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Who Has the Power in a Negotiation?

September 19, 2012 By

One big piggy bank and one small piggy bankIn almost 30 years of working with clients to help them prepare for significant negotiations, I have frequently found that most negotiators buy into the false assumption that their counterpart has more power than they do.

I disagree. I have found that almost always, the power in a negotiation is equally balanced. However, there is one exception to this finding: if the other party truly has no need for you and would prefer to move forward without you, then you may be right, they hold all the power. When clients tell us they have no power in a negotiation, we always ask the same questions. Do they return your emails and phone calls? If you did want to meet with them, would they agree to a meeting? If the answer is yes, then your counterpart needs you, and you have more power than you think you do.

Whether you believe that your counterpart holds all the power or that you hold all the power, you are right. Ask yourself this: if you believe you hold no power, why does your counterpart agree to continue the relationship?

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Negotiation Tactic #18 – Clarifying the Ground Rules

May 24, 2012 By Leave a Comment

Summary: Creating rules to help enable a win-win negotiation.

Although creating ground rules for conducting a negotiation is not necessary with the majority of counterparts, it may sometimes be in your best interest to do so.

Example

At a negotiation between the union and management team of a Fortune 100 company, the union president and 25 of his closest friends showed up to negotiate. Parts of the negotiation resembled the scene in the famous movie Animal House, when the student body held a trial to formally put the naughty fraternity on probation. There were so many sidebar conversations and comments made by people not leading the negotiation, it was difficult to tell who was really in charge of the union’s team. Just as management started to make progress, someone on the union team would disagree. In this case, the first issue that should have been negotiated was how many players each team could have in the room at one time and who would be allowed to speak on behalf of each team.

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Always Counter the First Offer in a Negotiation

May 22, 2012 By Leave a Comment

Empty Conference RoomOne of the most frequent questions I am asked is, “Should I counter or should I accept the first offer?” This is usually followed by, “I don’t want to jinx my deal by countering when I felt the original offer was acceptable.”

As a general rule, you should never accept the first offer. Why? People expect you to counter and I believe you should not disappoint them. When you don’t counter the original offer, you leave your counterpart with two bad thoughts: they should have made an even better first round offer, and there must be something wrong with your willingness to agree so quickly.

Let’s say that I’m selling my used 2008 Ford F150 King Ranch pick up for $21,000. You come by to look at my truck, take it for a test drive and then return, saying, “Your truck is in excellent condition and I am comfortable with the $21,000 price. Would you prefer a cashier’s check or all cash?” Now you have left me with the terrible thought that I priced my truck too low and I now think I could have easily gotten more from you. On top of this, I may be suspicious about you wanting to finalize the deal so quickly.

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The Role of Power in Negotiation

May 5, 2010 By 2 Comments

The word power has had a bad connotation for many years.

It has received this reputation because most people associate the word with one side dominating or overpowering the other. I define power as the ability to influence people or situations. With this definition, power is neither good nor bad. It is the abuse of power that is bad.

Types of Power

Various types of power can influence the outcome of a negotiation. I emphasize the word can because if you have power but don’t use it, your power is of no value. The following are a few types of power that can be significant in the negotiating process:

  1. Position. Some measure of power is conferred based on one’s formal position in an organization. For example, if you are the marketing manager, you can influence decisions that affect the marketing department.

  2. Knowledge or expertise. Knowledge in itself is not powerful; it is the application of knowledge that confers power. It’s important to take the time prior to a negotiation to research facts and statistics, find out what the other party’s goals are, and discover what areas he or she might consider negotiable–and then use this knowledge!

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10 Types of Power

May 4, 2010 By Leave a Comment

Several types of power can influence the outcome of a negotiation. We emphasize the word “can,” because if you have power but don’t use it, the power adds no value to the negotiation.

  1. Position. Some measure of power is conferred on the basis of one’s formal position in an organization. For example, a marketing manager can influence the decisions that affect the marketing department. However, the marketing manager has little power to influence the decisions that affect the finance department.

  2. Knowledge or expertise. People who have knowledge or expertise can wield tremendous power. Of course, knowledge in itself is not powerful. It is the use of knowledge and expertise that confers power. Thus, you could be an incredibly bright person and still be powerless.

  3. Character or ethics. The more trustworthy individuals are, the more power they have in negotiations. The big issue here is whether they do what they say they are going to do-even when they no longer feel like doing it.

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