Have you ever sat in a sourcing negotiation where one of your own made a gaffe by blurting out an unplanned question or statement? It happens more often than you think and can cause the group to suddenly lose ground when it was going oh, so well, says Elaine Porteous, SmartProcurement contributing editor.
In a recent study, reported in Harvard Business Review (HBS), 45 negotiating teams in the US were studied and one of the big lessons learned was that some of the biggest challenges come from one’s own side of the table! Some major obstacles to the success of a negotiating team were identified and the researchers give some practical advice on how to address them.
Have a defined strategy and an agreed proposed outcome
It sounds obvious that the interests of all the team members should be aligned, but often they are not so this aspect needs preparation. Finance want to get the best price, lawyers want to make the contract watertight, Procurement wants to secure cost savings, and others may want to close the deal quickly and go home. When assembling the negotiating team the authors suggest that there are four areas that need attention before meeting with the supplier team:
• Make sure everyone has access to the same data.
• For each person, know their priorities, preferences and loyalties.
• Work with each person on the team and their constituencies to agree to a strategy in the best interests of the organisation.
• Manage conflicts of interest and mediate them early in the process.
Implement the strategy: preparing for the bargaining table
Undisciplined behaviour and emotional outbursts can undermine even the best thought-out strategy. Reiterate and clarify the strategy and allocate roles prior to the first meeting with suppliers.
• Simulate the negotiation with rehearsals including role plays to eliminate surprises.
• Allocate individual roles to play according to the strengths of the team members.
• Have a lead negotiator and also use a strategist that stays quiet and keeps the team on track.
• Be clear on the communication plan for using breaks and time-outs and how to use non-verbal clues in the sessions.
• Allocate the scribe role to an attention-to-detail person.
The researchers concluded that negotiating as a team is more successful that using a sole negotiator despite the inter-personal challenges. Preparation is vital, conclude your own internal team negotiations before you engage with the suppliers.
The six mistakes
Sometimes a negotiator is his or her own worst enemy. Here are six common blunders, according to HBS professor James K. Sebenius:
1. Neglecting the other side’s problem.
2. Letting price bulldoze other interests.
3. Letting positions drive out interests.
4. Searching too hard for common ground.
5. Neglecting BATNAs (best alternative to negotiated agreement).
6. Failing to correct for skewed vision.
An aspect often overlooked is the disbanding process and the necessity for a debriefing. It’s important to schedule a “lessons learned” session and it is a good idea to make this outcome available to other teams in the company.
For more information on negotiation practices contact Elaine Porteous at editing@smartprocurement.net
