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Happens If All Of This Goes Away?

In the U.S., there is the very real possibility that the national sport, American football, will not start its season on time because all of the players will be out on strike. What’s amazing is that the National Football League (NFL) and the players are currently more successful than they’ve ever been. The events that have lead us to this point and what happens next will provide opportunities for sales negotiators to watch and learn…

Football Has Been Very, Very Good To Many People

In the U.S., the sport of football is all about making (and spending) money. U.S. Football is the most successful professional sports league in the world. They are estimated to earn US$9B a year!

The NFL makes money in three different ways: they sell tickets so that fans can come and attend games, they sell broadcast fees to television networks so that they can show the games and sell advertising slots, and they sell corporate sponsorships to both individual teams as well as to the NFL itself.

Why A Football Strike Just Might Happen

If a strike happened, it could go on for months. When strikes like this have happened in other U.S. sports such as baseball, hockey, and basketball, billions of dollars have been lost.

The key point that may lead to a strike is simple enough: the owners and the players disagree about how to spend the US$9B in annual revenue that the sport of football generates. Right now, the owners get US$1B of that right off the top. The remaining US$8B is then split 60/40 between the players and the owners.

The disagreement has come about because now the owners want to take US$2B off the top and continue to split the remaining US$7B 60/40 with the players. The owners say that they need these additional funds because their costs have been dramatically increasing. What this means is that the players would be taking a 12.5% decrease in pay.

Just to complicate matters, the owners want two other changes: they want to play an additional two games every season (more tickets, more broadcast fees) and cut pay for rookies.

The players say that they don’t want a longer season because football is a rough sport and more games would mean that they’d have a greater chance to get injured. They are ok with the rookie pay cut, but they want the money saved to go to veteran players – not into the owner’s pockets.

What A Football Strike Would Mean For Everyone

If a football strike happens, there’s going to be a lot of money lost. First off, ticket revenue is going to vanish – if you don’t play a game, then you’re not going to be able to sell any tickets. Next, the corporate sponsorships are going to go away – if you’re not playing games, then the companies are not getting their brands out in front of potential customers and so they are going to have to find other places to spend their money.

It’s not quite clear yet, but there is a good chance that a federal judge may require the football team owners to place at least part of their US$4B in television broadcast-rights fees into an escrow account until things get worked out. If they don’t have access to this cash, at least some of the owners are going to be scrambling to find ways to pay the loans that they’ve taken out.

What All Of This Means For You

From a sales negotiator point of view this very expensive possible strike should provide all of us with a fantastic learning experience. As I’m writing this article, both sides have already been in negotiations for over 10 days. They’ve agreed to extend negotiations by a week and the talks continue.

What you should be looking for is what both sides say publically. The press will be used to communicate bargaining positions to the other side. We should also watch to see what both sides actually do: are they preparing their members for a strike to happen, are they telling them that it’s going to be a long strike?

Most of us won’t be negotiating a US$9B deal anytime soon. However, all of the standard rules of a sales negotiation apply here: you need to prepare for the negotiation, power is a fluid thing that will change sides many times during a negotiation, and it’s always better to show up with a good team that knows their roles.

Watch the news, read the newspaper and take it all in. Hopefully they’ll find a way to resolve this issue and the U.S. football season won’t be impacted, but no matter what happens we’ll all be better negotiators once it’s over!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: If you were representing the NFL players, what point would you compromise on? What point would you stand firm on?

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What We’ll Be Talking About Next Time

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1. Sales Negotiators Need To Be Good Pressure Thinkers Let’s face it: a sales negotiation is a high-pressure situation....

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Even In Hollywood, Sales Negotiations Are Not Make-Believe

Can anyone remember what happened way back in November of 2007? That’s when all of the writers in Hollywood went on strike. After that the Screen Actors Guild walked out. Talk about a mess. Well guess what, in the first half of 2011 this could all happen again – those contracts are once again just about ready to come up for re-negotiation once again…!

What Went Wrong Last Time

There were a whole host of things that caused the last set of Hollywood negotiations to go wrong. For one thing, during the process the Screen Actors Guild ended up firing its chief negotiator, Doug Allen, due to internal disagreements.

