When hiring technical consultants or experts, seek out those who have worked with that particular regulatory body before. This strategy will greatly increase the comfort level of the regulators involved.
Initiate Conversations Early in the Process
IT’S BETTER TO APPROACH REGULATORS before you’ve dotted every i and crossed every t in your application. Seeking help with an incomplete application gives you the time and space to respond to concerns that may not be clear in the published regulations. Spend time talking with lower-level professional staff at the agency about what you, as an applicant, can do to ensure adherence to the rules. (If you discuss such matters with higher-level staff, they may well respond by turning every information request into an official statement of agency policy.) Make clear that you’re not asking for any sort of commitment, only a chance to brainstorm. Regulatory staff will tell you that it’s not their job to solve your problems and that they can’t offer opinions until you’ve submitted your final application. But during informal, off-the record conversations, they can help focus your attention on possible problems through the issues they raise.
Submitting multiple proposals early in the process is the best way to smoke out regulatory concerns. Instead of asking for a reaction to a specific technology or a radically new design, put forth several rough sketches and ask what’s necessary to win approval of such designs. Staff comments on the strengths and weaknesses of each alternative will provide important clues as to what is likely to win approval. When you’ve finally submitted your application, don’t attribute any changes that you may have incorporated to the regulatory staff that helped you.
Once you understand the regulatory agency’s primary concerns about your proposal, it’s often useful to proceed with some form of joint fact-finding. As described in chapter 1, this is a collaborative process in which negotiators with different agendas gather, analyze, and interpret information with the goal of reaching consensus on what is known and not known (even if they disagree on what ought to be done). Regulatory agencies can participate in joint fact-finding as long as it is not keyed to a specific pending proposal.
Suppose that a national agency is concerned about the health effects of a new pharmaceutical product. In such cases, it’s usually a good idea to recruit stakeholder representatives and agency staff to oversee data collection to address those concerns in exploratory studies. A joint fact-finding process might delay your final application, and it will certainly impose additional costs, but it will almost always be worth the wait. Forecasts or analyses developed by both proponents and opponents are more likely to be taken seriously by regulators than those prepared solely by advocates of a given product.
Most government regulators want to be respected for their expertise, but they don’t want to be asked to solve your problems for you. They want to be acknowledged as important players in decisions that fall under their auspices, but they don’t want to be perceived as exercising subjective judgments. They don’t want to engage in negotiations (which would imply that they have discretion), but they are almost always willing to talk with applicants before proposals are finalized. To summarize, the key to negotiating with regulators may be to avoid describing your discussions as negotiations!
How Not to Deal with Regulators
A MAJOR GROCERY CHAIN, “Cornucopia,” wants to build a new superstore on a 10-acre parcel in a suburban town that lacks any sort of food store. Using the design of one of its most financially successful stores as a template, and without consulting local planning or public safety departments, the company files a completed application with the town seeking a special permit and site-plan approval to build a 65,000-square-foot supermarket with almost 300 parking spaces, a pharmacy, and a bank.
In the application, Cornucopia’s consultants have tried to anticipate and answer every question that might be raised in a formal regulatory review. The company also hired a local attorney to meet informally with elected officials to explain why it would be in their interest to support the permit request. In addition, Cornucopia hired a PR firm to place a story in the local newspaper reporting the results of a survey indicating that a substantial percentage of residents favor the new market. When Cornucopia realizes that residents are worried about how traffic patterns might be affected, it commissions a study showing that any problems could be minimized with signs, lights, and curb cuts.
To the surprise of Cornucopia’s management, local regulators rejected their permit application. Where did the company go wrong? First, the company should have met with town planning and public-safety professionals prior to submitting its formal proposal. Second, it should have modified its basic store design once it heard from residents and officials about their traffic concerns. Third, it should have organized a series of community meetings to allow residents to ask questions and receive information about the project directly rather than from the newspaper and other second-hand sources. Fourth, it should have initiated joint fact-finding, perhaps by offering to fund a traffic-impact study by the town.
WHEN NEGOTIATING WITH REGULATORS, IMPROVE YOUR ODDS OF APPROVAL BY:
•Thinking like a regulator
•Assuming that regulators have more discretion than they admit
•Basing your request on past approvals and experiences
•Initiating conversations early in the process
Negotiating with regulators means helping them sell your proposal to their back table and building a winning coalition. GreenTech and Cornucopia made no such efforts. They probably did not even imagine that regulatory staff had back tables to whom they were accountable. If you think like a regulator, you can help them make your case to their back table.
MEDIATION AS PROBLEM SOLVING
AS NOTED EARLIER, parties in complex negotiations can move into the trading zone with the help of mediators in ways they may not be able to on their own. And, once in the zone, the parties can get help from a mediator as they try to create value and, ultimately, as each attempts to win at win-win negotiation (without harming their long-term relationship).
