For more than 30 years, DPSS has mentored and supported senior negotiators. Throughout that time, our understanding of the factors that underpin success continues to grow. Our consulting seeks to understand the needs, wants and motives of the other side. We advise on when to persuade and when to influence, and we encourage the benefits of having a mentor (coach) when negotiating the tougher challenges.
World Commerce & Contracting (WorldCC) states that “The purpose of a negotiated contract is to enable the creation and delivery of value for both sides, we must keep this objective at the front of our minds - throughout the planning, preparation and the negotiation itself.”1
Our approach to coaching subscribes to that ethos -- from preparation to signoff. Research by the Centre for Negotiation at the Copenhagen Business School2 states that 19% of the negotiation value goes to the purchaser and 39% to the seller, and an astounding 43% is left on the table! 3This figure (if nothing else) makes the case for coaching and practical support for those who are involved in complex negotiations and yet lack the skills or an understanding of the process. These negotiations can originate from almost anywhere – from both the buy and sell side negotiations over disputes, or claims and variations, or local and global entities.
In my book Practical Contract and Commercial Negotiations published by Cambridge Media,4 I define negotiation as “A process whereby two or more commercial parties attempt to persuade each other to accept the merits of their relative bargaining positions and to influence each other to reconcile their often-competing needs.” This proves that commercial negotiations are basically a balance between value gained and relationships maintained.
Many CEOs are reluctant to admit the need for support regarding conducting negotiations. That’s why we at DPSS are taking steps to restore their confidences when they seek our advice.
Our practical advice to senior negotiators is to first gain an insight into their organization’s culture, mission, and vision by evaluating the context of all three regarding value and risk potentially affecting future negotiations. These insights must align with the negotiation strategy.
We then advise robust planning and preparation, because stakeholder engagement and endorsement of the outcomes and strategy are also very important. This planning can include determining required outcomes.
Another critical step is about time. We need to carefully conduct a market analysis (or a supplier or client analysis) to determine which leverage steps can be too time consuming. Too often, business executives skip this step, but it too often causes them to compromise their bargaining positions in key future negotiations.
Don’t forget research. We advise our clients that they must do the research surrounding stakeholder engagements. Sometimes we have performed this task for them and presented our clients with fully referenced reports. We then identify all the red lines and concessions they need to evaluate before any negotiation event begins.
Before negotiation starts. We advise our clients to develop pre-negotiation conditioning messages and send them to all parties involved before the negotiations begin. Statements -- such as “We look forward to welcoming you to the forthcoming negotiations which we are confident will result in a mutually beneficial outcome” -- helps to set tone in advance of the first encounter.
Next analyze the personality and emotional stability of both the negotiator and the people likely to be encountered across the table. Results of this analysis will influence the negotiation strategy and tactics.
If you encounter a negotiator’s ranting or angry retorts, of course, you would not respond in kind. We do offer various negotiator profiles suited to different scenarios, and we would advise on which may or may not be the best fit with the senior negotiator regardless of the attitude you may expect to encounter.
Our experience shows that most extroverted and stable personalities tend to be the best negotiators. They are usually assertive, focused and calm under pressure. By contrast, introverted and unstable personalities tend to become uncomfortable in stressful situations.
On occasions, we have advised prospective negotiators that their profile is better suited to take back-office roles and that the actual negotiations should be assigned to those who demonstrate more extroverted personalities.
Before the negotiation event starts why not role play the negotiation? When doing this, we sometimes act as the team across the table. We arrange the negotiation environment, lighting, room layout and seating plan. This ambiance can help improve the various strategies. You can then test the planned tactics, fix errors or anything questionable and refine the final plan of action.
Common errors committed in strategic and complex negotiations include:
- Lack of clear aims, objectives and outcomes desired from the negotiations.
- Failure to define the “sweet spot” between least and most desirable outcomes for both sides, thus wasting time, because both sides are far apart and will be forced to move cautiously toward the middle ground.
- Lack of flexibility: laying down red lines and non-negotiable issues too early in the process, thus reducing flexibility and options for both sides.
- Lack of key stakeholder buy in and, as a result, having to reconcile the vested interests before starting the negotiation. This can lead to rejected outcomes.
- Self-imposed, unrealistic timelines that involve both sides but can lead to hastily made decisions.
- Failure to fully appreciate the motives and drivers of the other side. This limits the effectiveness of concessions made or sought.
- Failure to take control: allowing the other side to take control of the negotiations by setting the agenda and the schedule of events and venues.
- Lack of focus: trying to score points rather than gaining the real value. The 43% mentioned above is a classic example.
Next steps. During the time out sessions -- often a feature of high level and strategic negotiations -- we will sometimes assist in analyzing negotiations to date, and we will advise on next steps to support or suggest counter offers or changes in tactics.
Once the negotiations are completed, we would then undertake a full debrief to fully analyze the results and the lessons learned to use in future negotiations. If any reader is interested in learning more about this service, I can be contacted via WorldCC.
ABOUT THE AUTHOR
Second degree connection and second creator of 10C Model, Author of several titles related to procurement and contracting, including Practical Contract Management, Practical Procurement, Stores Management and Contracting Business Models, Dr. Carter has over 30 years’ experience in training and consultancy (both UK and Worldwide) specializing in Contract & Commercial Management, Procurement, Supply Chain & other related subjects. His company, DPSS Consultants, is accredited by CIPS, World Commerce & Contracting (formerly IACCM), APMG & ISO. Currently, he is working on the new Master Classes regarding his 10C Model and Contract & Commercial Management. During his working career has been fortunate to work with many companies and cultures which has helped him develop successful training courses. See also video about the author.
Developing People Serving the Supply Chain (DPSS) is an international training and development consultancy made up of 25 plus
specialist consultants recognized for their expertise in contract management, procurement, sales and commercial management and supply chain management training and consulting. DPSS has over 30 years’ experience in providing generic and bespoke, tailored, and customized solutions. Their courses are certified by internationally recognized awarding bodies, including CIPS, WorldCC, BTEC and the British CPD Standards Office. Consultants are well known as international Centre of Excellence World class presenters and published experts with many years of practical experience achieving outstanding results.
- World Commerce & Contracting practitioner course materials
- Copenhagen Business School
- Keld Jensen, Chairman of the Centre for Negotiation at
- Practical Contract and Commercial Negotiations