Negotiating Tip #66:
Why Internal Negotiations Matter
This series of tips about internal negotiations is based on material in the Harvard Business Review Press book Creative Conflict: A Practical Guide for Business Negotiators by Bill Sanders and Frank Mobus.
For sourcing managers, the key performance indicator is usually price-based cost savings. But a great price won’t help an operations manager who gets rated by output or runtime. It is tough to come up with a way to reward buyers for considering factors like on-time delivery, support, defect rate, and extended payment terms, but these factors can be crucial for the company.
That is even more true in the complex deals that increasingly characterize modern business. Whenever an external negotiation moves beyond simple tradeoffs and into more advanced creative deal making, there’s apt to be internal blowback—on both sides. What seemed like a no-brainer for the executive team may raise utter havoc a few layers down among those most directly affected. If they had no input into the deal, the fallout can be radioactive.
Sourcing groups may orchestrate a handful of big deals per year. Their next raise or promotion may ride on a single outcome. But once a contract is signed, they move on. It’s a different story for their stakeholders, who must live with the results and, what’s more, be measured by them. If sourcing made a bad choice, their department could be compromised. The dynamic is inherently conflicting. Internal negotiations carry huge ramifications for buyers, account managers and salespeople.
A failure to co-ordinate sales strategy can lead to unplanned concessions, like expedited delivery or accelerated software updates—and a bitter dispute with their manufacturing or tech people. Many a promising career has crashed and burned after a wrongfooted negotiation on a critical account. Now that we’ve laid out the challenges and pitfalls in this arena, let’s consider some steps you can take to reach agreements that are optimal for all.