Master the use of normative leverage. Normative leverage is the skillful use of common standards, social norms, and shared interests to create an argument to gain an advantage or protect a position an organization has taken.
When using normative leverage, contract professionals frame an organization’s needs as shared principles and norms that both companies strive to live by. For example, corporate policies about social responsibility, non-discrimination policies or sustainable sourcing are shared principles and norms for many companies. Framing needs in this way ties back to the conversation about negotiating the relationship before negotiating the transaction.
When negotiators understand some shared interest, they can leverage a shared interest into performance. For example, a shared interest could be sharing accurate data pertaining to both the customer’s performance and the supplier’s performance for a rolling period of many months. Sharing accurate performance data is a two-way street in performance- and outcome-based relationships, as both parties must perform to meet the customer’s business objectives.
Two-sided performance data (customer and supplier) when added to a TCO or TLC would give a contract professional leverage to craft a more holistic and systematic contract that supports both parties’ needs. This is a much more sophisticated and powerful form of leverage.