Sometimes going into a negotiation, we may feel like we don’t have enough negotiating power. If this is you, our advice is to postpone the meeting because you aren’t ready! Going into your negotiation without enough power is a pretty predictable way of getting punished.
This is a scenario we deal with daily as professional negotiating consultants at Scotwork - very rarely do people who ask for our help feel they have a lot of power! However, after a guided exploration of the power balance and strategies for leveraging it, it almost always turns out people have more power than they realise.
Surfacing power
Simply put, negotiating power comes in the form of sanctions (sticks) and incentives (carrots). In other words, what can I ‘do to you’ or ‘do for you’. We look in two areas when surfacing power:
|
Hard Sources of Power – the Tangibles |
Soft Sources of Power – the Intangibles |
|
Dependency What happens if we reach no-agreement? |
Relationship Does relationship help or hurt us? |
|
Market Is the market moving towards or away? |
Legitimacy Are we more credible than the alternatives? |
|
Knowledge Is our expertise easily replaced? |
Social Are they concerned about social perceptions? |
|
Time Who suffers/benefits from the passage of time? |
Trust Does the level of trust help? |
For example, if we explored DEPENDENCY: it is easy to threaten… but will/can they follow through?
- Do your competitors have capacity?
- Will the market be cheaper or more expensive?
- What will the cost of change be?
- How will your competitor behave knowing that their competition (you) is out of the picture?
- Have they already been to market? What did they find?
- Etc
Or if we explored SOCIAL: have they considered?
- How they might explain poor behaviour and the cost to their reputation? E.g. Would they be comfortable with a newspaper article highlighting bullying tactics?
- How comfortable they might be doing something their peers aren’t? E.g. if their peers are reversing price increases after COVID supply chains normalised, are they comfortable not?
I still have no power!
Even after a thorough exploration of the power landscape you may be feeling you don’t have a lot to work with… however we still have one trick up our sleeves! If you find yourself having to make concessions because you have no choice, those concessions can be a great source of negotiating power.
I was working with someone who got a phone call from his client saying “We want to consolidate our service contracts across the 6 sites and expect a discount to reflect our size”.
The response was simple “I understand you want to renegotiate better pricing, we actually wanted to renegotiate a few of those contracts anyway!”.
One of their sources of power was simply conceding – consolidating these existing contracts and offering better pricing. These concessions were bargaining chips. They were happy to trade these concessions if the client was agreeable to: a longer term, a more efficient servicing schedule, increased investment into the innovation fund, upgrading kit at 2 of the sites, etc. In fact, this renegotiated position was actually a far superior position commercially and operationally to the status quo!
To summarise
It is critically important not to engage in a negotiation without a good source of power and a plan for using it - instead postpone that meeting so you have time to prepare. Our experience is that if you take the time to explore it, you probably have more power than you realise. And, if you still don’t have a lot of power that’s okay… provided you have your own counter demands!
Want to better understand sources of power and how to deploy these? Download our latest eBook 'Understanding Negotiating Power' by clicking here.