By focussing on how negotiation works best in a corporate procurement environment, we can maximise the benefits seen by our clients. Buyer-focused negotiation training and coaching is key to this.
Negotiation is a central activity in a procurement or purchasing organisation and is the mechanism through which much supplier derived value is delivered. Being excellent at negotiation should be a core skill for our teams.
Negotiation training has been around for a long time and it is easy to assume that enough has been done. However, informal surveys of participants in courses suggest that there is often a long period between refreshes in negotiation training. Alongside this, few people receive feedback on how they negotiate, which suggests that learning opportunities are restricted for this most critical skill.
As such, we should be considering the ways in which we can enhance the negotiation skills which our teams can access and to do this, it is useful to be clear about the business case for negotiation training and coaching.
Increase in Effectiveness
Studies by respected bodies on the effectiveness of well prepared negotiations suggest that there is an uplift of 50% in outcomes when compared to other negotiations. Each study looks at different approaches and different measures of effectiveness, but all return the same improvement level, which could be regarded with scepticism.
However, the feedback from post education and coaching teams is that substantial uplifts in outcome are demonstrated, so we can assume that there is an increase in performance available. There may be reporting bias in some areas, but the underlying premise is sound: increased skills and preparation lead to better results. In our reviews, the 50% number has been seen often enough that it works as a good basis to start from.
The other challenge here is the definition of a ‘well prepared’ negotiation. Again, a review of the various papers circulating suggests a general approach which focuses on stakeholder engagement, firm links to business strategy, clarity of interests and the areas being negotiated, and great detail preparation in a range of areas. The difference between well prepared and under prepared can be seen easily when the two are directly compared, but takes practice and understanding for reviewers to clearly identify the features which make a negotiation fall into one or the other of those categories.
The other factor is looking at increases in performance over a longer run: tens of negotiations rather than a single negotiation. A single negotiation may not deliver a dramatic change, for a variety of factors (not least the challenge of measurement). However, where effective improvement is being delivered, a change in overall effectiveness can be expected, particularly when measuring post implementation results.
Return on Investment
Linked to the increase in effectiveness is the ROI argument for negotiation training. As the whole concept of buyer-focused negotiation training and coaching looks at the idea of delivering a better result, it can be seen that an improvement against a single negotiation in an organisation buying a Negotiation for Advantage course can easily cover the costs of a single course, but the opportunity spreads across all attendees, with a long-lasting impact in enhanced preparation.
The rate of return on a buyer-focused negotiation training and coaching course is massive compared to the investment, particularly when the training is backed up by excellent coaching, objective setting and review. Our general experience suggests that any particular course should identify one insight during the course which leads to the generation of an improvement which will pay for the course.
Duration of Benefit
Immediate application of the learned approaches is key to ensuring benefits derived in the course are delivered, and continue to be delivered over time. For this reason, our overall approach aims to use real examples from the participants working lives to accelerate that application. We aim to ensure that a number of people walk out of the training with well developed and executable negotiation plans which can immediately be either implemented or developed to the next stage for effective use.
However, when linked to developed coaching and review approaches, the use of the course content can be extended beyond that initial enthusiasm into a longer term change of behaviour. A part of this is through the development of high quality negotiation strategies, which act as a repository for the history of the development of a negotiation, a record of the approaches taken and the areas which needed to be negotiated, and a record of what worked well and what could be improved.
This means that the business starts to create a repository of negotiation approaches, which both builds capability and shortcuts preparation for the next negotiation. When we achieve this level of planning and insight, the benefits from a single negotiation course stretch forward in time and provide benefits over a number of years.
There is a further benefit available when we consider our position relative to our competition. if we are buying from the same marketplace, and some of the same suppliers, then the business with the best overall approach to negotiation (and category management) will have a competitive advantage. When that advantage is spread across the supply chain, then it can build into a decisive difference in experienced costs and access to value. This is significant. The tail end businesses may end up in a deeply uncompetitive place, and find recovery more challenging. By optimising negotiation approaches and extracting the maximum value from the suppliers, the risks of un-competitiveness can pass to others.
Poor negotiation is often driven by issues in internal alignment in the business. Procurement ends up negotiating on its own behalf, and other parts of the business do the same. Excellent negotiation approaches, as described in our training, form a critical part of increasing the internal alignment and ensuring that there is a single, effective business negotiation in place. Benefits from this are not just from the negotiation, but from far better internal alignment and communication in general.
There are a wide range of benefits available to those embarking on our Negotiation for Advantage courses. The immediate impacts from improved negotiation preparation are supplemented by long lasting effects and by improving competitive position. All concerned with optimising outcomes should consider the development of a business case to access these benefits.
We would be happy to talk with you about buyer-focused negotiation training and coaching and provide figures and examples to support your efforts.
Negotiation Training focussed on Procurement Professionals
Our approach to negotiation embraces the insights and approaches from category management and SRM, maximising the reinforcement between these areas. We also follow up on the strong linkages between negotiation and effective stakeholder management.
Focussing on Procurement maximises the relevance of our approach to our clients
About Mark Hubbard
30+ years experience in procurement and supplier management, in line and consulting roles
Previous employment: Positive Purchasing Ltd, SITA,
QP Group, BMW, SWWS, Rover
Education: BSc in Engineering Metallurgy, MBA University of Plymouth
CIPS: Current Member