The National Football League’s Pittsburgh Steelers faced a dilemma. Mid-contract, the team’s star wide receiver, Antonio Brown, asked the team to improve upon the six-year, $42.5 million deal they negotiated back in 2012. Brown had risen to become the best receiver in football and believed that he was underpaid. How did both sides come to an agreement and create mutual gains?
Performance-based incentives for Antonio Brown
The Steelers wanted to reward Brown for his amazing performance and keep him motivated. Yet the team had a longstanding policy of not re-negotiating with its players, other than quarterbacks until they had one year left on their contract, reports Jeremy Fowler for ESPN.com. If the Steelers broke that policy for Brown, other players might ask for the same favor.
What to do? The team gave Brown a $4 million advance on his 2017 salary. The move, by raising his season earnings to $10.25 million, placed Brown within the ranks of the top-10 highest-paid receivers for 2016. The decision should pave the way for Brown to negotiate a “monster deal” in 2017, according to Fowler.
The Steelers had used this route previously with Brown, rewarding him for his 2015 performance by advancing $2 million of his planned 2016 earnings. In doing so, the Steelers can uphold their policy against negotiating mid-contract while also “keeping a highly productive player happy,” notes Fowler.
The story highlights ways to enhance your negotiation skills through mutual gains negotiation.
What do “mutual gains” mean in negotiation?
We often assume that achieving mutual gains means that both sides do better off financially than they would if they had simply competed on price. But mutual gains go far beyond the issue of price.
In integrative negotiations involving multiple issues, as compared to distributive negotiations involving just one issue, parties often achieve mutual gains by making wise tradeoffs across their differing preferences across issues. Consider the simple case of a couple that is trying to decide how to spend their evening on the town. If one member cares more about what movie they see, and the other cares more about where they have dinner, each can make concessions on an issue of low value in exchange for a concession on an issue he or he values more.
How to create mutual gains
Let’s look at other types of differences that can be leveraged to create mutual gains:
Negotiators can achieve mutual gains by trading on their differing beliefs about the future. Suppose (as is often the case) that an entrepreneur is highly optimistic that her product will succeed, but the potential investor with whom she is negotiating is more skeptical. The investor might agree to pay a certain amount upfront, with future payouts contingent on the product’s success. By trading on their different forecasts, the parties are able to reach a deal through a so-called contingent contract—and reap mutual gains.
Negotiators can use differing risk preferences to realize mutual gains. Take the case of two firms that are considering a joint venture, where one is more risk-averse than the other. The more risk-averse party might offer to give the other party a larger percentage of potential profits in return for accepting a larger percentage of losses. This deal would achieve mutual gains not by maximizing both parties’ earnings, but by addressing the key interests of both parties.
Negotiators can also secure mutual gains by trading on their different time preferences. If one party in joint venture values early returns more than the other, it could propose that it accept a greater percentage of early profits and a smaller share of later profits relative to the other party.
Parties’ differing values can also offer opportunities for mutual gains, according to Massachusetts Institute of Technology professor Lawrence Susskind. A manufacturer that is highly motivated to maximize profits might achieve cost savings by replacing aging, polluting equipment with more cleaner, more efficient technologies—a move that is likely to appease community groups that are more focused on pollution reduction.
How to achieve mutual gains through reframing
In their “non-negotiation” with Brown, the Steelers gave the star what he wanted—more money for the current year—in exchange for a concession, namely that the two sides not formally renegotiate his contract.
In this case, the negotiators achieved mutual gains through reframing the issue in question—from a renegotiation to a salary advance. Negotiators can often benefit jointly through this type of reframing. An employer might raise a high-value employee’s compensation above a predetermined range by compensating her with stock options or a tuition benefit, for example.
In sum, if a negotiation seems terribly complex, take heart: the more issues there are on the bargaining table, and the greater the differences among parties’ preferences, the more opportunities you likely have to reap mutual gains.
Share your mutual gains success stories with our readers in the comments.