As I sit in my garden this Easter holiday listening to the peaceful sounds of the birds singing in the trees and watching them and sometimes grey squirrels on the lawn, keeping a wary eye out for the cat, I am minded by way of contrast of some of the very aggressive approaches to contract negotiation I have encountered.
I am here thinking in particular about complex service contracts such as IT outsourcing or facilities management contracts, but I suspect the principles have a more general application.
As these contracts are being procured and negotiated, I suggest that there is one cardinal principle which should be applied. Will this agreement enable the successful and timely delivery of services to the customer with a reasonable but not excessive return for the supplier?
In order to achieve this ultimate goal of successful delivery and return I propose that the parties need to establish a co-operative and constructive relationship that should commence during the formation phases of the contract and continue to enable both sides to ride out the inevitable challenges that will always come in any complex delivery programme.
“Winning” the negotiation, “scoring legal points” or “getting one over on the other side” are really irrelevant. However too often in private practice and in industry I have seen suppliers and customers (and their advisers) behave in ways like this that appear designed to avoid or even deliberately destroy any “partnership” approach. I have seen procurement advisers (a profession I greatly admire in general by the way) insisting price is all that matters and driving suppliers to what could literally be bankruptcy. I have watched aggressive lawyers in negotiations refusing to shift on any point, even when their clients want them to. Some companies refuse to even considering changing their view on a perfectly reasonable “ask” because they have a “policy” set in stone by their headquarters organisation – who of course are too remote and aloof to even be approached. I have reviewed contracts drafted by very competent lawyers that are so one sided as to be almost laughable, often supported by false contentions that these are “industry standard.”
See for example this Harvard Law School article 10 Hard-Bargaining Tactics to Watch Out for in a Negotiation which commences with:
Some negotiators seem to believe that hard-bargaining tactics are the key to success. They resort to threats, extreme demands, and even unethical behavior to try to get the upper hand in a negotiation.
In fact, negotiators who fall back on hard-bargaining strategies in negotiation are typically betraying a lack of understanding about the gains that can be achieved in most business negotiations. When negotiators resort to hard-bargaining tactics, they convey that they view negotiation as a win-lose enterprise. A small percentage of business negotiations that concern only one issue, such as price, can indeed be viewed as win-lose negotiations, or distributive negotiations.
Much more commonly, however, business negotiations involve multiple issues. As a result, these so-called integrative negotiations give parties the potential to create win-win outcomes, or mutually beneficial agreements. Business negotiators can negotiate by brainstorming creative solutions, identifying differences in preferences that can be ripe for tradeoffs, and building trust.
I also found this article which comments Subsequent to the 1980's, a lot of companies had a tendency to concentrate their negotiation training on aggressive tactics. Although the application of these tactics will often yield a short term result, we don't support using them in a professional business context. The reason we don't support their usage is because of both the long term damage that they will impact on your business relationships, and the dubious ethics of employing these manipulative tactics.
While this Forbes article provides some good advice on dealing with aggressive negotiators commenting that
Aggressive types are projecting an image of what they think a negotiator should be, and they end up coming off as irritating or egotistical. These people like to be aggressive with deadlines and threats, but they don’t have a strong grasp on the underlying fundamentals of the negotiation. Aggression is their entire strategy.
Negotiation is all about preplanning, setting clear objectives, getting stakeholder buy-in, having confidence in yourself and your colleagues, and using the process to determine if you actually want and will benefit from a good business relationship with the other organisation you are dealing with.
Agreeing successful contracts is about mutuality and give and take – any truly one sided agreement will end in tears. As Winston Churchill once said “Courage is what it takes to stand up and speak; courage is what it also takes to sit down and listen.”
To repeat a quote I think I have used before, but is very relevant in this context We cannot negotiate with people who say what's mine is mine and what's yours is negotiable- John F Kennedy.
Here (as we all rewatch old movies) is an apt quote to conclude from Star Wars Episode II Attack of the Clones.
Anakin: When I got to them we got into aggressive negotiations.
Padme: Aggressive negotiations? What’s that?
