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Tips on Negotiation & Settlement – What HR Professionals and In-House Counsel Can Learn From A-Rod & the Yankees

Posted in Human Resources (HR) Compliance

Lately, the best soap opera in the area has been the on-again, off-again negotiations between Alex Rodriguez (otherwise known as A-Rod) and the New York Yankees. As a Yankees and baseball fan, it has provided lots of drama already in the offseason.  But the case has also provided a very good example of how to handle difficult negotiations. Whether it is for hiring or retaining a star worker, or negotiating a difficult settlement, there are some good lessons that we often preach, that show up here.Arod- Creative commons

First, the background, as provided in two excellent posts by The Word on Employment Law which can be found here and here.   Essentially, Alex Rodriguez — a three-time Most Valuable Player award winner who had one of the best regular seasons ever for a baseball player — decided to opt out of his current  contract to negotiate a new deal.  The Yankees — who were willing to negotiate with A-Rod as long as he didn’t opt out because of some money they would receive from another ballclub – had told him that if he opted out, they would not negotiate with him further.  When A-Rod opted out, the Yankees stuck to their word and cut ties with him.  The Yankees also said that they would not overpay him.

By press accounts, A-Rod was surprised by the results and perhaps surprised by the tepid market reaction to his free agency.  Thus, after apparently receiving advice from Warren Buffett , A-Rod did a unique thing — he reached out to the Yankees personally, instead of letting his agent handle it.  And  the Yankees responded by encouraging him to have a face-to-face meeting with Senior Vice President Hank Steinbrenner (George’s son).  After that, the two parties hammered out their differences in short order and are in the final stages of getting a new 10-year, $275 million contract signed. 

So what can HR professionals and in-house lawyers take away from this series of events? Plenty.

  • Allow a party to save face to salvage negotiations.  When A-Rod reached out to the Yankees directly regarding restarting negotiations, the Yankees could’ve played hardball by saying no and leaking it to the press. They didn’t.  Instead, they allowed the discussions to continue in private and until a framework could be established. They didn’t pour salt in open wounds by calling A-Rod names for his opt-out, even with "anonymous sources".   Listen to this quote from Hank Steinbrenner shortly after word on the negotiations became public:

"Everyone seems to be pleased about it. I’m certainly pleased. Despite some cynical attitudes there may be over the next few weeks, Alex genuinely does not want to leave the team, and you really can’t blame him, because we’ve got the talent to win. "

Doesn’t sound like someone who is bitter; and it allowed A-Rod to save face and rejoin the Yankees.

  • Don’t nickel & dime. Ok, so with millions of dollars at stake, it’s more than a few coins. But when A-Rod came back, the Yankees didn’t restart negotiations at a much lower level (they did take into account the money that was lost by the opt-out but that makes some sense).  There is a tendency on some parties to nickel and dime at the end just to try to get the absolute best deal — no matter what the cost is to the other side. But as another lawyer once told me, in words appropriate to the occassion, "when you get in the ballpark, get the deal done".   Getting a deal done for a fair value that you can live with that won’t have a long-term impact the relationship, should be a goal of negotiations.
  • There is no substitute for face-to-face negotiations.  Listen to this quote from Hank Steinbrenner:  "The meeting was a final get-together.  He wanted to make sure myself and my brother knew that he was sincere and serious."  In this day of e-mail and even cell phone calls, sometimes a short face-to-face meeting is all it may take to finalize a tricky deal.  Thus, when you’re in litigation, take advantage of court-ordered mediations; you never know what can happen when the parties have to talk to each other.
  • Consider talking directly to the opposing party.  Where there are lawyers involved, there is a tendency to let lawyers handle all the negotiations.  While that may be appropriate in many cases, it can also be a mistake in some instances. Some attorneys resort to the advocacy role too much, leaving hurt feelings and obstinence on the other side.  Having the parties talk directly with each other can resolve some of those feelings.
  • Never be afraid to change your mind.  Parties tend to make absolute statements in negotiations. "This is my absolute final number" or, as here, "If you opt-out, we’re not negotiating with you."  Hank Steinbrenner and the Yankees were wise enough to know that when A-Rod came to them looking for a deal that was within range of what the Yankees were willing to offer, he threw out his hard-line position.  Why? Because ultimately, he realized he could get what he wanted to begin with — even if he had to go back on his original statement.   For parties negotiating difficult matters, never lose sight of what your ultimate goal is; when it’s within reach, do what it takes to get there, even if it means overruling yourself once in a while.
  • Don’t be bullied.  This lesson is courtesy of The Word

Steinbrenner said no to baseball’s biggest star and held his ground. You have to do that sometimes, even with your stars.

There are very few people in this world who cannot be replaced in a company or an organization.  If those people try to hold a company hostage with claims of a "better deal" elsewhere, know what the market price is. If your compensation package is fair, hold your ground. You may not keep every A-Rod in your company who makes a threat to leave for more money, but you’ll also earn the respect of other employees who know that the company won’t be bullied by anyone. 

  • http://www.hrheroblogs.com/theword John Phillips

    Bravo, Dan. Thanks for the plug about The Word on Employment Law. I’ll put this post on my blog