Understand Your Counterpart’s Incentives

By — on / Business Negotiations

Adapted from “View Your Counterpart as an Agent,” first published in the Negotiation newsletter.

Looking for yet another way to build your power at the negotiating table? Examine the incentives of your counterpart—and then consider whether they align with those of the group she represents.
In most business negotiations, notes Harvard professor Guhan Subramanian, your counterpart is acting as her organization’s rep¬resentative, or agent (just as you’re acting as your organization’s agent). Her interests are thus unlikely to be perfectly aligned with those of her organization. A sales representative may be rewarded based solely on the sales volume she generates, yet her organization likely has other concerns, such as the quality of her decisions and her ability to manage relationships.
You can enhance your power by probing such agency issues. Subra¬manian recommends that you ask yourself questions such as these before you negotiate:

  • How is the negotiator across the table compensated?
  • How long has she worked for her organization?
  • What are her long-term career goals?

By differentiating your counterpart’s interests from those of her orga¬nization, you could find opportunities to enhance your power. If you learn that your counterpart is desperate to close a deal and move on to the next one, for instance, she may be willing to take a lower price than she has claimed.

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.

Related Article: When Incentives Strike Out

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