In the high-stakes world of mergers and acquisitions (M&A), small negotiation missteps can snowball into costly setbacks, while unexpected developments can produce remarkable wins. For this reason, business negotiators have much to learn from real-world M&A negotiation strategies reported in the news.

One frequently cited example is the 2015–2016 bidding war between Marriott International and China’s Anbang Insurance Group for Starwood Hotels and Resorts Worldwide. As described in a Wall Street Journal article by Craig Karmin, Dana Mattioli, and Rick Carew, the episode offers a vivid lesson on the risks—and hidden costs—of secrecy and unpredictability in negotiation.

Early Offers

On April 15, 2015, Starwood Hotels and Resorts Worldwide—the owner of Westin, Sheraton, W Hotels, and other major hospitality brands—announced it was exploring a sale. Among the interested parties was Anbang Insurance Group, a 12-year-old Chinese firm owned through a complex web of shareholders and holding companies across China.

Starwood, however, was skeptical of Anbang’s ability to secure financing, according to the Journal. Although the Beijing-based company had been acquiring insurers and hotels worldwide, its broader strategic goals were unclear.

Throughout the fall, Anbang chairman Wu Xiaohui floated several potential deal structures as part of the firm’s M&A negotiation strategy. But in November, Anbang backed away when Starwood insisted on detailed financing plans. That same month, Starwood accepted a $12.2 billion bid from Marriott International. The proposed deal promised clear synergies and relatively straightforward financing—and would create the world’s largest hotel company.

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On Again, Off Again

Anbang soon reemerged. On March 10, just two weeks before Starwood shareholders were scheduled to vote on the Marriott deal, Anbang submitted a $76-per-share all-cash offer.

“Our friends in China have resurfaced,” Starwood CEO Thomas Mangas told Marriott CEO Arne Sorenson, according to the Journal. Proceeding cautiously, Starwood informed Anbang that it would need both a higher bid and proof of financing to displace Marriott.

Anbang responded by raising its offer to $78 per share and providing a letter of credit from China Construction Bank covering the full amount. Still, Starwood had concerns. What strategic value did Starwood hold for Anbang? And what would happen if Chinese regulators blocked the deal after Starwood walked away from Marriott?

To mitigate this risk, Starwood secured an extraordinary concession: Anbang guaranteed that the deal would close at the agreed price even if Chinese regulatory approval failed. With that assurance in hand, Starwood announced on March 21 that it was accepting Anbang’s $13 billion bid and terminating its agreement with Marriott.

Clarity, at Last

Marriott was not finished. The company returned with a $13.6 billion offer that relied more heavily on cash than its earlier stock-and-cash proposal. Starwood accepted.

As negotiations intensified, Anbang countered once more with an all-cash offer of $81 per share. Starwood pushed Anbang to increase the bid to $82.75 per share—roughly $14 billion—and demanded renewed proof of financing and regulatory approval.

Unable to compete further on price, Marriott argued that it offered stronger long-term strategic value than Anbang. Starwood waited three days for Anbang to meet its latest demands.

Then, abruptly, Anbang’s strategy changed. Its lawyers informed Starwood that the company was withdrawing from the process. Marriott emerged as the winner—at a price roughly $1.2 billion higher than its initial bid, largely due to Anbang’s involvement.

“It’s great to have clarity,” Marriott CEO Arne Sorenson told the Journal. “We had very little insight into what the competing bidder was prepared to pay.”

Following regulatory approvals, Marriott and Starwood completed their merger on September 23, 2016, forming the world’s largest hotel company, with more than 5,700 properties worldwide.

The Downside of Unpredictable Behavior

Throughout the process, Starwood attempted—largely unsuccessfully—to understand Anbang’s underlying interests and motivations. Although Starwood ultimately benefited financially from the bidding war, its limited insight into Anbang’s strategy could easily have pulled the company into a high-risk transaction. Meanwhile, Marriott paid significantly more for Starwood because it was forced to compete with a bidder whose decision-making process was difficult to predict.

Many negotiators pride themselves on secrecy and surprise. During the 2016 presidential campaign, Donald Trump told New York Times that unpredictability was essential in dealing with China, saying, “I don’t want to say what I would do because . . . we need unpredictability.”

The Starwood deal highlights the downside of this approach—not only in M&A negotiation strategy but in negotiation more broadly. While secrecy may seem like a way to gain leverage, it often ends up confusing counterparts rather than pressuring them. Worse, it can leave significant value on the table. When negotiators conceal their interests and motivations, they miss opportunities to uncover mutually beneficial tradeoffs.

Of course, discretion still matters. It’s wise to protect your bottom line and safeguard sensitive financial information. But being open about your underlying interests and strategic goals can foster trust, encourage reciprocity, and increase the odds of a durable, value-creating agreement.

Have you experienced a counterpart’s unpredictable M&A negotiation strategy?  

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Sometimes in negotiation, the path to a joint gain is through your most unlikely counterpart. That’s what executive Joel Manby came to realize after becoming CEO of embattled theme-park operator SeaWorld in the spring of 2015.

For more than two decades, the Humane Society of the United States and other activist groups had condemned SeaWorld for breeding killer whales, known as orcas, to use as entertainment at its parks in Orlando, Florida; San Antonio; and San Diego, saying SeaWorld’s orcas were neglected and stressed.

Upon release of the 2013 documentary Blackfish, the public began to listen. The film focuses on Tilikum, a captured SeaWorld orca that had been involved in the deaths of three individuals, including two trainers.

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In the wake of the negative publicity, SeaWorld’s park attendance and profits began falling, and lawmakers started introducing legislation aimed at phasing out orca captivity. Upon taking the helm of SeaWorld, Manby at first resisted the idea of ending the orca shows, the centerpiece of the company’s brand.

Then Manby began to understand that concerns over SeaWorld’s treatment of its animals had gone mainstream. “Our research showed it would be a losing battle” to continue the orca program, Manby said.

