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the table with a strong argument about all the good weve brought the
Islandsthe jobs, the fair wages, the community service projects.
Negotiation would be more appealing if we were dealing with a more
reasonable government, Gabriella said. Everyone nodded. This wasnt
the first time the governor had raised the tax on extractors; in fact, there
had been four increases in the past decade. And it wasnt clear where the
extra revenue was going. The territory was still struggling to maintain
roads and meet other basic needs. The new proposal called for a 400%
increase, and, unfortunately for Mariana Ash, it seemed poised to pass.
This might be one of those times we need to play hardball, Gabriella
continued. Threaten to shut down and see what they do. This had been
suggested in past negotiations, but Alan had always managed to
persuade the others that a cooperative stance was better than a
confrontational one.
I agree, Tom said. Were in a good position. Palacios doesnt want us
to shut down. He cant afford to lose thousands of jobs, especially in an
election year. Hell look terrible if he runs us out.
Alan sat down at the table. It had been a long meeting. I think that
depends on how the press covers this, he said. We dont want to look
like another mainland company that screwed the Northern Marianas. All
the media outlets are going to be following the issue closely. We need to
come out looking good.
Not a Bluf
The next morning Alan got to the office early. He wanted to review a
report on the companys economic contributions to the Islands over the
past decade. On his way to the printer, he saw that Rachels office door
was open and peeked in.
Rachel was surprised to see him. Oh, brother, you scared me, she
exclaimed. I thought I was the only one in. She spoke quickly, with a bit
of a Southern lilta holdover from her childhood in Texas. She had a
reputation for taking risks and getting what she wanted, and shed
achieved more growth at Mariana Ash than anyone had expected. Alan
respected her, but he also feared her a bit; when she had a strong
opinion, it was tough to push back. The companys previous CFO had
been good at tempering her aggressive approach, but hed recently left
Los Angeles for a job on the East Coast and hadnt yet been replaced.
There was talk around the company about who would step up and keep
Rachel in check now that he was gone.
We might need to play hardball, Gabriella said. Threaten to shut down
and see what the governor does.
A Press Release
Alan put his briefcase down to search for his car keys and heard someone
call his name. Roberta Simmons, the head of public relations, was
running across the company parking lot.
Dont ever run in heels, she said, out of breath as she got to his car.
Its excruciating. But Im glad I caught you. Did you get my e-mail?
Alan reached into his pocket for his BlackBerry and found his keys.
I wanted you to review this press release before you left. Its set to go.
She handed him a piece of paper.
But I didnt ask you for a draft release. Were not ready to make a
statement yet. Were still preparing, Alan said.
You-know-who asked me to write it, Roberta said, smiling. She
explained that Rachel had stopped by her office earlier that afternoon
and essentially dictated the release. Id assumed you had agreed on the
messaging, but Im guessing from the look on your face thats not the
case.
Alans stomach lurched at the first line of the draft, which said that
Mariana Ash would shut down operations in the Islands the following
week if the government didnt withdraw its tax proposal.
She told me to get your sign-off before we send it out tomorrow
morning, Roberta said.
Tomorrow morning? Alan asked.
Roberta nodded. And you know I dont like to cross her if I can help it.
None of us do, Alan said. He asked Roberta to hold off on the release.
Ill talk to Rachel tonight.
Hey, Alan, its Lorenzo. Alan immediately regretted taking the call.
Lorenzo was a reporter for the Saipan Tribune. Alan had worked with
him a lot over the years, and he liked him, but he knew that Lorenzo
could be ruthless when it came to getting a story.
I hear youre sitting on something. Im wondering if we can see it first,
Lorenzo said.
Alan was silent.
So, what have you got? Lorenzo prompted.
Were really not ready toI mean, were still analyzing the situation
taking a look at the numbers
Lorenzo cut him off. Is that a no comment?
Alan tried to gather his thoughts. He knew what Rachel would say; he
almost told Lorenzo to call her instead. But as general counsel, he was
responsible for making sure that Rachel understood the risks of taking
such a hard stance. He wanted more time to figure out their chances of
calmly negotiating an agreement.
