How effective is your teams’ price decision making capability?

Is there a big difference in price decision making across teams and industries?

What happens when a pricing organisation or pricing department goes through a rocky patch in performance and ends up fighting, politicking or conflicted over the price decisions they make?

In any company, especially the large corporations, conflicts will arise anytime. Whether in the mail-room to the top executives’ boardroom. In effect, the trick here is how to recognise those conflicts. Thus, reasonable people, making decisions where the company should go, are likely to have honest disagreements with other co-workers.

 

Pricing management teams whose members question one another’s thinking to develop a comprehensive understanding of choices create a diverse range of factors affecting pricing decisions. Ultimately, make right and effective pricing necessary for today’s competitive environments.

 

However, sometimes that conflict of opinions can lead to misunderstandings with personalities clashing with one another.  Which can, at times, be unhealthy and counterproductive for the team and company.

 

Most pricing professionals pride themselves on being rational decision-makers, they find it difficult even to acknowledge—let alone manage—this emotional, irrational aspect of their behaviour.

 

 

 

 

A case study in price decision making

In one study, we had the opportunity to observe closely the work of a dozen top-management teams in technology-based companies. All the companies competed in fast-changing, competitive global markets. Thus all the teams had to make high-stakes decisions in the face of considerable uncertainty and under pressure to move quickly.

For example, when we worked on major Price Optimisation and Analytics Project with a leading ASX Sydney based Energy business, we worked closely with the pricing function and a specialist systems implementations consultancy team. We observed how each team went about minimising conflicts in their daily work to keep the environmental influences on pricing decisions on track and key stakeholders happy. Both teams had to make high stakes decisions in the face of considerable uncertainty and under pressure to move quickly.

 

However, despite considerable project pressures, they both described the way they work as a team and with each other as “open,” “fun,” and “productive.” The pricing function actively pursued any project risks or data issues, without wasting time politicking, posturing or defending their turf.

 

Questioning them individually

 

Each team consisted of between five and nine executives; we were allowed to question them individually and also to observe their interactions firsthand as we tracked specific strategic decisions in the making. The study’s design gives us a window on conflict as top-management teams actually experience it and highlight the role of emotion in business decision making.

 

In 4 of the 12 companies, there was little or no substantive disagreement over major issues and therefore little conflict to observe. But the other 8 companies experienced considerable conflict. In 4 of them, the top-management teams handled conflict in a way that avoided interpersonal hostility or discord. We’ve called those companies Bravo Microsystems, Premier Technologies, Star Electronics, and Triumph Computers. Executives in those companies referred to their colleagues as “smart,” “team player,” and “best in the business.”

 

Work as a team

They described the way they work as a team as “open,” “fun,” and “productive.” The executives vigorously debated the issues, but they wasted little time on politicking and posturing. As one put it, “I really don’t have time.” Another said, “We don’t gloss over the issues; we hit them straight on. But we’re not political.” Still, another observed of her company’s management team, “We scream a lot, then laugh, and then resolve the issue.”

The other four companies in which issues were contested were less successful at avoiding interpersonal conflict. We’ve called those companies Andromeda Processing, Mega Software, Mercury Microdevices, and Solo Systems. Their top teams were plagued by intense animosity. Executives often failed to cooperate, rarely talking with one another tending to fragment into cliques, and openly displaying their frustration and anger. When executives described their colleagues to us, they used words such as “manipulative,” “secretive,” “burned out,” and “political.”

The teams with minimal interpersonal conflict were able to separate substantive issues from those based on personalities. They managed to disagree over questions of strategic significance and still get along with one another. How did they do that? After analyzing our observations of the teams’ behaviour, we found that their companies used the same six tactics for managing interpersonal conflict.

 

For the pricing teams to get price decision making effectively they need:

 

  • work with more, rather than less, information and debate on the basis of facts;
  • develop multiple alternatives to enrich the level of debate;
  • share commonly agreed-upon goals;
  • add a bit of humour to the working day;
  • to maintain a balanced power structure;
  • to resolve issues without forcing consensus.