Initial contact

As he explored ways to phase out SeaWorld’s orca entertainment, Manby considered reaching out to SeaWorld’s longtime adversary, the Humane Society. Collaborating on a new direction for SeaWorld with the nation’s leading authority on the treatment of animals could go a long way toward restoring the company’s public image.

John Campbell, a recently retired conservative Republican congressman from California, reached out to Wayne Pacelle, president of the Humane Society, on Manby’s behalf. “He called me and said Joel is a really good guy, and I think you would really like him a lot,” Pacelle told the online magazine TakePart. “And I think that company has to change, and you need to spend some time with him and see if you can get somewhere.”

In a face-to-face meeting, Manby told Pacelle that he was proud of SeaWorld’s animal-rescue work, according to Pacelle. “I said that was fine, but all your orca activities are stepping on the rest of your work,” Pacelle said. “No one can see that because your company is so defined by the treatment of your orcas.”

A changed mission

The discussion led to a negotiation and, ultimately, a partnership. On March 17 of that year, SeaWorld and the Humane Society issued a joint statement announcing that SeaWorld would stop breeding captive killer whales and end all of its iconic “Shamu” theatrical orca shows by 2019. The company said that instead of its theatrical shows, visitors would view the animals in more naturalistic pools and learn about marine-life conservation.

In a Los Angeles Times op-ed, Manby explained that SeaWorld’s 28 orcas, unequipped to survive in the wild after years of captivity, would receive top-quality care as SeaWorld’s last generation of killer whales. The company vowed to invest $50 million over five years in its marine animal rescue and rehabilitation program and said it would be partnering with the Humane Society to combat commercial whaling, seal hunting, shark finning, and ocean pollution worldwide.

“We love animals, and a lot of people don’t realize that,” Manby said, speaking of SeaWorld in a joint National Public Radio interview with Pacelle. “And Wayne’s organization does, too. And we need to move together on where we agree. Let’s dialogue and have something productive happen, not monologue and fight.”

3 Ways to partner with critics and find joint gain

1. Educated, targeted advice. Our critics are often the best source of information and opinions about where we’ve gone wrong and how we might do better. Seek out their advice with an open mind.
2. An end to conflict. Ending conflict and negative publicity can be motivation enough to partner with an adversary. Work together to develop plans that address each side’s needs.
3. A powerful signal. When you gain an endorsement from your fiercest critic, you send the message to interested observers that your position has credibility and legitimacy.

In a search for joint gain with a counterpart, what do you perceive as the most challenging hurdle?

Thanks to a series of cultural events and news stories, job negotiation advice has become a hot topic among women professionals and businesspeople more generally. First came Facebook CEO Sheryl Sandberg’s book Lean In: Women, Work, and the Will to Lead (Knopf, 2013) and corresponding movement, which encouraged women to take on leadership roles and negotiate their salaries. Then, in December 2014, leaks of data hacked from Sony Pictures revealed instances of female stars and executives earning significantly less than their male counterparts for comparable roles and positions. Actress Jennifer Lawrence, for one, publicly vowed to negotiate harder for herself and to stop worrying about whether her tougher stance would lead her to be perceived as unlikable and difficult.

Yet, back in Hollywood’s Golden Age, a small number of actresses hit upon a new dealmaking model that could inspire you to negotiate more creatively at work. In the 1930s, many Hollywood actresses negotiated assertively for themselves with great success, achieving better deals than their male costars in the process, as Chapman University professor Emily Carman reveals in her book, Independent Stardom: Freelance Women in the Hollywood Studio System (University of Texas Press, 2016). Well-known actresses of the day—from Carole Lombard to Barbara Stanwyck to Irene Dunne—bargained effectively for stellar independent deals, blazing a trail for male and female stars alike and shaking up Hollywood’s entrenched studio system.

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Carman’s archival research into these stars’ savvy dealmaking suggests creative strategies that both women and men can use across industries to improve the outcomes of their employment negotiations. We begin with Lombard’s career as a case study, then detail three pieces of job negotiation advice you can use to take your career in a bold new direction.

The case for negotiating harder

Beginning in the silent-film era, the major movie studios developed a system of negotiating long-term option contracts with male and female actors. Under the so-called studio system, stars received a regular paycheck and job security but sacrificed creative control over their careers. Despite her considerable star power, Bette Davis, for instance, never achieved the ability to choose her roles while under long-term contracts with Warner Brothers throughout much of the 1930s and ’40s, Carman writes in Independent Stardom. Moreover, the deals were often lopsided: Although a star could not exit his contract early, his studio typically had the right to decide every six months whether to continue his contract or release him.

Although many actors appreciated the stability of lengthy studio contracts, others chafed under them. Lombard was a prime example. At the end of a frustrating long-term deal with Paramount, which typecast her as a glamorous clotheshorse in second-rate films, Lombard chose by the mid-1930s to become, in essence, a freelancer, Carman explains. Working with the top talent agent at the time, Myron Selznick (brother of the legendary film producer David O. Selznick), Lombard negotiated for a broader range of lead roles in two concurrent three-picture deals with Paramount Pictures and Selznick International Pictures. By 1937, Lombard had emerged as Hollywood’s leading comedienne, while also earning praise for her more dramatic performances.

In addition to gaining creative control over her career through freelance deals, Lombard used them to improve her finances. Soon she was routinely earning $100,000 per film—an impressive figure for anyone at the time—while also cannily negotiating for a cut of the studios’ box-office profits.

In 1939, Lombard and Selznick negotiated a six-film “contract like no other” with RKO, according to fan magazine Photoplay, which included story approval, a requirement to be paired with an established leading man, and an innovative profit-participation arrangement for the final two films in the deal.

