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Complex Contract Negotiation Benefits from Team Diversity
by SheryL MorriSon Director of Finance Pitney Bowes inC.
ONE PROJECT with which I was involved as director of finance was a contract renewal for IT support with an outsourcing vendor. The challenge was to lead a team in structuring a deal with pricing, terms, and conditions that were in line with the company’s expectations. The global contract renewal was a multi-million dollar, five-year deal with numerous points to be agreed upon. A global cross-functional team was established that included IT, Finance, Procurement, and Legal. The team diversity encompassed age, gender, cultural, and racial differences. The team’s diversity was a catalyst to achieving a successful outcome. Different ideas were generated through numerous team meetings and the team prioritized frequent communication. Through communication and an inclusive mindset, the team was able to understand various points of view and develop effective solutions. We were able to evaluate the facts, without bias. We also determined what items were critical and what items were negotiable. In addition, we developed evaluation criteria to determine the need for competitive bidding. An external benchmarking service was engaged to provide market reference and productivity data. Workload volumes and service level requirements were updated from the prior contract for the U.S., Canada, and International operations. We conducted several rounds of negotiations with the vendor, covering all key elements of the contract. Initially, there were some areas where both parties held firm to their positions. There were numerous long nights, spirited debates and heated discussions.
the inclusive mindset of the team broke down any cultural barriers or bias, and the diversity helped appeal to a vendor located in a different country.
However, the team understood that in order to have a successful outcome for the contract, there needed to be perceived value on both sides. So the team was willing to be flexible on the negotiable items that were important to the vendor, while holding firm to other points that were critical to Pitney Bowes. The inclusive mindset of the team broke down any cultural barriers or bias, and the diversity helped appeal to a vendor located in a different country. The inclusive team environment also led to greater innovation and creativity, as well as openness to listen to different perspectives. The vendor’s final response met, and exceeded, both our internal evaluation criteria and the external benchmarks for competitiveness. The contract saved $1 million in 2009, with essentially flat pricing through 2013. Foreign exchange exposure was borne by the vendor. Additional contract highlights included improvements in service levels, increased customer satisfaction targets, and elimination of fees for early contract termination. As a result, the team negotiated a mutually acceptable renewal contract and the agreement was signed. Such a favorable outcome was directly linked to the diversity and inclusiveness of the team. PDJ
Pro f i les i n D i ve rsit y Journal
M aY / J u n e 2 0 1 0