Does Virtual Negotiation Work?

IACCM research suggests that around 80% of today’s business-to-business contract negotiations are ‘virtual’ – that is, they use technology of some sort, rather than physical meetings. The theory is that this approach cuts costs, increases efficiency and shortens cycle-times. Whether or not any of these benefits have actually occurred, I do not know – but I somehow doubt that the overall balance sheet has seen much improvement.

Researchers and academics are trying to make sense of the move to virtual meetings and when they may (or may not) be appropriate. A recent book by David Pearl suggests that creativity is one notable victim of the virtual world – ideas and brainstorming apparently flourish in a physical environment. Pearl also highlights the need for physical presence ‘when you are making important decisions or working on matters that concern the organization’s core business’.

Professor Richard Arvey adds to the list by pointing to the constraints on communication in a non-virtual environment. Not only are non-verbal cues largely lost, but attention spans waver (who is really listening during those interminable conference calls?). Team spirit and group identity also suffer, potentially undermining a sense of shared goals or objectives (an issue often critical to contract results).

Taken together, these factors suggest that many negotiations would gain from more frequent physical meetings and that many of today’s disappointing results could be improved. Certainly this is likely to apply for negotiations of strategic importance or where team consensus is essential to the outcome.

So when does virtual make sense? It appears to be in three specific types of negotiation scenario:

1. Where the deal or contract in question offers little chance of added-value and therefore no need for creative thinking;
2. Where the meeting is either ‘non-discursive’ or where information flows are largely one-way – for example, basic fact finding or issuing instructions on tasks to be undertaken, or setting an agenda.
3. As a method of follow-up, for progress checks or detailed discussion of very specific points between experts.

A well-planned negotiation would take account of this need for a more nuanced approach and I am sure some experts establish the right mix. But it would be good for all organizations to be more aware of the impact of the virtual / physical choice …. and I will write more on that theme tomorrow.