For organizations who are buying from non-competitive supply markets (for example, the supplier solution is the only viable option for reasons of specification, location or confidentiality), the most suitable negotiation route is a collaborative negotiation.
Given the fact that there is no credible alternative to this supplier, many such negotiations still fail to achieve any agreement. Or the agreement made is sub-optimal to one or both parties. Buyers cite the reasons for this, which often include: ▪ Lack of flexibility of the supplier ▪ Personality clash ▪ Inadequate or inappropriate concessions made on either side
It is essential to review such negotiations and to assess whether the necessary prerequisites for collaborative negotiation were in place. For example:
1 Mutual trust
The correct negotiation atmosphere must exist to negotiate in collaborative negotiations. Many commercial buyers and contract managers allow their ego to cloud their negotiation planning, often thinking “I will start off collaborative and see what the other party does – I may switch styles if I don’t like how things are going”. If collaboration is perceived as a bargaining technique then it will not work. The commercial manager must have the courage to select the appropriate style and the associated behaviors and commit to them, regardless of their ego or personal preferences.
2. A positive relationship
Where there is dependency, it is essential to treat the commercial relationship as if it has value in its own right and must be nurtured appropriately. It is not a matter of being “friendly”, which is often a misinterpretation of collaborative negotiation. The relationship must be underpinned by respect, with practices such as sharing of goals, continuous improvement activity and joint effort to identify and deliver mutual benefits.
3. Shared interests
In collaborative negotiation, all parties acknowledge that a negotiated settlement will always be superior to no agreement. Where it is accepted that agreement is in all parties’ interests, the focus of negotiation becomes how everyone can contribute to meeting the goals of all parties and not just maximizing their own spoils.
4. A zone of possible agreement (ZOPA)
A ZOPA is the negotiating area where agreement is feasible, regardless of which party appears to be achieving a greater “win” from negotiation. All negotiation parties must establish whether a ZOPA even exists early on to avoid wasted effort. This can be achieved through sharing organizational interests accurately and adequately.
Collaborative negotiations typically fail because one or more of these conditions was not in place, either because the negotiating parties were not aware of their importance, or due to a lack of skill on the negotiating parties’ part. Unfortunately, many commercial negotiators would rather treat negotiation like a game or a gamble than apply a tried and trusted effective negotiation framework to their efforts.