Wednesday, November 14, 2012

The Grand or Aggrandized Bargain

 
 


"Don't bargain for fish which are still in the water"

Indian Proverb
 
 
Those who knew me before I retired, know that at one time I had a real "day job". In the working world, I was employed by five large companies, including one of the largest -"Big Blue". My job was basically two fold - first, to ensure the pricing and terms on any deal the company was involved with measured up and was most importantly, was adhered to. Second, was to lead the negotiation  team on any new or modified deal. Consequently, over the decades, I have been involved in many, many negotiations. 
 
Why do I need to tell you that? Simply put, based on my experience, I know something about negotiations, both large and small. The largest, most important negotiation in many years is due to start this week in Washington. Yes, the fiscal cliff negotiation is going to be one for the ages, and so far it it not starting out very well.
 
Lesson 1 - "QTIP" - "QTIP" stands for "quit taking it personal". In other words, separate the deal from your feelings. I have negotiated with many people I really liked as well as some I did not like. Those feelings were left outside the negotiation room. One of my big breaks early in my career came when my predecessor told the other negotiator he was going to "break his arm off and feed it to him". The next day I was called in to  see the boss and offered his job. The man I was negotiating with was truly a jerk, but I looked to find common interests and gain his trust. I worked with him for two years with no problems and finished five deals.
 
Lesson 2 - Agree when you can agree - In most negotiations there are a multitude of issues that need to be addressed. Some are huge and others are "throw away". It is best to find the small or "throw away" issues and take care of those first. By doing that, it gives both sides the opportunity to agree rather than disagree. Also, it puts both teams in the "habit" of agreement. Most people like the feeling of consensus rather than not.
 
Lesson 3 - Beware of the "line in the sand" - The best way to screw up any negotiation is to start out by drawing a line in the sand. I have seen this many times and it is a killer. Rather than following Lesson 2 above, you go right to the toughest issue and lay out an intractable term. Rather than a negotiator, you become a "Dr. No". Once a line in the sand is drawn, it is very hard to "undraw' it, or even worse, cross over it.
 
Lesson 4 - Never rush - A good negotiation, like a good meal, takes as long as it takes. If you rush the preparation of good meal, the result will probably be disappointing. The same it true for a negotiation. A good negotiator has a "sixth sense" when the deal is "fully cooked", ready to be agreed to and signed. It also is a stop gap in making sure nothing was left out or forgotten. Many rushed negotiations have ended up with buyers remorse on one side, sometimes both.
 
Lesson 5 - Never leave the other side bleeding - If you decide to go for the kill in any negotiation, it will be your only chance. The other side will never want to deal with you again. It is critical that both parties walk away from the deal feeling like they got something. Most negotiations are hard, lots of travel, many nights away from home. However, when you can finish and feel good about the outcome, it is all worth it. To walk away feeling like you have been skewered, will make you never want to walk that path again.

When I look at the upcoming fiscal cliff negotiations, I can see that most of lessons have already been violated. The President has said in the past, if he won re-election, he could "break the back" of the Republicans (Lessons 1 and 5). Bad move. This now has to be done in less than fifty days whereas it could have been started eighteen months ago (Lesson 4). In addition, the President has publicly said he would not negotiate on extending the tax cuts for folks making over 250K (Lesson 3).

If I was a betting man, I would put the chances of success somewhere between slim and none. Unless there is a huge change in mindset, this week will be one more example of how not to do things, how not to govern. Sometimes I really wish the adults could be in charge once again...

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