Teach Your Students to Address Fundamental Value Differences While Negotiating Indigenous Land Rights

Indigenous land rights have been a key aspect of negotiations by private companies and governments around the world. Indigenous land rights are the rights of indigenous peoples to land and natural resources, which they have occupied for hundreds, if not thousands, of years. Land is of fundamental importance to many indigenous peoples because of religious significance, self-determination, and tribe identity. Negotiations between private companies or governments and indigenous peoples often involve complicated issues, including how to address identity and fundamental value differences, as well as resource allocation.

The Teaching Negotiation Resource Center (TNRC) has developed a wide variety of negotiation simulations to teach students how to negotiate indigenous land rights. Three of the TNRC’s most useful simulations for negotiating indigenous land rights are Big Pipeline in Swagwit, The Guatemala Role Play, and Hydropower in Santales.

Big Pipeline in Swagwit

This thirty minute, two-party, two-issue integrative negotiation between representatives of a construction company and a Native American group addresses building a pipeline through indigenous land and allocation of construction jobs associated with the project. Major lessons include:

• Knowing your own BATNA and interests.
• Trading across issues you value differently.
• Using standards you both accept to help you choose among options and packages.
• Effective cross cultural communication.

The Guatemala Role Play

This three hour, six-person mediated negotiation among representatives of the Guatemalan government, military, rebel groups, indigenous people, and U.S. government addresses post-armed-conflict human rights, land claims, and cultural and political rights issues. The three issues on the table are how to protect human rights, how to deal with Mayan land claims, and how to recognize Mayan cultural and political rights. Major lessons include:

• This role play underscores the relevance of general lessons about “basic” negotiation skills as they apply to multi-party, multi-issue negotiations: e.g., active listening, improving one’s BATNA, focusing on interests rather than positions, inventing options for mutual gain, etc.
• Imparts an understanding of the processes of international treaty negotiations as they are currently conducted.
• Highlights the importance of understanding the human dimension in ethnic conflict and the difficulty of proposing solutions without grasping the complexity of the relationships.
• Emphasizes the importance of understanding the interests of internal constituencies and designing negotiation strategies which manage the link between internal and external negotiations, as well as the importance of creating external coalitions without letting internal coalitions crumble.

Hydropower in Santales

This two hour, six-party, multi-issue mediated negotiation addresses the construction of a hydropower plant in South America. The development of the project could bring jobs and infrastructure investment to Villaverde, but would probably reduce the flow of the river, which could threaten the livelihoods of many community members, including local residents and nearby indigenous people. Major lessons include:

• Expose participants to different viewpoints and interests regarding energy development and related land use dilemmas.
• Importance of voicing those different interests and perspectives early in the project development process (e.g. for identifying project impacts and possible design alternatives).
• Questions about the role and responsibility of the mediator in: helping parties listen to each other, raising constructive options, clarifying solutions reached, and drafting written agreements.
• Build competency with brainstorming creative options based on party interests.
• Address fundamental value differences as a key source of disagreement among parties.

Take your training to the next level with the TNRC

The Teaching Negotiation Resource Center (TNRC) offers a wide range of effective teaching materials, including

• Over 200 role-play simulations
• Critical case studies
• Enlightening periodicals
• More than 30 videos
• 100-plus books

Most TNRC materials are designed for educational purposes— for use in college classrooms or corporate training settings. TNRC cases and exercises help mediators and facilitators introduce their clients to a process or issue and help individuals who want to enhance their negotiation skills and knowledge.

Role-play simulations introduce participants to new negotiation and dispute resolution tools, techniques and strategies. Videos are also a helpful way of introducing viewers to key concepts, and TNRC books, case studies, and periodicals address the theory and practice of negotiation and conflict management.

Check out all that the TNRC has in store >> 

Q: Last week I sat in on a negotiation among some of our company’s partners. Just when it seemed that they had reached a stalemate, my boss cracked a joke that instantly lightened the mood. Almost magically, she was able to rejuvenate the conversation—and reemphasize her position—in a way that proved effective. But I can also recall times when jokes have flopped in meetings. This experience left me wondering: When and how should I use humor during negotiations (if at all)?

A: Humor may seem like a frivolous distraction, but few other conversational strategies have the ability to transform moods (in both positive and negative directions) as quickly and with such impact. Humor influences whom we are drawn to and whom we trust, can help us cope with negative circumstances, and can make work and life more enjoyable. However, in the workplace, where norms of appropriateness and professionalism are often stringent, ambiguous, and consequential, it can be tricky to figure out when humor can or should be used as a means of improving our social interactions.

