Between 29th and 31st March 2019, NALSAR University of Law of hosted a national level inter-law school mediation tournament.
The problem, ‘A Suitable CEO’, was drafted by Ms. Kritika Krishnamurthy, on behalf of the Centre for Mediation and Conciliation, Bombay Chamber of Commerce and Industry. It drew from disputes regarding corporate governance issues recently faced by big Indian business houses, such as tensions created by appointment of outsider CEOs in family-run conglomerates, and allegations of conflict of interest against a top banking executive.
The Format
All the tournament rounds were based on the same central problem. For each round, teams were given different sets of confidential information, and the confidential information of each successive round built upon the earlier round. Each round thus presented new dilemmas and complexity to the teams. The finals were adjudicated by a panel consisting of mediation, business and legal experts.
The Contours
Did the Maya Group make a mistake by appointing an outsider as CEO? Or has Kushal Maya, the Maya Group’s erstwhile CEO, lost confidence in his own choice in the face of family pressure? Can Kushal Maya and Varun Sood reconcile their differences? Or will Varun be forced to move on?
The Who, What and Why
The Maya Group is a well-established family-owned multi-national business enterprise, headquartered in a country like India. Its core values are: employee and consumer welfare; and internal and external transparency. Maya Holding Co. is the holding company for the group’s subsidiary companies. The holding company is controlled by family-owned trusts.
Upon Kushal’s retirement, the group offered the post of Maya Holding’s CEO to Varun Sood (the first outsider in the group’s history). Varun is a US Silicon Valley-based executive with expertise and experience in the IT sector. Although initially reluctant to take up the role, Varun accepted the offer in February 2018, after Kushal assured him of autonomy.
As the CEO, Varun began realigning the Maya group companies’ internal technology and employee performance related processes. Varun and Kushal also became good friends and would openly discuss office matters (strictly unofficially, according to both of them).
But after Varun appointed independent committees for the group’s new acquisitions, and cancelled contracts with an old business partner of the group, trouble emerged. A number of old managerial employees of the group companies opted for voluntary retirement. They got replaced by younger, better-paid staff, which upset the remaining older staff. Kushal was unhappy with the cancellation of the business partner’s contracts. The group companies’ staff also complained to the Maya family – they are dissatisfied with Varun’s style of working.
In February 2019, the nominee directors on the Board of Maya Holding moved a resolution for the removal of Varun. At this time, the independent directors were firmly behind Varun.
The news of trouble brewing within the Maya Group created ripples in domestic and international markets. The group’s stock value an market valuation plummeted due to decreased investor confidence. An internal e-mail indicated that many of Kushal’s brothers and sisters had advised him against appointing Varun as CEO. Since the Maya Group is a significant contributor to the country’s GDP, the central government has intervened and suggested that both parties attempt mediation. Varun Sood is the requesting party.
The Analysis
A mediator does not control or seek to control the parties’ decisions, but is expected to facilitate meaningful engagement between the parties. Understood in this way, the task of a mediator is not so much to ‘settle’ the dispute, but to help the parties ‘resolve’ their differences themselves.
In my understanding, it is crucial that a mediator make the right decisions at the right time, which would require that they:
- Get the parties to briefly yet clearly give their side of the story;
- Quickly (as early into the mediation as possible) identify the zone of conflict, for issues on which an agreement seems unlikely, and the zone of possible agreement i.e. the broad set of common interests and/or interests on which parties appear to be willing to collaborate;
- Help the parties utilise the mediation session to clearly identify each other’s core interests, and communicate these to each other. The mediator should also try and ensure that the parties agree upon the issues they want to address during the mediation. Depending upon how the session proceeds, the mediator could also inquire of the parties if they wish to reprioritise/add/delete issues; and
- Know when to push parties for more information gathering, when to let which party speak (and when to intervene/politely cut off a party) and when to call for what kind of caucus, etc.
When parties to a mediation move towards any settlement, I feel there is one question everyone at the table must ask of themselves – In ironing out our differences, did we spend time enough waiting for the creases to disappear?
If the above makes sense, then should not a mediator/the mediators push parties to clearly identify and express existing differences (especially the irreconcilable ones) from the very beginning?
