Lerbinger O. Corporate Public Affairs. Interacting with Interest Groups, Media, and Government

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Chapter 3

Conflict Resolution:

Mediation and Negotiation

Mediation and negotiation extend dialogue communications into the

public policy realm of conflict resolution and consensus building. The

objective is to resolve an issue with its protagonists and thereby discour-

age, and perhaps preempt, public and government involvement. Resolu-

tion is based on the premise that the parties involved need each other

and can mutually benefit by arriving at a win–win agreement.

A sign of the importance of negotiation and negotiating skills for

managers is the continuing popularity of seminars for executives of-

fered by the Program on Negotiation at the Harvard Law School. The

program was the outcome of a consortium of Harvard University, Mas-

sachusetts Institute of Technology, and Tufts University experts in busi

ness management, mediation and dispute resolution, economics,

government, law, psychology, and strategic planning. A brochure tells

senior executives that negotiation techniques have “proven especially

effective as a tool for achieving better business relationships, resolving

complicated corporate disputes, untangling complex litigation, defus

ing threatening international crises, repairing intra- and intergovern

mental conflicts, and addressing critical labor-management issues.”

Public relations professionals, who must often deal with confronta

tions, have also recognized the importance of negotiation skills.

In a

monthly newsletter, the Public Relations Society of America (PRSA) an

nounced a pilot program on how to negotiate. It said that it “will teach

participants basic negotiating skills and give them the chance to use

those skills in actual case study situations involving, for example, irate

community groups, tensions between two organizations that have just

merged, or media aggressively covering a strike.”

Seminars on conflict

resolution and negotiation are now routinely offered by PRSA.

A further confirmation of wide interest in conflict resolution meth

ods is the spectacular success of the book Getting to Yes: Negotiating

Agreement Without Giving In by Roger Fisher and William Ury, who have

been associated with the Program on Negotiation.

The book has sold

more than 3 million copies worldwide and has been translated into sev

eral languages.

APPLICATIONS OF CONFLICT RESOLUTION METHODS

As suggested by brochures and literature on conflict resolution, many

types of problems and situations are amenable to the processes of medi

ation and negotiation and the associated processes of consensus build

ing and collaborative planning. Several are discussed here: alternative

dispute resolution in contractual relationships, resolving environmen

tal disputes, engaging in collaborative planning in a nuclear power dis

pute, and resolving differences between Hydro-Quebec and native

populations.

Alternative Dispute Resolution

As an alternative to litigation, businesses have turned to conflict resolu-

tion methods. The increasing use of alternative dispute resolution (ADR)

demonstrates an effort to avoid costly litigation and crowded court

dockets. ADR’s general purpose is to link disputants with a neutral third

party experienced in using these methods. More than 500 corporations

have signed ADR corporate policy statements, according to Catherine

Cronin-Harris, vice president of research and publications at the Center

for Public Resources. Among the companies are Bank of America, Abbott

Laboratories, Cigna, and Bristol-Myers Squibb. These corporations

pledge to try ADR in disputes with companies that have made the same

pledge.

One company, General Mills, goes a step further by refusing to

sign a contract with another company unless it agrees that disputes will

be settled through ADR.

The Internet is helping the ADR movement by changing the art of le

gal negotiating. Cybersettle.com, formed in 1998, is the world’s top

claim settlement site. It facilitates high-speed, confidential claim settle

ments by matching offers and demands through a blind-bidding, pat

ented, secure website. It is the official and exclusive online settlement

tool of the Association of Trial Lawyers and the Canadian Bar Associa

tion. Both the plaintiff and the defendant, who get confidential pass

words, enter bids over encrypted software. If an insurer wants to settle,

it enters three confidential offers. Cybersettle.com then contacts the

plaintiff’s lawyer and asks for three offers that will be acceptable. The

computer compares them and automatically settles the case if they fall

within $5,000 or 30% of each other. As of June 2003, Cybersettle has

processed approximately 75,000 claims. The smallest claim ever settled

was $500, but most settlements fall within the range of $5,000 to

CONFLICT RESOLUTION I 73

$50,000. In June 2003, it announced its largest “cyber-settlement”

ever: $12.5 million.

ADR is also recommended in labor disputes by the Commission on the

Future of Worker-Management Relations, the so-called Dunlop Com

mission, formed in 1993. These disputes are about dismissals under the

employment-at-will doctrine, equal employment opportunity, and

other regulatory matters.

