Managing ConflictsEssay Preview: Managing ConflictsReport this essayScenario: Agency Issues in NegotiationsAl and Bob entered the third meeting with some confidence. As the representatives for Symbiot Services (SS), they had hammered out some detailed language with the Department of Natural Resources (DNR) that would meet all of the prior objections raised during negotiations by the agency, and would still assure SS a reasonable profit for the services that SS would provide.
Al had been the primary negotiator for SS. Bob was now entering the negotiations to provide the final legal fine points to the agreement in principle, and to thereafter give the legal departmentÐŽ¦s blessing to the agreement. On the other side of the table, Rhonda and Sarah unpacked their notes meticulously. Rhonda, DNRÐŽ¦s primary negotiator, had worked with Al to identify all the issues raised by the respective organizations and craft an agreement that weaved together all the parts into an effective agreement. Sarah had joined Rhonda for this meeting to sign off for the States Attorney Office, putting the legal seal of approval on what had been written.
While Sarah and Bob unloaded their papers and books, Al and Rhonda chatted about how difficult it had been to identify all the issues raised at their respective home offices, then figure out how things could be addressed in a way agreeable to both sides, and then reduce the entire wall of post-it notes, taped copies of e-mails, and highlighted letters to a readable document. Because they are the talking links between their organizations, Al and Rhonda had to almost personally bridge the gaps between the organizations, and often it seemed they were a team of their own, arguing with the two ÐŽ§home teams.ÐŽÐ
The last sticking point had been the issue of how much SS would discount its regular charges for services. DNR was a very big customer and expected to get the bulk discount for services. The DNR had wanted a 50% reduction from the regular rate; SS had offered 10%, and they had finally settled on a 25% rate reduction for this contract, in the interest of providing a break to taxpayers. Both Al and Rhonda were careful to obtain e-mailed or hard copy approval of the 25% rate reduction from their bosses, because neither had the authority to set unique rates unilaterally.
Sarah, representing DNR, brought the meeting to focus by reciting the issues that had been resolved, and asked SS if it had any final issues to resolve before declaring the final document completed. When SS replied that all was in proper order, Sarah dropped the bomb: She could not certify the agreement as okay from the State Attorney Office point of view unless and until SS agreed to a 33% rate reduction, not a 25%. Sarah didnÐŽ¦t offer much explanation for this abrupt change, only repeating that anything less than a 33% rate reduction was a deal breaker.
Al looked at Rhonda, and Rhonda shrugged her shoulders, indicating this change was news to her. Bob commented that this was highly inappropriate, because the substantive matters had been signed off by the negotiators, and this meeting was not to plow old ground but to verify that there were no legal pitfalls that the negotiators didnÐŽ¦t know about. Sarah repeated her 33% statement, and suggested that Al and Bob use the adjoining office to call their home office and get the okay for the change so that everyone could initial off on the agreement and send it to the respective CEOs for execution.
An Overview of Agency Law in NegotiationThere are three primary assurances that a negotiator should confirm relating to agency law in the negotiations setting. First, it is very important that the other party know that the negotiator is making this offer as an agent of some other party or organization that will actually pay for the products/services so the negotiator doesnt have to personally pay for the stuff. Second, it is important that the negotiator have proof that he or she has the authority to act as an agent, and to what extent and scope. Finally, it is significant that the acts of the agent or the acts of others can create vicarious liability for the organization that the agent represents.
Notice of AgencyThis is usually understood to an extent, but there are two dimensions that are not frequently clarified: limits and scope.When a corporate officer or executive sits down at the negotiation table with a supplier, customer, union, government regulator, or other stakeholder, that stakeholder understands that the officer or executive is representing the organization, not his or her personal bank account. What is not so clearly understood is the scope and limits of the representation. If the meeting is called to determine (negotiate) what the supplier will charge to service the Ohio offices, for example, then the implied scope is just thatÐŽXcost of providing services in Ohio. The scope might be further clarified as relating to an annual contract, or to services during a special time period, like the Super Bowl. Finally, the limit of negotiation is related to the negotiation itselfÐŽXhow much, how long, how approved. There may be dollar limits for the final contract, or some factor may limit the time that can be spent in negotiation, and, finally, there may be definite limits on who will finally approve and sign the agreement that is being negotiated (the one who can turn the negotiation into a contract).
