Black men and women continue to be vastly underrepresented in leadership roles in corporate America. Those who advance in majority-white organizations encounter both overt and implicit biases, and often struggle to feel authentic and connected, write contributors to the book Race, Work & Leadership: New Perspectives on the Black Experience, edited by University of Virginia Darden School of Business professor Laura Morgan Roberts, Harvard Business School professor Anthony J. Mayo, and Morehouse College president David A. Thomas. The Program on Negotiation spoke with Roberts about the barriers facing African Americans who aspire to leadership roles and how to promote greater inclusion through negotiation best practices.

Program on Negotiation (PON): Overt discrimination aside, what subconscious or implicit biases do interviewers display toward Black applicants during the hiring process?

Laura Morgan Roberts: Some of the implicit biases that lead to lower likelihood of Black applicants being hired and Black workers being promoted include very subtle cues about racial identity, such as having a Black-sounding name. For instance, if two résumés are identical except for the name on top, the résumé with the Black-sounding name is much less likely to be selected, University of Chicago professors Marianne Bertrand and Sendhil Mullainathan, as well as others, have found in their research. When Black applicants show up for the interview, certain racial cues are penalized, including hairstyles. People who have an “ethnic” hairstyle are judged as being less professional and are less likely to receive opportunities, Tina Opie (Babson College), Katherine Phillips (Columbia Business School), and others have found in their work.

When it comes to performance evaluations, compelling research by Andrew Carton of the Wharton School of Business and Ashleigh Rosette of Duke University indicates that when Black leaders succeed, evaluators tend to give the credit to their team rather than to the individual. So, for instance, if a football team with a Black quarterback wins a game, the media is more likely to report on what the team did right. If the team with the Black quarterback loses, the media is more likely to report on the shortcomings of the Black quarterback himself. The converse is true for white quarterbacks. This discrepancy likely challenges Black job candidates, who may not receive full recognition for their prior leadership accomplishments.

PON: How can interviewers overcome these implicit biases?

LMR: First, by naming them. In many organizational contexts, race and racial bias are becoming unspeakable. Race is a scary topic, and being perceived as racist in any form is deeply threatening to the ego and psyche of members of dominant groups, especially white leaders. So the tendency is to shy away from conversations about implicit biases that disadvantage Black candidates and leaders. When we name them, we have a greater opportunity to pause before making assumptions.

Second, when evaluating a candidate’s profile, it’s important to recognize the various obstacles that many African American candidates had to traverse to get to where they are. For instance, when you’re evaluating two graduates from an MBA program, look not only at their degree and class placement but also at their journey to and through the entire educational system.

Metaphorically speaking, one student may have traveled on a smooth road with a prepaid gas card; the other student may have traveled on a dirt road and had to stop to work to buy more gas. People often debate which students have access to greater or less privilege. In many cases, racial prejudice constitutes a bumpy dirt road. This doesn’t mean you have to lower the bar for a Black student who traveled this road. Rather, it means respecting and recognizing the incredible talent, endurance, and ingenuity that many African American leaders have displayed for years before they even show up at the hiring organization—and viewing it as a source of strength.

PON: What hurdles do Black leaders face, and how might they negotiate to overcome them?

LMR: One is the experience of trying to navigate your own career path in an organization where you’re a numerical minority. In those situations, Black employees feel more pressure to behave in inauthentic ways at work. They may feel they need to modify their appearance or what they share about their interests and families, and so forth, if they believe those attributes will be stigmatized, research by Courtney McCluney shows. On a personal level, I have had to learn how to negotiate with myself about my own identity and the tradeoffs I’m willing to make for the sake of advancement. We’ve heard many Black leaders strategize about that type of agentic and calculated processing—which is often fraught with tension but also sometimes rather empowering. Black employees are making a set of decisions about what aspects of their racial identity they want to share at work and which they would rather not. They have to decide what tradeoffs feel most ethical, comfortable, and sustainable for them.

The other hurdle that African American leaders often have to negotiate has to do with taking on different types of job opportunities. In our book, Simmons University president dean Lynn Perry Wooten and Wharton School dean Erika Hayes James describe their research showing that African Americans are disproportionately more likely than whites to be offered and to accept “glass-cliff” CEO assignments—risky leadership positions that involve managing organizations in crisis. Again, those are tradeoffs African Americans are making to have the opportunity to lead. One interpretation is that Black CEOs are more comfortable taking on such positions because many of them had to travel a dirt road with little gas in the tank to get to where they are. So, they’re not afraid of a challenge. The question they face is, “What is my BATNA, or best alternative to a negotiated agreement? This is my only option to lead. I’m going to have to take this risk because what is my alternative?”

PON: What can those in the majority do to increase diversity and inclusion in their organizations?

LMR: Our book highlights three key roles that guide the pathway toward change and that ultimately have to work together. The first key role is that of the bottom-up outsider advocate—those students who took matters into their own hands and said, “We’re tired of hearing that you can’t find qualified applicants. Just give us the support and resources, and we’ll show you how it’s done.”

The second key role is top-down, at the C-suite level. Diversity and inclusion research shows that senior management has to be onboard in a genuine and sincere way. People who are in positions of power have to take public leadership actions to shape the culture, determine the reward systems, and place a higher premium on diverse talent.

The third key role is that of ally. White partners need to have a level of humility that communicates they don’t know everything about the Black experience but are interested and open to learning. They also need to take ownership of the problem, so it’s not just thrust upon the shoulders of the person on the margins. Allies’ most important role is as bridge builders to the dominant group. Many folks in power get fixated on retaining their power, so they presume that inclusion is a zero-sum game—“Why should I give up my seat at the table?” White allies can help organizational stakeholders view inclusion as akin to integrative bargaining, not distributive bargaining.

For example, how can we expand our resources to maximize diverse human potential? Then white allies can articulate the BATNA of failing to change: For people on the margins, what are the costs of homogeneity, exclusion, and identity suppression in organizations? Why would the CEO care if these individuals are less represented and included? Organizations often fail to articulate what they like about their BATNA—the status quo. Allies can help drive that conversation.

