The Five Rules of Negotiating

1. Always ask - you never know what you might get.
 
2. Know what you want - it is difficult to have a successful negotiation if you don't know what you want. It's also important to know what is totally unacceptable, and would be a deal breaker. Sometimes it's better to go with the status quo, rather than to accept a lesser deal.
 
3. Prepare for the kind of negotiating you will be engaged in. There are five types of negotiations: impromptu, informal, formal, one-of-a-kind and ongoing relationship.  It's this last kind that requires the most preparation and care. These are the negotiations that take place with your spouse or your manager, and they deal not only with tactical issues, but also longer term strategic ones. This kind of negotiation is more cooperative, and has a greater atmosphere of trust and concern for the ongoing relationship as well as possible solutions.
 
4. Understand cultural differences. In may places outside the United States, the marked price is not the one that people expect to pay. There is an expectation that there will be haggling. And it turns out that these days, you can go to a store like Home Depot in the United States and ask for a lower price. 
 
5. Practice, practice, practice. This means ask for things everywhere in your life. If the person you're asking can't give you what you want, find out who can. As kids, we learned to ask Mom or Dad for what we wanted until they gave in. Don't accept the first "no", and remain committed to win-win.  Look for ways to reach a mutual agreement on solving a common problem.

Adapted from: 5 Rules of Effective Negotiating, www.globalknowledge.com

Why Emotional Intelligence Matters more than IQ in Business

IQ has long been considered the key measure of a person's ability.  However, studies have shown that having a high IQ is not a good predictor of success in life or in the business world.  It is thought that IQ contributes about 20 percent to life success leaving 80 percent attributable to other factors such as emotional intelligence.

Emotional intelligence includes abilities such as being able to motivate oneself; to persist in the face of difficulties; to control impulsiveness and delay gratification; to regulate one's mood so as to keep emotions from blocking the ability to think; and to be able to empathize and to hope.

There is a cost to the corporate bottom line from low levels of emotional intelligence on the job. The consequences for a work group can be severe if a member or leader keeps exploding in anger, or has no sensitivity to the feelings of others.  Emotionally upset people cannot remember, attend, learn, or make decisions clearly.

On the flip side, there are clear benefits to working in a group whose members are skilled in emotional intelligence.  They would be attuned to the feelings of others, able to handle disagreements so they do not escalate, and have the ability to get into flow states while working.

Eight Leadership Skills that Matter Most in the Real World

1. Competence  This is the most important leadership quality; it's not enough to have vision and purpose.  Competence has four pieces to it, intellectual, emotional, strategic and instinctive. This characteristic often is not transferable - the news is full of stories of successful CEOs from one industry failing when they try to apply their skills to a new industry.
 
2. Accountability Leading is mostly about the relationship between the leader and the led, and trust, accountability, and the faith others have in you is at the core of this relationship.
 
3. Openness This is a soft skill that can't be quantified, however, openness, candor, frankness, and honesty are bedrock qualities of leadership.  This includes the ability to speak plainly, to listen to new ideas, to tolerate errors on the learning curve, and to build relationships with people at all levels.
 

Managing and Leading, What's the Difference?

Everyone is fascinated by "leadership". It's viewed as the secret ingredient that's needed to transform a good organization into a great one. But great managers are the backbone of successful organizations, and the truth is you need to have both kinds of people. The roles of leader and manager are completely distinct, with different responsibilities, starting points, and talents required to excel. Anyone can be a leader or manager, but to be great at either requires certain core talents.

Great managers turn each employee's talent into performance. They do this by making each employee believe that their success is the manager's primary goal. Employees will respond to this by giving their best effort. Great managers are tough on their employees; they hold them to high standards, and then show them how to achieve these benchmarks. They paint a picture of excellence in a role, and then coach their employees to embrace this vision.

Great managers commitment to each employee's success is driven by a form of spontaneous intuition commonly known as the coaching instinct. They are drawn to and thrill at the small successes of others, and this is a talent that is innate and cannot be learned.

Great leaders rally people to a better future that they see as a vivid image in their mind's eye. Leaders are fascinated with the future, they are restless for change, impatient for progress, and deeply dissatisfied with the status quo. This friction between "what is" and "what could be" propels leaders towards that better future.

The core talents of great leaders are ego and optimism. The former is important because ego allows a leader to channel his self assurance, self confidence, and press them into the service of an enterprise bigger than herself. The latter is important because leaders must believe deeply and instinctively that things can get better, not just hope they can be improved, or to put on a brave face. The possibilities of the future must seem so intense that they have no choice but to do everything in their power to make them real.

The necessity for great leaders to possess both optimism and ego means that they are born, not made. The skill of bringing the best performance from employees also cannot be learned. You either have this ability, or you do not. It is possible to be both a great manager and a great leader. but it helps to know when to change gears. Management starts with the person, while leadership starts with the picture of where you are headed.

Adapted from: Buckingham, Marcus, The One Thing You Need to Know ...About Great Managing, Great Leading, and Sustained Individual Success. New York: Free Press, 2005, pp 29-71.