Anakin: Ah, well, it’s negotiations with a lightsabre.
Sort of sums it up. Have a great Easter.
I am here thinking in particular about complex service contracts such as IT outsourcing or facilities management contracts, but I suspect the principles have a more general application.
As these contracts are being procured and negotiated, I suggest that there is one cardinal principle which should be applied. Will this agreement enable the successful and timely delivery of services to the customer with a reasonable but not excessive return for the supplier?
In order to achieve this ultimate goal of successful delivery and return I propose that the parties need to establish a co-operative and constructive relationship that should commence during the formation phases of the contract and continue to enable both sides to ride out the inevitable challenges that will always come in any complex delivery programme.
“Winning” the negotiation, “scoring legal points” or “getting one over on the other side” are really irrelevant. However too often in private practice and in industry I have seen suppliers and customers (and their advisers) behave in ways like this that appear designed to avoid or even deliberately destroy any “partnership” approach. I have seen procurement advisers (a profession I greatly admire in general by the way) insisting price is all that matters and driving suppliers to what could literally be bankruptcy. I have watched aggressive lawyers in negotiations refusing to shift on any point, even when their clients want them to. Some companies refuse to even considering changing their view on a perfectly reasonable “ask” because they have a “policy” set in stone by their headquarters organisation – who of course are too remote and aloof to even be approached. I have reviewed contracts drafted by very competent lawyers that are so one sided as to be almost laughable, often supported by false contentions that these are “industry standard.”
See for example this Harvard Law School article 10 Hard-Bargaining Tactics to Watch Out for in a Negotiation which commences with:
Some negotiators seem to believe that hard-bargaining tactics are the key to success. They resort to threats, extreme demands, and even unethical behavior to try to get the upper hand in a negotiation.
In fact, negotiators who fall back on hard-bargaining strategies in negotiation are typically betraying a lack of understanding about the gains that can be achieved in most business negotiations. When negotiators resort to hard-bargaining tactics, they convey that they view negotiation as a win-lose enterprise. A small percentage of business negotiations that concern only one issue, such as price, can indeed be viewed as win-lose negotiations, or distributive negotiations.
Much more commonly, however, business negotiations involve multiple issues. As a result, these so-called integrative negotiations give parties the potential to create win-win outcomes, or mutually beneficial agreements. Business negotiators can negotiate by brainstorming creative solutions, identifying differences in preferences that can be ripe for tradeoffs, and building trust.
I also found this article which comments Subsequent to the 1980's, a lot of companies had a tendency to concentrate their negotiation training on aggressive tactics. Although the application of these tactics will often yield a short term result, we don't support using them in a professional business context. The reason we don't support their usage is because of both the long term damage that they will impact on your business relationships, and the dubious ethics of employing these manipulative tactics.
While this Forbes article provides some good advice on dealing with aggressive negotiators commenting that
Aggressive types are projecting an image of what they think a negotiator should be, and they end up coming off as irritating or egotistical. These people like to be aggressive with deadlines and threats, but they don’t have a strong grasp on the underlying fundamentals of the negotiation. Aggression is their entire strategy.
Negotiation is all about preplanning, setting clear objectives, getting stakeholder buy-in, having confidence in yourself and your colleagues, and using the process to determine if you actually want and will benefit from a good business relationship with the other organisation you are dealing with.
Agreeing successful contracts is about mutuality and give and take – any truly one sided agreement will end in tears. As Winston Churchill once said “Courage is what it takes to stand up and speak; courage is what it also takes to sit down and listen.”
To repeat a quote I think I have used before, but is very relevant in this context We cannot negotiate with people who say what's mine is mine and what's yours is negotiable- John F Kennedy.
Here (as we all rewatch old movies) is an apt quote to conclude from Star Wars Episode II Attack of the Clones.
Anakin: When I got to them we got into aggressive negotiations.
Padme: Aggressive negotiations? What’s that?
Anakin: Ah, well, it’s negotiations with a lightsabre.
Sort of sums it up. Have a great Easter.
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