Negotiating Successfully – The 7 Steps
Over the years, I have conducted and observed many commercial negotiations with various of type of organisations often with small to medium sized enterprises (SME) suppliers. These negotiations can be protracted and end up in a cul–de-sack of lose/lose outcomes and no agreement.
These “negative” negotiations are characterised by ongoing disputes, they are time consuming and costly, they create tension between the parties, stress the negotiators and often led dead ends. I have spent some time trying to identify what are the root causes of these sub optimal outcomes and experiences and have come up with the following list of what SME organisations sometimes get wrong!
1) A lack of proper pre-negotiation plan, which needs to include aims and objectives, including the most and least desirable outcomes. Without this the negotiators, can lose focus and end up in place or position that they never intended.
2) There is ALWAYS a need to develop a Best Alternative to a Negotiated Agreement (BTNA) so prepare in advance in case a backup is needed.
3) The formation of the team is a very important part of the process, yet often the SME send an individual, without any supporters or advisors. Often a corporate team will include advisors re finance, legal, compliance and other disciplines, were as the SME negotiator is flying solo. This can put the SME at a disadvantage. The reason is no doubt mainly due to lack of resource, but also a confidence in their abilities that might be misplaced.
4) SMEs do not devote sufficient time or effort to the task of pre-negotiation preparation. This could be due to a lack of resource or perhaps over confidence. Whatever the reason it is often a fatal flaw. It is critical to a successful win/win and time efficient outcome that both sides are well prepared. This preparation can include research and data gathering about the relative leverage between the two organisations, current supply market situation, the record of accomplishment of both sides, in terms of win/win or win/lose approach to negotiations.
5) The strategic or tactical nature of the product or service and price indices are also very important. All this information needs to be gathered and analysed as part of the overall process of defining the relative bargaining positions and negotiation strategy of both sides, often via the use of a simple SWOT analysis.
6) Some people believe that negotiations is all about “wining” although often they do not realise that by winning a battle, they go on the loose the war. For example, they win a small concession from the client, but then are eliminated from any future contracts. Win/Lose (or positional style negotiations) have their place, depending upon circumstances, but I always promote Win/Win (or principled) as the default.
7) Effective negotiators make full use of influencing techniques, which is the process of applying some form of pressure in order to change other people’s attitudes or behaviours, to secure their compliance, obedience, conformity or commitment. At the same time use persuasion techniques, which is influencing other than using power. The aim is to pull or lead people to change by aligning their beliefs and goals with those of the influencer. These techniques can include compromise, bargaining, cohesion and emotion.
In summary, if the SME negotiator has a good understanding of its objectives in both a strategic and tactical, is fully prepared and adopts an appropriate negotiating position, then the outcome is more likely to be mutually beneficial to both sides.