The Role of Power in Negotiation

Posted by Peter Barron Stark |

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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 dont 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
ones 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.
Its important to take the time prior to a negotiation to research
facts and statistics, find out what the other partys goals are,
and discover what areas he or she might consider negotiable
and then use this knowledge!
1.
Character. Individuals who are seen as trustworthy have a
great deal of power in negotiations. You are perceived as
trustworthy if you have a reputation for doing what you say you
are going to do.
2.
Reward and punishment. Those who are able to bestow
rewards or perceived rewards, such as raises or job benefits, hold
power. Conversely, those who have the ability to create a
negative outcome for the other party also have power.
3.
Behavior style. Most people exhibit one or a combination of the
following behavior styles:

analyticalprocess oriented, methodical


driventask oriented, goal directed

supportiverelationship oriented, focused on feelings

Which behavioral style is most appropriate depends on the situation. For
example, if you were going through a divorce and wanted to maintain a
good relationship with your spouse, you would want to use the supportive
style. You gain real power from a knowledge of behavior styles only if you
can read a situation and adapt your style to it.
Most people have more power than they think. I believe there is a link
between a persons self-esteem and the amount of power that person thinks
he or she has. It has been demonstrated that people with high self-esteem
feel they have more viable options (and thus more power to act) in
negotiations. I believe the reverse is also true: People with low self-esteem
feel powerless, and do not stand a fair chance.
Rules of Power
Knowing the following rules of power comes in handy when entering into a
negotiation.
Rule #1: Seldom does one side have all the power. Even the individual
who goes to a bank to ask for a loan has powerthe power to decide which
bank to apply to, the power to decide an acceptable interest rate, and the
power to decide what to put up as collateral.
Rule #2: Power may be real or apparent. When I was a proctor in the
sociology department at San Diego State University, I knew that cheating was
a potential problem. As I was passing out tests, I announced that I would
uphold the universitys policy on cheating. One bold student asked what the
policy was. My response was simple: If you need to ask, you dont want to
know. This was the first time I had ever seen all sixty students staring at their
own paper! Does the university have a policy on cheating? I dont know. But in
this situation, whether the power was real or apparent didnt matter. The
students perceived that I had the power.
Rule #3: Power exists only to the point at which it is accepted. At the
airport on a return trip from Europe, I noted that all the ticketing agents for
economy class had at least a twenty-minute line to check baggage. Yet the
business and first-class agents had not one person in line. I boldly walked up
to the business class agent and got my seat assignment. Of course, this

strategy was successful only because the ticket agent was willing to work with
me. But I never would have known if I hadnt tried.
Rule #4: Power relationships can change over time. This is one of the
hardest lessons I have ever learned. In my youth, I had the same girlfriend
from the seventh to the eleventh grades. In the beginning, I had the power in
the relationship. I chose which activities we would become involved in and
who our friends would be. Then something happened that sent me into a
tailspin. My girlfriend was asked out by the student body president! Overnight,
I was sending roses and begging for a date.
Rule #5: In relationships, the side with the least commitment
generally holds the most power. If you are negotiating to buy a car from a
salesman whose boss has warned him that he had better start making sales,
and you are not committed to buying this particular car from this particular
dealer, you are in the drivers seat in the negotiating process.
Testing Your Power
What is the lesson to be learned here? Power is of no value unless you take
advantage of it. (Remember, power is not badthe abuse of it is bad.) When
negotiating, be willing to take a chance. Try out your ability to influence the
other party and the outcome of the negotiation. You may find out you have
more power than you think!

Use of persuasion
PERSUADING involves being able to convince others to
take appropriate action. NEGOTIATING involves being
able to discuss and reach a mutually satisfactory
agreement.
INFLUENCING encompasses both of these.

These skills are important in many jobs, especially areas such

as marketing, sales,advertising and buying, but are also
valuable in everyday life. You will often findcompetency-based
questions on these skills on application forms and at interview,
where you will be required to give evidence that you have
developed these skills.

