Tag Archives: negotiation in business

The Fine Art of Negotiation

Your negotiation skills come into play practically every day in the procurement game. But that doesn’t mean there isn’t room for improvement.

essential negotiation strategies

Strong negotiators master verbal, written and non-verbal communications. They’re assertive, approachable and know what they want.

And while procurement professionals are relying on their negotiation skills more than most, there’s always room for improvement to ensure you’re getting what you want during the negotiation process, regardless of whether you’re the buyer or seller.

Getting the Right Result

Strong negotiators rely on specific skills including patience, self-confidence and creativity. This is according to Australian business and leadership coach Cheryl Daley, who focuses specifically on the art of influencing others.

“People don’t often believe they have strong negotiation skills, but it’s a skill we all need in life, particularly in business. There’s always better ways to approach negotiations, but we often fall into the same rut and forget about the importance of looking for new ways to get the result we want when negotiating,” Daley says.

Negotiations often become a power-play between two parties, but the aim should be for everyone to walk away feeling good about the outcome, she says.

Long-Term vs. Short-Term

Anyone about to enter into a negotiation of any kind should start by determining the type of negotiation it will be.

“The type of negotiation will have a huge impact on the way you approach it. A buy and sell negotiation with someone you will deal with once, will be a completely different situation than if you’re entering into something you believe will be a long-term partnership,” Daley explains.

“The longer-term negotiation processes in the business world can take months or even years. These usually involve higher stakes, and can involve a discussion back and forth for some time until everyone has an outcome they are happy with.”

Set Your Goals

Be sure to set the goals in your own mind, before the initial discussions with the other party, so you don’t feel disadvantaged from the outset, Daley says.

“Be prepared to do some personal preparation before the first discussion with the other part. Always be polite and create a dialogue that doesn’t position one party as the ultimate winner and the other one as the loser. Be firm, but not aggressive. Stay calm, because the moment you lose it, you’ve lost the battle.”

Knowing what the other person’s weaknesses are will really help. It’s easy to be steamrolled by the other party if there’s no connection or relationship in place, so take the time to get to know them, and how you can help them achieve what they’re aiming for.

“It will always be more difficult to negotiate if you don’t first ask a few questions of the other party first to determine whether you’re able to solve their problems during the negotiation process. Otherwise, you could find yourself at a disadvantage,” Daley adds.

Not All About Price

Meanwhile, licensed Buyers’ Agent Nicole Marsh reminds us that negotiation isn’t always just about price. Often, negotiating other terms for real estate buyers such as a longer settlement, being able to move in on an earlier date, or the vendor leaving behind the white goods is enough to get the deal over the line.

“Long term partnerships may require each party to make concessions to make it work and may involve more problem solving skills to get the deal across the line,” Marsh says.

On the other hand, when a negotiation does come down to price, it’s important to set a ‘walk away’ price so you don’t agree to a higher price than you can afford, she says.

“It’s never too late to look at how you approach your negotiations, and consider adding new skills to your repertoire,” Marsh says.

Top Tips for Negotiating

Marsh also shared her top tips for negotiating:

  • Be firm, but not aggressive.
  • Strive for solutions that work for both parties.
  • Stay calm. Stick to the issue, and don’t become hostile or frustrated.
  • Don’t take it personally.
  • Pick a mutually convenient time and place for the negotiation to take place.
  • Put details in writing.
  • Consider whether you need legal advice.

Negotiation is no game… but here’s how to win at it (anyway)

Welcome to the first blog in a monthly series from John Viner-Smith.

I have spent my career negotiating. I’m guessing that you have too. I’ve worked in procurement as a buyer, a manager and consultant for over ten years but it was only when I left procurement and worked as a consultant and trainer working with procurement and sales people and focused solely on negotiation that I really came to appreciate negotiation as the core commercial skill.

