There are a very few natural born negotiators, the rest have to practice.....
Negotiations happen everyday and everywhere, in various forms all around us. Our day starts reasoning with the kids to make them drink a glass of Milk, negotiating the price of an antique showpiece you want, from a mom & pop Thrift shop.
Even Professional negotiations follow the same rules as these day to day negotiations, maybe on a more detailed level.
Not everyone is an expert negotiator, but someone who has the skills and has been doing it with the right attitude & panache, actually does a lot of winning.
Nowadays IT projects consume a major chunk of an organization's revenue, sometimes upto 20-25 percent according to a recent study. Many companies are utilizing their hard earned revenues to solidify and streamline their IT Process and systems, so that they can reap the business benefits in times to come. For this reason it makes sense for both parties in an IT deal to be Negotiations savvy. Due to the fear of an unknown outcome, Negotiations are very much dreaded by IT and business folks alike. It is kept as a last minute activity and attacked head on when time comes - Something like a Deer staring at a racing car's Headlights and then you know how it goes.
If proper time is spent on planning and executing negotiations, you will reap the benefits in times to come - in form of increased profits and revenues and successfully executed projects.
IT Negotiations occur at various levels - Marketing, Pre-Sales, Sales, Project Scoping, Resourcing, Contractual agreements in terms of Contract types, SLAs, Milestones and Commit dates etc
Negotiations occur between various parties - IT Firms, Servicing companies, Clients (Insurance companies in my case), at various levels - project level between Team members, leads and resources, clients and vendors, suppliers and end users etc
Negotiation skills help,
Achieve project goals and objectives
Avoid unnecessary conflicts and arguments later in the project lifetime
Build trust and priorities amongst the project teams
How to be a good negotiator?
Practice, practice and some more practice.
Good negotiation skills should be imbibed in your senses. Organizations usually have a cut out approach towards negotiation, something that defines their org culture, e.g. having negotiation planning meetings, specific negotiation templates and proceses etc. Overall, the negotiation Team's objectives and motives have to be aligned with the organizational agenda. The corporate direction could either be a Win All-Lose none (Aggressive), Win some-Lose Some (Moderate) or Win-win for both (Practical). It all depends on what strategic importance the deal has for the corporation.
On a personal level, an important skillset for a successful negotiator is soft skills - i.e. ability to have meaningful and engaging conversations. Conversations that lead the other party to reveal or atleast point to their interests and areas that will help you build focus and leverage. Something that will help develop relationships between with all parties involved. Remember here from a psychological perspective, everyone wants to win in life, be it negotiations or a free 5 day cruise to the Caribbean.
To cite an example - On one of the projects i was managing, we responsible for an Insurance Installation for a mid size P&C Carrier, the contract was signed based on initial high level estimation, but during the actual scoping and definition phase, the client wanted the everything under the sun to be included.
After much efforts and involvement of many a c-level executives and a heavy level setting exercise, the client finally agreed on the scope which could be delivered in the duration of the project. The way the client agreed to the option was, if the client wanted 100 things to be done in the project duration and cost, the quality of the product would suffer, but to have the best quality installation within the project cost and timeline which will help the client achieve set their business goals, it was beneficial to both parties to cut scope and go live with 70 items which would have the best quality.
Negotiation Steps
Every negotiation is a logical process, it has a beginning, the actual process and the end or specifically "Pre-Negotiation", "Negotiation" and "Closing".
Pre-Negotiation involves
Establishing an objective, background preparation or doing your homework, (Always start with a 10000 ft view of what you want out of the negotiation and why you want it - i.e. laying the objectives, ground rules and favorable expected outcome and finally how you wil get there).
This includes establishing a steering commitee, involving all related stakeholders, end users, everyone who will be impacted by the project or contract negotiation. Because doing this later in th`e game will not give you much wiggle room to try and resolve issues, incase an impacted party gets left out or finds something that may de-rail the whole deal. Preparing the RACI chart for all involved parties also helps as it clearly defines what is expected of each involved party. Laying down the negotiation rules and guidelines on rules of conduct during the negotiation path.
