Almost all technologist get the opportunity at some point in their career to negotiate with vendors and/or manage a vendor relationship. Often this is a critical part of the job for the VP of Operations or the CTO/CIO. Below are some ideas on how to make the negotiation and ultimately the relationship with the vendor successful.

1. Be honest. Don’t lie to vendors about anything. It’s often tempting to stretch the truth about other vendors and their offers, timelines, budgets, approval requirements, etc. It’s better to say nothing, lies will damage the relationship forever.
2. Don’t take things personally. The vendor’s sales reps do this day in and day out, most aren’t going to lose sleep worrying about if you like them or not. Your loyalty and motivation should be to your investors.
3. Consider the relationship. While negotiating is often viewed as a game, be aware that your behavior will follow you into the relationship. See rule #1.
4. Give yourself time. Time is your best friend in negotiations. Many vendors have rearranged their fiscal year because their clients know how desperate many sales reps are to close sales and receive their commission during these times.
5. Give yourself options. Follow our advice on scalability so that you are vendor neutral and can change vendors with little effort or concern.
6. Do your homework. Find out about the vendor, their customers, their solvency, their post sales support, etc.  Use your network, find out what other people pay for similar services. Be prepared for there to be huge differences based on the total size of a purchase a company makes but at least know the ballpark range.
7. Keep negotiators separate from implementers. If possible have the people negotiating the deal different from the people who have to work daily with the vendor. This way in the event either party feels slighted in the deal they don’t have to work with the same people the next day.
8. Don’t discuss your budget. The vendor has no need to know how much you can afford to spend on this purchase. It’s okay to let them know that you will need additional authorization to make the purchase if you think the price is beyond your ability to authorize.
9. If it’s not in writing it never happened. Lots of things get said during negotiations that get put into the contract and therefore never get delivered. If it’s important get it in writing.
10. Ask for anything. Once you’ve exhausted the pricing negotiation ask for other things that aren’t cash related such as additional modules, higher support levels, steeper discounts for future purchases, etc.

In the 2008 essay “Most Likely to Succeed” that appeared in The New Yorker magazine, Malcolm Gladwell looks at NFL quarterbacks, high school teachers and personal financial advisors in the top firms.  College quarterbacks experience rather high failure rates in the NFL.  School teachers see rather high retention even with varied results; the worst teachers cover ½ of a year’s material in an academic year while the best cover 1 ½ years material in the same amount of time.  Compare both of these with North Star Resource Group, a personal financial advisory firm, which has had over 56% of its advisors recognized by the industry as top advisors.

Gladwell paints a picture of recruiting with NFL quarterbacks on one end and teachers on another.  NFL recruiting is entirely experiential, with performance being personally observed by scouts.  The problem in this arena is that the game is different – the NFL has better, stronger and faster players and the play of a quarterback can’t be determined by simply watching what is fundamentally a different game (college).   Teachers, on the other hand, almost entirely without observation and based almost solely on their academic resume.  It turns out that the complexities of teaching is such that academic prowess is only one skill and others like personal interaction, emotional intelligence, and “withitness”, the ability to control the classroom, are just as important.

North Star Resource Group does their recruiting a little differently.  They interviewed 1,000 candidates, hired 49, put them through a four month training camp where only 23 graduated and then over the next three to four years expects to keep only at most 9 individuals from the original group. While this may seem harsh as we mentioned above the North Star Resource Group consistently gets great performers.

One implication for us as hiring managers is that perhaps the standards for hiring shouldn’t be raised but rather lowered.  Learning from both the NFL and teachers, perhaps we should lower our “offer” standards and evaluate more people on the job with the foreknowledge that we will cut them quickly.  We are clearly unable to predict future success based on past performance in a different environment (different employer, different culture, etc) and academic prowess alone isn’t likely to be a good indicator of job performance.  Clearly a couple hour interview will not net a better result.  Perhaps we should approach hiring, especially in “right to work environments” such as we have in the US more akin to the way we purchase cars:  take the employee for a test drive.

Said more simply, we should hire more people but make the cuts way faster. If you have read and implemented our model of seed, feed, and weed then you’re actually on the right track.  If you’ve allocated 33% to each phase, Gladwell’s hypothesis is that you might get better results with a ratio more like 10% seed, 45% feed, 45% weed. Continuing with the gardening analogy it would be like spreading a wildflower mixture of seeds, providing them with plenty of fertilizer and water, and removing the ones that don’t thrive in your garden.