ARE WIN-WIN NE­GO­TI­A­TIONS RE­ALLY POS­SI­BLE?

In the third of a series of six ar­ti­cles fo­cus­ing on strate­gic pro­cure­ment, Daniel Field­ing ex­plores the need for ne­go­ti­a­tion ex­per­tise in or­gan­i­sa­tions and five key steps to in­creas­ing your ne­go­ti­a­tion power.

Business First - - PROCUREMENT -

As the world be­comes more glob­alised, the per­for­mance and value de­liv­ered by our sup­pli­ers be­comes more and more im­por­tant to busi­ness bot­tom line. In the past there has been a per­cep­tion that any­one in the busi­ness can ne­go­ti­ate how­ever the need for strong com­mer­cial acu­men within the Pro­cure­ment pro­fes­sion is now well un­der­stood.

In lead­ing or­gan­i­sa­tions Pro­cure­ment teams with highly de­vel­oped ne­go­ti­a­tion skills are de­liv­er­ing sig­nif­i­cant cost sav­ings, im­prove­ments in ef­fi­ciency and in­creases in value across the sup­ply base to help grow the com­pet­i­tive ad­van­tage for the or­gan­i­sa­tion.

Ne­go­ti­a­tion has moved on from ag­gres­sive ‘bang­ing the table’ com­pet­i­tive ne­go­ti­a­tions to an un­der­stand­ing that sup­pli­ers are ac­tu­ally key to the suc­cess of the or­gan­i­sa­tion. The re­la­tion­ship is key and ne­go­ti­at­ing the best pos­si­ble deal for the re­la­tion­ship is not easy.

In these si­t­u­a­tions, peo­ple of­ten use the term “win-win” to de­scribe ne­go­ti­a­tions where both par­ties are equally suc­cess­ful in meet­ing their ob­jec­tives, but is this re­ally pos­si­ble? In most si­t­u­a­tions, the ob­jec­tives of both par­ties are dif­fer­ent – the sup­plier wants higher mar­gins, the buyer wants lower cost. The skill of the ne­go­tia­tor is to un­cover these ob­jec­tives and be cre­ative in de­sign­ing a deal to make both par­ties feel sat­is­fied.

And the key here is the word ‘feel’. Per­cep­tion in ne­go­ti­a­tion is ev­ery­thing and the way the ne­go­ti­a­tion process is man­aged can have a pro­found ef­fect on how the other party feels about the qual­ity of the out­come they achieve.

We know this is in our per­sonal lives – if we of­fer $10k for a used car and the seller im­me­di­ately ac­cepts it – we feel as if we could have got a bet­ter deal. If how­ever, the seller ne­go­ti­ated and man­aged our ex­pec­ta­tions, we could end up with ex­actly the same deal, how­ever feel happy about it.

So how do you get your team to man­age these ex­pec­ta­tions ef­fec­tively? We’ve pre­pared some key point­ers for you to set your Pro­cure­ment team on the path to bet­ter ne­go­ti­a­tions.

BE­FORE YOU EVEN THINK ABOUT NE­GO­TI­A­TION - UN­DER­STAND THE OTHER TEAM

The goal here is to un­der­stand the other party at least as well as they un­der­stand you. Develop a per­sonal pro­file for them in­clud­ing their per­son­al­i­ties, mo­ti­va­tors and driv­ers. We can do this through a num­ber of means, in­clud­ing meet­ings and con­ver­sa­tions prior to the for­mal ne­go­ti­a­tion.

A cru­cial part to this pro­fil­ing, is un­der­stand­ing ne­go­ti­a­tion styles. Ev­ery­one has a pre­ferred ne­go­ti­a­tion style which can be used de­pend­ing on the cir­cum­stance, we iden­tify five ma­jor ‘styles’. Too many ne­go­tia­tors are ‘one club’ play­ers - they have a style that suits and which they be­lieve, rightly or wrongly, to be ef­fec­tive, but they haven’t learnt to change their ap­proach ac­cord­ing to cir­cum­stances. They only use one golf club for the whole round!

We are not clair­voy­ants, but through re­search of the other party and the mar­ket we should be able to make some ed­u­cated guesses as to what may hap­pen when we meet.

