In 2006 representatives of wind-energy developers started knocking on the doors of Wyoming ranchers. They were seeking to persuade the ranchers to sell the rights to build wind turbines on their land, Addie Goss reported on National Public Radio.
Typically the developers build wind farms by leasing large blocks of land from many different landowners in western states. In Wyoming ranchers began signing leases without knowing the true value of the wind sweeping across their land.
Grant Stumbough, a program coordinator for the U.S. Department of Agriculture, heard about the wind developers crisscrossing Wyoming and had an idea: By working together, the ranchers might be able to get better deals. Stumbough formed a “wind association” model through which ranchers and farmers pooled as much as 100,000 acres of their land, negotiated leasing rights with wind developers as a group and divided the profits.
There are now eight wind associations in Wyoming alone, and the model is catching on in other western states. Rather than waiting passively for an offer from a single developer, the associations market their land rights to dozens of companies, sometimes triggering bidding wars in the process.
Royalties from a wind project can potentially generate hundreds of thousands of dollars annually for a rancher, Stumbough told N.P.R., a gold mine for men and women struggling to stay afloat in a depressed cattle market.
As a negotiator, you’ll sometime find yourself in over your head, negotiating with another company or governmental body which dwarfs you in terms of scale, resources and bargaining power. Carefully assessing your alternatives and those of your counterpart, trying to change the rules of the game when they work against you, creating a strategy for your entire portfolio of negotiations and appealing to the other side’s sense of fairness are a few techniques you can use to increase your strength at the table.
Sometimes, however, the answer lies in a coalition. As those Wyoming ranchers have learned, you can gain leverage and improve your results by banding together with other relatively weak parties. As a member of a coalition, you can harness the resources you need to face a tough opponent.
In certain situations, including the wind-rights negotiation, some of the parties may lack the expertise to bargain on their own behalf. Lawyers, agents and other third parties can provide the expert guidance needed in situations as wide-ranging as a divorce settlement, a book sale or a corporate merger.
A negotiating coalition takes this “don’t go it alone” strategy a step further. Rather than, or in addition to, hiring one or more advisers to negotiate for them, a number of weak parties – who might otherwise be in competition, further weakening their position – join forces to negotiate in a collective, organized manner with one or more stronger parties.
Labor unions are the most obvious example of a negotiating coalition. When a company negotiates with an employee individually, it has overwhelming advantages of scale and can meet the employee’s demands by the simple threat to hire someone else instead. Essentially each worker is in competition with all other workers. By contrast, when employees bargain collectively through a union, they avoid competing against each other, at least on certain issues, and typically achieve a more competitive compensation-and-benefits package than they could have negotiated on their own.
Returning to our Wyoming story, a rancher who negotiates leasing rights with a wind developer individually risks being coerced into accepting a lowball offer. After all, both sides understand that the developer can always walk away and talk with the rancher’s neighbor instead.
By contrast, when ranchers join wind associations, they become part of an organized, informed group. The coalition has the power and ability to negotiate with multiple developers for the lease of a much larger – and thus much more attractive – piece of land. They still aren’t as big as the companies on the other side of the table, perhaps, but the two sides are much more comparable.
Coalitions bring several benefits to weak parties. First, when weak parties join a coalition, they avoid destructive competition with each other and, by pooling their resources, gain strength in negotiations with stronger parties. A coalition defuses a common adversary’s ability to pit one weak party against another or to credibly threaten to walk away.
Coalitions also can bring advantages to the party across the table, however. Susan Williams Sloan, who works for the American Wind Energy Association, a wind-industry trade group, told N.P.R. that developers appreciate the “one-stop shop” aspect of wind associations, which allows them to avoid wasting time on dozens of similar, small-scale negotiations. Securing a large tract of land in a single negotiation is beneficial to a developer even if the per-acre lease price is higher as a result.
Landowners who belong to associations also tend to be better informed about the issues at stake in their leasing negotiations, Sloan added, which helps to smooth the negotiation process and avoid extraneous detours.
In sum, a coalition is likely to lead to a more efficient negotiation process that could benefit everyone involved, including consumers and other constituents who may be affected by the outcome.