“She has one of the best agents in the business, but she really does not need one,” director Garson Kanin said of Lombard, writes Larry Swindell in his book Screwball: The Life of Carole Lombard (William Morrow and Company, 1975). “She makes her own deals and does as well as anyone could.” Tragically, before making the last two films in her RKO contract, Lombard died in a plane crash at age 33.

Lombard wasn’t the only actress in the 1930s who bucked the Hollywood system—well before men were doing so—in favor of independent stardom. Dunne, Stanwyck, Constance Bennett, Janet Gaynor, and others navigated the exclusively male-run studios to score deals that led to commercial and artistic success, writes Carman.

How did these women manage to negotiate such favorable deals when many of their colleagues remained stuck in routine studio contracts? How did these “independent stars” avoid the type of backlash that women who negotiate assertively so often face today? Three strategies answer these questions and offer job negotiation advice to us all.

Award-winning job negotiation advice from a silent-film superstar

1. Calculate and capitalize on your negotiating power

In the 1920s, an estimated 75% to 80% of filmgoers were women. Well into the 1930s, film studios catered to the demands of this largely female audience by casting glamorous actresses such as Gloria Swanson, Greta Garbo, and Joan Crawford in leading roles, writes Carman.

The audience’s near-insatiable demand for movies starring women gave promising and established actresses great power at the negotiating table. A small number of ambitious actresses, including Lombard, took full advantage of their bargaining power as female talent. In their pursuit of freelance deals, they signed with skilled agents but didn’t passively allow those agents to take control or advantage of them.

Working through a top-notch agent, Dunne, for instance, parlayed her success on Broadway into a thriving freelance film career in Hollywood, negotiating with RKO, Universal, and other studios for innovative terms that included a percentage of gross receipts, script approval, and the freedom to take the stage in New York between films.

Yet most actresses didn’t take advantage of their bargaining power in the 1930s. They chose the security of a studio contract over the risks of freelancing, which would have required them to gamble on the success of particular films and the fickle tastes of the public. It wasn’t until the 1940s that the studio system, which has often been compared to indentured servitude, began to crumble in favor of freelance deals.

When it comes to career advancement, not everyone is a risk taker or trailblazer. But you won’t actually know if a move would be risky until you’re well educated about your true bargaining power. For example, although feature film audiences are no longer largely female, as they were in the 1930s, the common belief that young white males dominate today’s movie audiences is also outdated. In fact, film audiences have been split roughly 50-50 across gender in recent years, while the numbers of African American and Hispanic moviegoers have skyrocketed, according to the Motion Picture Association of America.

In your own job negotiations, arm yourself with evidence of your bargaining power and use it to correct common stereotypes and misinformation—both your own and others’. In addition, identify creative opportunities for tradeoffs. In the 1930s, for example, some actors proposed reducing or even eliminating their up-front salaries in exchange for a share of back-end profits, a move that often led to financial windfalls for them while tempering the studio’s up-front commitment.

2. Take steps to avoid a backlash

“If I’m honest with myself, there was an element of wanting to be liked that influenced my decision to close the deal without a real fight,” Jennifer Lawrence writes in her 2015 Lenny Letter essay on the gender pay gap in Hollywood. Lawrence’s fear is supported by research by Harvard Kennedy School professor Hannah Riley Bowles and her colleagues showing a backlash effect for women, but not men, who negotiate for higher compensation: They are viewed as less nice and as less appealing colleagues than women who do not ask for more.

Just as women face a backlash for negotiating counter to stereotypes of women as passive and likable, we all risk being penalized for acting contrary to stereotype-based expectations. How did female stars of the 1930s negotiate assertively in Hollywood without suffering a backlash? By carefully managing their public relations, Carman explained in an interview with Negotiation Briefings.

Displaying further evidence of a keen business acumen, Lombard was one of the first major stars to hire her own publicist, and she also negotiated with studios for approval of her publicity campaigns. By actively courting the press, Lombard retained her celebrity status even when her films underperformed. By contrast, despite deftly negotiating their own freelance contracts, stars such as Bennett and Miriam Hopkins saw their fortunes wane when they overlooked the value of good publicity and marketing, according to Carman.

In today’s world as well, a positive image and good PR can head off a negotiation backlash. When Lawrence aired her frustrations with her past negotiations and vowed to do better going forward, she underscored her likable image and provided a strong justification for future bold requests and demands.

Similarly, in Lean In, Sheryl Sandberg offers some job negotiation advice and encourages women to cite the gender pay gap when opening salary negotiations. “In doing so,” Sandberg writes, “women position themselves as connected to a group and not just out for themselves; in effect, they are negotiating for all women.” Women may be able to avoid a backlash by displaying a communal motivation. More broadly, job negotiators of both genders may find that they can offset aggressive requests by carefully cultivating a positive reputation, whether in the press, social media, or their network.

3. Look for “off-casting” opportunities

Because actors often face long idle periods between films, in the 1930s, studios often struck “loan-out deals” with other studios for their stars on long-term contracts, Carman writes in Independent Stardom. For example, RKO might loan out a star for a month to do a film with Columbia, which would pay the star’s RKO salary that month, plus a surcharge of several weeks’ pay—which would bypass the actor and go straight to RKO.

Such side deals were often viewed and treated as burdensome to actors. For example, MGM chief Louis B. Mayer loaned out Clark Gable to Columbia for the 1934 film It Happened One Night as a form of punishment for being difficult.

By contrast, a small coterie of actresses recognized loan-outs as opportunities to expand their range and star power through “off-casting”—that is, playing against type, Carman writes. When renegotiating long-term contracts with Paramount in 1934 and 1936, for example, Claudette Colbert bargained for loan-out deals that granted her top billing—including a costarring role with Gable in It Happened One Night, for which she won an Oscar.

We often fail to progress in our careers because others view our skills too narrowly. To avoid being pigeonholed, we need to seek out opportunities to “off-cast” ourselves, Carman tells Negotiation Briefings. By taking creative risks, fostering opportunities for new and challenging roles, and reframing burdens as potential benefits, we can expand our bargaining power and take our careers in unexpected, exciting directions.

