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What's Your Interdepartmental Negotiation Strategy?

By Calum Coburn, Last Modified
Dec 13, 2018
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Have you noticed that certain departments within your company seem to work at cross purposes? Interdepartmental conflict usually isn't intentional. In fact, department managers understand that their respective units must work together if the company is to achieve its corporate performance objectives.  

Effective, constructive interdepartmental coordination depends on whether the negotiation strategies used by each department comports with and supports the organization's strategic goals.

Organizational and negotiation strategies

Without a doubt, a company's senior managers must determine a firm's overall corporate strategy and performance objectives as a first step before doing anything else. 

After deciding on strategy and performance goals, management can then identify the negotiation strategies which individual departments should use to move the organization closer to achieving its corporate goals. A company's desired market position and marketplace differentiation strategy must be carefully designed to align with shareholder expectations. 

Once the strategic path is set, management must do everything possible to integrate the strategy into the corporate culture. Having a strategy that is achievable, executable and visionary enough to generate passion at all levels of the organization is essential. People must believe in the strategy in order to work together to see strategic goals come to fruition.

Once the corporate strategy is in place, then creating good negotiation strategies at the departmental level should be the next priority. Here is where management needs to be careful.

Creating a departmental negotiation strategy that doesn't agree with the bigger picture can be a recipe for problems, and such problems often materialize. Departments can work with a "silo" mentality, where a department's motivations and goals tend to take precedence over those of other departments, even conflicting with the company's overall strategy. This type of disconnect can lead to damaged relationships, fractured partnerships and overall ineffectiveness. Even the best negotiation training is of limited benefit if individual departments aren't working collaboratively toward shared goals. 

How to achieve alignment

Most departments would do well to have a negotiation strategy in place, even if they deal mainly with internal customers or stakeholders. Sales and purchasing (aka sourcing or procurement) are the main departments to benefit from formulating departmental negotiation strategies as seen in the following scenario:

Consider a company that seeks to be a technology leader known for product innovation. In this case, there wouldn't be much sense in having its purchasing department drive toward lower-cost pricing. When viewed through the lens of an organizational strategy of technological leadership, a cost-saving strategy is counterproductive, since new and evolving technology tends to be expensive at the outset. 

If sales is also trying to negotiate using a low-cost leadership strategy, then distributors could become confused as well. If distributors and customers have bought into your company's brand focus of product innovation and technology leadership, the pursuit of a low-cost negotiation strategy could confuse them and ultimately damage the corporate brand.

Strategic agility is crucial

As the saying goes, "The only thing that is constant is change." Being agile enough to pivot in response to the market is essential to corporate survival and continued competitiveness.  Eastman Kodak, Blockbuster and Sears are examples of companies that didn't quickly adjust their strategies in response to radical market shifts. A company's strategic planning arm must have the ability to quickly pivot as market conditions change. Likewise, a department's negotiation strategy must be quick to change as well.

Summary

A company can only maintain competitive advantage if departmental negotiation strategies align with corporate strategic objectives and performance targets. The added ability to pivot strategically whenever the market dictates can ensure continued success for the organization over time. 

Appropriate negotiation strategies at the departmental level are a must. Negotiation training can be instrumental in equipping department leaders with the tools needed to align negotiation practices with the overall corporate strategy.

Calum Coburn
Calum Coburn
See Calum Coburn's Profile
Calum Coburn, Senior Vice President for The Negotiation Experts, enjoys building negotiation capability in his clients’ negotiation teams. Calum’s negotiation experience has been honed in international deals worth hundreds of millions. He gets his inspiration by finding sustainable solutions that leave everyone involved with a sense of ownership. Graduates of The Negotiation Experts’ courses note Calum’s negotiating acumen and his dedication to translating negotiation best practice into their negotiation capability.
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