The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters.
Experienced negotiators guide the negotiation to focus on aspects of the transaction which are most important to them. Astute negotiators also understand that in some cases, there isn't any one element that is more important than the agreement as a whole. This gestalt negotiating strategy increases flexibility and decreases the adversarial role of the negotiators.
In planning for a negotiation, we learn that there are many elements of the agreement to consider. Price is not the only element of an agreement that should be negotiated. At times there are many dozens of elements that should be considered and negotiated. However, once the talking starts it's easy to get locked into just one or two details and loose sight of the bigger picture. Details such as the negotiator's attitude, high price, slow delivery or poor quality can trigger an emotional response and cloud our judgement.
We all understand that the long term cost of ownership, delivery, service and support are critical issues, and should be considered in a major purchase. But have you ever walked away from a deal based on the salesman being condescending, or because the price isn't what you expected; and later wished that you had struck with it instead of having to start over? In this situation, if the detail is wrong, it's easy to forget the rest of the elements, stop the discussion too quickly and end up with no agreement at all.
Consider also the effect of a detailed-focused negotiation on the participants. If I tell the negotiator that the price is too high, it generates a defensive response pertaining only to the price. This can happen with any specific element of the negotiation. The more times I tell the negotiator, "the price is wrong, the delivery is wrong, the quality is wrong, etc." the more the negotiator will become defensive. We can both become frustrated and never get past this roadblock.
However, if we avoid getting lost in the details, then the negotiator doesn't have to immediately respond to a specific issue and can be flexible in offering alternative concessions in other elements of the agreement. Sure pricing may be the immediate issue (and it may be too high) but the negotiator in this case now has the flexibility to be creative about solving the "whole deal" problem. They can bring in other issues to offset the price problem, long term cost of ownership, financing, rebates for future order, discounts for service, etc.. By extending the discussion we give the negotiator some flexibility and we give ourselves a chance to re-think our position and realize the total cost of ownership is more important that just price.
By characterizing the negotiation in this form "I will issue the purchase order when the whole deal is the best" we avoid making the negotiator defensive about any one particular issue. We will work together to find the optimum solution. Lack of an agreement indicates that the discussion is incomplete, and we both are encouraged to keep searching for a "better" solution. We have also given a negotiator who has room to make a concession, but doesn't want to seem to be too easy, a way to insert the price reduction at a later time in a face saving way.
Here is another example.
I can't start negotiating without knowing my delivery needs. However, once the talking starts, the delivery detail becomes a piece of the whole agreement. After talking about it, I might decide that I can accept a few extra days for delivery time in exchange for packaging which better meets my user's needs. This is a better deal for my company, than I wouldn't have achieved if I had walked away from the negotiation when the supplier said he couldn't meet my delivery requirement. Examination of the whole agreement, revealed opportunities for creativity that made the deal work. We let each detail or element flex depending on its interaction with the other parts of the agreement
It is still critically important to consider all the various elements of an agreement when preparing for a negotiation. The person who fails to plan, plans to fail. Of course at some point, all that can be said, has been said and you have to give up. But, by setting the negotiation goal of finding the "best overall agreement" I have given the process the best opportunity for success.
|MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M.|
|Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld.|
|Copyright; Michael L. Taylor, C.P.M.|
|Last Updated: 11/26/2016|