Why Do Negotiations Fail? – Part 1

This is the first in a two-part series on why negotiations fail and how to build an action plan for successful negotiations. Today, we’ll be discussing two of the four core areas of negotiation, value and process.

Generally speaking, negotiators fail because they don’t negotiate in a holistic way. Research has shown that our actions and communications will be most effective when they are used in a whole brain format.

Negotiators must steer their actions and communications effectively by concentrating on these two core areas of negotiation:

  1. Value Negotiators must make certain that they have an astute understanding of the facts that are the basis for any negotiation. Failure to gather & understand the relevant facts that support optimal deal making will result in a failed negotiation or negotiations where value or resources are left on the table.
  2. Process Any negotiation that does not have a defined negotiation process runs the risk of a sub-‐standard outcome. A framework to operate within is necessary so that it can provide an environment where risks can be proactively managed. A robust negotiation process guarantees a positive momentum and offers all framework of reference that lessens unforeseen complications & risks.

Here is an action plan for implementing lessons from these two core areas of negotiation.

  1. Define a negotiation strategy by answering the following questions:
  • What group or groups of people should be capable to negotiate effectively in their vocational environments?
  • What are the key negotiation characteristics of successful negotiators in your department?
  • Should you be providing any free products or services to your clients or user community?
  • What are your deal specific negotiations strategy and tactics?
  • Should you be providing any concessions to your negotiation counterparts without receiving a counter concession of equal or greater value in return?
  • What is your BATNA analysis (Best Alternative To a Negotiated Agreement)?
  • How will you measure success in the negotiation environment? (Consider both leading and lagging indicators).
  • How can you make time and allocate resources for negotiation debriefing?

2. Implement a supporting negotiation process.

The negotiation process must be robust and have a high utility value to its users. The single most important consideration in implementing a negotiation process is ensuring a consistent application of leading negotiation practice across the department or organization. Additionally, this will result in a shared vocabulary and a common platform for the evaluation, refinement and improvement of negotiated outcomes. Build your negotiation process around the following key areas:

  • Deal qualification
  • Deal objectives identification (for all parties to the negotiation)

The negotiation process should be designed in such a way as to support both the relevant purchasing and sales strategies. Training should be rolled out across the enterprise to instill a corporate negotiation capability with a specific focus on two things: 1) Maximizing margins and savings on purchasing budgets and 2) Identifying and mitigating risks.

A key requirement of the negotiation process is the ability to integrate with the company standard purchasing and sales processes, to ensure the most effective deployment of resources. Early results are pointing to enhanced returns resulting from agreements as a result of:

  1. An improvement in the skills level of all negotiators due to best practice based negotiation skills training
  2. The application of a uniform negotiation process which allows for the dissemination of relevant information on a uniform basis
  3. A common negotiation vocabulary and a best practice cross cultural negotiation approach across territories
  4. Individual negotiation competency, preference & style analysis
  5. Optimal negotiation team composition & role definition
  6. Best practice based negotiation debriefing & refinement

If you’d like to learn more about negotiating tactics and determine how negotiating process training will improve your company’s profitability, please contact KeyRoad to schedule time to talk.

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