Negotiation includes
Meeting on the set dates and having discussions per agenda and guidelines decided. This helps to have focused discussions and helps achieve the desired positions effectively. Also make sure the Teams meet internally on a regular basis afterwards, while negotiations are in progress so if team member needs to be aligned or steered or some points need to be given in or held against, can be avaluated and then comes
Negotiation Planning should include contract break clauses, long term contract pricing policies and sharing the Total cost of ownership for a contract.
The total breakdown of all fees sould be enforced in a contract, SLAs and other KPIs to evaluate the levels of service provided.
Closure and Lessson learned (This is the most important step in every negotiation and is also the most missed one). If this is followed as a regular process, rather than a 1 time post negotiation activity or if done only for certain high profile negotiations it will miss its actual impact and utility.
Lessons learned will actually help you learn and do course correction which may help save many a future negotiations. This may also help you lay foundations for setting an organization culture in terms of process and templates setup
Essentially for any negotiation to be successful you have to have the right set of people, tools and strategies, past experiences, thoughtful planning and documentation.
Showing posts with label Negotiation. Show all posts
Showing posts with label Negotiation. Show all posts
Wednesday, June 27, 2012
Monday, September 26, 2011
Art of Negotiation
Negotations - how can anyone live without it. Every day and in every walk of life, we use different negotiation forms on a personal and professional level.
Kids negotiate with their parents on what they want to (or dont want to) watch/eat/play? (and somehow always win...hhmmm i wonder why?..)
We negotiate with our better halfs on whether we eat the leftover cold pizza for dinner or dine out (Guess who wins there?)
At work, we negotiate with our bosses for better career roles, better projects, salary, promotion etc.
While on a project we negotiate the project deadlines, the workscope, experienced resources with skillsets matching the requirements etc etc. In a sales role, we negotiate with the prospects on the RFP Scope and costs. After bagging the project we negotiate with the client on Scope, timelines of the current project.
Well the point here is, Negotiations happen everywhere.
What is Negotiation?
Negotiation is a process where 2 or more parties get together and work towards a mutually acceptable solution to an issue in question.
This is also something that is closely associated to "Workplace Politics". Now generally the term politics is usually referenced or viewed in a negative sense, but it need not be the case. Politics is about talking, negotiating, convincing your Team, resources, stake holders to understand your point of view. For a person to really understand workplace politics, you have to invest your time into it. I mean really invest into it.
For this there are certain necessary steps that you have to take like,
You have to be really interested in people, their likes and wants, their concerns. This helps develop a level of trust and credibility between the 2 parties involved and this Trust is what makes it easier for the other party to understand you, accept you and your viewpoints
But this is not always an easy task to accomplish. But it is an art that can be learned, honed and sharpened with time.
Pre-Steps to a Negotiation
In any type of negotiations, there are certain guidelines to be followed. For e.g.,
1> Invest some time in genuinely understanding the other person or party. This may not always be possible but if you have a chance to do, please do it.
2> Do not deal any negotiation from an emotional angle. Always be ready to have alternatives, walk away solutions
3> Think and work on alternatives that are Win-Win for both.
4> Always make sure you have the deal makers or the actual decision makers at the negotiation table
Rules of Negotiation
1> Listen, Listen, Listen
- When on the Negotiation table, Sincerely listen to understand the other party, their viewpoints and beliefs. Many a deals and arguments are lost because one party did not try to understand the other party.
Always remember, when an person acts, (he may be right or wrong from your perspective) it is because he BELIEVES this is the right thing to do at that moment in time. So step in his/her shoes and things will be easier from that point on.
2> Do not take anything personally
- Negotiations can be stressful, tempers may rise and unwanted and harsh words may be thrown around. Try to keep your calm and focus on the situation rather than the person.
3> Focus on Relationships
Always be empatic to the other person. Focus on strengthing relationship with the other party
- Not all negotiations will end the way you want. In some cases you may get your way and in other cases, you may not. But always remember in the end, people matter more than the deal in hand so do not try to win any negotiation at the cost of losing people.
4> Backup plan
And last but not the least, always remember to work out a back up plan if your current project negotiations fail.
Negotiation Types
Any type of negotiation falls in either of these negotiation styles,
1> Accomodating
- This mostly leads to a Lose-Win situation in which first party is more emphatic to the other person's problems and issues and ultimately succumbs to a compromise.
