Why do we spend so much time negotiating the wrong things

Negotiation is supposed to help us reconcile perspectives and interests. A simple definition is “a formal discussion between people who are trying to reach an agreement”. Based on this definition, a high proportion of business-to-business negotiations must be considered successful: they reach an agreement. The problem with this definition is that it is too inclusive: merely reaching an agreement does not mean that either or both parties benefitted from that process.

IACCM research findings suggest that most business-to-business negotiations suffer from some (apparently fatal) defects. Among these are:

·   A lack of coherence;
·   Unclear goals;
·   Rigid rules and standards;
·   Lack of confidence in capabilities and process;
·   Inconsistencies of culture or value that negotiators make little effort to understand.

How do these manifest themselves? The findings here are interesting. For example, negotiators on both sides claim that they value a sense of partnership – yet in most cases neither feels the counter-party offers this. Indeed, on digging further, you find that negotiators are generally not confident about the behaviour or performance of their own organisation, so they are understandably hesitant about what they will commit to, even though they expect full commitment from the other side.

In addition, findings show that each side looks for “responsiveness” and hopes for a “single point of contact, empowered to make decisions”. And again this is something that both parties consistently feel is something the counter-party lacks or – ironically – if they find a counter-party with these characteristics, they don’t believe what they are being told!

Flexibility is another key value, but is once again something that each side feels is missing from the other negotiating party. The findings show that participants are critical of other parties for their use of standard-agreement templates, which the participants feel either reflect the wrong type of relationship or introduce an adversarial focus on legal and financial risk allocation. 

A key issue related to flexibility is how people engage with cultures that are different to their own. Different cultures approach things differently, which has important ramifications in any negotiation, and yet there is little evidence that the parties seek to explore those differences and address their respective concerns.

Ultimately, many negotiations suffer from a lack of clear ownership and leadership. The interests of competing stakeholders make coordination extremely difficult. As a result, negotiations are often quite fragmented and decision-making may be inconsistent and desired characteristics like ‘partnering’ and ‘collaboration’ are lost in an atmosphere of scepticism, cynicism and a general lack of trust.

In an environment of growing complexity and increased interdependency, the need for organisations to work together in relative harmony has never been greater. Right now, the typical framework and approaches to negotiation are clearly not helping. We reach an agreement, but at what cost and with what loss of opportunity?

Contributed by: Tim Cummins, President of the International Association of Contract & Commercial Management

Article first appeared in Bespoke Procurement Bulletin:  BESPOKE.png