On the movie making side of the table, things were not much better. The labor problems were used as an excuse to lower everyone’s pay and get out of deals that the studios no longer wanted to be in.

In a nutshell, both sides of the table ended up being unhappy. Clearly this is not the way to conduct a sales negotiation.

What Might Be Different This Time Around

You would think that all of the parties involved would have learned from last time and would be taking steps to make sure that history did not repeat itself. Of course, you’d only be partially correct.

Time marches on and this time around the negotiators who sit down across from each other at the table will be a different set of folks. That may help things just a bit.

Additionally, both sides are already starting to make noises about the upcoming negotiations. They are saying that they are committed to doing a lot of talking. That sure sounds like a hopeful sign, right?

However, be careful. There are a lot of minefields in this set of talks. The directors will be looking for ways to get higher residual payments for the use of their work. How to handle the ever-growing area of “new-media” will be a big bone of discussion (thanks a lot Apple iPad!). Once again, the role of writers in reality shows will come under fire as these shows continue to grow in popularity.

What All Of This Means For You

As professional sales negotiators the looming Hollywood negotiations offer us a unique opportunity to see multi-party sales negotiations played out in the public eye.

There will be a lot to watch and learn here. We should expect to see a lot of press leaks, public statements, and perhaps even some angry storming out.

In the end, we all know that they’ll reach a deal. However, it’s how they end up getting there that will provide the real learning experience…!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Help For Technical Staff

Question For You: Do you think that the actors and writers should plan on stopping work or should they offer up the hope that a strike can be averted?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Hey, did you read any of those Harry Potter books (or at least see one of the movies?) The stories are fiction but it turns out that sales negotiators do have some real magic that they can use to get what they want during a negotiation…

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Post tags: actors, directors, film industry, Hollywood, new media, reality shows, residual payment, S.A.G., Screen Actors Guild, strike, talking, writers

The SAG And The Studios Are Deadlocked In Their Negations, Now What?

In the world of Hollywood, they have the ability to make the unreal seem oh so real. However, right now they are having a great deal of difficulty negotiating to make a contract between the big movie studios and the Screen Actors Guild (SAG) become a reality. Are we going to be looking at another actors strike?

Perhaps a bit of a background is needed here. The SAG is a 120,000 member union that represents, what else, actors. The SAG is currently negotiating with the major studios to create a new contract for its members – their old contact ran out back in June.

This type of negotiation is fairly common. However, what’s making it interesting this time around is that there appears to be a difference in opinion on how best to negotiate within the SAG. This is causing a split to occur and may be significantly reducing the SAG’s negotiating power.

Within the SAG there are two groups that are taking differing views of how the negotiations need to proceed. The first group, called Members First,  is lead by the SAG’s president Alan Rosenberg and their Executive Director Doug Allen. Doug also happens to be the SAG’s chief negotiator. The second group calls itself Unite for Strength and has won several key seats on the board and now, by aligning with other board members,  has a slight majority.

So what’s the issue here?

Currently the SAG is in deadlock in their negotiations with the big studios. The Members First team wants to have the SAG members vote to authorize a strike if the negotiating team needs to call one. The Unite for Strength team wants the board to vote against having a strike vote as well as having them replace the current negotiating team. Talk about bad blood!

If the Unite for Strength team got their way, then they would probably try to jump-start the stalled negotiations with the studios. They would go along with the pay terms for new media that other unions have negotiated with the studios as  an exchange for getting improvements in the traditional media pay areas.

Why does the Unite for Strength team not want a strike vote to be taken? They believe that a strike now would be a poor decision based on the current economic state of the country.

Tom Hanks supports the Unite for Strength team. Mel Gibson supports the Members First team.

Just to make things a bit more complicated, the studios are insisting that their current offer on the table is their final offer. It contains some provisions that no SAG members likes such as a proposal to eliminate mandatory meal times (I mean come on, an actor has got to eat…)

So what should a negotiator make of all of this back-and-forth?

