In this module, we will be looking

at a variety of factors that might have an impact on how your

negotiation proceeds. I will talk about balance of power,
trust and authority. I will also address the issues
of value and fairness as well as what each might mean to the progression
and the outcome of the negotiation. The final segment of this module addresses
how emotions play a role in a negotiation. The objectives for this module, are to
clarify the factors that might influence a negotiation, and how to prepare for
and use them to our advantage. To understand the meaning of value and
options in a negotiation. To understand the role of fairness and
from whose perspective to evaluate it and how to define success in a negotiation.
The first important factor to consider
when planning a negotiation is power. In this lecture I will talk about what
power is, the types and rules of it. As well as the factors and
circumstances which influence it. We will also talk about the role that
level of authority plays in a negotiation, along with trust and empowerment.
Consider for a moment what comes to mind
when you think about the word power. Do you think of strength,
influence, authority, or dominance? Certainly the word can be used in various
contexts to mean all of those things. And the term power often
has negative connotations. The term power with respect
to negotiations should have neither a negative nor
a positive connotation. Power refers to the ability
to influence a negotiation or the people involved in that negotiation. The more
power you have,
the more influence you have on the timing, the scope, and
the style of negotiation that takes place. Power is easily misinterpreted and
often underutilized in negotiations. Be aware of and
encouraged by the fact that there is often more power on your side than
you see on the surface. And that you can take steps to
increase your power, and reduce or minimize your counterpart's power. Even if the
balance of power at the outset
appears to be in your counterpart's favor, you can change this balance of power. To
favor your organization by being
proactive and taking control. An important piece of being proactive
about power is being knowledgeable about your counterparts' position in
terms of their current situation. Their market conditions. Competitors vying for
the same contract. And their BATNA. You need to know not just
about the company and organization but also about the person
with whom you are going to be negotiating. Information increases power. For
example,
if you know you're major competitor has recently raised their prices or suffered
a loss of a manufacturing facility. Or you know your counterparts organization
is about to launch a major product in a new market in 30 days. Then you have
information that
can be used to your advantage. And engineering a high value agreement. That's
power. Another critical piece of knowledge which
relates to power is your counterparts accountability structure. Most everyone whose
negotiating, is accountable to someone else
higher up in the organization. That organization has most likely provided
the negotiator with some guidelines. Some bottom lines and some timelines. The more
information you can gain about
these guidelines, the more power you have. The good news is that in reality you
probably have more power than you think. It has a lot to do with self confidence
which is enhanced through
effective preparation. In order to prepare be sure you do your
research before the first conversation. Use planned, targeted questions to
gain potentially useful information. And consider where you stand with
respect to the power balance. Stark and
Flaherty describe ten types of power. Position, knowledge, character,
rewards, punishment, gender, powerlessness, charisma,
lack of interest, and craziness. These are all sources of power. They all have
potential weak points or characteristics that could be used to
shift the balance of power in your favor. This is where information and
preparation come in. If you have information about a real or perceived power held
by your counterpart,
you can much more effectively overturn it. Know also that perceived power is
just as effective as real power, if well implemented. If your counterpart believes
that you hold a certain power, it doesn't matter if you really do or
do not. It's quite real to your counterpart,
unless you tell him or her otherwise. Your counterpart may well be trying to
project more power than he truly holds. But if you see the use of a power
which you know from your research and questioning that your
counterpart does not have, you will not succumb to a bad
option in the agreement. This brings us to the rules of power. There truly aren't
any real
rules to the negotiation. But there are some of what I'll
call truths regarding power. I've spoken already about the fact
that you probably have more power than you think. You will perceive and your
reasearch will tell you about
the power held by your counterpart. It is very easy, however,
to overlook your own sources of power, so be sure to consider both. The reality is
that in most negotiations
the power is close to evenly distributed when you consider all of
the sources of power from both sides. This is important in that the more