Resolving Environmental Disputes

Conflict resolution methods—mediation and negotiation, as well as dia

logue—have been especially successful in resolving environmental dis

putes. These methods were started in the mid-1970s as one answer to

the age of confrontation. One of the earliest successes came in 1974. Two

mediators helped settle a flood-control dam dispute between the Army

Corps of Engineers and local conservationists on the Snoqualmie River

near Seattle. By early 1983, about 40 environmental wars were settled

through mediation and another 40 were cooled off. The Conservation

Foundation actively encouraged the use of mediation.

Vermont’s Deer River Reservoir. New England Electric System used

stakeholder negotiations to solve a decade-long dispute on how water

from the huge Deerfield River reservoir in Vermont should be shared by

contending parties—the power company, rafting and canoeing compa-

nies, fishermen, and local communities. Key to the successful agreement

was the skillful negotiating role of Kenneth O. Kimball, director of re-

search for the Appalachian Mountain Club. A Wall Street Journal article

commented, “The surprise is that this one [dispute] is ending amicably,

with environmentalists and power-company executives praising each

others’ sensitivities.”

As in many other mediation and negotiation situations, certain pres

sures in the sociopolitical environment prodded the parties into action.

In this case the incentive for the power company to negotiate was the

expiration in 1993 of its federal license to operate the Deerfield Project’s

eight dams. Furthermore, the Electric Consumer Power Act of 1986 re

quires the Federal Energy Regulatory Commission to balance electric-

power generation with the concerns of other stakeholders, including

fish and wildlife, recreation, environmental quality, and energy

conservation.

Corps of Engineers Misstep. The result of another community

conflict, with the Corps of Engineers, was quite different because no ef

fort was made to listen to community citizens and learn what was on

their minds. The Corps of Engineers decided to build a second dam in ru

ral North Dakota to cure the area of flooding. Believing it had the sup

port of opinion leaders, the Corps drew up a plan and prepared to

present it at a public hearing.

74 I CHAPTER 3

After spending large sums to complete the plan, the Corps of Engi

neers learned strong local opposition could be expected. Nevertheless, it

decided to go ahead on the “decide, announce, defend” principle. Had the

engineers visited the dam site to gain local feedback on the problem’s

real cause, or even to observe for themselves, they would have learned

what the community really wanted: not a new dam, but managing the

old one differently so that the river below the dam would not freeze

solid, causing floods in the spring. The well-organized local opposition

eventually killed the new dam project.

McDonald’s Packaging Decision. Another highly publicized use of

consensus building was the McDonald’s decision to phase out foam

packaging in its then more than 8,500 restaurants, which was hailed as

an “environmental touchdown.”

Actually, it demonstrates both the

triumph of consensus building and some hazards.

McDonald’s formed an alliance with the Environmental Defense

Fund in the summer of 1990 in a joint task force to study ways to deal

with the solid waste generated by the restaurant chain. The outcome

was the replacement of the foam “clamshell” with a paper-based wrap-

per, which has the advantage of coming from a renewable resource.

Although a confrontation was avoided and McDonald’s can call itself

“green,” the decision was based on public perception, not science, Ed

Rensi, president of McDonald’s USA admits: “Although some scientific

studies indicate that foam packaging is environmentally sound, our

customers just don’t feel good about it. So we’re changing.”

Obviously

the manufacturer of the clamshells thinks the decision was faulty.

Thomas Kornegay, western regional director for the issues management

department at Amoco Foam Products, says, “We firmly believe that

polystyrene is the most environmentally-friendly packing material.”

He conceded, however, “McDonald’s is in the business of selling ham-

burgers, not packaging.”

A decision should be scientifically sound as

well as agreeable to its stakeholders. What went wrong is that some

body failed to educate the public about the relative merits of polystyrene

and paper. Consensus building requires an aware and educated public

and participants.

Collaborative Planning

Citizen groups are increasingly invited to participate in corporate plan

ning or decision making. The public relations model of two-way com

munication is expanded in that the input of citizens or stakeholders is an

integral part of the decision-making process. Often this occurs in the ab

sence of conflict, such as in consumer advisory panels (CAPs), issue

councils, and product panels. However, as mentioned by two profes

sionals, Kenneth D. Kearns and Anna L. West, collaborative planning can

be used to “develop public policy recommendations; make siting deci

CONFLICT RESOLUTION I 75

sions; develop facility operational plans; develop strategic plans; de

velop community actions plans; and lots more.”