 

Six tactics for managing interpersonal conflict for price decision making

 

  • Focus on the facts

 

Some executives believe that an overload of data can lead to pricing team members to argue with each other on what objectives of pricing decision done right. However, if data and information sources are varied, current and reliable enough, it generally encourages people to focus on issues, not personalities.

 

  • Multiply the Alternatives

 

Developing only one or two alternatives could minimise the conflicts as some price managers would believe. However,  the opposite is true, team members come up with multiple alternatives, often considering four or five options at once. Therefore, to promote debate, managers will even introduce options they do not support.

 

  • Use humour

 

It relieves tension and encourages collaborative esprit within a team even if it seems inappropriate at times. Like the old saying said, “all work and no play makes Johnny a dull boy”. Hence, have practical jokes sessions, Halloween and April Fool’s Day celebrations, and “dessert pig-outs” relax everyone— increasing tactfulness, effective listening, and creativity.

 

  • Balance the power structure.

 

The CEO wields the most power than the other executives, but the others wield substantial power as well—especially in their own areas of expertise. Therefore, it lets the whole team get involved in price decision making, establishing fairness and equity.

 

  • Seek consensus with qualification.

 

If the team can’t make a unified consensus, the most senior manager makes the decision, guided by the recommendations from the others. Therefore, consensus with qualification makes decision-making faster.

 

  • Create common goals

 

Another tactic for minimising conflict involves creating strategic choices as collaborative, rather than competitive decisions. Thus, elements of collaboration and competition coexist within any management team. Hence, by doing a common goal around which the team could rally.

 

 

So how do you build an effective and fighting pricing team for price decision making?

 

  1. Assemble a diversified team, including different ages, genders, functional backgrounds, and experience. Additionally, if everyone in the executive meetings looks and sounds alike, then the chances are that they probably think alike, too.

 

  1. Meet together as a team regularly and often. Thus, team members that are strangers with one another don’t know what’s their opinion on issues, impairing their ability to argue effectively. Hence, frequent interaction builds the mutual confidence and familiarity team members require to argue on points.

 

  1. Get the team members to assume roles beyond their obvious product, geographic, or responsibilities. In other words, being the Devil’s advocates, great innovators, and action-oriented executives can work together to ensure that all sides of an issue are discussed.

 

  1. Think out of the box. In effect, try role-playing, putting yourself in your competitors’ shoes. In effect, such techniques create fresh perspectives and engage team members, spurring interest in problem-solving.

 

  1. Be the referee. Don’t let the team acquiesce too soon or too easily. Often, what passes for consensus is really disengagement.

 

Discussion

 

Conflict over issues is not only likely within top-management teams but also valuable. Hence, such conflict provides executives with a more inclusive range of information, a deeper understanding of the pricing decision definition, and a better set of possible solutions.

 

The remedies to conflicts in team building

So, what are the behavioural signs of a world-class pricing team that can deal with conflict and use it to solve difficult problems?

 

  • They work with more, rather than less, information and debate on the basis of evidence and facts;

 

  •  Develop multiple alternatives to enrich the level of debate;

 

  • They develop a framework for dealing with conflicts so whenever the debate turned to the ‘dark side,’ members had a way of pulling the focus of the debate back;

 

  • Share commonly agreed-upon goals – and didn’t have secret agendas;

 

  • They have fun and add a bit of humour to the working day even though the pressure was on;

 

  • Maintain a balanced power structure and neither of the teams pulled the authority or experience card to outdo the other;

 

  • They resolve issues quickly and head-on without forcing consensus or denying the emotion belying the disagreement.

 

Conclusion

 

Facts let the pricing team move quickly to the central issues surrounding a strategic choice. More importantly, reliance on current data makes sound strategic discussions in reality.

 

Working together to shape those price decision making enhanced the group’s sense of teamwork; while promoting a more creative view of the company’s competitiveness and its technical competencies.

 

To learn more about building a fighting-fit pricing team, download this whitepaper.

 

This offer may not last long. So contact us and see what you think of our pricing team assessments. After all, with so much to gain—and with absolutely nothing to lose—shouldn’t you at least find out how?