Negotiation has been defined as “the art of letting the other person have it your way!” can you get the deal you want whilst making your opponent feel the same?
For short-term victories will not create lasting business relationships. Both sides must leave the negotiation table believing that they have gained. Therefore, no skill is more central to your professional career than the skill of negotiation, and as negotiations, expert Chester L. Karrass famously put it, “In business, as in life, you do not get what you deserve, you get what you negotiate”.
Negotiation in the procurement and supply context is defined as: “a process of planning, reviewing and analysing used by a buyer and a seller to reach acceptable agreements or compromises, which include all aspects of the business transaction, not just price”.
As a procurement professional, you would probably associate negotiation with commercial negotiations of price and other contract terms (payment, delivery, quality, and so on). However, negotiation is a fact of life, everyone negotiates something every day. Negotiation is a basic means of getting what you want from others, it is back-and-forth communication designed to reach an agreement when you and the other party has some interests that are shared and others that are opposed.
In this broader sense, negotiation is important not just in the development of commercial agreements with external suppliers, but in the management of activities and relationships within workforces and teams, and in the management of issues and interests with organisational or project stakeholders.
Negotiation is partly an internal process (e.g. when buyers negotiate with user departments over the details of a requisition) and is partly external (e.g. negotiations between buyers and external suppliers).
In this article, I am exploring the significant principles should be borne in mind, in order to facilitate commercial negotiations process:
1. Prepare carefully:
- Engage the right people within your organisation, define your objectives clearly, and review any history of dealings with your counterparty.
- Learn all you can about your negotiation partners and the reality of the commercial context in which they operate. Imagine their likely interests, priorities, limitations, and scope of authority.
- Be ready to explore with your counterparty the various legal rules available to govern your deal.
2. Take cultural differences into account:
- Educate yourself on the local business practices of your negotiation partner.
- Be sensitive to your own culturally-rooted habits and assumptions about how to conduct business.
- Develop a practice that encourages you to continue to question your assumptions and probe for assumptions your negotiation partner may be making about you.
- Keep in mind the value of being able to deal well with difference.
3. Make early agreements with a negotiating partner about a process to guide the logistics of the negotiation, which paves the way for making agreements about more substantive topics:
- Decide early with your negotiating partner on procedural questions such as timelines, venues, agendas for meetings, the language of proceedings, attendees at meetings, and drafting responsibilities.
4. Allocate appropriate human and technical resources to a negotiation:
- Anticipate the people you will need to have in the room or on standby to support negotiations, such as people with decision-making authority on issues at hand, specialised technical experts, translators, legal drafters, tax advisors, and local counsel.
- Aim to maintain consistency on the negotiation team - avoid presenting a revolving cast of characters.
5. Aim to develop an open and reliable working relationship with a negotiation partner:
- Deals are often on-going commitments that evolve over time as circumstances change. A good working relationship between the parties will make it easier to address both sides’ future needs efficiently and effectively.
- Acting with transparency and the genuine desire to understand and find solutions can help focus discussions on substance.
- Negotiation partners do not need to be friends to create a productive working environment.
6. Behave with integrity:
- You do not need to reveal everything, but everything you say should be true.
- Lying or misleading imperils the deal, the working relationship at hand and your reputation in the trading community, and may ultimately lead to legal sanctions.
- Your willingness to bring your values and integrity to the table is a signal to your negotiating partner of how seriously you are approaching the negotiation.
7. Manage your emotions:
- Act rather than react – modelling that you are acting independently of a counterparty’s provocation is powerful.
- A counterparty that views you as reasonable may ask for help, allowing you to collaborate on a solution, rather than hiding information out of pride or fear, which may lead to an unrealizable agreement or no agreement at all.
8. Be flexible:
- Be open to thinking creatively with your negotiating partner about how your interests may complement each other and be satisfied without diminishing value for either party.
- Only a mutually beneficial deal will be sustainable over time — if one party receives a disproportionate benefit, the other party may be unable to implement the agreement.
- Understanding the difficulties your negotiating partner may be facing is an important element in building a realistic, durable deal.
9. Make realistic commitments:
- Agree to only those things you genuinely intend to undertake, as you would expect your negotiating partner to do.
- Clarify your negotiating partner’s scope of authority - people may overstate their authority and make commitments they cannot make or keep.
- Know your alternatives, and know when to leave the table because you can find a more suitable deal elsewhere.
10. Confirm the agreement to ensure a common understanding:
- Review carefully what was agreed with your negotiating partner at the end of a negotiating session, resolving any details on which your views diverge.
11. Be ready for the case where negotiations do not succeed:
- Negotiations may not reach a conclusion for a variety of reasons, either within or beyond the control of the parties.
- Anticipate such situations, prepare and be ready to discuss alternative options with your negotiating partner.
Finally, we should consider negotiation as a cause of relationship damage. Equally, it may be an approach to repairing damaged relationships.
Author: Eman Abouzeid
