Negotiating well is an art. When it’s not done well, the consequences can be ruinous. Just look at the current partial US government shutdown caused by a budget standoff between US President Barack Obama and Congressional Republicans. More than 700,000 government workers have been placed on unpaid leave, national parks have been shut and small business loans are not being approved.
Acrimonious discussions can derail businesses large and small. This week, LinkedIn Influencers weighed in on communication breakdowns — their consequences and one possible cure.
Here’s what some of them had to say:
John Taft, CEO at RBC Wealth Management-US
“...The government shutdown isn’t what really matters. The debt ceiling could have a far bigger impact on financial markets and on the economy,” wrote Taft in his post Don’t Let the Showdown in Washington Derail Your Investment Strategy.
In less than two weeks, the US government “is expected to reach its credit limit… At that point the US Treasury will have only $30 billion or so in cash to cover expenses … including principal and interest. Which means the United States of America could default on its publicly-issued debt,” he explained.
In the near term that could be catastrophic. As Congress continues to hash out both a budget to reopen government and a debt ceiling increase, “we are likely to see the financial markets become far more volatile. That’s what happened in the summer of 2011 — the last time we faced an imminent threat of default — when the U.S. equity markets experienced some of the biggest price swings in history,” Taft wrote.
But, Taft wrote, “...it’s important for investors to shut out some of the noise and look beyond the headlines” and focus on the fact there is zero chance the US won’t eventually pay its debts. “… It’s not enough to cause long-term investors to change, much less abandon, their long-term investment strategies,” he wrote. “If anything, it might present the kind of investing opportunities we last saw in the winter of 2008-2009, at the depths of the financial crises.”
Robert E Moritz, US Chairman and Senior Partner, PricewaterhouseCoopers
Is political wrangling and uncertainty a key reason businesses aren’t expanding and hiring? That’s more certain than ever, wrote Moritz, in his post, We Are Still Waiting.
“I speak regularly with CEOs and business owners who say their frustration is now at an all-time high. In fact, nearly 90 percent of US CEOs who responded to PwC’s most recent annual survey said volatile or uncertain economic growth is one of their top concerns, and more than two-thirds said they were extremely concerned by the government’s response to the fiscal deficit and the debt burden,” he wrote. “Faced with uncertainty over economic policy from one quarter to the next, executives are hesitant to plan for hiring, growth or market expansion.”
Mortiz explained that business leaders understand that striking the right balance isn’t easy — but it’s what leaders must do.
“As business leaders... we weigh how to take care of our people, how to stay relevant in a competitive landscape and how to create efficiencies and generate revenue. This isn’t easy work, and often it’s incredibly difficult and fraught with conflict,” he wrote. “But as business leaders, we know it’s essential. Similarly, politicians need to step up and prioritise long-term sustainability over short-term gain.”
Jack Welch, former CEO at General Electric and founder of Jack Welch Management Institute
Welch, famous for his hard-charging management style, wrote that those following the story of the US government shutdown “might be missing the most important lesson of it all,” in his post Schmooze or Lose: How the Lost Art of Negotiation Led to a Shutdown.
“You have to schmooze early and often. You can’t suddenly burst out of your office to build relationships when you hear rumbles of trouble from down below, and it’s certainly too late by the time a crisis flares,” Welch wrote. “No, schmoozing has to be what you do all the time as a leader; it has to be a massive part of your job. Walking around, having a coffee, sitting and listening, getting real, letting people get real with you.”
Ordinary social schmoozing won’t do, Welch wrote. “Leaders have to do something harder and more essential; something that can feel awkward at first. You have to schmooze with your known “adversaries” too, say, for instance, your union, or the group of employees who hate your new strategy and want the old one back. The resistors that exist in every organisation. The perennial naysayers,” he wrote.
Doing so builds a necessary level of trust and transparency for crisis times, he wrote. “Without thriving relationships and ongoing dialogue, it will shut you down, be it in the grand corridors of Capitol Hill or over in the three cramped rooms you call headquarters,” he wrote. For leaders whose opinions and beliefs may genuinely differ, he wrote, “the building of transparency and trust is what makes those differences negotiable.”