This happens more so, when first party is more concerned about preserving the relationships with the other party rather than the Negotiation in hand.
e.g. Consider that you as a Project or account manager are siting at a negotiation table with your prospect and are discussing and finaling the project deal. You are leaning and advocating 'X' dollars per hour more than the Prospect But a savvy negotiator would give in wherever possible if there is a prospect of a better deal/s in the future.
or
You are in the last few weeks of developing your Policy and Billing System and now you are told about a new change that business wants to push in, since you want to be in the Good books of the business director and are also a non confrontational person, you may agree to the change (with the accepted risk of quality compromise, elongated Testing Cycle leading to extended timeline possibility) and log more work hours for your Team .
This usually leads the compromising party feeling resentment and short changed
2> Avoiding
- This is a more of a Lose-Lose situation where the first party may try to move away from any contradictions and issues that exist in the negotiation. This may seem as a skillful act by the other party but is actually not. As in the end, both parties tend to lose if the actual issues and problems are simply swept under the carpet.
Consider that on your Policy System implementation project, you want to integrate to a Third party medical Bill review system but the system vendor does have a good delivery record. When you are discussing budgeting and Vendor procurement for this integration with your Business Sponsors and avoid talking about the issues with Vendor performance and delivery, you tend to lose on a larger scale. Becuase when you are actually implementing the project that is when the actual realtime problems will hit you head on.
3> Collaborating
- This negotiation style leads to more of a Win-win situation than other Negotiation tactics for the simple reason being, both parties are willing to collaborate and understand each other's problems and come up with a middle ground
Consider that in your Claims Implementation project, you are developing a Legal evaluation solution in the application, but the business requires this functionality be linked to another third party application which actually feeds overnight to a (say) reporting data warehouse.
You as a project manager understand that, the Legal Evaluation functionality is required in the application for the business to complete their claims entry and processing workflow, but at the same time the business Team understands that you cannot complete the third party system integration in this short time frame without compromising on quality. So you both adjust your scope to implement the UI functionality in the shorter term, but not the integration atleast for the current release and then commit a later release date for the integratin piece of it.
4> Competing
- This leads to a Win-Lose situation wherein the first party negotiator looks at the negotiation as a 'Must Win' game and will try any all creative tactics to win at the game. In this type of behavior the first party negotiator tends to lose on the relationship aspect with the other party as the other party may feel short changed later in the whole deal and may not want to do business with you ever again.
e.g. In your Policy System implementation project, the client wants to implement the endorsement functionality before project release, but you do not want to give in, in any case and will come up with 'n' reasons and workarounds to 'NOT' do the change. In the end, you may win this negotiation, but lose your relationship with the Business Owner or jeopardise future long term deals with the Client,
5> Compromising
- This Negotiation style again may lead to a Lose-Win Situation because the first party wants to close to deal as soon as possible and not look at other possible alternatives and solutions. This may serve to the other party's advantage at the best.
Consider an example where you are working on a Client contract bid and are negotiating the proposal with the Client Business Manager. The Client does not agree to the implementation approach and may want to cut corners by shortening the Testing phase, now based on this concern, the first party instead of trying to come up with some creative alternatives, will begin to lean and then agree towards corner cutting and closing the deal which may not benefit your project and organization as a whole in the long term.
Negotiation Tactics
People who are skillful negotiators or have sufficient street smarts will use various negotiation tactics. Inept or unskilled people may not recognise these. Here are some such techniques used,
1> Playing Good Guy-Bad Guy
- There are 2 guys on one side of the table and one of them will be pro-deal and other one will be anti-deal guy.
2> Competitor Threat
- Negotiators may try to squeeze benefits from the other party by throwing other cometitor names in the mix.
3> Delay
- Skillful negotiators will try to delay and lengthen the negotiation process by using unnecessary questions, viewpoints and delays thrown in the whole mix. The whole purpose of doing so is to tire you out mentally and emotionally so you will agree to the other party's demands.
