Remote negotiations were always an alternative to face to face meetings, but the social distancing and remote working that the Coronavirus pandemic brought into our lives make remote negotiations more relevant than ever. The Coronavirus pandemic is a global crisis and negotiating during a crisis has its own unique elements to consider.
One of the unique elements of the Coronavirus crisis is that the negotiation teams do not only have to negotiate remotely, but they also have to complete all the activities before and after the negotiation events remotely as well. This means that the team members need to prepare their plan and coordinate their pre and post negotiation actions without physically being in the same room at all.
There are many unknown factors around this particular crisis and this can trigger feelings of stress and panic in both buyers and suppliers. This pressure may lead to poor planning and suboptimum decisions that will create issues for all parties in the long term.
Table 1 below shows some of the key challenges that the negotiation teams have to face because of the remote negotiations and the Coronavirus crisis.
Table 1 Key remote negotiation and Coronavirus crisis challenges for the
negotiation practice
When face to face meetings for preparing and executing your negotiations are not possible, you have to find alternative ways to engage and align your internal stakeholders, as well as to manage the interaction with the suppliers during the negotiation event. There are four key elements of the negotiation practice you need to consider to ensure that you are prepared for the internal and external challenges of the remote negotiations:
Planning, Methods, Technology, Communication
Planning
Proper planning and being well-prepared are fundamental enablers for the success of any negotiation, but this is particularly true in remote negotiations during the Coronavirus crisis.
Consider using the “Negotiation event one-pager” template (included in “The Negotiation Hypercube” book). Your party-specific objectives, alternatives and tactics are presented here. You should try to include only the key elements of your plan. Complete the one-pager with your stakeholders and circulate the latest version to your team before the event. This template provides one version of the truth and can help you make sure that your stakeholders are aligned before the negotiation.
In some cases, the Procurement or Supplier team may propose postponing the negotiations until a face to face meeting is possible. This is a risky strategy as the time that will pass may make some of your current alternatives unavailable and give more power to the other party. If you are considering postponing your negotiations try to answer the below key questions before you take a decision.
What is the potential impact of the delay on savings and risk mitigation?
How will the delay in this negotiation affect other categories and projects?
Who will be benefited by the postponement and why?
What needs to happen in order for the negotiation activity to start again?
Will your team and stakeholders be available to support the negotiation in the future?
Apart from the expected negotiations for sourcing events and category strategies, you should be prepared to negotiate with suppliers that try to invoke the force majeure clause in their contracts to justify their inability to deliver what was promised. Also, you may need to negotiate more claims and disputes than normally as your suppliers, or even your own operations, may underperform. These negotiations require a slightly different approach than the business-as-usual sourcing negotiations, so you may need more time to prepare your plan, engage your legal team and potentially request support from dispute resolution specialists.
Another area that attracts more interest during a crisis is risk sharing. Proactively prepare you approach about risk related negotiation elements like:
-Indexation, exchange rates and material prices
-Gain-Share mechanisms
-Detailed milestone and delivery date commitments
-Volume and demand commitments
-Shorter payment terms
-Penalties and bonuses
Consider how risk sharing can make you attractive or unattractive to your suppliers in these challenging times. Thinking out of the box and brainstorming with your stakeholders will help you build strong value propositions.
From an operational perspective, there are some simple things, like being on time for your negotiation call, that you should not ignore. Try to have few minutes available to review your plan before the negotiation and do not allow other calls to overrun. You should also check the availability of your internal and external stakeholders. Some of them may be affected by the virus or have other commitments.
Finally, plan how you will proceed after the negotiations are completed. Sending contracts for signing may be an issue during the Coronavirus crisis, so you may need to decide which online contract signing tools you will be using. Also, your supplier mobilisation plans need to be carefully drafted, as the availability and capabilities of the suppliers may not be what they were assumed to be during the negotiation.
Negotiation methods
Due to the Coronavirus crisis, face-to-face negotiations are very rare, while businesses encourage their teams to remotely negotiate projects of both high and lower importance. The main remote negotiation methods are:
Teleconferences are typically preferred over other remote negotiation methods, at least for the first negotiation round, as the use of body language and facial expressions make it easier to build rapport and trust between parties. On the other hand, in phone negotiations, the tone of your voice and the words you use are the main means of communication. The more limited your communication tools are, the higher the difficulty to grow the negotiation pie and overcome deadlocks will be.
Negotiating via email is largely avoided as these negotiations typically take longer to be finalised while there is always the risk of the messages being misinterpreted and not being corrected on time. On the other hand, emails give you time to think, research and carefully calculate your responses, something that may not be possible in a face to face negotiation.