First, the public SAG split is bad news for the actors because it transfers power to the studios. When the other side of the table is in disagreement, your position is stronger. However, this also means that reaching an agreement with the SAG will be more difficult – the studios need to get all of the SAG to agree to a new contract.

It looks like SAG has done a poor job of PLANNING their side of the negotiation. There is a critical question of what is more important: money from traditional (films, TV) media or money from new (DVD, Web) media. Pick your poison, but this is an issue that all of the SAG needs to get behind.

Both sides of the table are at fault for allowing the deadlock to continue for six months. One subtle point here is that the studios may be willing to live with a deadlock because there is no current threat of a strike and the longer they wait, the greater the split within the SAG grows.

If the SAG replaces their negotiating team, then there will be a great deal of negotiating ground that will need to be revisited as the two negotiating teams meet for the first time and work out their negotiating positions.

What’s to be learned from this negotiating mess? A couple of key points: negotiations need to be planned out before discussions start so that inter-team squabbling can be taken care of BEFORE the talks start. Next, replacing a negotiating team during negotiations is a radical step that should be avoided at all costs – it’s just too expensive in terms of time. There’s a lot more to learn here, but I’m pretty sure that time will reveal what mistakes were made and which side ended up with more negotiating power…

If you were a member of the SAG, which team would you want to be a part of (the Tom Hanks team or the Mel Gibson team)? Who do you think has the stronger position in the negotiations right now? What would your next steps be if you were the studios? Leave me a comment and let me know what you are thinking.

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Post tags: bargaining, conflict, contract, deadlock, deal, deals, differences, how to negotiate, labor, Mel Gibson, money, negotiation, negotiator, planning, SAG, strike, Tom Hanks

The Strike Is Over At Boeing, But Who Got What?

Just in case you had not heard, the Association of Machinists and Aerospace Workers has settled its strike with Boeing. The machinists had been off the job and on the picket lines for 52 days – a very long time for a Boeing strike. Both sides are calling the agreement that they came to as being a “fair compromise”. But was it? Let’s take a closer look at how things worked out from a negotiating point-of-view and see what we think happened…

One of the key components of the negotiated agreement is that this contract will cover 4 years unlike previous contracts which have covered only 3 years. This was very important to Boeing because in three years they will just be reaching the peak of production for their new 787 jet and the possibility of having another cripling strike occur then could damage the company’s bottom line as well as their reputation.

The machinists union is actually fairly small – only 27,000 workers. However, they were negotiating from a position of strength. Boeing currently has 3,725 orders for new airplanes that need to be filled. It was rumored that the strike was costing Boeing $100M a day. The machinists were also helped by the fact that the type of work that they perform is highly specialized and not easily replaced. The work done by the machinists has a direct bearing on the final safety of the finished product and this is something that Boeing needs to make sure never gets compromised.

Boeing had bigger issues to consider during their negotiations with the machinists. Boeing is getting ready to face another contract renegotiation with the 21,000 strong Society of Professional Engineering Employees in Aerospace (SPEEA). This contract expires on December 1st so Boeing really needed to get the machinist strike wrapped up before they potentially had another strike on their hands. This also meant that Boeing could not just cave in to the machinists because then the SPEEA would be expecting the same.

Boeing has some other issues that had to be weighing on their decision making team. They were already going to have problems meeting their goal of delivering the first 787 Dreamliner planes in 2009. The lead time for getting a new plane design approved to be sold is quite lengthy. After Boeing has been able to assemble several of the first 787 planes, they will then need to start almost a year of around-the-clock flight testing.

So who walked away with what in the final contract?

It sure looks like the machinists got what they wanted. Specifically, Boeing agreed to limit its use of contractors doing work that machinists had previously done. Contractors will still be able to deliver parts to the production lines; however, the machinists will be in charge of tracking and distributing those parts once they enter the factory. I believe that this was the key point of the negotiations – if Boeing had been able to expand the role of contractors, then they would have been able to use fewer machinists. However, it looks like in order to end the strike quickly, Boeing backed away from this demand.