What experience do you have with implicit biases in the workplace, whether as an applicant, employee, or interviewer?

Black men and women continue to be vastly underrepresented in leadership roles in corporate America. Those who advance in majority-white organizations encounter both covert and overt bias, and often struggle to feel authentic and connected, write contributors to the new book Race, Work & Leadership: New Perspectives on the Black Experience (Harvard Business Review Press, 2019), edited by University of Virginia Darden School of Business professor Laura Morgan Roberts, Harvard Business School professor Anthony J. Mayo, and Morehouse College president David A. Thomas. Negotiation Briefings spoke with Roberts about the barriers facing African Americans who aspire toleadership roles and how we can all promote greater inclusion by using negotiation best practices.

Negotiation Briefings: Overt discrimination aside, what unconscious biases do interviewers display toward black applicants during the hiring process?

Laura Morgan Roberts: Some of the unconscious biases that lead to lower likelihood of black applicants being hired and black workers being promoted include very subtle cues about racial identity, such as having a black-sounding name. For instance, if two résumés are identical except for the name on top, the résumé with the black-sounding name is much less likely to be selected, Marianne Bertrand [University of Chicago] and Sendhil Mullainathan [MIT], as well as others, have found in their research. When black applicants show up for the interview, certain racial cues are penalized, including hairstyles. People who have an “ethnic” hairstyle are judged as being less professional and are less likely to receive opportunities, Tina Opie [Babson College] and Katherine Phillips [Columbia Business School] and others have found in their work.

When it comes to performance evaluations, compelling research by Andrew Carton of the Wharton School of Business and Ashleigh Rosette of Duke University indicates that when black leaders succeed, evaluators tend to give the credit to their team rather than to the individual. So, for instance, if a football team with a black quarterback wins a game, the media is more likely to report on what the team did right. If the team with the black quarterback loses, the media is more likely to report on the shortcomings of the black quarterback himself. The converse is true for white quarterbacks. This discrepancy likely challenges black job candidates, who may not receive full recognition for their prior leadership accomplishments.

NB: How can interviewers overcome some of these unconscious biases when making hiring decisions?

LMR: First, by naming them. In many organizational contexts, race and racial bias are becoming unspeakable. Race is a scary topic, and being perceived as racist in any form is deeply threatening to the ego and psyche of members of dominant groups, especially white leaders. So the tendency is to shy away from conversations about implicit biases that disadvantage black candidates and leaders. When we name them, we have a greater opportunity to pause before making assumptions.

Second, when evaluating a candidate’s profile, it’s important to recognize the various obstacles that many African American candidates had to traverse to get to where they are. For instance, when you’re evaluating two graduates from an MBA program, look not only at their degree and class placement but also at their journey to and through the entire educational system.

Metaphorically speaking, one student may have traveled on a smooth road with a prepaid gas card; the other student may have traveled on a dirt road and had to stop to work to buy more gas. People often debate which students have access to greater or less privilege. In many cases, racial prejudice constitutes a bumpy dirt road. This doesn’t mean you have to lower the bar for a black student who traveled this road. Rather, it means respecting and recognizing the incredible talent, endurance, and ingenuity that many African American leaders have displayed for years before they even show up at the hiring organization—and viewing it as a source of strength.

NB: What hurdles do black leaders in particular face in their organizations as a result of their race, and how might they negotiate to overcome them?

LMR: One is the experience of trying to navigate your own career path in an organization where you’re a numerical minority. In those situations, black employees feel more pressure to behave in inauthentic ways at work. They may feel they need to modify their appearance or what they share about their interests and families, and so forth, if they believe those attributes will be stigmatized, research by Courtney McCluney of the University of Virginia shows. On a personal level, I have had to learn how to negotiate with myself about my own identity and the tradeoffs I’m willing to make for the sake of advancement. We’ve heard many black leaders strategize about that type of agentic and calculated processing— which is often fraught with tension but also sometimes rather empowering. Black employees are making a set of decisions about what aspects of their racial identity they want to share at work and which they would rather not. They have to decide what tradeoffs feel most ethical, comfortable, and sustainable for them.

The other hurdle that African American leaders often have to negotiate has to do with taking on different types of job opportunities. In our book, Cornell dean Lynn Perry Wooten and Emory dean Erika Hayes James describe their research showing that African Americans are disproportionately more likely than whites to be offered and to accept “glass-cliff” CEO assignments—risky leadership positions that involve managing organizations in crisis. Again, those are tradeoffs African Americans are making to have the opportunity to lead. One interpretation is that black CEOs are more comfortable taking on such positions because many of them had to travel a dirt road with little gas in the tank to get to where they are. So, they’re not afraid of a challenge. The question they face is, “What is my BATNA [best alternative to a negotiated agreement]? This is my only option to lead. I’m going to have to take this risk because what is my alternative?”

NB: Very little negotiation research has been done on race. The negotiation research on gender often focuses on what women might do differently to get better outcomes, such as negotiating communally, in keeping with feminine stereotypes, rather than on the biases and structural barriers that are holding them back in their organizations.

LMR: Yes. The message is, “Fix yourself so that you can course-correct the bias.” And that’s the same way that race has been discussed in management studies in general.

NB: Do black people get the same advice that women do—to negotiate in a stereotypical way, whatever that might mean?

LMR: Actually, it’s different. There are two dimensions of stereotyping identified in social psychology: warmth and competence. Generally, African Americans are perceived as low on competence across the board. In some circumstances, as in caregiving positions, they’re characterized as being higher on warmth—as jovial, for instance. But in general, black men and women tend to be stereotyped as angry, overly aggressive, and greedy. So, in a negotiation context, they don’t have a set of positive stereotypes on which to draw to legitimate their requests. If the general negotiation advice is to be tough, African American professionals respond, “Yes, but not too tough because we don’t want to be perceived as the angry black man or the angry black woman and then be dismissed as overly emotional.” That’s similar to what women experience when they try to be more assertive in negotiation.

