Daily Archives: January 15, 2008

the doctor Hopes That You Don’t Get Too Emotional (in Your Negotiations)

the doctor recently came across an article in The Negotiator Magazine titled Emotion in Negotiation that had some good advice on incorporating emotional awareness into negotiations, as long as you don’t take it too far, especially when you’re the buyer and the purchase under consideration is a technology solution.

The article suggests that because emotion is an integral and essential part of the human experience, that it is thus inherent in negotiation, especially since researchers have found that emotion is an integral part of reasoning and decision making. Furthermore, there is research that suggests that an absence of emotion has been found to have the same disruptive effect on decision making as strong negative emotion. Thus, the suggestion of the article is that in order to be a truly skillful negotiator, it is important to also be emotionally intelligent.

The article also suggests that being an emotionally intelligent negotiator involves not only emotional awareness, but the ability to use emotions in creative and adaptive ways. And although I heartily agree that Emotional Intelligence, or EQ, as us bloggers like to put it, is very important both in, and outside of, negotiations, I don’t think you should be relying on EQ alone for negotiations. You should be relying on heavy hitting analytics and expected ROI calculations.

Let’s face it … the big technology vendors, especially those without innovative solutions to sell, have known for years that their chances of making a sale increase greatly if they can get you emotional about their product. But you don’t want to be buying a product for how it makes you feel – you want to be buying a product for what it can do for you.

Moreover, you want to know how much value you expect to get out of the product. How much is the increased process efficiency really going to save you in manpower? (Chances are, not much.) More importantly, how much savings is the product expected to enable through advanced analytics, optimization, risk management, or spend visibility? Per year?

This is the basis for your negotiations. A conservative estimate of how much value you expect to obtain from the application. If you conservatively expect to save 10M per year, than you can conceivably pay as much as 1M per year for a solution. But if you only expect to save 2M per year, it doesn’t matter how good the solution makes you feel – spending 1M+ per year on it is just plain stupid.

I’m not saying that you shouldn’t pay attention to your emotions when evaluating technology solutions, or that you shouldn’t try to use them to your advantages in your negotiation with the technology vendor (should you get the chance), but that you shouldn’t be swayed by your emotions in making a decision.

Supply Management in the Decade Ahead XI: Attracting & Retaining Supply Management Talent

This post continues our coverage of Succeeding in a Dynamic World: Supply Management in the Decade Ahead (a detailed report based on research jointly undertaken by the ISM, A.T. Kearney and CAPS Research), and our review of the seven critical supply strategies for succeeding in a dynamic world in particular, with the sixth critical supply strategy identified by the report – the attraction and retention of supply management talent.

As far as the doctor is concerned, this is the most important strategy of them all. Without talent, there’ll be no one to implement your category management strategies, no one to develop your suppliers, no one to optimize your supply networks, no one to help you benefit from technology enablers, no one to collaborate with your partners, and no one to enable the supply management organization. (That’s why the doctor has an ongoing series on this blog about talent. You won’t succeed without it.)

The authors outlined three main areas that they believe companies need to focus on in the decade ahead:

  • identifying needed skills and capabilities
  • attracting, developing, and retaining talent
  • managing a diverse, dispersed workforce

This is a great start, but I’d also add, at the very least:

  • succession planning

As the study notes, a great deal will be expected of tomorrow’s supply management professionals, and this will be considerably more than what is expected of them today, even though some organizations already expect a lot. Tomorrow’s supply management professionals will have to find and leverage sources of innovation, contribute to revenue as well as savings, expand efforts to manage supply, address risk, and ensure business continuity and sustainability in a broad sense (and possibly before they even get their morning coffee).

As the report notes, to meet all of these requirements, supply management professionals will need the skills and capabilities to understand and interpret supply market dynamics, analyze complex supply options and risks, and develop value acquisition strategies that integrate with – while supporting – business and functional strategies. They’ll also need the skills required to properly implement the six other strategies being covered in detail in this series – category strategy development, supply base development, technology leverage, supply network optimization, collaboration, and supply management organization enablement.

The foundational skills will continue to center upon a combination of supply market knowledge and supply process expertise. Professionals will also be required to possess broad business knowledge and multi-disciplinary experience – the cross-functional skills, as well as international experience and foreign language skills – the cross-cultural skills. Finally, they’ll also need a collaborative style, innovative spirit, and leadership ability – the “soft-side” skills.

The top three talent management strategies identified by the respondents were:

  • Establish a knowledge and skill competency model for supply management
  • Recruit and/or develop talent with broad general management expertise for supply management roles
  • Recruit and/or develop talent with specific technical or foundational domain expertise for supply management roles

However, there will be no one-size-fits-all strategy. As the authors note, companies will need a thoughtful, multi-pronged strategy to acquire, develop, and retain individuals with the skills and competencies that they require. Companies will also need to cast a wider net and be far more aggressive and creative in identifying and attracting supply management talent.

Talent succession planning will also be important, as supply organizations face the loss of knowledge not just to retirement and recruitment efforts by other companies, but recruitment efforts from other organizations within the company who will increasingly realize that the most qualified people in the company are those in the supply management organization, where complexity is a way of life.

In addition, the ways in which companies adapt their training programs over the next decade will also be important to success. Training curricula will also need to be expanded and constantly refreshed to support the broader skill sets and deeper expertise required of individuals in the processes and supporting technologies required to deliver value from supply markets. In addition, training programs will need to support cross-functional teams and not just the individual. These training programs will also have to integrate tightly with knowledge management to capture what the organization collectively knows and make that information available to new staff anywhere in the company, regardless of where they are physically located in the world, to more quickly overcome the learning curve that will continue to creep up steeply over the decade ahead.

Also, companies will have to compensate their top supply management talent accordingly – and move beyond the so-called “one-percent” dilemma (where top performers receive 4% raises while poor performers receive 3%) because if you won’t compensate your top performers, you can be damn sure your competition will. To keep your top talent, superior individual performance will need to be reflect in both base pay and incentives. Remember, it takes somewhere between five and twenty dollars of sales to have the same impact to the bottom line as every dollar of savings achieved by a supply management professional. Given this fact, who should be compensated more in your organization? The sales person that reached his million dollar quota, the marketing executive that made it easy for him to do so, or your category manager who trimmed a million dollars off of the top? If you answered the sales person or the marketing executive, then I wish you good luck when you find yourself in the unemployment line in three years because because you didn’t have the supply talent to foresee and mitigate that major supply chain disruption that put your company into bankruptcy. (On average, a company has a major supply disruption every twelve months these days … and that number is shrinking fast among those without the talent to develop and implement the appropriate visibility and mitigation strategies.)

Talent management will be the deciding factor between success and failure in tomorrow’s supply management organization, so the doctor sincerely hopes that, for your sake, you get it right. (And just remember, if you need help, the doctor is an experienced academic and professional lecturer and trainer, has a lot of strength in knowledge management, and is also quite good at process development – which is key in succession planning. the doctor is also quite good at working with third parties and can help you in your selection, and management, of partners should you decide to outsource some or all of your recruitment efforts. For more information on what the doctor does, see What Does the doctor Do? For Executives.)