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A Yield Guide to Negotiating: Authority has its limits. That's when negotiating skills kick in.
Leader's Edge, October 2007
Fast Focus
- Like successful producers, managers need to be skilled in the art of negotiation.
- Producers who close an extremely difficult deal should share the wealth of negotiating knowledge gained with colleagues.
- Emphasize the importance of negotiating skills by making them part of performance reviews for both producers and managers.
When you want a new car, you know the process involves negotiating. New
house, same drill. In a typical day of business, you may negotiate a
number of times with vendors, bankers, even a potential customer. The
one arena where you can just lay down the rules and make something
happen is with employees, yes? As you can probably guess, I think that
answer would be no.
Great leaders don't rule from on high, and getting into the trenches
often requires a little give and take with others also using the
ladders. Negotiation will make every day more pleasant and productive
with employees and colleagues as surely as it will get you a better deal
on that '08 BMW. And because business success is the path to that shiny
new road rocket, you'd be well-advised to consider the concept.
When you look at the traits of great or even good leaders, you will find
negotiations woven in. For example, building trust and respect implies
rapport, which comes from active communication, which in turn derives
from discussing ideas and solving problems. What is that if not
negotiating? You could parse out a number of other leadership terms and
arrive at the same basic processes and acts. Enacting a vision.
Mentoring. Long-range planning. Setting goals. Achieving objectives.
Unless you can do all these yourself in a vacuum-sealed office cubicle,
you are going to need a team of willing others to be a party to your
schemes. How do you get them to sign on and to act in the best interests
of the organization? Part of the process will inevitably involve
negotiation.
Too often, negotiation skill is not taught in management classes. Nor is
it one that leaders put at the top of their resumes. But title and
responsibility-being the "buck stops here" person at the top-will carry
only so much weight with your staff. Authority has limits, and great
leaders know that success comes from a team effort.
Often, I have seen the old suggestion to "surround yourself with people
smarter than you" paying dividends for a savvy manager who draws out
great advice and action from his or her team. The manager's most useful
skill, in fact, may be the ability to effectively negotiate with people
who are smarter and more talented.
This situation is in evidence as soon as you step outside your agency's
doors. Out in the rest of the world, you basically have no authority.
What you have are your skills. Now, some high-powered rainmakers may
charge through their day issuing edicts and commands to everyone from
vendors to friends. But authority is only recognized through respect and
trust, and those traits are only visible when you truly get to know
someone. Thus, giving an order to a perfect stranger is about as
effective as yelling into the wind.
A successful producer-whether dealing with a carrier, a risk manager, a
CEO or a CFO of a client or prospect-needs to be not just technically
skilled, but also able to assert leadership and, indirectly, negotiating
skills. So, too, must a successful manager in order to foster those
successful producers.
Three Communication Cues
Negotiating is communicating. We all know from sales training that the
most valuable communications trait is the ability to listen. As goes the
salesperson, so goes the negotiator. "Active" listening involves more
than just waiting for the other party to stop talking, of course. It is
more than simply saying "I understand" or "that makes sense." This is
even more vital when you're having regular conversations with people you
know well, such as staff. They can quickly sense if you're engaged in
the conversation. Listening is a developed skill, one that can be honed
through application of three major techniques: paraphrasing, inquiry and
acknowledgement.
- Paraphrasing. In negotiating, this often means restating what you
think you heard, without expressing agreement. The goal is to reflect
back the other party's key points as accurately as possible. You do this
verbal note-taking chiefly to give the other person the ability to
clarify the message, which will reduce future misunderstandings. A side
benefit comes from being able to distill a motor-mouth's chatter down to
something that you can grasp and retain.
- Inquiry. To further understand the other party, ask open-ended
questions. Asking questions that require explanation rather than just a
yes or no is especially useful when you want the other party to unveil
the reasoning behind ideas, positions or conclusions.
- Acknowledgment. This goes beyond paraphrasing. It requires you to
ascertain the emotional sense of the other person's message and reflect
back to them your understanding. This is a vital step in better
communications and more effective negotiations because with this
technique you will be earning their trust. For instance, it is often
difficult for people to express negative feelings. However, in
conversation you can "read between the lines" and realize that the
person is upset. A producer talking to a client might say, "It sounds
like you're unhappy with our services." This offers the client the
chance to express emotional feelings. While it may be difficult for you
to hear them, once the issues are raised, a door to a solution is often
opened.
Improving Your Skills
Knowing how to be a good listener who draws out the other person's needs
is a skill that cannot function by itself. Your mindset and your
business practices must mesh with the plan to actively negotiate in the
office. Using negotiation skills in a leadership role is "management by
talking around"-you need to be committed to an open dialogue whenever
you step into a situation.
