B2B Street Fighting Blog

have you identified your own company's negotiation stakeholders?

Posted by Marie Dudek Brown on Wed, Nov 14, 2012 @ 01:57 PM

internal negotiation stakeholdersThe key to establishing a successful business strategy is stakeholder involvement.  That's certainly true of all members of the company's internal negotiation system.  This means not only the field salesforce but all those in the legal department as well as in sales, product, and senior management who are involved in negotiations.  It's essential to include these groups for several reasons.  Perhaps the most important of which is they all have their own particular roles in the process, their own methods and their own interests in the outcome.

Salespeople, for example, are looking to make their quotas, while legal types are primarily interested in lowering risk.  Sales managers are concerned with generating top-line sales revenues, while product managers are typically interested in the margins for their particular products.  And senior management's most important priority is shareholder value.  In addition to these unique concerns, these individuals are likely to have equally unique negotiation strategies and tactics.  And unless those strategies and tactics are coordinated, the inevitable result is a great deal of internal misalignment and external confusion.  All of this can be avoided, however, by involving them in the process.  Involving them also has an additional benefit - it ultimately leads to a higher probability of adopting whatever strategy evolves from the process.

It's important to bear in mind that at this point it's not necessary to identify every single stakeholder.  All you need to do is determine who all the stakeholders are and select a valid sample from each stakeholder group.  If, for example, there are five lawyers, it's necessary to involve only one at this point.  Similarly, if there are three salesforces - inside, regional and national - that together amount to 1,500 salespeople, you need to choose only a few members from each of the salesforces to subsequently be involved in establishing a strategy.

Organizational agreement in this context means the development of a consensus among all stakeholders groups regarding how negotiations are to be conducted and what the results of those negotiations will be.  These stakeholders must agree to guidelines, not rules imposed on them by headquarters.  Imposing centralized corporate constraints on negotiators in an effort to counter the effects of changes in the business world doesn't really solve the problem.  In fact, when salespeople have to go through a pricing committee or some similar corporate group, the sales process becomes slow, bulky, inflexible and non-customer-friendly.  And it often results in losing sales to more creative competitors.  At the other extreme, when salespoeple are essentially allowed to do whatever they want, it invariably results in inconsistent customer and competitor messaging as well as inconsistent profits.

So even though having general agreement on a particular way to negotiate deals is beneficial to the entire organization, individual negotiators must have the flexibility to address their own situation as appropriate within those guidelines.  Having a negotiation strategy developed by the appropriate stakeholders provides an organization with what we think of as a radically centralized strategy but radically decentralized execution.  Once the stakeholders agree on ranges for what can be negotiated, they have the ability to move within those ranges and must go to management only in exceptional situations.  And there are very few such exceptions when all of this is done correctly because of the creativity and flexibility built into the strategy.

But why establish such a negotiation strategy?  There are several very good reasons, not the least of which is it provides a means of successfully addressing the changes in the business environment that have made negotiation so much more difficult.  When consensus exists in an organization about where you want to go in negotiations, how you're going to get there, and what the results will be, the result is inevitably a reduction in internal conflict and external variance.  Reducing variance sends more proactive and consistent messages to both your customers and your competitors.  And consistency enables you to avoid creating lack of trust in your customers and irrational behavior in your competitors.  Ultimately, of course, the advantage of establishing a negotiation strategy is these behavioral changes have a positive effect on the bottom line.

If you'd like to know more, request the Strategic Account Management Association (SAMA) Velocity article on negotiation strategy and/or the Ryder ROI case study.

Tags: business negotiations

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