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Fiscal cliff negotiations show how not to make a deal By Dave Logan, Special to CNN

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Editor's note: Dave Logan teaches at the USC Marshall School of Business and is the author of four books, including "Tribal Leadership" and "The Three Laws of Performance." He is also senior partner of CultureSync, a management consulting firm, which he co-founded in 1997.

(CNN) -- Washington appears to be run by screenwriters, where the rule is to get as close to the cliff as possible. Drive off, if it won't be too unbelievable. Then -- like young James T. Kirk in the J.J. Abrams reboot of Star Trek -- jump out as the car plunges to the bottom and climb your way back up. That's great Hollywood -- and perhaps the best-case scenario in Washington as lawmakers drive toward the fiscal cliff.

There's an upside too. If you watch the news closely, you'll see our Washington leaders making the classic mistakes that bad negotiators make. You'll see when they should be changing direction, doing B instead of A. And you'll be improving your own negotiation skills along the way.

I'm totally serious here: As you watch, notice what they should be doing, instead of what they are doing, and it's likely that you'll act more effectively when you have to negotiate a new house, a big sale, or a pay increase to cover the increase in your taxes if lawmakers drive over the edge.

Dave Logan
Dave Logan



Over the past 20 years, I've helped organizations of all kinds negotiate the sale of companies, contracts for C-suite executives, and union-management agreements. I've also taught negotiation techniques to members of law enforcement -- many SWAT teams and their federal counterparts.

Here's what I can tell you: Negotiation has three steps and three rules.

Let's look at what should be happening in Washington.

Step 1. Say what you want and ask the people on other side what they want. What results is "positions" -- what each side says it wants. You tell the car dealer that you'd like $5,000 more for your trade-in than you really think you can get. It's not what you expect, but it's a way to start the negotiation.

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The first serious set of positions came out from Republicans on December 3. The Democrats got there a bit sooner. This step should have been over a couple of days after the election.

Step 2: One side steps up and asks why the other's position is what it is, and keeps asking "why" until it gets to core values. Don't laugh, but in the real world it works like this: Democrats to Republicans: "How come 'no tax increases' is so vital for you?" Republicans to Democrats: "Why is it so important to raise taxes on households making over $250,000?" These questions "surface" each side's interests, the reasons behind the positions, as William Ury, Roger Fisher and Bruce Patton note in their classic "Getting to Yes: Negotiating Agreement Without Giving In."



I once worked in a hospital where the nurses insisted on a large percentage increase in their pay. Stuck at step one, they'd repeat what they wanted, and the hospital executives would call them greedy and out of touch, often with the press listening. The nurses responded that the hospital was run by greedy trolls who only cared about making money.

Things moved forward when someone asked the nurses why that position was so important. "It's about fairness," they said.

When the nurses were asked why fairness is so important, they said "respect." They felt disrespected by the process, the various offers, and being kept out of hospital decision-making. When they settled, a part of the deal was -- are you sitting down? -- that they wanted to put in more time, invest more passion and expertise, and have a greater sense of ownership in the hospital.

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By the hospital giving them a fair slice of its financial success, through a sort of profit-sharing deal, the nurses did better than they would have done with just the straight percentage increase. And they won -- emotionally and financially. People will surrender a position if it helps them achieve what they're really after.

The hospital executives went through a similar process. Their position was that the nurses would get no increase. Why zero? "Market realities" -- salary surveys showing that they were already paid fairly. Why were market realities important? Because the executives wanted the hospital to be the best in its market, in all respects.

The core value for the executives was "best of the best." Notice the Hollywood ending that results: The executives and nurses both got more than they originally wanted, and both were invested in making it happen. Research my colleagues and I published found that groups get far better results when decisions are based on values rather than compromise or interests alone.