Power in Negotiation

Power in Negotiation

Physics defines power as work divided by time. Work, in turn, is the application of force in a direction. Power, then, can be thought of as the ability to get things moving (more) quickly in a desired direction. The same definition applies in social interactions like negotiation.  Power is the ability to get desired things done more optimally than one could in its absence. Whether “more optimally” means “more quickly,” “more completely,” ” more profitably” or something else depends on the negotiators’ goals.

Unfortunately, the simple comparison ends there.  Negotiation power is variable. It can speed things up, slow things down, stop them, send them backward, or change direction (i.e. choose a different goal, method, or priority).

In physics, how power is accumulated or applied can be reduced to a precise equation. But negotiation is a social act; of communication and discovery between two or more people; because negotiation power is social, it varies over time and in context.

Some people think of power as the accumulation of things – more money, more bargaining skill, more lawyers, more eloquence, and so on, But just as physics’ concept of power is nonsense when there is no object to apply it to – no weight to lift or ball to roll – there is no point to discussing social power without discussing its target (power over whom?), and its goal (power to do what?).

Context is also important.  Where is power being exercised? The CEO who is a leader in the boardroom may follow his wife’s lead at home, or his coach in weekend sports.  Our power varies as our social roles change.

The Structuralist Dilemma

Thinking about negotiation power as a dependable constant, like electricity in a battery, leads to unsound thinking. For example, consider the “structuralist dilemma:” How can weaker parties negotiate with stronger parties and still get something?”

The answer(s) is/are a) that the “weaker” party is not weaker in context, b) that the transaction cost of acquisition without negotiation may be too high, or c) that some other factor, such as the possibility of future dealings, outside pressure, or a normative standard, dictates the weaker party should benefit from the transaction. All three explanations indicate that the weaker parties were stronger than it first appeared.  Rational people do not negotiate unless there is a risk that the result of not negotiating will be worse. As Professor William Zartman of Johns Hopkins University puts it, “Negotiation takes place when neither party in a conflict is strong enough to impose its will or to resolve the conflict unilaterally”. The stronger party negotiates because it needs to; there is no real dilemma.

Power is variable because it is socially conferred by those around us, and must be accepted. To illustrate: Suppose you are very rich, well educated, good-looking, and smart.  An observer might guess that you have plenty of power.

And perhaps on Monday you do. On Tuesday, suppose everyone learns that you have done something universally abominable in the community. Thereafter, you are shunned: no one will take your money, buy from you, talk or listen to you, feed or shelter you, or be seen aiding you,   In one day, you have gone from powerful to poor, lonely, hungry, homeless and outcast – because no one will accept your power.

A loss of power need not be complete to matter. Consider how Richard Nixon’s power diminished after Watergate, or how the events at Chappaquiddick impaired Ted Kennedy’s political ambitions.

You might say: “To talk about not accepting my power is ridiculous.  If I want your house and I have money, I can meet any price, or hire thugs to break your legs, or lawyers to drag you into court.  I can bankrupt you!” But this misses the point: You may offer me a hundred times the value of my house.  Though it might be a bad idea, I can continue to say “no.”

As for thugs, court and bankruptcy, no one said refusing to accept power was without consequence. While negotiators usually pursue their self-interest, they may act against their own interests to inflict pain on opponents or achieve some goal external to the negotiation objective.

For example, suppose Ames owns the property next to his mother Betty’s house.  The highest bidder is Betty’s former neighbor Cabot, who previously threatened her during a dispute. Ames worries that Cabot means Betty no good.  The other bidder is Duffy, a stranger who offers less.    Yet, given Ames’ concerns about Cabot, he is almost certain to take the loss and sell to Duffy or wait for a better offer.

Power at the negotiating table

These principles all apply at the negotiating table. But because the point is making a deal, in thinking about negotiating power we can focus on three things: 1) how well one can meet or block a counterpart’s objectives, 2) The parties’ relative need for the deal, and 3) the character of the counterpart as a solution partner.

Achieving objectives

To use achieving a counterpart’s objectives as a source of power, one must explore what they are – and therefore learn as much as possible about the counterpart, through direct interaction or investigation.

Don’t begrudge the time this process takes, if it is available. As negotiation expert Roger Fisher points out, it is usually worthwhile to gather a unnecessary information in order to discover a few highly relevant facts.

The objectives achieved need not be directly related to the object of negotiation.  For example, Anne could get Bob to choose her offer from among others by making a donation to Bob’s favorite charity.

It may be that the negotiating counterpart conceals or misrepresents his objectives, a common result of a competitive, winner-take-all orientation. In this case (while continuing to attempt exploration) the diligent negotiator can attempt to approximate the counterpart’s objectives by reviewing what she knows of him and by developing objective data — referring to similar cases, market values, and so on.  It is likely that the counterpart has at least consulted this kind of information in determining his goals. But while an approximation can help in preparation, the negotiator must be particularly vigilant for indications of true objectives while at the table, since the process will not be perfect.

If a bargainer lacks resources, the exploration process may alert her, and enable her to prepare for negotiations. She could arrange a loan, find a partner, or even try to change the objective, like this: “You won’t get much of a wrongful death verdict.  Fred wasn’t working and hadn’t spoken with you in a year.  But shouldn’t we really be thinking of a way to honor his memory instead of fighting about money?’

