"I've been so busy tendering for new supplier contracts and not had much time to negotiate" was the response I got when I asked someone I met at a recent networking event how they were approaching their public sector negotiations here in the UK.
For context, in February this year, the UK Government introduced changes to how public sector contracts are procured, with the aim being to simplify and modernise processes and give the public sector more freedom and flexibility to negotiate agreements, which historically has been a challenge for several reasons.
Greater flexibility to negotiate presents both opportunities and challenges. On the one hand, it allows for more creative and value-adding agreements. But on the other hand, it requires a solid understanding of the negotiation process to ensure that this flexibility leads to better outcomes rather than giving away value for free.
The run up the launch of the regulations was filled with publicity, events, training etc. to help both buyers and suppliers in the public sector prepare for the changes, with a significant focus on negotiation. So I was surprised and concerned by the response to my question, because not only did my new friend not realise that they were in multiple negotiations and had the opportunity to get a better outcome, but it made it more likely that they were giving value away for free.
And it reminded me of another story. A customer is on holiday, and while doing some shopping on a busy day, walks into an empty, independent clothing shop in the middle of the day and tries on a reasonably expensive coat. They don’t really need it, but they like it and want to buy it. But there's no price tag. They ask the shop attendant for a price, who it seems is also the shop owner. A price is stated, the customer accepts and buys the coat.
Yes, an agreement is reached, and both sides are probably satisfied with the outcome. But the customer missed the chance to potentially get a better outcome, either by trying to negotiate something in addition or even haggling on the price. The shop was quiet on what was a busy shopping day, so it is fair to assume the shop wanted (needed) a sale and this gave the customer some additional leverage. And there was no price tag on the coat, so it is also fair to assume the attendant might have added a little extra to what was their first proposal and are therefore likely to have some flexibility. And lastly, it is also assumed the attendant is also the owner, who would have the authority to agree a different price or including something additional.
Failing to realise we're in a negotiation or there’s an opportunity to have one can be costly. In one-off situations we don’t get a better outcome. In longer-term situations, not only is there not a better outcome achieved, but a dangerous precedent is also set for future negotiations.
Whether we like it or not, there are several situations when it's either appropriate or a requirement to negotiate, including when there’s the potential to get a better outcome. Don’t look back in anger by failing to recognise it's a negotiation in the first place.