balanced the sources of power, the more likely it is that you can operate
your negotiations with a principled or a win,win style. When the balance of power
is close to
being even, you are both more likely to be searching for additional point of
value to add to the agreement. When the balance of power favors one
counterpart more then the other, there's a tendency to work on simply
distributing the existing power and acknowledging that and acknowledge
value with one partner exerting his or her power over the other partner to
gain as much of this value as possible. Gauge refers to this
as value distribution. Another truth which I've mentioned
before is that power can be real or perceived, and that perceived power
can be just as affective as real if the counter part believes in it. Related to
this is the fact
that power must be tested to truly evaluate just
how much of it you have. I've stated before that power must be used
to be useful, but it is also true that power only exists where it is acknowledged
and accepted by the other party. In other words, if the other party does
not recognize that you hold that power, it doesn't really exist for
the purposes of the negotiation. Conversely, if you don't
have a certain power, but your counterpart perceives that you do,
then you are able to use it. A truth which is both good and
bad news to negotiators is that power relationships can change in
a negotiation and can do so quite rapidly. This often occurs, when new information,
new points of value, new participants, new conditions or limitations,
become a part of the negotiation. The level of trust between negotiators, is an
important factor, in the approach
to, and progression of, a negotiation. So why is trust necessary in negotiation?
Many of us have interacted with
individuals who operate in a cycle of mistrust, viewing most counterparts as
adversaries, and worthy of suspicion. Certainly this is one stance that
can be taken in the negotiation, but it is not likely to lead to the most
productive agreements in the long run. Generally, a negotiation between parties
who do not trust each other takes the path of a win,lose approach with no new value
or options added to the conversations. A better strategy is to take the time in
the beginning stages of the negotiation to take steps to build trust
with your counterpart. This is because a trusting relationship
allows for a meaningful and robust exploration of options
that will benefit both parties. You as a negotiator will need to assess
the level of trust between you and your counter part. And proceed accordingly. Take
care not to place too much
trust in an untrustworthy individual as a result of your desire to
develop a better relationship. On the surface being empowered with the authority to
make offers and
decisions on a wide range of variables and price points might seem to be a great
benefit to your side of the negotiation. Certainly such empowerment allows
the negotiator a wide range of options during the negotiations. But such
empowerment also means
greater exposure and risk. Be sure at the outset to determine
what level of authority and empowerment your
counterpart has been given. You want to find out what constraints
he or she is working under. And how they compare to yours. It may seem that a
higher level person
with greater authority to approve price or component changes would be in
a better position to negotiate. But this generally is not the case. This is because
the person with
the greater scope to negotiate also carries a greater risk. A high level of
empowerment can lead to
quick and less well considered agreement, in which the full range
variables is not evaluated. This is where limits provided
by those in authority over you can be in your favor as a negotiator. As you are
much less likely to fall victim
to unfavorable offers by the counterpart, or settle too quickly or easily.
Similarly, if you have a high
level of authority and are empowered to make decisions
regarding concessions or price changes, it might be in your best interest to allow
an individual with less authority but armed with a set of guidelines
to negotiate for you. Quite often,
higher level individuals give in or walk away more quickly in
order to complete the process. A lower level individual with a set of
limits and expectations might be in a better position to explore a wide
variety of options for the agreement. If your counterpart holds considerably
more authority than you do, he or she may not be willing to discuss points of value
with someone at your level of authority. And choose to either
dominate the conversation or demand an individual with a higher level
of authority with whom to negotiate. Negotiating between teams of individuals
from each organization is another approach to managing this authority issue. When
different members of
a negotiating team are empowered with different components of the agreement and
each member focuses on his or her area, of the empowerment. The opportunity to take
advantage
of a single individual or agree to conditions or
value points too quickly is eliminated. Team negotiations tend to
provide greater protection. For the organization and enables the
development of some high value agreements by utilizing the expertise and
constraints
within the team to greatest advantage.