3 strategies for award-worthy negotiations

1. Calculate and capitalize on your negotiating power. Don’t believe the conventional wisdom on your bargaining position; instead, challenge expectations with hard data.

2. Take steps to avoid a backlash. Cultivate a positive reputation to improve the odds that your innovative requests will be well received.

3. Off-cast yourself. Avoid being typecast in stifling roles by seeking out opportunities to expand your skill set.

When other job negotiation advice doesn’t work, produce your own negotiations

What if your bargaining power remains weak, or the possibilities you’re offered seem too narrow? Look for ways to produce your own opportunities to negotiate.

In Independent Stardom, Carman reveals that some stars, including Constance Bennett and Ida Lupino, began producing their own films when their careers began to wane. “Today, many women in Hollywood continue on this path,” Carman told Negotiation Briefings, “including Reese Witherspoon, Jennifer Aniston, and Salma Hayek, to name a few.”

Even if it’s not feasible to start your own business, you may be able to create new negotiating opportunities through freelance work, internships, and training.

What job negotiation advice would you add to this? Let us know in the comments.

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Sometimes in negotiation, your most unlikely counterpart may turn out to be your most promising one. That’s what executive Joel Manby came to realize after becoming CEO of embattled theme-park operator SeaWorld in the spring of 2015.

Stormy seas

For more than two decades, the Humane Society of the United States and other activist groups had condemned SeaWorld for breeding killer whales, known as orcas, to use as entertainment at its parks in Orlando, Florida; San Antonio; and San Diego, saying SeaWorld’s orcas were neglected and stressed.

Upon release of the 2013 documentary Blackfish, the public began to listen. The film focuses on Tilikum, a captured SeaWorld orca that has been involved in the deaths of three individuals, including two trainers.

In the wake of the negative publicity, SeaWorld’s park attendance and profits began falling, and lawmakers started introducing legislation aimed at phasing out orca captivity.
Upon taking the helm of SeaWorld, Manby at first resisted the idea of ending the orca shows, the centerpiece of the company’s brand, he told the blog brandchannel this past March.

Then Manby began to understand that concerns over SeaWorld’s treatment of its animals had gone mainstream. “Our research showed it would be a losing battle” to continue the orca program, Manby told brandchannel.

Initial contact

As he explored ways to phase out SeaWorld’s orca entertainment, Manby considered reaching out to SeaWorld’s longtime adversary, the Humane Society. Collaborating on a new direction for SeaWorld with the nation’s leading authority on the treatment of animals could go a long way toward restoring the company’s public image.
John Campbell, a recently retired conservative Republican congressman from California, reached out to Wayne Pacelle, president of the Humane Society, on Manby’s behalf. “He called me and said Joel is a really good guy, and I think you would really like him a lot,” Pacelle told the online magazine TakePart. “And I think that company has to change, and you need to spend some time with him and see if you can get somewhere.”

In a face-to-face meeting, Manby told Pacelle that he was proud of SeaWorld’s animal-rescue work, according to Pacelle. “I said that was fine, but all your orca activities are stepping on the rest of your work,” Pacelle said. “No one can see that because your company is so defined by the treatment of your orcas.”

A changed mission

The discussion led to a negotiation and, ultimately, a partnership. On March 17, SeaWorld and the Humane Society issued a joint statement announcing that SeaWorld would stop breeding captive killer whales this year and end all of its iconic “Shamu” theatrical orca shows by 2019. The company said that instead of its theatrical shows, visitors would view the animals in more naturalistic pools and learn about marine-life conservation.

In a Los Angeles Times op-ed, Manby explained that SeaWorld’s 28 orcas, unequipped to survive in the wild after years of captivity, would receive top-quality care as SeaWorld’s last generation of killer whales. The company vowed to invest $50 million over five years in its marine animal rescue and rehabilitation program and said it would be partnering with the Humane Society to combat commercial whaling, seal hunting, shark finning, and ocean pollution worldwide.

“We love animals, and a lot of people don’t realize that,” Manby said, speaking of SeaWorld in a joint National Public Radio interview with Pacelle. “And Wayne’s organization does, too. And we need to move together on where we agree. Let’s dialogue and have something productive happen, not monologue and fight.”

3 benefits of partnering with critics

1. Educated, targeted advice. Our critics are often the best source of information and opinions about where we’ve gone wrong and how we might do better. Seek out their advice with an open mind.
2. An end to conflict. Ending conflict and negative publicity can be motivation enough to partner with an adversary. Work together to develop plans that address each side’s needs.
3. A powerful signal. When you gain an endorsement from your fiercest critic, you send the message to interested observers that your position has credibility and legitimacy.

Many negotiators swear by the element of surprise. When the New York Times asked Republican presidential candidate Donald Trump about China’s aggressive moves in the South China Sea, for example, he responded, “I don’t want to say what I would do because . . . we need unpredictability.” He continued, “I wouldn’t want them to know what my real thinking is.”
Wise negotiators understand the importance of concealing their bottom line and other sensitive information lest the other party use it to take advantage. But how does extreme secrecy, such as concealing one’s key interests, motivations, ability to pay, and even one’s identity, affect negotiation?

The recent bidding war between hotel chain Marriott International and China’s Anbang Insurance Group, as detailed in a Wall Street Journal article by Craig Karmin, Dana Mattioli, and Rick Carew, sheds some light on this issue.

Early offers

In April 15, Starwood Hotels and Resorts Worldwide, the owner and operator of Westin, Sheraton, W Hotels, and other hospitality brands, revealed publicly that it was for sale. Anbang Insurance Group, a 12-year-old Chinese company owned by a murky blend of corporate shareholders and holding companies registered across China, expressed interest. But Starwood was skeptical of Anbang’s ability to secure financing, according to the Journal. The Beijing company had been devouring insurers and hotels across the globe—it had purchased New York’s fabled Waldorf Astoria for $1.95 billion—but its broader goals were unclear.

