The A.I.G. bonus payout spectacle reminds me of the importance of considering the pros and cons of going public in a negotiation. Why go public?
1. To influence the decision makers
By holding public hearings, Congress is exerting pressure on the A.I.G. executives to “do something” about the millions in bonuses it recently paid its employees. The politicians are concerned about how they are being perceived by their constituents given that the government bailout money didn’t have adequate strings attached.
2. To strengthen your leverage
By creating a public outcry and desire for “justice,” politicians are attempting to undermine the attractiveness of A.I.G.’s alternative, or Plan B, which is doing nothing or something other than what the politicians want. Reportedly, A.I.G. is so concerned about the growing backlash it hired extra security at its Financial Productions Division office.
3. To control the agenda
Holding public hearings can be an effective agenda control tactic as it allows those involved to highlight the importance of certain issues and raise the stakes in the negotiation. Here, Congress wants the focus on A.I.G., not on Congress’ lack of control and oversight involving how our bailout money was being spent.
Of course, going public has potential drawbacks. For example, it may increase the competitiveness of the negotiation, decrease a party’s flexibility regarding its publicly taken positions and result in the mischaracterization or miscommunication of a party’s position by the media and/or the public.
As I am writing this, The New York Times is reporting A.I.G.’s CEO will ask bonus-receiving employees to return half of the money. We’ll see how it turns out.