Listen, Alan, let me level with you, Lorenzo said. The paper would
gladly lead tomorrow with whatever you all have to say. But if you have
no comment, were going to go with the governors statement about
companies paying their fair share. Lorenzo added that he knew that
wasnt the full story, but the paper didnt have much else to go on.
Alan looked at the release on his screen.
I dont want this decided in the press, he said.
Where else would it be decided? Lorenzo asked. Palacios is ready to
talk. You should be, too.
What Would You Do? Some advice from the HBR.org community
Alan shouldnt miss this opportunity. The newspaper is going with the
story the next day, and unless he provides a comment, the article is likely
to be slanted toward the party who is willing to speak. Alan should give
Lorenzo the statement, emphasizing the companys stand especially
against the backdrop of the four other increases in the past decade.Omkar
Sapre, adviser, Devgad Taluka Mango Growers Co-operative Society
Mariana Ash shouldnt release the statement, but Alan should make it
clear to Lorenzo that the company has found other regions with a similar
quality of ash at a similar cost. This will give Palacios a sense of what it is
prepared
to
do
if
the
negotiation
doesnt
Charokopos, business navigation manager, IKEA
go
well.John
No, Alan should not give the press release to Lorenzo. Let the paper run
the statement that companies need to pay their fair share, because they
do. Mariana Ash can then negotiate with the governor for a fair trade
agreement with a fixed tax rate. For example, a five-year agreement
would give the cosmetics company enough cost stability and time to
formulate a plan B.Karen Corliss, owner and principal, Pack Systems
Engineering
Alan needs to agree with the governors statement that businesses should
pay their fair share, but he should then immediately begin a campaign to
inform people about the value of the company to its employees, its
shareholders, and the territory. He can start by placing a full-page ad in
the newspaper explaining how the company affects the local
economy.Gary Packwood, owner, GPA Project Management
Should Alan give Lorenzo the press release containing the CEOs
ultimatum?
The Experts Respond
The second scenario is if Alan and Rachel think the company could
influence the election and oust Palacios. Mariana Ash can threaten the
governor only if it has more power than he does. Otherwise, Alan needs
to proceed more carefully.
In any case, Alan needs to buy some time and should promise to call
Lorenzo back in 20 minutes. That will give him a window in which to
strategize. He needs to do three things.
First, he should contact Rachel and the other executives. Its obvious that
there isnt a consensus on how to deal with Palacios, and its possible
someone else has already spoken to Lorenzo. If internal divisiveness
were to come out in the press, it would hurt the firms credibility and its
ability to negotiate.
If he thinks an amicable solution is possible, Alan needs to find a way to
help the governor save face.
Second, Alan should try to determine what the companys BATNA (best
alternative to a negotiated agreement) really is. Its not clear whether
Rachel understands the ramifications of pulling up stakes and starting a
new operation elsewhere, or whether thats even a viable option. Nor
have the executives fully explored what it would mean to leave
production levels in the territory where they are and add a second facility
in another location.
Third, if an amicable solution is possible, Alan needs to come up with a
way to present Palacios as a winner. In my experience, politicians always
want a face-saving solution. If the governor were to backtrack on the tax
hike, Mariana Ash should seek to portray him as someone who saved
jobs.
If Alan cant resolve at least the first two issues in time, he needs to tell
Lorenzo that he has no comment. If after having these conversations he
believes he can make a statement that wont hurt his ability to negotiate,
he should explain that the company is evaluating its options and will do
whats best for its business, which might include relocating.
Alan shouldnt put anything in writing, and he should ask to review his
quotes before the story goes to press. Journalists codes of conduct vary
from country to country, but in Poland, for example, people are entitled
by law to make that request, and I regularly do so.
A change of government might be the best outcome for Mariana Ash.
Absent that alternative, the company needs to negotiate in a way that
helps Palacios save face while also ensuring that it can continue to run a
stable, profitable business.