This document outlines a negotiation scenario between the marketing staff trade union of Gotabhaya Corporation and company management. The marketing staff have organized as a trade union and are demanding a 30% increase in basic salary, an increase in sales commissions to 5% of sales, and no deduction of commissions for sick leave. Management rejects the demands, citing falling sales and profits. Both sides are unwilling to compromise but recognize the disadvantages of a strike. A negotiation is needed to resolve the conflict.

1. Practical Approach for Negotiations
Workshop on negotiations
This case study should be conducted in the class by dividing the class into four groups as
follows.
1. Trade Union 2. Management 3. Federation of Trade Unions 4. Employers Federation
Then you have to advice the roles of each group. Then group representing the Trade Union should
be coupled with Group representing the Federation of Trade Union. Then the group representing
the management should be coupled with group representing the Employers Federation. Finally
you should have two groups for discussion.
Initially the facilitator should talk with all four groups about the negotiation scenario. Then he or
she should separately talk with each group highlighting their roles. Then the groups should be
coupled. Then they should be sent separately into different locations to analyse and discus the
case and develop their own game plan. One hour should be allowed for the individual group
discussions. Once the discussions are finished, the negotiation should be started and 60 to 90
minutes could be allowed for the negotiation.
By this exercise, the facilitator should be able to analyse and show the problems related with
positional bargaining in negotiations. If the negotiation process can be video filmed and shown to
the participants it would be very useful. That is what I do with my students in Sri Lankan
universities.
Once you have an analysis of the negotiation, you can start a discussion on “ Win win
negotiations” It is provided in the slide share with the topic name “ win win negotiations” for
your use. It would take about two more hours. Then after that, ask students to discuss again as
two groups separately to sort out the problem this time on “win win method” Once the
discussion is done, you can have a fresh negotiation session with the two groups on “win win
method” You can video record this too. Then you will observe a vast difference on the first round
of negotiations on positional bargaining and the second round of negotiations on win iin method.
Gotabhaya Corporation is a Sri Lankan company established in 1975. It deals in machinery and
equipments for industrial use. It has a very good reputation as a supplier of quality products.
The Director Marketing, Mr.Gotabhaya Jayaratne is a respected marketer in the field of machinery
and equipments. He improved the business of Gotabhaya Corporation with two salesmen from a
very low scale. The average sales were around Rs. 10,000 per day at the initial stages when he
assumed office. In order to encourage the sales staff Mr. Jayaratne adopted a system where every
member of the marketing team in the company gets a commission of 3% of the sales income. This
commission was shared among them equally. However 25% of the commissions will be deducted
per day if an employee gets absent for work. Even an employee gets absent from work for
sickness his or her commissions were deducted. Anyway the company did not retain that deducted
commission, but was paid to other workers who came for work. Therefore the employees who
worked in excess of their normal work during the absence of other workers were able to get a
better commission than the absentees. Although the employees were allowed to take leave without
any restrictions, this commission system made workers take less leave. Certain workers reported
to work even they were not really fit to work. By this approach company has been able to
minimize absenteeism and Mr. Jayaratne boast about his strategy of motivating workers in his
department with the heads of other departments.

2. The Marketing Department did not bother about increasing the salary as employees earnings
automatically increased with the increasing sales income. The average earnings of an employee
are around Rs. 10,000 to Rs. 15,000. This rate was about 25% more than the standard salaries of
the similar businesses. The commission component was about 30% to 40% of the salary.
Employees were quite happy with their take home salary and did not complain until they
experience a drop in the sales.
The company has a Sales Manager, Mr. Gunawardene and he is a very loyal and efficient
person. However, he is also a disciplinarian and certain workers did not like his way of
handling employee’s problems.
The marketing division employs about 50 workers and the Salary bill comes to about Rs. 550,000
per month. The competitive environment, the slow growing economy has put a lot of pressure on
the company sales and profits. The operational cost of the company has started rising and the sales
income has dropped during the past few years. The employees have found that their sales
commissions are falling down and their income is reduced. Therefore their salaries are much lower
than the salaries of other divisions.
Marketing staff have organized as a Trade Union and have put forward many suggestions to
increase their salary as they have found that they cannot depend on the sales commission any
longer to increase their salary. They have had few discussions with the Sales Manager without any
positive results. In a recent discussion, the Sales Manager lost his patience when sales
representatives were shouting in the discussion and he said “One donkey at a time”. This really
irritated the Sales staff and they walked out of the room saying that we cannot talk to a person who
has no respect to employees and having a superiority complex.
Mr. Diyabalanage the Trade Union leader had heated arguments with the General Manager over
this issue and finally threatened to strike work if following demands were not met. Trade Union
members have put up posters indicating “ Gunawardene has no heart ” in the canteen and entrance
to the premises. Furious Mr. Gunawardana has called the trade Union Leader Mr. Diyabalanage
and has told him that very soon he will become “ a homemaker” as he will be chucked out from
the job sent home
1. Increase their basic salary by 30%. ( before commission)
2. Increase the sales commissions up to 5% of the sales.
3. Not to deduct sales commission for sick leave.
The company earns a net profit of around Rs. 250,000 per month. However as a prudent
businessman, Mr. Gotabhaya Jayaratne wants to develop company’s financial reserves to fall back
on difficult times ahead. He has even reduced his own salary to be an example for his employees.
He rejects all the demands and says that he cannot increase the salary due to the loosing sales and
increase in overheads. Further he says that he cannot pay a higher commission than 3% as the
profit margins have come down. Further he says that if he relaxes commission-paying method the
absenteeism will rise and that will make things very difficult for the company. He wants workers
to work hard, bear with the situation and help him to overcome the problem. He says that workers
have become lazy and they want everything to be done by the management to improve sales.
Even if workers strike, they will not be able to find alternative jobs in the stagnating economy.
Sales Staff are very well aware of this fact even they have threatened to strike.
Further they know that it is very difficult to negotiate when Mr. Jayaratne and the Sales Manager
team up. However, Sales Staff do not wish to give up and they think this is the most opportune

3. time to win their demands. Trade Union is also backed by a leftist political party who has wider
political agendas. They are present nationally in many companies and their support can be
obtained if a negotiation to take place. They are pressing the trade Union to go ahead with the
demands and not to bow down to the employer.
Mr. Jayaratne knows that even if he hires new workers, it is very difficult to train a person within a
short period to sell specific machinery that they sell. On the other hand if workers strike, he will
have a lot of problems in paying the short-term loans obtained from banks and pay the suppliers in
time. This will destroy the good name of the company. However, the management does not wish
to bow down for the workers as they think that it will set a wrong precedence as all members of
the other divisions also will resort to this type of demands and action. The company is a member
of the Employers Union and the support of them can be obtained at any time for a negotiation or
other wise. The Employers Union has strictly advised them not to yield to trade Union demands as
it would affect the other businesses around the country.
Negotiate the problem and find an answer.
Contact Maxwell for further clarifications : maxran1@yahoo.com