Building Your Renegotiation Team (Part 3)

Spend Matters would like to welcome a guest post from Vantage Partners. Click here for Part 1 and Part 2 of this series.

  • It's tempting to... bring in "professional negotiators"
  • But think about... involving those who are part of the day-to-day team

While smaller renegotiations may only require a person or two on each side, many require the participation of a broader team, including those with important knowledge about the deal, the right approval authority, and/or some critical stake in implementation. When renegotiation is viewed as a threat, the prevailing assumption is that those who work together on the buyer and provider side should be shielded "for the good of the relationship." Expert negotiators are brought in and walls are raised between negotiators and delivery personnel on both sides out of a well-meaning desire to keep someone focused on getting work done during renegotiation.

Someone certainly has to keep the trains running during renegotiation, and professional negotiators may bring specialized expertise in terms and conditions and knowledge of the market that account and/or governance teams don't have. But excluding those involved in the day-to-day relationship raises some key problems. First, outside experts don't have the knowledge (of the deal or the relationship). As stated in Part 1 of this series, more knowledge is a bene?t every renegotiation has that initial negotiations don't. While these experts may have been part of the original deal creation, lessons have certainly been learned since their departure. It's dif?cult to take advantage of those lessons when individuals with intimate knowledge of the relationship aren't involved as part of the team.

Second, expert negotiators don't have the personal relationships that governance or account teams do. Although that might make it easier for them to "get tough" (some providers lament having account team personnel who have "gone native" and "think they work for the customer"), it's these personal relationships and knowledge of the other party's interests and ways of operating that can make more creative, valuable deals possible.

Finally, these individuals generally have no stake in the implementation of the renegotiated deal. Their orders are usually to strike the best deal they can (or give up as little as possible), and the best deal on paper isn't always implementable -- as many initial deals have shown.

That's not to say that professional negotiators can't be valuable in a renegotiation. They are professional for a reason -- their expert knowledge can be very useful. And in some cases, relationships between teams can be so damaged that it is nearly impossible for them to try to start anew without some support. In these situations, outside help can assist in getting past bad experiences to imagine a better deal. But that's different from deliberately excluding them "for the good of the relationship." Even when experts are driving the renegotiation (on one or both sides), those involved in the day-to-day relationship should be leveraged as team members with important knowledge.

When building a renegotiation team, companies should:

  1. Create renegotiation teams that include people with intimate knowledge of the deliver model, financials, and players on both sides.
  2. Establish clear roles, responsibilities, and authority for each member of the team. Defining responsibility and authority helps teams avoid sending mixed messages to their counterparts when parties disagree. It also makes it easier to proceed efficiently without having to re-open issues when an important party hasn't been consulted appropriately.
  3. Decide how the team will operate, including protocols for communication and a set of ground rules. Renegotiations often involve numerous meetings, documentation, and information sharing, sometimes across a global team. Defining at the outset how the team will share information (including getting clear on what information needs to be shared with whom) will help the team operate more effectively. Setting ground rules also helps individuals on the team avoid potential internal conflict that can impede success.

In my next post, I will discuss how to choose a renegotiation process.

- Sara Enlow, Principal at Vantage Partners

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