One of the main reasons for the present dispute were the completely different working styles of Varun and the Maya Group. Ironically, therefore, one of the main reasons Kushal had brought in Varun was the latter’s dynamic business strategy; but Varun’s ‘go getter attitude’ is also the key cause for the internal resistance he was facing. The mediators ought to have asked the parties to come up with ways to address this important difference. They could have posed questions such as:
- Despite knowing that Varun’s working style was different, why did Kushal pick him?
- Does Kushal expect Varun to change his working style? Is Varun willing to do so, and to realistically what extent?
Importantly, with the release of each successive round’s confidential information, the zone of possible agreement kept expanding.
In the first round, the confidential information was created such that there was not much common ground for the parties to work together. Varun was averse to exploring something (smart technologies) that Varun thought critical to the company’s growth, and retaining his position in the company. As a result, initially, it did not seem like there would be much that the parties could collaborate upon.
In the second round, the confidential information created some traction. It was revealed that Kushal did not want an matter regarding irregular contracts, which had been discovered at the behest of Varun, to be taken up at the board meeting. So Kushal realised that he had to keep Varun happy.
In the next two rounds (quarter and semi-finals), the confidential information revealed large scale financial irregularities in the companies, and employees threatening to turn whistle blowers. Also, it came to light that the CBI investigating the company, and this made it imperative for Kushal to skilfully manage any internal staff who was privy to the irregularities. Since the confidential information also indicated that Varun was not really interested in leaving, all that was required that the parties and mediators create clarity about Varun and Kushal’s roles and responsibilities in the company going forward.
In the final round, once Kushal and Varun revealed their willingness to work together, it became evident that both sides’ dominant strategy was cooperation. Immediately, the mediators ought to have stepped in and asked Kushal and Varun to clearly identify their respective internal division of roles and responsibilities. Also, since the internal dissatisfaction was clearly responsible for Varun’s attempted removal, the mediators could have asked Varun to think of ways of assuaging the staff, without necessarily changing his working style. In a private caucus (one-on-one session with the mediator) with Kushal, the mediators could have also questioned Kushal about whether he could spend the amount reserved towards Varun’s severance in some other constructive way. By doing this, the mediators would have helped the parties in coming up with creative solutions.
For me, a ‘successful’ mediation session between Kushal would comprise of the following ingredients:
- The parties should have taken the mediators’ assistance, and spent time deliberating upon the past. This would have helped everyone understand how and why differences actually arose between Kushal and Varun.
- To do so, the principal negotiators from each side ought to have acknowledged that the basic work ethos of the negotiating parties were very different.
- Keeping the above two in mind, the mediators should helped the parties identify multiple options for working together in the future, and then ask both sides to collectively choose any one option.
The Final Word
Teams should never apply strategies learnt from mediation handbooks mechanically. Although a positive and forward-looking attitude is essential to the mediation process, how practical is it to begin by making strong assumptions about the final outcome of a session? The overarching objective of the process of mediation is to identify and address differences meaningfully.
A successful settlement will work well in the long run, for all stakeholders. So sometimes, parting ways on good terms may be a better solution than a patch fix / short term solution which could worsen a relationship.
About Author
Paaras carries over three years of experience at the bar, having represented and advised corporate and individual clients on private/public civil, commercial and criminal legal disputes before judicial and quasi-judicial forums in Karnataka, New Delhi, Jaipur and Raipur, in the techno-commercial legal space. Presently, he is working with a team of four lawyers that advises clients predominantly in the energy sector, with a focus on electricity laws. Earlier, during his college years, he interned with Mr. Ashok Pannikar at Meta-Culture (a conflict resolution studio) in Bangalore. Before relocating to Bangalore earlier this year, he was working as the Teaching Assistant for Law and Economics at his alma mater, NALSAR University of Law, Hyderabad. There, he was also coaching students on elements of non-adversarial dispute resolution and argumentation.
His interest in mediation arises from his belief that conflict can be addressed more effectively when people have a better understanding of problems from others’ perspectives. Mediation offers conflicting parties the option of cooperating to address their issues, which he believes, can often lead to longer lasting and less expensive solutions. He enjoys studying and understanding philosophy, human behaviour and communication.