The Organization for Economic Cooperation and Development (OECD) is supposed to hold multinational corporations to high standards of corporate social responsibility. The OECD member states are thirty-four of the major economies of the world. More than a decade ago, they adopted guidelines regarding human rights, environmental protection, the rights of workers, and child protection that all their member countries agreed to respect. Recently, the OECD directors undertook a ten-year review of those guidelines. During the previous decade, member countries appointed agencies called National Contact Points (NCPs) to investigate claims that multinational corporations headquartered in their country, or their subsidiaries, wherever they might be located, have violated the guidelines. The NCPs have investigated as best they can (often with very limited staffs and budgets). The assumption is that being called out by their national government will push a multinational to correct whatever guideline infractions they or their subsidiaries may have committed. On some occasions, NCPs have not found sufficient evidence that the guidelines have been violated. In others, though, corporations have clearly violated the guidelines.
At a meeting of all the NCPs and some of their constituent organizations (including their Trade Union Advisory Group, their Business and Industry Advisory Group, and OECD Watch), the NCPs reaffirmed that their goal is to rectify inappropriate practices, not just determine whether guidelines have been violated. More generally, the NCPs were urged to step back from their adjudicatory (or investigatory) efforts and emphasize their problem-solving capabilities. In particular, they were urged to take their mediation mandate seriously. If you were a multinational corporation charged with violating global social responsibility standards, you would probably prefer a chance to correct the situation rather than wait for an embarrassing reprimand from the national government in your home country. For that to happen, though, quite a few parties need to come to the negotiating table.
M
ediation can provide valuable assistance in such situations. I am especially supportive of a problem-solving approach to mediation. In too many situations, mediation is viewed as the last step in adjudication—that is, when impasse has been reached—rather than as the first step in a collaborative effort to work out a creative resolution of conflicting claims. When a complaint is filed, an NCP must determine whether the charges should be taken seriously. It sometimes does this by asking its national embassy to make inquiries about the local reputation of the company against whom the complaint has been filed. Then, it might follow up with a call to the company and ask for its version of the story. In short, the NCP tries to determine whether the company has, in fact, violated the OECD corporate social responsibility guidelines. They proceed in this way because their primary goal is to determine the legitimacy of the claim that has been brought. In the past two years, the NCPs have begun experimenting with mediation to resolve specific complaints.
Now that some NCPs see their goal as correcting inappropriate practices or implementing appropriate remedies, they have selected qualified mediators—located in the places where infractions supposedly have occurred—to meet informally with the relevant parties to see what solution can be worked out. The more informal the interaction, the less likely the parties have been to overstate their claims or react defensively. A problem-solving approach to mediation seeks to bring the parties into the trading zone and shift from assessing blame to creating value. From the standpoint of a company charged with violating the OECD guidelines, winning in such a situation might include garnering positive publicity (for cooperating) and improved relations with a national government whose support is crucial to expanding business operations.
If you were a company accused of violating OECD guidelines, wouldn’t you prefer to meet privately with a neutral party (who would keep what you said confidential) rather than have to defend yourself in a public way as an official investigation gets under way? From the standpoint of preserving your corporate image, mediation is certainly preferable. If you were a trade union or an environmental NGO concerned about the actions of a multinational company in your area, wouldn’t you prefer to have a professional mediator bring everyone together to respond to your concerns rather than wait a year or longer while an invisible agency—often in another part of the world—determines whether the OECD guidelines have been violated and then writes a report? Adjudication in the absence of enforcement (and that is the situation globally) cannot guarantee change. Mediation leading to voluntary agreements can guarantee compliance with whatever has been worked out—definitely an all-gain outcome.
Mediation (behind closed doors and with a promise of confidentiality) can be the best way of getting one side to accept a pretty good outcome while the other side gets a great outcome. Usually, in the current OECD context, a multinational that has violated OECD’s corporate social responsibility guidelines is not going to admit publicly to doing so. However, if the product of a mediation effort involves a commitment to take a set of corrective actions without admitting that rules have been broken, those who want compensation or want the multinational’s practices to change can get what they want (a very good outcome), while the multinational gets an acceptable outcome.
Mediation as problem-solving requires three things: (1) a willingness on the part of all the relevant stakeholders to work together to resolve a problem or deal with a situation, (2) the availability of a neutral with sufficient knowledge and skill to manage difficult conversations, and (3) an agreement on procedural ground rules (e.g., confidentiality, timetable, agenda, good faith effort, etc.).
I have been tracking some of the instances in which multinational corporations have been charged with violating OECD guidelines. In one case, the subsidiary of a European clothing company based in India was charged with refusing to let its workers unionize. While the case was pending in court in India, a complaint was filed in the national capital in Europe. The NCP decided that mediation rather than just an investigation of wrongdoing was called for. After the NCP met with the workers, the management of the Indian company, the leadership of the multinational in Europe, and other interested labor organizations, a resolution was worked out.