Several benefits come with using humor successfully. For example, research led by Nale Lehmann-Willenbrock at Universiteit van Amsterdam shows that using humor induces positive emotion, which in turn triggers positive communication and better team performance. Furthermore, humor has been shown to boost creativity. When coworkers with high levels of trust among one another used sarcasm (a specific type of humor in which you say the opposite of what you mean) in their conversations, they performed better than others on tasks that required creative insight, Li Huang of INSEAD found in her research.

In research conducted with Brad Bitterly and Maurice Schweitzer of the University of Pennsylvania’s Wharton School, I found that telling a joke that elicits laughter and is viewed as funny and appropriate projects confidence and competence (by conveying an accurate read of social dynamics), and also increases our status.

Although the benefits of well-timed quips may sound appealing, a joke can fail in many ways. Jokes can be perceived as unfunny or inappropriate (or both). Because an inappropriate joke can be damaging, you should keep lewd, derogatory, or other deprecating jokes to yourself.

Negotiations are often fraught with tense moments and negative emotions. In fact, I recommend a strategy, first proposed by the late Harvard professor Howard Raiffa, called a post-settlement settlement—continuing to negotiate after a deal has been reached—because some of the best outcomes can be uncovered after the tension of the negotiation has been cut by reaching a deal. Using humor has the same effect: A welltimed, sincere, successful joke can help break the tension, increase social closeness, build rapport, and foster an enjoyable, positive tone during your negotiation.

You might also use humor as a way to answer difficult questions. One of the most challenging aspects of negotiating is being asked questions that you don’t want to or shouldn’t answer—because by answering directly or transparently, you would put yourself in a weak or compromised bargaining position. In those scenarios, you may be able to use humor to divert or distract—even for a moment—so you can think more carefully about what information you can and should disclose.

Finally, humor makes our interactions more memorable. The best negotiators make their counterpart feel great about the outcome, even if it isn’t in the counterpart’s favor. Finding the humor in your negotiation will increase your counterpart’s subjective sense of satisfaction and help you both remember the interaction in a favorable light.

I will end with one word of warning: Know thyself. Humor comes easily to some people. But if you are not a natural jokester or witty conversationalist, you can also score interpersonal-warmth points by laughing authentically at others’ jokes. Very few people enjoy interacting with someone who is overly serious or never laughs. Don’t be afraid to make your negotiation light and fun. When you do, you and your counterpart will enjoy it more, be more likely to uncover creative, cooperative deals, and remember the interaction more fondly.

Alison Wood Brooks
Assistant Professor of Business Administration
Harvard Business School

In negotiation, learning from past mistakes is a critical skill. In our July issue, we detailed errors that Republicans made in their initial attempt to repeal and replace the Affordable Care Act in the House of Representatives. Although the House narrowly passed its American Health Care Act (AHCA) in May, Senate Republicans repeated many of the House’s mistakes when they tried and failed to pass their own version of the bill in July:

• A one-sided approach. Republicans in both the House and the Senate ruled out the possibility of collaborating with Democrats on an Obamacare replacement. In the process, they limited themselves to a narrow path to victory that required winning over competing factions within their party. “We’re getting nothing done, my friends,” Republican John McCain chided from the Senate floor, criticizing both major parties for refusing to collaborate with each other on health care and other issues.
• A secretive process. House Speaker Paul Ryan and his staff drafted the AHCA in secret, then released it on March 6 as a fait accompli. Similarly, after the bill moved to the Senate, Majority Leader Mitch McConnell invited a small number of Republican senators—all of them white men—to work on the redrafting, which they did in utmost secrecy.
• Unintimidating threats. President Donald Trump reportedly threatened certain House members that he’d fight their reelection efforts if they didn’t vote for the AHCA. Most seemed unfazed by the threat. In a similar manner, Interior Secretary Ryan Zinke reportedly warned Alaska senator Lisa Murkowski that the Trump administration would not support key projects in her state if she voted against the bill. Murkowski, who oversees the Interior Department’s funding in the Senate, voted against it anyway.

In negotiation, learning from past mistakes is a critical skill. In our July issue, we detailed errors that Republicans made in their initial attempt to repeal and replace the Affordable Care Act in the House of Representatives. Although the House narrowly passed its American Health Care Act (AHCA) in May, Senate Republicans repeated many of the House’s mistakes when they tried and failed to pass their own version of the bill in July:

• A one-sided approach. Republicans in both the House and the Senate ruled out the possibility of collaborating with Democrats on an Obamacare replacement. In the process, they limited themselves to a narrow path to victory that required winning over competing factions within their party. “We’re getting nothing done, my friends,” Republican John McCain chided from the Senate floor, criticizing both major parties for refusing to collaborate with each other on health care and other issues.
• A secretive process. House Speaker Paul Ryan and his staff drafted the AHCA in secret, then released it on March 6 as a fait accompli. Similarly, after the bill moved to the Senate, Majority Leader Mitch McConnell invited a small number of Republican senators—all of them white men—to work on the redrafting, which they did in utmost secrecy.
• Unintimidating threats. President Donald Trump reportedly threatened certain House members that he’d fight their reelection efforts if they didn’t vote for the AHCA. Most seemed unfazed by the threat. In a similar manner, Interior Secretary Ryan Zinke reportedly warned Alaska senator Lisa Murkowski that the Trump administration would not support key projects in her state if she voted against the bill. Murkowski, who oversees the Interior Department’s funding in the Senate, voted against it anyway.

