Join A Negotiation With Caution
PurchTips edition #227
By Charles Dominick, SPSM, SPSM2, SPSM3
Should A Manager Join A Negotiation In Late Stages?
Over lunch last week, a procurement colleague and I discovered a common thread in our early careers: the worst negotiation results we'd ever seen happened as a result of managers joining negotiations in late stages. While these managers all said similar things like "I'll jump in later and squeeze another 5% out of the supplier," the fact was that their actions resulted in our companies getting worse deals, not better.
So, if you are a manager or may become one in the future, how can you avoid doing more harm than good by joining a negotiation? Remember these things:
- Learn the obstacles to agreement from your team first. Some managers think that joining a negotiation will intimidate the supplier. Actually, the supplier may welcome another counterpart - that way they can play "divide and conquer" and get the manager to agree to concessions that the buyer would not. And there may be a good reason that the buyer was not agreeing to those concessions!
- Beware of conditioning your suppliers to withhold their best deals from buyers. If past history compels a supplier to predict that a manager will join a negotiation in its late stages, will the supplier ever give its best deal to the buyer? No - the supplier will withhold it so that it has something to offer the manager later. But what type of results will be achieved if competing priorities keep the manager from joining every negotiation?
- Realize that you don't have to join the negotiation at all. Joining a negotiation to "squeeze another 5% out of the supplier" implies that the manager has better negotiation skills than the buyer. A manager's job is to get peak performance out of his/her subordinates, not to do their work for them. If a manager has to negotiate for his/her buyers, that means that s/he has failed at the management responsibility of developing his/her subordinates. Coaching subordinates or enrolling them in negotiation training can produce a lifetime of positive results in the time that it takes to "squeeze 5% more" out of just one deal.
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