NB: In your book, Harvard professor Henry Louis Gates Jr. writes about the successful efforts of the founders of Harvard Business School’s African American Student Union to increase the representation of black students at the school in the late 1960s. But the onus shouldn’t just be on minorities. What can those in the majority do to increase diversity and inclusion in their organizations?

LMR: Our book highlights three key roles that guide the pathway toward change and that ultimately have to work together. The first key role is that of the bottom-up outsider advocate—those students who took matters into their own hands and said, “We’re tired of hearing that you can’t find qualified applicants. Just give us the support and resources, and we’ll show you how it’s done.”

The second key role is top-down, at the C-suite level. Diversity and inclusion research shows that senior management has to be onboard in a genuine and sincere way. All large corporations today have some kind of language around inclusion, but when it comes down to making real change to corporate culture, nothing really happens. People who are in positions of power have to take public leadership actions to shape the culture, determine the reward systems, and place a higher premium on diverse talent.

African Americans are disproportionately more likely than whites to be offered and to accept “glass-cliff” CEO assignments—risky leadership positions that involve managing organizations in crisis.

The third key role is that of ally. White partners need to have a level of humility that communicates they don’t know everything about the black experience but are interested and open to learning. They also need to take ownership of the problem, so it’s not just thrust upon the shoulders of the person on the margins. Allies’ most important role is as bridge builders to the dominant group. Many folks in power get fixated on retaining their power, so they presume that inclusion is a zero-sum game—“Why should I give up my seat at the table?” White allies can help organizational stakeholders view inclusion as akin to integrative bargaining, not distributive bargaining.

For example, how can we expand our resources to maximize diverse human potential? Then white allies can articulate the BATNA of failing to change: For people on the margins, what are the costs of homogeneity, exclusion, and identity suppression in organizations? Why would the CEO care if these individuals are less represented and included? Organizations often fail to articulate what they like about their BATNA—the status quo. Allies can help drive that conversation.

When industry disrupters and established firms face off at the negotiating table, they’re likely to have different ideas about what’s negotiable and what’s not. Such was the case when screening service Netflix and two major U.S. theater chains tried to negotiate a wide theatrical release for The Irishman, the Netflix-financed Martin Scorsese film. Their impasse highlights the importance of being open to creative alternatives when old business models are no longer working.

A deal and a promise

When Scorsese—whose body of work includes Taxi Driver, Raging Bull Goodfellas, and The Departed—began shopping a screenplay about labor-union official and self-proclaimed mafia hit man Frank Sheeran, Hollywood executives didn’t doubt it could be a masterpiece, but they did question whether it could turn a profit. A sprawling story of organized crime, the labor movement, and the U.S. government in the last century, The Irishman was expected to run more than three hours and cost over $100 million.

For flashback scenes, Scorsese planned to deploy costly computer-generated imagery, or CGI, to “de-age” the film’s actors, including Robert DeNiro, Al Pacino, and Joe Pesci. Paramount Pictures bought domestic distribution rights to the film—but bowed out after its budget ballooned to over $125 million.

With no other appealing options, Scorsese sold world rights to The Irishman to Netflix. The partnership secured him the big budget he desired but was an imperfect fit, artistically: Laptop and smartphone screens would be tiny canvases for the director’s vast cinematic vision. To address this concern, Netflix promised Scorsese it would try to negotiate a significant theatrical release for the film before its streaming debut.

A wide window

In 2019, Netflix began negotiating The Irishman’s theatrical release with multiplex chains AMC Theatres and Canada’s Cineplex. Netflix was motivated not only to meet its obligation to Scorsese but also to win over Academy of Motion Picture Arts and Sciences members, who tend to favor traditional studio releases for the Oscars the streaming service so coveted. (Netflix’s Roma won several major Oscars in 2019 but was widely viewed as having been slighted in the Best Picture category.) As profligate Netflix approached the negotiations, the chance to offset some of the film’s final $159 million price tag with box-office receipts was a less pressing goal.

Though a win-win agreement seemed in sight, talks quickly hit a roadblock over the “three-month theatrical window”—the exclusive period of time that theater companies reserve to show films before they can be released in other formats, including streaming. Netflix flatly refused to make its approximately 150 million subscribers wait three months to view The Irishman at home.

The theater companies were in a quandary. If they agreed to shorten The Irishman’s theatrical window, Hollywood studios would demand shorter windows for their films. With ticket sales in decline since 2002, theater executives feared that narrowing the window to just a few weeks would lead more consumers to skip their local multiplex entirely. In fact, two other movie mega-chains, Regal Cinemas and Cinemark, passed on bidding for The Irishman because they viewed the three-month window as nonnegotiable.

That’s a wrap

Over several months, AMC and Cineplex each agreed to shorten the three-month window to about 60 days for The Irishman, according to the New York Times. Netflix refused to go above 45 days. With the parties reportedly just 15 days apart, negotiations came to a halt. Speaking to the Times, National Association of Theater Owners president John Fithian accused Netflix of “leaving significant money on the table” and called its refusal to budge further a “disgrace” that would deprive many theatergoers of seeing The Irishman on the silver screen.

In the end, Netflix appeared to calculate that chasing box-office revenues could be a risky distraction from its primary goal of signing on new members, especially the older Scorsese fans they hoped to attract with The Irishman. Moreover, Netflix didn’t need the big theater chains to meet its minimum commitment to Scorsese: Numerous independent theaters and small theater chains were willing to show the film without a three-month window. The Irishman played at a small number of screens in some major U.S. cities over several weeks in November.

Lights, camera, action

In the near future, a host of new streaming services from Apple, AT&T, Comcast, Disney, and other content providers will create fierce competition for Netflix, as well as a new set of demanding negotiating partners for theater chains. Impasse will become less of an appealing option for all, necessitating creative dealmaking.

“Both the studios and the exhibitors have to look at every aspect of how we do business together and figure out different paradigms to move it forward,” former 20th Century Fox executive Chris Aronson told the Times. Some established film studios, including Warner Bros. and Universal, have had tentative talks with theater owners aimed at updating their business model, Variety reports. Under one proposal, studios would offer theater owners a percentage of digital revenues in exchange for shorter theatrical windows.