The fallout from a disadvantageous negotiation can reverberate for years to come. That’s what the City of Miami is learning from its 2009 stadium deal with Florida Marlins owner Jeffrey Loria as he reached an agreement to sell the team this past August.

Off to a winning start

Loria launched his career as a Major League Baseball (MLB) team owner back in 1999, when he bought a 24% stake in the Montreal Expos, a neglected team with a crumbling stadium, for just $12 million, writes Jonah Keri for CBS Sports. Within two years, as the team’s fortunes continued to suffer, Loria engineered the financing needed to secure a 94% stake in the franchise.

Then came “the Great Franchise Switcheroo of 2002,” as Keri calls it. With the Expos’ future in Montreal uncertain, Loria sold the team to the other 29 MLB owners for $120 million—10 times his initial investment—and bought the Marlins for $158.5 million from their owner, John Henry, who turned around and bought the Boston Red Sox. Loria funded the difference in the Marlins purchase with a $38.5 million interestfree loan from the MLB.

Carrots and sticks

The Loria era started on a high note for the Marlins: In 2003, the team beat the New York Yankees in the
World Series. But then Loria traded away some of the team’s stars and didn’t make a serious effort to rebuild. According to Loria, he couldn’t afford to invest in payroll because ticket sales were so low. Fans stayed away from the Marlins’ outdoor stadium during Miami’s many hot, humid, and rainy summer days.

What the team needed to reverse its fortunes was a retractableroof stadium, Loria said. He then claimed—while refusing to open the team’s books—that he couldn’t afford one himself. Saying taxpayer financing was needed, Loria began threatening to relocate the team to another city while also touting the economic development a new stadium would surely bring to the ballpark’s Little Havana neighborhood.

Whether swayed by these messages or by campaign contributions, city leaders fell in line behind a very generous deal: City of Miami and Miami-Dade County taxpayers would pay about 75% of the $634 million construction costs for the 37,000-seat stadium. The team itself would pay just $125 million and keep almost all the revenue generated from the building.

With some government officials reluctant to vote in favor of the ballpark, Loria made a concession on the percentage he would pay the city if he sold the team in the next 11 years. Profits would be shared on a sliding scale: 70% in year one, 60% in year two, 50% in year three, 5% in year five, and less in the years after that.

Build it, but they might not come

When it opened in 2012, the shiny, new Marlins Park substantially enhanced the value of the team, but the economic benefits Loria had predicted failed to materialize. Ticket sales remained stagnant, and with the stadium surrounded by parking garages, opportunities to revitalize the neighborhood were few. The team has not had a winning season in eight years.

Moreover, the burden the stadium placed on taxpayers turned out to be far worse than anticipated. Largely because Miami-Dade County used public bonds to secure high-interest loans to fund the deal, the stadium is expected to cost taxpayers a whopping $2.4 billion over 40 years, according to the Broward County Sun-Sentinel. The stadium itself is tax-exempt; Loria pays about $2.3 million annually in rent, which is used to pay back a $35 million loan from the county.

Meanwhile, contrary to claims that the team was operating in the red, a 2010 Deadspin exposé suggested that the team was turning a profit—and that Loria was funneling millions of dollars into his own pockets each year as “management fees.” The Securities and Exchange Commission launched an investigation but closed it without filing charges four years later. Voters angered by the deal recalled Miami-Dade mayor Carlos Alvarez in protest.

The competition heats up

As the Marlins played another lackluster season, Loria began floating the idea of selling the team in late 2016 at a price of $1.7 billion, according to the Miami Herald.

Forbes estimated the team’s value to be $675 million, second-lowest among MLB teams. But media revenues have been exploding league-wide, and a highly lucrative TV deal with Fox appeared to await the Marlins in 2020. New owners might also be able to sell naming rights to Marlins Park. And then there was the cachet of owning an MLB team with a brand-new, tax-free stadium: priceless, to some.

An “unusually lengthy and public” bidding process unfolded, with the Marlins handling it themselves to avoid paying bank fees. By May 2017, two main buyer groups had emerged as front-runners: a group of 16 partners that included former Yankees star Derek Jeter, former Florida governor Jeb Bush, and basketball great Michael Jordan, to be largely financed by venture capitalist Bruce Sherman; and a group led by Tagg Romney, the son of former presidential candidate Mitt Romney. Bush eventually switched over to Romney’s group after a falling out with Jeter, according to the New York Times.

