Since the issue in India needs to be fixed quickly, Ava tackles this first. It is necessary to resolve this as soon as possible as there are two possible outcomes - both will involve expenditure. The first is that terms are re-negotiated and the second is that the Indians will withdraw their services and leave the company in a difficult situation. Ava identifies that the Indian team have a large degree of leverage since they could withdraw their services. If they do this they know that the company will have a project half completed and this will cause them a major headache; however Ava also knows that as a contracting team, their next job depends on the feedback from their previous client. Therefore the question is who has more leverage - this is where negotiation will take place. One of Ava's assistants is asked to research hourly rates of pay in India for programmers who would be working within a company. Also working hours, breaks etc. are to be researched. She wants to enter negotiations with all the necessary information to ensure she can put together a water tight case. Logistically, Ava and her team cannot justify travelling out to India, therefore they set up a video conference meeting to deal with the issue. They send out a meeting agenda. This includes the format of the meeting, for example each party will have 15 minutes to put forward their case. After each party has put forward their case questions and negotiations will take place. From the research her assistant undertook, Ava knows that the average programmer in India gets paid $15 per hour in a company, and a very experienced programmer who is working for him/herself can ask for $40 an hour. Programmers in Dublin would charge $100 an hour. The current programming team in India are on $22 an hour, which Ava believes is a good compromise. She does not want to have to pay them more than $35 an hour; this is the maximum she will pay. The best outcome for Ava is to increase the hourly rate to $26 an hour and offer a bonus if the project is completed on time. She will also ensure that the team only work 7 hours a day instead of 9. If the project is completed successfully she will also agree to use this team again, and increase their hourly rate to $30 for subsequent projects. Fitzwilliam Institute Group 4 Negotiation Skills Case Study She will present a document which will demonstrate to the team that this is a fair settlement, as both parties are going to reach a solution. Within this document she will demonstrate that a programmer in Dublin gets paid a higher hourly rate however the cost of living is more, therefore the team in India will in fact be better off than their Irish counterpart! Since she has up to date information regarding the Indian economy and rates of pay it will be difficult to dispute this fact. Since the project is at a critical point, she is worried that the team will use that to leverage the negotiations, although she does know that they understand the importance of the relationship between her company and themselves. If they were to withdraw their services now this would cause the programming team a lot of problems in the future. Ava discusses this with her management team and they agree that the worst-case-scenario is that they end up paying $35 per hour to the team. However, if they agree to this amount, there will be no bonus if they complete the project on time. The second negotiation process is with the team member in Dublin. Because the team member breached the communication protocol they caused this issue which will now cost the company time and money. Ava requests that the IT department examines emails sent and received from all team members in Dublin to those in India. Prior to doing this, she checks with the legal department to ensure that there is no legal issue with doing this - she finds that it is in their contract that all emails are the property of the company and can be examined as needed. She discovers that one of the team members, Phil, had been communicating with Raj, the team leader in India, telling him that they were being \"used\" and \"underpaid\" which was \"typical of this company\". Fitzwilliam Institute Group 5 Negotiation Skills Case Study It's evident that Phil has issues with the company, and has now caused a lot of problems. Ava calls a meeting with Phil, advising him that it is a disciplinary meeting and that he is entitled to representation. Looking back through the history of Phil's employment she notes that he is not the easiest of employees, and HR has had problems with him. Therefore she does not see that this meeting needs to have a mutually acceptable outcome. HR has told her that if Phil needs to be dismissed they will stand over this decision. He is not a key member of the team and can be replaced. Ava decides that she will not reveal to Phil the exact nature of the meeting, only that it is being called due to a breach in his contract that was discovered. Prior to the meeting Ava receives copies of Phil's contract, highlighting the areas relating to communication with other teams etc, HR sends reports from Phil from other managers. It transpires that this is his second disciplinary meeting, meaning that he understands that he could be fired at this meeting. Again this gives Ava leverage at this meeting, as she has all the evidence. Fitzwilliam Institute Group 6 Negotiation Skills Case Study Lessons Learned Ava realised that two issues had occurred - that of the team leader looking for more money but also that of a breach in contract of the staff member in Dublin. Each one of these situations required a different form of negotiation. Ava realised that the team in India were important to the success of the project and if they pulled out of the project now this could be disastrous. The team in India know this and can use this as leverage; however as contractors they also know they are only as good as their last job. Ava's company are very large and the team know that if there is bad publicity from her company this could affect their chances of getting contracts in the future, thus each side has a degree of leverage, but both parties know that they want to continue the existing relationship so it has to be a win-win situation for each party. Phil on the other hand has breached his contract, and is not a key member of the team, thus Ava takes a different approach to this situation. She has the leverage here, both because of the contact and the fact that Phil is not a key member of the team. She thus enters into distributive negotiations in this instance. Key Point to Note The identification of different negotiation strategies is essential; however being prepared for the meeting is also very important to ensure that you are fully prepared to defend your case. In the case study above, Ava conducted the research on hourly rates for contractors in India so she knew what she was talking about. In the case of Phil she also checked about the legality of checking team member's emails - if she had not done this and it was not legal, she could have gotten into a very tricky situation. Be prepared for your negotiations to ensure the best outcome. Fitzwilliam Institute Group 7