Such changes could turn out to be less painful to theater companies than they fear. Calling the three-month window a “relatively antiquated concept at this point,” the Atlantic noted that even blockbuster movies tend to make most of their money in their first few weeks. With more companies producing more and more films—Netflix alone is planning to roll out a staggering 90 per year—the result could be more movies showing at a theater near you for shorter time periods. The future remains out of focus, but refusing to change is likely the riskiest option of all.

Adapting to industry change

When you or a negotiating counterpart are wedded to the status quo, the following guidelines may help:

• Encourage a gain frame. When thinking about the future, we tend to focus more on what we could lose than on potential gains. As a result, we stick to the status quo and resist change. At the start of negotiations, try to move anxious counterparts—and yourself— beyond a “loss frame” by highlighting what they might stand to gain, as well as how outdated business models are holding them back.
• Bring everyone to the table. When an industry is in upheaval, cutting creative deals with one party at a time can generate even more turmoil as outsiders complain about being left behind. To craft a healthy new business model, you might invite all relevant parties— including industry experts, consumers, and the media—to contribute novel ideas aimed at creating value for all.
• Look beyond the numbers. In their positional bargaining, Netflix and the theater chains staked out firm positions and, not surprisingly, haggled their way to impasse. Arguing over a single contentious issue rarely prompts win- win deals. Bring a host of other issues to the table to identify overlooked opportunities and potential trades across issues.

When industry disrupters and established firms face off at the negotiating table, they’re likely to have different ideas about what’s negotiable and what’s not. Such was the case when screening service Netflix and two major U.S. theater chains tried to negotiate a wide theatrical release for The Irishman, the Netflix-financed Martin Scorsese film. Their impasse highlights the importance of being open to creative alternatives when old business models are no longer working.

A deal and a promise

When Scorsese—whose body of work includes Taxi Driver, Raging Bull Goodfellas, and The Departed—began shopping a screenplay about labor-union official and self-proclaimed mafia hit man Frank Sheeran, Hollywood executives didn’t doubt it could be a masterpiece, but they did question whether it could turn a profit. A sprawling story of organized crime, the labor movement, and the U.S. government in the last century, The Irishman was expected to run more than three hours and cost over $100 million.

For flashback scenes, Scorsese planned to deploy costly computer-generated imagery, or CGI, to “de-age” the film’s actors, including Robert DeNiro, Al Pacino, and Joe Pesci. Paramount Pictures bought domestic distribution rights to the film—but bowed out after its budget ballooned to over $125 million.

With no other appealing options, Scorsese sold world rights to The Irishman to Netflix. The partnership secured him the big budget he desired but was an imperfect fit, artistically: Laptop and smartphone screens would be tiny canvases for the director’s vast cinematic vision. To address this concern, Netflix promised Scorsese it would try to negotiate a significant theatrical release for the film before its streaming debut.

A wide window

In 2019, Netflix began negotiating The Irishman’s theatrical release with multiplex chains AMC Theatres and Canada’s Cineplex. Netflix was motivated not only to meet its obligation to Scorsese but also to win over Academy of Motion Picture Arts and Sciences members, who tend to favor traditional studio releases for the Oscars the streaming service so coveted. (Netflix’s Roma won several major Oscars in 2019 but was widely viewed as having been slighted in the Best Picture category.) As profligate Netflix approached the negotiations, the chance to offset some of the film’s final $159 million price tag with box-office receipts was a less pressing goal.

Though a win-win agreement seemed in sight, talks quickly hit a roadblock over the “three-month theatrical window”—the exclusive period of time that theater companies reserve to show films before they can be released in other formats, including streaming. Netflix flatly refused to make its approximately 150 million subscribers wait three months to view The Irishman at home.

The theater companies were in a quandary. If they agreed to shorten The Irishman’s theatrical window, Hollywood studios would demand shorter windows for their films. With ticket sales in decline since 2002, theater executives feared that narrowing the window to just a few weeks would lead more consumers to skip their local multiplex entirely. In fact, two other movie mega-chains, Regal Cinemas and Cinemark, passed on bidding for The Irishman because they viewed the three-month window as nonnegotiable.

That’s a wrap

Over several months, AMC and Cineplex each agreed to shorten the three-month window to about 60 days for The Irishman, according to the New York Times. Netflix refused to go above 45 days. With the parties reportedly just 15 days apart, negotiations came to a halt. Speaking to the Times, National Association of Theater Owners president John Fithian accused Netflix of “leaving significant money on the table” and called its refusal to budge further a “disgrace” that would deprive many theatergoers of seeing The Irishman on the silver screen.

In the end, Netflix appeared to calculate that chasing box-office revenues could be a risky distraction from its primary goal of signing on new members, especially the older Scorsese fans they hoped to attract with The Irishman. Moreover, Netflix didn’t need the big theater chains to meet its minimum commitment to Scorsese: Numerous independent theaters and small theater chains were willing to show the film without a three-month window. The Irishman played at a small number of screens in some major U.S. cities over several weeks in November.

Lights, camera, action

In the near future, a host of new streaming services from Apple, AT&T, Comcast, Disney, and other content providers will create fierce competition for Netflix, as well as a new set of demanding negotiating partners for theater chains. Impasse will become less of an appealing option for all, necessitating creative dealmaking.

“Both the studios and the exhibitors have to look at every aspect of how we do business together and figure out different paradigms to move it forward,” former 20th Century Fox executive Chris Aronson told the Times. Some established film studios, including Warner Bros. and Universal, have had tentative talks with theater owners aimed at updating their business model, Variety reports. Under one proposal, studios would offer theater owners a percentage of digital revenues in exchange for shorter theatrical windows.

Such changes could turn out to be less painful to theater companies than they fear. Calling the three-month window a “relatively antiquated concept at this point,” the Atlantic noted that even blockbuster movies tend to make most of their money in their first few weeks. With more companies producing more and more films—Netflix alone is planning to roll out a staggering 90 per year—the result could be more movies showing at a theater near you for shorter time periods. The future remains out of focus, but refusing to change is likely the riskiest option of all.