Winners and losers

On August 11, 2017, the Herald broke the news that Loria had reached an agreement to sell the Marlins to the Sherman/Jeter group for $1.17 billion. Jeter would take over as head of baseball operations, realizing his longtime dream of running an MLB team. “The lure of Sherman’s money and Jeter’s prestige” won out, according to the Times. The league’s owners are expected to vote to approve the sale during their meetings in October.
How much of that $1.17 billion will local governments receive to help pay down the billions they invested in Marlins Park? Likely just a few million dollars.

How to keep from striking out:

• Don’t be intimidated by threats.. Bullies often have no intention of following through on their threats and are fully expecting you to cave. Take a clear-eyed view of the worstcase scenario, and work on developing a strong backup plan. Then bargain for everything you’re worth.
• Take the long view.. In the business world, one negotiation often leads to another. Think through the long-term implications of deal terms, analyzing the various scenarios that could play out, and then prepare for both the best- and the worst-case scenario.
• Choose your partners wisely.. A businessperson’s past negotiations can say a lot about him or her. Research potential negotiating counterparts’ reputations in their industry and keep in mind that past behavior is an excellent predictor of future behavior.

Women are underrepresented in leadership roles in the workplace, holding only about 16% of executive positions in Fortune 500 companies. Facebook COO Sheryl Sandberg and others have urged women to “lean in” by competing for high-level managerial jobs and negotiating for better pay and greater responsibility. Yet substantial evidence shows that many women who try to lean in face biased hiring and promotion processes that favor men. In new research, London Business School professors Raina A. Brands and Isabel Fernandez-Mateo show that women’s perceptions of being unfairly rejected create a vicious cycle that perpetuates their underrepresentation in top management.

Perceptions of unfair treatment

Brands and Fernandez-Mateo theorized that men and women may respond differently to being rejected for a leadership position with a firm. Women may be more likely than men to perceive that they were rejected unjustly due to a prevailing sense that they do not belong in the ranks of upper management. Consequently, women may be less likely than men to apply for other jobs with firms that reject them. This trend could perpetuate the underrepresentation of women in leadership roles.

The researchers confirmed their theory in three experiments. First, in a field study using hiring data from a U.K.-based executive search firm, they found evidence that women are less willing than men to consider a job opportunity with a firm that rejected them in the past.

In a second experiment, the researchers surveyed high-earning U.S. residents who had been rejected for a job in the past three years. The participants were asked to describe the rejection in detail and then to imagine that the same firm approached them about applying for another job appropriate for their career level. Women were more likely than men to report that the firm had treated them unfairly and were less willing than men to apply for a job with the same firm.

In a third experiment, the researchers asked executives to read a scenario describing someone of their gender being rejected for an executive position. Female participants were more likely to believe that the person they read about had been treated unfairly and would feel a lack of belonging in the executive community; women, relative to men, also said they’d be less likely to apply for a job with the same firm in the future.

If, at first, you don’t succeed…

For women, the findings can be taken as a challenge to “try, try again” with a firm after a rejection, as the firm’s decision making may be less biased than they perceive it to be.

At the same time, research shows that when job applicants receive feedback on their rejection, women are more likely than men to be critiqued based on their personality and style rather than their abilities and skills. Organizations may be able to attract more female candidates to leadership roles by providing all rejected applicants with more formalized, standardized feedback that focuses on qualities most pertinent to the job.

Source: “Leaning Out: How Negative Recruitment Experiences Shape Women’s Decisions to Compete for Executive Roles,” by Raina A. Brands and Isabel Fernandez-Mateo. Administrative Science Quarterly, 2017.

Women are underrepresented in leadership roles in the workplace, holding only about 16% of executive positions in Fortune 500 companies. Facebook COO Sheryl Sandberg and others have urged women to “lean in” by competing for high-level managerial jobs and negotiating for better pay and greater responsibility. Yet substantial evidence shows that many women who try to lean in face biased hiring and promotion processes that favor men. In new research, London Business School professors Raina A. Brands and Isabel Fernandez-Mateo show that women’s perceptions of being unfairly rejected create a vicious cycle that perpetuates their underrepresentation in top management.

Perceptions of unfair treatment

Brands and Fernandez-Mateo theorized that men and women may respond differently to being rejected for a leadership position with a firm. Women may be more likely than men to perceive that they were rejected unjustly due to a prevailing sense that they do not belong in the ranks of upper management. Consequently, women may be less likely than men to apply for other jobs with firms that reject them. This trend could perpetuate the underrepresentation of women in leadership roles.

