Negotiation techniques you need to know
Discover the most advanced and efficient negotiation techniques and obtain better results in your purchase contracts.
Resolving conflicts in negotiation
Conflicts can arise during a negotiation and means to resolve them must be found. But what is the best strategy to achieve positive results for the negotiating parties? Check out this post and find out!
Identifying the difficulties of negotiation
We can define conflict as the lack of understanding between two (or more) parties, causing tension on at least one side involved in the negotiation process.
There are two ways of looking at conflicts when it comes to negotiation. The first is to think that it is harmful and that the people who produce it are emotionally disturbed. The other way is to see it as an opportunity to work to minimize losses and maximize gains for all.
For those who want to do well in a negotiation that involves different opinions, only the second view on the subject is possible. But before resolving a disagreement, it is necessary to know whether it is an affective or a conflict of perspective, teaches the negotiation teacher, Paulo A. Alves de Almeida (PUC/MG), who has among his students many professionals from the purchasing department.
An Affective Conflict involves interpersonal incompatibility among negotiators, making it difficult to exchange information and causing the energy of understanding to be directed towards solving people’s problems rather than seeking solutions for business.
But in a Conflict of Perspective there is a disagreement of thought among the elements that are participating in the negotiation, which is natural, after all, each individual has his own ideas and perceives reality in a particular way.
William Ury, founder of Harvard University’s School of Negotiation, says that conflict is natural and will always exist, and it is up to the negotiator to find ways to overcome it.
But the expert also says it is a mistake to believe that good negotiators are born ready. For him, to be successful in a negotiation that involves conflict is something you learn, and for that he gives the first tip: before influencing someone, you must influence and dominate yourself!
Solving conflicts in a negotiation
This is an essential point in a negotiation: the participants must be able to persuade and modify each other’s ideas. How can this be done? Follow the tips that follow – they are very useful for those working in the purchasing department.
Overcome interpersonal conflict
By considering each other opponents, there is no chance for dialogue and the negotiation will not progress. The negotiator should focus on resolving the deal, preventing personal feelings from being a part of the negotiating table.
The Harvard professor says that a classic mistake in negotiation is to think that being soft on people means being soft on the problem. Or the opposite: to imagine that a firm approach to the problem requires being tough on people.
According to the expert, what successful negotiators do is separate people from the issue discussed so that they can be calm with people while remaining firm about the problem.
In addition, if you notice that other members of the group have this kind of disagreement, you cannot get involved in the situation or take sides. The best way out is to value opinions, creating space for all group members to express themselves.
When all participants have the perception that their opinions have been listened to in a respectful way, even without being adopted, there is a feeling of collective responsibility for the final decisions.
Find similar points
No matter how different the opinion of people who are taking part in the negotiations is, there will always be at least one point in common. And you have to identify it before they are camouflaged by differences.
The negotiator must therefore find the similar points of the two parties and start the conversation on this item and gradually introduce the disagreements.
Another important point is to take the initiative in the negotiation because, according to experts in this field, those who have this attitude can have greater control of the situation, increasing the chances of success – those who work in the purchasing department need to know this.
Know how to deal with problems
Preparing for uncomfortable situations can help the negotiator deal with them, when (and if) they happen – at such times, it is essential to control anxiety and maintain balance.
One way to overcome a conflict is to apply the active listening technique. Also known as empathetic listening or reflective listening, it consists of listening and responding to the other party in a truly understanding way, capturing not only the words (verbal language), but also their feelings, manifested by gestures, posture and even looks (non-verbal language).
Calling the person by name, using the same tone and volume to the other party and always being very polite are simple attitudes that help to establish greater interaction and closeness.
The active listening technique allows you to:
- Increase trust and mutual respect;
- Release emotions and reduce tension;
- Encourage participants to disclose information;
- Create a safe environment for problem solving.
Act as a mediator
In complex negotiations, the way out for conflict resolution can be to act as a mediator. This is one of the concepts taught in the Harvard Negotiation class by Professor William Ury.
What he calls the third side is a negotiator who, even though they have interests in the issue to be resolved, manages to advocate for the interests of all. In order for this to work, however, this negotiator must be trusted from both sides, otherwise they will not be able to establish themselves as a mediator.
A well-conducted negotiation leads to the difficulties being overcome, allowing everyone to be sure in the end that they have been heard and that the decision was the best possible one for all parties.
However, it is worth noting that it is not only the result of the transaction that should be considered, but the way the process was conducted. If in the course of the transaction there was an exchange of concessions between the parties, the necessary balance was established so that everyone felt comfortable and left the process satisfied – and ready for future negotiations based on mutual respect.
Advanced Negotiation: Prepare yourself for great results
In times of large influx of information, advanced negotiation skills tend to be increasingly elaborate – and important, especially for those in the procurement department.
Studies, research, persuasion and speech techniques are some of the knowledge a good negotiator should have. But what makes a negotiation achieve the best possible result? Read below!
