HOW TO ENGAGE A RELUCTANT NEGOTIATING PARTNER

A large corporate client was trying,  unsuccessfully,  to negotiate  a long term supplier agreement with a small US electronic components manufacturer with a global reach.

Negotiations had been on and off for several months and was at an impasse. They were not making much progress in terms of pricing, type of contract (sole, dual or multi-source) or mutually acceptable warranties, assurances and other terms and conditions. 

Our client had very specific needs to meet their newly instituted just-in-time, lean manufacturing processes, and customer made-to-order products. Although there were alternative suppliers to contract with, they felt that they  would get better pricing, high service levels, responsiveness, flexibility and attention from the smaller company that was anxious to prove itself.  

Our client was surprised at the cavalier attitude and recalcitrant tenor of the smaller company and would have expected them to jump hoops to get this business. They approached us for negotiation advice and strategy, challenging us to put talks back on track, to repair the strained relationships and to salvage deal.

Identifying the Challenge

As we listened to our client's point of view, we too were puzzled at the other party's apparent reluctance to pursue this business. I made a mental note reminding myself that if a negotiator's position is not making sense, it usually means that there is further unknown information that I need to work to uncover, expand and develop.  

Before offering our client any advice, I needed to put together a diagnostic working hypothesis. Towards this end, I questioned our client on the specific dynamics of the conversations thus far, and requested copies of email correspondence, red-lined contracts and any other documents that may be pertinent to the talks.

After careful study of the material, it became abundantly evident that our client perceived themselves as the Goliath in this relationship. They were asserting themselves by imposing unreasonable demands rather than engaging the other party in good faith, balanced negotiations. 

Our hypothesis was that the small company felt belittled, abused and humiliated. Moreover, we premised, they were concerned about entering into what they perceived to be an exploitative and oppressive relationship with a demanding never-satisfied customer.

We needed to help our client change this conversation, if an agreement was ever to be reached.

Finding the Solution

Good negotiation outcomes are achieved when procedural justice (that parties feel that the procedure and process are just and fair) has adequately occurred. Parties need to feel that they are being treated with dignity, fairness and respect and that they are being taken most seriously.

A common violation of this necessary procedural justice and fairness is to attempt to drive a solution or proposal before adequate dialogue and development of information with the other side has happened. 

Our client's negotiation team needed to take a few steps back and follow a prescribed process, part of which was to gather and develop as much information from the other side before making suggestions or proposals. They would have to demonstrate understanding of their counterparts needs, concerns, fears and constraints before they could craft and present potential solutions.

We coached the team intensively as we prepared them for the next round of negotiations. We vigilantly instructed them to use the entire session to elicit relevant information from the other side and to demonstrate understanding, as opposed to asserting their demands.We armed them with advanced communication skills together with powerful questioning and probing techniques to accomplish this effectively and efficiently. In addition to developing important information with which to further fuel the negotiation, we anticipated the other side feeling more respected and heard, which we hoped would reverse some of the damage already done.

Our strategy worked like a magic spell.The dynamics and tone of the negotiations transformed into a collaborative partnership.The two companies together hammered out an innovative agreement that addressed pricing, terms & conditions, deliverables, warranties and remedies to their mutual satisfaction. 

The foundation for a strong profitable alliance and a productive working relationship had been built.