What’s a negotiator to learn from all of this? Your negotiating power is not always obvious. The machinists were in a powerful situation and they knew it. They used this as leverage to prevent Boeing from reducing their importance and ensured that the next time they enter into a negotiation, they will be well positioned to get what they want.

Who do you think came out ahead in this negotiation? Do you think that Boeing erred in settling the strike without getting the ability to use more contractors? Do you think that the machinists should have held out to remove contractors from delivering parts to the production line? Leave a comment and let me know what you are thinking.

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Post tags: bargaining, bargaining power, Boeing, concession, concessions, contract, contract agreement, deal, deals, negotiating, negotiation, negotiations, sales, strike, success

Boeing Workers Are On Strike And Everything Is Shut Down

We’ve talked before about the labor negotiatons and the strike that is happening at Boeing. Since we last talked, the International Association of Machinists and Aerospace Workers has gone out on strike against Boeing. This has caused Boeing’s commercial airplane factories to be idled for over three weeks so far. Probably what’s even more important here is that this strike is starting to show signs that it could turn into a protracted standoff. Where’s a good negotiator when you need one?

There appear to be two major issues on the table right now: job security and rising health care costs. Both sides seem to feel that if they are the first to suggest a resumption of negotiations, then the other side will believe that they blinked and will negotiate from that position. The end result of all of this is what we’ve seen in other negotiating situations: the party that hurts the most will be the party that requests to resume negotiations. The strikers will start to feel the pinch from their lost paychecks soon and Boeing is rumored to be losing $100M per day of the strike. Oh, and Boeing has the extra problem that their suppliers are going to start to get skittish when they can’t deliver and can’t get paid.

Federal negotiators have become involved (that’s where the negotiators are!). The union has presented a long list of items that they say must be addressed before they would be willing to accept a new contract. Boeing is trying get the union to shorten the list before they will agree to participate in the negotiations.

Doug Kight is the lead negotiator on the Boeing side. What’s interesting is that Doug is the head of HR and as been so for the past two years. Before that he was a lawyer. Hmm, that’s all good stuff, but how good of a negotiator do you think he is? More importantly, has he been involved in major labor negotiations before?

Folks close to the strike believe that it could last 45 days or more. The workers have missed one paycheck so far and the union has started distributing strike pay of $150 / week per member. Meanwhile, suppliers are starting to furlow their workers in order to not create too much of a backlog of parts.

So negotiators what needs to happen here? First, the two sides definitely need to get back together and start talking. It really doesn’t matter what they talk about, just start talking. Next, they need to find some common ground. If the union has been able to create a long list of demands, then that’s the place to start. Boeing needs to agree to some minor issues and push back on others. This will get the ball rolling. They’ll encounter big issues that can’t be solved right now, but that’s ok – put them off to the side. Eventually all that will be left will be the big issues. Perhaps everyone can agree to go back to work while these are worked on? If not, then both sides need to be willing to give in some. Boeing won’t be able to get all of the health costs that they want to push to the workers to be agreed to. However, they can probably get the workers to take up some of the costs. Boeing needs to find ways to keep its workers healthier so that their health costs go down due to lifestyle changes. Boeing can probably get permission to allow some suppliers to get closer to the production line. However, they aren’t going to get everything that they are asking for. The workers will have to give a little, but not too much. The real question is just how long it’s going to take before both sides can get here…?

What do you think that Doug Kight should do? Do you think that Boeing or the strikers should make the first offer to go back to the negotiating table? How do you think that whomever makes the suggestion can not appear to be weak? Leave a comment and let me know what you are thinking.

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Post tags: Boeing, concessions, deal, deals, negotiate, negotiating, negotiation style, negotiations, strike

If you’ve been following the news lately, you are probably aware the that the International Association of Machinists (IAM) has gone on strike against the Boeing corporation. News reports are saying that Boeing stands to lose up to $100M every day that the machinists are on strike – wow, that’s a lot of money! Boeing’s and the IAM’s situation provides a unique ecosystem for us to peer into in order to watch a high stakes negotiation while it’s in progress. Both sides are actively maneuvering to boost their negotiating power and take power away from the other side so there is a lot for us to learn here.

