No one wants to engage in crisis negotiations. When parties need to hurriedly work out a solution to a shared problem, time is short, tempers are frayed, and the disaster is looming. Feeling they’ve exhausted good-faith bargaining, parties in crisis negotiations may believe they face an impossible choice between caving in to the other side’s demands or standing firm and watching the worst-case scenario unfold.
That seems to be the choice that the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) thought they faced when their negotiations for a new labor contract stalled in mid-2014.
The lack of agreement quickly became a problem. The PMA accused the ILWU of a deliberate work slowdown that left billions of dollars in imported consumer goods stranded at ports in Los Angeles and Long Beach, California. For its part, the union said poor management was to blame for delays. The longshoremen and port management have had a contentious history for decades, according to the New York Times.
After the West Coast Ports Conflict, Damage Remains
The financial costs mounted, putting a damper on the holiday season for many U.S. retailers. In January 2015, a federal mediator entered the dispute. Then U.S. Labor Secretary Tom Perez got involved, and a deal was reached on February 20. Union workers ratified their new five-year labor contract by May.
Perez characterized the negotiations as a difficult challenge. “Helping to facilitate resolution involves the development of mutual trust, and so I had to do that and I had to do it fast because I didn’t have the luxury of time,” he said, according to CNN.
The damage caused by the shipping delays at ports ranging from Southern California to Seattle were immense, with costs potentially reaching $7 billion, according to the Wall Street Journal.
Though Perez expressed confidence that the reputation of the West Coast ports would bounce back, others were more skeptical. According to a Journal of Commerce survey, 65% of shippers planned to send at least some of their cargo to other ports that year and the following year due to the crisis at the West Coast ports.
In a CNBC editorial, U.S. Chamber of Commerce president and CEO Thomas J. Donohue, National Retail Federation president and CEO Matthew R. Shay, and National Association of Manufacturers president and CEO Jay Timmons wrote, “the global supply chain and free market forces will simply move on and find less risky options of getting goods to market” if labor and management at the West Coast ports continue to have difficulty seeing eye to eye.
Rather than encouraging an end to collective bargaining, Donohue, Shay, and Timmons wrote that “an evaluation of how management and labor negotiate future labor contracts covering the nation’s ports” was needed.
Here are four additional advice points to help parties avoid the need for crisis negotiations:
1. Build trust early.
Don’t wait until an urgent deadline is looming to begin the rapport-building phase of a negotiation. Instead, launch negotiations as early as possible to take full advantage of the time you will need to establish trust. If your relationship is ongoing, check in with the other party periodically throughout the life of your contract to ensure that you can mutually address any issues that come up before they become serious problems warranting crisis negotiations.
2. Beware overconfidence.
Crisis negotiations, including labor conflicts and strikes, often arise because each side falls prey to the common tendency to be overconfident in the strength of their negotiating positions and their ability to negotiate a great deal. We also tend to downplay the potential for long-term damage if we fail to reach agreement. To avoid the overconfidence trap, think through all of the possible scenarios that could unfold and prepare for them accordingly.
3. Avoid extreme demands.
When talks get heated, resist the temptation to draw a line in the sand. When you make firm demands, you may miss out on more creative proposals that could meet your needs even better. In addition, demands increase the tendency to escalate commitment to hardline positions in crisis negotiations.
4. Seek an outside opinion.
Third parties can add a much-needed dose of rationality and impartiality in crisis negotiations. To keep a conflict from escalating, ask a disinterested adviser, such as an industry expert, for an objective critique of your plans. You might also hire a third-party mediator to help you reach agreement. Rather than imposing a solution, a mediator will work with you to find a version that meets all parties’ interests.
Establish Crisis Management Protocols
Organizations often establish elaborate business crisis management plans. Through a rapid, centralized response, an organization can shift swiftly and efficiently from day-to-day operations into crisis-management mode, whether that crisis involves a building evacuation, a tumble in the company’s stock price, or a product recall.
How can this case study help you in future crisis negotiations?