Negotiation: your place or mine?
I’ve spent much of my career in the procurement field and I’ve heard a heck of a lot of bunkum about the power aspect of the location for negotiations. I hear it again and again from buyers that ‘home is best’, with the ‘other side’ supposedly feeling more intimidated when they have to negotiate on the buyer’s home turf.
As a buyer, and then procurement leader, I almost always preferred negotiations to take place at the supplier’s location. Of course, it wasn’t always comfortable, but it did give my colleagues and I a few key advantages:
- It signalled to the supplier we were confident and would not be intimidated by any price threats.
- We controlled the time. How many suppliers would tell a customer to leave?
- When we probed for the supplier’s interests and/or detailed information, the supplier wasn’t able to say: “I’ll have to get back to you because we don’t have the information with us.” We could say: “Go find it, please. Take your time. We’ll wait.”
- Just the experience of being at the supplier’s location gave us fresh insight and learning about the supplier’s capabilities and their business as well as the knowledge to use there and then or bank for later.
What we were doing is mining the supplier’s territory for information on the supplier’s own interests and priorities. We could test any supplier assertions by viewing the data immediately. We were always more successful getting the facts when at the supplier’s place, much to our advantage.
I can’t say this approach worked perfectly every time, but I would say in nine cases out of 10 it was the other party that felt the most intimidated, pressurised and obliged to come-up with an agreement.
- David Atkinson is founder and managing director of Four Pillars.
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This is spot-on advice.
I totally agree, if you feel the need to be on your home ground to have the power in a negotiation then you are already at a disadvantage. A deep breath and sip of the supplier’s tea or coffee should clear any concerns you have and very quickly you will forget whether you are playing home or away.
We should not forget that usually Sales functions have been sent on training courses specifically to assist them negotiate at their customers premises so will be prepared.
Visiting the supplier gives you access not just to information, a chance to walk round the factory, speak to the backroom staff, understand the mood of the company and instant access to more senior management who can make those difficult decisions that would have been referred back to the office.
As for controlling the time, at the end of the day I may only have an empty hotel room to return to whereas the supplier has his home and family so may be more willing to give in on the sticking points.
Useful comments in the article – I would add that another benefit of negotiating away from home is that, if the supplier makes some claim about (e.g.) their production process and its costs and you can’t follow what they are talking about or doubt its validity, you can say “show me…”
This is an similar situation to home sales, where the homeowner is disadvantaged by not being able to cut short discussions by leaving, or by claiming they don’t have access to required information. That’s also why so many salespeople are keen to ensure that the prospective customer’s partner is there, to remove any “I need to speak with…” excuses for not agreeing the deal.
In a procurement situation, I would say that being on the supplier’s site gives all the advantages listed above, as long as you retain flexibliity regarding travel & flights etc. The supplier will be faced with all the usual pressures/interruptions of being at work, and so will be under greater pressure than if they were scheduled to be out the office for the day.
I could not disagree more with this approach. Research has proven that negotiation outcomes are on the whole more positive for the home side. This is usually put down to the subliminal effect that familiar surroundings have on confidence. If you feel more confident, you make more bullish demands, and are less likely to concede.
However, there are more practical considerations. If the meeting is on your turf you typically ‘own’ the meeting. You can therefore:
- control the agenda and minutes for the meeting
- choose dates and timescales that suit you
- set the room up as you want it
- ask them to sit where you want them
- manage break outs (leave them in the room)
By all means hold ‘fact-finding’ meetings at the supplier’s premises, but my advice is negotiate in your own office unless there is a compelling reason not to.
Great advice and well stated!!
A wise boss once told me to ignore the travel restrictions and get out there in order to know who I was dealing with. You have to see how your negotiating partner’s boss, colleagues and reports behave in her/his presence, he advised me.
Never forgotten that; and find myself passing it on to a new generation.
I agree with you David. As with football, the away game is always satifying to win!
Interesting topic.
Isnt the real issue that salespeople get all sorts of dark arts influencing training, while buyers are often left to fend for themselves?
The key point is that David is thoughtfully and deliberately taking the offensive.
Nykolas – feel free to take your comfort blanket when you visit suppliers.
I don’t disagree, David, but any professional negotiator worth his or her salt should be equally comfortable negotiating either home or away. The skill is in making the most of advantages and neutralising the disadvantages whatever they may be.
At times, the best bet logistically might be a neutral venue, such as a hotel. On one occasion, when a particularly mired dispute needed a good couple of days to thrash out a solution, a hotel venue meant that business services and refreshments were easily to hand and, best of all, neither team could suffer from distractions. Being at a place dedicated for the purpose of negotiating meant both parties could knuckle down to business.
