A global study has found that many food manufacturing executives are striking deals worth millions without adequate preparation.
This delivers disappointing results, according to the world’s most comprehensive study into business negotiations.
Negotiating deals
The Scotwork International Negotiation Skills Survey* explores the tactics employed by over 5 000 executives in some of the world’s largest organisations across 31 countries and 51 industries.
It lifts the lid on the methods used in the food manufacturing industry to negotiate better deals with clients and suppliers. Over one in three respondents routinely strike deals worth over £1 million.
The study reveals how a lack of preparation and negotiating skill is leading to poor returns, with the food manufacturing sector substantially behind global averages in some key areas.
Its three major findings are:
1. Most food manufacturing negotiations fail to deliver long term value: only 13% of negotiators in the food industry always create long term value for their businesses – that’s nearly half the global average across business
2. Poor preparation is resulting in bad trades, with 38% of executives in the food industry never or only occasionally having a fallback plan if things go wrong – that’s eight percentage points higher than the global average.
3. The average negotiator is a poor negotiator: over half (55%) of food manufacturing executives do not always know what the best outcome of a negotiation would be before they even start; and only around a quarter (28%) can always identify the benefits of what they have negotiated once the deal is done
Richard Savage, director of Scotwork UK, said: “This is a wake-up call for food manufacturers. With automation, sustainability and exporting all high on the agenda, it is highly likely that negotiating will form a vital part of delivering growth in 2020.
“Poor negotiating behaviour can adversely impact relationships and outcomes. Whether it is lost revenue, missed opportunities or damaged relationships, getting negotiating wrong hurts a business like little else.
“The most common mistake is to pursue as much of what you can – typically money – in exchange for nothing. If advertising companies fail to see the value of exchange, of trade, they are missing out in ways that far exceed pounds and pence.”
Influencing the power balance
The Scotwork report also reveals the lengths all negotiators will go to in order to influence the power balance during negotiations. These include:
· Lying: 46% of buyers have been lied to during negotiations
· Threats: 37% of sellers say buyers have delivered veiled threats
· Misdirection: over half make false claims, set false deadlines or refuse information
· U-Turns: 60% of sellers have reneged on an agreement to suit their cause
Richard Savage added: “Commercial negotiations are not for the faint-hearted and our study demonstrates just how prevalent cut-throat tactics are. The fact you might encounter challenging approaches makes it all the more important to have clarity on what value you wish to secure from the negotiations in advance. It is therefore all the more concerning how few businesses have this clarity before they sit at the negotiating table.”
*Note: The Scotwork International Negotiation Skills Survey had two components. Firstly, a general survey of 4,693 recipients, who completed a 75-question study into the methods employed during a negotiation. Secondly, these responses have then been cross-referenced with 704 additional responses from buyers and sellers, which explore the motivations and outputs from the negotiating process. The study is continually updating each month with responses collected so far between July 2017 and August 2019. Data was gathered over a
two-year period in a variety of different businesses and industries spread across 31 countries and 51 different sectors and industries. Full list of nations and sectors available on request, or can be found in the full report. 251 respondents were in the food manufacturing sector.