Adapting to industry change

When you or a negotiating counterpart are wedded to the status quo, the following guidelines may help:

• Encourage a gain frame. When thinking about the future, we tend to focus more on what we could lose than on potential gains. As a result, we stick to the status quo and resist change. At the start of negotiations, try to move anxious counterparts—and yourself— beyond a “loss frame” by highlighting what they might stand to gain, as well as how outdated business models are holding them back.
• Bring everyone to the table. When an industry is in upheaval, cutting creative deals with one party at a time can generate even more turmoil as outsiders complain about being left behind. To craft a healthy new business model, you might invite all relevant parties— including industry experts, consumers, and the media—to contribute novel ideas aimed at creating value for all.
• Look beyond the numbers. In their positional bargaining, Netflix and the theater chains staked out firm positions and, not surprisingly, haggled their way to impasse. Arguing over a single contentious issue rarely prompts win- win deals. Bring a host of other issues to the table to identify overlooked opportunities and potential trades across issues.

For years, Donald Trump has complained that the United States is getting a raw deal in international trade negotiations. As president, he has tried to improve U.S. trade partnerships in different ways, with mixed results: Trump withdrew the United States from the Trans-Pacific Partnership entirely, renegotiated changes to NAFTA with Canada and Mexico, imposed punitive tariffs on China that escalated into a trade war, and reached limited trade deals with countries such as India and Japan.

Recently, the Trump White House triggered an international negotiation that, though receiving little media attention, can be counted as one of its more successful trade initiatives: a deal to update the rates that countries pay to deliver one another’s mail. The story illustrates an effective use of one of Trump’s favorite negotiating tools— the threat.

Special delivery

In 1874, the Universal Postal Union (UPU) was established to help countries move mail and small packages seamlessly across the globe. Now part of the United Nations, the UPU sets “terminal dues”—the fees that its 192 member nations pay one another to deliver mail, according to Time magazine.

In 1969, UPU members agreed to a rate-setting formula that was based largely on nations’ level of economic development at the time. China received heavily subsidized international postage rates; the United States did not. That basic formula never changed, even as China grew into an economic powerhouse.

Today, Chinese companies typically pay less to mail small packages to the United States than American companies do to mail such packages within the states, according to Time. In 2016, under pressure from the Obama administration, the UPU approved a 20% increase in its terminal-dues formula, but it didn’t sufficiently address the rate imbalance. When Trump took office, the United States was effectively subsidizing the cost of delivering imports up to $500 million annually, according to the White House.

Cargo hold?

In October 2019, Trump threatened to withdraw the United States from the UPU in a year’s time if it didn’t address the rate imbalance to the White House’s satisfaction. That raised the prospect of a chaotic “postal Brexit” during the 2019 holiday season if U.S. stamps were no longer recognized abroad and the Trump administration needed to negotiate bilateral postal agreements with 192 nations.

Trump’s threat motivated the UPU to schedule a so-called Extraordinary Congress—emergency talks—for September 2019 during which members would negotiate a new rate system. The congress prepared to consider three proposals, Time reports. Option A wouldn’t fundamentally change the UPU’s rate formula but would allow rate increases—a nonstarter for the U.S. government. Option B would do away with the UPU’s terminal-dues system entirely and allow member nations to immediately begin setting their own shipping rates. Option C, a more gradual approach, would phase in increases to UPU terminal dues and give nations the option to self-declare rates between 2021 and 2025.

In a Financial Times editorial, White House trade adviser Peter Navarro wrote that the United States would accept Option B or C, but would withdraw from the UPU by October 17 if the UPU congress voted for Option A.

Inside the box

UPU negotiations kicked off in Geneva on September 24 with representatives of about 150 UPU member nations in attendance. They began by discussing the most drastic proposal, Option B. Despite U.S. support, it was voted down in a secret ballot due to the likely disruption caused by allowing all countries to immediately set their own postage rates.

The next day, the discussion turned to Option C and dragged on for several days. “There were moments when I really felt like things were falling apart,” UPU director-general Bishar Hussein later told the New York Times.

To try to get a handle on the unwieldy negotiations, Hussein convened a “convergence group” made up of representatives of 34 countries, including the United States and China, for two days of talks. Those meetings identified areas of disagreement as well as a “box of consensus,” according to Navarro, or what negotiation experts would call a zone of possible agreement (ZOPA)—the confines of a potential deal.

Stamp of approval

Ultimately, a majority of member nations voted to approve a more moderate version of Option C that was dubbed Option V, with V standing for victory.

Under the final deal, the small number of countries that import more than 75,000 metric tons of mail annually, including the United States, will be able to set self-declared rates for the distribution of foreign mail beginning in July 2020. Starting in January 2021, other high-volume importers will be allowed to choose between imposing their own rates or sticking with the status quo. In return for the ability to self-declare rates, countries will pay $40 million annually toward the UPU’s employee pension program and security systems aimed at reducing the shipping of illegal goods such as the drug fentanyl, according to the Times.

With the deal, the Trump administration achieved most of its goals in exchange for relatively minor concessions. The switch to self-declared rates was expected to reduce the financial burden on the United States Postal Service and private shipping companies such as UPS and FedEx. American manufacturers expressed hope that the new system will reduce the flow of counterfeit imports from China and elsewhere.

However, Navarro and many experts acknowledged that shipping costs would rise worldwide. “The end customer will definitely have to pay a higher price,” the UPU’s Hussein told reporters. In that sense, whether the V actually stands for victory may depend on who you are.

3 notes for writing new rules:

1. Combine threats with engagement.

A risky tactic, threats often diminish trust and inspire retaliation. Moreover, when you make a rash threat and then back away from it—as Trump has done often in his presidency—counterparts learn not to take you seriously. By contrast, Trump’s threat to exit the UPU was credible, and the White House referenced it frequently before and during the rate negotiations. If you decide a threat is warranted, make sure you’re prepared to follow through with it, and combine it with collaborative dealmaking.

