Moving Past Price and Avoiding Single Issue Negotiations

Copyright 10.7.2014: Scientific Cowboys – Nancy C Everitt

Overview:

If you’ve ever sat helplessly by while a single item negotiation spun out of control, help is here. Mastering the skill of expanding the deal is critical for effective negotiators. When only one item “price” is on the table, the result will either be a “Win-Lose”, “Lose-Lose” or “No Deal”.

The key to success in avoiding a single issue negotiation is in the preparation stage of the negotiation. Focus on becoming adept at open-ended questions and listening to identify other key points of interest.

“The beginning is the most important part of the work.”

- Plato-

The Art of the Deal:

To be an effective negotiator it’s critical to understand that the negotiation is a process with a beginning, a middle and an end. By starting with the bargaining phase first, it’s like reading a book and skipping past the first few chapters to get to the meat of the story. Skipping ahead without preparation can create disastrous results such as a single issue negotiation.

A quick rehash…the 4 fundamental steps for an effective negotiation include:

  1. Preparation
  2. Information Exchange
  3. Bargaining
  4. Commitment/Closure.

Each step is vital to the outcome of a negotiation that has “staying power”, meaning a deal that will not unravel and will stand the test of time.

Why is a Single Issue Negotiation Doomed for  “Win-Lose”, “Lose-Lose” or “No Deal”?

Single issue negotiations are psychologically limiting because so much focus is placed only on one element. When this one element is price it is not uncommon to see unrelenting positions established. In these situations there will be a winner, a loser or everyone goes home empty handed.

The key to a healthy negotiation is to discover additional interests for both parties before the negotiation begins and get these on the table. You will often be surprised that other issues can be equal to or greater than price.

  • The best time for discovery is during the preparation and information exchange phases.
  • The worst time for discovery is if you skip ahead without preparation and discover only one item on the table or are called into a negotiation in progress and there is only one item on the table.

Often the wheels come off a negotiation because someone “assumes” they have all answers, there is no curiosity to seek more information or reality test assumptions.

Below we’ll review two scenarios one where we’ve prepared to mindfully expand the deal and the other scenario where we need to use some fancy footwork to save the deal.

SCENARIO 1: Preparing to AVOID a Single Issue Negotiation

If you are a seasoned negotiator you likely have tools that you utilize to prepare your negotiation. If you a new negotiator or an evolving negotiator it is helpful to tailor your own “processes” to prepare for a negotiation.

Below are a few samples of negotiation tools from simple to complex. I personally utilize a single page call plan for routine negotiations and more robust planning tools for more sophisticated and multi-party negotiations. These links are simply a guide for refining your own preparation process.

Simple Tools (Examples):

More Robust Planning Tools (Examples):

Tools and Techniques for Preparation:

Brainstorm: Use brainstorming techniques to identify potential additional interests for both parties

  • Research: Seek out any publicly available information about the other party and likely interests related to strategic or corporate goals or other environmental factors that may influence interests such as cash flow, expansion, mission
  • Engage Externally: Talk to the other party before putting an offer on the table
    • “Jane, I am looking forward to working with you on the Sample Negotiation, so that we can make this an impactful deal, share with me how your organization is positioning strategically in 2015?
    • Great you are looking at growth into 22 additional counties. Are there any specific product lines that are important to your health system?
    • Other than price what else will be of value to your organization, I want to ensure that we get all important points on the table.”
  • Engage Internally: Ensure that you have the same type of discussions with your own team and are not led solely by price; otherwise you will inhibit the success of your own negotiation.
  • Evaluate both parties BATNA (Best Alternative to a Negotiated Agreement): Yes, sometimes a deal does not need to occur if you result in a worse position than your starting point.
  • Validate your interests and ranges with legitimacy and then prep your offer.
  • Don’t be afraid to anchor the deal and go our first with an offer. If you are prepared, it’s a myth that you should not make the opening offer.

 

SCENARIO 2: Heimlich Maneuver: Expanding a Single Issue Negotiation

If by chance you are reading this article because you have a floundering deal around a single issue, take a deep breath and let’s try to revive your negotiation. If this situation exists because you failed to prepare, lesson learned and its time to go backward in order to go forward.

Grab a planning worksheet and a shot of creativity and start creating alternatives and value plays. There are other viable interests, however now you must QUICKLY uncover these.

Sample Dialogue for Reopening Information Exchange:

“Richard it looks like we may have rushed into our discussion and didn’t take the time to get all of the items on the table. I understand that price is important to both of us, however for our respective organizations to have a valuable long term relationship there are other issues and opportunities that we should explore as part of this deal.

As I’ve spent more time reflecting about our negotiation. A few things that I have thought about are (INSERT) and explain. What about you, how can this deal with XYZ Health Plan help your organization?

This is where your skill at open ended questions becomes important. Allow the other party time to think if necessary. For me, I would like time to think. I am not a big fan of off the cuff remarks and emotional demands.

  • Document the negotiation! After every session someone should be scribe,  documenting what is agreed to so that the collective memory is the same. Again, I like to document so that my memory is closest to the truth.

 

Handling Disaster: A True Single Issue Negotiation

So what happens if your opponent says, “Bob I don’t give a *+%$^%& about any other items other than price.”

Reality test and give it a few days to sit. Sometimes bluster is simply a tactic.

If this is not a tactic and there is nothing on the table other than price, you have a transaction, not a negotiation.

  • If you can get within your ZOPA (zone of potential agreement) do the transaction.
  • If not, leave the table (professionally).
  • Don’t make an irresponsible deal solely to save face. Will this happen, sure on occasion, roll with it.

Summary:

Using a solid framework and tools for preparation will help you develop into a more strategic negotiator, regardless of industry. The ability to expand the deal and create value plays for both sides, beyond price, separates great from good negotiators.

Getting back to Plato, “The beginning is the most important part of the work.”

Use discipline to follow the negotiation process and hone your skill at open ended questions in a non threatening, collegial manner

Takeaway: Tailor your negotiation process. Develop or refine a preparation tool that you hold yourself accountable with for thinking strategically through a negotiation BEFORE it begins.

Avoiding single issue negotiations begins with a good negotiation plan.

 

About the Author:

Nancy C. Everitt, MBA, PMP  is the President and CEO of HEOPS, Inc., CentEO of CENTIPEDE Health Network and Editor in Chief of Scientific Cowboys. Ms. Everitt is lead strategist to Clients on the design and fulfillment of patient access solutions such as network development and provider engagement, quality analytics, Medicare Advantage STARS strategy, disruption analysis and mapping. Ms. Everitt has been involved in the strategy of each engagement and provides significant perspective on industry best practice.

In addition to serving as Editor in Chief on Scientific Cowboys, Ms. Everitt is a frequent contributing writer to the publication sharing real world advice and operational insights on process and performance improvement. Questions on this article may be addressed directly to neveritt@heops.com.

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