You will be Terry for this simulation. Terry is a gender neutral Anglo name so you can assume your own personal pronouns (might be spelled Terri).

Please do not share your confidential information with your partner. They will be sent the same "background" information and different confidential information.

Hope you have fun with this simulation!

Develop a WIN-WIN approach script using a collaborative mode negotiation for the simulation.

-------------------------- CHIPTECH

Confidential Instructions for Terry Austin, Head of Human Resources You are the head of human resources at Chiptech. In the past decade, Chiptech has grown from a small manufacturer of computer chips to a company that markets a variety of well-regarded electronic products for business and personal use. It currently employs 15,000 people and enjoys gross revenues in the hundreds of millions. The company's income has continued to grow in recent years at an average of 12 percent annually, but costs have grown at a corresponding pace, so earnings have been disappointingly flat. Recently, you have been riding an emotional rollercoaster. A month ago, you won apparent approval for a sweeping reorganization of human resources (HR) services at the company. You are convinced that the planned changes will significantly increase the productivity of the workforce and, as a result, be widely recognized as a personal triumph for you. Your outlook plummeted, however, when you received a memorandum from CFO Chris Brown one week later. In an effort to revive the company's sluggish profitability, Brown has launched the budgeting process for the coming year with a stern request for proposals from all departments: "I will work closely with you to determine how we can make more efficient use of departmental resources. To expedite our discussions, I expect that each of you will develop a hard-headed plan. Under no circumstances will I entertain proposals for an increase of more than five percent over the current budget; the average increase will be considerably less." Not long ago, Chiptech's president started to push for rigorous cost reductions, announcing, "We must learn to be more productive with leaner resources." Brown is obviously carrying out the mandate with a zeal that is consistent with a reputation as being one of the toughest people in senior management. There is no way that you can implement your planned reorganization under that five percent cap. If that ceiling holds, the initiative is dead. Worse still, you fear that you will be expected to deliver the benefits of the reorganization without having sufficient resources to carry it out. You understand Chiptech's need to control costs, but you believe that the HR reorganization plan is the most promising means to that end. Specifically, under the proposal many HR services (with the exception of traditional administrative functions like payroll) would be decentralized and expanded. This plan was inspired by the success of Cellnet, a division that Chiptech acquired several years ago. Cellnet has used a partnership approach in which HR people work closely with managers right down to line operations. They help managers organize their staffs more efficiently, provide skills training, and promote more effective collaboration. Cellnet has been the most profitable division in the company, a fact that seems indisputably related to its higher employee productivity. Cellnet has far less absenteeism, less turnover, and fewer grievances than do other Chiptech divisions, even though their operations are quite similar. Given Cellnet's success story, and despite Brown's unambiguous mandate, you submitted a budget proposal seeking a 30 percent increase in personnel costs. For the current year, HR personnel accounted for approximately $7.5 million in salary and benefits. Your requested increase would amount to well over $2 million. Although this is a substantial amount, you had initially figured that the plan would cost significantly more, but you pared the budget to the bone after receiving Brown's directive. Within Cellnet, the ratio of HR personnel to total staff is 1:66, while in the rest of the company the proportion is closer to 1:100. Considerable hiring is required to implement the new HR plan, as well as some promotions. At least two new senior management positions will have to be created to help coordinate this new system. These actions will bring the company average much closer to the Cellnet standard, but still would not equal it. On the eve of the meeting with Brown about the budget, you now feel pangs of regret about so blatantly disregarding the CFO's five percent cap, even though you carefully documented the numbers. In hindsight, you may have drawn false comfort from the fact that the office of the president approved the HR reorganization plan in principle. In truth, however, that was a very preliminary endorsement of the concept that the rest of the company ought to learn from Cellnet's successful HR partnering approach. That approval did not include any explicit budget authorization. On the other hand, you personally feel that senior management should have realized that Cellnet had proved the adage that sometimes you have to spend money to save money. How could they expect you to mimic the Cellnet program without having equivalent resources? You are about to meet with Chris Brown to resolve this budget problem. You were tempted to ask Randy Smith, senior vice president for strategic resources (to whom you report), to take your place and advocate for your proposal, but you know the plan far better than Smith. And the last thing you want is to have others slash your resources while at the same time expanding your responsibilities. Endeavor therefore to find solutions that are consistent with your own interests, as well as those of Chiptech.