Management by Baseball

Baseball is the world's best stage on which to observe & analyze negotiation techniques. Last month, Ken Rosenthal of The Sporting News wrote a three-dot column that included three clarifying lessons about negotiation every manager should internalize. Today's entry includes discussion of the second of the three.

LESSON: Define beforehand what your Settlement Range is: That is, what is the lowest acceptable result you are willing to take and what is the maximum supportable position you can argue.

Tim Worrell pitched last year for the very successful San Francisco Giants, and he was a surprise team hero. When the Giants' star closer Robb Nen went down, the team didn't immediately go out and replace him with another star. They experimented by using Worrell, previously defined as a setup man. In the first ten years of his career, Worrell had finished 113 games and earned 7 saves; last year he finished 64 and got 38 saves.

For most relievers, that's cash-in time. If they are free to negotiate a deal, they hustle various teams to "monetize" their newfound title of closer and work the biggest, longest contract they can (even though they rarely repeat their one-year success). Outside of baseball, there are tons of analogies to this -- people who suddenly have one great mement and milk it for all its worth for the rest of their careers without ever again matching that success. But Worrell knew what he wanted, and it wasn't the biggest dollar number he could get.

According to Rosenthal,

The Blue Jays were stunned that free-agent RHP Tim Worrell spurned them after they offered him a chance to close and $1 million more than the Phillies. Worrell signed a two-year, $5.5 million deal to become LHP Billy Wagner's setup man.

"Spurned" might be a loaded word here. The rumors about why Worrell made the decision (there was no clear statement from either the pitcher or his agent) were: he wanted to stay in the National League, while both teams are competitive, Philly is more likely to get into the playoffs because of the division they are in; and because he wanted to remain a setup man.

Analysing Worrell's decision from a negotiation perspective, it's not important that we know his reason. It is important he knows.

KNOW WHAT YOU CARE ABOUT & STICK WITH IT

I make less than $2.75 MM a year. I suspect almost all my readers make less than that, too. Worrell turned down the chance to make $3.25 MM a year. It's hard to see that the difference would make for any noticeable lifestyle changes. It's basically the same kind of money. We look at it that way. But to many people, it's the number. Bill Gates chased wealth in his pre-age-40 focus for the number. It wasn't actually the money he cared about, it was racking up points, like in a long session of Castle Wolfenstein or Doom. A-Rod is the same. Peoplke can criticize A-Rod for his choice to play in Texas for $20 MM+ a year, but that was what he thought he wanted: the number.

In many neogtiations, people forget about their lives, what they value, and end up disapparing into the numbers or other "side factors", things that aren't core to what you care about. And once the person on the other side of the table sees that, you're toast. Successful automobile salesfolk are masterful at this technique, which is how they close a big investment decision.

In Worrell's case, he and his agent had a clearly-defined idea of what outcome they wanted. It wasn't the label "closer". It wasn't the largest amount of money. And, apprently, they stuck with it, not being seduced by either of those two factors into making a decision different from what they wanted at the beginning.

That's sticking to your guns. When you go into a negotiation know exactly what you have to come out with. Know what other factors you can live without. Don't allow yourself to yield on even one have-to item even in exchange for a dozen live-without or would be nice frillips. This won't always happen. If you're, say, Iraq (annual military budget $1.3 billion, ranked 45th in the world), and engaged in a war with, say, the U.S. (212 times as powerful with an annual military budget $276.7 billion, ranked 1st in the world), and everything's set up to push the button, the negotiation standards change for both sides of the table. But in general, the guidelines I discussed above will hold.

The corollary is know what you really want is to try to discern what the folk on the other side of the table really want; they won't always tell you, sometimes you have to deduce it by probing with multiple counter offers. A great negotiation results in both sides getting what they have to, and even the would be nices, too.

Learn from Tim Worrell the wisdom of knowing in advance what you care about and sticking with it and not being seduced by side issues into ending up closing on a deal you looked back on with regrets.

NOTE: My favorite practical, pop book on negotiation is Negotiation: The Art of Getting What You Want by Michael Schatzki. No longer in print, apparently, but libraries and used books stores had it in abundance. It's readable and practical, not academic nor dull, and very tools-oriented.