4> Not enough Authority
- Skilled negotiators never impress on the other party that they are the decision makers and will always leave some wiggle room to think over things. That is why always make sure you have the right decision making people at the negotiation table
5> Low balling
- Skilled negotiators will always try to low ball a deal and will offer you something that is much below the actual deal price (Although this may not always be true). So make sure you do your homework about the deal in question, the market position etc
Negotiation always happen between people (You do not negotiate with a robot, atleast not yet in the real world). This means each party/person will come with his own bag and baggage of emotions, goals and objectives etc. It is therefore mandatory and beneficial to come to a negotiation with a clear mind. Your attitude and perception sets the tone on the Negotiation table (atleast partially, if not completely). Please comment on whether you agree to these points or you feel there is anything else to add here.
Kids negotiate with their parents on what they want to (or dont want to) watch/eat/play? (and somehow always win...hhmmm i wonder why?..)
We negotiate with our better halfs on whether we eat the leftover cold pizza for dinner or dine out (Guess who wins there?)
At work, we negotiate with our bosses for better career roles, better projects, salary, promotion etc.
While on a project we negotiate the project deadlines, the workscope, experienced resources with skillsets matching the requirements etc etc. In a sales role, we negotiate with the prospects on the RFP Scope and costs. After bagging the project we negotiate with the client on Scope, timelines of the current project.
Well the point here is, Negotiations happen everywhere.
What is Negotiation?
Negotiation is a process where 2 or more parties get together and work towards a mutually acceptable solution to an issue in question.
This is also something that is closely associated to "Workplace Politics". Now generally the term politics is usually referenced or viewed in a negative sense, but it need not be the case. Politics is about talking, negotiating, convincing your Team, resources, stake holders to understand your point of view. For a person to really understand workplace politics, you have to invest your time into it. I mean really invest into it.
For this there are certain necessary steps that you have to take like,
You have to be really interested in people, their likes and wants, their concerns. This helps develop a level of trust and credibility between the 2 parties involved and this Trust is what makes it easier for the other party to understand you, accept you and your viewpoints
But this is not always an easy task to accomplish. But it is an art that can be learned, honed and sharpened with time.
Pre-Steps to a Negotiation
In any type of negotiations, there are certain guidelines to be followed. For e.g.,
1> Invest some time in genuinely understanding the other person or party. This may not always be possible but if you have a chance to do, please do it.
2> Do not deal any negotiation from an emotional angle. Always be ready to have alternatives, walk away solutions
3> Think and work on alternatives that are Win-Win for both.
4> Always make sure you have the deal makers or the actual decision makers at the negotiation table
Rules of Negotiation
1> Listen, Listen, Listen
- When on the Negotiation table, Sincerely listen to understand the other party, their viewpoints and beliefs. Many a deals and arguments are lost because one party did not try to understand the other party.
Always remember, when an person acts, (he may be right or wrong from your perspective) it is because he BELIEVES this is the right thing to do at that moment in time. So step in his/her shoes and things will be easier from that point on.
2> Do not take anything personally
- Negotiations can be stressful, tempers may rise and unwanted and harsh words may be thrown around. Try to keep your calm and focus on the situation rather than the person.
3> Focus on Relationships
Always be empatic to the other person. Focus on strengthing relationship with the other party
- Not all negotiations will end the way you want. In some cases you may get your way and in other cases, you may not. But always remember in the end, people matter more than the deal in hand so do not try to win any negotiation at the cost of losing people.
4> Backup plan
And last but not the least, always remember to work out a back up plan if your current project negotiations fail.
Negotiation Types
Any type of negotiation falls in either of these negotiation styles,
1> Accomodating
- This mostly leads to a Lose-Win situation in which first party is more emphatic to the other person's problems and issues and ultimately succumbs to a compromise.
This happens more so, when first party is more concerned about preserving the relationships with the other party rather than the Negotiation in hand.
e.g. Consider that you as a Project or account manager are siting at a negotiation table with your prospect and are discussing and finaling the project deal. You are leaning and advocating 'X' dollars per hour more than the Prospect But a savvy negotiator would give in wherever possible if there is a prospect of a better deal/s in the future.
or
You are in the last few weeks of developing your Policy and Billing System and now you are told about a new change that business wants to push in, since you want to be in the Good books of the business director and are also a non confrontational person, you may agree to the change (with the accepted risk of quality compromise, elongated Testing Cycle leading to extended timeline possibility) and log more work hours for your Team .
