The Role of Emotional Intelligence in Negotiations
Procurement and supply chain professionals must be aware of and strive to improve their emotional intelligence. It has a key impact in negotiations. Soft skills are becoming more important - even in the digital age. A definition of emotional intelligence is the capacity to be aware of, control, and express one's emotions, and to handle interpersonal relationships judiciously and empathetically. Some would say that emotional intelligence is the key to both personal and professional success.
My Story on One Method of Improving Your Emotional Intelligence
I improved my emotional intelligence by interviewing thousands of people over my career. As a former human resource professional, talent management is the key success factor. I strived to put people at ease and understand their motivations, fears, and emotions during the interview process. I tried to find some common interest or experience to alleviate the tension. More often than not, this happened. Reading people is a great skill to help improve collaboration and mutual goal setting. I strongly recommend procurement and supply chain professionals increase their socializations and direct face to face contact with colleagues, suppliers, and customers. It gives you the advantage of observing body language and facial expressions. In our profession, it is about relationship building. Unfortunately, the digital age limits this type of contact, but I urge professionals to try to overcome this current state.
Emotional intelligence is especially critical in negotiations. I classify three main types of negotiations and I will try to discuss the importance of emotional intelligence skills in each type.
The three types of negotiations strategies that are generally recognized are:
- Adversarial (or the win-lose approach)
- Win-Win, where both parties win on certain issues or concerns
- Information-based negotiations, where a deep understanding is obtained by both parties and often a strategic partnership can evolve
The adversarial approach requires some emotional intelligence but often degenerates into a shouting contest with great histrionics, intimidation, and a brutal battle of wills. Since both parties are often acting, exaggerating, and pushing their own agenda, relationship building or empathy takes a back seat to just one party getting its way or out-bullying the other. The emotional intelligence skills required are very low or non-existent.
The Win-Win approach starts with a discussion of the respective parties wants and needs. The goal is a mutually satisfying agreement. People are separated from the problems; a variety of possibilities are created, and the results are based on some objective standard. There is a fairly strong commitment to empathy and no blaming is allowed. Both parties are involved in problem solving and there is a focus on each party’s interests. The focus is then redirected to mutual interests or common ground. The objective is to be trustworthy but not totally trusting. This approach requires a moderate level of emotional intelligence skills from the procurement professional or negotiator.
An information-based negotiation is a radically different approach. It emphasizes deep knowledge of the second party, usually the supplier and their industry. It transgresses from some traditional approaches to negotiations but in information-based negotiations the procurement professional gains a deep understanding of the supplier’s industry, their margins, and their culture. In essence, this is an immersion or empathy with the supplier and their competitive landscape. The best way to describe it is that the procurement professional knows as much or more about the supplier and their industry as they do!
Some would argue that this approach is highly analytical. Information drives decisions rather than emotions or one-upmanship. However, the procurement professional becomes highly tuned emotionally with the supplier. A deep and mutual understanding of their competition, margins, challenges, and constraints is mastered. Trust issues are quickly overcome and resolved. Trust becomes nearly total. It requires the procurement professional to become the resident expert on a market and an industry (just like the supplier). It tends to yield much more significant long-term gains than adversarial or even win-win approaches. Using this approach is one of the best methodologies for transforming the supply chain and developing true mutual breakthroughs with your supplier. Below is a summary table:
My conclusion is that procurement and supply chain professionals must not only work to develop their emotional intelligence skills, but also realize its degree of usefulness and appropriateness for each different type of negotiations tactic or strategy.
Emotional intelligence can be measured and I recommend this book. Emotional Intelligence 2.0 by Bradbury and Graves. As far as trying to connect emotional intelligence to results I do not recommend using a traditional dashboard or other supply chain metrics. I instead recommend measuring how well a professional does in forming meaningful strategic partnerships with suppliers and getting results with them. Skill and success in using information-based negotiations for this is recommended. A success measurement should focus on what I call breakthrough results or results than actually gives the organization a competitive edge or advantage that the customer values especially in the VOC or voice of the customer. In other words, focus on the big picture strategic ah-ha or wow results.
Voice of the customer (VOC) is a term used in business and Information Technology (through ITIL, for example) to describe the in-depth process of capturing customer's expectations, preferences and aversions.