The researchers confirmed their theory in three experiments. First, in a field study using hiring data from a U.K.-based executive search firm, they found evidence that women are less willing than men to consider a job opportunity with a firm that rejected them in the past.

In a second experiment, the researchers surveyed high-earning U.S. residents who had been rejected for a job in the past three years. The participants were asked to describe the rejection in detail and then to imagine that the same firm approached them about applying for another job appropriate for their career level. Women were more likely than men to report that the firm had treated them unfairly and were less willing than men to apply for a job with the same firm.

In a third experiment, the researchers asked executives to read a scenario describing someone of their gender being rejected for an executive position. Female participants were more likely to believe that the person they read about had been treated unfairly and would feel a lack of belonging in the executive community; women, relative to men, also said they’d be less likely to apply for a job with the same firm in the future.

If, at first, you don’t succeed…

For women, the findings can be taken as a challenge to “try, try again” with a firm after a rejection, as the firm’s decision making may be less biased than they perceive it to be.

At the same time, research shows that when job applicants receive feedback on their rejection, women are more likely than men to be critiqued based on their personality and style rather than their abilities and skills. Organizations may be able to attract more female candidates to leadership roles by providing all rejected applicants with more formalized, standardized feedback that focuses on qualities most pertinent to the job.

Source: “Leaning Out: How Negative Recruitment Experiences Shape Women’s Decisions to Compete for Executive Roles,” by Raina A. Brands and Isabel Fernandez-Mateo. Administrative Science Quarterly, 2017.

This past July, the News Media Alliance (NMA), a trade association of approximately 2,000 U.S. and Canadian news organizations, announced that it was planning to ask Congress for a limited antitrust exemption to allow its members to negotiate collectively with Google and Facebook regarding digital advertising. With consumers increasingly accessing their news through web platforms, print and online newspapers have seen their ad revenues plummet, while Google’s and Facebook’s have soared.

As more and more papers go out of business, publishers are desperate to stanch the bleeding. But the fact that the NMA felt the need to seek permission to negotiate collectively points to the legal hazards of doing so in the private sector.

Legal roadblocks to coalition building

In negotiation, there can be strength in numbers. Parties that might not even be able to get a meeting with a monolithic counterpart often can get its attention by joining forces with other weak parties and attempting to negotiate collectively. For example, individual employees join labor unions to gain leverage in contract talks with management, and community groups often band together to negotiate environmental and zoning issues with manufacturers building in their towns.

When for-profit businesses try to negotiate collectively with key partners, however, things get more complicated. In the United States, the Sherman Antitrust Act prohibits any contract that would constrain interstate or international trade or commerce. Price fixing among industry competitors, including colluding with competitors to drive down bidding in auctions, is against the law, for example.

Business people typically assume that means they are not allowed to even talk to their competitors when participating in an auction or negotiation-auction (“negotiauction”) hybrid, writes Harvard Law School and Harvard Business School professor Guhan Subramanian in his book Dealmaking: The New Strategy of Negotiauctions (Norton, 2011). But explicit agreements among bidders generally are not forbidden if they would promote competition or marketplace efficiency. For example, private-equity firms sometimes team up to make bids for public companies, a practice that is generally tolerated by the U.S. Department of Justice.

David versus Goliath?

Today, newspapers and other media outlets are portraying themselves as modern-day Davids facing off against the two-headed Goliath of Facebook and Google. As consumers increasingly turn to online platforms for their news, the platforms are attracting ad revenue that used to go to media companies.

Forced to negotiate one on one, newspapers have been unhappy with the returns they’ve received.

Increasingly, news outlets have had to rely on Google and Facebook to make their articles visible to consumers. Forced to negotiate one-on-one with the big online platforms, the papers have been unhappy with the returns they’ve received, reports Jim Rutenberg in the New York Times. For example, the Times, Forbes, and other outlets backed out of Facebook’s “Instant Articles” feature—which shows Facebook users fast-loading articles in an effort to keep users on the site longer—after revenues proved disappointing, reports Digiday.

In an editorial in the Wall Street Journal, David Chavern, president and CEO of the NMA, writes that the web platforms rely on high-quality news and analysis for ad revenue, but the quality of that news is threatened by the news industry’s financial woes. To rectify the situation, he argues, publishers need the ability to negotiate collectively for “stronger intellectual-property protections, better support for subscription models, and a fair share of revenue and data.”

Asking permission

The fact that the NMA decided to ask Congress to pass a law allowing publishers to negotiate collectively reflects the alliance’s keen awareness of the perils of running afoul of antitrust law.

Back in 2007, five major U.S. publishers banded together to negotiate a new business model for e-book pricing with Apple, which was preparing to launch the iPad at the time. Unhappy with the prevailing wholesale model, which allowed retailers such as Amazon to set whatever prices they liked for the e-books they bought from publishers, the publishers successfully lobbied Apple to switch to an “agency model” in which publishers set their own e-book prices and gave a 30% sales commission to Apple. Amazon reluctantly agreed to adhere to the new model as well.

