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There is an old saying that nothing succeeds like success.

The more one can create the impression that negotiations are moving ahead, the more likely all parties are to remain involved in the negotiations.

My experience over the decades working with many different clients, is that organizations with exceptional people with accomplished negotiation skills prove to be the most profitable.

If your company does not have this skill set, I recommend you hire an outside consultant to negotiate large dollar purchase orders on your behalf. The cost that you will pay that consultant will pale in comparison to the savings that can be achieved through the actual negotiation process.

The more issues that are resolved, the greater the chance of resolving the remaining issues. Linkage plays a positive and negative role in negotiation. It can slow down initial progress, but it can also build a momentum that pushes the parties towards a comprehensive settlement.

For this reason, care must be taken if negotiators tackle each issue separately and reach a settlement of the issues on an issue by issue basis, they risk playing into their opponent’s hands.

If one negotiates away too quickly, conceding unilaterally all non-critical issues, then there may be nothing to offer to secure concessions from the other party concerning the issues of most importance. To maintain the ability to provide a flexible response, some potential concessions need to be held in reserve.

Negotiations should never be conducted on an open-ended basis, since preparation for negotiation is critical to the defence of one’s interests.

At a minimum, preparation involves investigating the facts, clarifying one’s rights and obligations and obtaining instructions.

This cannot be done unless one is working to a reasonably settled agenda. A negotiator should insist upon defining an agenda for discussion before attending the meeting.

He or she is entitled to refuse to deal with matters that are not placed on it. It is no sign of bad faith to refuse to allow one party to take the other by surprise. It is also no sign of bad faith to insist that discussions not be side-tracked by consideration of extraneous matter that were not agreed for discussion in the first place.

There should also be settled terms of reference governing the conduct of negotiation.

More specifically, it is necessary to settle in advance such matters as:

• The timeframe for negotiation, the venue and any logistical matters;
• what areas of dispute are to be negotiated;
• whether any subjects are off-limits;
• the authority that negotiators are expected to possess;
• the general nature of the discussions to take place;
• the procedure for submitting proposals for consideration;
• requirements regarding response to proposals;
• ratification and other approval procedures;
• the protocol to govern communications with respect to negotiations (including any requirements as to confidentiality and privilege); and
• the process for recording and finalizing discussions made at the negotiation.

The agenda for each session must be consistent either with these terms of reference or agreed amendment to them.

Failure to deal with these matters in advance can lead to confusion, frustration and a complete breakdown of negotiations, even at a time when an agreement seems in sight.

So far as possible, negotiations should be focused on dealing with issues, rather than on staking out positions. A position is a statement, fixed posture or stance that may have nothing to do with a party’s real needs and wishes.

An interest is a real need or requirement. An interest does not necessarily relate to something tangible or monetary. It can concern something substantive, procedural or psychological.

An issue is a specific aspect of the dispute between the parties or the transaction that the parties intend to enter. In the business sphere, issues may relate to commercial need, business objective or legal rights and obligations.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.