You could hardly get a greater contrast. Between 2007-8, the world’s top 2000 companies saw incomes drop by nearly a third. Yet the top quartile of businesses – those adopting a disciplined approach to negotiation – achieved an average net increase of over 40 per cent.
So how to explain such a huge variation in bottom line profitability?
Some things don’t change. Those either side of the negotiating table still need skills training. However, the most successful companies have one other thing in common. They have all fundamentally restructured their approach to negotiation.
At one end of the scale, the weakest companies lack process, are purely reactive and rely totally on the ability of individuals. By contrast, ‘world class’ organisations have formalised their negotiation processes. These are constantly reviewed and incorporated into the broader buying or selling process.
Moving to an effective negotiation strategy means that staff at all levels and across all departments have to be suitably trained. You also need to establish a common set of processes and standards, which can be documented and measured.
This is a world away from simply relying on the mental agility and verbal skills of your best salesman – especially when complex deals worth many millions of pounds are at stake.
As with any major change process, you need buy-in both at the top and the negotiating ‘coal face’. With any change therefore, it is best to start small and grow on the basis of the successes you generate. Forcing new processes on the business without properly explaining the benefits and potential payoff is doomed to failure.
You must also be realistic about the pace and degree of change your business can achieve. So review your benchmarking data, identify the biggest gaps in current performance and take action on a step-by-step basis.
It is unlikely that negotiation directors sitting at the boardroom table will ever become a common sight. Even so, something this important cannot be left to chance.
Today’s best-performing companies have shown how it should be done: in each case they have transformed negotiation from an individual competency into an organisation-wide capability.
by David Freedman, sales director, Huthwaite International