But then the U.S. Department of Justice stepped in to accuse the parties of colluding to artificially raise e-book
prices. The five publishers reached a settlement with the government, while Apple went to court and was found guilty of price fixing and ordered to pay $450 million in damages.

Clearly, with its appeal to Congress, the NMA is eager to help its members skirt that kind of legal trouble. The NMA’s request is expected to be a long shot, given the current adversarial climate between the press and Washington politicians. However, lobbying from News Corporation founder and executive chairman Rupert Murdoch, who holds sway with Congressional Republicans and President Donald Trump, may help, according to the Times.

3 guidelines for coalition building

When you’re trying to get the attention of a powerful party, the following advice may be useful:

1. Look for potential partners.

Before negotiating from a position of weakness, look around to see whom you might be able to team up with to strengthen your hand. That doesn’t necessarily mean banding together with competitors, as you may be able to find partners outside your field whose offerings complement yours and allow you to make a stronger bid.

2. Take a broad view of the landscape.

When antitrust regulators object to agreements, typically it is because the deal leaves consumers worse off. So, when thinking about teaming up with others for a negotiation with a powerful counterpart, don’t forget to consider the potential impact of whatever deal you might reach on outsiders, including customers, clients, and society at large. In creating benefits for those at the table, might your deal impose hardship on other parties? If your agreement would harm outsiders, you could end up breaking your own ethical code and possibly the law.

3. Ask your lawyers.

When thinking about teaming up with one or more competitors in a negotiation, consult in advance with lawyers who are thoroughly versed in antitrust laws and regulations. If your plans would violate industry standards or the law, abandon them or seek permission through official channels, being up front about your intentions.

This past July, the News Media Alliance (NMA), a trade association of approximately 2,000 U.S. and Canadian news organizations, announced that it was planning to ask Congress for a limited antitrust exemption to allow its members to negotiate collectively with Google and Facebook regarding digital advertising. With consumers increasingly accessing their news through web platforms, print and online newspapers have seen their ad revenues plummet, while Google’s and Facebook’s have soared.

As more and more papers go out of business, publishers are desperate to stanch the bleeding. But the fact that the NMA felt the need to seek permission to negotiate collectively points to the legal hazards of doing so in the private sector.

Legal roadblocks to coalition building

In negotiation, there can be strength in numbers. Parties that might not even be able to get a meeting with a monolithic counterpart often can get its attention by joining forces with other weak parties and attempting to negotiate collectively. For example, individual employees join labor unions to gain leverage in contract talks with management, and community groups often band together to negotiate environmental and zoning issues with manufacturers building in their towns.

When for-profit businesses try to negotiate collectively with key partners, however, things get more complicated. In the United States, the Sherman Antitrust Act prohibits any contract that would constrain interstate or international trade or commerce. Price fixing among industry competitors, including colluding with competitors to drive down bidding in auctions, is against the law, for example.

Business people typically assume that means they are not allowed to even talk to their competitors when participating in an auction or negotiation-auction (“negotiauction”) hybrid, writes Harvard Law School and Harvard Business School professor Guhan Subramanian in his book Dealmaking: The New Strategy of Negotiauctions (Norton, 2011). But explicit agreements among bidders generally are not forbidden if they would promote competition or marketplace efficiency. For example, private-equity firms sometimes team up to make bids for public companies, a practice that is generally tolerated by the U.S. Department of Justice.

David versus Goliath?

Today, newspapers and other media outlets are portraying themselves as modern-day Davids facing off against the two-headed Goliath of Facebook and Google. As consumers increasingly turn to online platforms for their news, the platforms are attracting ad revenue that used to go to media companies.

Forced to negotiate one on one, newspapers have been unhappy with the returns they’ve received.

Increasingly, news outlets have had to rely on Google and Facebook to make their articles visible to consumers. Forced to negotiate one-on-one with the big online platforms, the papers have been unhappy with the returns they’ve received, reports Jim Rutenberg in the New York Times. For example, the Times, Forbes, and other outlets backed out of Facebook’s “Instant Articles” feature—which shows Facebook users fast-loading articles in an effort to keep users on the site longer—after revenues proved disappointing, reports Digiday.

In an editorial in the Wall Street Journal, David Chavern, president and CEO of the NMA, writes that the web platforms rely on high-quality news and analysis for ad revenue, but the quality of that news is threatened by the news industry’s financial woes. To rectify the situation, he argues, publishers need the ability to negotiate collectively for “stronger intellectual-property protections, better support for subscription models, and a fair share of revenue and data.”