How to succeed in an advanced negotiation
The American negotiation expert, speaker and author of the book Negotiation Boot Camp: How to solve conflicts, satisfy clients and make better deals, Ed Brodow, explains that, in today’s turbulent commercial climate, the ability to negotiate can make all the difference between failure and success.
Brodow, who is one of the world’s top speakers, lists some important tips for the professional who will go through this challenge:
- Be consistent and don’t be afraid to ask for what you want;
- Know how to listen;
- Gather information and studies before going to the meeting;
- Don’t show you depend too much on a positive outcome;
- Be patient;
- Focus on the best possible outcome and be optimistic;
- Don’t focus on your limitations, but on the pressures from the opposite party;
- Look at the transaction from the other party’s perspective;
- treat everything bilaterally – don’t offer anything without receiving something in return.
Advanced negotiation still requires a number of other practices involving environment, style, communication, relationship and image. Check out – and don’t miss out on the essential skills for the 4.0 shopping manager!
Inform yourself and prepare the environment for the negotiation
Study, planning and preparation of the environment are part of the prenegotiation process. The professional should have clarity of points their targets might bring up, their objectives, possible concessions, limits and, mainly, the negotiated theme and the history of such negotiations.
From that point on, the negotiator may set up an environment and a presentation that are consistent with the process in question.
Learn about trading styles
There are several negotiation styles and negotiators that are defined from studies of the management area. It is necessary to have knowledge about these concepts and to understand which one is more adapted to the negotiator, the subject of the negotiation and the other parties involved.
This understanding goes through a profile identification for the development of the negotiator’s skills.
Several authors in the field of management have already conceptualized different terms for negotiation and negotiation styles. For example, there is the assertive negotiator, who is clearer and more objective when exposing his ideas; the persuasive negotiator, with great argumentative power; the stable negotiator, who is more secure and patient; the detailed negotiator, who only acts after having all the relevant information.
Regardless of the negotiator’s style, it is important that they always put the company’s interests at the forefront, but know how to put themselves in the other person’s shoes to analyze the situation from a different perspective.
A good result is one that offers advantages for both parties involved. Therefore, be aware of the values you have to offer, but know how to recognize what the other is granting so that the transaction is an exchange and starts an assertive relationship.
Be aware of your personal image and brand
The image, posture and behavior of the negotiator are extremely important. Professionals should maintain an adequate visual aspect, and they should know how to control their emotions.
To avoid having an unstable mindset, one should be prepared to deal with anxiety, frustrations and responses, whether they are positive or negative, and use their image, brand and style as gaining differentials. The negotiator must impose confidence, demonstrating these characteristics.
A valid tip is to study Personal Branding and invest in this personal marketing practice, which teaches the professional how to manage their career as if it were a brand.
Build relationship networks and invest in communication
A Good negotiation also depends on strong relationships and long-term thinking, according to conflict management expert John G. Shulman. Working collaboratively can be the key to building lasting relationships.
Having a good relationship also involves the practice of communication, which must be clear, assertive and work through its complete flow – emission, message and reception. When acting in cross-cultural environments, communication must be bidirectional, based on trust, expressing interest in the culture of both parties and with respect to the contributions of those involved.
Plan a better alternative to the agreement
There is a concept developed by two great negotiators, William Ury and Roger Fisher, in the bestseller “Getting to Yes”, which must be taken under consideration when the negotiation between the parties is paralyzed due to a deadlock.
BATNA stands for Best Alternative to a Negotiated Agreement. The concept explains that it is possible to overcome the obstacles and move towards a final result. Planning and observing BATNA helps the negotiator to have power during the decision-making process.
Ideally, we should already foresee possible deadlocks in order to identify them more easily when negotiating. After that, it is necessary to map the consequences (burdens and bonuses) of possible alternatives to the agreement and understand the position of the interested parties.
Meet BATNA, Harvard’s Advanced Negotiation Method
Answer quickly: how many times have you left a meeting with a client or supplier with the feeling that the agreement reached was not ideal for your business? If this happened more times than you would like to admit, the time has come to meet BATNA, an advanced negotiation method developed by Harvard Business School that will change this outlook. Learn more!
What is BATNA, anyway?
Developed by professors Bruce Patton, Roger Fisher and Willian L. Ury, the BATNA method was first described in the bestseller “Getting to Yes”, launched in 1981 and considered by executives around the world as one of the most important negotiation guides in the corporate environment.
BATNA (Best Alternative to a Negotiated Agreement), in general terms defines its “plan B”, or what needs to be done to get around an unfavorable situation and reach the best possible result, if there is no chance of reaching the agreement initially imagined for the negotiation.
Why is it important to have a well-defined BATNA?
Arriving at a negotiation with a customer or supplier without a clear notion of your BATNA can bring serious harm to your business.
This is because ignoring this advanced negotiation technique increases exponentially the chances that you expose the company to unnecessary financial risk, either by rejecting an agreement that should have been accepted or, on the contrary, by signing a contract that should have been rejected due to the anxiety of closing a deal.