Throughout the fall, Anbang chairman Wu Xiaohui proposed various deal options but backed away in November when Starwood said it wouldn’t proceed without receiving specific financing plans. The same month, Starwood accepted a $12.2 billion bid from Marriott. The deal, which would create the world’s largest hotel company, offered clear synergies and straightforward financing.

On again, off again

Soon, however, Anbang was back in the picture. On March 10, just two weeks before Starwood shareholders were due to vote on the Marriott deal, the Chinese firm submitted a $76 per share, all-cash offer for Starwood.

“Our friends in China have resurfaced,” Starwood CEO Thomas Mangas notified his counterpart at Marriott, Arne Sorenson, the Journal reports. Still cautious, Starwood told Anbang it would have to bid higher and provide proof of financing to displace Marriott. Anbang promptly raised its offer to $78 per share and offered a letter of credit from China Construction Bank for the full amount.

Yet Starwood still had qualms. What did Anbang expect to gain from the acquisition? And what would happen if the Chinese government scuttled the deal after Starwood walked away from Marriott? To address this concern, Starwood asked for and received an extraordinary guarantee from Anbang, according to the Journal: that the deal would still close at the promised price even without Chinese regulatory approval.

On March 21, Starwood announced that it was accepting Anbang’s $13 billion bid and calling off its deal with Marriott.

Clarity, at last

Marriott came back with a $13.6 billion bid that relied more on cash than its previous stock-and-cash offer. Starwood accepted.
Anbang upped the ante once more, this time with an all-cash offer of $81 per share. Starwood convinced the Chinese firm to nudge its offer up to $82.75 per share, or $14 billion, then demanded proof of financing and regulatory approval at the new price. No longer able to compete on price, Marriott made the case that it offered stronger strategic value to Starwood than the mysterious Anbang.

For three days, Starwood waited for Anbang to meet its demands. Then Anbang’s lawyers abruptly revealed that the company was walking away. That left Marriott the winning bidder—but for $1.2 billion above its opening bid, thanks to Anbang.

“It’s great to have clarity,” Sorenson told the Journal, looking on the bright side. “We had very little insight into what the competing bidder was prepared to pay.”

The downside of unpredictable behavior

Throughout its negotiations with Anbang, Starwood tried but largely failed to gain an understanding of the bidder’s interests and motives. While Starwood ultimately profited from the bidding war triggered by Anbang, its lack of knowledge about Anbang and its motives easily could have drawn it into a high-risk deal. Meanwhile, Marriott paid substantially more for its prize because of the involvement of a bidder whose decision making was difficult to understand.

The Starwood deal illustrates the downside of secrecy in negotiation. We may try to get an edge by keeping the other side guessing but end up simply confounding her with our behavior. What’s more, negotiators who maintain an aura of secrecy typically leave value on the table. When you fail to reveal information about your preferences and interests to the other party, you miss opportunities to discover mutually beneficial tradeoffs.

Of course, it’s smart to keep information about your bottom line, as well as sensitive financial and other data, under wraps. But be open and forthright about your underlying interests and motivations. Your counterpart will appreciate your candor and likely reciprocate. Through this process, you will build trust and increase your odds of a successful long-term partnership.

On April 6, former Massey Energy CEO Donald Blankenship was sentenced to a year in prison and a $250,000 fine, the maximum punishment allowed, after receiving a misdemeanor conviction for conspiring to flout mine safety rules. In 2010, 29 Massey miners were killed in the Upper Big Branch coal dust explosion in West Virginia, while Blankenship was at the company’s helm. A state panel concluded that, to maximize his personal compensation, Blankenship had pushed managers to put coal production above safety concerns.

At his sentencing, Blankenship maintained his innocence. “It’s important for everyone to know that I am not guilty of any crime,” he told U.S. District Judge Irene Berger. “There’s no direct evidence that I committed any crime.” Blankenship then attempted to apologize to family members of those who died in the blast, but the judge cut him off and scolded him for failing to live up to the expectations of his community, according to West Virginia Public Broadcasting.

As Blankenship left the courthouse, relatives of the victims shouted bitterly at him. “For six years, he never apologized,” Tommy Davis, a former Massey miner whose brother was killed in the explosion, told reporters through tears, according to Bloomberg News.

In negotiations and conflict resolution efforts, an apology can be a powerful, even essential means of repairing a trust violation. In a 2009 review of legal disputes, Albany Law School professor Elizabeth A. Nowicki found that apologies can improve the odds of settlement, reduce legal and other costs, save time, and mitigate the fallout from damaged reputations and relationships. To take one example, hospitals that adopted apology procedures for medical errors faced fewer lawsuits and reached cheaper claim settlements than those that did not have such policies, Columbia Law School professor Carol Liebman and mediator Chris Hyman found in one study.

By contrast, those who fail to apologize or whose apologies are perceived to be insufficient may have difficulty restoring their reputations and regaining trust, as Blankenship’s situation suggests.
What are the hallmarks of an effective apology in negotiation and conflict resolution? Ohio State University professors Roy J. Lewicki and Robert B. Lount, Jr., and Eastern Kentucky University professor Beth Polin examined this question in a new study in the journal Negotiation and Conflict Management Research.

Six components of apologies

Lewicki and his colleagues present a list of six components that can be included in an apology:

1. An expression of regret: “I felt terrible when I realized the harm I caused.”
2. An explanation for why the offense occurred: “I made the mistake because I was in a hurry and working too quickly.”
3. An acknowledgment of responsibility for any harm caused: “I was wrong, and I accept responsibility for my actions.”
4. A declaration of repentance that signals the violator won’t repeat the action: “I regret that this occurred, and I have learned my lesson. It won’t happen again.”
5. An offer of repair that clarifies the steps the violator is willing to take to remedy the situation: “I will compensate you for the expenses related to the error.”
6. A request for forgiveness: “I humbly ask you to forgive my mistake.”

