I wonder if, like me, you have recently followed the story of a shoplifter who stole a tray of cans of beer from a supermarket. This was no ordinary shoplifter, he looked like the actor David Schwimmer and his CCTV photograph was shown widely in the media. David Schwimmer showed his sense of humour by posting his own photograph on social media showing him clutching a similar looking tray of beers and taking a furtive look at a shop camera.
This reminded me of articles I read some time ago about David Schwimmer’s role in negotiating the contracts between himself, his five fellow actors in the hugely successful television series “Friends” and Warner Brothers. I am sure that you will remember "Friends" as an American sitcom set in New York featuring six actors playing the eponymous friends. When the series began all six actors were paid the same salary – according to reports, $22,500 per episode. The series was written and presented in such a way that all six actors were given approximately equal airtime in each episode. Apparently, Warner Brothers felt that this gave them leverage in negotiating contracts with the actors because no one of them had more power than any other as the series could cope with losing anyone, or even two of them and still continue. As time went on, David Schwimmer and Jennifer Aniston achieved, through their agents, salaries which were approaching double the salary figures achieved by the other four actors. Speaking in an interview, David Schwimmer told how he thought this was unjust even though his agent was suggesting that he should ask for even more money for the following episodes. Schwimmer suggested to his fellow actors that it would be more effective for them to negotiate as a group than as individuals and that they should indicate to Warner Brothers that failure to agree with all of them together would jeopardise the potential for future episodes of a massively lucrative network franchised series. Individually they may be replaceable, collectively they were not. To achieve this objective Schwimmer offered to reduce his own salary and persuaded Jennifer Aniston to do the same. The outcome was that in Season 3 of the series all six were paid the same: $75,000 per episode. As time went by and the sixth series was being prepared that salary multiplied by 10 for each actor.
Gradually, the actors in the series felt that they would wish to move on and further their careers elsewhere. Warner Brothers, however, had a series which averaged 24.7 million viewers every week significantly more than any other show on television. Advertising revenues were lucrative because of the young audience and the producers wanted to continue the series for as long as possible. The outcome was that the six actors, in negotiating their ongoing contracts for the final year of "Friends" were placed in a powerful position. They used this to negotiate salaries of $1 million each per episode – $22 million for each actor for the year. But they didn't stop there. You must know as you flick through the myriad of television channels now available to you that there seems to be an episode of "Friends" always playing somewhere. Recognising this, the six actors negotiated the deal whereby they would gain in an open-ended way for all networked episodes of the series anywhere in the world - forever. It is said that this still earns each of them $20 million a year.
By strategically reframing the relationship between the actors as a collective bargaining group and Warner Brothers the actors enhanced their value much more than if they had continued to deal as individuals. They appealed to the interest of the producers who wanted to keep the series going for as long as they could, and also, by having the foresight to readjust the salaries of the highest earners, the sacrifice of a few thousand dollars turned into a benefit of many millions. Moreover, using time to project their negotiating leverage into the future secured those earnings even after they had stopped working to provide them.
I share this with you because it illustrates some important negotiating points about examining your own power, increasing your value and using the fact that collective action can trump self-interest, using that collective value to greatest effect, being brave enough to accept a short-term "hit" for long-term advantage and recognising how to future-proof your deals. Very clever!
About the author:
My background is human resource consulting, I am a former KPMG consulting partner and head of global HR development with the firm. I began my interest in negotiating as an industrial relations specialist in the early part of my career and have spent many hours with trade union representatives practising what I now preach! I am also a coach and use these skills in my work with Scotwork’s clients.