OECD’s decision to use problem-solving mediation ought to ring some bells with smaller companies everywhere. If charges have been made that your company is out of compliance with health and safety regulations, rather than wait for an official investigation or a court case to unfold, you can initiate mediation. An appropriately qualified neutral can meet with all sides, help shape an agenda, bring the parties together, and work out a voluntary remedy. That’s got to be a win for all sides. Anyone interested in winning at win-win negotiation should consider adding a mediator to the mix. You may be able to claim more and win at win-win negotiation if the terms of an agreement are worked out with the help of a mediator in a confidential context.
TO SOLVE PROBLEMS USING MEDIATION:
•All parties have to be willing to work together
•A competent neutral professional should guide the process
•The parties must agree on procedural ground rules (e.g., confidentiality, good faith effort, etc.)
5
PROTECT YOURSELF
Insulate Agreements against Predictable Surprises
NO MATTER HOW MUCH strategizing you do, almost every negotiation will include some unexpected twists and turns. In the middle of a negotiation, for example, your counterpart may be replaced. Outside events, like a drop in the stock market or the emergence of a new competitor, may require recalibration of your negotiation strategy. Internal changes on your own side may require a shift in priorities. Although you can’t plan for every possibility, you ought to proceed in a way that insulates you against an array of possible surprises—the kinds of things you are aware might happen—without knowing precisely which one will occur. You should negotiate in a way that gives you as much protection as possible.
BRINGING TALKS BACK ON TRACK WITH FACILITATION
AS MENTIONED IN THE PREVIOUS CHAPTER, one underappreciated and underutilized way to way to win at win-win negotiation is to bring in an outside mediator or facilitator (there are differences between the two, as you will see below) who can help you and other parties create as much value as possible, maintain relationships, and help you respond to unexpected events. Let’s look more closely at how a professional neutral actually works using a story from my experience. Bill and Dan shared a lucrative real estate business. After many years of constant bickering, they decided to call it quits. They were, however, not sure how to divide their joint holdings, each challenging the other’s valuation of properties they really wanted. Bill and Dan finally agreed to get help from a mediator. (I must admit that I was the mediator.) After talking with them separately, I offered a low-cost solution that didn’t involve paying for outside appraisals or fighting about the value of each property in their portfolio. I suggested that they flip a coin. The winner would get to choose any property he wanted from the list. The loser had the next choice, and they would keep going until all the properties were assigned. They followed this advice, and each was convinced he came out ahead. Neither had any basis to refute the other’s claims. The mediation process took less than a day and helped the partners divide hundreds of millions of dollars worth of holdings. They loved telling the story about how they settled their dispute because it portrayed each of them as a risk-taker, since only the coin toss winner got to go first. With just that simple suggestion (based on my understanding of what made them tick), I offered them an inexpensive way to resolve their differences.
Managers often face similar situations—tempers flare, talks stall, anarchy threatens—especially when chairing tense meetings and complicated negotiations. As with the case of Bill and Dan, enlisting the help of a process expert, in this case a professional facilitator, might save the day.
Consider the dilemma faced by “Joe,” the vice president of semiconductor technology at one of the largest comput
er companies in the world. His situation is similar to Brad’s in the Best Care case described in chapter 2 (although Brad was focused on internal group conflict while Joe is dealing with external negotiations). One of Joe’s many responsibilities includes chairing an alliance of representatives from six other large companies. Although the firms are heavily invested in competing with one another most of the time, the group works together to develop and acquire certain production technologies.
Unfortunately, Joe is the head of the alliance in name only; the other members second-guess every move he makes. What’s more, months of difficult internal and external negotiations have caused the group to split into two warring factions. One wants to move quickly to purchase a recently patented software package from a small firm in Europe. The other is reluctant to make the buy, arguing that the software soon will be outmoded. Joe’s own corporate interests have forced him to side with the first group, thereby undermining his ability to run the alliance evenhandedly.
After listening to Joe complain about the situation for many weeks, his assistant advises that he enlist the help of an outside professional facilitator. Facilitation is the process of guiding multiparty, multi-issue negotiations both within and outside an organization, often with the goal of heading off conflict or resolving a specific dispute.
Do You Need a Mediator or a Facilitator?
BUSINESSPEOPLE OFTEN USE the terms “facilitation” and “mediation” interchangeably, yet important distinctions exist between the two. It is smart to enlist the help of a mediator when your negotiation has already reached a standoff or when communication is entirely blocked, as was the case with Bill and Dan, or in the OECD case in the previous chapter. Professional mediators are generally expected to be strictly neutral and to bring a substantive knowledge of the issue under discussion to the table. Mediators also focus on getting the right people to the table and implementing the final deal.
Good for You, Great for Me Page 12
