Essay: NHL Lock-out Analysis - Power, Trust In Complex Negotiations.

Introduction to negotiation: An alternative dispute resolution approach

Question:

Discuss about the Game theory and the practice of bargaining.

In order to manage disputes and make decisions one of the common approaches that can be considered is negotiation. The process of negotiation acted as an extensive method in alternative dispute resolution procedures (Schaerer et al.). In case of negotiation participants are required to identify the issues in order to educate themselves about the needs and interests by generating possible settlement thereby generating over the terms and conditions of final agreement (Chatterjee). In the present case study it is required to analyze the issues of negotiation by identifying the physiological, structural and tactical barrier to successful negotiation. The essay seeks to provide an understanding on the role of the power and trust in complex negotiations. 

The present case study is regarding an issue related to 2004–05 NHL lock-outs which engendered the repudiation of 88^th season of National Hockey League (NHL). The National Hockey League led by Commissioner Gary Bettman, in an attempt to convince the players asked them to accept a salary structure which is likely to link the salaries of the players to league revenues which was defined by the league as cost certainty (Micieli and Micieli). However on July 2004, on the presentation of NHL Players Association (NHLPA) with six other concepts in order to attain cost certainty the concepts were believed to have originated from an obstinate salary cap similar to those used in National Football League (Hutchison et al.). Bettman stated that with the inclusion of a luxury tax that is similar to the one in Major League Baseball would not in any way satisfy the targets of cost certainty of the league. In this regard it caused the NHLPA to dispute the financial claims of the league. The six concepts presented by the NHL were rejected by the union on the basis that such concepts contained salary caps in different forms. The contractual structure of the League was highly criticized by the players that overpaid many unproven players. It can be stated that though the numbers of NHL was disputed and criticized no questions were raised about the other franchises that lost their money and some of them went severely bankrupt.

It can be stated that in order to emphasize on the issues of negotiation it is important to introduce a new concept in order to understand the reason behind successful negotiation. In the theory of negotiation Best Alternative to a Negotiated Agreement (BATNA) has been used by most negotiators in determining the course of action in case an agreement has not reached within a certain frame of time (Kirk, Oettingen, and Gollwitzer). A well structured Best Alternative to a Negotiated Agreement acts as an essential insurance policy (McKibben). It can be stated that skilled negotiators are benefitted from the structure of a clearly defined BATNA which helps the negotiators to break off the negotiation.

The issue of negotiation: NHL lock-out 2004-05

In the present scenario, for the purpose of Collective Bargaining Agreement both the parties had contradictory positions and interests. It is noteworthy to mention here that there was no scope for agreement and bargaining zone on every issue that aroused between the league and the NHLPA. However the NHLPA in this regard had different point of views. According to NHLPA moving out of negotiation is easier and is considered as a right decision when the nature of the negotiation is extremely complex. In this regard an individual can walk away from a negotiation due to various reason however if the BATNA becomes efficient then in such cases it is important to satisfy the needs of the issue (Kirk, Oettingen, and Gollwitzer). In this regard the National Hockey League (NHL) is a vast and well known organization to part away from negotiation. In the season of 2003-2004 the average player made less than 2 million dollars a year and the collective salaries of the players comprised more than 1.5 billion dollars. In this context it can be observed that such number would be marginally above by the next season. 

While discussing the effects of physiological, structural and tactical barrier to successful negotiation it is important to mention here that NHL has immense power in uniting people of different nations. Different perspectives of negotiation has been discussed however most of the majority wants hockey to be a part of the league and therefore the agreement on negotiation took place. It is noteworthy to mention here that there are barriers in all kinds of negotiations and such barriers tend to make the process of negotiation more complex. These three barriers can be classified as psychological, structural, and tactical. Firstly in regard to National Hockey Leagues Players Association it can be stated that the players felt confident when they thought that they will be represented well by Bob Goodenow. Bob Goodenow was a successful lawyer an experienced hockey player as he played hockey for Harvard and the Junior Wings. It can be observed that since time immemorial and from the beginning of dispute the players were totally confident. It can be seen that their claims were met in 1992, when they went on strike about marketing benefits and where the player became in full control only after conducting strike for 10 days. The Lock Out of 1904-1905 was emphasized on the financial issues of the league as well as it aimed to curb the growth of salaries. According to the owners they gained victory in the process however in general the players were the real winners. This reality irked the owners until the beginning of next Collective Bargaining Agreement negotiations. The supply of players in the market was low and the demand was still high.

