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Negotiating a new compact

Previously, Martyn Jones has called for a new compact between construction clients and their suppliers. This month he argues that Integrative Negotiation – with the key elements of Emotional Intelligence and Co-creation – present a way to shape the new compact.  He also sets out what he sees as the main skills and attributes needed to make it work,

In an Integrative Negotiation, often referred to as “win-win”, everyone benefits from the agreement. There is usually more than one issue to be negotiated so there are opportunities for each party to create value and for trade-offs too so that a mutually beneficial agreement can be reached.

Negotiation, a well-established form of procurement amongst private sector clients, is where the client and a preferred contractor enter a contract through direct negotiation. As we saw in the recently published Rider Levett Bucknall (RLB) survey of procurement, around 20% of the projects sampled were procured in this way.  However, its use in the public sector is currently problematic because of its procurement constraints – barriers that will need to be removed if the sector is to share the benefits of negotiation.

Negotiation is ideal where the work is of a unique nature and the client is confident that there is only one contractor suitable to undertake the work, or where the client has a strong preference to use a particular contractor who has performed well in previous projects. Here, I argue that “Integrative Negotiation”, is key to fashioning a new compact between client and their advisers and main contractors.

And not just between client and main contractor but along the supply chain too, between main and specialist contractors and manufacturers (what we might dub a “win-win-win-win-win”).  The alternative form of negotiation,  “Distributive Bargaining”, where both sides try to gain control of a limited amount of resource is considered a “win-lose” negotiation where one side’s gain equals the other side’s loss and is seen as inappropriate in forging our new compact in shifting to a race to the top rather than the bottom.

What skills and attributes do negotiators need for an Integrative Negotiation approach? What are the keys to unlocking mutually beneficial outcomes?  Alongside the obvious  technical knowledge and “hard” skills, soft skills are very much needed too, including Emotional Intelligence, listening, persuasion, planning and co-creating. Understanding and deploying these skills and attributes are the first steps to becoming an effective negotiator.

But bear in mind, as in all situations, the specific skills needed will be shaped by the product or service being procured, the operating environment, the intended outcomes, and the culture of the people and organisations involved.

For me, there are two attributes and skills at the core of what I’m proposing: Emotional Intelligence and Co-creation.

Emotional intelligence (EI) because it combines personal competence (self-awareness, self-regulation and motivation) with social competence (empathy and social skills).  It provides a means to manage emotions, empathise with the  feelings of other parties and raise everyone’s consciousness of the emotional dynamics at play.

And, given that we are looking to establish a new compact, negotiations also need to include innovation. This is where co-creation comes into play, a form of collaborative innovation where ideas are shared and improved together, rather than retained by each party. It provides a shift in thinking from the single organisation as a definer of value to a more participative process where people and organizations together generate and develop meaning and value.

But there are other attributes we need to include too. The ability to build rapport helps establish and sustain relationships where both sides feel comfortable, appreciated and understood.

Listening skills are critical in order to truly understand the people involved, their needs, aspirations and ambitions, and the specificities of the situation.

Integrity or having strong ethical and moral principles are important as being thoughtful, respectful and honest builds trust.

Persuasion, the ability to influence others, can help explain why a party’s proposed ideas and solutions are beneficial to all parties and encourage others to support their point of view. In addition to being persuasive, negotiators should be, where necessary, assertive too to get their views across whilst respecting the perspectives of others.

Patience, doesn’t always fit comfortably in construction’s often gung-ho approach to projects but some negotiations can take a long time to complete, occasionally involving renegotiation and counteroffers. Rather than seeking a quick conclusion, negotiators often practice patience to properly assess the situation and reach the best mutually beneficial conclusions.

Negotiation requires planning, research and strategizing to help parties to determine what they really need and want.

Managing expectations. Just as negotiators should enter a negotiation with a clear goal, the other party will also likely have their own defined expectations. If one party might not be able to agree to each other’s terms, they should try adjusting their expectations and maintaining a balance between being a firm and collaborative negotiator.

We must always bear in mind that construction is project based with a wide diversity of organisations and products so adaptability is an important skill for a successful negotiation as each negotiation is unique, and even the situation within a singular negotiation may change from one day to the next.

However difficult negotiation might be given the specificities of construction, remember the words of Nelson Mandela: “No problem is so deep that it cannot be overcome, given the will of all parties, through discussion and negotiation rather than force and violence.”

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