In line with the new restructuring plans for the Spanish subsidiary, the head-office in Europe had ordered the Spanish company to offer early retirement to employees aged 55 or older. This amounted to a group of 25 people. Some had been working in the company since the age of 15. The employees who accepted the early retirement offer would receive an enhanced package: 100% of their last salary plus annual increases higher than the cost of inflation, an improved medical package, etc. The company was surprised when the “more-than-generous” offer was rejected out-of-hand by the employees and the union representatives. Interestingly, the members of the HR Negotiating team had attended a “Principled Negotiation” training course some months prior to these negotiations. After various meetings the negotaition became blocked and we were called in as mediation specialists. Upon investigating the interests of both parts we discover that the company considered their interest to be “That the employees accept the offer” and the perceived interest of the employees to be “We want to keep working”. The company had not spoken of interests to either the employees or the union representatives at any point. Upon deeper investigation we discovered a whole range of interests on both sides that needed to be covered if the negotiations were to reach a successful outcome.
The factory is located in a small village in Catalunya. It is, and always has been, the largest employer in the area and currently has a factory work force of around 400 people who work a five day week with three shifts per day. In addition, there are around 90 people involved in administration, sales, marketing, logistics, etc. Any industrial problems in the factory would affect the whole village and the local economy. The Spanish subsidiary had no choice about the planned early retirements – the plan had to be implemented! Labour relations up to this point had varied over the years from direct confrontation to total acquiescence – depending on the relationship between the HR Director & the union negotiators, For the past few years the relationship had generally been “good”. The company could have resorted to legal means to enforce the early retirements (and had been advised to follow this line but the company lawyers!): However, the HR Director chose not to do so in order to preserve and, if possible, improve company / union relations.
Interests of the multinational biscuit manufacturing company.
1. Ensure that the orders from head-office were carried out properly, promptly & efficiently.
2. Arrive at a negotiated agreement that was a good outcome for all concerned parties.
3. Avoid, if at all possible, a legal solution to the problem.
4. Maintain “social peace” within the company & the village.
5. Follow the company’s often stated Human Relations policy of consultation and cooperation with employees and the unions.
6. Avoid setting a negative precedent with the outcome of this negotiation.
7. Create a positive precedent for use in this company and other members of the group in Spain.
8. Create a positive climate for future negotiations with employees and the unions.
9. Covertly teach the members of the union negotiation team how to use “Principled Negotiation” skills and techniques to achieve better outcomes in negotiations.
Interests of the 25 long-time employees of the company.
1. Although the men dearly loved their wives and families, the idea of spending 7 days a week, 365 days per year with them was consider terrible. One of the principle interests of the men was that they had somewhere to go 5 days a week for 8 – 9 hours..
2. All of the men considered themselves “Heads of their families”.with all of the respect that the post carried. In Catalunya, men work! If, at 55 years of age, a man loses his job, it implies loss of status. And equates to “useless”, incapable, “on-the-scrapheap”, etc. Another principal interest was the need to maintain their own self respect and that of their families and other members of the community.
3. The only place for retire people to go in the village was a “Club for Pensioners”. The perception of the majority of the people in the village was that it was “Halfway to the cemetery”. The people who attended the club were basically waiting to die! Another key interest of the employees was to avoid at all cost this club.
4. All of the men were in excellent physical health. For them it was a primary interest that they were able to do something productive everyday which required the use of their bodies and minds.
Interests of the Leader of the Union negotiation team.
1. Show his skill in negotiation to the company, the employees and to the other union officers.
2. Obtain the best outcome in this, his first negotiation with the company.
3. Maintain, if possible, the cordial relations with the HR dept & the company.
4. Use this and future negotiations as “stepping stones” to a greater personal future.
1. Maintain a good working relationship with the other parties.
2. Obtain a negotiated agreement.
How the biscuit company used “dovetailing” to achieve the desired results:
1. The company converted an old store room in the factory into a “club” for the retirees. The placed card tables, a T.V., a coffee machine, telephone, etc., in the room and arranged for it to be open whenever the men wanted to use it. This covered the retiree’s interests to have a place to go to “escape their wives and families” other than the “Club for Pensioners”in the town.
2. Since the company offered guided tours of it’s installations to school children, old age pensioners, and other interested parties. The retirees were asked to act as assistants to the usual tour guide.
This offer was accepted as it covered their interests of having programmed, meaningful tasks to do.
3. At the employees request, the company also provided all the help necessary to start a cooperative selling their products which was based initially in the club room but rapidly expanded to another office within the factory.
1. The employees accepted the early retirement proposals of the company because their main interests were clearly covered.
2. The company covered its’ interest to implement the restructuring plan prepared by the head office.
3. The negotiators were seen to have negotiated an excellent agreement that provided a win/win outcome for all the concerned parties.
4. The relationship between Human Resources, The Union & the employees was reinforced and improved.
5. The union negotiators asked the company for a training course on “Principled Negotiation” for all the union representatives in the company.
My objective is presenting this case to you all is to show fellow negotiators that we need to “Think outside of the box” in all of our negotiations and use our individual or team creativity to ensure that we get the best outcomes possible for all the parties involved.
The information in this case study is real. Some details have been changed to protect the confidentility & identities of the parties involved.
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(c) Brownlee & Associates, S.L., 1999. This case study may not be copied, reprinted or used without the prior written permission of Brownlee & Associates, S.L.