Power in Negotiation
If you are going to go for win – win in your negotiations, you had better make sure that you have “Power” before you start.
So, where does power come from the in any negotiation? This is an interesting question.
There are in fact three areas that are potential sources of power for you in any negotiation. One of them is obvious, the other two are less so.
Knowledge is Power.
The first area of power for the negotiator is knowledge. The more you know about your negotiating opponent and the more you know about what is to be negotiated, the more power you have in the negotiation.
Let me give you an example. Imagine there is a young man who wants a salary increased from his boss. His wife has just had a new baby and she would like to take two years off to look after the child. He has just bought a new house to make sure there is enough space for the new baby, and his eldest daughter has moved into high school, so he is tied into the area.
The boss knows all this about the young man. The boss knows that the young man is tied to the area, but the boss also knows that his bosses, the board, have told him there will be no more salary increases. ” You are already one-and-a-half per cent over budget”, say the board “so they will be no more salary increases “. The boss also knows that the young man had a salary increase six months ago so he is not entitled to an increase at this time.
Who has the power in this negotiation? The boss of course.
The more knowledge you have, the more power you have in any negotiation.
Where else would you find power?
Preparation is Power
If you are a salesperson and you want to negotiate with a buyer in his office, the buyer would have the advantage of home territory, and preparation. Sales people will know that some buyers, not all of course, but some buyers design their office to give them power in the negotiation. For instance, the chair they use is set just a little bit higher than the guest chairs, so the buyer will be looking down upon the salesman. In addition, the guest chairs may well be rickety, and make a rude noise when you sit down. Sometimes the buyer will arrange his office so that the main window is behind him and the curtains are left open allowing the Sun to stream in over the buyer’s shoulders into the sales person’s eyes. In this position, it is difficult for the sales person to negotiate and the buyer has the power.
It would be better for you to find a level playing field to negotiate in, the boardroom for instance, where both sides in the negotiation feel equally comfortable. If management is negotiating with the unions, a level playing field maybe the staff canteen, where both sides feel comfortable.
Power is in your “NDA”
There is still one area of power that we have not considered. Last week we discussed the importance of going for a win – win or no deal. If this is your target, you had better make sure that you have an alternative “fallback” position otherwise you will feel compelled to agree with whatever your negotiating opponent has to offer. This fallback positions is called your “NDA” (No Deal Alternative). When going into a negotiation, you should have in your mind an “NDA” so that if your negotiation fails, you have something to fall back on. Without an “NDA” you will feel weak in the negotiation because you will have to accept whatever offer you are made.
If we consider the young man in the above example he can swing the balance of power his way by introducing an NDA into the equation. Before he goes to see the boss to ask for a salary increase he sends his CV to three local companies, gets two interviews and one firm job offer in writing at a salary greater than he is currently being paid. He folds up the job offer and puts it in his pocket. Who has the power in the negotiation now?
Of course, the young man has the power. He doesn’t even have to use the letter offering him another job, he just has to have it in his pocket to make him feel powerful.