Not Prepared to Negotiate? Perhaps This Will Change Your Mind
It seems that rescued lender Allied Irish Banks has dramatically bowed to pressure from the Irish taxpayer and government, and have confirmed it will not now award big bonuses to staff.
Allied Irish Banks has already received £3bn in bailout funds, as a consequence of its, some may say strange, lending practices, and is set to receive billions more under the terms of the rescue agreement in place from the IMF and EU.
Over 2,500 workers were due to collect bonus relating to their performance in 2008, before the financial crisis gripped the banking sector, sharing a pot of almost £34m. But the country’s finance minister, Brian Lenihan, wrote to the bank on Monday threatening to withdraw state financial support if the bonuses were honored. AIB released a statement last night detailing the pressure it was under and announced a climbdown.
From a negotiating standpoint the Government was in a perfect position to force this change of heart by virtue of their ability to both sanction and incentivize AIB. In this instance the sanction of withdrawing support (which they clearly meant, unlike the UK banks when put in similar circumstances recently) or incentive by carrying on with the plan and save hundreds of jobs.
Power in negotiation comes from this combination of incentive and threat, and crucially the intention to follow through.
But perhaps the most interesting part of the tale came from AIB’s own executive chairman, David Hodgkinson, who said: “The Board of AIB very much welcomes the actions of the Minister and is relieved to be in a position not to pay these bonuses.”
The opportunity to save face should never be underestimated or undervalued. Particularly when so much is still at stake.