Conducting negotiations in project management
Step 1: Obtain information
If you are going to negotiate, find out as much as you can about the other party and the company. The internet can be a great help. The company's website usually provides the original information, but information from other sources (e.g. newspaper articles, social networks) can also be easily researched. Information and documents from previous transactions with the same customer, which are kept as part of knowledge management, are also helpful. For example, it is interesting to know what position the negotiator holds in the company, what their tasks are and what their motives are. For example, is the employer cutting jobs at the moment, so the pressure to succeed is high? Or is retirement imminent and the budget is less important in the negotiated contract? Private information can also be very valuable. The best way to find this out is through informal discussions with people who have dealt with the person in question. This is also a good way to find commonalities that create closeness and trust (e.g. hobbies, acquaintances or field of study).
Step 2: Identify and prioritise goals
The next step is for the project manager to think about what they really want to achieve. What are their goals? Often brainstorming with the project team will yield more results than brainstorming alone. They then weigh up the points they have collected, possibly with the team. In this way they will find out which is the most important goal. They can then focus on this in their further preparations. It also gives them the opportunity to cut back on less important goals in order to achieve the main goal. Now it is important to make sure that the goals are realistic, clearly defined, measurable and compatible with each other. Objectives with these characteristics facilitate argumentation and convey competence and experience to the negotiating partner. Vague objectives, on the other hand, prolong the negotiations unnecessarily because no precise agreement can be reached. It is advisable to write down the objectives in the form of bullet points. The project manager can then take his "cheat sheet" to the meeting. A cheat sheet is also essential for telephone negotiations.
Step 3: Clarify scope
The project manager should note down, or at least keep in mind, how much room for manoeuvre there is in the negotiation, or how far the outcome of the negotiation may deviate from the objectives set. Determine what the optimal outcome would be and what must not happen. Finally, they consider compromises and ask themselves: "What is my final offer?" In order to be able to assess this, for example, they calculate or negotiate internally the permissible cost framework before the price negotiations and obtain prices and deadlines from possible subcontractors.
Step 4: Prepare a strategy for the discussion
The project manager must now think about how they want to build the argumentation. They make sure that they have the necessary arguments, examples, scenarios, etc. ready at the right time. Nothing is more annoying than coming up with a good argument too late. It is important to put yourself in the other person's shoes: Do they think the offer (e.g. price, product, delivery terms) is something useful? How urgently do they need it? Do they have alternatives?
Step 5: Prepare the external environment
When the negotiator arrives, the project manager, as host, should make them feel at home. It's time to tidy up the desk, remove lint from the guest chair, check the floor and toilets for cleanliness, get glasses without fingerprints, make sure someone can get a snack at any time. These seemingly small things should not be underestimated. If your negotiating partner isn't a neat freak, you're in luck. But you should still be prepared. For some negotiations, choosing a neutral location is crucial.
Keep your goals in mind
An important basic rule that should always be followed is to keep the agreed objectives clearly in mind throughout the conversation. If the project manager keeps these objectives in mind, they can react quickly if the other person tries to steer the conversation in a direction that is favourable to them. It is helpful to make notes of relevant statements in order to maintain a sense of direction as the conversation progresses. This is also a direct way of documenting and recording the results of the discussion. It is advisable to follow this procedure even on occasions that may seem less important.
Emphasise common ground
At the beginning of the meeting, the project manager should include the commonalities that have been researched in preparation. This will motivate the interlocutor to listen, as a positive decision is often based on sympathy. It is important for the project manager to show the interlocutor that they have researched them and the company out of respect and professionalism. This will give the impression that they understand their counterparts' positions and motives.
It is very important to always emphasise the benefits of working together so that both sides benefit from signing a contract. The aim is to create a win-win situation where there are no losers, only winners. Such a long-term and successful business relationship is fostered by mutual understanding and the identification of common interests.
Some basic behaviours are very important for a successful conversation. One key element is to allow the other person to express their thoughts fully and without interruption. However, as a project manager, it is equally important to listen actively and to be attentive. Active listening means:
- Show that you understand and respect what the other person is saying by using small expressions such as 'uh-huh' and 'aha' or non-verbal signals such as nodding your head and gesturing.
- Maintain eye contact throughout the conversation to establish a personal connection and convey a sense of value.
- Echo what the other person has said in your own words and add your own experiences. This shows that you are actively listening and focused on the content of the conversation.
- Only after you have listened to and understood the other person's arguments do you present your own. This gives everyone a head start in terms of knowledge, which can be used for constructive discussion as the conversation progresses.
- If something is unclear, ask questions to make sure you understand what the other person is saying. This shows interest and commitment to the topic.
Involve the interlocutor
An effective way of actively involving the interlocutor is to ask questions. An example might be: "In what areas do you see potential for improvement in our product?" Open-ended questions that leave room for broader answers are better than restrictive yes-no questions. The wording can be refined as the negotiation progresses, e.g. "Can you give me a firm commitment?
Body language is very important as it conveys unspoken messages that should not be underestimated. During a negotiation, it is important to look at your counterpart in a friendly but confident manner. This conveys that you are comfortable in the presence of your counterpart, but also that you are clear and decisive. Open eyes signal interest in the person and what they have to say, while an upward gaze expresses an optimistic attitude.
It is important that the upper part of the body is facing the other person and that the hands are loosely open to show openness and willingness to communicate. Crossing your arms in front of your body can be a sign of closeness and defensiveness. By being aware of these body signals and using them accordingly, you can create a positive and open atmosphere during the negotiation that can lead to a successful outcome. When it comes to body language, it is important to remember that negotiations in the international arena can have their own peculiarities.
Only those who are understood can negotiate successfully. Therefore, the following applies:
- Use concise formulations and avoid complex nested sentences.
- Use examples and pictures to explain complex issues clearly.
- Avoid technical terms with which the interlocutor is not familiar. Even if this means that some technical details are missing or the explanation seems more superficial, it is important that the core message becomes clear.
- Speak the "language" of the interlocutor, which may be influenced by education, culture and corporate culture.
- Pay attention to the reactions of the interlocutor. Have they perhaps not understood something? In this case, the explanation should be repeated or enquired about, e.g. with the question: "Have I expressed myself clearly?”