Reference no: EM133590964

Case Study: Golden State Savings & Loan (Golden State) is the second largest savings and loan company in the country. Just over a year ago, it contracted with Computec, a computer consulting firm to organise and computerise its data processing system and to operate that system for a period of ten years. Computec, thus, became responsible for all of the computer-related activities of the savings and loans, such as account management, loan processing, investment activity and payroll. Golden State agreed to pay Computec a consulting and administration fee of over R10 million per year for the term of the contract.

At the end of the first year of operation under this contract, Computec presented Golden State with a bill for approximately R425 000 in addition to the agreed-upon fee. This bill represents costs incurred by Computec staff in attending seminars and meetings related to the installation of computer technology in banks and costs incurred while meeting with various outside consultants on aspects of the contract with Golden State.

Upon receipt of this bill, Golden State wrote to Computec, advising that because Golden State could find no express term in the contract requiring reimbursement for these charges and because the bank had a strict policy against reimbursement for such expenses incurred by its own employees, it would not reimburse Computec staff for similar expenses.

Computec responded quickly, informing Golden State that this type of charge was universally reimbursed by the purchaser of computer consulting services and that it would continue to look to Golden State for reimbursement.

The conflict is generating angry feelings between these two businesses, who must work together closely for a number of years. Neither party can see any way of compromising on the costs already incurred by Computec and of course Computec expects to be reimbursed for such charges in the future as well.

Questions: The parties have resorted to mediation, but have reached a deadlock and can see no way of resolving the dispute. If you were the mediator in this scenario:

a) what type of mediation style would you use, why?

b) what do you see as the major hurdles that the parties need to get over before an agreement can be reached?

c) what skills and techniques would you employ in order to break the deadlock?