Persuading
One scenario where persuading skills can be important is the job
interview, but the following tips are valuable in many other settings.
Focus on the needs of the other party. Take time to listen
to them carefully and find out about their interests and
expectations. This shows that you are really interested in them

and they are then more likely to trust and respect you. It will
also make it easier for you to outline the benefits of your
proposal in terms they understand.
Argue your case with logic. Do careful research on your
ideas and those of your competitors (if there are any) and
make sure that any claims you make can be verified.
The more hesitant language you use such as "isn't it", "you
know", "um mm" and "I mean" the less people are likely to
believe your argument. (Journal of Applied Psychology)
Use positive rather than negative language: instead of
saying "You're wrong about this", say "That's true,
however ...", "That's an excellent idea, but if we look more
deeply ....." or "I agree with what you say but have you
considered ....".
Subtly compliment the other party. For example: "I see
that you've done some really excellent research into this".
Even though they may realise this is being done, evidence
shows that they will still warm to you and be more open to
your proposals.
Mirroring the other person's mannerisms (e.g. hand and
body movements).A study at INSEAD Business School found
that 67% of sellers who used mirroring achieved a sale
compared to 12% who did not. People you mirror
subconsciously feel more empathy with you. However, it can
be very embarrassing if the other person detects conscious
mirroring so it must be very subtle. You need to leave a delay
of between two and four seconds before the mirroring action.
See ourbody language quiz for more on this.
Try to remember the names of everyone you meet. It
shows that you are treating them as an individual.
BATNA - Best Alternative

Having available options during a negotiation is a good alternative which

empowers you with the confidence to either reach a mutually satisfactory
agreement, or walk away to a better alternative.

"Don't put all your eggs in one basket." It's an old saying which has stood the test of time.
Some of you urbanites, sitting in your cubicles, may be scratching your heads and
wondering, 'What in the name of Hades does this mean?' Meanwhile, back out there in the
countryside, a ruddy faced farmer, is likely rolling his eyes and patiently explaining, that
should you trip on the way back to the kitchen, eggs are no longer on the breakfast menu.
To a negotiator, this wise old proverb illustrates that if you bring only a single proposal to
the table, you may likely end up with a rotten deal, or no deal at all. You need to have an
alternative plan waiting in the wings.
It should be fairly obvious that not every negotiation is going to get tucked away in a nice,
neat settlement package. This is where BATNA comes to the rescue for those of you sensible
enough, to have heeded the sage advice of that old farmer who coined the above proverb
many ages ago.
BATNA means 'Best Alternative to a Negotiated Agreement'. This is your alternate plan when
the talks start to wobble out of control. It can also be your trump card to make the deal
happen to your advantage, or walk away from it altogether.
Let's illustrate BATNA by using a simple example. In the first scenario, let's say that you are
a buyer who goes to a supplier to purchase some badly needed parts to complete a project.
The supplier senses your urgency; his eyes begin to gleam with anticipation. You want the
lowest price possible while he wants the higher price. Oh! Oh! You have no fallback position. You're both in the boat, but it's the supplier who's holding the oars, so guess
who decides where the boat makes land?
On the other hand, say you go to the meeting prepared. Before arranging the meet, you set
up talks with 2 other suppliers who are ready and able to handle all your needs. When you
meet with the first supplier in this second scenario, you can calmly sit back in your chair,
and allow the supplier to finish his spiel. Now, watch the gleam fade from his eyes when you
spring the little titbit, about his competitors willingness to solve your problem. You have
BATNA! The talks suddenly become more amenable. So, who's holding the oars now?

BATNA or NO BATNA? That is the Question

The power of your BATNA is a matter of scale. When you have a strong alternative solution
to a lousy proposal, you have leverage to build a more potent proposal. If not, then you can
turn to your best alternative solution. A strong BATNA is like a warm, fuzzy insurance policy.

A strong alternative provides you with two possibilities. Either you settle an agreement with
more favourable terms, or you have the option to simply say, 'No dea1!'
BATNA doesn't come in a package. It comes from planning and preparation. It is a two fold
process. First, you have to determine all your available options. Then, you must also
realistically estimate your counterpart's alternatives. Each is equally important. Otherwise, it
will be impossible to gauge the strength of your best alternative in relation to their best
alternative.
Your plan should be a flexible approach. It is important to keep in mind that both your
approach, and your alternatives, should be able to bend in the wind and weather the
unexpected storm. A negotiator may enter the talks with a preconceived idea of the best
alternatives available to both parties, but must not be bound by them.
Circumstances can alter rapidly. Unexpected changes can be anything from new information
on the table; a sudden rise in costs due to political upheaval; new legislation: or, even a
climatic intervention such as an unexpected and untimely frost. A sudden shift in conditions
can immediately affect the strength of either parties BATNA during the negotiation process.

What's in Your BATNA?

