The issue of power in negotiations is a large one, and there is a great deal of literature about it. Not all writers on the topic define what they mean by “power”, but some do. Magee, Galinsky & Gruenfeld (2007, 201) state “We define power as the capacity to control one’s own
and others’ resources and outcomes…” Anderson and Thompson (2004, 125) view power a little differently: “Along with many theorists, we define power as the capacity to influence others…” I think that the first definition is preferable and that the second is subsumed in it because we desire to influence others in order to obtain the outcomes to which Magee, Galinsky & Gruenfeld allude.
Wolfe and McGinn (2005, 5) suggest that power is a function of relative dependency: “According to social exchange theory, a party who is less dependent on her counterpart than her counterpart is on her for an acceptable outcome has more power in the negotiation. Power between the parties becomes more balanced as the parties become more equally dependent on each other for some outcome.” This dependency is a function of what a party needs from what the other party can supply, and this is related to the first party’s options or lack of them.
Tracey (1994, 134) develops this perspective. “Roughly equal power encourages negotiation toward compromise or collaboration. Large power differentials stemming from subordination, or differences in size or level, encourage domination and appeasement. Ability to withdraw or avoid interaction, to form a coalition, or to appeal to a mediator or arbitrator may provide means for circumventing the power differential and enabling agreement on terms of interaction that are more mutually fulfilling.” This is enlarged upon at page 10 of this paper.
Not everyone reports that power differentials are important issues in negotiations. The usual focus in the literature I have seen seems to be on skills, but people do not always agree on which skills are the important ones. Greene and Burleson (2003, 801-833) have a chapter by Michael Roloff, Linda Putnam, and Lefki Anastasiou in which is written: “Others might suggest that bargainers learn skills that are appropriate to the contexts that he or she encounters. For example, in his survey of professional negotiators, Karras (1970) found variation across professions with regard to essential skills. Engineering program managers were highly individualistic, saw little value in personal rapport, and ranked the most important negotiation skills as setting clear objectives, exploiting power, and taking risks. Design engineers valued product knowledge and self-control but saw little value in insight, establishing personal rapport, or taking risks. Supplier salespeople, in contrast, valued persistence, product knowledge, and intelligence but saw little value in problem-solving skills. Conversely, attorneys and accountants felt that problem solving was the most important skill.” (Roloff, Putnam, & Anastasiou, 2003, p. 827). Earlier, the authors do allude to the issue of power, but in the context of the skill to manage its effects: “Skill in negotiation also entails effectively managing the intangible aspects of conflict management, such as adapting to psychological motivations, saving face, and balancing power difference. Thus, effectiveness in negotiation is linked to career success, often derived from adapting to, analyzing, and addressing complex problems.” (Roloff, Putnam, & Anastasiou, 2003, p. 801-802).
Some authors view power as a tool to be coveted. Here is an excerpt from a book review: “This book is tough. It's all about tough. It is not for the faint hearted, or perhaps it is. By reading this book, a weak negotiator can become a better, tougher negotiator. Yet, by advocating toughness in negotiations and making many situation-specific suggestions for tougher negotiating, the authors prepare the negotiator to perform the task in a smoother, though not friendlier, way. The authors set the tone at the beginning: Negotiating is a competition; and if you are not there to win, you have no business being involved. Negotiating is not about giving your opponent what he needs or wants. It is about getting what you want. That includes getting it for the least amount of giving.
“However, later in the book, the authors suggest various ways of giving to your opponent. However, their purpose in giving is not to satisfy the opponent, but that we give to get. We set up our opponent to feel good by using specific presentation techniques aimed at relaxing them, getting them to let down their guard. Then, they suggest, we strike quickly, strongly (though not hurtfully), and precisely, both at the correct moment and at the exact spot previously identified as the opponent's weak spot.” ("Effective Communication Techniques," 2010).