As they approached their experiments, the researchers theorized that (1) certain of these apology components would be more effective than others at restoring trust, and (2) the more components an apology included, the more effective it would be.

Because the nature of a trust violation also may affect how people receive an apology, the researchers were interested in studying whether apologies for competence-based trust violations—those caused by a lack of knowledge or experience—would be better received than apologies for integrity-based trust violations—those caused by intentional unethical behavior.

Weighing apologies

In one experiment conducted online, the researchers asked several hundred individuals to imagine that they were reviewing the application of a job candidate for an accounting position; the candidate had been reported for filing a client’s tax return incorrectly. Some participants were asked to imagine that the candidate made the error because of a lack of knowledge of tax codes (a competence-based violation). Others were told the candidate knowingly filed the tax return incorrectly (an integrity-based violation).

Next, participants were asked to imagine that the candidate responded by using one of the six apology components described earlier (presented one at a time), three of the components, or all six of them. They then were asked how effective, credible, and adequate such an apology statement would be.

Overall, participants evaluated apologies for competence-based violations more positively than apologies for integrity-based violations. In addition, although apologies with three or just one of the six apology components were viewed similarly, apologies with all six components were received most positively.

Of the six components, acknowledgment of responsibility and an offer of repair were most favorably received. A request for forgiveness was the least effective. When three components were bundled together, the most effective bundle was an acknowledgment of responsibility, an offer of repair, and an explanation. By comparison, the least effective bundle was an expression of regret, a declaration of repentance, and a request for forgiveness.

The value of taking responsibility

Overall, Lewicki, Polin, and Lount find that the more elaborate an apology is, the more favorably it will be received. In addition, certain components are more valued than others, particularly an acknowledgment of responsibility and an offer to repair the broken trust. By contrast, merely asking for forgiveness or expressing regret is unlikely to have much of an effect. In addition, victims are more accepting of trust violations when lack of competence is to blame than when lack of integrity is the underlying issue.

The public apology has become a virtual rite of passage for individuals and organizations who have hurt or offended others. The results of this study suggest that when an apology is warranted, you would be wise to craft one that is thorough and expressly acknowledges your mistakes and eagerness to make things right.

A final note: Because there can be liability issues related to apologizing, you may want to check with a lawyer before expressing wrongdoing or admitting to mistakes. You may still be able to apologize, but your lawyer may have specific guidance on how to do so.

On April 6, former Massey Energy CEO Donald Blankenship was sentenced to a year in prison and a $250,000 fine, the maximum punishment allowed, after receiving a misdemeanor conviction for conspiring to flout mine safety rules. In 2010, 29 Massey miners were killed in the Upper Big Branch coal dust explosion in West Virginia, while Blankenship was at the company’s helm. A state panel concluded that, to maximize his personal compensation, Blankenship had pushed managers to put coal production above safety concerns.

At his sentencing, Blankenship maintained his innocence. “It’s important for everyone to know that I am not guilty of any crime,” he told U.S. District Judge Irene Berger. “There’s no direct evidence that I committed any crime.” Blankenship then attempted to apologize to family members of those who died in the blast, but the judge cut him off and scolded him for failing to live up to the expectations of his community, according to West Virginia Public Broadcasting.

As Blankenship left the courthouse, relatives of the victims shouted bitterly at him. “For six years, he never apologized,” Tommy Davis, a former Massey miner whose brother was killed in the explosion, told reporters through tears, according to Bloomberg News.

In negotiations and conflict resolution efforts, an apology can be a powerful, even essential means of repairing a trust violation. In a 2009 review of legal disputes, Albany Law School professor Elizabeth A. Nowicki found that apologies can improve the odds of settlement, reduce legal and other costs, save time, and mitigate the fallout from damaged reputations and relationships. To take one example, hospitals that adopted apology procedures for medical errors faced fewer lawsuits and reached cheaper claim settlements than those that did not have such policies, Columbia Law School professor Carol Liebman and mediator Chris Hyman found in one study.

By contrast, those who fail to apologize or whose apologies are perceived to be insufficient may have difficulty restoring their reputations and regaining trust, as Blankenship’s situation suggests.
What are the hallmarks of an effective apology in negotiation and conflict resolution? Ohio State University professors Roy J. Lewicki and Robert B. Lount, Jr., and Eastern Kentucky University professor Beth Polin examined this question in a new study in the journal Negotiation and Conflict Management Research.

Six components of apologies

Lewicki and his colleagues present a list of six components that can be included in an apology:

1. An expression of regret: “I felt terrible when I realized the harm I caused.”
2. An explanation for why the offense occurred: “I made the mistake because I was in a hurry and working too quickly.”
3. An acknowledgment of responsibility for any harm caused: “I was wrong, and I accept responsibility for my actions.”
4. A declaration of repentance that signals the violator won’t repeat the action: “I regret that this occurred, and I have learned my lesson. It won’t happen again.”
5. An offer of repair that clarifies the steps the violator is willing to take to remedy the situation: “I will compensate you for the expenses related to the error.”
6. A request for forgiveness: “I humbly ask you to forgive my mistake.”

As they approached their experiments, the researchers theorized that (1) certain of these apology components would be more effective than others at restoring trust, and (2) the more components an apology included, the more effective it would be.

Because the nature of a trust violation also may affect how people receive an apology, the researchers were interested in studying whether apologies for competence-based trust violations—those caused by a lack of knowledge or experience—would be better received than apologies for integrity-based trust violations—those caused by intentional unethical behavior.

Weighing apologies

In one experiment conducted online, the researchers asked several hundred individuals to imagine that they were reviewing the application of a job candidate for an accounting position; the candidate had been reported for filing a client’s tax return incorrectly. Some participants were asked to imagine that the candidate made the error because of a lack of knowledge of tax codes (a competence-based violation). Others were told the candidate knowingly filed the tax return incorrectly (an integrity-based violation).