This usually leads the compromising party feeling resentment and short changed
2> Avoiding
- This is a more of a Lose-Lose situation where the first party may try to move away from any contradictions and issues that exist in the negotiation. This may seem as a skillful act by the other party but is actually not. As in the end, both parties tend to lose if the actual issues and problems are simply swept under the carpet.
Consider that on your Policy System implementation project, you want to integrate to a Third party medical Bill review system but the system vendor does have a good delivery record. When you are discussing budgeting and Vendor procurement for this integration with your Business Sponsors and avoid talking about the issues with Vendor performance and delivery, you tend to lose on a larger scale. Becuase when you are actually implementing the project that is when the actual realtime problems will hit you head on.
3> Collaborating
- This negotiation style leads to more of a Win-win situation than other Negotiation tactics for the simple reason being, both parties are willing to collaborate and understand each other's problems and come up with a middle ground
Consider that in your Claims Implementation project, you are developing a Legal evaluation solution in the application, but the business requires this functionality be linked to another third party application which actually feeds overnight to a (say) reporting data warehouse.
You as a project manager understand that, the Legal Evaluation functionality is required in the application for the business to complete their claims entry and processing workflow, but at the same time the business Team understands that you cannot complete the third party system integration in this short time frame without compromising on quality. So you both adjust your scope to implement the UI functionality in the shorter term, but not the integration atleast for the current release and then commit a later release date for the integratin piece of it.
4> Competing
- This leads to a Win-Lose situation wherein the first party negotiator looks at the negotiation as a 'Must Win' game and will try any all creative tactics to win at the game. In this type of behavior the first party negotiator tends to lose on the relationship aspect with the other party as the other party may feel short changed later in the whole deal and may not want to do business with you ever again.
e.g. In your Policy System implementation project, the client wants to implement the endorsement functionality before project release, but you do not want to give in, in any case and will come up with 'n' reasons and workarounds to 'NOT' do the change. In the end, you may win this negotiation, but lose your relationship with the Business Owner or jeopardise future long term deals with the Client,
5> Compromising
- This Negotiation style again may lead to a Lose-Win Situation because the first party wants to close to deal as soon as possible and not look at other possible alternatives and solutions. This may serve to the other party's advantage at the best.
Consider an example where you are working on a Client contract bid and are negotiating the proposal with the Client Business Manager. The Client does not agree to the implementation approach and may want to cut corners by shortening the Testing phase, now based on this concern, the first party instead of trying to come up with some creative alternatives, will begin to lean and then agree towards corner cutting and closing the deal which may not benefit your project and organization as a whole in the long term.
Negotiation Tactics
People who are skillful negotiators or have sufficient street smarts will use various negotiation tactics. Inept or unskilled people may not recognise these. Here are some such techniques used,
1> Playing Good Guy-Bad Guy
- There are 2 guys on one side of the table and one of them will be pro-deal and other one will be anti-deal guy.
2> Competitor Threat
- Negotiators may try to squeeze benefits from the other party by throwing other cometitor names in the mix.
3> Delay
- Skillful negotiators will try to delay and lengthen the negotiation process by using unnecessary questions, viewpoints and delays thrown in the whole mix. The whole purpose of doing so is to tire you out mentally and emotionally so you will agree to the other party's demands.
4> Not enough Authority
- Skilled negotiators never impress on the other party that they are the decision makers and will always leave some wiggle room to think over things. That is why always make sure you have the right decision making people at the negotiation table
5> Low balling
- Skilled negotiators will always try to low ball a deal and will offer you something that is much below the actual deal price (Although this may not always be true). So make sure you do your homework about the deal in question, the market position etc
Negotiation always happen between people (You do not negotiate with a robot, atleast not yet in the real world). This means each party/person will come with his own bag and baggage of emotions, goals and objectives etc. It is therefore mandatory and beneficial to come to a negotiation with a clear mind. Your attitude and perception sets the tone on the Negotiation table (atleast partially, if not completely). Please comment on whether you agree to these points or you feel there is anything else to add here.
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