With mobile connectivity there should be no excuse for not having the necessary information to hand. Someone back at base can always email, tweet, Bluetooth, whatevs…
I tend not to follow any rule of home or away. I assess the supplier I am dealing with and take it on a case by case basis. To generalise sometimes means you are not maximising your options and techniques.
Better to read a few good psychology books and beat the sales guys at their own game than follow a ‘one for all’ rule.
‘Another fan of felix chan’ – nice comment to Nykolas but must complain about it. I nearly spat my coffee over my computor screen!!
I have always preferred negotiating away from home – there is, for me, an added incentive to “come home” with a good deal.I also agree with Dave’s comments and some others. I think Nykolas’s point about the research is interesting though and worthy of being checked out – source please. Of course the most important factor is not location but preparation, preparation and preparation together with negotiating expertise.
A good negotiator should be confident in any location. The key to me is what, if any, internal support from other groups will I need for the negotiation. If you will need help I would rather do it at home where I can involve others during the break without them needing to participate in the negotiation. I don’t want those people to travel to the suppliers location because of the damage they can unknowingly cause. If you don’t need help, I don’t care where I negotiate. If I negotiate at a supplier’s I want to make it clear that 1) I know in advance who will be participating on their side and 2) I set the expect that the negotiation must be un-interrupted by outside activity. If they can’t do the latter I want it to be at a neutral location without the interruptions..
“Across three studies, we find that residents of an
office space outperform the visiting party in a distributive negotiation.”
Source: http://apps.olin.wustl.edu/workingpapers/pdf/2011-04-001.pdf
The study shows that theres an ‘home advantage’ for untrained students carrying out an artificial negotiation exercise.
It also shows that a confidence boosting exercise for the visitor negates this advantage.
Conclusion: it doesnt support your point.
Nykolas – the study you quote is interesting, but it is not based on actual purchasers and sales people. Sales people are trained to operate and negotiate at their customers’ premises. If we, as purchasers, negotiate at the supplier’s premises, the sales people are out of their comfort zone (ie for a sales person, home is our premises rather than theirs).
http://www.pon.harvard.edu/daily/negotiation-skills-daily/your-place-or-mine/
This Harvard article contains a long list of advantages from negotiating on home turf. However, in making the counter-point it concludes that “The most important reason to negotiate on the other side’s territory is that it gives you opportunities to learn.”
I contend that learning about your suppliers’ facilities, systems, personnel etc is something that should be done prior to any negotiation. Once equipped with this insight, the balance tips heavily toward home advantage.
There is a bit of bravado from from those who feel ‘equally comfortable’ negotiating home or away, but I’m not afraid to admit that the additional familiarity and control might make the difference between a good and a great deal.
Take whatever advantage you can when planning to negotiate. Ultimately, most Buyers I have met prefer to conduct meetings at their premises purely for convenience. Time taken to travel to another premises present disadvantages to those travelling simply by lost working time (regardless of whatever glorius gadgets you may have). That said, visiting your counterpart is extremely useful for many of the reasons stated within these posts. However, planning your negotiation to occur on your first visit does introduce a level of uncertainty and a risk of circumstances developing beyond your control. Time is always the biggest constraint to the degree of “success” in negotiations and as Nykolas suggests – the other being the Negotiators view of their own capability. I have negotiated with many who start out bullish but equally concede ground due to poor research, planning and development of available options. There is no magic bullet here – home or away.
What an excellent exchange of views and experiences. Thanks everyone for taking the time. Great input from Nykolas in particular for providing links to a couple of interesting articles/papers. They’re both worth some of your time.
As a couple of contributors have pointed out; the research presented in these papers is unconvincing; it seems that negotiating confidence trumps home advantage, even in zero-sum negotiations, so I’m sticking to my original assertion that negotiating at the supplier is preferable.
There are three essential steps in negotiation that I’d like to bring some attention to: firstly, an understanding of the relationship dynamics (power, dependency, switching costs, etc.); secondly, clarity around your own business requirements (your interests); and thirdly, the opportunity to mine for the interests of the other party. A deep understanding of these will all contribute to confidence-building that can neutralise any perceived territorial advantages. The first and second can quite easily be done at home, but the third is surely best executed on away territory.
Do your homework on the above, enter negotiations with high aspirations (there’s plenty of research available on the impact of aspirations on negotiating success) and, if we accept that zero-sum is not the only game in town (I’m sure we do), then the opportunity to create value can be enhanced when we can gain real-time access to the supplier’s own business, where we can investigate many avenues where value can be created and then, ultimately, appropriately distributed.