Member Article

Is business negotiation 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 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 skills needed to ensure they get the result they want.

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 organisations’ armour could be.

The good news is that recently companies have been waking up to this: a report* commissioned by Barclaycard has identified that eight in ten procurement professionals believe data analytics are playing 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’ 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.

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) do not feel as though they have the authority to make an on-the-spot decision, a similar number (46 per cent) avoid negotiations as they don’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, good negotiations rely 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.

This was posted in Bdaily's Members' News section by Paul Fisher .