A Powerful Strike-out

By on / Business Negotiations, Daily

Adapted from “Why Your Next Negotiation Power Trip Could Backfire,” first published in the Negotiation newsletter.

Powerful negotiators generally don’t devote enough time to considering the other side’s point of view, Northwestern University professor Adam D. Galinsky and New York University professor Joe C. Magee have written in Negotiation. As a consequence, the powerful may fail to anticipate “irrational” behavior from their counterparts. When confronted with your demands, someone may refuse to concede on principle despite a weak bargaining position.

Here’s one example, as reported by Russell Working in the Chicago Tribune. During 2003 contract negotiations with its service employees’ union, the Congress Plaza Hotel in Chicago insisted on a salary freeze and the right to subcontract certain jobs. Blaming a slump in the travel industry for its tough stance, the independently owned hotel took a gamble that Unite Here Local 1, a relatively low-clout union, would cave. Yet with their salaries already trailing industry averages, 113 Congress employees, primarily housekeepers and restaurant staff, chose to strike instead. The hotel brought in temporary workers to replace them.

Seven years later, neither side has budged. As of late 2010, dozens of strikers continue to report to the picket line in front of the hotel, scaring away potential customers. To cope, the Congress has slashed its rates.

It’s unclear how much the owners of the Congress, led by the wealthy Nasser family of New York, have sacrificed financially in the strike or how committed they are to reviving the 114-year-old hotel’s reputation. But for those motivated to grow and improve their assets, the Congress offers a cautionary tale. The hotel owners underestimated their employees’ tenacity and overlooked the union’s outside interests. For the union, the strike allows it to communicate to other negotiating partners, including nationwide hotel chains, that it is prepared to wait out a powerful counterpart.

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