Collaborative planning, however, is more like short-circuiting the of

ten lengthy public policy process by taking private initiative. It “helps

parties, often with divergent views, solve problems, reach goals, resolve

differences, satisfy needs, or complete tasks to the mutual benefit of the

participants.”

Bringing together all interested and affected parties im

proves the quality of final decisions, in addition to building support for

them. Kearns and West therefore view collaborative planning as dispute

avoidance and distinguish it from mediation and arbitration, which are

used to resolve existing disputes.

Companies engage in collaborative planning when other methods of

coping with a problem are unsuccessful. Portland General Electric,

whose Trojan nuclear power plant faced technical problems and social

opposition, realized this fact after exhausting traditional approaches.

Although licensed to operate until the year 2011, the plant had been be-

set with technical problems since its opening. Its performance was

among the worst in the nation. It soon was targeted by antinuclear

groups, including the Coalition for Safe Power, Don’t Waste Oregon, and

Physicians for Social Responsibility.

One of the groups, Don’t Waste Oregon, sponsored a referendum on

the November 1990 ballot to shut down the plant. A representative of

the group said, “Everybody wins if this measure passes. Nobody gets

killed, nobody lives in fear. Nobody raises their child in the shadow of a

cooling tower.”

Were the referendum to pass, Northwest power customers would

have paid an additional $800 million to $2.2 billion over the ensuing 20

years, so Portland General Electric conducted a fierce campaign, spend-

ing $3.5 million to defeat the measure. The vote was 40.6% in favor and

59.4% against the shutdown, even though early polls indicated about

65% of voters favored the initiative. A similar attempt failed in 1986.

Despite the utility’s victory, the plant had to be closed in March 1991

when cracks and other defects were discovered inside the pressurized

tubes that carry superheated water to the plant’s generators. Repairs

had to be made, and the utility faced the alternative of replacing—not

just repairing—four defective steam generators within 10 years at a

cost of between $125 million and $200 million.

Preferring neither the option of mothballing the plant nor that of

spending up to $200 million on replacement parts, the utility was re

ceptive to the concept of collaborative planning. The question then be

came whether some third alternative could be found.

Kearns and West undertook collaborative planning efforts, as de

scribed in the following:

1. Identify stakeholders: Discover who has an interest in the outcome

and, after obtaining balanced representation, conduct research to

learn about their history, issues, and concerns.

76 I CHAPTER 3

2. Assess context: Following the pattern of issue analysis, ask: (a)

What are top issues for the organization and stakeholders? (b) What

is the history of the organization’s relationships with stakeholders?

the community? (d) What is the nature of media coverage?

3. Develop, test, and refine the collaborative process: (a) Enter into

dialogue—conduct a stakeholders meeting with an organization

or industry to explore options for mutual gain. (b) Conduct fur

ther communication and research. Public relations research was

used to the maximum (see Box 3.1).

4. Implement the collaborative process: Invite participants to the first

meeting where ground rules and the scope of effort are reviewed;

conduct “offline” contacts with one-on-one and small-group dis

cussions; use documentation to reflect group discussion and direc

tion; continue meetings, communications, and research.

5. Communicate outcomes and build understanding and support for

decisions: Use media briefings or announcements, white papers,

newsletters, employee briefings, and so on, to share results and

build interest in outcomes.

As a result of this collaborative planning, stakeholders agreed on the

compromise to phase out the Trojan nuclear plant in 5 years. Portland

CONFLICT RESOLUTION I 77

Box 3.1 Portland General Electric Trojan Nuclear Power Plant:

How Public Relations Research Methods Were Used

• Survey research was used as follows: Seventy personal interviews

were conducted with key stakeholders to determine their underlying

interests, their recommendations for how to conduct the public

involvement process, and their recommendations on who should

be involved in the process. Stakeholders included state officials

(including the attorney general, public utility commissions and staff,

and representatives from the governor’s office and the Oregon

Department of Energy); environmental leaders from the state and

region; industrial, commercial, and residential customers; mem

bers of the financial community; other leaders important to these

issues, including the activist community; and company officials.

• Focus groups were held with some stakeholder groups, primarily

residential customers.

• Other meetings would not formally fall under the heading of survey

research. These groups ranged between 5 to 30 people and were

classified as:

Technical advisory groups

Public policy groups

Demand-side management subgroups

General Electric would not have to invest in an expensive replacement

program and antinuclear groups had a guarantee the plant would be

closed in a reasonable amount of time.