How do you determine your best alternatives to a negotiated agreement? First, you have to
dissect both your position and your interests. Then, look at the sum of these parts relative
to all the alternative options available. Pick the best option. Finally, do the reverse from your
counterparts perspective. A well prepared negotiator looks at the whole picture.
Some of the most crucial factors which should be considered include;
The cost - Ask yourself how much it will cost to make the deal relative to the cost of
your best alternative. Cost estimation may entail both the short term and the long
term. It boils down to figuring out which of your options is the most affordable.
Feasibility - Which option is the most feasible? Which one can you realistically apply
over all the rest of your available options?
Impact - Which of your options will have the most immediate positive influence on
your current state of affairs?
Consequences - What do you think or estimate will happen as you consider each
option as a possible solution?

Mine Is Not Necessarily Bigger Than Yours!

Is that your ego showing? Put that thing away right now! After all the work you put into
estimating your BATNA, you might be feeling pretty smug. Studies have clearly shown that
it is an all 'too human' tendency to overestimate the strength of one's own BATNA,
while underestimating the strength of your counterpart's.

The underlying danger occurs at the point when one party reveals an over-estimated BATNA
too early in the talks. Having put all their cards on the table too soon, they call the other
side. Suddenly, they find that their big hand really equates to a pair of deuces facing a full
house. Kiss that pot goodbye!
The other side of the coin happens when you are absolutely certain that you have the
stronger BATNA. Let's suppose you know the other party needs to make a deal, and they
have no options available except to turn to your company. Now is the perfect time to put
your own powerful BATNA on the table. The BATNA you employ can act as a powerful
leverage while you decide whether or not to make the deal. As always, gauge the situation
accordingly. Timing can mean everything in determining when to put your BATNA on the
table.

Boosting Your BATNA

In the reverse situation, what can you do with a weak BATNA? Can your turn the tables?
Yes, there are two ways this might be accomplished. The first possibility is to strengthen
your own BATNA. The second way is to reduce the BATNA of your counterpart.
Be Creative - Simply ask yourself what other options you might employ that could
increase your bargaining position. Brainstorm the situation with all the key players
in your organization. Your planning must also factor in your counterpart's interests
and options.
Improve Your BATNA - Endeavour to expand your options. One possibility is to
consider bringing into the mix, other interested third party partners. A third
parties interests may coincide with key components of your interests, or of your
counterpart's. For example, this might entail creative financing which presents a
more attractive option to your counterpart. If you weaken the other sides best
alternative by injecting another element into the mix, the game takes on a whole
new slant.
Use Experts - Neutral parties with their own relevant expertise might be able to
unravel your problem into a newly designed, but more attractive perspective. If
your side lacks some area of expertise, get the experts to lend a hand.

Summary
Failing to have available options during a negotiation is simply unwise. Having a good
alternative empowers you with the confidence to either reach a mutually satisfactory
agreement, or walk away to a better alternative.

7 Negotiation Techniques
That'll Boost Your Power at the
Bargaining Table
Written by Jami Oetting | @jamioetting

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You didnt get into this business to spend your days arguing. Conflict
resolution was certainly not in your job description when you started
out as a designer, account manager, or copywriter. Instead, you
daydream about quiet days agonizing over creative -- not being on
stage in a courtroom.
But the reality is that you have to lead the charge for your agency, and
that sometimes requires you to deal with hard-bargaining clients who
want more work at less money.

The Value of Negotiation Skills

Without negotiation skills, you might simply give in or give away more
than was necessary, causing your agency and staff to suffer the
consequences of your being intimidated. By learning negotiation skills,
you can ...
Gain a competitive advantage.
This isnt about determining a loser and a winner. Its about managing
your agencys interests with those of the client. If you have negotiation
skills, you limit the inequalities between your agency and the client.
Increase your confidence in business deals.
It feels like the client has all the power once you send the contract or
proposal over. You simply have to wait for a decision. When the client
finally calls, you sound desperate. You want to win this account --

badly. Its a blue chip brand that will push your creative limits.
When the client starts asking you to cut this price or change this
timeline, you do so because you don't want to lose the account.
Ultimately, you get the account, but the love has soured into
resentment because you feel taken advantage of. If you know where
you real power lies in the relationship, you can negotiate and
collaborate with the client.
Counter intimidation tactics.
How many times have you been afraid to tell a client that something is
out of scope? You rationalize that you dont want to ruin the
relationship or seem like you are analyzing every line item. Youll just
take the hit on this one. This avoidance of the issue is causing your
agencys profitability to plummet. Remember that confidence breeds
respect, and mutual respect means you have a partnership.
Preserve relationships by managing conflict.
Healthy relationships are give-and-take. But it is also about
appearances. By understanding how to be an active listener, how to
provide reassurance in a conversation, and other negotiations skills,
you can manage your image and the response of clients during
difficult conversations.
Negotiation is the act of balancing competition with cooperation to get
a result where both parties are satisfied. And to do this, you need to

know your clients BATNA, or best alternative to a negotiated

agreement.