Asking permission

The fact that the NMA decided to ask Congress to pass a law allowing publishers to negotiate collectively reflects the alliance’s keen awareness of the perils of running afoul of antitrust law.

Back in 2007, five major U.S. publishers banded together to negotiate a new business model for e-book pricing with Apple, which was preparing to launch the iPad at the time. Unhappy with the prevailing wholesale model, which allowed retailers such as Amazon to set whatever prices they liked for the e-books they bought from publishers, the publishers successfully lobbied Apple to switch to an “agency model” in which publishers set their own e-book prices and gave a 30% sales commission to Apple. Amazon reluctantly agreed to adhere to the new model as well.

But then the U.S. Department of Justice stepped in to accuse the parties of colluding to artificially raise e-book
prices. The five publishers reached a settlement with the government, while Apple went to court and was found guilty of price fixing and ordered to pay $450 million in damages.

Clearly, with its appeal to Congress, the NMA is eager to help its members skirt that kind of legal trouble. The NMA’s request is expected to be a long shot, given the current adversarial climate between the press and Washington politicians. However, lobbying from News Corporation founder and executive chairman Rupert Murdoch, who holds sway with Congressional Republicans and President Donald Trump, may help, according to the Times.

3 guidelines for coalition building

When you’re trying to get the attention of a powerful party, the following advice may be useful:

1. Look for potential partners.

Before negotiating from a position of weakness, look around to see whom you might be able to team up with to strengthen your hand. That doesn’t necessarily mean banding together with competitors, as you may be able to find partners outside your field whose offerings complement yours and allow you to make a stronger bid.

2. Take a broad view of the landscape.

When antitrust regulators object to agreements, typically it is because the deal leaves consumers worse off. So, when thinking about teaming up with others for a negotiation with a powerful counterpart, don’t forget to consider the potential impact of whatever deal you might reach on outsiders, including customers, clients, and society at large. In creating benefits for those at the table, might your deal impose hardship on other parties? If your agreement would harm outsiders, you could end up breaking your own ethical code and possibly the law.

3. Ask your lawyers.

When thinking about teaming up with one or more competitors in a negotiation, consult in advance with lawyers who are thoroughly versed in antitrust laws and regulations. If your plans would violate industry standards or the law, abandon them or seek permission through official channels, being up front about your intentions.

Imagine that you are a café owner who is soliciting quotes for a redesign of your space. One of the interior designers you’ve been talking to is known for being affordable, if not innovative. But the designer’s initial estimate, $20,000, is well over your $16,000 budget for the project and, you believe, excessive. As you prepare to make a counteroffer, you are not sure whether to emphasize your own cost constraints or to cite what you perceive as the designer’s rather middlebrow reputation in your argument for a lower price.

When preparing to negotiate price, buyers and sellers have access to plenty of advice about whether to make the first offer and, if they do, what price to choose. Making the first offer is often a smart move, especially if you have a strong sense of the value of the item or service being sold. The first offer often anchors the discussion that follows and, as such, can have a powerful effect on the final outcome.

But what if the other side makes the first offer, whether because of convention, because you weren’t sure what to offer, or because they simply spoke up first? In such cases, you will need to be prepared to make a strong counteroffer—one that not only resists the other party’s anchor but also makes a compelling case for the price you name.

One underdiscussed tool for making strong counteroffers—and any offer, for that matter—is a strong rationale. When you present a persuasive rationale, you may increase your odds of reanchoring the discussion and avoiding impasse. But what types of rationales will help you reach your goals?

In a new study in the journal Organizational Behavior and Human Decision Processes, researchers Alice J. Lee of Columbia Business School and Daniel R. Ames of Columbia University compared the effectiveness of two common types of rationales that buyers use when responding to a seller’s opening bid. We’ll consider how negotiators can benefit from these insights and present other tips for framing price offers in negotiation.

Constraints and complaints

Buyers can supply many types of rationales for their counteroffers. In their study, Lee and Ames focus on two of the most common rationales that buyers use: (1) constraint rationales and (2) disparagement rationales.
A constraint rationale focuses on the buyer’s own limitations, which are typically financial. Returning to our
opening scenario, for example, the café owner might respond to the designer’s opening bid of $20,000 by saying, “That’s way over my budget and won’t work for me.”

By contrast, a disparagement rationale critiques what the seller is offering. For example, the café owner might say to the designer, “My understanding is that your services are pretty no-frills. Given what you’re offering, your price seems much too high.”

Both types of rationales appear to be very common in negotiation, Lee and Ames found when they videotaped pairs of MBA students engaging in a role-play negotiation as buyer and seller. About 90% of those in the role of buyer used constraint rationales, delivering two such rationales per negotiation, on average. And 95% of buyers used disparagement rationales—about five times, on average, per negotiation.