Resolving Public Disputes: The Mutual Gains Approach

The broadest application of mediation and negotiation is in resolving

public issues. This application is the subject of Lawrence Susskind and

Patrick Field’s book, Dealing With an Angry Public: The Mutual Gains Ap

proach to Resolving Disputes, which reflects the ideas and approach of the

MIT-Harvard Public Disputes Program.

The book’s aim is to help busi

ness and government leaders negotiate, rather than fight, with their

critics. The core method is the mutual gains approach, the gist of which

is “to think of the interaction with the public as a multiparty, multi-is

sue negotiation.”

This approach is based on six key principles:

1. Look at the needs and concerns of the other side instead of demon-

izing or ridiculing others. Don’t get stuck in a zero-sum bargain-

ing game.

2. Open the doors wide and engage in fact finding together. Remem-

ber that your “best possible” information may not be convincing

to others.

3. If you promise that something will not happen, be ready to prom-

ise a contingent offer of compensation.

4. Accept responsibility but admit mistakes when made, and be will-

ing to share power with others who have a stake.

5. Act in a trustworthy fashion at all times. Don’t conceal intentions,

sugarcoat the truth, or spin the story to make it sound better.

6. Focus on building long-term relationships if you care about your

reputation and credibility.

Susskind and Field comment, “In one respect, this book is about pub

lic relations. How to interact with the public in a way that will minimize

harm to and maximize gain for [government] agencies and organiza

tions.”

This idealized version of public relations, however, is not al

ways realized. Thus, they add another aspect to the book: It “is about

honesty, accountability, reputation, and integrity.… It is about qualities

we value above and beyond their ability to generate profits or votes.”

These values, which are attributes of leaders, are exposed during contro

versies that typically require quick thinking and rapid response.

Susskind and Field apply the mutual gains approach to three major

categories: accidents (the Exxon Valdez oil spill and the Three-Mile Is

land nuclear accident), risks (the breast implant controversy and the

New Bedford Harbor Superfund Forum), and value conflicts (the clash

ing cultures of Hydro-Quebec and the Cree, and the animal rights dis

78 I CHAPTER 3

pute). Of these three, value conflicts are the most difficult because

values are not the same as interests, which are central to most negotia

tions. Different positions or “packages” can be invented to accommo

date a variety of interests. However, with values, which are strongly

held beliefs, a dispute translates into who we are, our very identity and,

perhaps, existence.

The Hydro-Quebec dispute with native peoples over the flooding of

ancestral lands in northern Quebec for the purpose of creating more hy

droelectric power dramatically illustrates the consequences of not using

a mutual gains approach (see appendix).

HOW MEDIATION AND NEGOTIATION WORK

In mediation, a neutral party intervenes between conflicting parties to

promote reconciliation, settlement, or compromise. He or she listens to

evidence and helps negotiate a settlement but does not have the power to

make a binding decision. Gerald W. Cormick, executive director of the

Institute for Environmental Mediation in Seattle, Washington, sees me-

diation as a device for facilitating the negotiation process. He defines

mediation as “a voluntary process in which those involved in a dispute

jointly explore and reconcile their differences.” He adds: “The mediator

has no authority to impose a settlement. His or her strength lies in the

ability to assist the parties in settling their own differences. The medi-

ated dispute is settled when the parties themselves reach what they con-

sider a workable solution.”

Cormick distinguishes mediation, which is used in conflict resolu-

tion, from dialogue and consensus building. Policy dialogues, he says,

“are intended to identify joint positions which can be advocated in the

public policy arena by interest groups that are normally opposed to one

another.” Consensus building “emphasizes the common interests of dis

putants in jointly defining and solving problems.”

An outside

mediator facilitates such discussions.

In negotiation, however, contending parties confer with one another

directly in an effort to reach an agreement. Negotiation depends on

communication and persuasion in which each party seeks to gain some

thing that requires the cooperation of the other party. Both sides engage

in a sequential process whereby each alternately presents demands or

proposals, and offers counterproposals.

As stated by Gerard I.

Nierenberg in The Complete Negotiator, “Whenever people exchange ideas

with the intention of changing relationships, whenever they confer for

agreement, they are negotiating.”

Each party has to feel it has won

something, however. As Nierenberg reminds us, “The objective should

be to achieve agreement, not total victory.”

