Experienced negotiators know the
importance of building a personal relationship before entering a negotiation.
Negotiations involve two parties, usually an organisation and its Suppliers,
trying to reach a deal in which both parties may want a different outcome.
Reaching a Compromise
In most, if not all, negotiating
scenarios, the best deals and compromises are reached between an organisation
and its Suppliers, where the parties involved in the negotiating process are
removed from the day-to-day operational and administrative tasks of trading.
Operational and administrative staff
within organisations rarely, if ever, formulate or write the technical
specifications upon which an organisation describes the needs of its Suppliers.
Negotiations with Suppliers should be undertaken and led by those who have an
intimate knowledge of the technical specification upon which the negotiation
will be based.
Those negotiating with Suppliers must
have an objective view of what is being negotiated and a clear understanding of
an organisation's strategic needs without political or operational bias. A
successful negotiating process must balance an organisation's strategic and
tactical needs.
Operational and administrative staff are
deeply involved with an organisation's tactical needs and often lack the
strategic clarity and visionary intent required in the negotiating process. As
such, they should be involved in, but not lead, negotiating processes to
balance an organisation's strategic and tactical needs.
Negotiating With Suppliers
An organisation and its Suppliers must
be able to negotiate with each other in a scenario where neither side is viewed
as more potent than the other. Each party is equally reliant on the other to
create a mutually profitable trading opportunity. Organisations must lead the
negotiating process to ensure that Suppliers understand their requirements so
that Suppliers can meet them profitably.
A personal relationship with an
organisation’s Suppliers against whom the organisation will be negotiating
prevents an adversarial relationship from souring the deal before it starts. If
an organisation’s negotiation Stakeholders see themselves as adversaries in a
confrontation with an organisation’s Suppliers, both sides tend to become
defensive and reactive.
An overly heated atmosphere and anger
can unravel the most carefully planned negotiation process. However, much can
be done to avoid the problems and issues when an organisation tries to
establish a “personal relationship” with its Suppliers, who will be on the
other side of the negotiating table.
If an organisation and its Suppliers did
not have divergent needs, negotiations would not be needed. However, when both
parties are asked to give up something, this can create a problematic
atmosphere.
Reaching a Mutually Beneficial State
If an organisation’s Suppliers believe
that the organisation is genuinely looking for a mutually beneficial deal, the
organisation is far more likely to make a concession. It is always good to
remember that business is business and that an organisation must establish
itself as the leader in the negotiation process, as it has the requirement to
fulfil, which it knows best.
Negotiation stakeholders should never
make personal attacks or attribute any combative exchange between an
organisation and its Suppliers to malice on the part of their opponent. In this
situation, asking for even a tiny concession can be seen as an encroachment or
an attempt to take advantage of the other party.
When things become tense in a
negotiation, it is always best to suggest a break. Taking some time away from
the negotiating table can help the parties steer the conversation back to a
more convivial personal relationship. It always pays not to take things
personally.
Getting the Best Advantages While
Compromising
Understanding what a Supplier wants from
the negotiation can help an organisation achieve its goals. It is wise to
remember to get to know the negotiators' positions on the other side and the
people with whom an organisation is negotiating. Focusing on seeking their
cooperation can be the element that closes a deal.
A good negotiator will build a personal
rapport with the person against whom they will be negotiating before they even
get to the table, emphasising the importance of maintaining a professional but
personable approach to managing an organisation’s supply base.
The key is for the negotiator to
frame themselves as a friend first and a negotiator second to the Supplier,
transforming the relationship between the parties in negotiation from
competitors to co-operators to provide a positive perspective on the Supplier
that an organisation is negotiating with.
The Positivity of Negotiations
Positive negotiation relationships are
meaningful with suppliers because they engender trust, vital to securing an
organisation’s best negotiating position with suppliers. Consideration of a
proposed action entails risk. People view negotiations and the associated risks
as more acceptable when a proposal is made by someone they trust.
Research in the social sciences has
found that people tend to respond to negotiations with similar reactions. Suppliers
tend to react kindly if an organisation cooperates and treats its suppliers
with trust and respect. Effective leadership within the negotiating process is
crucial to securing a successful outcome.
The nature of reciprocal trust
reinforces the value of taking time to get to know and understand the other
party and build rapport before an organisation begins to negotiate. It is
important not to assume that an organisation can form a bond simply by
exchanging a few friendly emails before meeting in person. Instead, it should
forge a personal connection before the negotiation process begins.
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