To prevent this from happening, it is essential to go to the meeting with a clear vision not only of your aspirations regarding the results of what is being negotiated – that is, what you consider your best result – but also of the limit of concessions you can make and, above which, you will need to reject an offer.
Advanced negotiation: how to evaluate my BATNA?
The definition of your business’ BATNA goes through 3 fundamental stages:
1. Evaluate your options
Gather your team, evaluate the situation that will be negotiated and think about all possible scenarios: which points will be easily negotiated, which items can lead to an impasse, which ones will hardly be accepted by the other side?
Then build the possible solutions, because it is important to have a clear notion of your alternatives beyond what was initially thought.
Making an honest assessment of the possible options in case you don’t achieve the expected terms, besides taking a huge pressure off that moment, prevents you from making decisions on an emotional basis and that may represent little advantageous solutions for your business. [link to article Using emotion for better trading after publication]
2. Establish your BATNA
With the available options in mind, it is possible to establish your BATNA, that is, the one that would be your best option if it is not possible to obtain the performance initially expected.
When establishing your BATNA, it is important to also consider the other side of the negotiation and think about the BATNA of your interlocutor. In other words, you may wonder if, in case the client or supplier does not close the contract with you, what would be his best option?
Obviously, it is important not to answer this question based on assumptions about the other side. One of the fundamental premises of this advanced negotiation technique is to do an in-depth research about your interlocutor and the scenario in which they are inserted, so that your BATNA can be established on a safer basis.
Pro Tip: In addition to information about the other party, it is essential to update in relation to the global market. Therefore, we indicate 3 important readings on the subject:
- How Slowbalisation affects the Supply Chain
- The second wave of Industry 4.0
- Incoterms 2020 – for buyers.
3. Calculate your reserve value
With BATNA established, you can also define your reserve value, that is, the limit where the negotiation is no longer interesting for your company and that it is not possible to cross.
This is the value that defines the deal breaker, the issue (or a set of issues) that one of the parties to a transaction considers essential to its interests and, therefore, cannot be abdicated. These points are usually left until the end of discussions, when other items are already advanced.
In simple words, you can establish the exact moment when you need to leave the negotiating table, since advancing would mean signing a contract that is disadvantageous to your company.
It is important to understand, however, that defining your reserve value in a negotiation is quite different from setting a target. This is because, as you already know, the first is the minimum acceptable value for that to be a viable deal, while the second is the value you are willing to arrive at for the transaction to be considered a success.
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Using emotions for a better negotiation
Our emotions influence every aspect of life. However, both in our personal and professional lives, keeping our emotions and feelings in check can be a great challenge.
When we talk about the workplace, controlling your emotions becomes fundamental in order to pursue a successful career and in some sectors it must be even greater. This is the case, for example, in the purchasing department, where negotiation processes are common, which demands a lot from professionals.
In this article, we will bring useful information to use emotions in a positive way, which helps you to have better results in negotiations in general. Check it out!
Feelings at the Negotiating Table
Until recently, emotion was considered an obstacle to reaching constructive agreements. But this concept is changing, and now it is suggested that controlling emotion in negotiation can bring positive results.
In the book Building Agreement: Using Emotions as You Negotiate, Daniel Shapiro and Roger Fisher develop the idea that it is possible for the negotiator to stimulate positive emotions and overcome negative ones by showing appreciation and valuing the other party’s membership, autonomy, status and position.
For the authors, the advantage of aknowledging and knowing how to deal with these emotional dimensions is that they can be explored with the aim of understanding each party’s expectations, helping to create a more positive bargaining environment.
As we can see, negotiating depends a lot on the influence of emotions. This is because the successful negotiator needs to have good persuasive and oratory resources, but he also needs to have the perception and control of his feelings.
Studying principles of negotiation, researchers Norbert Schwarz of the University of Michigan and Gerald Clore of the University of Virginia used the phone to ask questions about life satisfaction. Fun Fact: Half of the participants answered the question on a sunny day and the other on a rainy day.
Participants who were contacted on a rainy day showed less satisfaction with life than participants who received calls on a sunny day. But when the scholars began the conversation asking, “How is the weather there?” Participants in a rainy condition responded as positively as those who were experiencing a sunny day.
Why did this happen? Simple: by recognizing the bad weather, the respondents turned off the impact of the rain when assessing their satisfaction with life.
The study therefore demonstrated that negative emotional triggers had to be turned off before negotiations could take place.
Controlling emotions in negotiation
In general, everyone is able to control the way they express their emotions, but there is one strategy that helps to take advantage of this control: control your feelings! In this way, it will be possible to disguise or emphasize an emotion, according to need and moment.
In this aspect, it is essential to prepare in advance for the negotiation. For example, if there is a setback on the way to the meeting, or if you walk into the room and encounter someone you had a confrontational relationship with, these situations must be worked through before you begin to negotiate – that is, in practice, to deactivate the negative emotional triggers!
