Learning from Crisis Negotiations

The year 2020 continues to offer negotiators lessons on the virtues of adaptability.

By PON Staffon / Business Negotiations

When businesses and industries are hit by an unforeseen disaster, they often need to quickly launch crisis negotiations and wrap them up as soon as possible. But time pressure can stifle essential elements of sound dealmaking, including rational thinking, perspective taking, and collaboration, while also promoting dysfunctional competition. Recent negotiations within industries facing crisis offer some concrete guidance on how to make the best of a terrible situation.

The show must go on

In March, the Covid-19 pandemic ground the entertainment industry to a halt. Plays, musicals, films, and TV productions—sources of joy and vitality for their participants and viewers alike—suddenly became hazardous environments conducive to the spread of a deadly disease.

Production lots went dark, performers and staff filed for unemployment, and industry leaders tried to figure out what to do. In June, the film and television industry, led by the Alliance of Motion Picture and Television Producers (AMPTP), released a 22- page “white paper” as a “first step” in the longer process of negotiating Covid-19 protocols that would allow cameras to roll again Variety reports. Negotiated by a safety task force made up of studio and union leaders, the document called for regular Covid-19 testing of cast and crew, physical distancing and the wearing of personal protective equipment (PPE) when possible, the presence of independent Covid-19 compliance officers on set, and other protocols.

Two weeks later, Hollywood’s major unions released a more detailed report, titled “The Safe Way Forward,” that stipulated a “path for employers to provide a safer workplace for their cast and crew members in a pre-vaccine Covid-19 world.” The union called for all cast and crew to be tested for the virus before their first day on set and regularly thereafter. The guidelines also mandated that sets
be divided into zones to help protect cast members who would need to forego protective gear while filming. The report was spearheaded by director Steven Soderbergh, the chair of the Directors Guild of America’s safety committee.

In July, as Covid-19 tests became more available in the United States, studios began restarting a limited number of TV and film productions after negotiating the specific terms for each project
with unions. Meanwhile, studio and union representatives got back to work negotiating a long-term industrywide agreement on Covid-19-related work rules. The thorniest issues included not only safety protocols, such as the frequency and type of virus testing, but also whether cast and crew members would receive paid sick or quarantine leave if they or a member of their household was diagnosed with the virus.

The talks dragged on for four months, with unions and studios blaming each other for the delays. The six unions involved in the negotiations presented a united front: They had “never been so united on an issue and are holding fast to the need for frequently scheduled [Covid-19] testing,” Art Directors Guild president Nelson Coates wrote in a letter to guild members.

In an invitation to an “emergency” Zoom meeting, SAG-AFTRA, the Screen Actors Guild, told Hollywood talent agents that talks with the AMPTP had stalled over the issue of quarantine pay, Deadline reports. Studios were facing skyrocketing production costs as a result of pandemic-related expenses. When the film Jurassic World: Dominion went back into production on July 6 in New Zealand, 27,000 Covid-19 tests were required at a cost of $3 million.

On September 21, the major entertainment studios and unions announced they had reached agreement on a comprehensive set of safety protocols. The deal cemented many of the procedures outlined in the preliminary reports, including a zone- based safety system for sets, strict testing regimens, and mandatory use of PPE by those not being filmed. Performers, deemed “uniquely vulnerable because they are not able to utilize PPE and physical distancing when cameras are rolling,” would need to be tested for Covid-19 at least three times per week, according to the deal. In addition, all employees were promised a maximum of 10 days of Covid-19 paid sick leave or quarantine pay from each producer they worked for, along with a guarantee that they will be reinstated once cleared to work.

“How much sourdough starter for those Clorox wipes?”

Bartering, an ancient form of negotiation, appears to be experiencing a resurgence as a result of the Covid-19 pandemic, write Johns Hopkins University professor Brian C. Gunia and Ohio State University professor Roy J. Lewicki in a recent article in the Negotiation Journal. Public Facebook posts mentioning “barter” or “trade” shot up 250% in March and April, and bartering of packaged goods between individuals is expected to have jumped 50% by the end of 2020.

Several factors may be motivating individuals and organizations to exchange goods and services rather than buying or selling them. High unemployment and revenue shortfalls have left many with less money to spend; to get what we need, we may find we need to give something away. In addition, spending more time at home during quarantine may promote bartering within families and communities, as in the case of neighbors who take turns babysitting or tutoring each other’s kids.

Do we bargain differently when bartering as compared to when money changes hands? Little research has been done on the topic, but there’s reason to believe we may be more creative, cooperative, and relationship-focused when bartering than when negotiating financial transactions, write Gunia and Lewicki. It’s not always easy to identify a trading partner; upon making a match, we may feel a special connection. And, particularly during a crisis, bartering can highlight people’s urgent needs, which may elicit a desire to help rather than compete with them.

You can expect bartering to be a less efficient process than financial negotiation. Finding the right trading partner can be challenging, and a focus on the relationship might lead us to overlook the competitive aspect of negotiation. Still, there are plenty of reasons these days for individuals and organizations alike to try out this age-old practice.

