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How much money are you leaving on the table?

Having salespeople with clear minds in negotiations has never been more important. In the conflicted world of sales negotiation, the tensions between closing a deal and not losing commission are just two factors which leaves money on the table. Then, there are mixed measures given by Executives about which is more important – revenue or margin. Of course, there are more conflicting messages, but you get the picture. No wonder buyers are emboldened to hold their position of “My price or the highway”. So, having sales people with clear minds in negotiations has never been more important.

The consequences of being conflicted as a sales negotiator is that you start believing that your customers have all the power and you become an easy “mark” for being easily influenced by aggressive anchors like“you have to give us ‘x’ or else”. The challenge is that while we can’t blame you for wanting to get back to what you were hired for, negotiation is not as something to be “got through”. It’s not rocket science and it doesn’t need to be an unpleasant experience. It’s like a game of chess; you have to know the rules of the game. Once you know those rules and play by them you can be calmer and reduce the negativity you feel about negotiating. But, you do have to play the game.

So, if negotiation is like a game of chess – Where’s the Board? I hear you ask.

Here’s how you can build your own trading board before you negotiate and then record the moves you and your opposite number make towards agreement. The Board’s assumptions are:

  • Every negotiating issue is quantifiable in terms of money, even where subjective judgement is used.
  • All negotiations take place over time and that there are often different deadlines for both parties to reach agreement.
  • Both negotiating parties are looking for compromise to a lesser or greater degree
  • Both parties are looking for the best deal for their side e.g.  buyers want the lowest price  and sellers want the highest price possible.

During planning and early negotiation phases you need to build your Trading Board. It’s the area bounded by yours and the other side’s trading limits, e.g. buyer’s lowest price or seller’s best price. Next consider the deadlines by which your and your buyer need agreement.  The tighter the deadline for either party will dictate the overall speed at which agreement is reached.

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Behind such lines, will be a complex set of behaviors, but at any point the user has a shorthand description for how the negotiation is progressing, and give
useful information about what response a move could have on the other party.

For the model to be useful, you have to decide, what your own give and take limits, (Best and Worst) and then predict your opponents give and take limits depending on relative strengths and weaknesses, arguments,  etc.  This will then help you assess the extent of possible trades and the basis for planning your negotiation.

Where there is no overlap between the two parties e.g. sellers fallback price is greater than the buyer’s fallback price it is likely that either or both are being
unrealistic and there is no basis for negotiation.

The next stage is for the user to consider the deadline or deadlines at which an agreement has to be struck.  The tighter the deadline for either party will take the overall speed at which agreement is reached.

Having constructed your Trading Board, it is then helpful to decide at what rate they should trade towards an agreement.It is unlikely that the negotiating moves will be a straight line more like a series of stair steps which will summarize progress and record the moves made during the negotiation period.

It is useful at this point to plan in what increments you will move on an issue. We recommend your think carefully about how to apply the Law of Diminishing Moves. i.e.

  1. Every move you make is proportionately less than the last move
  2. Do not move in whole percentage points especially the closer you get to agreement

Examples of Diminishing Moves = 2.5% – 1.75% – 1.37% – 1.187%

This plan can then be confirmed or altered as result of progress during the negotiation such as, if a buyer is giving nothing away in the first period of negotiation their line will be parallel to their Best Price line. At any given point, your can use this negotiation overview to compare your progress with your original planning.  This information will also provide useful intelligence about what response will be forthcoming if later a move is made.

Finally, post negotiation, you have a shorthand picture of the success or failure of your negotiating strategy that can help improve your negotiating skills.

Author: 

Nick Anderson has extensive international experience in both as a negotiation skills coach, trainer and Subject Matter Expert.

How well does your leadership development deliver results?

Leadership engagement at every level is an undeniable requirement for successful change.  Unfortunately many executives think a seminar or other training program meets this need.  No surprise that such palliatives have little impact. This is especially true when previous leadership training was to be endured and change initiatives have failed.

Consequently, leading up to planned and often public change, leaders become part of the problem as they feel disengaged and powerless. The result is that they are too often unable and unwilling to manage rising uncertainty and declining morale. The question is:

How can you reengage managers and develop their leadership competence?

