Business Negotiation February 17, 2016

Performance Must be Measured

It is not enough for two department heads to agree on a budget allocation or a new procedure for alleviating a problem. Another matter that often arises to impact relationships is the parties’ unwillingness or inability to define and settle how performance will be measured. When two negotiators fail to agree on this issue at the table, resolution later will be far more difficult.

In that respect I recall a negotiation that took place years ago. The 300-person purchasing department of a large corporation was moving from one building to another two miles away. Bids for moving were obtained from outside sources and the company’s own moving operation. The company’s own moving department’s proposal was lower than the outside sources. Negotiations between the purchasing manager and manager of the in-company moving operation went smoothly and an agreement was reached regarding the final price, what was to be moved and the timing of the project. All moving was to take place over the weekend and be done by 5 A.M. Monday morning.

On that Monday morning when the purchasing staff reported to work in the new building they found their offices a mess. Litter was everywhere: empty paint cans and brushes on the floors, wall construction materials in piles, heavy layers of dust on everything, and corrugated boxes, full and empty, strewn about.

A hasty conference was called between the purchasing manager and the in-company moving manager. Purchasing soon learned that in the moving business the word “done” with respect to performance means moving what is to be moved, when and where it is directed by the customer. “Done” does not necessarily include cleanup unless clearly stipulated in the contract and defined precisely in terms of what, when and who will do the work. It took purchasing days of delay, painful effort and added cost to do what they assumed would be done for them.

The cleaning disaster taught the purchasing manager a lesson he should already have known. When dealing with others in your own organization, or elsewhere, the rule is clear: always define the scope of work to be performed, who will do it and how it is to be measured. Precision in the use of words is crucial.