What information to share with your negotiation counterpart, when to share it and how to get that internal alignment before you do share can be tricky…. but it’s not magic! Allow us to share a few simple tips, rather than tricks!
In discussions with a major telecommunication company recently, the dilemma of what information they should share and when they should share it with their procurement clients was a major concern. Specifically, they were fearful of being taken advantage of, citing the example “Please share your costs, so we can help you find a cheaper way…”. This scenario is compounded when for example, Sales and Operations departments are not aligned internally in that they have different KPIs, and thus are motivated differently, meaning they are able and willing to share or not share different information with clients.
So, what’s the best approach when it comes to disclosing information? Here are our negotiation consultant's 3 tips on how to proceed:
Collaborative negotiations often include an element of risk. One of those risks is being taken advantage of by the other party. If both parties have been trained and are therefore skilled in negotiation, the risk is reduced. If trust is lacking, then it needs to be developed and maintained. One way to develop trust is to share information. The law of reciprocity states that if you share a little information, then your counterpart is likely to share information. The more you share, little by little, the more trust is built over time. Trust comes in on a donkey and leaves on a racehorse!
If sharing the information won’t hurt you or is even likely to progress the negotiation, then our advice is to share it… but give nothing away for free! For example: “If you share your experiences of reducing costs similar to ours and agree to grow our margin at X, then we will share specific costs with you…”
Finally, one way to obtain internal alignment, particularly when there are different KPIs for different departments is to develop and share internal cost models. One of our consultants developed such a model for a large FMCG client which has been effectively used to price customers so quickly and easily, it has since become a competitive advantage and a motivational tool for their salesforce who now feel in control of their own destiny. There were some complex cultural internal margins to navigate, but like most negotiations, a compromise was reached, and an understanding was achieved which everyone could implement and sustain.
Sharing information in collaborative negotiations is encouraged to create value, but keep in mind that there is risk involved which needs to be prepared for both internally and externally.
Good luck with your negotiations!