5 Tips for handling Contract Negotiation meetings...

In the article "5 tips for contract negotiation" in last months People Development News, we covered some of the key things to remember when planning for a negotiation meeting. For those who read last months article, you will recall the point that many of us are involved in negotiation meetings related to contracts and business;

• salespeople
• business consultants
• procurement specialists
• professional service firms involved in fee negotiation

were some of the examples that I gave.

In this follow on article there are a further five tips - this time in relation to making sure that the meeting itself is effective and that positive agreements are reached. In the meeting you are dealing with people; their emotions, stresses and concerns. Therefore the behavioural and influencing negotiation skills become key.

1. Move from positions to interests and motives

You will recall that in the last article I emphasised the importance of defining your optimum and final positions. If the "other side" are also professional negotiators they will have done the same. However, in the meeting itself if both sides remain purely at the position level the risk is deadlock.

For example, if the one party is demanding extended credit and the other side is saying that payment must be made in 30 days, and both are determined to stay in their respective silos then the discussion will not move forward. Moving from positions to interests is about understanding why the other party are taking the position they are. The understanding is gained by asking questions. This requires an open relationship, and being prepared to share the interests and motives behind your stated position.

In the extended credit/30 days payment example the supplier of the goods and services may be reluctant to move because in their experience even though customers agree to 30 days many do not pay for 45 days. The concern is that customers may abuse extended credit terms. The purchaser may be facing cash flow problems because they are waiting an average of 60 days for their customers to pay them. Sharing interests and motives will not necessarily solve the issue but it increases the understanding and creates a more open dialogue. In this example, when interests and concerns are shared it may be possible for the supplier to agree to 45 days credit on the understanding that the customer will pay on the due date, and an interest penalty will be added for late receipts.

2. Keep reminding each other where you agree

By its very nature negotiation focuses on differences - if there were no differences you would not be negotiating in the first place! The focus on differences can lead to conflict. However, the other viewpoint is that you are negotiating because you both see the merit in reaching an agreement.

In most situations, when you reach the negotiation stage there are more points of agreement and common ground than there are differences. At the start of the meeting summarise what you have already agreed; as you go through the meeting summarise the additional agreements that have been reached. This will help put the outstanding issues into context, and drive the motivation to resolve them.

3. Be creative, generate alternatives

There is a danger that as we get immersed in a negotiation discussion we get locked in to "there is only one way forward". We see the issue, have decided the solution, and try to persuade the other party to agree. This may work..or it may not! Step back and look at the options. How else can we approach this? Is there another way to resolve the issue? Of course, it takes two to step back so being open, saying that you feel we are getting bogged down, suggesting you both step back to at least consider the alternatives will encourage the other party to be open.

4. Separate the people from the issues

I have already referred to the risk of emotions becoming involved. It is understandable! You have spent days designing a proposal for a potential new client. You are now at the negotiation phase, involved in detail points where the potential client is in clear disagreement on your implementation recommendations. There is a natural inclination to defend - it is your work, you feel criticised, you want to defend and attack. You may feel better for saying what you think [and in fact being open about your feelings, in a balanced way is constructive] but it is unlikely to move things forward in a material sense.

The way to handle the emotion is to separate the people from the problem. Take an assertive not an aggressive approach. Assertion is about being factual, confident, being prepared to defend your position, at the same time as recognising the positions and interests of the other party.

5. Keep your "BATNA" in mind

BATNA - To define the term, it stands for the best alternative to a negotiated agreement. This is an interesting concept, helping you to stay focused on the importance of reaching an agreement, at the same time as keeping the importance in perspective.

Understanding your BATNA will also influence how you approach specific issues in the negotiation. For example if your alternative to reaching an agreement with this party is nearly as attractive, you can take a more robust and confident stance in maintaining your optimum position. If your alternative is nowhere as near as attractive to you as reaching this agreement you will be more prepared to move more towards your final position to gain an agreement. It is also worth considering the other party's BATNA. How attractive is it for them to reach an agreement with you?

Our next People Development News will feature the final in this negotiation series; "How to manage people who take a confrontational approach to negotiation"...