How to do this? Ask permission to go to the bathroom and take the opportunity to work on your breathing (take a deep, paused breath a few times), do a quick relaxation or meditation, call someone who has the ability to calm you down and give you confidence, etc.
Now, if you notice that the other side has negative emotions related to the negotiation, try to create a bridge with the source of those feelings. It is possible to identify this non-positive reaction through the individual’s speech, but also through body expression, as illustrated by FGV teachers Yann Duzert and Ana Tereza Spínola, in the area of Business Management: contracted lips and eyebrows lowered and joined (means anger), touching the nails or the eyebrow as a sign of impatience.
Questions such as “hard day?” or “how was your journey here?”, aside from creating empathy, can be the starting point to minimize the influence of negative emotions during discussions.
Harvard Business School assistant professor Alison Wood Brooks explains some of the feelings that can appear at a negotiation table: “The most common emotion to appear before the process begins or during the early stages is anxiety. We are more likely to show irritation or excitement in the heat of discussions. And disappointment, sadness or grief often appear especially in the final stages of negotiation”.
All these feelings can be controlled and taken to a more advantageous side during the negotiation process, as explained by Alison, who teaches negotiation in MBA and executive education courses and is a member of the behavioral insights group.
According to her, a useful strategy to reduce anxiety is to invite an outside expert to articulate the negotiation, as these people have less personal interest in the job and can demonstrate more controlled skills.
Anger can arise from the general tendency to view negotiations in competitive, and not collaborative terms. But this feeling, according to the teacher, is not all bad. Demonstrating anger in a controlled way can make people appear stronger and more powerful, which increases their self-confidence.
But if the tension is exaggerated, pressing the pause button is a good strategy. After calming the spirits, the meeting can be resumed in a more productive way.
However, there is a line that divides irritation from disappointment. And that second emotion can already be more damaging when demonstrated at the negotiating table. One of the factors that can cause disappointment is the very fast speed of the process, which brings the feeling that more could have been done. The most obvious way to reduce the likelihood of disappointment is to act calmly and thoughtfully and, if there are any doubts, ask pertinent questions to make sure you have explored all possible alternatives.
As for joy and excitement, Alison says that in certain situations showing these feelings can generate disappointment in the other party. The best negotiators make great deals for you, but make your opponents believe that they too have made a fabulous deal.
And so we come to the last two tips about emotions in negotiations:
- Have respect for others, not letting your excitement make your interlocutors feel like losers;
- Be skeptical and don’t let your excitement turn into overconfidence, damaging future negotiations.
Emotions are inherent to conflict and play a positive role in decision-making, creativity and relationship building, such as those involving negotiation.
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Triune Brain: improving purchasing Negotiations
Understanding how our brains work can simplify the way we negotiate or positively transform our interactions with other people.
The concept of the Triune Brain, developed in the 60’s, broadens our knowledge of this body, still so little understood, and offers the opportunity for development in the work environment, including for the purchasing professional – always involved in negotiations connected with several different interlocutors.
What is the Triune Brain, anyway?
The Triune Brain is a model formulated by neurosurgeon Paul D. MacLean based on the division of the human brain into three distinct regions, and organizing itself in a hierarchy based on its evolution. The regions are:
1. Primal or Reptilian Brain
As the name suggests, this brain part is also found in reptiles and controls the body’s vital functions, and is also responsible for our survival instincts. It warns us, for example, of our basic functions such as when we are hungry, cold, hot or thirsty.
Located in the brain stem, in the place where the spinal cord accesses the skull, the primitive (or inferior) brain governs our five primary feelings: anger, sadness, joy, disgust and surprise.
In a situation of danger the reptilian structure is awakened, releasing chemical substances to act instinctively, in defense of our self-preservation. When we lean our hand on a hot pot, for example, the automatic reaction is to push it away immediately – we act without thinking, something common when this brain is in charge.
But, besides primitive impulses, this brain is also related to habits and procedural memory, like getting into the car and starting to drive automatically, without having to think about every step that involves this action. The repetition leads to the recognition that the action is safe.
2. Limbic or Emotional Brain
Its location is exactly above the reptilian brain, that is, right in the middle of the Central Nervous System. The limbic (or middle) brain is the center of our emotions, memory and motivation.
By being activated it can raise the heart rate, increase oxygen consumption, preparing our body to fight or escape from some situation it perceives as dangerous. It can also trigger stress, one of the biggest problems faced in the workplace – whether at the office or working from home.
When we receive a disturbing message or see shocking news, for example, the limbic system is triggered, leading to an emotional experience before the occurrence.
3. Rational or Intelligent Brain
The intelligent brain is a younger cerebral part, constituted by the neocortex, and is responsible for all the conscious activities of superior order: language, reasoning, imagination, creativity, abstract thought, etc.
Located just behind the forehead, the rational (or superior) brain also concentrates a good part of our biographical and automatic memory – essential so that we can talk, write or calculate, among other actions. Responding to the perception of time and context, inhibition of inappropriate actions, generates understanding and empathy, and thus governs the way we conduct our interpersonal relationships and allows us to live in society.
