By Tom DePaoli
Purchasing and supply chain professionals must be aware of and strive to improve their emotional intelligence. 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.
Emotional intelligence is especially critical in negotiations. I classify three general types of negotiations and I will discuss the importance of emotional intelligence skills in each type.
The three types of negotiations that are generally recognized are:
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. In summary, 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 does require a moderate level of emotional intelligence skills from the purchasing professional.
An information-based negotiation is a radically different approach to negotiations. It emphasizes deep knowledge of the supplier and their industry. It transgresses from some traditional approaches to negotiations but in information-based negotiations the purchasing professional gains a deep understanding of the supplier’s industry, its margins and culture. In essence this is an immersion or empathy with the supplier and its competitive landscape. The best way to describe it is that the purchasing professional knows as much or more about the supplier and its industry as it does!
Some would argue that this approach is highly analytical. Information drives decisions not emotions or one-upmanship. However, the purchasing professional in essence becomes highly tuned emotionally with the supplier. A deep mutual understanding of its competition, margins, challenges and constraints is mastered. Trust issues are quickly overcome and resolved. Trust becomes nearly total. It requires the purchasing 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 your supply chain and developing true mutual breakthroughs with your supplier. Below is my summary table:
My conclusion is that purchasing and supply chain professionals must not only work to develop their emotional intelligence skills, but realize their degree of usefulness and appropriateness in each different type of negotiations strategy.
Dr. Tom DePaoli is the Management Program Director at Marian University in Fond du Lac, Wisc., and the Principal (CEO) of which does general business consulting in the supply chain, Lean Six Sigma and human resources areas. Recently he retired from the Navy Reserve after more than 30 years of service. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and Lean Six Sigma deployments. He is the author of eight books and numerous articles. His Amazon author’s page is https://www.amazon.com/author/tomdepaoli
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