By Marty Finkle
In this world of not having enough time and resources to get things done, we can't afford not to become proficient in areas that make the most impact. One of the most important, and most impactful, skill sets for the supply chain is negotiation skills and behaviors.
To become an effective negotiator, it takes more than just honing your skills. You need to learn how to establish a plan that can be applied to all your supply and demand chain processes when sourcing, selling or operating your company. Then you need to communicate the results to employees, shareholders, customers and vendors.
Return on Investment — and Expectations
When you allocate resources for a negotiations course, don't forget about return on investment (ROI). Take the dollars you invest and any fully loaded costs and measure the delta from deals your teams close with vendors, customers or internal parties. Compare your benchmark of what you expected to what you actually received. Divide this into your investment and you have a simple ROI that provides a good measurement but doesn't require much time to determine.
But what about return on expectations (ROE)? Jim Kirkpatrick, renowned expert on justifying resources dedicated to training, talks about a measurement that impacts the business in a qualitative way. He says that before training, we need to measure expectations of how people will behave after they're trained. For example, if we put in place a process for preparation of negotiation, we should develop a preparation document to identify certain outcomes that we expect in the major deals with vendors. If people use this document, it is an observable behavior. If we expect them to use it in every engagement, then we can measure their actions against those expectations. The ROE (use of the process document) will drive behaviors that impact the way we get to our ROI(more sound outcomes by using the planning document). Sometimes we forget that we're dealing with human beings and need to measure behavior, not just dollar outcomes.
Following are a few areas to consider when you're conveying the investment and expectation impact to the business for negotiation training, based on one of our case studies.
Start at the Top
Our experience working with corporations across the globe has shown that the best place to start identifying the impact on negotiation is at the highest point of business impact. This means the top level in your supply and demand chain organization. If you begin with your executives and change their behaviors and applications of negotiation, you'll have the best chance for sustainable change and meaningful ROI and ROE.
For one technology industry company, we started with the C-level executives within the organization, which had brought its top executives into a single course over two-and-a-half days. We worked them like we intended to work their teams. Their issues were not with single vendors but with different categories, business units and parts of the country and the world, spanning all business service offerings.
The executives who enrolled comprised five division presidents, vice presidents, senior directors, the CEO, the chief operating officer, the chief procurement officer, the chief information officer and the chief financial officer — all major influencers on their organization. Most entered the course thinking they were too seasoned to be "taught." But since the course is a behavioral experience, they all got to practice process and engagement the entire time. In other words, they weren't taught — they practiced and learned. By the end of the two-and-a-half days, the executives were designing the deals they would take on and conveying key messages to their organization about the desired impact, who would be involved and how they would sustain it in their business.