Next, participants were asked to imagine that the candidate responded by using one of the six apology components described earlier (presented one at a time), three of the components, or all six of them. They then were asked how effective, credible, and adequate such an apology statement would be.

Overall, participants evaluated apologies for competence-based violations more positively than apologies for integrity-based violations. In addition, although apologies with three or just one of the six apology components were viewed similarly, apologies with all six components were received most positively.

Of the six components, acknowledgment of responsibility and an offer of repair were most favorably received. A request for forgiveness was the least effective. When three components were bundled together, the most effective bundle was an acknowledgment of responsibility, an offer of repair, and an explanation. By comparison, the least effective bundle was an expression of regret, a declaration of repentance, and a request for forgiveness.

The value of taking responsibility

Overall, Lewicki, Polin, and Lount find that the more elaborate an apology is, the more favorably it will be received. In addition, certain components are more valued than others, particularly an acknowledgment of responsibility and an offer to repair the broken trust. By contrast, merely asking for forgiveness or expressing regret is unlikely to have much of an effect. In addition, victims are more accepting of trust violations when lack of competence is to blame than when lack of integrity is the underlying issue.

The public apology has become a virtual rite of passage for individuals and organizations who have hurt or offended others. The results of this study suggest that when an apology is warranted, you would be wise to craft one that is thorough and expressly acknowledges your mistakes and eagerness to make things right.

A final note: Because there can be liability issues related to apologizing, you may want to check with a lawyer before expressing wrongdoing or admitting to mistakes. You may still be able to apologize, but your lawyer may have specific guidance on how to do so.

Thanks to a series of cultural events and news stories, job negotiation—and the question of how to succeed at it—has become a hot topic among women professionals and businesspeople more generally. First came Facebook CEO Sheryl Sandberg’s book Lean In: Women, Work, and the Will to Lead (Knopf, 2013) and corresponding movement, which encouraged women to take on leadership roles and negotiate their salaries. Then, in December 2014, leaks of data hacked from Sony Pictures revealed instances of female stars and executives earning significantly less than their male counterparts for comparable roles and positions. Actress Jennifer Lawrence, for one, publicly vowed to negotiate harder for herself and to stop worrying about whether her tougher stance would lead her to be perceived as unlikable and difficult.

Interestingly, in the 1930s, many Hollywood actresses negotiated assertively for themselves with great success, achieving better deals than their male costars in the process, as Chapman University professor Emily Carman reveals in her new book, Independent Stardom: Freelance Women in the Hollywood Studio System (University of Texas Press, 2016). Well-known actresses of the day—from Carole Lombard to Barbara Stanwyck to Irene Dunne—bargained effectively for stellar independent deals, blazing a trail for male and female stars alike and shaking up Hollywood’s entrenched studio system.

Carman’s archival research into these stars’ savvy dealmaking suggests creative strategies that both women and men can use across industries to improve the outcomes of their employment negotiations. We begin with Lombard’s career as a case study, then detail three approaches you can use to take your career in a bold new direction.

A case study: Lombard breaks free

Beginning in the silent-film era, the major movie studios developed a system of negotiating long-term option contracts with male and female actors. Under the so-called studio system, stars received a regular paycheck and job security but sacrificed creative control over their careers. Despite her considerable star power, Bette Davis, for instance, never achieved the ability to choose her roles while under long-term contracts with Warner Brothers throughout much of the 1930s and ’40s, Carman writes in Independent Stardom. Moreover, the deals were often lopsided: Although a star could not exit his contract early, his studio typically had the right to decide every six months whether to continue his contract or release him.
Although many actors appreciated the stability of lengthy studio contracts, others chafed under them. Lombard was a prime example. At the end of a frustrating long-term deal with Paramount, which typecast her as a glamorous clotheshorse in second-rate films, Lombard chose by the mid-1930s to become, in essence, a freelancer, Carman explains. Working with the top talent agent at the time, Myron Selznick (brother of the legendary film producer David O. Selznick), Lombard negotiated for a broader range of lead roles in two concurrent three-picture deals with Paramount Pictures and Selznick International Pictures. By 1937, Lombard had emerged as Hollywood’s leading comedienne, while also earning praise for her more dramatic performances.
In addition to gaining creative control over her career through freelance deals, Lombard used them to improve her finances. Soon she was routinely earning $100,000 per film—an impressive figure for anyone at the time—while also cannily negotiating for a cut of the studios’ box-office profits.

In 1939, Lombard and Selznick negotiated a six-film “contract like no other” with RKO, according to fan magazine Photoplay, which included story approval, a requirement to be paired with an established leading man, and an innovative profit-participation arrangement for the final two films in the deal.

“She has one of the best agents in the business, but she really does not need one,” director Garson Kanin said of Lombard, writes Larry Swindell in his book Screwball: The Life of Carole Lombard (William Morrow and Company, 1975). “She makes her own deals and does as well as anyone could.” Tragically, before making the last two films in her RKO contract, Lombard died in a plane crash at age 33.

Lombard wasn’t the only actress in the 1930s who bucked the Hollywood system—well before men were doing so—in favor of independent stardom. Dunne, Stanwyck, Constance Bennett, Janet Gaynor, and others navigated the exclusively male-run studios to score deals that led to commercial and artistic success, writes Carman.
How did these women manage to negotiate such favorable deals when many of their colleagues remained stuck in routine studio contracts? How did these “independent stars” avoid the type of backlash that women who negotiate assertively so often face today? Three strategies answer these questions and offer guidance to us all.

1. Calculate and capitalize on your negotiating power

In the 1920s, an estimated 75% to 80% of filmgoers were women. Well into the 1930s, film studios catered to the demands of this largely female audience by casting glamorous actresses such as Gloria Swanson, Greta Garbo, and Joan Crawford in leading roles, writes Carman.