Power, or want of it, can be the result of perception. Here is an excerpt from instructions by Crilly and Sherman (2010, 733), a little long so as to give it some context, but note sub-paragraph (b) at the end of it:
“B) Knowing the Strategy. Before advancing into serious negotiations with a potential licensee, the licensor must have a well-defined strategy in place and must ensure the following things:
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“a) It is utmost crucial to find the right licensee. A thorough examination of potential licensees must be done before even entering into serious negotiations. The following questions are likely to provide a preliminary report on the licensee:
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“b) Do not get over-impressed and intimidated by a larger licensor's resources and lawyers and as a result, end up being in a way weaker bargaining power and end up licensing technology at far below the current or eventual market value of the technology. Be honest about the value of the intellectual capital you possess.”
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They are telling us that a negotiator can cede power by believing he doesn’t have it.
There should be little doubt that absence of power is a negotiating disadvantage. On the union-management stage it is viewed by Swearengen (2011, 529) in this way: “The view of the ability to strike as part of this socio-economic right is premised on the understanding that there is an imbalance in bargaining power between employer and worker such that in the absence of a strike right, "collective bargaining would amount to collective begging."” She elaborates on this (page 513): “By depriving workers of the ability to strike, however, the Taylor Law disrupts the very balance of bargaining power it purports to establish. It allows employers to be recalcitrant in their bargaining without fear of repercussion, and deprives workers of their most potent bargaining tool. Strike deterrence is achieved, but to the detriment of workers and the bargaining process itself. This Note proposes two ways to reform the Taylor Law and restore a balance of power to negotiations, while maintaining the public order. First, the ban on public sector strikes should be limited to only those workers who perform "essential services" as defined by the International Labour Organization ("ILO"). Second, the Taylor Law's requirement that parties bargain in good faith should be enforced so that it is truly meaningful.” (Swearengen, 2011). She goes on to say (page 522) “Thus the Taylor Law's impact on the parties' strike costs creates a situation in which the union's bargaining power is so weakened that it must concede to the employer.”
There are other areas of business where an imbalance of power is maintained by a party simply for the benefit of being able to excel in a distributive negotiation and being able to enforce the sometimes coerced agreement. “The waltz between the client and the bank that Codes of Finance documents is both an old story in the long history of banking and a new one created because of the porosity of lending and borrowing institutions—lenders want to make sure they will retrieve the money invested in uncertain business ventures. Businesses seeking capital from banks or venture capitalists have to allow these lenders access to their companies—if not always literally, as there is normally not much of the physical premises themselves to assess, at least the business plans are usually reviewed thoroughly and the conduct of the business itself is often under close scrutiny. The distinction between this long-standing characteristic of relational banking and what Codes of Finance is purporting is that in our case clients invite themselves to the bank, as opposed to bankers reining in company managers. This intrusion seizes the occasion of products' design but far from simply reversing the relation of trespassing, and proving that relational banking is about wielding power by holding the purse strings, the new presence of clients among financial salespeople, engineers, traders, and back-office managers transforms the long established relations between these centers of operation.” (LÉpinay, 2011, p. xiii).
The same fundamentals occur in the goods supply chain. Aspers (2010, 142-143) writes about the impact of an imbalance of power on negotiations between suppliers and buyers. It appears power goes with financial and marketing clout more than it does with the party’s position and function in the supply chain. “If one analyzes the situation between a larger manufacturer and a larger retailer, it is clearly the latter (the buyer) who is the strongest (cf. Giuliani, Pietrobelli, & Rabellotti, 2005). One should also remember that most of the product-value is added in the final stage, where retailers face consumers. This is fundamental to understanding how retailers have power in negotiations with vendors, and thus determine not only the conditions of business, but also the business culture. The power that larger buyers have over manufacturers is partly due to economic resources, but it is also due to their structural position (Burt, 1992). Buyers can, for example, force manufacturers to keep production running even on holidays to meet deadlines.
“The contracts between buyers and manufacturers set the terms of interaction. The buyers, then, make sure that the products are delivered and shipped on the right day, and that the manufacturer ships the right quantity at the quality demanded, produced according to the specifications, and under the ethical and environmental conditions that the contracts specify.
“This does not contradict the fact that not all deals are made with a signed contract, another aspect of the culture of this industry. A manufacturer informed me that in the long-term relations they have with buyers, everything is “open.” Moreover, some buyers know that the producers need a margin in order to stay in business. This means that they accept a markup of 10–15 percent. The power relations between the two sides are thus reflected in the culture, or more specifically, in “the way of doing business.””
