Introduction – Background to the case
Negotiations are always a critical aspect related to the operations and management of an organization which is essentially of a non-profit character. Being the Chairperson of the Board at Midwestern Contemporary Art (MCA) it is important to have a balanced approach to the resolution of a conflict with the MCA and Peter and Catherine Smith. While it is indeed out of character to coerce the Smiths into payment of the pledge especially after being able to meet them and understanding their present predicament, it is also crucial to ensure that the best interests of the MCA are upheld especially looking at the financial challenges the institution is now facing. As a result, what becomes important is to evaluate the situation in accordance to the prevalent factors and select the best approach from available alternatives .
The Original Goals of the Negotiation
Clearly, the present predicament is based on the issue of collection of the pledge of $5 million from the Smiths. Since the inception of the MCA in 1945, the institutional requirements make it mandatory for the Chairperson to pledge a certain amount of money for the operations and improvement, which in the case of Peter and Catherine Smith was $5 million. It is important to highlight the critical factor in this case that the Smiths owe the MCA the above mentioned money in its entirety – that none of the pledge amount had been paid and that the FASB makes payment of pledge money legally binding. As a result, the MCA stands in complete authority to retrieve the entire pledge amount from the Smiths – especially Peter Smith since he was elected the chairman in 1989.
Taking into consideration that the FASB stipulations made payment of pledge binding on Chairman of institutions like MCA, and the fact that the MCA is in critical financial duress in 1997 due to construction of the new building – 8 years since Peter Smith’s election, the goal is clear – to collect the money which is due to the MCA by the Smiths.
Original, BATNA and value
An important factor that needs to be highlighted here is the fact that the MCA aims to ensure that funds are generated – through all means necessary due to the ongoing projects and ambitions of the institution. The original amount of money due is that of $5 million. The perspective of the MCA could have been a little different had the Smiths been paid a part of the pledge amount, as going with the humanitarian aspect it had occurred earlier that many Chairpersons did not have to pay up the pledge amount in its entirety.
Legal proceedings which seem to be the most effective action to collect the amount from Peter Smith will definitely not be worth value of $5 million on account of attorney charges and expenses related to legal proceedings. At the same time fighting a legal case in the court will take time which will have an impact on the costs associated with the construction project due to delays.
Thus, the requirement is to arrive at a best alternative to a negotiated agreement (BATNA) . The priority in this case is ensuring funds for the construction project which is ongoing as a combination of failure to make payments and legal action against its own former chairperson will gravely tarnish the public image of the MCA. Nevertheless, it is critical to ensure voluntary succession to the position of Chairperson in the future, which will become challenging if the MCA resorts to its legal course of action. As a result, the BATNA is to recover as much of the costs involved in the construction project as possible from the Smiths and prevent slapping a lawsuit on them for the payment of pledge money amount.
The factor which complicates the entire situation even more is that Catherine Smith is diagnosed with terminal disease and is receiving very expensive medical care. This is one of the most crucial factors which justify a negotiation with the Smiths as far as the present situation is concerned . Assessment of the current position and interests of the Smiths and MCA highlights the following points:
(1) It is unlikely that without negotiation the true value for recovery would be $ 5 million. It is because to fight for the same in a court of law by both parties, expenses would be involved. While for MCA this would reduce the value of money recovered (which is a string possibility given the FASB stipulations), even in case the court directs the Smiths to pay the pledge money amount, with the additional expenses incurred on their part to fight the case will increase the overall financial obligation.
(2) In such a situation, the goodwill and image of the MCA will be tarnished and it will affect future recruitment to the board. Nevertheless, the exposure that MCA took the dispute to court with knowledge of the fact that Catherine was diagnosed with cancer will further hamper the popularity of the organization.
(3) The MCA needs to show compassion to its previous Chairperson especially keeping in mind the fact that initially Peter Smith had rejected Schmidt’s plan of rapid expansion and advocated a measured and sustainable approach to growth. The MCA has to take into account the fact that the point of argument from their behalf will largely suggest that the fulfillment of the expansion plans is solely dependent on the pledge money owed by the Smiths. It implies that the MCA’s operations are solely dependent on the pledge money provided by Chairpersons – a disclosure which will raise serious questions and repercussions in the future on the need to have Directors, or even the responsibility with which institutions such as the MCA operate.
Mutual Gain for both parties involved
Influence Tactics for Negotiation
The most important factor which favors the suggested negotiation is that of reaching a common ground and to some extent, persuasion whereby the Smiths can be intrinsically motivated to contribute to the best interest of the MCA whose responsibility Peter Smith had taken up a few years back. The focus from the point of view of the MCA is to persuade Peter Smith to pay for the construction project expenses. Even if he is not able to provide the financial resources for the construction project in full, his contributions will definitely play an important role in the construction project and will relieve MCA of some of the financial burden. At the same time, restraining from a legal course of action will not only ensure that the MCA exhibited a very humane and moral character, but the same will also boost the confidence of stakeholders towards the institution in the field, which is very much vital to the realization of Peter Smith’s original goals – making the MCA a more nationally prominent Art museum in the country.
Conclusion
The entire focus of this reflection from a Chairperson’s point of view to the case highlights one of the very important factors associated with all negotiation processes – reaching a common ground. Clearly, the damages have been done to the MCA and the focus should move from looking behind and placing blame on one another. Rather, the above mentioned approach of reaching to a common ground is justified as the only alternative of a legal battle will do anything but good to both the MCA and the Smiths.
Works Cited
Baldi, F. (2013). Options in Alliances. Valuing Flexibility in Inter-Firm Collaborations. Milan: Heidelberg.
Dana, D. (2010). Conflict resolution. New York: McGraw-Hill.
Hener, G. (2010). Communication and conflict management in local public organizations. Transylvanian Review of Administrative Sciences , 30 (E), 132-141.
