Problem: Negotiation Strategy
Brief:
Mr. James Osterberg:
Mr. James Osterberg, the Chief of Production of your gentlemen's luxury footwear company, plans to discuss an increase in salary with the company where he works. He is an outstanding specialist in luxury shoe manufacture. It is a close-knit industry, and the company is aware that a competitor is trying to sign him in for a much higher income.
Mr Osterberg is 45, he just got divorced. He has to pay 750 Euro in children support for each of his three children Peter (21), Anne-Mary (14) and John (16) - all of whom are still at school/university. This amount is due until the end of their education, but only until they reach age 25. Mr. Osterberg lives alone in an apartment that costs him 1200 Euro a month. His monthly wages amount to 4,400 Euro after tax. He is finding it very difficult to make ends meet.
Apart from the economic aspects of his life at present, he also has a joint custody agreement, which means that he is interested in adjusting his working hours in order to be able to spend more time with his children the weeks they are with him. He needs more money but is also interested in having the option to work in a more flexible manner.
He was not actively looking for a new job, but the interest shown in him by other companies has made him realise that he should first try to improve his present employment situation and before deciding whether to leave.
The company:
A market leader for over 30 years, as custom tastes have changed the company is now confronted with new competitors. Over recent years it has found it difficult to find young trainees willing to spend the necessary time to learn the shoe making craft. It is chronically understaffed and customers are starting to complain about delivery delays. James Osterberg is one of your most productive employees and you often have to rely on him to cover problems in production and delivery.
Moreover, the recent re-organisation of your company constrains you to enforce a drastic control of payroll expenses - and you have indeed managed to freeze salaries in the last round of negotiations with the union. According to this agreement, you are committed to treating all employees equally, i.e. you cannot accept any exceptions in salary matters. You are, however, able to adjust hours and if the company is able to get the new contract presently being negotiated, there is the possibility of bonuses in the near future. James Osterberg is a key member of the organisation and the company would like to avoid losing him.
Based on the information provided answer the following questions:
• If you were Mr. James Osterberg what would your BATNA be and how could you use it? Why is it important to have a BATNA prior to negotiating?
• From a purely distributive perspective, what are the "pieces of the pie" in this negotiation?