NEGOTIATING POWER

NEGOTIATING POWER

Negotiation may be understood as a process of conferring and communicating with two or more parties for the purpose of influencing their decisions for an agreement. However, the concept of negotiating power is a little difficult to comprehend – it is one‟s ability to influence others‟ decisions and depends upon others‟ perception of one‟s capability and not what he actually has. In essence, negotiation power is all a matter of perception!

(1) Myths about negotiating power

Two popular myths that must be overcome are:

(i) Negotiating power is the physical force
Physical force is considered to be both necessary and sufficient element of negotiating power. It must be understood that the total negotiating power depends up on many factors and enhancing the total power is building up the combined potential of all of them. Effective negotiating power is orchestrating all the factors so as to maximize their cumulative effect.

(ii) Start tough as one can always go soft later
It is also influenced by the concept of physical power and leads to the belief that starting the negotiations with the threat of consequences of non-agreement is preferable. It is true that if other things are equal, more extreme initial position of either demanding high price or offering a low price, final outcome is likely to be more favourable. However, opening with low offer is quite different than opening with the threat of painful consequences if offer is not accepted because if one is committed to threat at an early stage of negotiations, it can severely damage one‟s negotiating power,

(2) Sources of enhancing negotiating power
Following should be used as a checklist for enhancing the negotiating power of individuals:
 Power of skill
 Power of knowledge
 Power of good relationship
 Power of good alternative to negotiations
 Power of elegant solution
 Power of legitimacy
 Power of commitment

These are detailed below:

(i) Power of skill
As discussed above, skilled negotiators have much advantage in being able to secure good agreement that has high degree of implement-ability and stick-ability. These skills can be acquired and persons should have them prior to actual negotiations.

(ii) Power of knowledge
Knowledge may be of general type regarding procedural options, awareness of members‟ style of negotiation and impact of cultural differences if any. A person with a repertoire of examples, precedents and illustrations can enhance his persuasive power.
Specific knowledge of particular issues under negotiations can make one even more powerful. Followings can strengthen one‟s ability to influence:
1. Knowledge about persons involved in the negotiations
2. Knowledge about the interests involved
3. Knowledge about the facts of the issues

(iii) Power of good relationships
Good working relationship does not imply approval of each others‟ conduct although mutual respect and affection may help. Two important aspects of good relationship are:

(a) Trust
It comes from building referent power over time through honesty, integrity and commitment to promises made. Individuals‟ power comes from the perception of others of whether they trust the person involved in negotiations.

(b) Ability to communicate
The process of communication is at the heart of negotiations – the ability to influence others to a common objective. Inter-personal communication is a difficult issue especially among adversaries when chances of miscommunication are the greatest.
Knowing and working with one another for a longer period help to improve mutual understanding and communications can be more effective and meaningful. A relationship that has the history of resolving issues amicably can lead to building relationship of cooperation and trust.

(iv) Power of devising good alternative to negotiations
In learning how to enhance one‟s negotiation skills, we ask individuals to develop „Best Alternative to Negotiated Settlement‟ (BATNA). The idea is to develop the most promising solution / agreement and then improve it to the extent possible. The greater the ability to develop an alternative outside of negotiations, higher would be the power of that person to secure a favourable negotiated settlement.

(v) Power of elegant solution
In any negotiation, there are several shared and conflicting interests. Although skilled negotiators initiate brainstorming sessions with the team to generate many options to satisfy legitimate interests of both parties, inventing a good, elegant solution enhances the negotiating power of the negotiators. It enables the negotiators to secure a more favourable outcome.

(vi) Power of legitimacy
The proposed solution should be legitimate as that enhances its acceptability. An outcome is legitimate when:
1. It is fair
2. Law requires it
3. It is consistent with precedent
4. It is the industry practice
5. It is based on sound policy
6. It is legitimate applying some other standards
7. It is legitimate in the eyes of the other side
Such solutions increase the negotiating power of individuals as they become more acceptable.

(vii) Power of commitment
Although planning for commitment is done in advance, commitments are made during the negotiations only. Every commitment involves decision making. Broadly there are two types of commitment:

(a) Affirmative commitments
These are:
 Offers that a party is willing to agree
 Offers that a party is willing to accept under certain conditions, failing agreement
Every offer ties up negotiators‟ hands. Power of positive commitment has the power of invitation to the other party. A skilled negotiator formulates the offer in a manner that would maximize all the above powers of negotiation. It has, therefore, the highest chance of being accepted.

(b) Negative commitments
These are:
 Unwilling to make certain agreements even though they would be better than no agreements
 Threat, failing agreement, to engage in certain negative conduct even though it would be worse than having no agreement
Negative commitment is the most controversial and troublesome element of negotiating power. It is also the last resort of the negotiators. The earlier a negotiator announces a „take-it-or-leave-it‟ position, less likely it would be that he has maximized the cumulative impact of all the elements of negotiation power.
Analysis of the negative commitments suggests:
 It is a mistake to attempt to influence the other side by negative commitment at the early stages of negotiation without having made use of other elements of negotiating power.
 If it is made as a last resort, it should be formulated to reinforce and complement other elements of negotiating power and not undercut them. Even then, it should be done in line with the tradition of maintaining good working relationship and concepts of legitimacy.