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Negotiation

October 7, 2009

Last year, IACCM undertook a study of the companies most admired for their post-award contract management. It resulted in a detailed report that set out the steps needed to achieve this recognition. Over recent months, they have repeated the exercise to establish which companies are most admired for their negotiation capabilities. Today those results are published. They will doubtless cause heated debate.

IACCM points out that their purpose in undertaking the study was not so much about applauding winners, but rather to encourage debate about the characteristics that represent excellence – and to aid discovery of the steps needed to improve.

Most companies believe that negotiation is an important competency. Yet few are clear about the steps needed to create organizational capability, rather than individual experts.

While personal expertise is important, longer term results are driven by a robust negotation process. The results of the survey emphasize the importance of planning and teamwork. Good negotiators are not simply wheeler-dealers; they must have underlying knowledge of capabilities and boundaries. Creativity and imagination are valuable qualities – but only if those on the other side are confident that promises will be fulfilled.

Other recent research (the IACCM study of the state of the global economy) has shown  diminishing confidence in the ethical behavior of negotiators, both buy-side and sell-side. Trading relationships ultimately rely on trust – and the companies at the top of our chart are generally trusted. They may not be especially liked – indeed, some of them are viewed as inflexible and at times unresponsive. But people believe they will do what they say and at a time of tough economic conditions, that is an important characteristic.

In general, sell-side negotiation appears to be better developed than buy-side. 64 of the top 100 companies were nominated for their sell-side capabilities. In part this is because executives invest more in winning business than in placing business. They understand the need to be more flexible when they are selling. Big companies in particular often believe that when they are buyers, they can impose their standard terms; they frequently do not empower procurement teams to negotiate on substantive issues and do not recruit people with the necessary skills to be good negotiators. This is often a mistake, because it prevents the realization of value and frequently results in poor relationships.

You can read the report at http://www.iaccm.com/loggedin/library/nonphp/Top Companies in Negotiation 2009.pdf – and once you are finished, please share your thoughts and comments.

13 Comments
  1. Hélio permalink

    These companies have an ethical way of doing business, and its stakeolders trust and approve their process and procedures, annual plans and the organization itself. These are just few important points that an organization shall take into consideration when doing business.

  2. Aart permalink

    Interesting outcome. I wonder how customers would rate the sellers negotiations capabilities …..

    • Aart, if you read the report, we have tables for both buy and sell, so you can quickly find the answer to this question!

  3. Jason permalink

    The report only lists the top 100. How many different companies in total were nominated?

  4. Aart permalink

    Tim, I mean how would our customers (on the other side of the table) rate our capabilities (vs. the current rating done by general IACCM audience).

  5. I’m very glad that attention is finally being given to the idea of negotiation as an organizational capability. It’s an idea that Larry Susskind & I advance in some detail in “Built to Win” (http://www.amazon.com/Built-Win-World-class-Negotiating-Organization/dp/1422110478/).
    It seems that the assessment in the case, however, was conducted absent any theory of negotiation, any theory of value creation, any theory of organizational learning, and any criteria for measuring what negotiation success/performance means beyond being “admired” (by whom?). I’d argue that the assessment is therefore largely meaningless. “Built to Win” describe the steps required to conduct a negotiation assessment or “audit.” Perhaps this would be helpful to IACCM in expanding/continuing future efforts. Again, though, I applaud IACCM for calling attention to the idea of negotiation as an organizational capability. – Hal Movius

    • Hal, thanks for your comment.
      Certainly all objective methods to assess negotiation capability are interesting to us. I certainly consider the research we did to have limits to its significnance – HOWEVER
      1) it could certainly be argued that gaining admiration from peers is a reasonable value indicator and arguably more objective than a consultant analysis. After all, what are the ultimate characteristics of ‘good’?
      2) As we point out in the report, we do not stop with simply gathering this data. We use it as a base for undertaking more detailed interviews and to gain insight into the approaches that have resulted in this acclaim. We discover whether there are things that top companies have done in consistent ways – for example, universal process, planning techniques, training etc.

  6. Is a copy of the questionnaire available? What about the actual results (not just the summary/conclusions provided in the report)?

    • The on-line questionnaire remains available. I am not sure what you mean by ‘actual results’. The report we have issued sets out the actual results of this part of the study. As explained in the report, we have also conducted extensive interviewing to extract more data on company approaches and this second report will be issued later this month.

  7. Adonis permalink

    I looked through the list of companies but did not see Dupont. Can someone advise if they are members or if they do not participate.

    • Adonis, membership of IACCM was not relevant to the placement of companies on the list. This was an open nomination process. It is of course not surprising that many top performers are IACCM members – because characteristics of organizations that do well in any field tend to include some openness to the outside world, to understanding best practice etc.

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