That is, in any situation in which we use our reason the intelligent brain is activated, without involving other brain structures. A good example is when we face professional challenges, and seek the best solutions for each situation.
However, it is important to stress, the rational brain can go offline in threatening situations (real or imaginary), giving way to the limbic system, the first to respond when the goal is to maintain our security.
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Triune Brain can improve purchasing negotiations
The concept of the Triune Brain can be used to improve the performance of the purchasing sector because, just as it is possible to develop essential skills for the professional to act in the digital age, it is also possible to better understand the functioning of this system to improve the work routine, as well as to obtain a better negotiation.
Well studied and applied, it can become a form of self-knowledge and be used to “map” better the people with whom we relate – in personal and professional life – even at the moment of negotiation.
As we have seen, our rational (or intelligent) brain is responsible for governing our behavior rationally, inhibiting the primitive impulses of our reptilian brain whenever they arise and prove inadequate.
If during a negotiation a primitive feeling arises, such as anger, for example, it is a sign that the reptilian brain is in command, giving flow to the irrational side.
It is worth remembering that we all carry emotional histories that can be unintentionally awakened by another person. Like the feeling of sadness or joy that comes to the surface, unconsciously, because of a gesture or perfume from someone present at the meeting – that is, many times the sensation awakened was not premeditated.
At such times the best way forward is to work on this sensation in a rational way, trying to understand why it has arisen and thinking about the harm it may offer if it is not mastered. And, of course, it must be replaced by a civilized and positive behavior, coming from the rational brain.
One way to achieve this effect is to go out for a drink of water or ask for the conversation to be postponed to another occasion – if it is possible to postpone – and especially to breathe deeply: this action better oxygenates the neocortex and helps it function.
In fact, it is always possible to make a choice: give in to the primitive impulses and desires of the reptilian brain or use the intelligent (or rational) brain to control them, and obtain the best results in personal and professional life, no matter how challenging the moment may be.
The three distinct brains, which emerged as we evolved and now coexist, do not operate independently: they influence each other. The balance between them will allow us to maintain harmonious relationships, regulate impulses and maintain the right behavior in the most varied situations – like the moment of an important negotiation in the purchasing department.
The concept of the Triune Brain comes to add to other information that can turn the game when negotiating – an essential task for the purchasing department.
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Emotional intelligence in procurement: why is it so important?
Emotional Intelligence (EI), also called Emotional Quotient (EQ), is a concept that emerged in the 1990s among psychologists, spreading rapidly to other sectors, including the organizational environment.
Read on and learn how this ability can generate benefits in many areas, including the purchasing sector!
Emotional Intelligence in the corporate environment
Emotional Quotient was first defined academically in an article published in 1990 by American psychologists Peter Salovey and John D. Mayer as “the ability to monitor one’s own emotions and those of others, using this information to guide thought and action.”
However, the psychologist and writer Daniel Goleman, Ph.D. at Harvard is considered the father of Emotional Intelligence for having popularized the subject by publishing a book on the subject (in 1995). And it was precisely this work, titled Emotional Intelligence: Why it can matter more than IQ, that moved the corporate world by stating that IE plays a particularly important role in the work environment.
In order to verify if this statement is correct, a survey conducted with 2,662 American managers revealed that 71% of those interviewed value the Emotional Quotient more, when compared to IQ, in their employees. Of those, 75% said they were more likely to promote an employee with high EQ and 59% said they would not hire a candidate with high IQ and low EQ!
The study, conducted after the 2008 financial crisis, showed that in periods of economic uncertainty – such as the one we are currently experiencing because of COVID-19 – companies need people who can handle high levels of stress.
In this sense, it is natural to prefer professionals who can make better decisions to solve difficulties, keep calm under pressure and have greater empathy – typical characteristics of those with high EQ.
But, it is necessary to highlight: the Intelligence Quotient (IQ) will always be very important for professional development because it involves, eloquence or learning capacity – among other essential requirements in any function.
Emotionally intelligent professionals and teams
We can say that Emotional Intelligence is able to help in the evolution of any career, because emotionally intelligent professionals can have self-control and maintain their motivation, enhancing their performance. But what about teamwork: does IE influence the community?
According to the researchers Druskat e B. Wolff, this is a reality. Teams with a high Emotional Quotient build a solid foundation of trust, effectiveness and cooperation, which is reflected in overall performance. Not to mention that organizations with a culture of emotional intelligence reduce absenteeism levels, while those with engagement increase.
However, attention is needed to excess Emotional Intelligence, say teachers Nikos Bozionelos of the French EMLyon Business School and Sumona Mukhuty of Manchester Metropolitan. Investigating the performance of 309 managers, the analysis concluded that managers with too much QE can have difficulty making difficult decisions – such as letting go of a team member who is not meeting expectations.
In other words, the balance between the two quotients will make the professional more complete. And the same goes for team building: by mixing individuals with higher IQs with others with good EQs, the team will tend to be more efficient.