Sometimes negotiating from a planned position of strength can result in huge personal costs, particularly when combined with a situation and with personalities that are prone to it. In Davies and Spencer (2010, 129-154), Ghassan Hage (p. 137), in his essay Hating Israel in the Field On Ethnography and Political Emotions, shares his perception of a perennial sore spot: “It did not mean that those subjected to power were totally dominated. It meant more that those in power aspired to such total domination.
“…. This is why it has always been the “power and domination aspect” of the Palestinian-Israeli conflict, far more than some historical sense of injustice concerning the colonization of Palestinian land that activates my anger. While I am sympathetic to the “they've stolen the land” discourse, I am nonetheless far more affected by the overwhelming power and capacity for domination that Israel vividly and daily displays when relating to the Palestinians, and that continuously aims at negating the possibility of even an inkling of Palestinian sovereignty. Good Palestinians are simply those who accept being powerless, and they can achieve “peace” by simply accepting Israel's proposals: again, no room for negotiations here. I am equally affected, if not more so, by the narcissistic and self-indulgent sentiments of “hurt”—“we are the victims,” “they don't recognise our right to exist”—that accompany this formidable display of power …”
Nevertheless, the marketplace of ideas and options tends to eventually deal firmly with too big of an imbalance in power. As Lewicki, Barry and Saunders (2010, 510) tell us, “no power imbalance exists forever…” Perhaps Waage (2011, first paragraph) is correct when saying that “An analysis of the negotiations between Israel and Egypt at Rhodes sheds light on and widens our understanding of the approach and power relations which marked the 1949 negotiations. The armistice negotiations represent the first example of a process and an agreement based largely on Israeli premises. Such an agreement could not provide the basis for peace in the Middle East.”
Ultimately power of suasion comes from the attitude of the ones upon whom that power is being applied. It is difficult to control someone’s beliefs and approvals, and harsh dealings with people without their approval tends to have a mortality. “This basic duality of the state was not new with the Ptolemies, although their new fiscal institutions and new administrative language certainly had profound effects. As O'Leary rightly points out, the power relations between the ruler and the rest of society did not amount to a zero sum game. It is the negotiations between ruler and society, and the equilibrium established between the extractive power of the ruler and the benefits gained by the ruled that ultimately determine a state's success and longevity; as well as the amount of support that the regime enjoys. Such equilibrium may be observed, for example, in the Tokugawa shogunate (whose rule was almost identical in length to the Ptolemies' at 268 years [1600– 1868]), which effectively balanced central and local power by means of its own unique political solutions (Bendix 1978:431–90).” (Manning, 2010, p. 67).
Clearly, one does not want to be the low-power party, particularly in a distributive negotiation. There are times when a high-power party will find it to their advantage to facilitate benefits to a low-power party in an integrative negotiation. On these occasions, the synergy may increase the overall pie. There are ways of dealing with power imbalances.
Power imbalances exist, and Lewicky, Barry and Saunders (2010, 217-218) summarize the advice of others in listing instructions on how a negotiator with a relatively weak bargaining position can respond to the power deficiency: “1. Never do an all-or-nothing deal. Relying on a single party…leaves the low-power party highly vulnerable…2. Make the other party smaller…dealing with a variety of different individuals and departments in the high-power party…3. Make yourself bigger….attempt to build coalitions…4. Build momentum through doing deals in sequence. Early deals can be done to build a relationship…and maximize the visibility of those deals to other parties. 5. Use the power of competition to leverage power…If you have something to offer, make sure you offer it to more than one high-power party….6. Constrain yourself…limiting the ways you…do business or who you do business with…7. Good information is always a source of power…8. Ask lots of questions to get more information…9. Do what you can to manage the process.”
References
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Aspers, P. (2010). Orderly fashion: A sociology of markets. Princeton, NJ: Princeton University Press. Retrieved from http://www.questia.com
Bendix, R. (1978). Kings or people: Power and the mandate to rule. Berkeley: University of California Press.
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Retrieved from http://www.people.hbs.edu/kmcginn/PDFs/Publishedarticles/2005-Perceived%20Relative%20Power-Wolfe%20and%20McGinn.pdf
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