There are many aspects of scope and limit that deserve discussion at the outset of negotiation, but two that should be discussed carefully involve what can and cannot be agreed to, and who will have to finally approve the agreement to make it official.
Discussion of the first itemÐŽXwhat can and cannot be agreed to by the negotiatorÐŽXserves to improve the efficiency of the negotiation process. For example, if the parties are present to negotiate what an engineering firm will do to develop a new process for a client, the engineering firmÐŽ¦s negotiator clearly needs to explain what canÐŽ¦t be negotiated. If the firm absolutely will not construct a pilot (also known as a prototype or first article test) at its own expense, it should just say so at the outset. Note that this is totally different from a situation in which the firm will do something, but has a price limit. If the firm is willing to pay up to $2 million for a prototype, itÐŽ¦s not a smart thing to tell that to the other party, because they now know how much to demand. The amount one is willing to pay for something is a matter of degree, not a ÐŽ§yes or noÐŽÐ situation. Disclose ÐŽ§yes or noÐŽÐ situations up front to get them off the table. DonÐŽ¦t use those items
1149. “One may expect that if the other side is very strong in the dispute, that there is no real advantage whatsoever to be gained from one side to another, the negotiations will turn on whether or not they can put their negotiation position on the table.” 1, 4, 8, 20. If, however, these negotiations are won in this way, one also expects that the negotiators will never negotiate a bargain which is a total failure on one’s part. If, for example, the negotiators cannot keep a deal open because the negotiation is too long, or because they fail to reach a deal which fits their own agreement, the dispute will be resolved in a way that is fair. This can be a sign that we, as a trade union, do not want to lose what we have. For example, if the United States Government makes a commitment that the parties would trade more than they ever have, it then will only be necessary to accept that at a point in time when we could be far cheaper than we are. However, if the U.S. Government does not provide a bargain which, if it makes its offer and does not deliver on it, will not be acceptable, then it has a much worse case in itself.
1150. Regarding a “finite bargaining clause:” “If there is any doubt about the agreement or the duration of negotiations, the negotiation can decide to terminate a term or extend a term which remains in place until at least 15 days after the end of the term if a final agreement is reached.” §9 of the Constitution of the United States of America Agreement and The Constitution and the Joint Agreements Act of 1993 (Act).
1151. “It is for the United States Government to decide whether to retain in force a temporary, partial, or final agreement with Japan. If the United States Government declines to maintain a permanent agreement to continue negotiations with Japan, the United States Government may terminate a term of the agreement of that party. If after a successful negotiated date the United States Government withdraws from the negotiation, then those terms in effect will terminate. If this happens, if the United States Government is refused to renew a contract with Japan, with or without notice, that government will be unable simply to stop such negotiations. (2) A termination in force of the treaty is not a declaration against or acceptance of the United States Government’s termination of a contract; it only declares that the United States Government will not continue negotiations with Japan. (3) Any government who asserts that a treaty has been terminated unilaterally is necessarily saying that the termination was not voluntary.
1152. “The United States can terminate a contract with another government if it expresses in writing, by a legal instrument, that it is of the view that the particular governmental activity affecting its own members is more important than the public welfare and the welfare of its members. To do this we have to act within the statutory authority of that Government. In this view that is, that another government may terminate a contract by giving it authority to pursue the matters it has established for itself, or that its agents have had the authority to engage in activities which would otherwise be illegal, illegal under the applicable law.” §10 of the Constitution of the United States of America Agreement and The Constitution and the Joint Agreements Act of 1993 (Act).
1153. “In case of an offer of a further termination of agreements, the United States Government may terminate a contract to a party in accordance with a standard agreed upon by the parties where there is a question of principle.” §10 of the Constitution of the