Sir Philip Green – “Our” Negotiation Strategy Is Flawed


Just in case you didn't know, Sir Philip Green, ex owner of retail chain British Home Stores, sold off the business for next to nothing to a multiple bankrupt with no retail experience. Predictably the business went bust and thousands of employees and ex employees are left wondering whether their pensions have any value.

The suggestion in some quarters is that Green followed this strategy deliberately to avoid those pension liabilities, so there is a lot of pressure on him now to contribute some money - probably a couple of £ hundred million - to help plug the deficit in the pension fund.

So what we have really is a negotiation between Green and the British "state". It is unclear really who represents the taxpayer and the employees - is it the pensions regulator, the government, the popular media? But there is no doubt that we are in a negotiation situation, even if it is somewhat unconventional.  And if you assume correctly that I'm not intrinsically on Green's side, "we" are screwing it up. We’re doing that by forgetting one of the key principles explained in the seminal negotiation book Getting to Yes, and we are making a good settlement less likely every day, I reckon.

That principle is "separate the people from the problem". It suggests that successful negotiations take place when both parties look at the task as a problem to be solved by the participants - not as a fight to the death between the two parties. So don't insult your opponent. If they make a silly offer, just say "that isn't acceptable, let's look at how we can reach a fair basis for agreement", don't say "you idiotic fool, didn't you learn anything in your young offender's institution"? Don’t make it personal.

That all seems reasonable, doesn't it? But what is happening in the case of Green? Basically, he is being insulted and denigrated by everyone from politicians to pretty much every part of the media. Some of that is very direct and frankly rude - it is not just criticism of what he has done, perhaps valid, but just childish insults about him personally.

So how do we think he might be feeling about this "negotiation"? In a positive, mutual problem-solving frame of mind? Possibly. But my fear is that the more he is personally insulted, the more he is likely to say "f*** you" and walk away. Unless he has actually broken the law, and that seems uncertain and probably unlikely, we are relying on a certain amount of goodwill and a desire on his part to reach an agreement that has mutual benefit. I'm not sure the insults help.

It would have been far better to use the threat of insults to weaken his BATNA (best alternative to a negotiated agreement). Keeping things civil now but saying "if you don't do the right thing, Sir Philip, then you realise how you might be portrayed in the press in the future" is a powerful negotiating point. It might help him to realise that the BATNA is not attractive.

That is important, because "our" side of the table don't have a particularly great BATNA - if he doesn't contribute, then staff and pensioners suffer or the taxpayer will have to cough up. So looking to weaken his BATNA is a legitimate and useful technique. Calling him names in the newspapers is not quite as sensible, we'd suggest.

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First Voice

  1. RJ:

    The Harvard Business Review made a similar point the other day with reference to Donald Trump:

    In both instances, the parties don’t seem to understand the effect that posturing for the benefit of your own supporters will have on the potential outcome of the upcoming discussions. I’d suggest that the Trump option is potentially even more worrying!

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