1 Negotiation – the Delicate Art of Getting What You Want

2 Workshop Structure Exercise 1 – Warm-Up Basic Principles Tips and Tricks Exercise 2 – What’s in the Locker? Behaviors Exercise 3 – Team Negotiation Wrap-Up

3 Exercise – Warm-Up

4 The Starting Point (1) Negotiations always have a purpose – to find a basis of agreement between two parties. You can’t enter the process unless you are clear in your own mind … What are your aims and objectives? What are you hoping for (aspiration)? What’s the least you can accept (fall-back position)? What are the deal breakers?

5 The Starting Point (2) This is one way to think about negotiation – both parties are looking for the overlap area which gives a “win / win” outcome. Always remember there are two parties involved. Each party has its minimum position. Although you can sometimes get a deal beyond this, the other party will not be highly motivated on the subsequent delivery. Recognise that it’s not always possible to reach a deal (there may be NO overlap). Be willing to walk away from bad deals.

6 Structuring a Negotiation Preparation Exploration Bargaining Offer Agreement Do your homework! Validate assumptions and identify problem areas Establish areas of agreement and provisionally trade concessions Confirm the overall deal shape Formalise the agreement and agree the follow-up actions

7 Preparation is Crucial The better you prepare, the better the result you are likely to get. Know the market and its cost drivers. Is it a buyer’s market or a seller’s market? What’s the economy like? What about the particular supplier? When is their month / year end? How are they doing? What value do you have for them? How will they see YOU? What do they know about you? Who is representing the other side? What motivates them? What levers may be most effective with them? What authority do they have to negotiate? (Don’t be caught out if they are not empowered). Allocate roles clearly across your team, if you have one. Have your facts and figures prepared.

8 Exploration Validate the assumptions and draw out the problem areas … Confirm the overall objective of the meeting and that the right people are present. Clarify / recap any existing offer Ask questions and listen more than you talk. Don’t worry about the occasional silence. Listen carefully for hints about problems or opportunities. Don’t make concessions at this stage – but help the other party to understand your areas of concern.

9 Effective Bargaining Bargaining aims to trade concessions as you work towards a mutually acceptable agreement. Once this phase starts in earnest, it’s hard to get something for nothing – so try to get the best possible offer BEFORE you engage fully in the process. Discuss specific points but always remember that the deal AS A WHOLE is what counts. Be flexible – look for creative solutions to sticking points. (It’s not all about money …). Don’t waste your time on items where no progress can be made. If you don’t understand a blocker, ask questions. (“WHY can’t you keep the room open past midnight …”). Similarly, if there is a block on your side, explain why and invite suggestions. Don’t give anything away – use language such as “if we were to do X, could you do Y”.

10 Trading for Value What We Want More Important to Us Less Important to Us What We Can Offer These are our best trades! and the same applies to the other side too … we need to understand their matrix too, and the perfect trade means that BOTH sides get something they want in exchange for something they can easily give away.

11 What’s in the Locker? Cash on this deal o Price o Payment Schedule (Cashflow) o Additional / Ancillary Business Cash later o Repeat Business o Related Business (Tell Your Friends!) Flexibility (what’s on offer?) Time (when can we commit?) Effort (can we reduce their costs) Goodwill o Additional business (see above) o Publicity

12 Managing the Discussion Real negotiations often have many elements – making it easy to lose track or miss opportunities. Take your time and manage the discussion. The same principles apply as to any effective meeting – agenda, structure, periodic summaries, playing back key points for confirmation and reaching a clear conclusion. Avoid surprises! Be clear in your communication – make it easy to reach agreement. Use open questions to break stalemates and seek new / lateral solutions. Take breaks when you need time to (re-)assess. Remember it’s the whole package that counts, not “winning” on every individual point. Get the best deal possible BUT don’t get carried away. No-one wants to snatch defeat from the jaws of victory …

13 Offer and Agreement All being well, areas of agreement will be established and deal-breakers will be removed. Once all areas have been considered, assess the overall position (take a break if necessary). Summarise the overall offer. Review all the elements on both sides … is there anything extra you can offer at this point which may secure a final concession to close the deal? (In general, the other party will still have some final room for manoeuvre – but don’t conflict with any existing agreement, or change your position unexpectedly). If agreement is reached, ensure a common understanding, agree who is writing it up (always offer to send notes as a minimum) and by when.

14 Behavior Relationships are crucial DURING negotiation Good relationships lead to better understanding, more openness - and often to extra concessions Relationships also OUTLAST the negotiation A good relationship will lead to good delivery and get problems solved. So … Be courteous and respectful Be consistently Act with integrity. (and none of these mean being soft!)

15 Exercise – Team Negotiation

16 Wrap-Up