Tag Archives: negotiation

5 Things Business Can Teach Politicians About Negotiation

I try to avoid politics in my blog, but after listening to politicians’ recounts of the negotiations now being held in Washington, I’m compelled share these suggestions from my years of experience negotiating and teaching negotiation skills.

  1. Tactical or Strategic – Is the negotiation tactical with no real impact or is it strategic? If tactical, it tends to be focused on the short term and has no real impact on the organization. If strategic. It’s best to develop guiding principles. People who dig into their positions tend to dig in so deep that the result is deadlock. People who explore the interests behind positions and work to establish guiding principles can find options and solutions.
  2. BATNA –Even someone with basic skills is taught to never enter a negotiation without a BATNA (best alternative to no/negotiated agreement). Failure to do so leads to deadlock, poor relationships and the inability to move forward.
  3. ZOPA -Every entry level negotiator is taught to analyze the situation, develop many options and calculate a ZOPA (zone of possible agreement) to be the focus on where positions can intersect.
  4. Competence and Capability – The parties need to be competent and capable to represent the interest of their stakeholders, while developing a solution that satisfies both parties and improves the overall organization.
  5. Ego – Make the negotiation about issues and solutions. Keep your ego in check and work in problem solving mode.

Unfortunately, if the negotiation involves two parties with big egos without the objective to solve, the negotiators can appear like children who take their toys home when they don’t get their way. In this case it’s best to start over with new teams who don’t carry baggage to the event. In business you change out the teams; it is possible for politicians to put a team together to work to an acceptable solution.

Can politicians step back and learn from business?

Advertisements

5 Ways to Deal with Emotion in Negotiation

emotion

Many times we enter negotiation with detailed plans, strategies, positions and a BATNA, but, sometimes, we forget that people on the other side have goals, objectives, needs, wants and strategies, too. When both sides are passionate about meeting their objectives, emotions, planned and unplanned, become part of the interaction. When dealing with emotion in negotiation, the one thing that that works for me is to be tough on the problem and soft on the people.

I have participated and observed several thousand negotiators across the globe and have found there are four skills separating the effective negotiators from poor negotiators:

  • Listening. Effective negotiators do more listening than talking.
  • Questioning. Question effectively and use questions to your advantage.
  • Communicating. Be clear, unambiguous and to the point.
  • Relationship. Separate the problem from the people

Effective negotiators learn how to recognize and deal with emotional people, challenging tactics and maintaining focus on the key issues.

Dealing with emotional opponents can be challenging, but here are 5 tips for managing emotional players in negotiations.

  1. Anger – find out why they are angry
  2. Insulted – address the feeling and move on to key issues
  3. Guilt – move away from the guilt and focus on the key issues
  4. Exasperation – empathize and understand
  5. False flattery – refocus the discussion

It’s important that you do not make substantive concessions in hope of deescalating the tension or sustaining the relationship. Always focus your points on the fact that you want an agreement that is fair to all parties. Avoid assigning blame or pointing out deficiencies and help them save face, it’s essential that you build and sustain trust by always separating people from the problem.

How do you diffuse emotion in negotiation?

Sole Source Suppliers? Your Future Depends on Supplier Relationship Management

SRM maize blue

You’ve tied the knot; is it effective?

Today, procurement and supply chain managers focus more time and energy on managing sole source suppliers than I’ve ever seen in my 30+ years in the profession. Typically these suppliers provide a technological edge, are locked in by regulatory requirements or are the sole survivor of a massive industry consolidation. Many supply chain practitioners aren’t effectively managing these supplier relationships that are so critical to their business’ success. As a result of the mismanagement, the supplier exercises a strong influence on the business as a whole, has a tremendous amount of power in the business, maximizes revenue and profit and takes advantage of the fragmentation of procurement and supply chain managers across a global business. The key to survival is effective supplier relationship management; as Joe Payne, in his MyPurchasingCenter.com post last month says “the future of procurement is SRM.”

Many clients have asked me to develop development programs for their teams to better manage sole sources of supply. During my 23 year consulting career, I have recorded a commonality among the companies managing sole sources of supply, which I’ve listed below.

Characteristics of Ineffective Sole Source Supplier Management

  1. No formal rigid performance metrics to drive continuous improvement that have been agreed by the business
  2. Fear of upsetting the supplier
  3. Fragmented management among the technical, executive, marketing, operations and supply teams with limited leadership
  4. No defined process, defined leader or coordinated cross-functional approach
  5. Supplier holds the power in the business relationship and defines the value delivered to the customer
  6. Rarely budget or dedicate teams to focus on generating cost and value opportunities with the sole source suppliers
  7. Typically the relationship with the sole source has tension and is somewhat adversarial
  8. Create a vacuum of leadership, causing the relationship to be technically driven verses commercially driven
  9. Focus on price rather than value extraction
  10. Develop tactical contracts with remedies for failure, rather than a principle-based agreement focusing on the relationship and formulas for success

While there is a great deal of challenge managing sole source suppliers, companies can go a long way to extend value delivery through strategic rather than tactical relationship management. It would take a tremendous cost and effort to strategically manage all suppliers; the more strategic a supplier is, the more of a company’s resource it will consume. Therefore, it’s critical that a company focus its efforts on the highly strategic suppliers.

To become effective with strategic supplier relationship management:

  • Renegotiate using the principles that will drive the relationship in the future. (My wife, @SourcingChick, uses this tip: contracts tend to contain penalties for non-compliance, while principles provide the framework for success. Maybe that’s why we’re still married after working together for so many years.) Some examples are:
    • Speed to market
    • Exclusivity
    • Innovation
    • Speed of response
    • Joint customer and supply chain integration
    • Principles around cost transparency, margins, and investments
  • Nominate a relationship leader and build a cross functional team that accommodates the technical, commercial and supply chain integration processes.
  • Create joint value targets and incentives for both sides.
  • Develop closer business integration.