This blog looks at how you can develop both measurable short- and longer term results based on:

  • Getting the leadership team on the same page and then,
  • Solving difficult problems while developing leaders’ skills

Why make sure Your Leaders are “On the Same Page”

Experience shows that any change process is seriously flawed if leaders and other stakeholders are not aligned. “Getting People on the Same Page” is crucial before finalizing a change’s scope, design and implementation. Our latest research underscores how to manage change successfully (Focusing Change to Win by Nick Anderson & Kelly Nwosu, 2012).

By surveying 1072 leaders from 19 industry sectors and analyzing their 6000 comments we concluded that successful change needs a Change Expectations Framework.  A framework that is accepted and consistently communicated at every organizational level to ensure that every stakeholder understands what they will:

  • Stop Doing         
  • Start Doing
  • Continue Doing

Assuming leaders are always managing change with limited resources; they have to manage the tension between these three elements of Stop, Start and Continue.  This underscores the need for leadership consensus on why and what are we changing. For many survey contributors, leader inconsistency fuels people’s natural resistance.  The ever-increasing rate of change demands that leaders give clear and compelling reasons for employees to overcome their feelings of “here we go again”. Unfortunately, too many of them either ignore, or are unaware that change will be stressful for their peers and employees.

Getting people on the same page relies on aligning individual and group expectations that develop more specific, objective and measurable ways of working to implement change. It stimulates people to assess performance expectations of others, and to ensure they are aligned, reciprocated, and strategically focused.  The process drives performance discussions between groups and/or individuals about their specific expectations and assumptions in relation to a specific change initiative.

Aligning leaders and their people is about helping individuals understand:

  • What is expected of them?
  • What they can expect from others.
  • How well they are strategically aligned with initiatives, purpose and vision.
  • How their performance is measured and compensated.
  • What they can stop doing.
  • What they need to focus on.
  • What they should start doing.
  • What information and resources can be used to achieve their goals?
  • How they are going to be supported and coached.

 

There’s no “perfect training methodology” that will achieve such clarity. The focus has to be on integrating leader’s competency development with the demands of a specific change.

We should start by giving leaders credit for the concepts, processes, and skills they have already learned. Adding methodologies (no matter how good they are) risks creating indifference. We know indifference does not change behaviors! Conversely, building commitment relies on giving your people credit for what they already know, while at the same time changing behaviors that do not work.

This will result in:

  • Mutually agreeing to clear change specific performance criteria against which individuals and groups will be measured.
  • Removing expectations that are non-value added and not strategically aligned.
  • Identifying significant issues for senior management to address in order to advance change with speed, intensity and momentum, above all
  • Reengaging leaders who are than more confident in their role as change leaders.

How do we make better use of this knowledge you already have?

Too often leadership training adds new and unnecessarily different language to already cloudy corporate cultures and does not address what change demands – sustained momentum and agility to solve critical and complex problems. This is where Action Learning can play a crucial role in successful and sustainable change. It is a powerful tool for developing leaders, building teams and improving performance. Such programs have helped create new products and services, saved billions of dollars, improved service quality and positively changed organization cultures (Marquardt, Leonard, Freedman & Hill 2009; Boshyk & Dilworth, 2010).

Since Reg Revans developed Action Learning back in the 1940s, there have been multiple variants but all share:

  • Real people solving real problems in real time – while learning
  • Solving difficult challenges, developing leaders and organizations at minimal cost

Action Learning Teams help sustain a clearer focus on assessing how to lead in transition and learning to focus on those tactics which have the greatest potential. The goals of such a process are:

  1. To make progress on solving some problem or opportunity in the real world
  2. To give managers sufficient scope to learn for themselves with colleagues, how best to approach ill-structured challenges to which nobody can, at the outset, suggest any satisfactory response
  3. To encourage teachers and others in management development to perceive their missions afresh. They should no longer try to teach managers anything about how to manage. Their goal along with senior managers is to create the conditions in which all managers learn with and from each other in the pursuit of successful change.

How do we get real value out of leadership development?

  • Focus on alignment first
  • Respect the knowledge and experience of your leadership team and help them use it to solve the immediate problems inherent in any significant change project
  • Use Action Learning to advance change and competence simultaneously

Author

Nick Anderson Founder of the Crispian Advantage.

Contact Details:

Email: nanderson@thecrispianadvantage.com)

Tel: +1 (616) 745-8667