Negotiating Satisfaction

A negotiator should approach their negotiation much like an investor approaches the stock market. With today's wild swings in the stock market, this can be quite a challenge! But, here's what I'm talking about.

Prudent investors look to increase the value of their money. They look at growth potential, expected dividends, and the risks associated with an investment. Investors attempt to calculate the present value of the potential investment given the expected growth rate and dividend payouts. In this way, their investment decision is balanced against the associated risks; compared to other potential investments; and a decision is made to buy or not. Is this potential investment fairly priced, over-valued or under-valued?

A good negotiator does the same thing -- but on a very subjective level. Negotiators need to focus on the present value of satisfaction; determine the value of future satisfactions (and dissatisfactions); and compare this to making a deal, making no deal, or working to create a better deal.

This brings up a fundamental but subtle point about any negotiation. The flow of positive and negative satisfiers in any deal is in the mind of each participant. Some participants are optimistic about the future. Others are pessimistic. Some want immediate satisfaction, while others are prepared to wait.

Much of your strength as a negotiator comes from your ability to provide satisfaction to the other party. You can help increase the present value of the deal by getting the other party to place a higher value on future satisfaction. You can do the same thing by showing the other party that future dissatisfactions are unlikely.

Concessions can play a big role in creating a flow of satisfaction. But this flow between people is not a simple as it looks. Before you start making concessions to increase the other party's satisfaction, think about how you want to do it. Take into account who will benefit, in what way, when, and from what source.

A concession can provide satisfaction to the reciver now or later. Maybe the receiver wants to take it all at once or a little at a time. A concession can direct its benefits to the organization, specific parts of the organization, third parties, to the other negotiator on a personal level, or to all of them at once. Make sure your well meaning concession does indeed provide satisfaction -- and not doubt, or dissatisfaction. Concessions can move people closer together (raise satisfaction) or move people further apart (decrease satisfaction). Be careful!

Every negotiator has the same role to perform: to raise the present value of future satisfactions for the other person and help the other party reach a decision that will provide satisfaction to both parties.

Good Suppliers Make Customers Better

In the July, 2007 issue of GLOBAL LOGISTICS & SUPPLY CHAIN STRATEGIES magazine, they report on their annual survey of the best suppliers in the transportation industry.

Out of the 1800 nominated suppliers they selected the best 100 and looked for what set them apart from their peers. The most common 10 qualities that users looked for in their vendors were:

Reliability (of course) --- "When a vendor has proved itself to be rock-solid, an enduring partnership is assured."

Repeatable excellence --- Good performance is expected routinely, but nearly a quarter of the finalists had a record of exceeding expectations on many occasions.

Value and cost savings --- This may be a good place to comment that you will not find in these top ten qualities any mention of lowest price, cheapest or lowest bid. The most important financial measure was creating value in increasing sales, production efficiency or other revenue related measurements.

Expertise and knowledge base --- Customers are looking to their suppliers to provide best practices specific to their market, product and industry.

Problem solving ability --- "Many of our nominations were based on companies that had experienced emergencies, but thanks to the supplier's response cost and delays were minimized."

Continuous improvement --- "Especially for technology vendors, companies want to see a plan for product development, so they know their needs will be met in the years ahead." Suppliers that help their customers be "first to market" will always be the least threatened in a competitive marketplace.

Support --- So many manufacturing and transport firms have experienced multiple rounds of downsizing that they now must rely on their vendors to do many of the functions they no longer have manpower to do. Winning suppliers now manage local and remote inventories, provide computer interfaces for the elimination of paperwork and quicker deliveries, assume maintenance functions……….

Positive culture --- The phrase most often mentioned in all of our nominations was "can do". "The greatest accolades were bestowed on those vendors that took on any challenge and found a way to accomplish a goal without complaints or excuses."

Global capabilities

Strong management --- Strong and long-term supplier leadership insures that no matter how many people in the selling functions leave and are replaced, agreements will be honored. In other words, there will be no erosion of commitment no matter who is managing the account.

I think these 10 winning characteristics provide a great checklist for self-evaluation, no matter where you are in the supply chain.

Remember, having all these positive characteristics does not matter much unless your other party is aware of them!

Negotiating Essential To Your Career

A recent newspaper article talked about the importance of 'negotiating' relationships inside your own organization. Getting promoted may depend upon your ability to negotiate internal relationships.

Telecommuters may go nowhere – career wise.
(Los Angeles Times – January 17, 2007)

Maybe Woody Allen was right, that 80% of life really is just about showing up. At least that's what most executives seem to think about people who work from home. Telecommuters are less likely to get promoted than peers who head into the office every day, according to a global survey of 1,300 executives. (Conducted by Los Angeles-based executive search firm Korn/Ferry International.)

Executives are concerned about promoting a hardcore telecommuter to a management position in which face time with employees is essential. . . 61% dinged telecommuters as being poorer bets for advancement.

If you're not cultivating the right network of people, you won't move up in any setting, whether you're telecommuting or not," said Jennifer Allyn, a human resource manager for accounting firm PricewaterhouseCoopers, which allows many employees to telecommute. But she and other executives recognize the pitfalls for workers, offering materials to help telecommuters and employees who travel frequently to maintain strong office relationships.

Employees are quick to cite the advantages of their home office routine, including no time lost to commuting, the ability to work in pajamas and bedroom slippers, and quieter surroundings. Human resource managers say telecommuting and other work-life programs cut turnover and improve productivity.

The findings of this study speak to a "general fear" that workers who have the boss's ear in the office will get promoted ahead of an off-site colleague who is doing better work. So if you are a telecommuter, beware. Find ways to regularly interact and negotiate with others in your organization. Use these opportunities to develop your relationships. Your career could depend on it!

Note from the Author . . .

We are very pleased with the readership of this site, but we would like to ask a favor.

If you don't have a comment on a particular article, how about a question regarding negotiation?

Perhaps you would share with the readership a difficult negotiating problem you have or are encountering.

We would like to hear from you. Is there a topic you would like us to discuss?

Jim Sauerwein