Emotional Intelligence: Your Procurement Negotiation Game Changer

“If your emotional abilities aren’t in hand, if you don’t have self-awareness, if you are not able to manage your distressing emotions, if you can’t have empathy and have effective relationships, then no matter how smart you are, you are not going to get very far.”
– Daniel Goleman.

Have you ever tried getting work done after a terrible meeting with your boss? What about finishing a long report after an argument with a colleague? How did it turn out? Like many others, I couldn’t imagine negotiating a procurement deal while wrestling with intense emotions. It’s a situation unlikely to produce a good outcome.

But what if you were able to harness your Emotional Intelligence to achieve successful outcomes?

What is Emotional Intelligence?

Emotional intelligence, commonly known as EQ, is more than just being in tune with your emotions. It also encompasses a keen understanding of others’ emotions and the capability to regulate your reactions accordingly. In essence, a person with high Emotional Intelligence can recognise and understand their feelings and those of others. This unique ability enables people with high EQ to handle interpersonal relationships effectively and with empathy. 

Emotional Intelligence is important as it can help us lead a happier life by providing a framework through which to apply standards of intelligence to emotional responses. It then helps us to understand that these responses may be logically consistent or inconsistent with particular beliefs about emotion. EQ is fluid and flexible and includes behavioural traits, the important element is that it can be worked on.

Imagine interviewing thousands of suppliers throughout your career. With each interaction, you develop a deeper understanding of people’s motivations, fears, and ambitions and how these influence their decision-making processes.

The Link between Emotional Intelligence and Procurement

If EQ is about reading people, what does it have to do with Procurement?

Most procurement professionals agree that a critical skill in the procurement toolbox is the ability to build relationships. When procurement professionals are tuned into others, a wealth of information is available. Reading people and situations allows you to gain insight beyond what is written in a supplier report card or a contract review document.  

Emotionally intelligent individuals excel in situations that require negotiation, leadership, and teamwork. They can read people’s body language and adjust their responses or strategies based on their reading, which often leads to more favourable outcomes.

Is EQ a Negotiation Secret Weapon?

Procurement can be a pressure cooker at times. There are so many situations hitting us at any given time and there can be many intense moments, particularly when large contracts or significant cost savings are at stake. One of the most stressful situations is when you find yourself in a high-stakes negotiation. The ability to control and manage your own emotions during negotiations whilst simultaneously reading others is truly an essential skill.

Procurement negotiation planning, at its core, is an information-gathering process. To prepare for a negotiation, you need a sound negotiation strategy. Negotiation strategies typically cover the following:

• Detailed analysis of the supplier’s industry, including market trends, competition, and potential challenges.
• Roles and responsibilities: who is on the negotiation team, and what is their role?
• Assessment and agreement of negotiation strategies that will be used e.g.
  • Compete (I Win- You Lose) 
  • Accommodate (I Lose – You Win)
  • Avoid (I Lose – You Lose)
  • Compromise (I Lose / Win Some – You Lose / Win Some)
  • Collaborate (I Win – You Win)
• Position Statements: Various trade-offs, non-negotiables and compromise position statements

Most negotiating planning templates lack a deep dive into the human element. What type of people and behaviours could you be facing on the other side of the negotiation table? In some situations you may be lucky enough to know the other side inside and out. This can be used to your advantage to understand what items they might be interested in or willing to compromise on, and, conversely, what their non-negotiables are.

EQ in Action

In a recent example, a buyer was preparing for a negotiation and was unhappy with the supplier requesting payment terms of 100% upfront. However, this was considered as too risky by the buyer due to the item being high value and having a long transit time via a risky shipping route. On this basis, the buyer made it a key part of their negotiation to go hard on price and payment terms.

Once in negotiation, they read the supplier’s body language and noticed their unease when discussing the price. The supplier mentioned something about a restructure, which led the buyer to look at the publicly available company information register again. They were able to find a previous organisational summary that offered details about the restructure, including an older profit and loss statement. The buyer realised that the supplier wasn’t in a position to accept the payment terms that they were planning on negotiating on.

With this in mind, the buyer changed tack and instead chose to focus on some areas of potential compromise. The supplier was more amenable to these items, and their body language, as well as that of their colleagues, shifted dramatically, becoming much more relaxed. The buyer agreed a payment of 70% upfront, but a reduction in the order to only include one critical item. The supplier agreed and the negotiation ended successfully.

Sharpen your EQ skills

Emotional Intelligence amplifies your power to negotiate effectively, resolve disputes, build stronger supplier relationships, and achieve successful procurement outcomes. It can mean the difference between creating a win-win situation or leaving a negotiation table feeling deflated and defeated. 

Can you learn to be more emotionally intelligent? The short answer is, yes.Psychology Today recommends starting with learning to identify your own emotions. If you can name the emotion you are feeling, you have a better chance of understanding it. You can also learn to better regulate your emotions just by stopping and thinking before you act and judge. Once you’ve mastered your inner world, it is easier to begin practising reading and responding to others.