Improve your hard-bargaining performance
In this class: vocabulary regarding negotiation.
In this class: vocabulary regarding negotiation.
Original source: Harvard Law
Acting up: Improve your hard-bargaining performance
Cast members of Modern Family show professional negotiators the ropes. Out of nowhere, it seemed, the routine salary renegotiation had escalated into a full-fledged dispute. On July 24, 2012, five members of the cast of ABC’s hit comedy Modern Family filed a lawsuit against 20th Century Fox Television, the show’s production company, to void their current contracts.
The same day, the cast members boycotted a table read (an early rehearsal) of the show. Production on the fourth season of Modern Family was due to start less than a week later.
For ABC, it was a cliff-hanger. Modern Family is a bright light in the network’s evening lineup, a top-rated show that is also critically acclaimed. Just a week before filing their lawsuit, all five of the actors in the negotiating coalition—Julie Bowen, Ty Burrell, Jesse Tyler Ferguson, Eric Stonestreet, and Sofia Vergara—had been nominated for Emmy Awards. In the show’s third season, the five cast members each earned about $65,000 per episode. When negotiations began, 20th Television reportedly offered to pay them $150,000 per episode for the fourth season.
The production company wanted to add two years to their existing seven-year contracts and promised to increase their wages to about $325,000 per episode by the show’s ninth season. Unhappy with the offer, the cast members banded together and reportedly asked for $200,000 per episode, according to The Hollywood Reporter.
When 20th Television balked, the actors sued, arguing that their existing long-term contracts violated California law, a common legal move for actors fighting for new, improved contracts. Show star Ed O’Neill, who was earning more than his costars, joined their lawsuit in a show of solidarity. Almost as quickly as the talks escalated, they came down to earth.
The actors showed up to a rescheduled table read two days later. On July 30, a deal was announced. The actors agreed to be paid about $175,000 per episode for the upcoming 22-episode season, an amount that would rise to about $350,000 per episode by season eight. They agreed to add one year to their contract, not the two requested by 20th Television.
And, naturally, they agreed to drop their lawsuit. The actors didn’t get as much as they asked for, but they did make significant gains over their employer’s initial offer, and they succeeded at pushing through an impasse. Here are three keys to the TV stars’ success as hard bargainers:
1. Join a coalition.
Perhaps the smartest move the actors made was to negotiate as a group. Individuals can gain numerous benefits from forming a negotiating coalition, most notably greater bargaining power. Negotiators who join forces avoid the need to overtly compete against one another for scarce resources. By banding together, the actors made it virtually impossible for 20th Television to ignore their demands.
The production company might have been able to justify releasing one actor from the ensemble cast, but it could not afford to lose its key players, especially when star O’Neill joined the group. Incidentally, the Modern Family stars may have borrowed this strategy from the six stars of another hit ensemble comedy, Friends.
In 1994, at the start of the show’s run, star David Schwimmer persuaded his fellow cast members that they should negotiate their contracts as a group rather than individually. At the time, the actors were earning about $22,500 per episode.
The six bargained collectively for the show’s duration, ultimately earning $1 million per episode in the show’s 10th and final season.
2. Escalate prudently.
After the actors formed their coalition, they continued to have difficulty gaining concessions from 20th Television. At this point, the actors opted to escalate the dispute by boycotting the table read and filing their lawsuit.
Both actions were largely symbolic: the table read could easily be rescheduled, and a slow-moving lawsuit could be called off. The actors and their agents (who were meeting as a group) appear to have designed the moves to draw publicity to the actors’ cause. The plight of underpaid Hollywood actors might seem unlikely to attract public sympathy.
But if Modern Family went off the air, TV viewers were more likely to blame the entertainment conglomerates behind the dispute than the actors, writer Tim Goodman argued in an editorial in The Hollywood Reporter. Taking a dispute public comes with significant risks. Public attention is likely to embarrass and anger your counterpart to a point that he retaliates in ways that harm both sides. So before you take a dispute public, warn your counterpart of your intentions. The threat of negative publicity could motivate him to grant the concessions you’ve been looking for. If he calls your bluff, be prepared to follow through with your threat—but continue to negotiate privately even after your dispute is widely known.
The Modern Family actors and their agents appear to have calculated that escalation was a risk worth taking. They knew that, for financial reasons, 20th Television and the Disney/ABC Television Group would be loath to tolerate a delayed or canceled season. Moreover, the actors were fairly certain their employer could afford to pay them more. Finally, because neither a missed table read nor a lawsuit was a shocking development in the context of TV negotiations, the actors calculated that the negotiators across the table would not be embarrassed to the point of behaving irrationally.
3. Take advantage of deadlines.
Not surprisingly, the Modern Family negotiations escalated at the point when a significant deadline—the start of production for the new season— loomed. It’s not unusual for negotiators to put off concessions, threats, and other key bargaining moves until they are staring the serious consequences of a missed deadline in the face. In fact, parties sometimes manufacture artificial deadlines simply to jump-start stalled talks.
In the Modern Family dispute, both sides faced significant losses in the event that production on the series was postponed: lost or delayed salaries for the actors, and lost advertising and other profits for 20th Television and ABC. It’s possible, even likely, that 20th Television would have begun offering concessions as the start of production approached even if the actors hadn’t filed their lawsuit.
Unfortunately, the tendency to procrastinate on substantive talks is common. In a perfect world, negotiators would use all the time they have available to carefully work out a mutually beneficial agreement rather than waiting for the clock to wind down.
But when your counterpart won’t take the time to deal with you, a last-minute gambit can be the best way to grab her attention.
What’s the most important lesson you’ve learned from this article?