5 Essentials of Contract Negotiation
Contract Negotiation:
Strategic process of coming to a dialogue table between two or more parties before going towards an agreement. Agreement may be in term of business or some other dealings. In a contract, there exist defined version of each party’s responsibilities and authorities, all the terms and conditions are mentioned in it clearly. Legally, both parties are bounded to perform their duties which are defined in contract. Both parties show flexibility if there comes any collapse in contract in future.
Contract negotiation strengthens relationship among parties so that both may carry on further. Contract negotiations deliver long-lasting quality solutions that make business more successful. Negotiation also makes things easier and controllable. Contract negotiation knowledge helps practitioners to identify steps which makes it victorious. Negotiation resolves conflicts and enhances contract values.
Five essentials of contract negotiation
In business contract negotiation each party informs other party about their point of view and tries to hunt other to accept his point of view. During contract negotiation, negotiators prioritized some strategies so that their focus remained on it. These strategies are actually “five essentials of contract negotiation”.
1. Grasp prioritization
Giant knowledge of your prioritization strategies proves beneficial to you in business contract. Get into your revenues and risks. Take heart in that, and then come up with a plan for what you want to achieve.
2. Research about other party before contract
Knowing what the other party wants to achieve will help you in building your strategy. Is their aim to get the best deal on price, is it to gain market share, expand into new markets or defeat their opposition? Find out if they have a walk-away position and what it is?
3. Build your strong Negotiation team
Structured an experienced negotiators team that are loyal to the firm. Their preferences and priorities must be for the company’s development. Contract negotiations fail if each member’s loyalties, preferences and priorities are not articulated.
4. Rehearsal Negotiation before table
Prepare your negotiation plan, that who will lead the team, who will analyze technical as well as business points and make sure their discussion with team members before implementing decision into contract. Present tactics and strategies to team. Predominantly, team negotiation proves advantageous rather than sole negotiator.
5. Avoid from blundering
Sometime contract negotiations are impaired due to the blunder of one of your own team members. Blunders could affect the validity of contract. Here are some common blunders in negotiation which actually exist;
- Taking negotiation personal
- Neglecting other party’s problem
- Making unreasonable demands
- Revealing secrets
- Letting price bulldoze other interests
- Starting work before the contract initiation
- Losing temper
- Neglecting BATNAs (“best alternative to negotiated agreement”)
- Searching too hard for common ground
Don’t take negotiation personal, when you allow your emotions entering in business negotiation, then you might get out of the way and ultimately will lose your focus. You must adhere to opposition what are they pointing? Don’t harass another party by making unreasonable demands. Keep control on yourself, never plunged yourself in such a debate that flows away all of your firm’s secrets and you remain holding your hands. Adopt positive approach while negotiating. So, be curious about these mistakes and then went for negotiation. Then results will be in your hands.
Reasons for Negotiation:
Organizations get through negotiation because they want to remain privileged and reduce their risks throughout the contract. Sometimes, company gets the services of one’s firm and in return either pay them for their services or give them better offers. So, there exist several reasons behind negotiation.
Agreement: To reach mutual agreement in collaborative style where all parties are satisfied.
Costs: To reduce the cost of acquisition by achieving a lower price.
Value: To achieve added value such as reduced lead or cycle times.
Performance: To improve performance though KPIs (Key Performance Indicators) and SLAs (Service Level Agreements).
- KPIs highlight things that are important to your business and should tie directly to business goals. It includes financial goals, operational goals, staffing goals.
- SLAs describe a set of non-functional requirements of the service.
Conflict: Resolve conflict through proper channel.
Quality: To achieve optimum quality.
How do you prepare for a contract negotiation?
While being a negotiator is tough one job. You must have general negotiation concepts and techniques implementation knowledge. Contract negotiation can be frustrating and time-consuming because many legal teams go into contract negotiations without clarity of their objectives and priorities.
You must have clarity about all the aspects relevant to contract. Come with strong negotiation planning, clarification & justification, positive approach, find a favorable pitch and then hit your point, question rather than demand, persuade them about your view point with strong arguments, why and for what you want to do that? Listen carefully to their suggestions and make decisions accordingly, which are acceptable for both. Different negotiators go through with different negotiating styles.
Key Solution:
You can turn contract negotiations from an operational weakness into a competitive advantage. If you’re not familiar with what contract negotiations are and how technology can improve your contract negotiation outcomes then you should take trainings relevant to contract negotiation which boost and polish your skillsets to improve your negotiation skills in easy and better way. Engenius Executive Education is the platform which is providing such trainings and courses with its top-notch consultants to upskill and deal with such kind of difficulties. Please visit our programs.