The audience’s near-insatiable demand for movies starring women gave promising and established actresses great power at the negotiating table. A small number of ambitious actresses, including Lombard, took full advantage of their bargaining power as female talent. In their pursuit of freelance deals, they signed with skilled agents but didn’t passively allow those agents to take control or advantage of them. Working through a top-notch agent, Dunne, for instance, parlayed her success on Broadway into a thriving freelance film career in Hollywood, negotiating with RKO, Universal, and other studios for innovative terms that included a percentage of gross receipts, script approval, and the freedom to take the stage in New York between films.
Yet most actresses didn’t take advantage of their bargaining power in the 1930s. They chose the security of a studio contract over the risks of freelancing, which would have required them to gamble on the success of particular films and the fickle tastes of the public. It wasn’t until the 1940s that the studio system, which has often been compared to indentured servitude, began to crumble in favor of freelance deals.

When it comes to career advancement, not everyone is a risk taker or trailblazer. But you won’t actually know if a move would be risky until you’re well educated about your true bargaining power. For example, although feature film audiences are no longer largely female, as they were in the 1930s, the common belief that young white males dominate today’s movie audiences is also outdated. In fact, film audiences have been split roughly 50-50 across gender in recent years, while the numbers of African American and Hispanic moviegoers have skyrocketed, according to the Motion Picture Association of America.

In your own job negotiations, arm yourself with evidence of your bargaining power and use it to correct common stereotypes and misinformation—both your own and others’. In addition, identify creative opportunities for tradeoffs. In the 1930s, for example, some actors proposed reducing or even eliminating their up-front salaries in exchange for a share of back-end profits, a move that often led to financial windfalls for them while tempering the studio’s up-front commitment.

2. Take steps to avoid a backlash

“If I’m honest with myself, there was an element of wanting to be liked that influenced my decision to close the deal without a real fight,” Jennifer Lawrence writes in her 2015 Lenny Letter essay on the gender pay gap in Hollywood. Lawrence’s fear is supported by research by Harvard Kennedy School professor Hannah Riley Bowles and her colleagues showing a backlash effect for women, but not men, who negotiate for higher compensation: They are viewed as less nice and as less appealing colleagues than women who do not ask for more.
Just as women face a backlash for negotiating counter to stereotypes of women as passive and likable, we all risk being penalized for acting contrary to stereotype-based expectations. How did female stars of the 1930s negotiate assertively in Hollywood without suffering a backlash? By carefully managing their public relations, Carman explained in an interview with Negotiation Briefings.

Displaying further evidence of a keen business acumen, Lombard was one of the first major stars to hire her own publicist, and she also negotiated with studios for approval of her publicity campaigns. By actively courting the press, Lombard retained her celebrity status even when her films underperformed. By contrast, despite deftly negotiating their own freelance contracts, stars such as Bennett and Miriam Hopkins saw their fortunes wane when they overlooked the value of good publicity and marketing, according to Carman.

In today’s world as well, a positive image and good PR can head off a negotiation backlash. When Lawrence aired her frustrations with her past negotiations and vowed to do better going forward, she underscored her likable image and provided a strong justification for future bold requests and demands.

Similarly, in Lean In, Sheryl Sandberg encourages women to cite the gender pay gap when opening salary negotiations. “In doing so,” Sandberg writes, “women position themselves as connected to a group and not just out for themselves; in effect, they are negotiating for all women.” Women may be able to avoid a backlash by displaying a communal motivation. More broadly, job negotiators of both genders may find that they can offset aggressive requests by carefully cultivating a positive reputation, whether in the press, social media, or their network.

3. Look for “off-casting” opportunities

Because actors often face long idle periods between films, in the 1930s, studios often struck “loan-out deals” with other studios for their stars on long-term contracts, Carman writes in Independent Stardom. For example, RKO might loan out a star for a month to do a film with Columbia, which would pay the star’s RKO salary that month, plus a surcharge of several weeks’ pay—which would bypass the actor and go straight to RKO.

Such side deals were often viewed and treated as burdensome to actors. For example, MGM chief Louis B. Mayer loaned out Clark Gable to Columbia for the 1934 film It Happened One Night as a form of punishment for being difficult.

By contrast, a small coterie of actresses recognized loan-outs as opportunities to expand their range and star power through “off-casting”—that is, playing against type, Carman writes. When renegotiating long-term contracts with Paramount in 1934 and 1936, for example, Claudette Colbert bargained for loan-out deals that granted her top billing—including a costarring role with Gable in It Happened One Night, for which she won an Oscar.

We often fail to progress in our careers because others view our skills too narrowly. To avoid being pigeonholed, we need to seek out opportunities to “off-cast” ourselves, Carman tells Negotiation Briefings. By taking creative risks, fostering opportunities for new and challenging roles, and reframing burdens as potential benefits, we can expand our bargaining power and take our careers in unexpected, exciting directions.

3 strategies for award-worthy negotiations

1. Calculate and capitalize on your negotiating power. Don’t believe the conventional wisdom on your bargaining position; instead, challenge expectations with hard data.

2. Take steps to avoid a backlash. Cultivate a positive reputation to improve the odds that your innovative requests will be well received.

3. Off-cast yourself. Avoid being typecast in stifling roles by seeking out opportunities to expand your skill set.

Produce your own negotiations

What if your bargaining power remains weak, or the possibilities you’re offered seem too narrow? Look for ways to produce your own opportunities to negotiate.
In Independent Stardom, Carman reveals that some stars, including Constance Bennett and Ida Lupino, began producing their own films when their careers began to wane. “Today, many women in Hollywood continue on this path,” Carman told Negotiation Briefings, “including Reese Witherspoon, Jennifer Aniston, and Salma Hayek, to name a few.”
Even if it’s not feasible to start your own business, you may be able to create new negotiating opportunities through freelance work, internships, and training.