With the amount of acquisitions and mergers, companies exiting from products and markets and the continuation of true globalization, supplier relationships will require close management and integration. Training and development programs have moved from functional training to cross-business training. I am hoping by sharing my thoughts on sole source management that companies will start to get a vision for the future and think about how to prepare their teams.

The Future is Now

Getting to NO! – 10 Tips to Improve Tactical Negotiation

getting to no

I have always thought that “Getting to Yes” by Roger Fisher and William L. Ury was one of the best negotiation books ever written. For my business clients (and in my personal life) I add “getting to no” as a technique for tactical negotiation.

One of the most interesting things about Americans is in many cases they’re reluctant to ask for what they want. Whether it’s fear of the other party saying no, worry that they’ll be seem unreasonable or fear of embarrassment, it’s enough to minimize their expectations and sub-optimize any opportunity they may have for improving the deal. Not only should supply managers ask questions, they should set and maintain high aspirations.

A few months ago, I worked in a small food manufacturing company on a project to significantly reduce cost and increase value. A cross-functional team quickly learned that by preparing, understanding the markets, their suppliers and asking enough questions, they were able to build the arguments to support cost and value improvements. By planning to ask questions until they “got to no”, they were able to determine the best opportunities without disturbing the supplier relationship. The result of planned “getting to no” was reduced product cost by 7% with a minimum of resistance in just three months. The savings dropped to the bottom line, which greatly enhanced the company’s profitability. They were amazed by what “just asking” for additional value until there was no more to be gained delivered to their business. All of the parties left the negotiations feeling satisfied with the deal.

Ten Key Tips for Tactical Negotiations

  1. Open the negotiation with high aspirations and maintain your demands throughout the negotiation.
  2. Remember that both parties are at the negotiation table to make a deal.
  3. Always enter a negotiation with research, a plan and a controlled argument from the first contact.
  4. Create multiple options to present to stop the negotiation from getting bogged down.
  5. Use your ability to influence and persuade and switch up methods of persuasion.
  6. Months before the negotiation, manage the other party’s expectations through a series of expectation management messages and events.
  7. Stick to your demands and give few, small concessions.
    Always calculate the cost or value of each concession and build a concession-trading list (if you do this, then I’ll …).
  8. Keep the negotiation focused on key issues, putting minor issues on the back burner.
  9. Don’t just hear or anticipate what you will say next, actively listen and use questions to probe and gather data.
  10. Never respond to pressure and keep pressing for all the cost and value opportunities you can get.

By using these tips, you can dramatically improve your tactical negotiations. While you will still be getting to yes, you will also leave confident that you did not leave anything on the table. Remember, these techniques are for TACTICAL negotiations which occur when you have many suppliers to choose from, there’s a competitive market and a lot of money and value are at stake. For strategic negotiations, you’ll require a more principled approach, which is a topic for another time.

Good luck and don’t forget there is no opportunity for success if you haven’t made the appropriate preparation and plan. If you are working with a team, brief the team, establish roles and practice. While many of us manage very busy schedules, prep in this area has a high return on investment.

Are you afraid of “getting to no?”

Hostage Negotiation –What can supply management learn from the FBI?

hostage

I read an interesting article from one of SourcingChick’s favorite blogs (Eric Barker’s Barking up the Wrong Tree) on how hostage negotiation gets people to change their minds. The more I thought about it, the more it applied to what sourcing people do every day. The article points out six key elements to success.

Ask open-ended questions

This is something that I have done and witnessed for years. Anyone who has participated in the negotiation classes I have taught knows it’s a key technique I encourage everyone to get better at. In reality, we usually don’t want the other party to answer a question with a yes or no. In negotiation the skilled negotiator is effective at open-ended questions striving for understanding the key issues and interests of the other party. By understanding the issues and interests, you can structure a deal that marries the interests of both parties. Think of the Colombo character in the old TV series, “Just one more question.”

Silence and Effective Pauses

Rarely does anyone like silence and pauses, but for the skilled negotiator these are some of the best tools in our toolbox. These techniques encourage the other party to continue dialogue. A pause can be used when emphasizing a point. In the hostage article, silence and pauses are used to diffuse when the other party is highly emotional. This works because it is difficult to sustain a one-sided argument.

Minimal Encouragers

These are brief statements to acknowledge to someone that you are listening and paying attention. It is words like yes, OK and I see. Active listening in negotiation is the core skill of any negotiator whether the negotiation is tactical or strategic. It is not just hearing or thinking of your next statement. It is hearing, listening and giving feedback.

Mirroring

This technique is one that again shows your empathy and listening skills by repeating some of the dialogue that you have just heard.

Paraphrasing

This technique is where we demonstrate that we heard and understand what our negotiation partner said. This is best done by repeating what the person said in your own words. I think it is a great way to insure that you are onboard with what has been said and clarify any misunderstandings or miscommunications.

Emotional Labeling

The FBI suggests that you give their feelings a name. This shows you identify with how the other party feels. Statements like “you seem pretty hurt about being left behind” or “it just doesn’t seem fair” are examples of emotional labeling.

Overall these are clearly skills that will aid in any negotiation. The core skills from the FBI are active listening, empathy, building a rapport, using influence skills, and creating behavioral change. I think this is a good process for procurement managers who are involved in a tough negotiation. While I have taught these skills, it always good to keep them up-front in your challenging negotiation.

We can learn a lot from behavioral negotiation!