One of former Chrysler president Lee Iacocca’s most formidable negotiation challenges occurred when Chrysler sought to avoid bankruptcy by negotiating with Congress in 1979 for a $1.5 billion loan guarantee.
Most lawmakers initially believed government should not bail out private enterprises.
So what did Iacocca do when faced with a seeming impasse? He asked Congress reality-testing questions that highlighted the consequences of Congress not helping out.
“Do you want to pay the $2.7 billion now (the Treasury Department’s estimate of the first-year cost in unemployment insurance and welfare payments if Chrysler went under) or do you want to guarantee half that amount with a good chance of getting it back?”
Congress guaranteed the loan, largely because – as Iacocca later wrote – when Congress “realized how many people in his constituency depended upon Chrysler for their living, it was farewell ideology.”
A big challenge in many negotiations revolves around how to break late impasses. While unlimited options exist, here are my Top 10 Impasse-Breaking Strategies:
1. Get more information by asking reality-testing questions.
Many negotiations break down before the parties have gathered sufficient information to accurately evaluate either side’s alternative to a negotiated agreement. So get more information. Information is power in negotiations. And ask reality-testing questions.
2. Switch objective criteria.
Negotiators often substantiate their positions by pointing to objective criteria such as independent standards. Expert opinions, precedent, market value, efficiency, costs/profits, or tradition provide powerful justifications. When impasses occur, switching justifications can break the logjam. For example, a homebuyer might switch from focusing on a home’s market value to the seller’s profits.
3. Prioritize needs and interests.
Parties negotiate to satisfy their needs and interests. The negotiation dynamic, however, can distract parties and focus energies on inconsequential issues. For instance, individuals’ egos and desire to “win” can get in the way of satisfying fundamental needs and interests. Explicitly prioritization can bring them back on track and break impasses.
4. Brainstorm options.
Creative solutions escape many negotiators when they don’t sufficiently explore ways to satisfy both parties’ interests. Impasses disappear when brainstorming parties find unexpected ways both can get what they want.
5. Set deadlines.
Fast, furious concessions increasingly occur when parties approach deadlines. Lawyers often talk of “settling on the courthouse steps.” Why? Because it’s their last opportunity to reach agreement. Agreeing to deadlines increases the likelihood parties will act.
6. Temporarily put aside the issue.
Sometimes parties negotiating multiple-issue deals can’t seem to get past one important issue. Set it aside and revisit it later. Then gain some momentum by agreeing on minor issues. Momentum can be a powerful force.
Published August 27, 1999 The Business Journal