Understanding Best Alternative to a Negotiated Agreement (BATNA)

It can be observed that Bettman had the power to lock out the players as the old Collective Bargaining Agreement came to an expiry. It can be stated that in the presence of psychological and structural barriers there are tactical barriers to negotiations as well. In this regard one barrier was put up by the owners was when Bettman used a goblin of sorts. It was observed that during such dispute, a letter was written to the union by him expressing his thought that the owners needed modification of 19 additional aspects of the Collective Bargaining Agreement. This added to the complexity to the matter of negotiation. However such message was not well received by the union which only discouraged them when there was a point for cooperation. The decision to deny the owners request of a renegotiation was another tactical problem which created issues for the players.

It is important to mention here that lifting these barriers is important while analyzing such kind of negotiation. Barriers have proved to be beneficial in providing assistance to the process of negotiation and understand the meaning of different perspectives (Schaerer et al.). These psychological barriers helped to determine the underlying motives which are causing hindrance to rational and logical processes. It can be stated that tactical barrier has been listed for the purpose of identifying the cause and effect of the actions of negotiations before and during such disputes. The structural, psychological and tactical barriers has proved to be beneficial in indicating that whether a previous behavior has positive or negative on negotiation policies (McKibben). The identification of such barriers proved to be effective and can be implemented as a learning tool.

The barriers of distrust and amity between the owners and the players were mostly demanding. The barrier brought down the fundamental dilemma of trust and power. Since the very beginning the relationship between the parties were not in good terms and was filled with accusations and threat. The players of NHL have accused the owners of concealing the revenue matters and keeping other financial information hidden from them. The players demanded an environment of financial transparency which the owners could not provide. The owners were reluctant in providing the confidential information relating to financial data by stating the fact that being a private enterprise it had no obligation. The NHL being in business has generated revenue of hundreds of millions of dollars every year. This was however the main dispute how was the hockey related revenue (HRR) will be split up between the two parties. The salary of the players’ were currently %57 of HRR, which is highest among the four major sports leagues, however the least popular among them. The owners have been reporting the losses of league-wide operations where only a handful of teams were generating the profit. It has been observed that at multiple times the players have accused the owners of false representation of financial information by denying access to their books. In 2004, Arthur Levitt, former chairman of the Securities and Exchanges Commission was hired by the league in order to audit the books. This was done because of the reason that many players had a doubt regarding the report and have accused the owners of not granting them to access all the information. The players were informed about the details of the report until the day before its release. In order to eliminate the barrier of distrust the idea of using a third party provided great help. 

Issues and barriers to successful negotiation

In this regard it can be stated that the process of negotiation takes place in different contexts. The important among them is power and trust. Power penetrates all the distinct features of negotiation. The subject matter of negotiation is ostensive which craves the structure of power contest and the process of tough bargaining (Gomes et al.). The concept of power in undermining the basic framework of negotiation has originated from the traditional background that proposes the fact that negotiation begins with the distribution of certain powers among the different parties (Gunia et al.). Scholars have argued about the concept of trust and its role in determining complex negotiations. The essay will analyze the fact that whether negotiation is a precondition for negotiation or it serves as a goal and strategy in determining the process of negotiation.

It is noteworthy to mention here that by entering into negotiations, the players might have thought they were equal in power to the owners and some were of the opinion that they had more power than the owners. However this was a mistake. It can be stated that from the very beginning to the season of cancellation, the majority of powers vested with the owners. The league since time immemorial was tenacious to hold a secure position and did not want to surrender to the players for the third time. The league had proper information as they had access to the financial data. Position- based power was also entrusted to them because being the owners of their respective organizations they have the power over the resources and they can control matters like money, organizational staff and players by creating contracts.

References:

Chatterjee, Kalyan. "Game theory and the practice of bargaining." Game Theory and Business Applications. Springer US, 2014. 189-206.

Gomes, Marco, et al. "Studying the effects of stress on negotiation behavior." Cybernetics and Systems 45.3 (2014): 279-291.

Gunia, Brian C., et al. "The remarkable robustness of the first-offer effect: Across culture, power, and issues." Personality and Social Psychology Bulletin 39.12 (2013): 1547-1558.

Hutchison, Michael G., et al. "An observational method to code concussions in the National Hockey League (NHL): the heads-up checklist." Br J Sports Med (2013): bjsports-2012.

Kirk, Dan, Gabriele Oettingen, and Peter M. Gollwitzer. "Promoting integrative bargaining: Mental contrasting with implementation intentions." International Journal of Conflict Management 24.2 (2013): 148-165.

McKibben, Heather Elko. "The effects of structures and power on state bargaining strategies." American Journal of Political Science 57.2 (2013): 411-427.

Micieli, Robert, and Jonathan A. Micieli. "Factors influencing visor use among players in the National Hockey League (NHL)." Open access journal of sports medicine 5 (2014): 43.

Schaerer, Michael, Roderick I. Swaab, and Adam D. Galinsky. "Anchors weigh more than power: Why absolute powerlessness liberates negotiators to achieve better outcomes." Psychological science 26.2 (2015): 170-181.