As we come into the holiday month, when we have a little more time on our hands for reflection, reading, and thinking about all the soft skills we never have time to address, what we don’t want to be doing is searching around for help, ideas, or tips. So, we’ve done it for you … we’ve trawled our best practice posts from our resident experts over the past year to pick out what we think will be most valuable to you.
Continuing our series of best practice advice for your Summer holiday reading, today we look at how to negotiate with the “un-negotiatable.” You might be in a battle of wills; you’ve tried all the tactics. You’ve tried the ‘bargaining’ – tactics if you are vying for a larger share of the fixed ‘cake’. You may try the ‘principled negotiation’ (more common in the public sector for win-win situations), and still the supplier says “No”!
Perhaps you are looking for a small change in the contract or in the service that is being delivered. You think the price the supplier has proposed is too expensive, they insist it is fair. Maybe it’s something really important, that has to be resolved quickly. That might be produce that will rot (in the retail world) or a decision that the politicians want to announce this week (in the public sector). But your supplier sitting opposite you isn’t budging.
What to do? You guessed — know your BATNA! Make sure you have your “best alternative to a negotiated agreement” clearly defined, just in case you simply cannot achieve your desired objectives. Basically, it’s what to do next … your fallback. But note: it is almost certainly never “give us what we want or we will terminate the agreement.” Empty threats don’t work for anyone, and in the public sector, where contracts and process are more formalised than in the private sector, it may be almost impossible to do anyway.
Here are a few other tips to consider:
- Use objective criteria — it supports a rational negotiation. Rather than squaring up to the ‘opponent,’ look for objective evidence to back up the statements you make during negotiation. This is very applicable to many public sector negotiations during the contract management phase for example. You might be talking about poor service levels, but simply stating they are not good enough does not help the negotiation move forward. You need to produce objective evidence – real measures of performance – that will put you in a stronger position and help the negotiation based on fact. (Contract management software is a great repository for documentary evidence and audit trail). If it’s about pricing levels while tied into a contract, be able to show the current market prices.
- Focus on interests — not positions. A position is: “I must achieve a 5% saving”. An interest is: “we need to achieve more outcomes for the money available.” Either way, you need to make the public agreement work, and focus is the key. You can be sure that if you start with a ‘position,’ the other party will take one too — their own. Then you get into bargaining rather than negotiating. Focusing on interests, allows more scope to explore options that might lead to a solution for both parties.
- Develop options for mutual gain. The more options you can give, the more likely it is that one will provide mutual benefit. If what you want is to reduce pricing, but the supplier has a profit expectation, there may be smart ways of satisfying both parties. The supplier may well value a good reference or testimonial very highly. A contracting authority that is prepared to provide such a reference (which costs nothing at all in monetary terms) has a negotiating “chip” that is of value, for example. Failing that, by open discussion you may find that there are just parts of a contract that the supplier finds expensive to provide: identify them and see if you can’t reshape the spec or package to accommodate. That’s what real negotiation is about.
“It’s important to remember this is not a personal battle. It’s two parties trying to find an acceptable business solution. It’s not personal, so don’t respond with personal attacks,” so sayeth our resident expert Peter Smith. See more here for your “fun” summer holiday reading:
And in the words of our good friend, Sigi Osagie, procurement guru and author of ‘Procurement Mojo – Strengthening the Function and Raising Its Profile,’ —
“The very nature of the purchasing job, sitting between people in the organisation and people in supply markets, makes the requirement for savoir faire with ‘people’ and ‘relationships’ crucial to our success.”