Emotional Intelligence in the Purchasing Sector
Digital transformation has been influencing the purchasing sector, and it is essential to act in a way that is compatible with this technological advance.
In addition, the area is subject to changes in the economy, in the supply chain and in company policies, requiring procurement professionals to remain flexible – the attachment to old processes, for example, could be very bad for the company and for the professional’s career.
Given these factors, or even during a complex negotiation, a good EQ level can be very useful. But is it possible to develop Emotional Intelligence? According to experts, yes!
Accompanied by psychologists, 132 people had the opportunity to develop their emotional skills and, at the end of a year, not only demonstrated (lasting) improvement in this type of intelligence, but also experienced greater physical and mental well-being, lower levels of stress and improvement in their social relationships.
Based on this experience, to achieve a higher degree of Emotional Intelligence, here are some guidelines to follow:
- Recognize your own emotions and how they influence your performance;
- Accept the fact that you cannot control everything and avoid making hasty decisions based on intense emotions – learn more in an article that shows how to use emotion for better negotiation;
- Find ways to relieve stress at work – it can be a hobby, watching a good movie, or a physical activity;
- Listen actively to what others have to say;
- Empathize and pay attention to how you respond to people;
- Work on your motivation, emphasizing what you love about your work and maintaining a positive attitude.
Experts say that we are all emotionally intelligent, but each one needs a different time to work on their feelings and develop the Emotional Quotient which can undoubtedly be a great ally for the procurement professional.
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The Value of Cultural Intelligence to the Purchasing Sector
The changes seen in recent decades in the world economy have brought a number of challenges for organizations. With a more connected world and a globalized economy, intercultural management has become an important dimension to be worked on by companies that deal with audiences in other locations (consumers, suppliers, employees, among others).
But what is culture, anyway?
Culture can be understood, in short, as the set of values, beliefs and habits of a given group in a specific context. It reflects what we consider normal, present in our daily interactions and, many times, we only realize its relevance when we leave familiar environments – which makes Cultural Intelligence in Purchasing a very important factor.
And we don’t need to go far to confirm this. When traveling to another city, is it not possible to notice differences in the customs of its inhabitants (food, forms of leisure, schedules of expedients, greetings, expressions)? These elements can bring challenges to those who are inserting themselves in a new context, depending on the distance between the cultures involved.
In the case mentioned above, language would not be a great difficulty (only some expressions would not be understood). But in an international context, dealing with this important cultural element becomes crucial to ensure success in communication and negotiations. For example, the growth and expansion in the last decades of the Asian market in the global economy has brought challenges for those dealing with companies from these countries.
Culture in the corporate world
In the corporate context, the examples on this issue are diverse: probably, when working with colleagues of other nationalities, you have already encountered some difficulties. By sending an e-mail, for example, you may have been concerned to ensure that there was no communication noise (a more informal greeting could be understood as a coarse attitude, or a less direct writing would cause difficulties of interpretation).
In a face-to-face meeting with a client, did you need to pay attention to behave in line with the space where you were? For example, was it customary at the venue for people to stand up to greet someone? Was the atmosphere of the meeting more relaxed or did the participants go straight to the issues on the agenda, without giving space for other types of interaction?
These situations help to highlight the importance of understanding the differences between groups. Thus, managing cultural diversity becomes a recurring activity in organizations. And this diversity can be understood in multiple dimensions: whether to deal with employees in different locations, but also for departments within a company that have particular cultural characteristics.
There is also a concern in the market and in academic studies of the area to understand issues related to cultural diversity. According to Harvard Business School research, companies with diverse teams had a 77% growth in employee engagement. In addition, where diversity is recognized and valued, there is a 50% decrease in conflicts.
To deal with these challenges, the concept of Cultural Intelligence (CI) has been used by professionals in the area. In this article, we will present what IC is and discuss its value to all areas of the companies (including the purchasing sector), giving tips on how to acquire this relevant skill.
What is Cultural Intelligence?
Different experts discuss the importance of Cultural Intelligence in the organizational environment. Tom Verghese, a consultant in the area, defines Cultural Intelligence as the ability to work efficiently between cultures, making interactions easier and providing insights and understanding about behaviors, values and attitudes of people from other cultural perspectives.
For Verghese, Cultural Intelligence is composed of four dimensions:
1. Objective: the interest and motivation to adapt to a multicultural context, whether for intrinsic issues (being involved in significant work, for example) or extrinsic (financial return), with the goal of understanding other cultures, norms and behaviors.
2. Knowledge: to understand similarities and differences between different cultures and the particularities of each context.
3. Strategy: ability to plan multicultural interactions, applying the knowledge that was previously acquired.
4. Skills: apply in (verbal and non-verbal) communication situations the repertoire obtained and adapt it according to the moment.
In an article published for the Exame magazine portal, Sofia Esteves, chairman of the board of the Cia. de Talentos group, talks about factors related to Cultural Intelligence: motivational, cognitive, metacognitive and behavioral. These elements are presented in different categories for conceptual purposes, but interact with each other in practical situations.
