This is a true story. Only names have been changed.
John was well aware that when unions negotiate the negotiators have to refer offers to their members. He also knew that some managers delegate buying to juniors and only become involved if necessary. In other words, he knew that some negotiators have to refer the agreement they reach to their boss for final agreement and signature. Unfortunately, he was not aware of the Ring a Ring of Roses tactic.
He had just completed a lengthy negotiation to sell a new IT system to an African country and expected, Mrs Khamolo, the person he was dealing with, to forward the MOU they had agreed for signature by the Permanent Secretary. As he stood up to leave, she announced that she was not authorised to present the MOU to the Permanent Secretary and that John would first have to discuss the MOU with her colleague Mr Ordungo.
Fortunately, John was able to see Mr Ordungo immediately. Mr Ordungo said he was familiar with the contents of the MOU but before he was prepared to refer it to the Permanent Secretary, he would require a reduction in price. Mr Ordungo said that he had to be able to show his boss that he was a good negotiator, therefore John had to give him something, meaning a reduction in price. After bargaining failed to move Mr Ordungo John reluctantly agreed to reduce the price by 1%. Mr Ordungo then said that he was not authorised to present the MOU to the Permanent Secretary, but that Mr Katongo would be able to assist John.
Fortunately, Mr Katongo was also immediately available. Mr Katongo said he was also fully briefed on the MOU. He demanded a further reduction of 2% in price before he would be able to refer the MOU to the Permanent Secretary for signature. They eventually agreed on a further 1% reduction in price. Mr Katongo then announced that John would need to see Mr Murengo who would be able to place the MOU before the Permanent Secretary for signature.
When Mr Murengo demanded a further price reduction of 2% John told him that he was not able to make a further reduction in price and after considerable haggling Mr Murengo agreed to place present the MOU before the Permanent Secretary for signature and asked John to sign the MOU as amended.
At this stage, John, although he had the authority to sign the MOU, realised he had been played, said that he was not empowered to sign on behalf of his employer and would refer the MOU as amended to his CEO for signature.
His CEO retracted all the concessions John had made and offered the MOU with the original terms to the Permanent Secretary who eventually signed.
The Lesson
- Recognise the ‘Ring a Ring of Roses’ tactic is possibly in play as soon as the person you believe to have the authority to finalise the deal says he or she cannot make the final decision and refers you to a non-decision maker.
- Ask to meet the final decision maker and state “I am mandated to offer the deal which is on the table and nothing more.”
- Alternatively, state “I can’t sign any agreement which differs from the final position you and I originally agreed.”
- In the planning of every negotiation your Walk Out Position must be mandated in discussions with your superior and when that position is reached you must walk out but leave the door open to further discussions if your opponent is prepared to reconsider their position. You might say, “We have come a long way in our discussions. It would be a pity not to find a win-win position where we can enjoy a long-term respectful, mutually beneficial relationship. Please contact me at any time if you are able to reconsider your position.”
- Alternatively, you can present your offer in a way which will postpone the requested concession to a future negotiation i.e. “If you are prepared to accept this package as it stands, we will be prepared to consider accepting the general principle of offering rebates at a future negotiation.” Another tactic is, if you are unable to make future concessions on something which is on the table consider making a concession on something which has not been raised in the current negotiation which may be of value to the other party.