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A Tale Of Two Negotiators

February 5, 2010

Recent IACCM research identified an interesting syndrome in negotiation effectiveness. It highlighted the contrast in where negotiators spend their time and the impact this has on results.

One group of negotiators operates in companies where the rules and standards are relatively well defined and understood. This group spends most of its time communicating with team members and the other side. Much of its time is either explaining the reasons and value behind positions, or evaluating and proposing variations from a mostly pre-defined set of capabilities.

The other group of negotiators comes from companies that like to believe they are either a) flexible or b) good at managing risk. These companies see negotiation as an individual art, rather than an organizational capability. Interestingly, the result is that more than 80% of the time spent by these individuals on negotiation is internal to the company. They are in fact trying to negotiate exceptions or understand capabilities.

The impact on the other side is significant. Negotiators from the first group are providing insights and information that enables the team on the other side to evaluate and commmunicate effectively. Negotiation cycle times tend to be shorter and the negotiation environment is more collaborative and open. Negotiators from the second group send confusing messages. There are often long gaps in communication and proposals are often unclear. This results in a lack of confidence and a sense of alienation.

The  moral of this story is that companies which believe that negotiation talent is the answer to their business success are wrong. Of course negotiators should be trained; but those who are successful have clear understanding of the boundaries and the reasons for those boundaries. Their talent is having the judgment to understand the implications of ‘deviation’ and the ability to negotiate trade-offs, rather than compromises. Negotiation is not a substitute for business discipline; in fact, it can flourish only when there is underlying discipline.

2 Comments
  1. Audrey Hallett permalink

    I am curious about the other attributes of companies where rules and standards are well defined for the negotiator. Where does the acquisition management function fit in the org structure? What kind of contract management tools/systems are used and what level of maturity does the organization have with these tools? What does the approval process look like and who has ultimate decision making authority?

    • Audrey, good questions! IACCM can in fact help you with some answers. You may be aware that last year, the Association undertook astudy of ‘the most admired companies for negotiation’. This was accompanied by a series of interviews to discover how top performers were achieving their success and a report on this was also issued. In addition, IACCM has a negotiations ‘community of interest’ which has around 800 organizations represented and undertakes a variety of studies, plus regular discussion groups. And I beleive there is also now a specific ‘capability matrurity assessment tool’ in preparation. So overall, your questions can be answered – you may want to get in touch with Katherine Kawamoto – kkawamoto@iaccm.com

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