What did we learn?

During the early days of the pandemic, uncertainty regarding the prevalence of the coronavirus and the duration of the disruption to daily life, combined with shortages of Covid-19 tests and PPE, rendered negotiations on restarting productions incredibly difficult. “Negotiating with producers during a pandemic is in some ways building the plane as we are flying,” Coates wrote to guild members. Entertainment industry leaders were wise to put the scaffolding of temporary protocols in place and give themselves time to negotiate a more lasting solution.

Another pivotal move by the unions was to release a more detailed document than the industry white paper that laid out their own preferred safety protocols. Whenever you want to steer the discussion, it can be wise to present a written draft of your envisioned deal to your counterpart, Tufts University professor Jeswald Salacuse has written in Negotiation Briefings. “Many experienced negotiators believe that the person who controls the draft controls the talks that follow,” according to Salacuse. Because they can speed up the dealmaking process, draft documents may be especially useful when parties in crisis are under intense time pressure to reach a deal, even if just a temporary one. Realize that your counterpart may object to the idea of being boxed in to your version of the deal, so be open to setting the draft aside.

Where there’s fire, there’s smoke

With many restaurants closed nationwide and tourism at a standstill, the U.S. wine industry was also ravaged by Covid-19 this spring. For wine regions on the West Coast, the horrible summer was rendered immeasurably worse by wildfires that struck in August and September, just as harvest time was beginning.

While relatively few crops burned, a potentially large percentage of the season’s grapes were tainted by the smell of smoke. “Smoke taint” can give wine the taste of “campfire, ashtray, and char,” rendering it “unpleasant and unmarketable,” writes Augustus Weed in Wine Spectator.

Unfortunately, smoke taint is often undetectable in unprocessed grapes; it’s only after they are fermented that the “smoky notes” assert themselves. Wineries in Northern and Central California began hiring private laboratories to analyze grape and juice samples for smoke taint compounds, writes Weed. But the labs quickly got backed up, leaving some growers facing a difficult choice between leaving the fruit on the vine or investing in harvesting and hoping it turned out to be untainted.

Growers’ contracts with vintners generally stipulate that winemakers can reject low-quality grapes, such as those with smoke taint. This year, many wineries, including bulk buyer Gallo, have told growers that they will accept only grapes that have passed lab tests proving they are unaffected by smoke, according to the California Association of Wine Grape Growers. Wine consultant Thomas Rivers Brown told Wine Spectator that he expected only about 20% of the 2020 crop in California’s storied Napa Valley to be bottled. Meanwhile, both grape growers and vintners face rising insurance costs and exemptions for smoke taint in their policies.

The situation can set longtime business partners up for conflict: “A winery doesn’t want to expose themselves to liability or make bad wine, and the grower is upset because they feel like they’ve
done nothing wrong,” winemaker Sam Tannahill told Wine Spectator.

Toward solutions

Some wineries, focused on the long term, are looking for ways to share the risk of smoke taint with grape farmers. Winemaker Joe Wagner made what he called the “tough decision” to reject 2,000 tons of grapes from 15 growers in Southern Oregon, but he told Wine Spectator that he wanted to help growers cover the costs of crop insurance.

Several independent vintners are offering growers tank space so they can make wine themselves and sell it on the bulk-wine market. And Napa grape farmer Pete Richmond told Wine Spectator that some wineries had agreed to pay him $1,500 per ton to leave grapes that are suspected of having smoke taint on the vine. “Paying growers not to pick is pretty innovative and helps maintain relationships,” Richmond said, citing shared risks and values. “We’re in this together.”

Grape farmers are trying to negotiate flexibly as well. Grower Andy Beckstoffer said that if wineries had to downgrade premium single-vineyard wines to blends as a result of smoke taint, he’d accept lower prices for his grapes, and even lower prices for grapes that had to be used for bulk wines. “We’ll make sure you get your processing costs,” he told Wine Business.

By extending a helping hand during the crisis, wine-industry players are improving their odds of making it through a disastrous year. But for the industry to thrive in the long term, most grape growers and winemakers agree, the root cause of smoke taint and wildfires—climate change—needs to be addressed. “There’s been smoke all up and down the West Coast for several years, and our industry needs to take a serious look at how to deal with it so that it doesn’t become endemic,” Tannahill said to Wine Spectator. Those larger efforts, too, will require creative partnerships and cooperation.

Negotiate your way through crisis:

  • Bargain in stages. Rather than rushing into a long-term agreement, try to put a temporary one in place to buy some time to get it right.
  • Consider presenting a draft. You may be able to anchor the discussion in your favor by putting a tentative deal in writing, but beware the risk of seeming too pushy.
  • Take a long-term perspective. It would be a mistake to let the stress of an immediate crisis destroy valuable business partnerships. Try to find creative ways to help struggling partners make it through tough times.