A winning rationale

Which of these two types of rationale from the café owner do you think the designer would find more persuasive? In several experiments, Lee and Ames compared the effectiveness of constraint and disparagement rationales in various scenarios.

In one experiment, the researchers asked participants to imagine they were participating in an online negotiation similar to the one we’ve described between a café owner and a potential designer. In the first phase of the experiment, those in the role of the café owner (the buyer) were told that the designer (the seller) submitted an initial estimate of $20,000 for the work. Some buyers were encouraged to focus on their budgetary constraints when responding with a counteroffer (constraint-rationale condition); others were prompted to focus on the mixed quality of the designer’s past work (disparagementrationale condition); while those in the control group were not given any special guidance.

In the next phase, all the participants assigned to the role of the designer (the seller) were told that the café owner had counteroffered $16,000. They also received the rationale formulated by their partner. Next, they responded to the $16,000 counteroffer and rationale with a counteroffer of their own.

The results? Sellers were significantly more swayed by constraint rationales than by disparagement rationales. Specifically, when offered $16,000 with a constraint rationale, sellers (those in the role of designer) responded with an average counteroffer of $17,059. But when offered $16,000 with a disparagement rationale, sellers’ average counteroffer was $18,375. In other words, when buyers justified a low counteroffer based on their own financial constraints, sellers conceded significantly more on price than when buyers disparaged sellers’ services to justify the same low counteroffer.

Sellers may view criticism as inaccurate and rude, and react by standing firm on price.

Relative to those who received disparagement rationales, sellers who were given constraint rationales also
were more optimistic about the odds of reaching agreement and were more likely to recommend their counterpart to a friend. In other experiments, Lee and Ames found a similar pattern of results.

Why disparagement falls flat

There are two main reasons why providing information about your constraints is likely to be more effective than disparaging the seller’s products or services. First, and most obviously, sellers may view the criticism as inaccurate and rude, and react by standing firm on price. Second, when buyers describe their financial constraints, they are revealing valuable information about their bottom lines. Sellers may take buyers at their word when they say they simply can’t afford the deal on the table.

Constraint rationales are more effective than disparagement rationales when sellers know the value of what they’re selling. When a designer believes he is offering a competitive price for his services, for example, he may dismiss the café owner’s critique as merely a bargaining tactic. By contrast, when sellers are uncertain about the value of what they’re selling (such as a new product), they may take a buyer’s criticism to heart and offer a better price, Lee and Ames found in another experiment. Thus, this is one situation in which disparagement rationales may be relatively effective—but no more effective than citing your financial constraints.

Overall, the research offers valuable advice to buyers: When responding to a seller’s offer, you are likely to get a better deal if you accompany your counteroffer with information about your financial constraints than if you try to diminish the value of what’s being sold.

3 other effective influence strategies

Here are some other influence strategies to use to improve the appeal of your price offers:

1. Highlight losses rather than gains.

People are more motivated to avoid losses than they are to achieve gains, research by the influential psychologists Amos Tversky and Daniel Kahneman shows. For example, in one study by researchers at the University of Santa Cruz, homeowners were asked to participate in a free energy audit and then listen to a sales pitch for insulation products and services that would lower their energy costs. When the insulation was pitched as a way to avoid losing money, homeowners were significantly more likely to purchase it than when it was pitched as a way to save money. Because losses weigh heavily on our minds, framing the exact same price as a loss likely will have a greater effect than framing it as a gain, write Deepak Malhotra and Max H. Bazerman in their book Negotiation Genius (Bantam, 2007).

2. Split up losses; combine gains.

Tversky and Kahneman also discovered in their research that people prefer to gain money in installments but to lose money in one lump sum. For example, most people would prefer to find a $10 bill two days in a row ($20 total) than to find a $20 bill once. Conversely, most people would prefer to lose a $20 bill than to lose a $10 bill two days in a row. Thus, when making a price concession, it can be smart to divide it into two or more smaller concessions. But when asking for a concession on price, make one demand rather than two or more partial demands, recommend Malhotra and Bazerman.

3. Avoid overjustifying. A well-known

1978 psychology experiment by Ellen Langer, Arthur Blank, and Benzion Chanowitz suggested that even a lame justification for a first offer can be more effective than no justification at all. In the study, an experimenter who tried to cut in line to use a copier to make five copies was far more successful using the rather weak justification “May I use the Xerox machine, because I have to make some copies?” than when giving no justification at all for cutting in (“May I use the Xerox machine?”).

But in a 2011 paper, Tel Aviv University researchers Yossi Maaravi, Yoav Ganzach, and Asya Pazy noted that people tend to rebel against more significant requests with weak justifications. And in their research, they found that when a justification for an offer is easy to counter, it can inspire a backlash. So, for example, if you are a salesperson who has already shown off the many attractive features of your product, you can let your first price offer stand on its own.