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Public Leverage in Negotiation Outcomes

negotiations-leverage

Summary

Four important points about how parties can publicly expose the issues and help control the ultimate course of the negotiation outcome.

by Marty Latz

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Seldom does a day go by that I don’t read in a newspaper about a high-profile negotiation. Perhaps it is a union picketing when talks break down, or a board of directors attempting to ward off an unwanted merger. It might even entail the possible settlement of a litigation lawsuit between prominent companies.

When I read about these, I often think about why the negotiation has “gone public.”

My first thought always is to assess who initiated the public coverage of the negotiation. Did a party issue a press release or invite the media to cover the negotiation? Or is the media covering it in spite of the wishes of the parties, who would rather negotiate behind closed doors?

If one of the parties “went public,” then it’s probable that party believes playing it out in public has some benefits (of course, the public element merely may be just feeding that party’s ego).

If it’s strategic, though, what could be the advantages and disadvantages of “going public”?

Think about the following in deciding if and when to “go public” in your negotiations:

1. Influencing the decision-maker

In high-profile legal negotiations, particularly those involving alleged criminal acts, the party “going public” may be trying to influence potential jurors – the ultimate decision-makers if the case goes to trial.
And in some merger and acquisition negotiations, the ultimate decision-maker could be the public company’s shareholders. One useful way to influence their behaviour is through the media.

2. Who does the public view as more “fair“?

Many companies and individuals place a considerable value on their reputation and how the public and their colleagues perceive them. Winning the public relations battle in a negotiation thus can have an extensive impact on their ability to achieve success not only in the negotiation, but also in other contexts where their reputation matters.

For instance, the National Hockey League’s collective bargaining agreement expires Sept. 15. Both the NHL and the players’ union already are at work attempting to influence the public’s — especially hockey fans’ — perception of the fairness of their positions.

Why? Both sides’ success depends in part on their ability to please the public’s interests. If a player has considerable negotiation skills, a good reputation and can put fans in the seats, he has more value to a team. If the team or the league turns off its fan base by appearing to take a greedy stand in the negotiation, it may “win” the negotiation but lose its fans.

Negotiation with governmental entities, such as cities, also entails this element. After all, elected officials constantly agonize about how the public perceives them. Evaluate this when you see police and other public employee unions negotiations going public.

This element, of course, is the ultimate in peer pressure.

3. Enhancing leverage

Parties may also go public to try and maximise their leverage. How? By suggesting publicly that their alternative to doing the deal with the other side is perfectly acceptable.

Let’s say a union leader publicly proposes that they have prepared for a strike. Simply making this statement in public may enhance the likelihood that their employer will consider a strike as a more realistic possibility.

A reasonable evaluation of the leader’s statement is that he would not go public and put his credibility on the line if it were not so. Since leverage is premised in part on the parties’ perception, the employers’ changed perception of the union’s willingness to strike may strengthen the union’s leverage.

4. Controlling the agenda

Finally, parties may go public to attempt to control the negotiation agenda. They might do this by highlighting the importance of certain issues, or by increasing the stakes in the negotiation.

By publicly commenting on particular issues or publicly committing to certain positions, parties also may curb their ability to backtrack on those issues. Backtracking on issues after publicly committing to them involves lost credibility. Nobody wants to endure this.
Of course, disadvantages also exist when going public, the most prominent of which include: 1) the increased competitiveness often associated with public battles; 2) the decreased flexibility which happens once positions have been publicly taken; and 3) an inability to control how the media characterises your position and the possible miscommunication that might thus occur.

So next time you read about a negotiation in the newspaper, think about why the parties are fighting it out in public. It just might help you keep the peace in your future negotiations.

Marty Latz, a negotiation columnist for The Business Journal of Phoenix.

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