Top-down versus Bottom-up Management

Top-down change management is the traditional management strategy in which all decision-making, guidance, and authority flows from top management down to everyone else. It is typically the only methodology used to manage change in organizations. This approach often fails due to low employee buy-in and lack of flexibility and empowerment of line management and front line employees. An even bigger problem with this methodology occurs when top-management doesn't understand the work processes of their own company, and so they are unable to make good decisions about how things will get done in the new system. This dissonance will lower productivity and ultimately damage employee morale.

Experienced project managers understand that employee buy-in is the most important variable in the success of any change management process. The most successful outcomes are achieved when supervisors actively engage employees in the change management process using bottom-up management techniques. This is the most effective method for managing employee expectations and securing end-user commitment.

Supervisors have the most direct line of communication with employees, and they have the greatest influence on employees' perception of change and of new systems. Each employee's attitude to the project needs to be assessed, and individual concerns addressed one-on-one. This should be treated as an educational process, with a goal of dispelling negative attitudes through increased understanding of the process, and the sharing of a clearly articulated common goal.

Change can be challenging, but handled correctly, it need not pose an insurmountable obstacle to achieving an organization's goals.

The Successful Manager: Create Strategic Alliances

To develop a better understanding of your organization's goals, consider using this approach to learn about your organization's corporate strategy:
Talk with people who were involved with setting goals to learn about the options that were discussed and the reasoning behind why they were chosen.

• Talk with leaders in the organization to develop an understanding of the organization's approach to its strategy, and the reasons for that choice.
• Meet with an experienced manager and learn the organization's history, the evolution of the company's mission, and the origin of the company's strengths and weaknesses.
• Read articles about your company as well as recent executive briefings to security analysts.
• Develop contacts in other departments to learn about their strategic issues and new developments.

Organizational strategy is not static. It's essential to constantly scan the environment to understand changes that may change your organization's strategy. Research the latest developments in your industry - talk with people, read industry reports.

Some common forces of change:

• Industry Changes
• Globalization
• Technology Changes
• Shifts in Competitive Advantage
• Human Capital Changes
• Government Regulations; either new or ending

The purpose of having a strategy is to help keep an eye on the ball. Use it to decide where to spend your time and energy and to stay focused on what's important. Evaluate decisions to ensure that they adhere to your strategy. Unless you are at the top of the organization, the corporate direction is set by others, then your role is to bring the corporate vision down to the next level.

Your group's strategy needs to be an evolving guide to what you and your team do.

Adapted from The Successful Manager's Handbook, by Lisa A. Stevens, Carol J. Skibe, and David G. Lee,  Personnel Decisions, Inc.; 6th edition (May 2000)

The Top Ten Procurement Changes in the Last Decade

10. ERPs Proliferated. Today, eProcurement and eSourcing are two of the most useful tools in purchasing. Ten years ago, these terms were unknown.

9. "Procurement" replaced "Purchasing". Ten years ago, even top purchasing departments processed purchase orders. Today, procurement departments centralize the supplier selection process, not the transactions, which are delegated to end users or outsourced.

8. Procurement Controls More Spend. When procurement deliver results, management seeks more spend that they can positively impact. Once sourced by other departments, categories like fleet management, benefits, and travel services are now sourced by procurement.

7. Social Responsibility Became A Top Priority. Whether for philanthropy or to avoid media scandals, management counts on procurement more than ever to buy from diverse suppliers, make environmentally-conscious decisions, and do business ethically.

6. Measurement Was Mandated. With the potential of smart purchasing widely known, senior management more strictly holds their procurement professionals accountable for results. The use of procurement KPIs and dashboards is now the norm.

5. Strategic Sourcing became an Internal Process. In the past, strategic sourcing was done mostly by consulting firms hired to help companies reduce spend. Today, many companies have their own refined and documented in-house strategic sourcing processes.

4. Vendor Roles Expanded. In 1998, there was talk about "partnering" with vendors. Today, there's action. Top procurement departments actively develop their vendors and look to their supply base for ideas, performance, and innovation.

3. Global Sourcing Went Mainstream. Ten years ago, only the progressive companies were searching abroad for suppliers. Now, in some countries, it is difficult to find products manufactured domestically.

2. The CPO Position Was Adopted. There is a growing number of professionals with the title "Chief Procurement Officer."

1. The Supply Chain Was Recognized. In the last decade, companies more closely analyzed the way material flows into, through, and out of the organization. This "supply chain" focus has those who once just placed orders now responsible for inventory, warehousing, outbound logistics, and distribution.

Adapted from: Top 10 Purchasing Changes In 10 Years. http://bit.ly/cfPJKj

The Six Laws of Persuasion

Persuasion is the ability to influence people's thoughts and actions through the use of specific strategies.  Getting what you want in life will require negotiation with a variety of people and the use of communication skills such as active listening and attention to non-verbal cues. Mastering the persuasion process will enable you to create the attitude change necessary for persuading others to agree with your line of thinking. You must be able to sell your ideas, and in a win-win situation, provide the other side with a fair deal.

