PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION MuLTIMobE, INC. General Information J. Amold is one of three vice presidents for Human Resource Development (HRD) at Multimode, Inc., an internationally known, American-based, manufacturer and distributor of specialized communications equipment. Arnold has been with Multimode for seven years — moving through the ranks in HRD. Before coming to Multimode, Amold spent 10 years with one of Multimode’s competitors. Multimode, Inc. has three separate divisions. ‘The original and largest division is Multimode Manufacturing, with 8,000 employees — in plants in seven cities. Multimode Communication Services, the smallest division, with 4,000 employees, is located in four cities. ‘The third division arose when Multimode acquired the subsidary, Tonepiteh Dialers of Canada. Tonepitch has 5,000 employees and operates as a completely separate unit of Multimode with its own management, T. Boyd is one of two Vice Presidents for Budget and Finance at Multimode, Inc. Boyd has primary responsibility for overseeing the annual budget process. Boyd has been with Multimode for 10 years, holding a variety of posts before becoming Vice President for Budget and Finance last year. Boyd has a reputation throughout the company for being a tough, unyielding manager with unlimited ambition. Boyd has just finished a detailed review of each department's preliminary budget request for the upcoming fiscal year. Boyd is meeting with the leaders in each department to tell them what the recommendations to J. James, the Chief Executive Officer, regarding next year’s budget will be. Multimode, Ine. has done reasonably well over the past five years, with gross revenues increasing an average of 11% a year throughout the period. Costs, however, have continued to rise at an almost equivalent level. Were it not for the spectacular profits, eamed by Tonepitch, Multimode would not look nearly as profitable as it does. James has indicated to Boyd that next year’s budget expenditures will increase no more than 5%, James also wants overall productivity enhanced. Arnold and Boyd are about to meet to discuss Boyd’s reaction to Amold’s HRD budget request. Despite the guidelines circulated by Boyd (indicating that each department should stay within the 5% cap), Arnold asked for an 8% inerease in HRD’s budget. Amold marshalled an incredible amount of information in support of HRD’s request, including figures showing that the current fiscal year’s HRD budget at Multimode was TAS RE WEN BY Ta SORTA COPS TRIS RTE COT ORE HOF TTS 258.4406, Fax: (617) 498-7818 This case may no be reproduced revised or alate in whole oF part by any Mans witout he ‘rien permission ofthe Director ofthe Cummeulam Development, Program on Negotiation, Harvard Ls Schoo, 518 ound al Cambridge, MA 02138, Pease elpogreserve the wseflnes of tis case by keeping it content. Copyright (6) 1986, 1993, 1994, 1995, 1996, 1999, 2008 bythe President and Fellows of Harvard College. Allrighs reserved, (Rev 9105)‘MULTIMODE: GENERAL INEORMATION far lower than comparable allocations in other firms of roughly the same size. Amnold also demonstrated precisely how the increment in funding in HIRD would help to increase productivity throughout the company. HRD has proposed a re-organization based largely on the human resources management ‘model adopted two years ago by Tonepitch. Amold explained that the 8% increment in funding for HRD was essential to the success of the reorganization. Most of Boyd's meetings with the Departments have run for less than half an hour. From, the rumors Amold has heard, no one has gotten more than the 5% cap. apa Te) TORS, 99S, 19VG, THK THRG, TOG, BODE By he resident and PTO of Maran Cocze ATE sane TROT 515),{ERAL INEORMATION, RESULTS SHEET NAME OR TABLE # RESUL’ 1. AGREEMEN’ Yes No 2. % INCREASE: 5% % M% 8% 3.Boyp: GE Give: ARNOLD: — GE’ Give: NTT TORE TS TT TST TST a FTN Ha COMER AT GAS TCT TRE 908).PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION Confidential Instructions for J. Arnold You are a bit nervous about today’s meeting with T. Boyd. HRD went out on a limb with the request for an 8% increase. HRD’s total annual budget for the current fiscal year is $6,500,000. The difference between a 5% increase and an 8% increase is $195,000. ‘That could mean at least two new senior positions plus the overhead to support those new appointees. You have had agonizing discussions within HRD leading to the proposed reorganization plan, ‘The new positions are crucial to implementing that plan. Boyd"s predecessor was tough on HRD and you had really been operating well below the staff and support levels you should be at. The 8% was not an opening bid. That is really the amount HRD needs to fully implement the new reorganization (which has been approved by the Executive Committee — a group of four top level managers that neither you nor Boyd sits on). On the other hand, given the pressure to keep costs down, you are quite sure that Boyd is never going to let HRD have an 8% increase. And HRD could implement the reorganization over several years. So, you absolutely will not sit still for a budget increase of less than $325,000 — that is a 5% increase. You would like the $520,000, or 8% increase, but you are not optimistic. ‘The more you can get for HRD, the easier it will be to implement the reorganization. Less than $500,000 and you would not even try to implement the new plan in the upcoming year. Less than $500,000 and you are going to look very bad with your staff and colleagues at HRD. THis case was wrt by Lan rence SUSINECopies re WATTS aa Temonable SON One HAAN, Ora Tephone TA) 258 446, Fax (617) 495-7818. This eave may’ nel be rpnced ese or warlatedin whole ofa pat by any means Without the “writen permission ofthe Distr ofthe Cureulum Development, Progam on Negotiation, Harvard Law Shoo, $18 Pound Hal, CCombridge, MA 02138 Please help o preserve the useTulessO this case by Keeping it enfidetial. Copyright @) 1986, 193, 1934, 1995, 1996, 199, 2005 by the Presiden andellows of Harvard College. Allrighs reserved. (Rev. 03)