HOW WIN-WIN NEGOTIATION TRAINING TECHNIQUES CAN HURT YOUR BUSINESS

Below is an actual letter we sent to "Company X" after speaking with an employee we'll call Ms. Smith. It was important to us to let the executive know what we felt was taking place regarding the negotiation training skills of Company X employees. You might find it relevant to your situation.

Dear Executive,

Please see this letter in the spirit of supporting you and your efforts as the leader of Company X. It is not intended in anyway to cast a shadow over anyone's effort and work. It is only an advisory that I hope will allow you to see what otherwise you and your negotiating team might not be aware of. I have thought about this a great deal and I feel strongly that I have a responsibility to you and your organization.

I had a very informed discussion with Ms. Smith last week. I learned a great deal of where your negotiating team stands today. When she first approached my team in late May both she and John felt it critical for Company X's future success to change the way their team negotiates. Having read my negotiation book they said they could see clearly what was taking place. Without a change from a compromise- to a decision- and vision-based negotiation training mindset, Company X would be at a strong disadvantage going against procurement negotiation pros. We had planned a two day negotiation training workshop during the summer for you and your executive team to decide if a comprehensive negotiation training program to bring about the required change was called for or to be pursued. Allow me to create a vision of what is taking place at Company X that you might not see and I am sure Ms Smith does not see.

Conventional negotiation wisdom is to play give and take. Collective bargaining (win-win trained negotiation) is the model taught by Harvard and all others. Compromise is required and has served many well when the other side stays within the boundary of "good faith" bargaining. Unfortunately, procurement in this day and age anywhere in our global economy is not bargaining in good faith and has not been for a long time. They drive your margins down by attacking the emotional psychology of your negotiation employees with statements like, "you are arrogant", "you are not a good partner", "you will not make our top three if you don't lower your price". They compound the emotion by piling on many different negotiation demands, urgency, false large quantities, meetings, and calls to superiors. These are just a few of the standard negotiation statements and tactics they are making to drive the emotion of fear of losing the deal. Hence your negotiation team has no choice but to return to your leadership and request compromise of price, or terms all the while promising to get the deal if granted. Worse, to your leadership team it appears it has to be that way with no way out except repeating the negotiation process hoping to do a little better now and then. Every now and then someone will use the negotiation tactic, raise the price knowing you will have to give deep discounts hoping that will ease some of the pain by ending at a higher price in the end.

So, how does your negotiation team defend themselves? Well, the only negotiation tool they have, they think, is to justify their price. They are asked to explain your margins, and costs. For example, your negotiation team will hear from the other side, "Ok, what is your cost for this? Explain how you came to that price." Or, "we want you to break down your cost for each of the critical parts in the process of the semiconductor." If your negotiation team falls into this trap it can almost never climb out. Here is why. Once they give up this critical proprietary information, they will always hear that the other guy has beaten them. "Now that you have given your cost structure we don't see how you can compete." "You have got to lower your price." If you ask your negotiation team what will win this deal, they will say price. And if they don't succumb with a lower price they will tell you, "you lost the deal on price." If you tell them not to give this information, they will tell you, "we have too, everyone else is." You will ask how they know that and they will tell you, "because the customer told us."

There are some fundamental problems many are not aware of. Until the negotiation people on the other side who are truly responsible for the success of their product see the critical importance of your product and see your product is critically valuable you will have negotiation teams settling with procurement at reduced pricing. The ability to meet with and discuss critical issues with the real decision makers who have the responsibility is a learned capability. Procurement is not responsible for the success of a product or service, only of driving prices down.

Negotiating decisions are not made with facts, they are made with vision and emotion by those responsible. I have fear Company X is falling into a trap. Ms. Smith's focus has gone from her negotiation team becoming effective negotiators to knowing more about cost and pricing. Unfortunately, that plays directly into procurement's hands as I discussed above. Ms. Smith may not be aware, but, there are two problems she faces that are probably unseen. First, the negotiation team thinks it is doing the very best it can already, just give us more ammo for costing and pricing, and second, the negotiation team does not know what it does not know. All it knows is compromise-based negotiation.

In the last 20 years I have seen this over and over again. Ms. Smith's team wants more negotiation training on how you price and build your semiconductors. She is under pressure from them to have the "secret" negotiation training information or the "magic bullet" to win the argument over pricing, cost of design, cost of manufacture and etc. with procurement. Unfortunately, that is exactly the wrong thing to do. Once they engage in the "argument" of how pricing is set and the parameters and how costs and pricing are managed, they will be attacked emotionally for defending pricing that is too "high, a rip off, or your cost of goods must come down and etc." Ms. Smith would be better off to go the other way and give them no information on pricing and such. No secret pricing sauce to argue over.

To end this, Ms Smith offered that maybe I could do one day negotiation training in September with her negotiation team. I have thought about this a great deal and must decline. I cannot in good conscience accept the monies for such a negotiation training day knowing I will only leave your negotiation team confused and disturbed. I would be more harm than good and don't want to participate in such an event.

If you would like to have your executive team spend a day to discover what we do and how to institute a comprehensive ongoing program of negotiation training and coaching that is completely different and drives a more effective organization, I would enjoy participating and facilitating such a negotiation training and coaching day.

Very Best Regards

Jim Camp, President

Call Jim Camp at 614-764-0213 or email him at jcamp@startwithno.com to find out more about Camp Negotiation Systems Negotiation Coaching and Support for executives.