On July 6, 2017, the state of Illinois finally resolved a 793-day budget impasse, the longest such impasse in U.S. history. The economically devastating stalemate between Republican then-governor Bruce Rauner and the Democratic-controlled state legislature, triggered by hardball negotiation tactics, offers lessons to negotiators managing difficult negotiations.
An Agenda and a Condition
As Illinois politicians approached negotiations for the 2015 budget, the state faced a $1.6 billion budget shortfall and a $6 billion gap between falling income-tax rates and the price of government services, even as the state’s economy was contracting.
The Illinois General Assembly passed a state budget that would have created a deficit of almost $4 billion. Rauner vetoed it and announced he would not agree to raise taxes to balance the budget unless the legislature passed his “turnaround agenda,” a list of proposed business-friendly, union-weakening laws. Democrats rejected many of the demands, saying they were unrelated to the budget.
For most of the following year, Rauner refused to negotiate an end to the standoff. The impasse led about one million Illinoisans to lose vital services, including mental-health care and cancer screenings, and thousands to be laid off. The state limped through the year on court-ordered spending and stopgap appropriations.
As a second budgetless year loomed, politicians returned to the negotiating table, frightened by the specter of “shuttered schools, lost road construction jobs, utility shutoffs at prisons, or further cuts to colleges and social service agencies,” according to the Associated Press. Rauner and legislators hammered out a temporary compromise to keep the government operating for six months.
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Turning Around the State
In February 2017, Rauner submitted a budget proposal to the General Assembly, but negotiations again collapsed. In June, the governor said he would order a special legislative session to convene until a budget passed. S&P, which had downgraded Illinois’ credit rating from A- to BBB during the impasse, threatened to lower it to junk status if negotiators didn’t succeed.
A budget bill passed the Illinois Senate and House, but Rauner vetoed it on July 4. With support from Republican defectors, both houses overrode the governor’s veto. After more than two years, the state finally had a budget. Lawmakers cheered, but Rauner wasn’t happy: “This is a two-by-four smacked across the foreheads of the people of Illinois.” In 2018, he lost his reelection bid to Democrat J.B. Pritzker in a landslide.
3 Keys to Managing Difficult Negotiations
Here are three lessons from the Illinois budget impasse for managing difficult negotiations:
- Adopt a Gain Frame
The off-and-on government negotiations involved making difficult decisions about scarce resources. Negative events (such as losses) tend to affect us much more strongly than positive ones (such as gains) of similar magnitude, psychologists Amos Tversky and Daniel Kahneman found in their research. Consequently, negotiations over costs and losses, such as mortgage foreclosure or a budget shortfall, are generally more competitive and challenging than those involving benefits and assets, such as a home purchase or a budget surplus.
To avoid approaching negotiations over losses with a rigid attitude, try to identify any benefits that may accompany the burdens you anticipate. Negotiators who focus on gains achieve greater overall profits than those who focus on losses, Stanford Graduate School of Business professor Margaret A. Neale, Harvard Business School professor Max H. Bazerman, and the late Thomas Magliozzi found in their research.
- Think Multiple Steps Ahead
The impasse in Illinois was triggered by Governor Rauner’s insistence that Democrats accept his turnaround agenda as a condition for doing a deal and by Democrats’ flat rejection of Rauner’s agenda.
A condition is an “if” statement that qualifies your entry into a negotiation or acceptance of a deal, such as “I’ll agree to your budget if you accept my agenda.” Refusing to negotiate or compromise unless the other party meets your condition can be a savvy means of crafting a more palatable agreement when you are the more powerful party. But when parties’ power is more evenly balanced or you are the weaker party, don’t be surprised if the other side refuses to meet your conditions.
Before engaging in hardball tactics in negotiation, such as issuing a condition, think multiple steps ahead about what could happen. Firm positions can easily lead to a protracted impasse. Instead of taking a tough stance, educate your counterpart about which aspects of their offer are most palatable to you, and think about what concessions you might ask for in return.
- Keep Talking
Illinois politicians failed to meet at the negotiating table even as the stalemate had painful repercussions for the state’s residents and reputation. Individuals and organizations sometimes refuse to negotiate in the hope that a counterpart will back down as the costs inflicted by an impasse mount. What’s often overlooked is that impasse damages both sides. If you do get back to the negotiating table, the ill will that accumulated makes managing difficult negotiations even more challenging.
Negotiation is usually a much more promising means of resolving a conflict and ending an impasse than refusing to negotiate. When talks have reached an impasse, try building trust and goodwill by proposing that you negotiate relatively minor issues first.
What other advice do you have for managing difficult negotiations?