Consider how negotiating skills might be improved in these areas:
- The best-interest test. Whether an employee will follow your lead
(or, for that matter, whether a customer will buy from you) is somewhat
determined by whether they believe it to be in their best interest. It's
human nature to consider, at some level, what's in it for me. Therefore,
effective leaders and producers focus not only on the other side's
position, but also on their interests, and they find ways to satisfy
those interests to achieve the end goal.
- Who's your buddy? Strong relationships within a team are not
important because of the warm, fuzzy factor; your business goals do not
revolve around developing golfing buddies. But the importance of
relationship building should be easily grasped by anyone who's ever been
a producer. Strong relationships build trust, and that is what creates
"followship" to your leadership. As a producer, you realize that your
client views you as the "trusted advisor," which makes your
recommendations and your products less risky and therefore more
acceptable. So, too, will an employee view your strategies and actions
for the firm.
- R U getting through? Communication these days is more often by cell
call, BlackBerry, text message or e-mail rather than an actual
face-to-face. How you communicate-and how well the message gets
through-is a critical component of effectively negotiating and leading.
Consider the tone and content of your casual messages as well as your
important ones. Make certain that your chosen communication mode
reflects the value of your relationship with your employee.
- The vision thing. Goals, objectives, action plans, deliverables. To
paraphrase an old song, they don't mean a thing if they ain't got that
zing. And by zing, of course, I mean the overarching vision. Behind
every leadership move should be the certainty that the action helps
further the vision-what the leader views as the direction and purpose of
the company. This is perhaps the most important element of leadership
and is certainly vital to an individual's ability to negotiate. Having
worked with hundreds of agencies, I have seen time and again that
effective communication of a plan or a vision is key to getting the
troops behind you. On the flip side, the single biggest problem raised
by employees is lack of understanding where the agency is headed.
Without a vision for the future, there can be no growth.
Boost Your Skills
Picture this scenario: one of your producers has just spent months
closing a deal with a new client. It's taken endless meetings,
proposals, presentations and discussions with carriers, and now you have
the new client that will help you achieve this year's business goals.
What next? The producer probably wants to go back to servicing the
simple accounts and getting life back to normal-an understandable
response. If you have experienced this, you are not alone, as this is
human nature.
But if you do not share that success and celebrate it, the producer's
great effort has not been fully utilized. Now, I know some of you will
say this is the nature of sales, and you are right. But if you don't
share your great successes among the team, the agency loses a great deal
of negotiation experience. It's a "teachable moment," where others could
learn from the experience. Negotiating skills, like sales skills, are
not learned overnight. Rather, the technique requires constant
refinement, not only for the individual but for the agency itself.
Make negotiating training an ongoing process in your agency, and your
entire staff will benefit from every success. Consider these steps:
- Performance Reviews. Unfortunately, performance reviews usually do
not measure negotiating skills. Instead, negotiating is lumped under a
category such as interpersonal effectiveness or persuasiveness. All key
management people should be monitored and counseled on their negotiating
skills. No, this is not easy, but it is a critical skill for leadership
development.
- Coaching and training. Whether this is done through internal
mentoring or the use of outside parties, providing ongoing coaching and
training is critical. Many firms have developed programs to send
talented employees to negotiations training taught by outside
professionals. Such programs go beyond effective selling, which is often
very broad, to target specific skills that are needed to be an effective
negotiator.
- Internal Sharing. When the firm experiences a difficult sale, you
might wonder whether it was really worth all the time and effort. The
real value in that situation comes from sharing the experience. What
management, sales and support learned from that sale could affect,
streamline and empower many future sales. The cycle time can be
examined, as can responsiveness, needs assessment, product development,
innovation and many other elements of the sales process. The team should
be asked, "How can we do this better next time?" Using the art of
persuasive negotiation, management should bring team members into an
understanding of how to better handle such a difficult situation. It's
by our failures, or our near failures, that we learn the most. Sales
training should include these stories as well as inspirational stories
of the big wins.
We all know that it's not enough to simply be good at one aspect of our
job. For instance, a top CEO may inspire visionary thinking, lead by
example with great work habits and be a decisive dealmaker. A great
manager is part salesperson, part accountant and part coach. Effective
salespeople excel at building trust, anticipating needs and being
responsive.
In the DNA of each of those individuals is a strand that enables
high-level negotiation skills. Whether those skills are nurtured and
given prominence may determine how successful the individual will be.
How much attention you pay to negotiating with others in your firm will
set the tone for what is expected when dealing with vendors, clients and
colleagues. When you next sit down to consider training and mentoring
priorities, take another look at negotiating skills.
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