Blocking objectives

Blocking (or threatening to block) another’s objectives, whether connected to the subject of the bargaining or not, is another way of trying to exert influence: “If you don’t do this for me, you’ll never work in this town again!” One common blocking threat is the prediction of poor results in litigation.  As long as the true cost of litigation multiplied by the likelihood of their occurrence exceeds the likely cost of settlement, negotiation (or mediation, which is ‘facilitated negotiation’) ought to occur. (For more on the true cost of litigation, see Mediation Mastery’s Special report, available here.)

Because it is negative, blocking objectives is a risky exercise of power.  It leaves open the question of whether the block can actually be achieved, as it may involve other parties. But assuming the counterpart believes the threat, it is as effective as reality. During the summer of 1944, the 1100 men of the United States Army’s 23rd Headquarters Special Troops used inflatable tanks, loudspeakers and sound effects, and similar techniques to make the Germans believe in an Army that wasn’t there and thus alter their deployments.  These strategies saved an estimated 15,000 to 30,000 lives.   These incidents illustrate that the perception of power is power. As Roger Fisher points out, however, perceived power is easily lost; real tanks are preferable to inflatable ones.

In day to day negotiations, using deception to enhance perceived power is likely to lead to anger if it is discovered. Anger makes people overconfident, eager to act, aggressive, in control, and happy with a worse outcome.  This is hardly the ideal mindset for the subject of an attempt at influence to have.  Also, a counterpart faced with this situation will likely feel it is unfair, which can lead to rejection of even advantageous deals.

Relative need

The need for a negotiation object is generally determined by the alternatives available. If Fred needs a car loan of $10,000 and has poor credit, and no friends or family able to help, he must take whatever terms he can get, or get no loan at all.  The banker has the power.  If Fred has good credit and generous associates, he can shop for the best terms, and holds the power during loan negotiations.  Failing to reach an agreement has no penalty except the cost of going to the next bank.

The power of alternatives explains the common negotiating training advice to develop a BATNA, or Best Alternative To a Negotiated Agreement. What will Fred do if the negotiation goes badly – if, for example, the one banker willing to listen offers impossible terms? Can Fred do without the loan? Can the car purchase can be deferred, or will the purchase of a less expensive substitute suffice? Can Fred borrow a car for a while, or take the bus? The point is that every negotiation carries with it the possibility of a negative result, and knowing your best alternative – even if it’s pawning grandma’s heirloom silver – will inform your negotiating behavior.

It is advantageous to develop more than just a BATNA. Schonewille and Fox recommend also developing a RATNA (Realistic Alternative To a Negotiated Agreement), and a WATNA (Worst Alternative To a Negotiated Agreement), to allow for an assessment of the full range of possible outcomes [17] Another benefit of preparing multiple scenarios is that it reduces fear and increases confidence at the bargaining table. [18] Every alternative reduces relative need – from “I must have X” to “I’d really rather have X,” or possibly to “I’ve decided I don’t need X after all.”

The character of the counterparts

Because negotiation is a social interaction, it is more than a mathematical determination of the subject’s value. Results will vary by the character of all counterparts, and their willingness to deal with one another. If I dislike you so much that we don’t talk, your power over me is questionable.

Who the parties are and how they treat one another has as much, or perhaps more, to do with the success of a negotiation as its merits.  Roger Fisher refers to the power of a “good relationship,” which he breaks down to communication and trust.

Communication, for Fisher, means being clear about your demands, offers, and proposals, and being sure you understand your counterpart well enough to reach them. Asking questions is one way to ensure clarity; another is to write out your points before you make them.  If you cannot write them clearly, you do not understand them well enough to communicate them to a negotiating counterpart.  Finally, confirming points in writing also ensures clarity.   Being sure you understand your counterpart is a combination of doing appropriate exploration and asking questions to confirm understanding.

In discussing trust Fisher focuses on the ability of your counterpart to trust you, skipping over the question of whether you can trust him or her. Fisher rejects deceitful communication. Because he focuses on long-term negotiation, he encourages development of a sterling reputation.

Not every counterpart is trustworthy, and not everyone avoids deceit. Be careful about potentially harmful disclosures.  Check the reputation of your counterpart.  Be prepared to be lied to. Ask yourself if the commitments made are sensible given what you know of the counterpart. If they seem too good to be true, it’s likely they are.

You might face hardball tactics or emotional manipulation during the negotiation. Check for performance. Know what you will do. – and be clear about consequences of non-performance, while indicating that you expect nothing of the kind.   If you must respond, do as you said you would.

Finally, look for and demonstrate professionalism as a fair proxy for trustworthiness:

  • Is your counterpart prepared for the negotiation?
  • Does he or she use objective standards in negotiation?
  • Is a professional tone maintained?
  • Are fair solutions proposed?
  • Is your counterpart’s position clear and consistent?
  • Does he or she make appropriate concessions?
  • If there are interim promises, are they met on time?
  • Are positions logically supportable?

To the extent that the answers are affirmative, this expected and accepted conduct will add to parties’ power.

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