As far as famous negotiations go, this was a classic professional sports negotiation case. Starting back in March of 1998, National Basketball Association (NBA) team owners and players were at loggerheads over their new contract. At midnight on June 30, 1998 the owners declared a lockout, halting preparations for the start of the 1998–99 NBA season. The players and owners negotiated for six long months, during which time the two sides collectively lost hundreds of millions of dollars.
In the end, it was a deadline that resolved the conflict. The team owners declared that if they didn’t reach an agreement with the players by January 7, 1999, they would cancel the rest of the season. In effect, the owners placed a final, arbitrary deadline on their participation in the famous negotiations; the chosen date had little significance to either side.
Through public statements, the owners committed themselves to declaring an impasse if the deadline came and went. In the early-morning hours of January 6, the two sides agreed to contract terms that dramatically favored the owners.
We’re all familiar with negotiation case stories of tough opponents who bargain for months without making progress, only to reach resolution in the final moments before the passage of a critical deadline. Without a deadline, negotiators are tempted to use stalling tactics, hoping to pressure the other side into giving in.
Despite the proven effectiveness of deadlines, they remain one of the most misunderstood negotiation strategies. Many negotiators hesitate to place a deadline on their talks. In his research, when professor Don Moore of Carnegie Mellon University asked people to predict the effect of deadlines on negotiations, even experienced negotiators predicted that the presence of a shared deadline would hurt them by forcing them to concede more quickly than they would like, thereby helping their opponents.
While there is some truth to these assumptions, it’s also true that deadlines increase pressure on the other party to reach an agreement in almost any negotiation case. Negotiators who recognize that deadlines affect everyone equally can use them to defuse costly stalling tactics. For example, car salespeople sometimes try to draw out price negotiations, hoping the amount of time you’ve invested will increase your commitment to making the deal. To defuse this strategy, try beginning your negotiation for a new car by informing the salesperson that you have only an hour to make a possible deal.
Because deadlines put pressure on everyone, they can get talks moving again. Don’t be afraid to set deadlines and commit to them. Furthermore, when negotiators tell their opponents about an existing final deadline, they get better deals. Why?
First, because both sides are more likely to work toward a dispute resolution agreement before the deadline passes, you reduce your risk of walking away with nothing. Second, when an opponent knows about your deadline, he’ll make concessions much more quickly. The NBA owners’ January 7 deadline would have been useless if they had kept it secret; the players’ union would have expected to keep negotiating past the deadline. It surely was one of the famous negotiations we can all learn from.
What have you learned from famous negotiations? Share your story with us in the comments.
Originally published in February, 2010.
You make excellent points on deadlines. Time is the ultimate lever when it comes to establishing power. You have to be careful when using deadlines, if you are in a distributive negotiation, revealing a deadline could cause the other party to use that information against you. The Owners were effective because the players had more to lose by missing the rest of the season. The owners effectively placed the deadline onto the players.
The idea is to place your time pressure onto the other party. Otherwise, if you walk into the deal saying, “I’ve gotta have this closed by Friday”, some negotiators will make you pay by using your deadline against you. You want to change that statement to “You’ve got my attention until Friday, and then we are moving on to other priorities”, etc. For more information check out http://bit.ly/61YfKZ
I agree with much of the article as deadlines may artificially help balance power and force folks to establish their BATNA.
The FLSA allows for such deadlines as labor contracts generally expire. This facet of negotiation worked for us while negotiating a multi-million dollar contract. The deadline helped the parties focus on closing a fair deal for both groups.
Yet I have also been involved in negotiating 10 digit contracts under the Railway Labor Act where no such deadline can occur. The NMB must declare an impasse and even then the President and Congress can interfere with the process — all in the name of preventing disruptions to the American public. Under the RLA, contracts have gone on for as long as 15 years without resolution because of failure to establish a deadline that would force counterparts to focus on settlement — to bring them to the table in a good faith effort of creativity and collaborative problem-solving.
How would you propose the RLA be re-drafted to address this inequitable difference between the FLSA and the RLA?