Negotiation is a very common and important process, not only in set

tling disputes but also in handling all kinds of exchanges between differ

ent persons and organizations when neither has formal power or

CONFLICT RESOLUTION I 79

authority over the other. Certain conditions must be present, however,

for negotiation to work. Furthermore, there are limits to what negotia

tion can accomplish.

The limits to negotiation listed in Box 3.2 are recognized by Lawrence

Susskind and Alan Weinstein in environmental disputes where sophisti

cated scientific and technical evidence clashes with social and political

arguments. They recognize that when contending parties hold extreme

ideological views and do not acknowledge the legitimacy of one an

other’s concerns, mediation and negotiation are not possible.

Cormick also recognizes that mediators are better off if they’re not

technical experts because of the danger of “leading” the parties. But they

must be conversant with the issues in dispute and understand the legis

lative, legal, and organizational environment in which they occur.

Some Useful Competencies

Negotiation has become a specialized field requiring considerable train-

ing. Several skills are commonly recognized as important in all kinds of

negotiations: understanding human needs, knowing what information

to reveal or not reveal, and learning to be creative and flexible.

Understanding Human Needs. A negotiator must understand the

interests and needs of the other party. Roger Fisher and William Ury list

four features of successful negotiations: (a) the separation of people

from problems; (b) a focus on interests, not positions; (c) the invention

of options for mutual gain; and (d) the use of objective criteria.

Their second feature is particularly important because too often ne-

gotiations focus on the position taken by the other, without realizing

that for every interest there are several positions that could satisfy it.

Asking the other person why a certain position is taken is a way to ex

plore the interests behind it.

Negotiators who have an understanding

of human needs may obtain additional insight. This is the reason books

on negotiation pay a lot of attention to lists of human needs.

Revealing the Right Kind of Information. For negotiations to prog

ress, both parties must have information about each other’s aims, ex

pectations, and acceptable solutions. Just how much to reveal about

oneself is a tactical matter. Ideally, each party seeks to uncover three

kinds of information about the other, which define the utility schedule:

• Resistance point, beyond which no bargaining will take place. For

example, a seller is willing to sell at a price no lower than $100,000

and a buyer is willing to pay no more than $150,000. The bargain

ing range lies between these two figures.

• Status quo point, which leaves conditions unchanged.

80 I CHAPTER 3

Box 3.2 Necessary Conditions and Limits

Negotiation involves two or more distinct parties with differing interests

with respect to one or more issues. But the parties at least share an in

terest in reaching agreement (and often have other common interests

as well). They recognize that more is gained through accommodation

than confrontation and that the payoffs of negotiations will exceed their

costs. They also recognize their interdependence, that is, that each

needs something that the other has or controls. This involves the volun

tary sharing or exchange of one or more specific resources or the reso

lution of an intangible issue or issues. Furthermore, both sides have

respect for each other. They recognize their mutual legitimacy and right

to survive, and they are aware of the power each possesses.

The application of these general conditions for negotiations to environ

mental disputes has shown that the following nine conditions must be

present:

1. All parties with a stake in the outcome are identified.

2. Involved groups are appropriately represented.

3. Differences among the values and assumptions of contending par-

ties are discussed and narrowed to fit a workable agenda.

4. A sufficient number of alternatives and options are raised. Disputes

cannot be narrowed to a yes or no decision.

5. Parties agree on the scope of the dispute and the length of time

needed for the appearance of negative environmental effects.

6. Relative values of costs and benefits are agreed on.

7. The worth of compensating actions is established.

8. Bargains are implemented.

9. Parties are held to their commitments.

In contrast to these enabling conditions, Cormick points out what

mediation and negotiation cannot do:

• Resolve basic differences that separate parties in a conflict. Mediation

helps them make accommodations that enable them to coexist.

• Avert conflict. Quite the opposite: There is no basis for negotiations

until conflict emerges. The inadequacy of unilateral solutions must

first be recognized.

• Remove the adversarial nature of the relationship. Parties must re

main mindful of their conflicting self-interests. A viable bargain is

one that can stand up to the pressure of implementation and possi

ble repudiation by constituents.

• Offer an absolute alternative to litigation. Actual or threatened liti

gation often helps bring parties to the table to seek mediation.

• Teach negotiators to like, trust, and agree with one another. Although

sufficient public trust among parties is needed to negotiate in good faith,

too much cooperation may be seen as a sell-out by constituents.