Another option is reverse e-auctions. The rule-based real-time e-auction systems can rapidly increase the competitive tension between the suppliers. This method can be very effective in projects with well-defined specifications, particularly in standardised products and services, as well as when there is a high number of participating suppliers. You can choose from a number of different e-auctions, like reverse English, reverse Dutch, reverse Japanese or multi-variable multi-directional electronic reverse auctions.
All the negotiation rounds do not have to follow the same approach. For example, you may have teleconferences with the suppliers as a first round and then run an e-auction as a second round and vice versa.
In terms of your wider negotiation approach, keep in mind that integrative negotiations and collaborative problem solving sessions are more challenging when done remotely. On top of that, the fear of the Coronavirus crisis can focus all your attention on your own interests, instead of properly thinking the interests of all parties. If you are not careful you may end up getting in an aggressive distributive negotiation that will make the pie smaller for everyone. If you intend to have an integrative negotiation, then share your expectations with the other party before the negotiation, make sure that you understand their interests and allocate some time for rapport building and collaborative brainstorming in your negotiation agenda.
Technology
Technology has changed the way we work remotely and the Coronavirus crisis made more people aware of the capabilities of the online working tools. Before, during and after a negotiation the teams can share information and work together using virtual collaboration and brainstorming platforms. This is not as easy as being in the same room, where you can use physical objects like sample products, but it is better than trying to jointly work on an issue using the phone or emails.
Examples of tools you can use to have teleconferences, share information and negotiate online include:
In terms of reverse e-auctions, systems like SAP Ariba, Coupa and GEP Smart have this capability, so the first step would be to check what tools your company has already available. Other powerful e-auction platforms that you may want to check include marketdojo, Arcus from Trade Interchange and ProcurePort.
Before you include the e-autions method in your negotiation plan, make sure that your internal systems and IT department are still supporting e-auctions during the Coronavirus crisis. If in doubt, ask your internal experts or “superusers” for advice on which tools are available and how to use them.
Also, to avoid uncomfortable situations when using teleconference applications and calls, follow the below practical points:
▪ Be mindful of your surroundings and background noises
▪ If you share your screen with others on the call, make sure that there are no other windows or sensitive information visible on your screen
▪ If you plan to negotiate with multiple suppliers one after the other using the same call details, then make sure that you control who enters the call. The last thing you want is for a supplier to join one of your calls while you are negotiating with somebody else.
Communication
The way you influence your stakeholders and suppliers, as well as the way you communicate, needs to be adjusted to the way remote negotiations work.
Make sure that you include some time for building rapport and trust with the other party. Ask how each one of them feels about the Coronavirus situation as well as how this crisis affects their business. By doing that you will not only build your relationship with the other party, but you will also be able to better understand their interests.
Remote negotiations can also affect how the teams think and behave. Some may be more aggressive or soft during a remote negotiation, while the tactics related to the seats around the negotiation table or the setup of the negotiation room are not relevant in this case.
Consider the below communication tips when you are negotiating remotely:
In terms of managing the flow of your remote negotiation, do not hesitate to ask for a break to regroup and come back with your feedback, as you would do in a face to face negotiation. Also, summarise frequently and consider following up with an email to make sure that you are all on the same page.
Another powerful communication tool is presentations that convey your message to your suppliers. These packs will be presented during the negotiation event to all participants to facilitate the meeting, compare the attractiveness of a party’s offer to their competition, highlight specific aspects of the project and introduce new proposals.
Final thoughts
Negotiating remotely during the Coronavirus crisis is definitely an interesting experience for anyone involved. You can manage the challenges of this period by planning properly, selecting the right negotiation method and technology as well as by being able to effectively communicate remotely. Try not to cripple the future of your business by allowing your present fear or concern to lead you to unwise decisions.
Take some time to consider the legacy of this crisis, as the use of remote negotiations and the focus on risk sharing mechanisms may remain significantly higher than before, even when this crisis is over. Also, you should be prepared for the number of the postponed negotiations you will have to manage after the Coronavirus crisis is over. Finally, as with every crisis, this is an opportunity to discover or create a new, more resourceful version of yourself and your company.
You can learn more about how to effectively prepare and execute various types of negotiations using “The Negotiation Hypercube” book, here: https://amzn.to/2TYYAGI
Author: George Dimitriadis MSc, MCIPS
Procurement Manager
Author of “The Negotiation Hypercube”