Many of us in the credit profession find ourselves in a position
every day in which we must negotiate with customers or our sales force about
a particular customer or situation. Yet, many
of us still need to work on our negotiating skills. As we begin to look at negotiation,
let's begin
by asking, "Why do companies, groups and/or individuals negotiate?" The definition of
negotiation is "Reaching an agreement which is amicable to all parties involved.
Our success in negotiation depends upon three factors. First,
a compelling desire to win, second, understanding the basic concepts, and
third, luck. At a recent leadership conference, I
was told that "success or failure in negotiation is based more upon actions,
inactions, habits, idiosyncrasies, blinders, insights, and clever strategic movements
of the individual involved
more than the terms of the agreement or other formal elements of the proposed
transaction."
There are three different types of negotiation. The first is internal. This type of negotiation
primarily involves managers and employees focusing on work and employee issues, such as job
rolls, pay, goals, priorities, tasks, productivity and deadlines. The second type of negotiation is
external. This type of negotiation occurs between an organization and an external party, such
as a customer, a supplier or your insurance carrier. All of us in the credit profession are
involved in external negotiation on a daily basis. Some examples of external negotiation are bid
proposals, delivery schedules, quality, deadlines, financing and the approval to supply our
customers on a credit basis. The third type of negotiation is legal, which involves an
organization abiding by the legal requirements of the various governing agencies. After this
brief look at the types of negotiation, we can then begin to look at the six different negotiation
styles. They are:
Forcing
A control oriented,"win-lose" approach. "A" gets what he wants - "B" looses.
This
type of negotiation doesn't lead to any further negotiations.
Smoothing
Covering up the conflict by "agreeing to disagree." "B" gets what he wants, "A"
loses. This type of agreement leads to frustration as only "B's" needs
are met.
Avoiding
Aide-stepping or postponing the issue. Neither "A" or "B's" needs
are met. This
often leads to antagonism, animosity, arguing, etc.
Bargaining
"Splitting the difference," "A" and "B" each gives
a little and gets a little. With this approach, some needs are met, but not all
those for either party.
Impasse
Both parties present their position and cannot come to an agreement.
Problem Solving - Win-Win.
Aimed at finding the best solution that fully satisfies the needs
of both sides.
Before we even begin to negotiate, there are a few "Steps of Preparation" we
should take. We should :
Define Goals & Objectives
Determine what you want from the negotiation process and prioritize them in
order of importance. Answer Why - Why do I/we want this? Identify what
you have to get to meet your needs. Think about what
you're willing to accept & what you're willing to give up.
Clarify the Issue
Think about yours & their stand in the negotiation process. Develop your proposal & think
about what they will propose and why. Know you're bottom-line before ever entering
the meeting.
Gather Information
Research the company & the person(s) with whom you'll be negotiating. Know the status & authority
level of the negotiating person(s). Identify your strengths and weaknesses
in your proposal and negotiating style,
as well as theirs.
Set the Climate
Consider when & where the negotiation will take place - your turf, their turf,
or a neutral zone. Also
determine how you will establish rapport.
Prepare for Conflict
Think about any factor(s) that may cause a deadlock. Also consider who will be most affected by
an impasse.
Resolution of the Issues
Be prepared for not getting what you want. Research other alternatives or options.
Agreement & Confirmation
How formal must it be? What approval process is required? How long will it take? What
implementation process is put into law?
In order to be an effective negotiator, we should have each
of the following characteristics. We should be an excellent listener. When
we have learned to listen, we'll be able to determine needs, uncover hidden
agenda, gather information, and
learn to listen, both verbally & non-verbally. We need to learn to be patient and stay focused on the discussion. We should
be willing to remain silent until we've gotten a response from the other party. Usually, the person who speaks first is the
looser. Approach the situation with a positive attitude. This helps provide more cooperation, better feed back, reduces the
"us vs. them" syndrome and helps us make our own position more convincing.
We should also ask open-ended questions, not those, which can be answered with
only a yes or no. This helps us find the objection(s), their need(s) and usually,
the
bottom line. We should always give the customer positive feedback. By doing so,
we're able to make the customer feel more comfortable, and as a result, the negotiation(s)
is more positive and is usually resolved much quicker. We should use
encouraging behaviors as we negotiate. When we acknowledge the other party throughout
the negotiation, it helps them
open up. We shouldn't react too quickly during any confrontation. When we over react to a situation, it allows
the other person to over react. We should allow ourselves to think through the solution. When we enter the
negotiating process prepared, we're more apt to be in control of the situation. We'll put forth a perception of
confidence, which will allow us to have a much higher comfort level.
None of us enter a negotiation with the intention of destroying it. We need to realize that there are a number of things we
can do, or have done, which destroy the negotiation process. Many times, we'll show our cards too early. The other party
knows our bottom line before the negotiation has begun. Some loose their temper, which results in a damaged relationship
with the customer. We should go in to any negotiation prepared with a proposal, which we have already though out.
Another of the things we shouldn't do is push the other party up against the wall. In doing so, the other person feels
trapped and is unwilling to cooperate.
When entering the negotiation, we should establish rapport with the other party involved. This helps break the ice. It helps
to take a few moments to get to know the other person. Call them by first name and keep the initial interaction friendly.
Allow each of the parties to identify their goals and objectives. Once these are known, we're able to specify and discuss
each of the issues. We should realize that this is where conflict usually begins. Once the issues have been discussed, you
are able to make a proposal and offer. Usually, additional negotiation will take place as you work your way toward gaining
an agreement. Once an agreement is gained, we should always summarize the agreement and the commitment that each
of the parties has made. We should accentuate those items, which have had a positive impact on both of the parties
involved.
I hope that each of you have found this article to be both helpful and insightful. If you have an item or issue which you
would like to know more about, please send me an e-mail to let me know. My e-mail address is
jhanselman@hughessupply.com. I'm looking forward to seeing each of you at the June C.F.D.D. meeting.
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