START STRONG

The first thing you say in a ne­go­ti­a­tion should con­di­tion the other party and man­age their ex­pec­ta­tions. Con­di­tion them to­wards your ideal ob­jec­tives and man­age their ex­pec­ta­tions away from their ob­jec­tives. Skilled ne­go­tia­tors will re­hearse their open­ing state­ments sev­eral times prior to en­ter­ing the ne­go­ti­at­ing room. Re­hearse and then ask your­self the ques­tion… ‘if I heard this state­ment would it en­cour­age me to walk to­wards my ideal ob­jec­tive or away from it?’ This would be a good cross check as to whether you are man­ag­ing the ex­pec­ta­tions of the other party pos­i­tively to­wards your ideal ob­jec­tives.

BE EMO­TION­ALLY IN­TEL­LI­GENT

Whilst we need to flex and ad­just our ap­proach to ap­peal to whomever we are ne­go­ti­at­ing with, we also need to up­skill our

EQ for ev­ery ne­go­ti­a­tion. Be­ing emo­tion­ally in­tel­li­gent helps us to read the other party, un­der­stand them and main­tain em­pha­sis on the re­la­tion­ship with­out com­pro­mis­ing our own po­si­tion. Ef­fec­tive ne­go­tia­tors spend more time con­sid­er­ing ar­eas of com­mon in­ter­est be­tween them­selves and the other party over which bridges could be built to reach agree­ment.

HAVE A STRAT­EGY AND USE TAC­TICS

A big pic­ture strat­egy and pur­pose­ful use of tac­tics to guide the dis­cus­sion gives us con­fi­dence that the ne­go­ti­a­tion is go­ing the right way. There are over 70 tac­tics that can be em­ployed in a ne­go­ti­a­tion - un­der­stand­ing the core tac­tics is the best way to set your­self or your team up for suc­cess in a ne­go­ti­a­tion.

THE KING OR QUEEN OF QUES­TIONS

We must never un­der­es­ti­mate the power of great ques­tions. An im­por­tant skill in ne­go­ti­a­tions is the abil­ity to ask the right ques­tions at the right time. If we ask open ques­tions it is very dif­fi­cult for the other party to evade and there­fore puts the asker in a po­si­tion of con­trol. A com­mon mis­take is that many peo­ple be­lieve that talk­ing gives you con­trol. In fact, it is the per­son ask­ing the open ques­tions and lis­ten­ing to the re­sponses that will be in a po­si­tion of con­trol. If you talk too much, and are un­der­pre­pared, the other party will put you on the spot with a well­cho­sen ques­tion. Re­mem­ber that ques­tion­ing is only part of the story – we also need to LIS­TEN to the an­swer!

By us­ing these tech­niques, we can man­age the per­cep­tion of the other party – maybe you won’t get to the the­o­ret­i­cal ‘win-win’ – but you may get close, and im­por­tantly the other party will value the process that we have gone through and it will feel like a win!

While some peo­ple are ‘born ne­go­tia­tors’, it’s not a skill that most peo­ple feel they pos­sess or feel com­fort­able us­ing. We can have all the qual­i­fi­ca­tions in the world but if we can’t ne­go­ti­ate we will never be suc­cess­ful in to­day’s chal­leng­ing eco­nomic cli­mate. Ne­go­ti­a­tion may not be in-born but it is a skill that can be learned and prac­tised.

Ar­cBlue is a global spe­cial­ist pro­cure­ment con­sul­tancy and train­ing group who are pas­sion­ate about the ben­e­fits that strate­gic pro­cure­ment can bring. Our ser­vices range from com­plex sourc­ing projects to lead­ing or­gan­i­sa­tional and sec­tor pro­cure­ment trans­for­ma­tion pro­grams, or­gan­i­sa­tional as­sess­ments, spend and op­por­tu­nity anal­y­sis, skills as­sess­ment and bench­mark­ing, func­tional devel­op­ment and ben­e­fits re­al­i­sa­tion. Daniel Field­ing is Di­rec­tor at Ar­cBlue Con­sult­ing and Fel­low of the Char­tered In­sti­tute of Pro­cure­ment and Sup­ply.

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