Several years ago, I wrote an article for Chief Executive magazine titled “Negotiation Lessons: When CEO Meddling Degrades the Deal.” This was one of my more important articles for CEOs and other C-level executives because deals involving C-levels usually have a major impact on business results. And currently, since many companies are conducting negotiations remotely, you’re even more likely than before to get involved in those key deals if you are a C-level executive working from home.
In the “Lessons” article, I made the point that it can be difficult to walk away from a deal, especially when your team has invested significant time, energy, resources and dollars toward achieving a particular objective. Once this investment takes place, you are emotionally invested, even if the deal has deteriorated well below the optimistic value you originally envisioned — something that is a more likely scenario under the current circumstances.
Once your team has been engaged in a specific deal, there are a myriad of ways you, as the CEO (or other member of the executive team), can assist to ensure it stays on track, adds value to the company or, in cases where it will not work, is quickly terminated. Here are some key directives all C-level executives should heed.
1. Do your homework. Most C-levels have experienced the pain of joining a call at a critical juncture and being expected to contribute or take over the discussion without fully understanding the critical aspects and most recent developments. The key is to ensure you are prepared and limit your level of input to what you know. Otherwise, stay out of the deal until your team updates you and you feel prepared. One caveat: keep out of the weeds. As the executive in the deal, your job is not to go over every term or line item but rather to highlight the strategy behind the venture, the value of the relationship and, if necessary, make some planned “principled concessions” to smooth road bumps and facilitate closure.
2. Showcase the risk/reward/action analysis. Simply stated, if the risks of action for the other side, or for you in entering into an agreement (whether it’s a partnership, purchase or sale agreement), are not overcome by the risks mitigated and the rewards gained by taking the action, the deal should not happen, especially in the current environment. This is where the CEO comes in by addressing risks and highlighting rewards, especially for their counterparts who may be stressed about their future and business fortunes. This approach should reinforce what your team has already discussed with the other side, albeit at a higher level.
3. Upscale the master-servant relationship. Your relationship with your counterparts can range from that of a mere vendor or customer to a strategic partner (and everything in between). Instead of a subservient situation, you want to create a peer-to-peer relationship based on exchanged value and mutual respect. As the CEO, you can use your stature to help achieve this objective by highlighting the value (business impact) that you deliver.
4. Make principled negotiations part of your culture. My business helps organizations make large leaps in the ability to practice effective multi-lateral (“win-win”) negotiation strategies. In almost every case, their success in this area has been driven by the client’s commitment from the top. Yes, individual sales or procurement professionals and managers want to improve in this area and to generate and reap the benefits, but it takes blessings and support from the C-suite to ensure that this is more than just another checkbox item on the training calendar.
5. Make it about them and not about you. Even rockstar CEOs like Satya Nadella and Jeff Bezos likely understand that, despite their notoriety, when it comes to making big deals happen, they need to step back and let the other side shine. Just look at the way Microsoft announced the LinkedIn deal a few years ago — the two companies focused on the users and shareholders of LinkedIn. When you help prospects come up with intelligent solutions without showing off how smart you are, they will realize the value of your partnership.
6. Create value-based relationships. Whether you are a CEO or other C-level executive, the more knowledgeable you are about value-based negotiation strategies, the more you will enjoy the process. And you will pass this positive feeling to your team, as well as your counterparts. I recently observed Bill McDermott, CEO of ServiceNow, on CNBC. Even during the current crisis, his enthusiasm about the business impact his company has for its worldwide clients is genuine and infectious. Knowledge-based enthusiasm about your customers helps fuel better outcomes for everyone. It may sound counterintuitive, but if your primary goal is to close the deal, you may close fewer deals. Conversely, if your primary goal is to create value-based relationships for everyone, you could close more deals, both in the short-term and long-term.
An example of a CEO who seems to have done this right was Mark Hurd, former co-CEO of Oracle and CEO of HP, who recently passed at the far-too-young age of 62. Of the hundreds of condolence comments from his former colleagues, many were from sales reps who had worked for him at HP, NCR or Oracle. They spoke about Mark Hurd’s ability to listen, ask relevant questions, do his homework and be supportive of both the sales rep and potential customer. Most importantly, despite his great success in the technology industry, I found that Hurd presented himself with empathy and humility.
The article I mentioned in the first paragraph contains a case study that illustrates how failing to practice the above strategies resulted in a highly flawed deal. Please read this to learn more about what not to do. Most importantly, heed the six directives above and you can’t go wrong. As a CEO or C-level executive, you can and should be the greatest asset in your company’s arsenal. Use that power to create long-term profitable relationships. Your customers and shareholders will thank you.
Note: this article originally appeared in May, 2020 on Forbes.com. You can view the original post here.