Outlining the Client's BATNA

Defining your clients BATNA (Best Alternative To a Negotiated
Agreement) will help you determine what power you have in the
negotiation, when the client would accept the negotiated contract, and
when he would end negotiations.
Its about what the clients alternatives are. If the client fails to sign the
contract because your agency wont concede on a specific point, will
the client fail to meet his quarterly goals? Will he have to start another
three-month search for a new agency? Can he find another agency
with your expertise and experience at the price he wants to pay?
You can also use this information when approaching a client about
work that is out of scope. If the client doesnt want to pay for out of
scope work, what will he do? Will he fire your agency mid-contract?
Will he concede and determine the out of scope work requested is not
really necessary?
To determine the clients BATNA in a contract situation, you should ask
yourself:
If the client doesnt sign the contract because you failed to
concede to his terms, what will he do?

 Figure out a list of possible options, and create reasonable

responses or points to counter the clients decision. If you
understand all the options available to the client, you can better
prepare yourself for negotiations and retain some
perspective during conversations.
What are your limits for the negotiation? Practice the same
approach from the client's point of view. Define where you can
compromise and what you ultimately want in the situation.
Outline your alternatives. While it might seem like the only
alternative is to lose the account, that's not the case. If the client
doesn't become a client, what are your alternatives? One might
be that you will continue to go after profitable accounts -- you
won't lose money by accepting a client who can't pay your fees.
Clients have a lot of power. (Obviously ... they're the ones sending the
check.) But if you want to be able to negotiate with any authority, you
have to establish a position and stick with it.

7 Techniques for Negotiating Like a

Pro
1) Practice being an active listener.
Listening is a key skill; one that requires you to hone your verbal and
non-verbal communication skills. Your posture, facial expressions, and
head movements all signal that you are -- or are not -- listening to the
speaker. And during negotiations, the person on the opposite side of

the table needs to feel that you are not only hearing but also
understanding, what he is saying.
To be an active listener, you should maintain eye contact. When
agreeing with points, acknowledge this with a yes or I agree. Dont
interrupt the speaker, but take the opportunity to paraphrase what the
person has said, and repeat it to make sure you understand. Ask
questions that prompt the speaker to clarify information.

2) Ask open-ended questions.

Consider these two questions:
What price would work for you?
Tell me: Why is this price seems too high? Is it because of the
results you have seen in the past?
If you start with the second question, the dialogue about price
becomes a way for you to emphasize the results your previous clients
have seen.

3) Set high goals.

Researchers at DePaul University found that when negotiators set
specific, challenging goals, they were able to secure better deals than
those with undefined or lower goals. Even if you go into a negotiation
with a client knowing you can reduce the final project cost by 20%,

attempt to negotiate a higher price or negotiate a change in timeline as

well as a price cut. Give yourself a goal.

4) Play to the clients emotions.

People, for the most part, buy based on emotions. This is especially
true when deciding between competing brands. (For example: "My
mom used Tide, so I should buy Tide even though the next brand is on
sale.")
The same applies to the professional services industry. Emphasize
your existing relationship or the excitement of your team about working
with the client. CMOs love to hear how their brand is inspiring a
creative team.

5) Be confident that you are the best option.

If you did your job in qualifying the prospect, you know this client
would benefit from working with your agency.
So if things broke down during the contract phase, and you are
negotiating the terms, you can be assured that the client wants to work
with you. It might just be a matter of securing his confidence.
Emphasize that you understand the clients marketing challenges,
have the experience they are looking for, and even offered a plan that
was better than your competitors.

6) Emphasize the urgency.

During the proposal phase, you found out what the cost to the client
would be if he didnt increase leads, drive sales by X percentage, and
so on. You also should have determined how the timeline for the
project would affect year-end or quarterly goals. Remind the client of
the consequences of delaying the project.

7) Be gracious.
Hopefully, you and the prospect will get past this phase. Then, he will
be a client -- someone you want to build a strong relationship with.
That means you want the client to be satisfied with the results of the
negotiation, which actually means you should seem not satisfied -- or
not as satisfied as you might be -- with the results of negotiation. The
client should feel that you both made concessions and are happy with
the path forward, not that one party exploited the other.
The goal of negotiation is not to get everything you want. It's
about how you communicate and cooperate with a client so that both
groups enter a relationship on equal standing. The result is a stronger,
more equal path to partnership.