Oct 06 2011
The NBA season is racing toward cancellation as the owners and players continually fail to reach an agreement on new union contract terms, much to their mutual detriment. Both the owners and players have seemingly tossed all semblance of reason out the window and dug in their heals in a way that demonstrates either a clear misunderstanding or a total lack of concern for their fans and for basic business negotiating strategies.
When you are negotiating your salary, take a lesson from the NBA in what not to do. Instead of digging in your heels and making demands, take a more conciliatory approach. Make it clear you have a unique skill set that your prospective employer wants, and make it known that you have other prospects. At the same time, don’t price yourself out of the market. Do your research and find out exactly what you’re worth. The best way to do that is to figure out what other people are willing to pay you.
Under the old NBA players’ agreement, which expired on June 30, players received 57% of all basketball-related income, while team owners received 43% According to NBA commissioner David Stern, out of the 30 teams in the NBA, 22 lost income because of the now expired agreement. The NBA as a whole lost an estimated $1 billion over the past 6 years. Of course, team owners are anxious to turn the tables and get their hands on a greater share of revenue.
In fact, owners are seeking to reverse the revenue distribution almost entirely by proposing that players take 47% of revenues to the owners’ 53%. Obviously, players balked at the prospect of taking what on first glance appears to be a significant pay cut. From their perspective, they do the work and fill the seats, and should therefore be entitled to the bulk of the income.
At the end of the day, the result is millionaires arguing with billionaires, which means the real losers are the support personnel, the general public and the fans who would just like to see some basketball. Lost in all of the greed and grumbling between the two sides is an appreciation for what is really at stake, which is the future success of the league.
In real life, the rest of us don’t have the luxury to behave the way either side in this debate has up to this point. Employees can’t afford to sit out an entire work year, and employers can’t afford to lose the productivity and profits that their employees generate for any extended length of time.
To date, both sides have failed to grasp what should be the purpose of any negotiation: finding common ground for mutual benefit. Rather than remaining focused on what works best for themselves, parties should instead work toward coming to an agreement that works for both sides
One of the great ironies in the current back and forth between the players and the league is that both sides lack one of the most basic and necessary tools of any negotiation: leverage. If the players don’t play, they don’t get paid. If the league cancels the season, it loses an estimated $4 billion. No one wins, and everyone loses. While both sides have something the other needs, neither side can really afford to use it against the other.
In a normal salary negotiation, the process works best only if both sides have something the other wants. On an individual level, this concept works great for athletes and sports teams, because a highly-valued player can take his skills and abilities to another team who is willing to pay him what he thinks he’s worth. Collectively, however, this approach fails because the players have nowhere else to go, and neither do the owners.
In business, remember the goal is to foster a relationship between employer and employee that is mutually beneficial, not destructive. Employees, don’t fool yourselves into thinking that you are irreplaceable, because the fact is that you are not.
At the same time, employers would do well to recognize the knowledge and years of experience their current employees bring to the table. They should carefully evaluate the potential costs associated with hiring and training new people before they are so quick to get rid of the folks they already have. In any case, both employer and employee should take a good hard look at the current NBA negotiations as a strong lesson in exactly what not to do.