Align Your Objectives

Misalignment Could Compromise the Outcome

The commercial director had been subjected to years of value erosion by this particular client due to sustained and successful downward pressure on price. Enough was enough – the commercial director wanted to go into negotiations taking a very aggressive stance… the MD wanted a much more cautious approach.

Negotiate with One Voice: Agree Your Objectives Before You Start

Do your key negotiations derail because you and your colleagues disagree on the terms of negotiation success? As Yogi Berra, the famous baseball player once so eloquently said, ‘if you don’t know where you are going you might end up someplace else’. One of the biggest obstacles to any successful negotiation outcome is misalignment of negotiation objectives within the team. Here are 6 steps to keep your negotiations in focus and on track.

When developing a negotiation strategy with clients, I often find myself facilitating heated discussions with management to try and determine what they really want as a successful negotiation outcome.

Finance, procurement and supply chain are mostly focused on maintaining cash levels and cost reduction; sales and marketing want to maintain long-term relations with their key clients; and top management is under pressure to deliver sustained profitable growth across the business. Differing personal agendas and contrasting short-term vs. long-term objectives lead to increased negotiation complexity and likely failure if a common direction is not agreed upon from the outset.

A negotiation team needs to speak in one voice to develop a robust and systematic course of action. Once this alignment is achieved it must be maintained at each step of the way to see the negotiation process through successfully.

I recently worked with a mid-sized manufacturer that was renegotiating its annual contract with one of its key accounts. The commercial director and managing director were at odds on a host of issues – walkaway points, the ability and need to impose varying levels of punitive measures and the variables to be traded between parties to name a few.

The MD was mostly concerned about losing business from this account in the event of a ‘no deal’ scenario, something he and the company could not afford; the commercial director had been subjected to years of value erosion by this particular client due to sustained and successful downward pressure on price. Enough was enough – the commercial director wanted to go into negotiations taking a very aggressive stance. The MD wanted a much more restrained and cautious approach.

In the end, after much coaxing and armed with thorough and accurate data, I was able to bring them together in their divergent views and see a distinct path forward. We defined very succinct objectives, clear opportunities for sustained growth between both companies and a series of sanctions to be implemented if agreement failed. In the end, my client took control of the process, aligned internally and was able to reach a profitable long-term deal.

The above scenario is a common one. Divergent views and approaches to negotiation must be unified into a common vision otherwise failure will be inevitable. Here are six steps your teams can take towards creating internal alignment:

1. Share views – Don’t plan for negotiations in a silo. Set time aside to get varied opinions from throughout the business on what will determine a successful outcome. This creates buy-in and alignment. Once objectives are clearly defined make sure they are fully signed off by senior management.

2. Get good data – Obtain sufficient and reliable data to make informed and clear negotiation decisions about your needed objectives. Accurate data is a pre-requisite to any objective defining exercise.

3. Know what THEY want – Determine what is important to your company, but also spend a considerable amount of time trying to determine what is important for the other side. Remember, when you negotiate collaboratively, you negotiate WITH your counterpart not AGAINST them. How can you help them to serve YOUR purposes? By developing and sharing these insights with the wider team you will create a common view as to what is most important for you.

4. Last year’s contract – Examine previous years’ contract negotiations. We are all creatures of habit and individuals will most often repeat their behaviour from one year to the next. The more you can accurately predict their actions the more you can control the negotiation outcome.

5. We must make them move – Align on best alternatives you may have if a no-deal scenario unfolds. Identify what realistic sanctions you can exercise if the negotiation does not proceed constructively. Make sure senior management is in agreement and willing to implement such punitive measures.

6. Escalation is inevitable – Manage the negotiation escalation process by continuously engaging all senior stakeholders internally. When negotiations get heated, senior management will be asked to intervene in the process. They can either make concessions or impose sanctions. Make sure the parameters of both are defined from the outset. Unwanted capitulation in the heat of the moment can be avoided with proper planning and alignment. Assigning clear negotiation roles will steer the escalation process in your favour.

Karim Davezac is Managing Director of Merindol Negotiation