2. Break talks down to size.

Multiparty negotiations can quickly become chaotic, so it’s smart to divide them into a smaller group or groups, perhaps with one representative from each faction. Another effective way of managing complex talks is to give negotiators several clearly labeled proposals to consider, as the UPU did. By gauging negotiators’ reactions to the different proposals, you can determine which one is most worth pursuing and negotiate from there.

3. Prepare to change with the times.

Like the UPU, many organizations resist diverging from the status quo. When we fail to adapt, inefficiency, accusations of unfairness, and conflict are likely. The time to prepare for change is when you first craft an agreement. Include clauses stipulating that you will revisit, and perhaps overhaul, the terms of your deal at regular intervals, factoring in economic, industry, and other changing conditions.

For years, Donald Trump has complained that the United States is getting a raw deal in international trade negotiations. As president, he has tried to improve U.S. trade partnerships in different ways, with mixed results: Trump withdrew the United States from the Trans-Pacific Partnership entirely, renegotiated changes to NAFTA with Canada and Mexico, imposed punitive tariffs on China that escalated into a trade war, and reached limited trade deals with countries such as India and Japan.

Recently, the Trump White House triggered an international negotiation that, though receiving little media attention, can be counted as one of its more successful trade initiatives: a deal to update the rates that countries pay to deliver one another’s mail. The story illustrates an effective use of one of Trump’s favorite negotiating tools— the threat.

Special delivery

In 1874, the Universal Postal Union (UPU) was established to help countries move mail and small packages seamlessly across the globe. Now part of the United Nations, the UPU sets “terminal dues”—the fees that its 192 member nations pay one another to deliver mail, according to Time magazine.

In 1969, UPU members agreed to a rate-setting formula that was based largely on nations’ level of economic development at the time. China received heavily subsidized international postage rates; the United States did not. That basic formula never changed, even as China grew into an economic powerhouse.

Today, Chinese companies typically pay less to mail small packages to the United States than American companies do to mail such packages within the states, according to Time. In 2016, under pressure from the Obama administration, the UPU approved a 20% increase in its terminal-dues formula, but it didn’t sufficiently address the rate imbalance. When Trump took office, the United States was effectively subsidizing the cost of delivering imports up to $500 million annually, according to the White House.

Cargo hold?

In October 2019, Trump threatened to withdraw the United States from the UPU in a year’s time if it didn’t address the rate imbalance to the White House’s satisfaction. That raised the prospect of a chaotic “postal Brexit” during the 2019 holiday season if U.S. stamps were no longer recognized abroad and the Trump administration needed to negotiate bilateral postal agreements with 192 nations.

Trump’s threat motivated the UPU to schedule a so-called Extraordinary Congress—emergency talks—for September 2019 during which members would negotiate a new rate system. The congress prepared to consider three proposals, Time reports. Option A wouldn’t fundamentally change the UPU’s rate formula but would allow rate increases—a nonstarter for the U.S. government. Option B would do away with the UPU’s terminal-dues system entirely and allow member nations to immediately begin setting their own shipping rates. Option C, a more gradual approach, would phase in increases to UPU terminal dues and give nations the option to self-declare rates between 2021 and 2025.

In a Financial Times editorial, White House trade adviser Peter Navarro wrote that the United States would accept Option B or C, but would withdraw from the UPU by October 17 if the UPU congress voted for Option A.

Inside the box

UPU negotiations kicked off in Geneva on September 24 with representatives of about 150 UPU member nations in attendance. They began by discussing the most drastic proposal, Option B. Despite U.S. support, it was voted down in a secret ballot due to the likely disruption caused by allowing all countries to immediately set their own postage rates.

The next day, the discussion turned to Option C and dragged on for several days. “There were moments when I really felt like things were falling apart,” UPU director-general Bishar Hussein later told the New York Times.

To try to get a handle on the unwieldy negotiations, Hussein convened a “convergence group” made up of representatives of 34 countries, including the United States and China, for two days of talks. Those meetings identified areas of disagreement as well as a “box of consensus,” according to Navarro, or what negotiation experts would call a zone of possible agreement (ZOPA)—the confines of a potential deal.

Stamp of approval

Ultimately, a majority of member nations voted to approve a more moderate version of Option C that was dubbed Option V, with V standing for victory.

Under the final deal, the small number of countries that import more than 75,000 metric tons of mail annually, including the United States, will be able to set self-declared rates for the distribution of foreign mail beginning in July 2020. Starting in January 2021, other high-volume importers will be allowed to choose between imposing their own rates or sticking with the status quo. In return for the ability to self-declare rates, countries will pay $40 million annually toward the UPU’s employee pension program and security systems aimed at reducing the shipping of illegal goods such as the drug fentanyl, according to the Times.

With the deal, the Trump administration achieved most of its goals in exchange for relatively minor concessions. The switch to self-declared rates was expected to reduce the financial burden on the United States Postal Service and private shipping companies such as UPS and FedEx. American manufacturers expressed hope that the new system will reduce the flow of counterfeit imports from China and elsewhere.

However, Navarro and many experts acknowledged that shipping costs would rise worldwide. “The end customer will definitely have to pay a higher price,” the UPU’s Hussein told reporters. In that sense, whether the V actually stands for victory may depend on who you are.

3 notes for writing new rules:

1. Combine threats with engagement.

A risky tactic, threats often diminish trust and inspire retaliation. Moreover, when you make a rash threat and then back away from it—as Trump has done often in his presidency—counterparts learn not to take you seriously. By contrast, Trump’s threat to exit the UPU was credible, and the White House referenced it frequently before and during the rate negotiations. If you decide a threat is warranted, make sure you’re prepared to follow through with it, and combine it with collaborative dealmaking.

2. Break talks down to size.

Multiparty negotiations can quickly become chaotic, so it’s smart to divide them into a smaller group or groups, perhaps with one representative from each faction. Another effective way of managing complex talks is to give negotiators several clearly labeled proposals to consider, as the UPU did. By gauging negotiators’ reactions to the different proposals, you can determine which one is most worth pursuing and negotiate from there.