To become skilled at persuasion, you need to know more; you must understand the the Laws of Persuasion. Psychologist Robert Cialdini described the six laws of persuasion in his book, Influence:The Psychology of Persuasion. He discusses the prevalent methods of marketing, and how by understanding persuasion laws, you can control how much marketers unduly influence you, as well as how to use these laws to your benefit during negotiations.

Cialdini’s Six Laws of Persuasion:

1. Law of Reciprocity  People try to repay what others provide them. Small favors bring on a sense of obligation. People feel compelled to “return the favor.” If someone gives you something you want, then you will wish to reciprocate because you now feel obligated. In negotiation, limited disclosure of the real reason for a stance, such as "this is all the money we have" can induce a concession from the other party.

The Future of Procurement: 2020: Talent Competition Heats Up

There is consensus that the talent pipeline is too thinly populated to meet the expected demand for strategic sourcing professionals in 2020. The CPO will need to function as a magnet for procurement talent by promoting global talent, utilizing state of the art technologies, training people broadly, and ensuring they are positioned to move up into bigger roles.

The emerging workforce has very different motivators. The younger generation wants the latitude to pursue all of their interests, both professional and personal. Flexible work arrangements, non-traditional compensation models with bigger bonuses and variable compensation tied to individual and team performance will become common. Companies will need to ensure that the procurement staff remains visible in the organization, and that people are developed so that they are promotable.

Adapted from VISION 2020: Ideas for Procurement in 2020 by Industry Leading Procurement Executives http://bit.ly/kIwoW3

KPIs for Responsible Sourcing

Responsible sourcing has reached a crossroad as companies have evolved from an approach based on employee compliance to one that goes beyond this to drive continuous improvement through strong supplier management and partnerships. Companies seek to demonstrate the value of responsible sourcing, but the lack of common standards for evaluating these successes threatens to undermine further development and wider adoption of these responsible sourcing practices.

There are a number of metrics currently in existence that impact the process of goal setting and evaluation:

• Goal setting and the key performance indicators for supply chain sustainability remains a work in progress. Most focus on qualitative program descriptions and challenges, rather than focussing on outcomes or value. A better approach would be to focus on continuous improvement.
• Public reporting is still focussed on negatives such as lack of supplier compliance, while measure so of positive values are underdeveloped. A more sophisticated approach would be to measure both supplier capacity as well as performance. Suppliers need to be able to understand the value created by their meeting responsible sourcing requirements, as this will provide them with the best motivation to comply.
• Supplier scorecards do not capture the data needed to allow internal audiences to make informed sourcing decisions. It's important to build ownership for metrics so that responsibility for implementation can be assigned throughout the company and accountability is clear. Micro-level targets can be established, and rolled up to provide a picture of overall performance,
• IT infrastructure remains a critical barrier to program measurement. Difficulty in accessing information has limited the ability to manipulate and analyze data. Fixing these problems will be expensive.
• Supply chain processes are not sufficiently transparent so that it can be determined that companies are managing their supply chain responsibility at an acceptable level. Companies need to demonstrate that they are meeting these commitments to their investors and other stakeholders, and they need to demonstrate how the value derived from these efforts on social and environmental issues.

Methods for evaluating the success and impact of supply chain sustainability programs must continue to be developed. Deficiencies in creating internal alignment must be addressed, and IT systems must be upgraded and improved. Communication between companies and investors must be developed with greater clarity around responsible sourcing practices and how they impact social and environmental outcomes. Communication and collaboration among stakeholders as well as transparency in the collection and analysis of metrics and indicators needs to be developed.

Adapted from: Key Performance Indicators for Responsible Sourcing, http://bit.ly/cD3EuM

The Future of Procurement: 2020: Outsourcing Explodes

Non-critical, transactional procurement activities currently done in-house that will likely be outsourced by 2020 include:

• All transactional processing, including POs, invoices, and payments.
  
• All non-strategic spend category management, such as leveraged commodities.
  
• Supplier catalog and contract management.
  
• Sourcing event execution.
  
• Data gathering, analysis, and reporting activities.
  

What will remain in-house will be the critical strategic spend categories. This will require procurement staff capable of strategic thinking, and who are capable driving innovation.

Adapted from VISION 2020: Ideas for Procurement in 2020 by Industry Leading Procurement Executives http://bit.ly/kIwoW3

The Future of Procurement: 2020: Prices Go Transparent

Negotiation will become a lost art in the future as prices become transparent due to e-sourcing, global trading networks, and on-line communities.

This move away from the price negotiation model will put a much greater emphasis on assembling the correct portfolio of suppliers, and the collaborative development of innovation and other values from supplier bases. This will include the creation of exclusive relationships with primary suppliers that share both roles and rewards.

Procurement will need to shift from generating savings through price cuts to savings derived from volume discounts and rebates, or through early payment of invoices. Going forward, there will be far less of an emphasis on savings, and more of a focus on bringing innovation and value, and of finding new ways of delivering competitive advantage to both sides of every agreement.

Adapted from VISION 2020: Ideas for Procurement in 2020 by Industry Leading Procurement Executives http://bit.ly/kIwoW3