Children negotiating marbles
Negotiate hard (like these children – over marbles…)

People have some funny ideas about what negotiation is. Let’s start by talking about what it’s not;

1.    Negotiation is not the price discussion that happens at the end of a sourcing process.

  • The entire sourcing process is the negotiation. Every conceivable variable (what are we buying? To what spec? Under what terms? Delivered where? When? How? Etc.) is negotiable.
  • If you park all of those early and plan to negotiate the price at the end, you’re either going to sleepwalk into a very competitive haggle or (assuming you’re negotiating with someone who knows what they’re doing), maybe you’ll just get the deal they wanted to give you all along.

2.    Negotiation is not comfortable

  • Negotiation is a tool for resolving conflict. It is therefore rooted in conflict, which is inherently uncomfortable.
  • If you fail to acknowledge and embrace that discomfort, you may find it becomes a factor in the outcomes you achieve. Ever held back from pushing for a little more in a deal because you didn’t want to be that person? That was your discomfort. And your failure to manage it costs you. Macchiavelli said “Whosoever desires constant success must change his conduct with the times”. Become comfortable with assessing and doing what is necessary.
  • As buyers, we have developed techniques and technologies that serve to insulate us from the discomfort of direct, face-to-face confrontation. The assumption that this is a good thing is deeply flawed.

3.    Negotiation is not compromise

  • The task of every negotiator is to get the most they possibly can get from each negotiation for themselves and their employers.
  • Compromise is what happens in the absence of effective negotiation.
  • Your goal is not to give the counterparty anything. Gifts are a sign of generosity.
  • If you are perceived as being generous, your counterparties won’t reciprocate with gratitude. They will become greedy. They will want more from you the next time.
  • Instead of conditioning people to expect free gifts, condition them to expect positive outcomes only if they earn them.

4.    Negotiation is not about securing a win-win outcome

  • Negotiation is about you getting everything you can get, not to be fair to the other party.
  • Win-win is a myth. If you assume you negotiate with rational, competent people, you must further assume that they won’t do a deal that has zero or negative value to them.
  • Therefore, they won’t do deals where they “lose”.  If your counterparty criticizes you for acting in a “win-lose” fashion, they are trying to influence how you feel about the deal. They may be genuinely aggrieved, or they may want you to think they are (it’s a backhanded compliment, designed to make you feel good about your “prowess”). If you have genuinely taken everything they could give you well, they still did the deal. So they’re winning something.
  • Conversely when your counterparty exhorts you to do a deal because “It’s a win-win”, one thing is clear; they’re winning something and want to close the deal. You may be doing ok, but could you do better?

5. Money never gets left on the table

  • I have heard countless negotiators tell me about the times they left money on the table.
  • No money ever stays on the table. If you didn’t take it, the other person did.
  • If the value is there to be had, your job is to get it. In a simple, one dimensional negotiation (typically price), that means you take everything and leave them just enough to close the deal and leave the table. In a complex, multi-variable negotiation that means you identify every conceivable source of value to them and to you and ensure you trade them to create a deal that’s bigger than the sum of it’s parts.

6.    Negotiation is not a game and it is not optional.

  • I meet (and negotiate with) people who’ll say “I’m not going to play games with you, the price is X”
  • If you have all the power in the world, and the counterparty has zero option but to do the deal with you on those terms, they will do it. But they will devote time and energy to clawing back some satisfaction in the deal. If and when the balance of power swings their way, you will be punished.
  • What if you’re counterparty was willing to settle for a price of X – Y? You just overpaid by Y, at least. Chances are that the counterparty will get you to move on your price, so you’ll pay more than X.
  • Negotiation is a necessary and important ritual to help you gauge and attain the best possible outcome every time.
  • Fail to negotiate and you just fail. If you closed a deal without negotiation you either created a risk for yourself down the line, or you got exactly the deal they wanted to give you.

I consult for and train procurement teams and sales forces. Effective negotiation training is not cheap, but it is also essential and an investment in people that delivers great returns in short order.