The motivational factor has to do with the willingness to know and deal with differences, to your interest in learning new things, being open to understand them and accept them, even if they represent values that differ from yours.
The cognitive factor refers to the respect for the norms of another culture, namely to behave in these spaces according to the social norms of the group.
The metacognitive is related to the “ability of transcultural awareness” and the capacity of “interpretation of texts”, that is, to understand the culture of the other from his/her own, to learn to read attentively, to absorb the message passed and to question when something is not clear.
Finally, the behavioral factor is our ability to respect and adapt to the other culture. As we have already commented, displays of affection in different cultural contexts can have multiple meanings: a strong handshake can be understood as a symbol of trust or disrespect, depending on where you are.
According to an article published in the Harvard Business Review, there is a dialogue between emotional intelligence and cultural intelligence: the former is related to what makes us human and, at the same time, different from each other. The second refers to detecting elements in a person’s or group’s behavior and checking whether they are true to all persons/groups or peculiar to these individuals.
That is, whether they would be universal or not when compared to other realities. In other words: when we are surprised by an attitude of a coworker living in another location, it is possible to observe whether it is related to the person’s personality or the common behavior of the group. This construction of values and habits among people, which are crucial to understanding them, would be what we call culture.
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Cultural Intelligence in the purchasing area
In recent years, Cultural Intelligence has become a skill to be developed by all company employees. As already commented, it is important in the management of intercultural teams in different countries, but also valid to reduce cultural tensions between areas of an organization located in the same place.
For example, in projects involving participants from different areas, there is the challenge of understanding the culture of each one, allowing the alignment of employees. Information Technology teams have some different characteristics of business professionals, while the purchasing department has a different rhythm from the legal area. Understanding these differences is fundamental to the success of the company.
TMA World, a consulting firm specialized in Development and Learning, focused on training for intercultural teams, lists reasons why it is important to be concerned with Cultural Intelligence in the context of organizations and their different areas (among them, the purchasing sector):
- IC helps to develop a deep understanding of working styles in other cultures, which builds tolerance, trust and understanding among employees. Cultural differences become strong points in problem solving, while enhanced collaboration creates the ability to respond more quickly to market changes;
- Managers who work with teams on the production line, with different degrees of education, should deal with the cultural dimension carefully, as it may be relevant to ensure the engagement of these employees. The company’s top management must also pay attention to the challenges faced by those who manage these areas;
- Local partners, customers and outsourced sectors will become closer with Cultural Intelligence, as it no longer will be an obstacle to success due to their differences;
- IC is also important in the context of emerging markets, because of the differences in management styles and expectations created. In some situations, these markets can achieve success in their operations without necessarily following all the protocols defined by the companies of the country of origin.
- A culturally intelligent individual gains confidence. By assimilating into a local culture, immersing oneself in its ways and mirroring the gestures of the people around it, one becomes more empathetic – as long as one’s immersion in the other culture is genuine;
- Culturally sensitive leaders are better managers, as they are able to resolve conflicts, including in negotiations, more efficiently, and they understand clearly the dynamics of multicultural groups;
- Training is crucial for employees and their families, who move to work in a branch of the company, as it helps to reduce culture shock and makes the individual more effective and prepared to integrate the new workplace.
- Multicultural marketing is important for all areas of the company, since understanding your consumer and their needs is an essential element of IC, respecting their gender, age, race, ethnicity, sexual orientation, among others.
- Cultural awareness helps individuals to recognize areas of their own communication that can be improved, to make their daily interaction with international – and national – colleagues more effective and enjoyable. In addition, by developing communication skills, the individual’s interactions (with family, friends, neighbors) also improve.
When we make acquisitions in our country, not many differences in terms of culture are usually felt. However, when the purchasing sector deals with suppliers from other nations, we become aware of these issues, requiring us to think globally.
One of the biggest misconceptions in the procurement process is that people will act in a similar way to us, which can generate noise during the understanding between the two parties. Therefore, bringing the concepts of Cultural Intelligence into the purchasing context is very valid.
For Fabio Hoinaski, CEO at IBID – E-procurement, there are a number of issues that impact a good relationship between people of different cultures in the purchasing process:
In the globalized world, English is fundamental for communication; however, not all countries have the custom of using it frequently, and prefer the local language. We can mention here the French, who generally use their mother tongue more. There are also nations that have begun to encourage learning English only in recent decades, and it is still a challenge to interact with the majority of the population.
However, by learning basic local language terms and showing that you are making an effort to speak in the language of your interlocutor, a barrier is broken and the person is more open to communication and negotiation.
2. Form of treatment between people
There are cultures where relationships are marked by more formality and hierarchy, without affective demonstrations in public, for example. Work relations also change: Brazilians develop more close and friendly relationships than colleagues of other nationalities (such as the United States and Germany).
It is also important to point out that there are countries that present a more collectivist culture, while in others people are more individualistic. This ultimately defines how teams interact in a working environment, with different degrees of cooperation among their members.
