An Interesting Piece on Physical vs. Virtual Negotiation

Last summer, eSide ran an interesting article on how (and where) you negotiate matters that overviewed different types of negotiation techniques and which work best in person, over the phone, and through e-mail. Given the amount of time that one spends on the phone, and, particularly, online (using e-mail and instant message communication) using a modern strategic sourcing system, this is now basic information that every Supply Management professional needs to know.

The article starts off by noting that negotiations are generally most productive when conducted in person, which is obvious when you consider that behavioural researchers say we lose 75% of the (nonverbal) communication content when speaking on the phone. The take-away from this is that all critical / high-value negotiations that are expected to result in the signing of a contract should be conducted in person. This doesn’t mean that all aspects of the negotiations need to be conducted in person, as you could conduct the initial rounds of a multi-round negotiation by phone or e-mail as you are working your way through the process to select a vendor of choice, but that the final negotiation should generally be in person.

Then it notes that there is strength in numbers. A team will always have an advantage over a single opponent as different members can play key roles that make the approach highly effective. However, it does not that there is an optimal team-size, and that a team that is too big can hinder as much as it helps. (It also has to have an empowered leader whose final say is final.)

For a telephone negotiation to be effective, you have to be prepared. Good interrogatives/questions draw information out from the other party during the discovery phase of the negotiation process. Inversely, bad interrogatives/questions don’t.

E-mail negotiations give the impression that you want the relationship to be arm’s length. If this is not the case, then you probably shouldn’t use e-mail for anything more than to gather information as a precursor to a telephone and/or in-person negotiation.

If you do use e-mail, remember the following:

  • once you give your position in writing, it’s harder to change it,
  • email encourages prompt, direct response, leaving little wiggle room,
  • it could indicate that you aren’t comfortable negotiating in person, that you can’t make decisions without consulting with someone else, or that you don’t have the time for the recipient,
  • it can put you at a nonverbal disadvantage (depending on the situation), and
  • it can be used to bypass you!

The advantages and disadvantages of e-mail work both ways! Just like a supplier can be at a disadvantage if they commit their position to writing first, you can put yourself at a disadvantage if you commit your position first. Similarly, just like a supplier will be at a disadvantage if he’s not used to e-mail negotiations, you can be at the disadvantage if the supplier is an expert at e-mail based negotiations, phrasing, and legalese and you’re not. Finally, and most important, just like you can use it to bypass a low-level supplier sales rep and get right to the VP, you can be bypassed if the supplier get’s a hold of your stakeholder’s direct e-mail! So while the article might focus on the advantages of e-mail based negotiations, it’s more important to keep the disadvantages in mind as one-slip up and you’ve given the supplier the upper hand.

But the most important thing to remember when negotiating by e-mail:
you may, technically, put a legally binding contract in place by agreeing to something the other party offers in an e-mail! Certain bodies of law (including the most recent changes to Article 2 of the Uniform Commercial Code) now explicitly regard electronic correspondence as being “in writing”. (See 2-211 [3] in particular, for example.) Take heed!