The Real Trump Deal. Martin E. Latz
if, when, and how should you use threats? And how has Trump used them?
Threats constitute an often-unspoken element in almost all negotiations. They’re simply a very aggressive effort to exercise leverage. Your ability to negatively impact their perception of their Plan B through a threat—the costs of noncompliance with your demand/offer—can strengthen your leverage.
Keep in mind, though, threats are not inherently evil. And they should be used at times, albeit in limited circumstances. As noted by Galinsky and Liljenquist, “researchers have found that people actually evaluate their counterparts more favorably when they combine promises with threats rather than extend promises alone. Whereas promises encourage exploitation, the threat of punishment motivates cooperation.”213
Evaluating the Effectiveness of Threats
Understanding this, here are four research-based guidelines to use in evaluating the effectiveness of threats, including Trump’s.
1. Strategically Planned?
“Put your bike away now, or no electronics for a week,” Mom might threaten after she finds her 10-year-old’s bike in the driveway for the umpteenth time.
Every parent has lost his or her temper. Does it help? No.
Threats based on anger, volatile emotion, and momentary pressures are almost always counterproductive. “Multiple studies have linked anger to reduced information processing, risky behaviors, and clouded judgment,” according to Galinsky and Liljenquist.214 Research also shows anger limits people’s ability to identify the relative importance of issues to others, according to University of California-Hastings Law Professor Clark Freshman.215
Strategically planning threats in advance, not acting or reacting instinctively, addresses these concerns and reduces the possibility of counterthreats and retaliation, which could spiral out of control.
Crucially, the goal of a threat is to satisfy your interests. Effective threats thus motivate cooperation instead of punishing bad behavior.
2. Used in Limited Circumstances?
Professor Jeanne Brett, Director of the Kellogg School’s Dispute Resolution Research Center at Northwestern University, and her colleagues have identified three circumstances in which threats can be necessary and effective:
– Getting counterparts to the table when facing a seemingly intractable deadlock (like threatening aggression or sanctions to get a recalcitrant country to engage in peace talks);
– Breaking an impasse by signaling strength and fortitude (bullies sometimes only respond if you demand respect by flexing your muscles); and
– As a mechanism to ensure compliance and implementation of an agreement.
Brett and her colleagues emphasized that the focus must be on the other parties’ interests to be effective. In other words, emphasize their interest in accepting your Plan A relative to their Plan B (your threat).216
The reason to only threaten in limited circumstances? Even well-crafted threats can carry significant negative consequences, including:
– Provoking resistance and anger, thus decreasing a counterparts’ likelihood of granting your wishes;
– Undermining an agreement’s legitimacy if a counterpart believes it resulted from coercion; and
– Inciting a desire for vengeance. “Psychologists have found that revenge has biological foundations, persisting until it is satisfied, like hunger. The more severe a threat’s consequences, the more extreme the retaliation is likely to be.”217
Threats should not be a regular part of a negotiator’s repertoire.
3. Credible or Empty Threats?
Negotiators should never start a war they’re not prepared to finish. Former President Barack Obama threatened Syria with severe consequences if it crossed a “red line” by using chemical weapons.
What did he do after the world saw unmistakable evidence it had crossed his red line? He said he didn’t have congressional authority to engage militarily and negotiated a deal to stop it from happening again.218
Did this prevent Syria from doing it again? No. Did Obama and the United States lose credibility relating to its future promises and threats with Syria and the rest of the world? Yes.
Reputations matter, especially relating to the credibility of threats.
4. Was the Threat Appropriately Framed?
Effective threats should be framed so they can be realistically satisfied and not engender ill will. They should thus:
- be specific and detailed;
- address your counterpart’s interests (This is crucial, per Brett.);
- be delivered respectfully in a measured, serious tone;
- include meaningful consequences;
- link to a timeline; and
- possibly include an escape route if circumstances change.219
They should also be used very sparingly in situations involving a future relationship between the parties. Threats can backfire long-term.220
They can also have long-term benefits. President Ronald Reagan in 1981 threatened 12,000 striking air-traffic controllers with the loss of their jobs if they did not report back to work “within 48 hours” of his statement. 11,359 did not comply. He fired them.
“Many observers view Reagan’s controversial threat and follow-through as a pivotal moment in his presidency and the foundation for future political victories,” according to Galinsky and Liljenquist.221
Has Trump Effectively Used Threats in Business?
Donald Trump has effectively used implicit and explicit threats in many business negotiations. He has also used them ineffectively, and they have backfired.
In analyzing successful and unsuccessful threats, we will do so based on two criteria. One, how much did they help him achieve his goals and satisfy his interests? And two, how much did his threats match up with our framework?
Of course, we can’t know with certainty whether every threat works. It may help close a short-term deal yet induce such ill will that it eliminates a greater opportunity down the road. Even the most effective threats rarely include all the factors described earlier.
However, we know this from the research: Including these proven elements increases the likelihood the threat will work short- and long-term.
Here are two business negotiations in which Trump effectively used threats to strengthen his leverage and achieve his goals.
• Trump’s Commodore Hotel Threats
Donald Trump, as described earlier, needed an unprecedented tax break from New York City to get his Commodore deal done. To get it, he needed New York City’s land-use authority, its Board of Estimate, to approve the tax exemption.
Here’s the Trump threat that got them on board, according to Trump Revealed. This occurred during a press conference outside the hotel called by three local lawmakers, just a day before the Board vote.
When the politicians had finished, Trump, who had shown up to refute their argument, told reporters that if the city did not approve the assistance, he would walk, and the Commodore would rot.
To dramatize how decrepit the Commodore would be without him, Trump had [earlier] directed his workers to replace the clean boards covering up the hotel windows with dirty scrap wood.222
Trump got his tax exemption.
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