3. Prepare to change with the times.

Like the UPU, many organizations resist diverging from the status quo. When we fail to adapt, inefficiency, accusations of unfairness, and conflict are likely. The time to prepare for change is when you first craft an agreement. Include clauses stipulating that you will revisit, and perhaps overhaul, the terms of your deal at regular intervals, factoring in economic, industry, and other changing conditions.

Chicago mayor Lori Lightfoot, a former federal prosecutor and head of the Chicago Police Board, was elected in 2018 as a reformer calling for big improvements to Chicago’s chronically underfunded public schools, including smaller class sizes, and more nurses and social workers. One of Lightfoot’s first major challenges after being sworn in on May 20, 2019, was to negotiate a new labor contract with the Chicago Teachers Union (CTU), which represents the Chicago Public Schools’ 25,000 teachers.

With cash-strapped Chicago facing a hefty budget deficit and a pension crisis, Lightfoot was in the difficult position of trying to hold the line on costs against a union pushing for the very reforms she’d promised during her campaign. Those negotiations quickly escalated into a strike that carried over 11 school days and caused widespread disruption for the families of the district’s 300,000 students. We revisit key elements of the contentious negotiations and lessons learned.

Negotiating perspective

The city’s opening offer to the union included a 14% pay raise for teachers over five years, according to the Chicago Tribune. The union countered by asking for a 15% raise over three years; the city then offered 16% over five years.

The intent behind the mayor’s generous offer was to avert a strike. But the offer reflected the incorrect belief that salary was the most important issue for the CTU’s members.

The city perceived that the union was “going to take the 16% and run,” Chicago alderman Anthony Beale told Reuters. “But for CTU, it wasn’t all about the money.”

In fact, Chicago teachers’ average salary, $71,150, was already higher than that of teachers in many other major U.S. cities, including New York and Philadelphia. By all accounts, Chicago teachers were more concerned about the effects of chronic underfunding on the district’s students.

With many schools lacking nurses and social workers, children’s health and well-being was being put at risk, many teachers believed. Crowded classrooms—some with as many as 40 students—were keeping students from learning and overburdening teachers, according to the CTU. The union also wanted more support for children who are homeless, a reform of the city’s juvenile justice system, and lower housing costs for teachers (who are required to live in the city limits).

Having squandered salary as a bargaining chip early in the talks, Lightfoot was left without salary increases to offer the union in exchange for concessions on class size, staffing, and other issues.

Lesson: Get a strong sense of what your counterpart values most before making any offers, or you’ll risk conceding too early and have difficulty making tradeoffs on other key issues.

Negotiating scope

According to a 1995 Chicago labor-relations law, the CTU can strike over pay and benefits but not over issues related to working conditions, including class size, staffing, and layoffs. As a result, the CTU said it would decide whether to accept the city’s salary offer only after other issues had been resolved. That enabled the union to cite the salary issue as the official justification for a work stoppage, Chicago’s WBEZ radio reported.

When the strike began on October 17, union leaders and teachers made it clear in protests, speeches, and interviews that class size, staffing, and other educational issues were a bigger concern than salary. The city could have gone to court to argue that the union’s strike was illegal because of its broad scope, but that might have led to the arrest of picketing teachers and staff—a potential public relations nightmare for the mayor.

Lesson: Resist your counterpart’s efforts to narrow the scope of talks. Adding more issues to the conversation creates opportunities for valuable tradeoffs that can benefit all parties involved, if they can see the big picture.

Negotiating pace

Lightfoot’s decisive victory in the mayoral runoff race—she won all 50 of Chicago’s wards—was a defeat for the CTU, which had backed her opponent, Cook County Board president Toni Preckwinkle. The outcome “set the stage for a walkout where the union could flex its muscles and try to impose its will on a political newcomer it opposed,” according to the Tribune. In a Tribune interview after the strike, Lightfoot said she believed the CTU had planned for a walkout even before negotiations began.

On the first day of the strike, the two sides met for a few hours; then CTU negotiators broke for a rally and reportedly were unavailable to negotiate over the weekend because they were attending a conference. With the strike in full swing, Lightfoot accused the CTU of unnecessarily slowing the pace of talks.

“We could have had this deal at the end of August,” Lightfoot complained to the Chicago Sun-Times. “If you really want to avoid a strike, you . . . ramp up the bargaining days. You stay at it night and day.” The city had shown a “sense of urgency,” she said, “but it takes two to tango.”

Likely adding to Lightfoot’s frustration was the fact that the union was well organized and effective at getting its message out to the public through protests, picket lines, speeches, and interviews. Meanwhile, the new mayor struggled to gain the backing of supporters who could get her message to the public.

Lesson: Negotiators often slow down or speed up talks to try to gain an advantage. Having launched a strike that pressured Lightfoot to make concessions, the CTU may have then ratcheted up that pressure by limiting their bargaining time. Stay attuned to such tactics, and do what you can to defuse them.

Negotiating victory

On October 30, the two sides reached a $1.5 billion deal that they both say will transform Chicago schools, according to the Tribune.

“Nobody wins in a circumstance like this,” Lightfoot told reporters, speaking of the punishing strike. But in the end, the city met many of the CTU’s demands: a guarantee that an additional 250 nurses and 209 social workers will be hired by 2023, as well as additional staff for schools with high numbers of students who are homeless, and the 16% salary increase over five years. The union didn’t win reductions to class-size limits but did get funding to better police violations of suggested class-size limits.

As for the mayor, she secured a five- year contract rather than the three years desired by the union, which would give the city more time to hire the promised staff members and push the next round of negotiations beyond her current term in office. Moreover, Lightfoot refused to negotiate the broad social-justice reforms that the CTU had pushed for.

Some critics felt the city had given away too much, but Lightfoot insisted her office had agreed only to terms that were “sustainable and financially responsible,” according to the Times. The mayor will soon return to the bargaining table to face Chicago’s powerful police and fire unions, who may view the CTU’s deal as an indication that they can demand “similarly lucrative packages,” the Tribune reports.

