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06 June 2023

Tip your way to the negotiating table

By The New York Times Syndicate

As a negotiator, what should you do when you are in over your head? Carefully assessing your own outside alternatives and those of your counterpart, trying to change the rules of the game when they work against you, creating a strategy for your entire portfolio of negotiations and appealing to the other side's sense of fairness are a few techniques you can use to increase your strength at the table.

You can also gain leverage and improve your results by banding together in a coalition with other relatively weak parties. As a member of a coalition, you can harness the resources you need to face a tough opponent.

In certain situations, negotiators are unqualified to bargain on their own behalf. Lawyers, agents and other third parties can provide the expert negotiation guidance needed to prosper in situations as wide-ranging as a divorce settlement, a book sale, or a corporate merger.

A negotiating coalition takes the "don't go it alone" strategy a step further. Rather than (or in addition to) hiring one or more advisers to negotiate for you, a number of weak parties who might otherwise be in competition with one another join forces to negotiate in a collective, organised manner with one or more stronger parties.

Labour unions may be the most obvious example of a negotiating coalition. When a company negotiates with an employee individually, it could threaten to hire someone else in the face of the employee's demands. By contrast, when employees bargain collectively through a union, they avoid the need to compete against one another (at least on certain issues) and typically achieve a more competitive compensation and benefits package than they would have negotiated on their own.

Coalitions bring several benefits to weak parties. First, when weak parties join a coalition, they avoid destructive competition with one another and, by pooling their resources, gain strength in negotiations with stronger parties. In addition, a coalition defuses a common adversary's ability to pit one weak party against another or to credibly threaten to walk away.

In sum, a coalition is likely to lead to a more efficient negotiation process that could benefit everyone involved, including consumers and others who may be affected by the outcome. When should you negotiate as a coalition rather than on your own? How can you ensure that your coalition functions productively? Here are three valuable tips:

1. Recognise coalition opportunities. Coalitions are often a possibility when you are one of numerous weak parties facing one or more stronger parties. Coalitions can operate as large, highly structured, and long-term organisations, or they can be groups that unite informally around a single issue.

Your organisation might try to temporarily co-ordinate sales tactics with those of your competitors if you believe clients are taking advantage of the market. For example, companies facing a profit-destroying e-auction could agree to insist on negotiation instead. Similarly, a small-business owner might sign on to a co-operative that negotiates collectively with insurance companies to lower the costs of providing health insurance to employees.

2. Weigh the pros and cons of joining a coalition. Before signing up with a coalition, take time to meet with your potential partners to discuss the potential benefits and costs of joining. Don't tie yourself down to a coalition before you have asked and answered key questions such as these to your satisfaction:

- Is the coalition well organised to negotiate with the other side?

- How much will I have to pay, if anything, to join and remain a member of the coalition? What costs might we face down the road?

- Does the coalition have an ethical reputation and a track record for success?

- Does the coalition understand the value of collaborative negotiation?

- What consequences might we face if a negotiation does not go well?

- Do the benefits of a successful deal outweigh these risks?

- If we succeed, how will the coalition allocate the value it creates?

Costly labour strikes, consumer boycotts and long-term damage to members' reputations are a few of the hazards coalitions face when they limit themselves to competitive strategies and underestimate their counterparts' strength and tolerance. To prevent such pitfalls, avoid groups that rely on hardball negotiation tactics as a matter of course.

3. Manage group interactions. If you decide to form a new coalition on your own, collect relatively firm commitments from potential partners while retaining the flexibility to switch allegiance. As the group comes together, appoint or hire a manager to prepare an agenda. Then, working together, make time to establish your ground rules, assign research tasks and summarise your conclusions. You also need a lead negotiator and, in the case of high-profile negotiations, a spokesperson to communicate your agenda to the outside world.

During the negotiation process itself, it is important to identify and address disagreements quickly and correct miscommunication away from the table. And when it comes time to make a decision, strive for unanimity but be willing to settle for near-complete agreement.