Transformational Leadership and Leadership

Contract Negotiation Situation Summary You are part of an Integrated Program Team assigned to the Perigee Advanced Design Program (PAD), with multiple Contract Options, for the Pulse Differential Quadrature (PDQ) Satellite System. A major Subcontractor, providing a crucial part in the PDQ, recently disclosed that unexpected obsolescence of a critical part will increase the cost of their original estimates, from over extended quotes, by an estimated 30% and add an additional 6 months to the planned delivery schedule. No other vendors are available to meet the critical part requirement at this time.

Conflict Overview In the modern business world with supply chains that span the globe, it is virtually impossible to account for every potential risk that can emerge in various circumstances. The PAD project is no exception and they have recently received devastating news that was unexpected from a critical leg in their supply chain. Not only is the part more expensive, but the lead time to acquire it has also been lengthened by six months.

It is no surprise that this has also created tensions upstream on the PDQ project and subsequent negotiations have already reached the brink of project failure. Everyone realizes that the obsolescence issue was not planned for and likely could not be expected, but the relationship is tense none the less. This analysis will provide a number of negotiating tips to help the company deal with their project situation and find a solution that will allow the project to progress.

Negotiation Strategies Discusssion There are many different forms of negotiation strategies that could be utilized in such a situation. However, there some high level objectives that should be mentioned first when tensions are high. For example, Fisher and Ury (2011) offer a variety of principled counter tactics that can be used when tensions are high which can often lead to an opponent who begins to use a tricky tactic that include: • Separate the people from the problem -- don't attack an individual for using tricky tactics on a personal level.

• Focus on interests, not positions -- consider what opportunity there is for mutual gain rather than accepting extreme positions • Insist on objective criteria -- be hard on principle and identify any objective criteria that are available to use. The goal is to not make the project's trouble anything that has the potential to become personal. When a problem arises, it is often the case that people naturally start dishing out blame, but it's best to keep an objective demeanor throughout such occasions.

One negotiation strategy that is closely related is the principled negotiation strategy which tries to avoid positional bargaining. Since PAD is only one of the potential suppliers in the PDQ, the host of the contract obviously has other options that they might find more favorable given the recent revelations of the cost and schedule overruns. Therefore, they are in a position of power that they could use for leverage.

In cases such as this it can be beneficial to focus more on the ongoing relationship between the two organizations, rather than this one problem that arose unexpectedly. If PAD can somehow take the emphasis off the short-term problems and hand, and refocus the attention on the long-term mutual benefits, then it is reasonable to suspect that a more satisfactory compromise could be reached.

Another strategy that could be relevant in this situation is to appoint a new leader for the PAD portion of the project that is considered to be a "transformational" leader. Being able to recruit a transformational leader to help initiate the project has also been identified as an advantageous idea because research has indicated that this can also serve as a critical success factor, especially during periods of uncertainty (Carter, Armenakis, Feild, & Mossholder, 2012).

Transformational leadership has been called one of the most effective among the various theories of leadership and such a leadership style has been known to be successful in a vast range of circumstances (Judge & Bono, 2000). A transformational leader has been correlated with the ability to refocus the short-term objectives of an organization, or multiple organizations, on a new vision, which would be highly relevant in this situation. It is recommended that PAD takes a hard look at their position from a holistic position.

If a new leader could help to mitigate the damages incurred by the unexpected issue related to their vendor, then this might.