How To Profit From Negotiation – Part I Of II

INTRODUCTION

Organisations are constantly seeking ways to increase revenues and margins whilst reducing costs. A question that is often raised is how the development of human resource skills can best be aligned to achieving these objectives.

All organisations’ efforts toward realising key objectives are characterised by communications with colleagues, suppliers, customers, shareholders and other stakeholders. The fact remains: individuals can no longer decide whether they would like to negotiate, they can decide only how well they would like to negotiate.

One of the most accessible and powerful mechanisms available to accelerate the achievement of your organisational growth objectives is optimising your organisation’s negotiation efforts.

WITH THE ACHIEVEMENT OF EVER-INCREASING TARGETS ON THE AGENDA, WHAT’S THE BEST WAY TO PROCEED?

The challenge is how to achieve profitable revenue growth whilst keeping a tight reign on expenses through quick improvements in operations.

Many organisations have come to the realisation that traditional growth tactics supported by initiatives such as pure play sales, marketing and purchasing training have run out of steam. This is due in large part to the era of ‘best practice standardisation’. Just as manufacturing organisations have embraced the implementation of proven best practices, so organisations across the spectrum have implemented best practices in the sales environment (typically through the formulation of a sales strategy and the implementation of a formal sales methodology) and the purchasing environment (typically through supply chain optimisation, strategic sourcing and supplier management initiatives). This has had the effect of leveling the playing field with most organisations deploying sales and purchasing strategies and processes that are similar in nature and design.

To achieve superior revenue & margin growth in a ‘standardised’ market environment requires a fresh approach. Deployed effectively, Negotiation Training will act as a catalyst to facilitate the continuance and entrenchment of competitive advantage.

Before exploring the best ways to deploy negotiation training to optimise returns, it is useful to consider why negotiators typically fail to achieve optimal returns from their negotiation efforts.

BUSINESS NEGOTIATIONS

At the highest level of abstraction, negotiators fail because they don’t negotiate in a ‘whole brain’ way. Research has proven that our actions and communications are most effective when they occur in a holistic, whole brain format. In the context of business negotiations, this means that negotiators must guide their actions and communications effectively by focusing on four core areas of negotiation:

Value

Business negotiators must ensure that they have an acute understanding of the facts that underpin any negotiation. Failure to gather & understand the relevant facts that support optimal deal making results in failed negotiations or negotiations where value is left on the table.

Process

Any negotiation without a robustly defined negotiation process and management infrastructure runs the risk of resulting in a sub-optimal outcome. A framework within which to operate is required to provide an environment within which risks can be pro-actively managed. A robust negotiation process ensures positive momentum and provides a referential framework that mitigates unforeseen complications & risks.

Relationship

Agreements can only be concluded between people or organisations represented by people. It goes without saying that the way we interact with other people is a critical determinant of negotiation success. The importance of relationships within a negotiation context is amplified when we find ourselves in an environment where ongoing partnerships and longstanding relationships results from our business interactions.

Vision

To achieve a collaborative deal frame, it is necessary that parties to an agreement have a shared vision of the losses and benefits associated with any agreement. It is only by having an understanding of all parties to an agreements respective vision that we can understand their driving motivators or interests. A key part of negotiation competency involves the ability to generate options that will serve the needs & interests of all parties.

World class negotiators develop their skills & competencies in each of the 4 main areas, thereby empowering themselves to deal competently in areas that would fall outside of their natural areas of ‘preference’.

NEGOTIATION SKILLS TRAINING

Effective negotiation skills training can be implemented in two ways:

  • Generic leading practice based (off the shelf)
  • In house training format
  • Public access open course training format
  • Verticalised & customised (suited to industry & organisational specific challenges, needs & strengths)
  • In house training format

The most effective negotiation skills training interventions will be preceded by the definition and/or design of a negotiation strategy and supporting process. This will ensure the establishment of a negotiation capability at an organisational level, equipping the organisation with a key competency in negotiation, which will result in competitive differentiation.

To ensure optimal positive impact, any negotiation training programme should cover the following key areas:

  • Individual negotiation preference & competency profiling.
  • Individuals must get an understanding of their preferences, negotiation style and negotiation competencies in the context of business negotiations.
  • A proven understanding of strategic sourcing and the approaches taken by buyers to negotiate purchases.
  • Sales negotiation training programmes should be built upon a strong foundation of understanding the procurement and purchasing functions within organisations. This is a critical element which will ensure that delegates are equipped with the skills to apply ‘mission specific’ negotiation strategies & tactics.
  • Provide delegates with a practical, simulation based environment within which to learn & deploy negotiation skills.
  • Research has proven that learning is accelerated by a practical learning environment.
  • Make provision for delegates to demonstrate their understanding and acquisition of new negotiation skills by means of a post course assessment.

Too many training courses don’t achieve their objectives because they don’t provide a post course assessment environment that encourages delegates to internalise the skills acquired.

Provide delegates with an individual Personal Development Plan based on their demonstrated preferences & competencies. It is hardly likely that one or even two negotiation training interventions will provide sufficient time for each delegate to fully develop their negotiation skills. It is therefore of critical importance to provide each delegate with a personal development plan that will assist them in the continued development of their negotiation skills.

To read about developing a personal negotiation development plan find my article entilted “Key Steps To Becoming an Advanced Negotiator” on this website or EMAIL ME FOR FREE