Inflation. Supply chain pressures. The war for talent. Scarcity. Energy costs. The factors driving prices north are all around us as we start the year. It might not be the most exciting of topics – we’re all trying to ignore the news about our utility bills, or is that just me? - but put it this way: the price of Hobnobs is likely to increase this year, and by more than 5%. If you’re one of the millions of folk currently enjoying the benefits of working from home, this is not the kind of news you’re likely to welcome. It’s a generalisation - but for many of us in commercial environments, the annual conversation about price increases of any significance has been something of a rarity since the 2008 financial crisis. So much so, that for some these conversations will be joltingly new – whilst for many others, the muscle memory of dealing with noticeable price increases will feel weak-kneed at best.
Just about everywhere we look, finances are being squeezed – personal and corporate. The question then becomes: what do we do about this? Whether we’re asking for, or resisting, price increases, how should we best go about it? Either way, the other party is unlikely to acquiesce, at least straight away. And few of us enjoy the role of bearing bad news. The trouble with that is that we can become reluctant to share it, and that rarely helps. More often than not it produces the opposite effect, making these conversations more difficult and complex.
I remember a long conversation with a supplier a few years ago. I avoided mentioning the fact that my budget would not extend to their new pricing. We got on very well, and I kept on telling myself that preserving that relationship was why I was keeping this rather unwelcome piece of information from coming to light. Rather unfortunately, my silence on the matter was – understandably – taken as tacit agreement to their new pricing. So when I eventually disclosed the fact that we would be unable to retain the supplier’s services on the basis of their proposed increase, it made matters worse. Why hadn’t I been open? Was budget really the problem? And, so on – I had opened a can of worms. While I can never be certain that being open sooner would have changed that, the vast majority of subsequent conversations with other suppliers were far more productive when that hesitation was removed. We may not enjoy sharing unwelcome news with our customers or our suppliers, but doing so as soon as is reasonable is almost always better than waiting. And thinking about it, what we’re waiting for – our supplier to voluntarily offer a discount, or our customer asking how much more we would like them to pay – is not a particularly likely avenue of conversation.
However, being transparent and upfront about bad news is one thing – but it doesn’t mean the other party will simply accept your position, grateful that you broke bad news early on. The key consideration for me would be: can I do a deal if the other party is unaware of this information? If the answer was no, or probably not, then how to release that information in a way that structured expectations in my favour would be the challenge I’d set myself. The urge to bury bad news and hope for the best is entirely natural, but best avoided.