According to amongst others, the Harvard Law School and Negotiations Group, the importance of negotiation skills can’t be overstated. To them having “negotiation skills hold the key to getting ahead in the workplace, business performance and productivity, with economic growth and development, resolving conflicts, and creating real value…”.
Similarly, Queensland University et.al succinctly posits that “Good negotiations not only contribute significantly to business success but also help build industries, societies, better relationships, deliver lasting quality solutions—rather than poor short-term solutions that do not satisfy the needs of either party and help avoid future problems and conflicts”.
In 1986, researchers Dean G. Pruitt. and Jeffrey Z. Rubin. wrote that “negotiators often fail to achieve mutually beneficial outcomes that are readily available to them. Even when compatible issues are on the table—outcomes that would be pleasing to both parties—many negotiators nonetheless fail to capitalize on them”.
Over thirty-six years later, the situation has not changed. Especially in developing economies!
Research by the Huthwaite Group (UK) indicated that from 2007 to 2008, the net income of the world’s top 2000 companies declined by over 30percent. Yet, over the same period, the top 25percent of companies adopting a systematic approach to negotiation achieved an average net income increase of nearly 43percent. The one common factor among the most successful companies was that they all re-engineered their negotiation capabilities. With expert home-grown negotiators countries like Singapore, South Korea and China have managed to transform their economies.
A six-year research into director-level perceptions of various aspects of supply chain management by PanAvest International investigated director-level perceptions of negotiations in the supply and value chain management environment.
The purposive study subtitled “director level perceptivities on aspects of negotiations,” drew on a sample of approximately 64 international organisations, including Fortune 1000, FSTE 250, and JSE 100 companies, as well as state-owned enterprises and government departments. The study involved various CEOs, CFOs, COOs, directors, and officers from engineering, marketing, logistics, supply chain management, project management, procurement, and related industries. Examining an array of issues relating to negotiations, bargaining, agreements, and contracts, the focused study found the following: Approximately:
- 3percent of public sector lead negotiators had attended a negotiation training course*
- 9percent of private-sector lead negotiators had attended a negotiation training course*
- 5percent of public sector supply chain and procurement negotiations were led by a supply chain management or procurement professional
- 28percent of private sector supply chain and procurement negotiations were led by a supply chain management or procurement professional*
- 12percent of private-sector institutions had professionally trained in-house negotiator*
- 1percent of public sector institutions had a trained in-house negotiator*
- 4percent of developmental project negotiations involved a procurement and supply chain professional;
It was interesting to note that eighty six percent (86percent) of the participants in the purposive study agreed that public sector related project negotiations had direct impact on industrialisation, economic growth and development.*
They also:
- Acknowledged there were negative consequences for the lack of supply chain management experts in both public and private sector negotiations in developing economies . T
- Concured that the lack of negotiation training and skills was the cause of most disagreements and associated contract challenges in especially developing economies.
The big conundrum is whether there is a direct correlation between the above findings and the relatively flawed agreements and contracts in Africa! The respondents also provided the following feedback on why there is a need for effective negotiation skills: –
- Capabilities for potential dispute resolution, including skills to walk away
- Interpersonal influence and persuasion. This includes tactics that facilitate a meaningful and ethical approach to the deal-making process
- Development of internal frameworks to help negotiating teams exert influence and get more value out of an engagement
- Updating of negotiating approach more towards a win-win and away from a win-lose deal-making
Katie Shonk the editor of the Harvard Business School’s Negotiation Briefings newsletter rightly pointed out that “Negotiators are more satisfied with the outcome of a negotiation …when they think the process has been fair … maximizes satisfaction and builds a strong working relationship…,”
Dr Markus Götzmann and James K Sebenius highlighted some of the reasons why negotiations fail. They included: –
- Lack of negotiation training
- Poor planning
- Accepting a deal too quickly
- A lack of clear targets
- Dismissing cultural differences
- Adversarial thinking and ignoring the other side’s problem
- Selling instead of solving
- Neglection of the best alternative to a negotiated agreement (BATNA)
- Searching too hard for a common ground
- Letting positions drive out interest; AND
- Not moving beyond price.
