Leverage: The Bastard Child of Coercion

Recently, “leverage” has become a popular word that found its way into public conversations regarding “fiscal cliffs”, “debt ceilings” and “sequestrations.”  Who has leverage? Who wants it? What are you going to do if you discover that you have it? Ah yes, the dilemma surrounding leverage is a complex one.   According to Wikipedia, leverage in negotiation is the “ability to influence the other side to move closer to one’s position.” In this definition, the word “influence” implies a persuasive effort.  However, at the functional level, leverage removes the free will to choose by severely limiting the viable choices. To translate, leverage means you have to give me concessions free, or I will do something harmful to you personally, to your company (an entity) or to your country.  In reality, leverage is simply the bastard child of coercion.  At the street level people get it.  This concept is clearly reflected in the way participants describe a negotiation manifested in phrases like “we have them over a barrel” or “we have them by the shorthair”. However, civilized people don’t use phraseology like this because it sounds too much like coercion, which has a negative connotation.  Consequently, at the executive level we put on our suit and tie, stand coercion on its hind legs, put a smiley face on it and proclaim “we have leverage!”  Doesn’t that have a nice professional ring to it? A wise man once said, if it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck. 

Why do negotiators want leverage so badly?  Mainly because they don’t have to negotiate a deal, but rather simply dictate the terms of the surrender.  As you can see, leverage can serve as a wild-card in the negotiation process by becoming a shortcut that retards the skill development of the players who rely upon it.   I am frequently asked in class “how do I negotiate when I don’t have any leverage?” The answer is simple: negotiation is a skill, leverage is a tool. Develop your skill and know the difference between the two and you will be fine.

“I Can See Clearly Now…”

In The Smart Negotiator!® course I am constantly stressing that participants need to improve their “vision” if they truly want to be a high quality negotiator.  Hence, the question:  what does a skilled negotiator “see” that other people who are engaged in the same situation simply miss?  One of the many aspects of vision, is the ability to distinguish between obstacles and challenges.  Negotiators see challenges to be overcome or worked around to keep the process moving.  Shoppers, on the other hand, see obstacles, which truncate the negotiation process and block the development of the deal. 

This point is often illustrated during a labor/management exercise presented during The Smart Negotiator!® course.  This case has a distinct degree of difficulty, due to the complexity of union contracts.   Inevitably, the lesson of “vision” is on full display as the parties try to navigate through the exercise.  As part of the negotiation context, a hypothetical company owns a tourism business in the nation’s capitol.  For a number of reasons, its drivers are not required to possess a CDL (commercial driver’s license) to operate the buses.  On its face, this issue appears to benefit the employees by providing people without a CDL who have the appropriate skill set to be gainfully employed.  However, drivers working at any of their competitors that are required to possess a valid CDL, earn 30% more in wages.  Moreover, as part of the situation, the company can get a $300,000 rebate in their insurance premiums if they get all (35) of their drivers a CDL.  If the company paid for the training and the employees were “on the clock”, the total one-time spend would be $277,900.  However, there’s a problem:  30% of the drivers are functional illiterates. 

Let’s apply the “vision test” to determine how participants view this situation. A shopper, seeing obstacles, will claim with conviction, that if the company pays for the training, then the employees will leave to get a job with a competitor for 30% more pay.  This shopper sees an obstacle that is framed as an intellectual dead-end forcing the negotiation to take a different direction.  However, the negotiator responds by recognizing the challenge in the situation, claiming that if the company pays for the training of the CDL, the employee must agree to stay for 2-years or pay back the prorated amount of training cost if they leave. 

What about the functional illiterates that are driving for this company?  How is this fact going to be handled by the participants?  As you might guess, the shopper is fatalistic in their assessment (vision).  “These people will never be able to pass the classroom part of the CDL requirement because they can’t read”.  Another manufactured dead-end, requiring a change of direction in the negotiation.  The negotiator understands that these drivers are skillful enough to pass the road and range portion of the CDL blindfolded.  The challenge that the negotiator sees is getting them to pass the written portion of the test.  Many states allow someone to read the written portion of the driver’s test to people who can’t read.  Remember this is a knowledge test not a reading test. This option could be one of the many ways to work around this challenge.  There are other ways to mitigate this challenge–if you are looking!