What’s Being Negotiated? The IAM is negotiating a new 3-year contract with Boeing. Note that the contract is fairly short. Boeing likes it this way because they aren’t comfortable with their ability to predict the future and they don’t want to be required to keep a lot of union workers on staff if the market turns on them in the future.

What’s the Hang-Up? The usual key issues revolve around wages and health-care costs. However the big hang up has proved to be job security. Boeing’s new 787 Dreamliner program has shown that the company is willing to outsource much of the creation of parts to international suppliers and have local staff just be responsible for final assembly. The current conflict is a direct result of a disagreement over how much say the union should have in future Boeing decisions on how much work should be shipped out to other suppliers.

Why Is This Such A Big Deal? Right now suppliers can deliver parts directly to the Boeing assembly lines. The union workers fear that the next step will be for the suppliers to install their parts directly onto the plane – thus removing the need for the union workers.

What kind of interesting tactics have been used during this negotiation? What’s caught my eye is that both sides seem to be trying to influence outside parties in order to apply pressure to the main negotiating parties. Case in point:

• Boeing presented a counter proposal to the union just before the Labor Day weekend. It was clear that they were hoping that this proposal would generate a great deal of family dinner table conversation. Boeing was hoping that the machinists wives/husbands would exert pressure to accept the contact because a strike would become very expensive very quickly in a world with $4/gallon gas.
• The IAM’s president had met with Boeing’s Chairman months ago and warned him that the outsourcing issue would be an important one. Then he told the newspapers that he had told him this.

So what happens now? We’ll have to wait and see but it should be quite interesting. Boeing has a backlog of 3,600 planes that are already late for delivery. This strike could cause those planes to slip even more. The union thinks that they have enough leverage that if they have to stay off the job until 2009, they are willing to do so. Let’s see who does what next!

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In case you haven’t been watching the news lately, the telecommunications giant Verizon has been locked in labor negotiations with the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). Both sides of this negotiation are run by professional negotiators who have done this countless times before. What this means for us is that it offers a great chance to learn from the masters.

What I’d like to draw your attention to today is the use of deadlines as a negotiating technique. We’ve talked about deadlines here before; however, it’s always even more instructive to see it at work in the real world.

The two sides had been going at it for several weeks when on 8/8/08 (Friday, and somewhat interestingly the day that the summer Olympics in China started) the CWA and IBEW announced that if an agreement was not reached by Monday, 8/11/08,…strike action then becomes possible….

Verizon’s Chief Communications Officer, Peter Thonis, then was quoted as saying that the company was …very surprised, given the situation. So what was going on here?

An interesting clue can be found in a comments that the CWA/IBEW made to the press in which they stated that progress had been “slow”. What we are seeing here is a classic negotiating end game move – the unions are signaling to Verizon that they want to wrap up negotiations. By all accounts, progress on the key issues had been made and things were drawing to a close anyway. By issuing this ultimatum, the unions were sure to get the attention of Verizon’s senior management.

It’s a good guess that the senior management on both sides were probably not involved in the long hours of nitty gritty negotiations that were taking place between the two sides. This this the type of task that is best left to lawyers and other professional negotiators. However, by sending this signal, the unions clearly communicated that it was time for senior management on both sides to return to the table.

Without actually being at the table it’s hard to say exactly where things stood. However, a good guess would be that the nitty gritty workers had gotten as far as they could. What could be resolved had been and what was still unresolved could not be resolved at their level. By calling the senior management back to the table, the hope was that the last few items could be resolved and the negotiations could be wrapped up.

What should you take away from all of this? Simply that a deadline has another role in negotiations – as a communications tool. Note that neither side appeared to be very angry with the other side, instead they were using the deadline as a way to mark the end of one phase of the negotiations and the start of the end game.

Now that you have another way to use a tool that’s already in your negotiating toolbox, how will you use it? Have you ever been given a deadline by the other side that was not what it appeared to be on first glance? Have you ever used a deadline to send a message to the other side? Leave me a comment and let me know.

Tags: Verizon, CWA, IBEW, negotiation, deadline, strike, art of negotiation

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