Is negotiation skill an art or a science?

In today’s data-driven world, businesses, and those who negotiate on their behalf, rely on data to inform and power the decisions they make. But data isn’t the only driver that can boost a company’s bottom line. My experience with UK and international companies has shown that even with time pressures, companies still value face-to-face communication and importantly, the negotiation skill coaching to give them the confidence to do this.

Given the increasingly complex world within which these organisations operate, it’s crucial for them to strike the balance between data usage and the softer negotiation skill needed to ensure they get the result they want.

>See also: How to negotiate a commercial lease – tips for negotiating with a landlord

What are the challenges to effective negotiation?

But what does that look like in practice and what are the challenges employees face when it comes to negotiating effectively?

Knowing what you don’t know

When entering a negotiation, how much you know is crucial. But preparation is also key. It’s essential that you can identify what you may need to know so you are best prepared to achieve your goals.

This can be achieved through a number of ways. For example, open and transparent communication with suppliers about your business strategy can help identify where the gaps lie and where the chink in an organisation’s armour could be.

The good news is that recently companies have been waking up to this: a report commissioned by Barclaycard identified that eight in 10 procurement professionals believed data analytics played an increasingly important role when negotiating with suppliers.

Having data-driven conversations with suppliers can often be an effective weapon to help demonstrate where you want your business to be and the change that needs to be made. However, it’s important for organisations to identify what metrics really matter to them.

At the outset of a relationship, or at a key moment such as the negotiation of a new contract, setting clear targets can help not only improve your business’s performance and the quality of service you can receive, but also help build trust in the relationship. A data-driven strategy can be an effective way to deliver more immediate results; however it’s important to consider a longer negotiation approach to managing a supplier partnership.

>See also: What are the best negotiation techniques?

Identify what a ‘win’ is for your business

While the Mad Men era is a distant memory, the truth is that relationships and softer skills still matter; and that’s not just to get yourself ahead – the relationships a business makes with its suppliers can make a crucial difference in how it conducts key negotiations and conversations that will affect its bottom line.

Encouragingly, despite the increasing importance of data analytics within supplier negotiations and prevalence of online portals, face to face negotiations are the preferred method of communicating with suppliers.

However, this doesn’t come without its pitfalls; confidence and misunderstandings on who is responsible for decision making are often barriers to a smooth negotiation. Aligning to this, the Barclaycard survey found that over half of procurement leaders (56 per cent) did not feel as though they have the authority to make an on-the-spot decision, a similar number (46 per cent) avoided negotiations as they didn’t have the confidence to get the right result.

To counter this, I always people to identify what they want to get out of a negotiation. This may not always be monetary but sometimes could be getting a better quality of service, improving KPIs or a change in payment terms. After all, having a clear strategy of what you define as a win before you walk into the room will help to retain focus and ensure you leave with at least part of what you need. Furthermore, the more issues, the more value you can generate in a negotiation.

Negotiation or preparation?

In truth, negotiation skill relies on a combination of relevant data insights as well as confidence and preparation. It’s not something that will happen immediately but taking a step back to identify what you need in advance, both from a data and strategy perspective, will put you in the best possible position to succeed.

Top 11 tips for successful negotiation

Here are 11 top tips if you want to brush up skill in a negotiation, such as seeing the other person’s point of view, not being fixed on positions and not being afraid to walk away.

#1 – Find out as much as you can about your negotiation counterpart

Negotiation is not a competitive sport and the more you can put yourself in the other side’s shoes and find out about them – understanding their pressures and influences – the more likely you are to create value at the negotiation table

#2- Prepare

Many negotiations fail before they get to the table. Find out about your counterpart, research industry benchmarks, leverage data analytics, secure your internal mandate, agree on goals and put in place an effective negotiation strategy

#3 – Negotiate the process

Where should we meet? What is on the agenda? What are the logistics and timelines? Negotiate an effective process and you are more likely to get a durable agreement

#4 – Separate the people from the issues

There are two core elements to any negotiation – people and issues. Don’t let one destroy the other. For example, don’t let your personal opinions towards your negotiation counterpart impact the negotiation or the difficulties of the issues impact personal relationships

#5 – Think interests, not positions

Setting out rigid positions at the outset of a negotiation makes it difficult to be flexible. Instead, think of the interests that underly these positions. Ask the question “why”

#6 – Remember that people can see the same issue differently

Each side often has multiple and varying interests, some of which are of high value to attain and others which are of low cost to give away. It’s through each party trading on these differences that real value can be generated

#7 – Make sure you have an alternative away from the table

The better your alternative to a negotiated agreement and your willingness to walk away, the stronger your negotiation position at the table

#8 – Don’t be afraid to make the first offer

People adjust, rather than create, when making decisions. Therefore, making a first offer can have a strong impact on the negotiation – a tactic known as “anchoring”

#9 – Face to face negotiations are preferable

There’s no substitute for looking your negotiation counterpart in the eye and building relationships. With time and cost pressures, however, more and more negotiations are taking place via emails, video conferencing and WhatsApp. Make sure you are flexible in your approach to adapt to different scenarios. With email negotiations, for example, leverage the benefits of clear records of offers, counteroffers, and the ability to leverage data to back up proposals

#10 – Don’t forget the people away from the table

They can have a major impact on both obtaining a deal and the durability of the agreement. A stakeholder management strategy, and the identification of potential supporters and obstacles to the negotiation, can be crucial

#11 – Negotiation skill isn’t a natural gift

It can be taught and learned. Natural born negotiators are few and far between. The best are self-made, and improve with conscious effort and training, practice and using the key principles above

Paul Fisher is programme director of the Oxford Programme on Negotiation at Saïd Business School, University of Oxford

Further reading on negotiation

Top negotiation mistakes and how to avoid them

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