04/08/2011 04:52 pm ET | Updated Jun 08, 2011

Don't Negotiate When You Are Not in a Negotiation

Two quick anecdotes:

  1. As part of the year-end review process, my direct reports were required to complete a self-appraisal. I encouraged them to be self-reflexive, identifying areas where they were excelling and where they could improve. All but one of my direct reports handed in a thoughtful self-appraisal. One direct report submitted a self-appraisal where he declared himself to be outstanding on every competency and suggested that he should be promoted three levels. When I asked him if this was his honest assessment of his skills and performance, he replied, "This is a negotiation, I bid high and you bid low and we'll agree in the middle. The higher I bid, the higher you'll go to accommodate." I handed him back the paper and advised him to either come up with a self-appraisal that was a more honest self-assessment or I won't consider it in the review.
  • Upon approaching the entrance to a local deli, a homeless man approached me for money. I informed him that I don't give money to the homeless but if he wants I can buy him some fruit. He responded, "I'll have a foot-long meatball sub, large coke and a bag of potato chips." After telling him that I am only getting some bananas for myself and offering to give him some he replied, "Either a foot-long meatball sub, large coke and a bag of potato chips or nothing!" I calmly replied, "You drive a very hard bargain, but you will get nothing."
  • In both situations, I was in a power position where there was only a limited impact in my decision to not negotiate. What about the president and the looming budget standoff? Bill Clinton showed in 1995 that as president he didn't have to negotiate with Congress and a shutdown ensued until a plan was worked out. Shutdowns are a consequence of not negotiating, but as I discussed recently, they have relatively benign short-term impacts.

    House Budget Chair Paul Ryan introduced a plan that is a blueprint for conservatives. It turns Medicare into profit-generating vouchers for private insurers and converts Medicaid and Food Stamps into state-level block grants with no control over if the states distribute the funds to the poor. Funding for schools and roads are slashed, all in the false name of being budget conscious yet, at the same time, taxes would again be lowered for the wealthy. There is no subtlety in this plan, no attempt to hide the fact that a budget crisis is being manufactured by lowering taxes for the wealthy while cutting programs for those in need.

    No one who is serious about financial responsibility would pretend that lowering taxes for the wealthy will do anything more than drive down government revenue, but this proposal is not meant to be passed. Rather, Ryan has put his flag in a place where he knows that the Senate and President can't possible agree, in order to create a crisis.

    While it would be refreshing to see The Great Compromiser inform the Republican Party that he won't sign any declarations of war against American's middle class and poor, I wouldn't bet on it unless his pollsters tell him it will increase his odds for 2012.

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