May/June 2009, eSide Supply Management Vol. 2, No. 3
How to Map Your Objectives and Blend Them With "The Human Factor"
With rare exception, natural-born talent has very little to do with successful negotiation. Top salespeople, winning negotiators and dominant diplomats are trained — and train themselves — to succeed.
They see negotiation as a process that can be analyzed, practiced, rehearsed and refined. They prepare beforehand and debrief themselves afterward. They note what tactics and approaches work in particular circumstances and with whom.
Knowing that, what defines a successful negotiation? In some ways, it is easier to start by defining what it is not: warfare. Negotiation is not about forcing the other party into submission; rather, it assumes that both sides have valid starting points and something to offer the other party. It also assumes there is at least the possibility of each side coming away from the table with a deal.
Nor is negotiation a game or duel. As a professional negotiator, you must keep absolute focus on the real objective: a conclusion that meets your business needs. Tactics and ploys have their place, but only as a means to an end.
A negotiation is successful when you achieve your objectives while ensuring the other party delivers against your expectations. As such, it must start with the setting of objectives.
Even in the most straightforward purchasing negotiation, there will be several — and perhaps many — objectives of varying importance and relation to each other. Often, you can categorize them into "need," "want" and "like."
In practice, setting objectives is more complex. In this example, let's look at price, which has already been identified as a "need" in this negotiation:
As this scenario illustrates, you should always have a range of acceptable outcomes for each variable in any negotiation situation. In this case, for instance, if the supplier will not budge on price (a "need"), that is your cue to walk away.
The objectives you set must account for the relative influence and importance of each side to the other, as well as what is possible, both technically and commercially. As such, you must understand the significance of your organization to your supplier, and its significance to you. Supply positioning and supplier matrixes — standard four-box models illustrated below — are essential tools for achieving this understanding. They have critical influence, not just on the objectives set, but on the planning and conduct of the negotiation as a whole.
As illustrated above, the supply positioning matrix relates business risk and value of spend for a particular commodity, or for all the supplies from a particular supplier. It also suggests a range of behaviors, from low-spend, low-risk situations wherein purchasing can, to a significant extent, be "automated" and there is limited use for negotiation; to situations in which the priority is to secure supplies, maximize profit or manage the business relationship — perhaps as a longer-term partnership — each requiring a different approach to negotiation.
But something is missing from the discussion so far: If negotiation was really defined by this mechanistic world of four-box matrixes, surely we could just drop in the numbers and let logic take over, right? Wrong.
Negotiation is a human activity conducted between individuals, or small teams of individuals. It is overwhelmingly influenced by human factors: likes and dislikes, fears and threats, voice tone and body language, comfort or discomfort, and so on.
The truly effective negotiator earns the title because he or she blends technical know-how with the ability to recognize and work with human behavior — their own and their counterpart's.
In short, effective negotiators are made, not born.
Simon Brown is the executive vice president of PMMS Consulting Group in Toronto. To contact the author, please send an e-mail to firstname.lastname@example.org.
For more articles and resources on negotiation strategies, visit the ISM articles database.
Take me to the eSide home page.