In this case, as a result of the negotiator seeing challenges, instead of obstacles, they are able to negotiate an agreement that will allow the company to reduce its insurance premiums by $300,000 annually. If you are the owner, this savings is worth the effort.  And if you are the negotiator, it is your professional responsibility.  

Is that a shopper I hear?  Or just Johnny Nash singing “I can see clearly now, the rain has gone.  I can see all obstacles in my way”?   Ah, but through the eyes of The Smart Negotiator, “Gone are the dark clouds that had me blind.  It’s gonna be a bright, bright sun-shiny day”.

Attica: A Deal Not Made

A Smart Negotiator clearly identifies the needs and wants of all parties involved in the deal, while staying true to the distinction between the two entities throughout the entire negotiation process.  By establishing the needs of all parties, the negotiator creates the foundation on which the deal is constructed.  Forty years ago, the line between needs and wants became blurred during negotiations to resolve a crisis at New York’s Attica Correctional Facility, contributing to a stalemate between the prisoners and the state that would eventually leave 39 people dead.

On September 9^th, 1971 approximately 1200 inmates overran “Times Square”, the central intersection at the heart of the state prison in Attica and took control of D-Block.  38 guards and civilian employees were taken hostage. Three guards were beaten in the initial fracas, one of which would die of his wounds 2 days later. 

The root causes of the uprising were overcrowding, racism and poor living conditions.  Attica was designed to handle a maximum of 1600 inmates.  At the time of the uprising, however, Attica was home to over 2200 prisoners.  Approximately 75% of the inmate population was African-American or Hispanic, while 100% of the guards were white males. The prisoners wanted a more culturally diverse guard population to reduce the overt racism within the prison.  Living conditions were better at the Buffalo Zoo.  For instance, prisoners were only allowed one shower per week, one roll of toilet paper per month, pork was part of every meal and Muslim inmates were not allowed to hold religious services.

On the first day of the takeover, inmates created a council to negotiate a settlement with prison officials. Because of a credibility gap between prison officials and inmates, the prisoners also called upon a select group to “oversee” the negotiations and “verify” events.  This group included members of Congress, the New York State legislature, the Black Panther Party, the media and lawyers.  William Kunstler, “Brother Bill” as he was known to the inmates, was asked to represent the prisoners regarding legal issues and began serving as a mediator to try to broker an agreement. The inmates created a list of 31 demands to be addressed to resolve this crisis.  The Corrections Commissioner, Russell G. Oswald agreed to 28 of the 31 demands, most of which were already supported by state and federal law, but had been ignored by unofficial prison policy.   The initial 28 demands dealt primarily with living conditions. The 29^th demand for “transportation to a non-imperialistic country for everyone in D-yard” was quickly dismissed by both parties.   The last two demands were more difficult. 

Demand #30 called for Superintendent Mancusi to be removed from his position immediately.  The prisoners wanted Mancusi replaced immediately with someone who would treat them like people, not animals.  The prisoners personalized this issue, which clouded their vision and left no flexibility to resolving it.  With the other 28 demands that dealt with living conditions having already been met, the prisoners’ needs in this area had been addressed.  The Mancusi issue, a want, could have been treated administratively by promotion or retirement at a later date. However, the shelf-life on any promise or agreement to satisfy this want needed to be longer than the immediacy of the moment. Since it was clearly a want, it didn’t warrant the significance that it was given.  As a result, this want was treated like a need and became a manufactured obstacle to reaching a final agreement.

Demand #31 demanded complete amnesty for everyone in D-yard.  The inmates knew the law. Once one of the guards died from wounds suffered in the initial takeover, it was clear that everyone in D-yard could be charged with felony murder.  Moreover, anyone in D-yard already serving a life sentence could now be subjected to the death penalty.  Realizing that someone would have to be prosecuted, the inmates didn’t want everyone in D-yard to be charged with felony murder.  From a negotiator’s standpoint, the inmates needed some protection from blanket prosecution for the prisoners. Concurrently, the state had a need to prosecute those responsible for the guard’s death.  In this case, the inmates lacked the sophisticated vision of a negotiator. They took a very myopic view and didn’t explore any other options except the binary position of complete amnesty for everyone.  This inflexible position became problematic, as again, it was a want, not a need.  Ironically, William Kunstler “saw” what was transpiring inside D-yard regarding this issue.  However, his vision also became clouded, either by his idealism or the drama of the situation, creating a disconnection from the reality of potential consequences.  This momentary lapse of discipline caused him to take his eye off of the prize, leaving this demand frozen in time as an obstacle to the deal.

