Adapted from “Can’t Beat Them? Then Join a Coalition,” first
published in the March 2009 issue of the Negotiation newsletter.
In 2006, representatives of wind-energy developers started
knocking on the doors of Wyoming ranchers.
They were seeking to persuade the ranchers to sell the
rights to build wind turbines on their land, reporter Addie Goss recounted on
National Public Radio. Typically, the developers build wind farms by leasing
large blocks of land from many different landowners in western states. In
Wyoming, ranchers began signing leases without knowing the true value of the
wind sweeping across their land.
U.S. Department of Agriculture program coordinator Grant
Stumbough heard about the wind developers crisscrossing Wyoming and had a
brainstorm: by working together, the ranchers might be able to get better
deals.
Stumbough formed a “wind association” model in which
ranchers and farmers pool as much as 100,000 acres of their land, negotiate
leasing rights with wind developers as a group, and divide the profits.
Eight wind associations now exist in Wyoming alone, and the
model is catching on in other western states.
Rather than waiting passively for an offer from a single
developer, wind associations market their land rights to dozens of companies,
sometimes triggering bidding wars in the process.
Royalties from a wind project could potentially generate
hundreds of thousands of dollars annually for a rancher, Stumbough told NPR—a
gold mine for those who are struggling to stay afloat in a depressed cattle
market.
As a negotiator, what should you do when you’re in over your
head?
We have discussed a number of strategies for boosting your
bargaining power at times when your position seems hopelessly weak. 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.
As some Wyoming ranchers have learned, 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.
How Coalitions Work
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,
organized manner with one or more stronger parties.
Labor 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.
Why join a coalition?
Returning to our Wyoming story, a rancher who negotiates
individually with a wind developer over leasing rights risks being coerced into
accepting a lowball offer.
After all, both sides understand that the developer could
walk away and talk with the rancher’s neighbor instead. By contrast, when
ranchers join wind associations, they become part of an organized, informed
group.
The coalition has the power and ability to negotiate with
multiple developers over the lease of a much larger, and thus much more
attractive, piece of land. 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.
Coalitions can bring advantages to the party across the
table as well. Susan Williams Sloan, who works for the American Wind Energy
Association, a wind industry trade group, pointed out to NPR’s Goss that wind
associations offer developers a “one-stop shop.”
She also noted that landowners who belong to associations
tend to be better informed about the issues at stake in their leasing
negotiations.
Although the developers may end up paying a higher per-acre
lease price to an association than they would to individual ranchers, the
developers typically prefer to work with landowners who understand their
contracts, according to Sloan.
In sum, a coalition is likely to lead to a more efficient
negotiation process that could benefit everyone involved, including consumers
and other constituents who may be affected by the outcome.
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