Lesson: Try to view negotiation as a collaborative enterprise rather than a win-lose contest—and encourage your counterpart to do the same.

Chicago mayor Lori Lightfoot, a former federal prosecutor and head of the Chicago Police Board, was elected in 2018 as a reformer calling for big improvements to Chicago’s chronically underfunded public schools, including smaller class sizes, and more nurses and social workers. One of Lightfoot’s first major challenges after being sworn in on May 20, 2019, was to negotiate a new labor contract with the Chicago Teachers Union (CTU), which represents the Chicago Public Schools’ 25,000 teachers.

With cash-strapped Chicago facing a hefty budget deficit and a pension crisis, Lightfoot was in the difficult position of trying to hold the line on costs against a union pushing for the very reforms she’d promised during her campaign. Those negotiations quickly escalated into a strike that carried over 11 school days and caused widespread disruption for the families of the district’s 300,000 students. We revisit key elements of the contentious negotiations and lessons learned.

Negotiating perspective

The city’s opening offer to the union included a 14% pay raise for teachers over five years, according to the Chicago Tribune. The union countered by asking for a 15% raise over three years; the city then offered 16% over five years.

The intent behind the mayor’s generous offer was to avert a strike. But the offer reflected the incorrect belief that salary was the most important issue for the CTU’s members.

The city perceived that the union was “going to take the 16% and run,” Chicago alderman Anthony Beale told Reuters. “But for CTU, it wasn’t all about the money.”

In fact, Chicago teachers’ average salary, $71,150, was already higher than that of teachers in many other major U.S. cities, including New York and Philadelphia. By all accounts, Chicago teachers were more concerned about the effects of chronic underfunding on the district’s students.

With many schools lacking nurses and social workers, children’s health and well-being was being put at risk, many teachers believed. Crowded classrooms—some with as many as 40 students—were keeping students from learning and overburdening teachers, according to the CTU. The union also wanted more support for children who are homeless, a reform of the city’s juvenile justice system, and lower housing costs for teachers (who are required to live in the city limits).

Having squandered salary as a bargaining chip early in the talks, Lightfoot was left without salary increases to offer the union in exchange for concessions on class size, staffing, and other issues.

Lesson: Get a strong sense of what your counterpart values most before making any offers, or you’ll risk conceding too early and have difficulty making tradeoffs on other key issues.

Negotiating scope

According to a 1995 Chicago labor-relations law, the CTU can strike over pay and benefits but not over issues related to working conditions, including class size, staffing, and layoffs. As a result, the CTU said it would decide whether to accept the city’s salary offer only after other issues had been resolved. That enabled the union to cite the salary issue as the official justification for a work stoppage, Chicago’s WBEZ radio reported.

When the strike began on October 17, union leaders and teachers made it clear in protests, speeches, and interviews that class size, staffing, and other educational issues were a bigger concern than salary. The city could have gone to court to argue that the union’s strike was illegal because of its broad scope, but that might have led to the arrest of picketing teachers and staff—a potential public relations nightmare for the mayor.

Lesson: Resist your counterpart’s efforts to narrow the scope of talks. Adding more issues to the conversation creates opportunities for valuable tradeoffs that can benefit all parties involved, if they can see the big picture.

Negotiating pace

Lightfoot’s decisive victory in the mayoral runoff race—she won all 50 of Chicago’s wards—was a defeat for the CTU, which had backed her opponent, Cook County Board president Toni Preckwinkle. The outcome “set the stage for a walkout where the union could flex its muscles and try to impose its will on a political newcomer it opposed,” according to the Tribune. In a Tribune interview after the strike, Lightfoot said she believed the CTU had planned for a walkout even before negotiations began.

On the first day of the strike, the two sides met for a few hours; then CTU negotiators broke for a rally and reportedly were unavailable to negotiate over the weekend because they were attending a conference. With the strike in full swing, Lightfoot accused the CTU of unnecessarily slowing the pace of talks.

“We could have had this deal at the end of August,” Lightfoot complained to the Chicago Sun-Times. “If you really want to avoid a strike, you . . . ramp up the bargaining days. You stay at it night and day.” The city had shown a “sense of urgency,” she said, “but it takes two to tango.”

Likely adding to Lightfoot’s frustration was the fact that the union was well organized and effective at getting its message out to the public through protests, picket lines, speeches, and interviews. Meanwhile, the new mayor struggled to gain the backing of supporters who could get her message to the public.

Lesson: Negotiators often slow down or speed up talks to try to gain an advantage. Having launched a strike that pressured Lightfoot to make concessions, the CTU may have then ratcheted up that pressure by limiting their bargaining time. Stay attuned to such tactics, and do what you can to defuse them.

Negotiating victory

On October 30, the two sides reached a $1.5 billion deal that they both say will transform Chicago schools, according to the Tribune.

“Nobody wins in a circumstance like this,” Lightfoot told reporters, speaking of the punishing strike. But in the end, the city met many of the CTU’s demands: a guarantee that an additional 250 nurses and 209 social workers will be hired by 2023, as well as additional staff for schools with high numbers of students who are homeless, and the 16% salary increase over five years. The union didn’t win reductions to class-size limits but did get funding to better police violations of suggested class-size limits.

As for the mayor, she secured a five- year contract rather than the three years desired by the union, which would give the city more time to hire the promised staff members and push the next round of negotiations beyond her current term in office. Moreover, Lightfoot refused to negotiate the broad social-justice reforms that the CTU had pushed for.

Some critics felt the city had given away too much, but Lightfoot insisted her office had agreed only to terms that were “sustainable and financially responsible,” according to the Times. The mayor will soon return to the bargaining table to face Chicago’s powerful police and fire unions, who may view the CTU’s deal as an indication that they can demand “similarly lucrative packages,” the Tribune reports.

Lesson: Try to view negotiation as a collaborative enterprise rather than a win-lose contest—and encourage your counterpart to do the same.