Commitment Matters Blog

 

If you are a professional in Contract & Commercial Management, committed to achieving the best possible outcomes from negotiations with all your trading relationships, then ‘Commitment Matters’ is the perfect source of regular articles and posts dedicated to helping you achieve that goal.

Negotiation in an age of automation

Posted by Tim Cummins, CEO, IACCM | Jan 9, 2020 8:48:07 AM

The nature of negotiation is changing. Today, approximately 70% of negotiations are ‘virtual’ in their entirety. 36% of negotiators never meet with external counter-parties - and that percentage is even higher in the United States. Worldwide, only 2% of negotiators say that all their negotiations involve at least some face to face interaction.
 
IACCM surveys of contract and commercial managers from both sales and procurement show that negotiation skills remain high on the list of important personal and organizational competencies, yet the changing nature of how and when those skills are deployed is often not understood. Indeed, the increasingly programmatic nature of many negotiations lends weight to the idea that they will increasingly be conducted by machines.
Among the findings from a December 2019 study are:
  • E-mail is the most common alternative to face to face, closely followed by conference calls (41% and 38% of the time respectively). Video is used just 21% of the time.
  • Although the most common, email is also recognised as potentially the least effective / most damaging medium (33% view it negatively, versus 14% for conference calls and 25% for video). Conference calls are judged the most effective medium by 55%, with 45% seeing video as effective and 31% email.
  • Decisions on whether to have face to face meetings are primarily based on value, complexity or whether the agreement involves a new relationship. Geographic distance is a less influential factor.
  • Internal negotiations are commonly conducted face to face, but closely followed by conference calls and email. Again, video lags well behind, used only around 17% of the time.
  • Negotiation approach and strategy is most commonly framed by case to case approvals (81%), followed by policy /authority documents (53%) and templates with pre-approved fall-backs (43%). Playbooks are used by just 36%.
  • Are negotiating parties sincere about negotiating? 57% say that half the time or more, they are not. Only 5% feel that their counter-party is always truly entering into a meaningful negotiation, versus seeking to impose a position.
  • For 68%, the consequence of ‘non-negotiation’ is an unwillingness to ‘go the extra mile’ and it makes nearly 40% either uncooperative or distrustful. For 12% it results in feelings of anger or wanting revenge.
  • 50% say that they endeavour to start negotiations ‘whenever possible’ from a balanced position. 47% say that the other side is the main barrier to this approach; 39% acknowledge it is their own organisation’s policies and culture that stand in the way.
Do these findings accord with your experience? Share your thoughts!
IACCM’s survey was conducted in December 2019 and gathered international input from 230 organizations.

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