Negotiate for satisfaction and success (16 June 2011)

20 Jun 2011 10:42 | Anonymous
"It’s a bit of science and a bit of art”, we do it up to 15 times a day, throughout our lives, and according to a USA study, men are more keen to do it than women.

Negotiation, whether it’s haggling over the price of a Turkish carpet, supervising children’s playtime, buying a new car, or asking for a pay increase, can be improved with a knowledge of the techniques and lots of practice. Giuseppe Conti has had plenty of practice, he is currently in charge of Services Procurement at Merck Serono Global HQ in Geneva, with extensive international experience in procurement leadership roles (P&G, Novartis, Firmenich), and is a lecturer in the fields of negotiation and change management at leading European business schools.

Giuseppe Conti treated his audience to a lively presentation based on his four-point guide to negotiation. His professionalism and passion shone throughout, as he combined academic research findings with his personal experience and insight. He shared some techniques and reflections in his 4 point plan.

When we negotiate, is it a ‘confrontational showdown, reminiscent of a shoot out’ or a ‘harmonious waltz’? Part 1 of Giuseppe Conti’s guide was about our attitude. Our attitude affects our behavior, and that of the person we are negotiating with.
 
If it is our own request for a raise, we need to be convinced that we deserve that increase, in order to be convincing to others. An effective negotiator sees both parties’ perspective, so much so that she/he can present the other party’s argument as well as their own.

The second part of the guide discussed the importance of preparation, relevant to many aspects of business and indeed private life. Mr Conti shared results from an Accenture study showing that a prepared non-expert negotiator enjoyed a 60% chance of success, whereas for an unprepared expert negotiator the chance of success was only 40%.
 
An example was given of steps we could take to prepare for buying a car:
  • We can consider expert reports,
  • comparing different models/manufacturers,
  • talking to users,
  • visiting different garages,
  • looking at sales statistics, and
  • finding out what the typical margin is.
What we find out helps us negotiate the best deal.

Included in the preparation is an assessment of the balance of power. This is affected by:
  • How many alternatives are available, should the negotiation fail, (known as the Best alternative to a Negotiated Agreement or BATNA).
  • How strongly we desire or need the item under negotiation.
  • What risks are we are prepared to take-the more risk we are willing to take, the more powerful we are.
  • The superior charisma or authority of one party.
  • How urgently we need the item and
  • What the relationship is between the parties.
The last aspect of preparation is to negotiate the right deal. If, for example we are negotiating pay rates for a nanny, is negotiating the lowest pay rate the best deal if what we are looking for is a person who will offer the child a good education, be reliable and flexible? There are creative ways, in the terms offered, to obtain a ‘win-win’ result, for example: offer further education, or more holidays but with less flexibility.

The third part of the guide concerned what to do at the negotiating table. The person who asks the questions leads the negotiation. Open-ended questions, especially if they encourage the other party to reconsider their thinking are important.

A question, which shows that we have listened to the other party, works well. And, after the good question, keep silent for the reply.

Timing is important, consider, for example, end of quarter, end of replacement cycle, and when might be time to make a new proposal or change the offer.

Active listening (including non-verbal behaviour), shows respect for the other person’s opinions, and enables us to focus on the content.

If questions lead the negotiation, emotions shape them.  Despite the preparation, adopting the right attitude and listening actively, the discussion can still become emotional. At this point the active listening becomes empathetic listening, and includes listening with our eyes, our ears and our heart.  We suspend our own thoughts and judgment, and feed back what the other party is saying, to show our empathy. Giuseppe Conti suggested we practice establishing rapport and being empathetic, and that we manage our emotions. Both rational and emotional messages have a place at the table.

Just how good are we at recognizing emotions? Interestingly, studies have shown that there are six emotions which are globally recognized. And Giuseppe Conti tested us to see if our recognition supported the studies. By and large they did, with a few people hesitating between fear and surprise!

What is the difference between a win-win and a win-lose attitude? Quite simply, the win-win attitude (creating value) is about relationship building, using objective arguments, exploring creative options (like the Nanny scenario).
The win-lose attitude (claiming value) is the ‘Turkish carpet trader’ scenario, when the first offer is aggressive to establish an entry position. Here we do not give anything away, we learn as much about the other partner and their BATNA (Best Alternative to a Negotiated Agreement) and we manage the concessions.

The last point of Giuseppe Conti’s plan concerned personal standards and ethical behavior. On a personal note, his words do not just relate to purchasing, but equally to many areas of business, including marketing. People do business with people they trust, and ethical behavior builds credibility over time. We should keep our promises, become partners once the deal is reached, and refrain from any activity which will betray that hard-earned trust.

He finished by repeating that negotiating is a skill, and practice is the key to success.

Questions from the audience:

We were able to get more wisdom from our speaker during question time:

We learnt that written negotiation is less effective than sitting around the same table, since we cannot see non-verbal or emotional behavior.

Procurement is a 7-step process, and negotiation is step 6, so there are many more facets to procurement than we heard about during the evening.

What about cultural differences?
 
This is a minefield. Clearly respecting etiquette is important, and we should find out about that before the negotiation. Stereotyping should be avoided, and stereotypes go beyond nationalities and cultures in the usual sense of the word, companies may have a very specific culture as well. One large difference, for example, is whether the party looks at the big picture or focuses on detail.

And what about the difference between men and women at the negotiation table?

The biggest difference is that most of the time, men tend to negotiate and women don’t, (found in a US survey).  And the reasons can be found in our upbringing and culture. Women tend to be more modest, and are expected to be compliant and to conform to policies. So Mr Conti’s advise for us is to go into negotiation more readily, and to take a firm position. We are better at win-win situations and need to improve in win-lose ones.  And that was where we lost the negotiation in favour of networking over a glass of wine!

Submitted by: Jane Rowsell

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