In their view, negotiation training must, therefore “aim to provide other tricks”. Other experts including Brain Tracy and Diane Coutu has also highlighted why negotiations fail: –
- Misunderstanding of the total cost of ownership
- Overvaluing what is being brought to the discussions
- Focusing too much on price and not on the value
- Compromising one’s ethics
- Making unappealing offers
- The negotiation team not having one voice; and
- Not having own house in order
Paul Fisher a director at the Oxford Negotiation Program said “When entering a negotiation, how much one knows is crucial. But preparation is also key.”
These suppositions were supported by Barot H. who with other thought leaders succinctly provide the reasons for having negotiations skills: –
- Confidence building
- Interpersonal skills development
- Improvement in reasoning & creative thinking abilities
- Becoming a better strategizer & planner
- Difficult for people to take advantage
- Building of relationships
- Better equipped to manage conflict
- Preparedness to switch between negotiating and bargaining when the need arises; and
- Command respect.
In 2020, Harvard Business School’s Matt Gavin affirmed that “negotiation is a vital skill for professionals in today’s business environment IF you’re aiming to maximize value for your organization at the table” Fisher with other experts including Simon Horton S, Patrick Collins, Brain Tracy provided some useful tips to help develop negotiation skills:
- The need to do the homework
- Need for negotiation coach
- Accept mistakes
- Know when to walk away
- Attend certificated training programs; and
- Practice with colleagues
Tony Rossiter summarily provides six key skills needed for effective negotiations
- Oral expression and ability to communicate
- Ability to:
- construct an argument
- digest the facts and examine arguments logically
- listen and question
- prioritise objectives
- relate effectively to others.
Negotiation skills as emphasized by Patrick Collins, and Christopher Copper-Ind are thus imperative not just in the professional setting, but also for normal people. Negotiation is not just a single skill but a combination of a variety of skills like active listening, interpersonal skills, rapport building, etc. Good negotiation skills are essential if you wish to move forward in your career, and also if you want to achieve progress in life. Having the right negotiation skills:
- Helps you build confidence
- Ensure getting a fair deal
- Find the middle ground
- Increase your ability to listen
- Develop interpersonal skills
- Hone your strategic planning; and
- Strengthen relationships.
Andres Lares managing partner at Shapiro Negotiation Institute, says there are two reasons organisations should train employees in negotiation.
- “It can significantly improve everything from working with teams to relationships with clients to managing both internal top and down personnel.
- It can be easy to track the impact of the training and measure ROI’.
As Jeff Cochran of Shapiro Negotiations rightly concluded “There is nothing more intimidating than heading into a high-pressure business meeting. The anticipation may weigh you down, but if you have negotiation skills to lean on, you can feel confident you will be ready to handle whatever comes your way.”
Various suppositions emanating from Oxford, Harvard, and Stanford and various leading institutions and experts indicate negotiations is a learnable skill and that perfecting negotiation skills takes time and effort.
Nobody is perfect and as Brian Tracy rightly pointed out an “excellent negotiator today was once a poor negotiator who ended up with far worse deals than today…” This means mistakes will be made. “The important thing is to keep evaluating performance and find new ways to improve. That is the best way to become an experienced negotiator” concluded the Shapiro Institute.
To sum up it is a fact that negotiating skills extend far beyond c-suite corridors and into everyday life. It is for this reason why business, politicians, and policymakers must make it mandatory for personnel tasked with negotiations to capacitate themselves with the skills through certificated and recognised training programs.
To conclude, there are unquestionable benefits to having the right negotiation skills to help with deal-making in the ever-complex business and political environment. With 86percent of C-suite executives* agreeing that negotiations have a direct impact on industrialisation, economic growth and development, it is critical that nations and businesses intensify their efforts to beef up their internal personnel associated with negotiating skills plus also make a conscious effort to include supply chain management experts in their Negotiations Teams.
Singapore, China, South Korea, Coca, Cola, Rwanda, Toyota, Mercedes Benz, Apple, Samsung, amongst others have clearly demonstrated that what you negotiate for is what you get and what you get has implications for organisational performance, industrialisation, economic growth and development.
African business and political leaders ignore this clarion call at their own peril !.
>>>the writer is an international chartered director and Africa’s first-ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance. He is the CEO of PanAvest International and the founding non-executive chairman of MY-future YOUR-Future and OUR-Future (“MYO”) and the highly popular daily Nyansa Kasa series. He is currently the non-executive chairman of the Minerals Income and Investment Fund(MIIF). Professor Boateng was previously the non-executive chairman of the Public Procurement Authority(PPA). For more information on Nyansakasa visit www.myoglobal.org.
