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negotiation: objectives

In Negotiating Contracts the normal objectives will include one or more of the following:

Certainty

The aim of contract negotiation is firstly to achieve certainty, to record what is being supplied, when, in what quantities and to what standard, and what are the consequences of delay or failure to meet the agreed requirements. Many a dispute is caused by the failure of the parties to define at the beginning of their relationship exactly what is going to happen; one example in my experience was the failure of a major IT agreement because the parties both thought that their man was project managing the project, in fact the issue had never been agreed. This is especially important in the case of complex projects, where project plans and methodologies will normally be prepared as part of the contractual documentation.

the best deal

Seeking clarity does not conflict with the view that negotiations should achieve the best deal, it merely points out that both parties to a negotiation have to understand what it is that they have agreed to. Many disputes have their origins in a lack of clarity. Careful discussions of each element of the deal also ensure that each party's objectives are acknowledged and dealt with. In the main negotiators should aim for a win-win solution which benefits both parties.

Achievement of an Organization's objectives

In their book "Drafting and Negotiating Computer Contracts", Paul Klinger and Rachel Burnett [pub. Butterworths, London 1994, to be reissued Nov. 2002] the authors note that "The goal of every negotiation must be to achieve a result which, even if it falls short of the original objective, can be considered a satisfactory advancement towards it. Compromise is an essential feature of most successful negotiations: each party needs to walk away afterwards feeling that he or she has gained." (Chapter 2, page 13)

Although most people, when asked, will say that money is the most important element in negotiation, in practice it may be only one of a number of elements. Only in unsophisticated markets, is price-bargaining the main element of the discussions. In most markets, quality, reliability of supply, the transform of "know-how" and the creation of a long-term relationship will be of equal or greater importance.

Creation of a long-term relationship between the parties

Whilst this is not always possible, and some cultures, such as the Japanese, place more emphasis on this aspect of negotiation, this is increasingly important as companies build networks of alliance partners. Partnering in industries like aerospace and IT is essential, due to the complexity of the products and related projects. As the supply chain evolves into a virtual organization partnering is becoming increasingly important in all industries.

The "Ritual Dance"

Few organizations are prepared to acknowledge that the process of negotiation often serves internal political functions. The process of negotiation with third parties may be necessary ensure that new policies are accepted within the organization.

There may also be a political or social need to "prove" that the company has driven a hard deal with the other party. This is sometimes the case in cultures like South Africa, which are often exposed to high levels of conflict within their societies. US companies will sometimes be driven by such concerns.

Sometimes being shouted at is just a normal form of social discourse in that society; it may have no serious aggressive meaning.

A skilled negotiator will ignore bad behavior by the other side and proceed with the deal, or manoeuvre the opposing negotiator into a fight where his (and it not always a he) aggression blinds him to his real objectives - he also needs a deal and to retain his kudos with his fellows. Like a skilled ju-jutsu fighter the negotiator will seek to let the opposing side over-balance. Never, ever, lose control of your temper during negotiations.

Walk-over deals can be achieved and these normally happen where ignorance leads the other side to negotiate in a very aggressive manner, this results in a game known as "chicken", the first one to jump loses. In such situations the normal course of events is that one person underestimates the other side and announces to the other members of his team that he will wipe the floor with that idiot, or words to that effect; the negotiation then becomes unpleasant. The game is played by sitting tight, being aggressive back if necessary, shouting if you have to. The other negotiator then makes the mistake of linking his ego to the game, and in his determination to win he loses control and loses face in front of the group, especially if you remain calm in the face of his behavior. There are variations to this game.

The Board room politics of the other company are nothing to do with the negotiator; who may have to take care to ensure that the negotiation reflects a number of critical elements within his own organization, for example legal and sales.

A Negotiator is also paid to walk away from a bad deal

A good negotiator must be prepared to walk from a bad deal, not to get the sale at any price. Your company will not normally thank you for an unprofitable contract, or one with a poor partner, or where it is unclear what the other side will actually do. If your company is prepared to make a deal at any price, unless this is the launch sale, then it has problems, see commercial infrastructure.

 

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