By Paul Kaspszak, MMBA Executive Director
Many have asked my thoughts on the recent state budget negotiations.
Instead of focusing on specific issues and proposals, I like to discuss negotiation concepts that led to the situation.
According to Dr David Venter Co-founder and Director of Global Negotiation Academy...
A "bottom line" signifies the worst possible outcome that a negotiator might accept. The bottom line is meant to act as the final barrier where a negotiation will not proceed further. It is a means to defend oneself against the pressure and temptation that is often exerted on a negotiator to conclude an agreement that is self defeating. Although bottom lines definitely serve a purpose, they also regrettably foster inflexibility, stifle creativity and innovation, and lessen the incentive to seek tailor-made solutions that resolve differences.
In the recent negotiations, here were the bottom lines of the participants:
Governor: The Need for Additional Revenue (While he focused on tax increases, his bottom line was more money.)
New Freshman Republicans: No Additional Revenue (It was not a "revenue" issue, it was a "spending" issue.)
Traditional Republicans: No Tax Increases (However, they wanted to support the Freshman Republicans responsible for creating the legislative majority.)
As you can see, these differing bottom lines did lead to a "barrier where the negotiation did not proceed further."
Agreement only occurred when the bottom line changed for the Freshman Republicans:
The Governor got additional revenue.
The Traditional Republicans did not allow a tax increase.
The New Freshman Republicans accepted additional revenue (contrary to their initial bottom line position) in exchange for reforms they deem important.
The question for the future will depend on the bottom line positions of each negotiator and whether or not the parties believe they have a strong Best Alternative to a Negotiated Agreement (BATNA).
According to Venter..
In contrast to a bottom line, a BATNA is not interested in the objectives of a negotiation, but rather to determine the course of action if an agreement is not reached within a certain time frame. As a gauge against which an agreement is measured, it prohibits a negotiator from accepting an unfavourable agreement or one that is not in their best interests because it provides a better option outside the negotiation.
Since BATNA is the alternative to what a negotiated agreement would be otherwise, it permits far greater flexibility and allows much more room for innovation than a predetermined bottom line. When a negotiator has a strong BATNA, they also have more power because they possess an attractive alternative that they could resort to if an acceptable agreement is not achieved.
In other words, what course of action will parties take should future negotiations fail?
Another shutdown?
Only time, bottom lines, and BATNAs will tell.