You might think that you’re entering a negotiation as the more powerful party, but those with considerable power often fail to take advantage of their privileged bargaining position. Meanwhile, negotiators who lack power routinely miss out on opportunities to gain leverage. To make the most of the power you have, it’s important to understand the effects of power in negotiation.
3 Sources of Negotiating Power
Power tends to come from the following three types of bargaining power in negotiations, according to Columbia Business School professor Adam D. Galinsky and NYU professor Joe C. Magee:
- A strong BATNA. Your best alternative to a negotiated agreement, or BATNA, is often your best source of bargaining power. When you develop a strong alternative to closing the current negotiation, you have the power you need to walk away from an agreement that doesn’t meet enough of your interests. For example, a job candidate will be less likely to accept a position with a lower salary than she’d like if she has other attractive options.
- Role power. We can also gain power from our role, title, or position, such as a high rank in an organization. A subordinate may need to defer to the wishes of his boss in a negotiation over an upcoming project, for example.
- Psychological power. Independent of their objective power, negotiators can come to the table armed with a sense of psychological power—the mere feeling that they are powerful. Just thinking about a time when you had power can actually improve your confidence and your outcomes, Galinsky and Magee have found.
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Make the Most of Your Power
Here are three guidelines for managing the effects of power in negotiation:
- Don’t squander your negotiating power. Powerful negotiators tend to rely on mental shortcuts that oversimplify their decision making, according to Notre Dame University professor Ann E. Tenbrunsel. By contrast, weaker negotiators are more likely to conduct deliberate, complex information processing. Consequently, those who have the upper hand may sacrifice their power and get worse deals—without even realizing it. Exacerbating these effects of power on negotiation, low-power negotiators tend to be more deceptive when communicating with high-power negotiators than vice versa, Tenbrunsel and Kellogg School of Management professor emeritus David Messick found in their research. In sum, powerful parties should prepare more, not less, for their negotiations. Thoroughly analyze your power, researching your various alternatives and assessing your role power in particular. You might find out that you have more power than you assume.
- Overcome the psychological impact of low power. A lack of objective negotiation power can harm people’s sense of psychological power, with detrimental effects on their outcomes, researchers Sonia Kang of the University of Toronto, Galinsky, Laura J. Kray of the University of California at Berkeley, and Aiwa Shirako of Google have found. In their experiments, they found that when participants were told they were being judged on their negotiating ability, low-power negotiators choked, while high-power negotiators thrived. But when low-power negotiators who were given five minutes before they negotiated to write self-affirming descriptions of their most important value in negotiation, they behaved more assertively and performed better in the simulation that followed. Thus, low-power negotiators may be able to improve their sense of power in high-stakes negotiation by thinking about their strengths or looking for ways to take the pressure off.
- Take practical steps to boost your power. Even as you work on enhancing your psychological power, there are steps you can take to improve your use of power in negotiations. If your organization regularly bids for business and has difficulty competing on price, call the customer and describe why you offer better all-around value than your competitor, recommend Deepak Malhotra and Max H. Bazerman in their book Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond (Random House, 2007). Try to set up a meeting to discuss how you can meet concerns of theirs other than price, such as reliability and quality. If the organization is focused on price negotiation, try submitting two or three bids (that you value equally) simultaneously, such as one that’s low on price and service and another that’s higher on both, recommend Malhotra and Bazerman. Stay in touch with prospective customers between auctions, encouraging them to share their needs with you. Because organizations that rely on price auctions often get burned by shoddy products and services, you could gain power by waiting for your competitors to fall short.
What other effects of power in negotiation have you observed?