Editor's note: This article was originally published November 27, 2001.
One of the worst feelings for a consultant is to approach the close of a deal with a potential client only to lose the business because of negotiating errors. No matter how good your IT skills are, if you can't close the deal, your 10 years of experience with enterprise applications or your 15 years as an IT manager won't do you any good.
What are some of the common mistakes in the negotiating process, and how can you avoid them? In the final installment of my three-part series on client negotiations, I'll look at questions you and your colleagues should ask before working to close the deal. (Catch up on parts one and two of the series: Negotiating skills for IT consultants and Use these tactics to establish trust in client negotiations.)
Know the answers to these questions
A perfect way to derail a negotiation is to bring in a team that lacks cohesion, a common plan, and poorly defined roles and responsibilities. When teams negotiate, which is common on both the client and the vendor side, it's critical that there be agreement about these elements:
- Who is in charge? Who has the right to make commitments, to close the deal, to make concessions?
- What are our team goals? This may seem like a basic assumption, but unfortunately, in some team environments I've been in, this was treated as confidential information, even within our own team. Although the team goals were known by the senior members, they were never divulged or discussed with the entire team. This is a recipe for negotiating failure, as team members present an inconsistent message to the client and proceed less confidently, knowing that they can only see a slice of the total picture.
- What is every player's role? There's nothing more disheartening, and frankly humiliating, than to be asked to attend a bargaining session and then to be required to sit on your hands with no opportunity to participate. It's a waste of time and a dispiriting experience. If I, as a consulting manager, am going to invite someone to a negotiating session, I'm going to be sure that that person has a meaningful contribution to make and understands the role and how to play it. Not defining that role can lead to surprises at the table as that team member tries to contribute without a clear understanding of the parameters and boundaries of the discussion.
- What negotiating latitude do we have? Never walk into a negotiation without a clear understanding of the bargaining power every member of the team has and of the concessions that are allowed. Nothing poisons the relationship more quickly than concessions or agreements presented by team members without the proper authority and that must later be rescinded or revisited. Clients will invariably look upon this type of negotiating error as a "bait and switch" technique, not as an honest mistake.
- What is our strategy? More than understanding your bottom line and the roles and responsibilities of the team members, it's also critical to do a walk-through of the bargaining session before it occurs. Make sure any presenters are prepared and all supporting documents are printed and ready to distribute. If your discussion may take a technical turn, ensure that the supporting technical material and expertise is available. Most importantly, think through your bargaining position in detail, and try to anticipate the client's team's responses and objections. This exercise in visualization of the actual session forces you to build a set of expectations about the team members' roles in the session and to put yourself in the client's place and see his or her point of view.
Common mistakes at the table
What other errors can taint the atmosphere at the bargaining table, making the conclusion of a deal impossible? Apart from the obvious blunders of dishonesty or manipulation, there are many situations that crop up in negotiations, and skilled negotiators must have strategies for troubleshooting them.
Let's examine a few:Conflict aversion: Conflict is a real element of any negotiation. If there were no competing goals, there'd be no need to negotiate. Remember that there is another familiar area where conflict is part of the process — the arena of facilitated work sessions. Some of the same techniques we use in facilitation (see my earlier article about conflict in facilitation) can be used to defuse discord in negotiations. Some of those techniques are as follows:
- Set ground rules for behavior.
- No personal attacks
- No interrupting
- No threats or intimidation
- Anyone can call a "time out."
Another technique for dealing with conflict at the bargaining table is to decrease the formality. Go to lunch or take a walk and discuss the issue in a less formal setting. Many of the great "coups" in statesmanship have occurred when two political leaders leave the formal bargaining table and take a walk around the grounds to air their views informally.Tricky tactics: Although old "hardball" tactics of negotiating are discredited, that doesn't mean that everyone has abandoned them. In fact, every IT professional I know has been confronted with these manipulative tactics at some time in their negotiating career, so let's examine a few and explore some countertechniques that allow us to retain our negotiating integrity without becoming a victim.
- 1. Deception: Some less-than-scrupulous negotiators will "fudge" the facts, make up statistics, or mislead you about their authority to bargain. In this case, there's nothing wrong with asking clarifying questions and forcing them to back up their claims. I'll often preface my negotiating sessions by asking outright if they have the authority to make a deal or if any deal needs to go "up the chain" before it can be approved. I'll also question any "facts" until I'm convinced that they are rooted in reality.
- 2. Intimidation: From "loading the table" by bringing in a big team and seating them together on the opposite side of the table to "verbal jujitsu," such as remarking on your appearance or preparation, to "good cop/bad cop" routines, there are plenty of manipulative tricks that hardball negotiators play to ratchet up your stress level and get you to act in ways you wouldn't normally behave. The best response to these tactics is recognition and preparation. From bullying to threatening to gamesmanship, recognize the symptoms and refuse to play. Stick to the content of the deal, avoid the emotion, and don't be afraid to let them know you recognize their tactics.
- 3. Escalation: The escalation game is one of the oldest tricks in the book. You walk out of a session believing you have a deal only to be greeted with further demands the following day. Again, recognition of the ploy and letting the perpetrator know that this is not what you agreed to is often the best medicine for this tactic.
Negotiate on facts, not emotion
The important thing to remember when you're faced with any of these negotiating tricks is to keep your emotions out of the mix. Getting you emotionally riled up, and so manipulating you into unwise behavior, is the whole point of these tactics. Stick to the content of the deal, keep referring to the fair process you expect, and you can avoid these traps.
Finally, when you and your team have negotiated a deal that fulfills your bottom line, gets the client what they need, and is mutually acceptable, document it and get a formal agreement. The uncaptured agreement is as dangerous as no agreement at all.
It's often said that the best contracts remain in the drawer after they're created. This doesn't absolve you of the responsibility to document your deal, but it illustrates the concept that good agreements are so clearly beneficial to both parties, and the process is so obviously fair and equitable, that it creates an atmosphere of trust that obviates the need to pull out the contract.Get weekly consulting tips in your inbox TechRepublic's IT Consultant newsletter, delivered each Monday, offers tips on how to attract customers, build your business, and increase your technical skills in order to get the job done. Automatically sign up today!
Rick Freedman is the author of three books on IT consulting, including "The IT Consultant." Rick is an independent consultant and trainer, working, through his company Consulting Strategies Inc., to help agile teams and organizations understand agile practices and migrate successfully.