Improve your Employees’ Negotiation Skill Outcomes
Five essential negotiation questions that all negotiators need to ask to get better results and outcomes with their customers and suppliers.
If your company is like the majority of companies today, you are looking at the bottom line seeking for ways to improve results. The negotiating skills of your employees control revenues, and have a direct and significant bearing on financial performance.
Employees are negotiating regularly, with customers and suppliers to buy and sell goods and services. In fact, most every relationship a company has must be negotiated or re-negotiated at some point. Most employees entrusted to handle this process have never been trained in negotiation skills. Most apprenticed by watching others, while not knowing if the observed techniques were all good or bad. The ability of your employees to effectively negotiate with your customers and suppliers relates directly to your bottom line in terms of revenues and expenses. Ineffective negotiators have a sizeable impact on your company’s image, and your ability to do business.
Contemplate the following questions while evaluating your negotiator’s effectiveness:
- Do my employees follow a formal negotiation preparation process that assists them to prepare for
- Do my employees understand the desired outcomes of a particular negotiation?
- Do they realise when it is OK to walk away from a deal, and is this supported within your company? Do your negotiators fear potential loss of relationships and stay in the negotiation beyond the “walk away point”?
- Are your employees always understand why they are negotiating? More clearly stated do they know the Best Alternative to a Negotiated Agreement? The BATNA is defined as what you would have done, had no negotiation taken place. Have they ever negotiated deals WORSE than the BATNA?
- Are the results from negotiations examined for effectiveness and passed along within the organisation?
Let’s take these issues one at a time:
1. Do my employees follow a negotiation preparation plan or process for “win-win” results?
Do they prepare a process based negotiation plan that includes:
- Identifying your interests, defined as WHY a particular outcome is needed. The position, the item with which we are most familiar in negotiations, is defined as what you want (cost, benefits, services).
- Identifying the other side’s interests. WHY do they want this?
- What outcomes are agreeable to us (identify three…the outcome you want the most, the one which is acceptable, and the one that is the least you will accept)?
- What can I trade? What is of lesser value to me, and of higher value to the other side that can be traded?
- What alternatives can be used to move the negotiation toward joint problem solving? “What if we did this…?” What if we tried to do it this way…?”
- What is my BATNA? Is my BATNA better than the least possible acceptable outcome?
2. Are my employees aware of the desired outcome?
Many negotiators make the error of going for one desired outcome. As a consequence, this alters the frame from an interest (WHY we want something) to a position (WHAT we want). Having three or more acceptable outcomes permits the frame of the negotiation to stay on interests, or joint problem solving.
Each outcome can also have alternatives. Increasing the pie to include things that can help move the negotiation to joint problem solving also must be considered prior to the meeting. “What if we did this….?”
3. Do my employees realise when it’s OK to walk away from a deal?
In many situations, the culture of the organisation is such that negotiators fear returning without a deal. Worse, they have a goal they want or have to hit and if they can negotiate something better than that, the result is rewarded. The problem with this approach is that it sets up the process to be oriented toward “win-lose” positional negotiation bargaining. This can create extensive levels of customer turnover. Having to find and convert new customers is very expensive.
Planning out the process aids the negotiator to see the potential outcomes, the options available, and the items available for trade. This allows the negotiator with the flexibility to know where they stand. Skilled negotiators know how to gracefully step back while leaving the relationship intact.
Unplanned and unmonitored negotiations can end up in unacceptable outcomes and trading without reciprocity. They can also lead to outcomes that are worse than the best alternative.
4. Are your employees cognisant of why they are negotiating?
The BATNA is simply defined as what you could have done had no negotiation existed. The question that should be understood is “What can or will we do if we cannot come to an agreement?”
The purpose of negotiations is to ascertain if your employees can get your business’ interests met via an agreement with another party, versus this best alternative.
Planning allows your negotiators to clearly realise the outcomes and the alternatives. Many times, negotiators, without identifying these results and alternatives come to agreements worse than the best alternative.
5. Are the outcomes from negotiations reviewed for effectiveness?
Not only is it vital to review results to provide negotiator performance feedback, but everything learned from the negotiation should be shared with everyone else.
Match the negotiated results to the previously identified outcomes. Follow performance of these outcomes to the performance of the transaction. This will supply a direct line from planning, to the negotiation, to the financial performance of the deal to ensure that the assumptions used to formulate the plan were accurate.
The ability of your employees entrusted to negotiate the buying and selling of goods and services regulates your ability to produce profitable results. Highly effective negotiators are able to develop closer relationships with customers and suppliers. They make the process of negotiating mutually beneficial, which allows the relationship more rewarding for both parties.
The employees, who negotiate as representatives of your organisation, ARE your organisation. Their level of sales negotiation skills has a direct impact on customer retention, in that individuals with lesser skills could, in the mind of the customer indicate a lack of care and attention in other areas. One of the most expensive activities any company undertakes is finding new customers. And a new customer is subjected to the same level of skill as the one that was lost.
Ineffective negotiating skills cost companies revenue in poorly negotiated deals. They also are costly in that customers become “turned off” by the poor technique and go elsewhere, causing companies to have to look for new clients. Spread across the entire organisation, this adds up, quickly.
Negotiating skills are generally assumed to exist in those entrusted to perform on behalf of the organisation. In truth, many mistakenly refer to them as “sales skills.” Taking inventory of negotiating skills and working to improve them will enhance the result with each negotiated transaction. This improves revenue. Retaining customers by using “win-win“ joint problem solving negotiating skills will decrease expenses. You will develop, from your existing customers, stronger relationships and more business.
The bottom line is: improving the skills of your employees will enhance your bottom line profits.
David A.Wachtel is the president of Hautacam Consulting, Inc., an Indianapolis based organisation that provides training and coaching in negotiations and sales.