3. Time Zone
It generates differences in business hours between countries and can make some communication formats difficult, such as video conferences and phone calls (when an email and text message are not enough to align a subject). Citing a case, when doing business with Asian countries, be prepared to deal with an eleven hour time zone difference, approximately, depending on the position on the continent.
4. A country’s history
Understanding how the main values of a country have been constituted and how they impact the organization of the State is another point to be observed. Nationalist governments, for example, present more protectionist measures, such as taxes and customs duties.
Moreover, the history of a country makes some issues (such as episodes of difficulties faced by the population) become taboo, and understanding whether this exists before a conversation is extremely important in order to avoid possible inconveniences.
Cultures deal with it in different ways, and it is necessary to make clear the time for the accomplishment of a certain activity in order to guarantee the alignment of expectations. There are studies that demonstrate the productivity rates of workers in each country. Sometimes forcing employees to adapt to the pace and culture of the organization’s home country can lead to reduced engagement.
6. Trade laws and standards
Understanding how the laws and tariff rules of a country have been structured helps to improve the understanding of its culture, avoiding difficulties in the processes of exporting and importing products – in this sense, we suggest that you know the main changes at Incoterms 2020!
Tips for developing Cultural Intelligence
Cultural Intelligence is very important for day-to-day business. Therefore, we listed some tips given by experts that will help develop this important skill, that will positively contribute to the purchasing departement’s activity performance. Take a look!
- Acquire knowledge about a culture in which you are interested. Read books, magazines and news, watch movies and TV shows about the country, listen to radio shows, podcasts. From these materials, you can observe people’s reactions and customs, and acquire vocabulary and expressions of the spoken language.
- Visit historical spaces, museums, art galleries and places where you can learn more about other cultures. There are several cultural spaces around the world that already offer their collection digitally, which are also an interesting option. In this way, you will acquire a relevant repertoire, which can be used in future work situations;
- When dealing with people from other countries, observe their body language, gestures and facial expressions. It is important to better understand people’s reactions, reducing possible noise;
- Always do a self-analysis, reflect on your emotions and behaviors in these situations of cultural differences, discover how you can change them in order to have a better interaction (for example, change your tone of voice and speed in speech to become clearer);
- If possible, immerse yourself in the country of your interest in order to better understand their culture. Take advantage of a vacation or leave to take a course abroad in another place, and you can have a very enriching experience when interacting with the locals;
- If you are unable to travel, learn the language of the country of interest at a distance. There are several options of websites and apps to acquire this type of knowledge, aimed at users of different levels (basic, intermediate and advanced), which allow you to interact, in some cases, with international teachers;
- In interaction, avoid reproducing common sense and existing stereotypes. That is, do not make comments that in some way generalize the group in which you are inserted (often this attitude can be understood as a sign of disrespect to the culture of your interlocutor);
- Do market research in order to detect perceptions and behaviours of the inhabitants of a region where you will do business;
- Search for information about the desired country in publications of companies and government agencies. This data is often available and published on the Internet;
- If you are a manager, implement intercultural training with the teams. This reduces cultural shocks and makes the individual a more effective, prepared, creative and open minded professional in their workplace, by allowing them to deliver their work without worrying about solving possible noises;
- If it is necessary to hold virtual meetings, try to respect as much as possible the working hours of your interlocutor, showing that you are attentive to this issue. Many people are bothered by having to extend their working hours, as they may have other social commitments;
- Study new technologies that make your work easier in the context of intercultural management (Speaking of which, check out the essential skills for the purchasing professional in the digital age). These new forms of communication can be important allies to ensure the engagement of teams in different locations;
- Ask! Don’t be afraid to question – respectfully – people about their cultures, this is an important way to create bonds and relationships, by showing interest and respect for others.
The documentary “American Factory” (United States, 2019, Netflix), winner of the 2020 Oscar’s Award, reports the entrance of a Chinese multinational manufacturer of automotive glass in the city of Dayton, Ohio. It is an interesting portrait of the challenges discussed in this text and an exercise to reflect on the importance of Cultural Intelligence within organizations.
The film shows that the city was in deep financial difficulties after the closure of the production yard of a U.S. automotive company located there, which guaranteed jobs to the population. The arrival of the Chinese organization brings optimism to everyone, however, its installation brings several tensions. Among them, the cultural clashes between American workers and the management of the emerging country, since the relationship with labor is deeply distinct in both countries.
In this article, we have seen how important Cultural Intelligence in purchasing is to ensure alignment between individuals in different cultures and situations. Whether dealing with different areas of the organization, or with employees and suppliers in other states and countries, being aware of the issue is paramount in our times. And this is a challenge for all people in an organization (not just managers).
Another important point is to have a specialized and culturally diverse team to facilitate acquisitions in different cultural contexts. For that, count on Soluparts.
Our employees, of various nationalities, speak several languages and many have lived abroad. Therefore, we have a team experienced in dealing with different cultural contexts, being able to conduct better negotiations and optimize the purchasing process. Request a quote!