Another level of complexity contributing to this situation is recognizing ALL parties involved in the negotiation, even if they are not physically present.  In this case, the absentee Governor of New York State, Nelson Rockefeller, was a major player.  Although the Governor was party to the negotiations from a distance, he had needs that had to be fulfilled as well. From a negotiator’s perspective, extending the deadline would have been very beneficial to all and may have produced workarounds for demands 30 and 31.  However, the Governor controlled the deadline and there was no flexibility. Nelson Rockefeller had a need to protect his political image. He was in the process of putting together his campaign for the 1972 Presidential election and had been criticized by the right wing of the Republican Party for being on the “liberal” side.  Therefore, anything short of an immediate end to the situation would be devastating to his political image.  Consequently, re-taking the prison in a timely manner, even if it turned into a bloodbath, was a political need.  The Governor could not risk being seen as soft on crime.  A brutal re-taking of the prison may not necessarily be viewed as a negative and may even enhance his image in the eyes of the electorate. William Kunstler didn’t recognize the selfishness of the Governor’s needs and was surprised on Monday morning September 13^th, 1971 when New York State Troopers took control of D-yard firing over 2000 rounds of ammunition and killing 39 people (29 inmates and 10 guards). As many as 83 other prisoners were injured seriously enough to require surgery.  After the shooting stopped, Governor Rockefeller publicly praised the State Police for a “superb job.” 

There are many lessons to be learned from Attica on a variety of levels.  From a negotiations perspective, negotiators must demonstrate a genuine commitment to a deal that satisfies the needs of all parties. In this case, the negotiation process broke down when wants were confused with needs and the needs of one party were privileged over all others. The tragic situation at Attica State Prison was certainly not caused by negotiators, but could have been resolved peacefully, if everyone involved had acted like one!

The “F” Word in Negotiation

What is the negotiation “F-word”? It is the word “fair”. Who can say that they haven’t heard “this is a fair deal,” or “this is fair and reasonable.”–or better yet, “I believe that this deal is fair for both of us”? When someone tells you that their offer is fair, you should instinctively reach to protect your wallet. Hopefully, your hand will get there before they do!

The continual use of the “F-word” relative to negotiations provides an interesting perspective, as it is frequently and improperly imposed as the ultimate criteria to gauge success. A successful deal must be functional, not necessarily fair. A functional deal is where both parties have their needs satisfied. Yes, I realize that both functional and fair begin with the letter “F”, but please do not confuse the two. If you put together a fair deal and offer it to the other party and they reject it, what happens then? Here’s what happens: you find yourself selling the deal through persuasion rather than continuing to negotiate.

The persuasive approach tends to lead to arguments that are not germane to the deal-making process and create obstacles to closure. At some point, you become fatigued from this persuasive exercise in futility and your reptilian brain encourages you to offer your bottom line, usually heading for a marginal deal (perhaps fair, but marginal).

Moreover, I am not so sure there is such a thing as a fair deal. I have seen good deals and bad deals, but can’t really say that I have seen a fair deal. Any negotiator can make the case that their position or offer is fair, no matter how far off of the grid it really is. Those who are most vulnerable to a “fair” deal are introverts. Let’s face it, negotiation is a communication nightmare for most people. It ranks right up there with public speaking and snakes in terms of what causes the most psychological discomfort. Even in the most successful deals, there are more statements of rejection than those of acceptance. Consequently, agreeing to “fair” makes perfect sense to introverts and/or linear thinkers, because it causes them the least amount of psychological pain. When psychological discomfort becomes the determining factor in whether to accept or reject an offer, your ability to achieve a quality outcome is diluted. Unfortunately, this gives the other party a ripe opportunity to game you.

This is not to say that introverts or people without an “E” in their Myers-Briggs rating cannot be successful negotiators. On the contrary, some of best negotiators that I have met are classic introverts. They may be very good at it, but they will never like it. Nowhere does it say that you must enjoy the process of negotiation in order to do it well and create quality deals. Consequently, The Smart Negotiator uses “Q” for quality as the word of the day (and the ultimate criteria to gauge success), rather than the “F-word”.