Oct 13, 2020 | Clare Chiappetta, MA, HRCI Contributing Writer
3 Ways to Become a Better Contract Negotiator
“Connection” isn’t a word we usually associate with negotiating, but creating an authentic human connection is key to establishing a good rapport — and an effective outcome. In fact, a comprehensive panel of qualities, including self-control and likability, can better predict an effective negotiation than aggressiveness or assertiveness alone.
As you negotiate new contracts with your human resources technology vendors this fall, bring your unique strengths as a people leader into play. “HR is a people-driven business,” says Mori Taheripour, negotiation expert and author of “Bring Yourself.” “That's your biggest asset, so leverage it and lead with that.” As an HR professional, you’re positioned to harness the distinctly human power of relationships to arrive at mutually beneficial terms.
Here are a few ways to put that power into action to become a better contract negotiator
Put Relationships First
The conversations leading up to the contract are crucial. In fact, most agreements are made during conversational negotiations and captured in written form in the contract. Getting to know who you’re negotiating with is essential for both parties. “Information exchange is really the essence of knowing who your counterpart is, not from a transactional perspective but from a much deeper sense of real understanding,” says Taheripour, who teaches Negotiation and Dispute Resolution for the undergraduate and graduate programs at The Wharton School of the University of Pennsylvania. This provides context for the negotiation, and the relationship empowers you to come back with questions and ask for modifications.
Since HR tech typically follows a software-as-a-service model now, you’ll be interacting regularly with your vendor. It’s important to lay the groundwork for an ongoing relationship that’s beneficial for both parties. You can provide value to the vendor at little or no cost to you, by offering to provide a case study or reference, for example, says Bernard Aller, SPHR, Managing Partner at POC and Associates LLC.
Define the Details
The smallest details in your contract can have a massive impact on your bottom line, which means it’s important to take time to dig into them. For example, most vendors will offer you a standard implementation plan, or statement of work. Rather than just accepting those terms, negotiate a personalized implementation plan that addresses your priorities. “Before you sign, get the people who are going to be implementing it involved,” Aller recommends. “Make sure the vendor develops an implementation plan that’s unique to you.”
Another detail to negotiate is which state’s laws govern your agreement. Contracts are typically written under the laws of the state where the vendor is headquartered, but you’ll likely be better served if you can switch it to the state where you operate. If the contract ever required adjudication, Aller says, you would need a lawyer certified to practice in that state, which would may preclude your in-house counsel. But if the vendor has a license to sell in your state, Aller continues, then they should be able to write the contract under your state laws.
We’re working through extreme uncertainty right now, and you should build that into your contract, Taheripour suggests. “Your contract should be written in a way that captures uncertainty, giving both sides maximum flexibility,” she says. As you negotiate the contract, tap into the notion of shared risk. Look for empathy in your vendor, but try to be empathetic with them, too.
Define specific contingencies — and always capture everything in writing, Aller says. Be specific about the length of the contract and the cost upon renewal. When planning for contingencies, don’t just say, “If the economy takes a downturn,” but actually define what that means in the context of your business. The more specific you can be upfront, the better prepared you’ll be for the future.