1.

Avoid accepting the first offer

2. Don’t be the first to share a number
3. Keep your emotions in check
4. Remember to negotiate additional perks
.5. Find balance between what you’re worth and what the
employer can offer
Internal factors that impact on
negotiations
 Bargaining power
- Power is the ability of one person to control the resources
and benefits of another
Internal factors that impact on
negotiation
 Amount of bargaining power held by a party
determines ability to win concessions or shifts in
position from their bargaining partner, as well as the
extent of resisting pressure
Bargaining Power
 It is metaphysical in nature (based on abstract
reasoning)
 If you are able to persuade your bargaining partner
that you have it, even if you do not, it is of value to you.
Similarly, if you have bargaining power, but you are
unable to convince your opponent of its nature and
extent, then it is of little use to you.
Bargaining Power
 Large part of manoeuvring and exchanges in running
up the opening stages are about demonstration and
establishment of bargaining power
 Power dynamics can change during negotiations
 leaving a party stranded high and dry.(???)
How to gain Bargaining Power
 Legitimacy
 Rational persuasion
 Inspirational appeals
 Consultation
 Exchange
 Personal appeals
 Ingratiation
 Pressure
 Coalitions
Bargaining power
 Employers as providers of work opportunities and
wages wield power by threatening to withhold work,
and by controlling and manipulating financial
resources, thereby limiting the amount available from
which to pay the workforce.
Bargaining Power
 Employees can exert pressure by threatening
collectively to withhold their labour, affecting
production processes and profitability of company.
 Negotiators to be well aware of their potential and
their ability to influence the opposition
Different kinds of power
 Legitimate power
- Directly linked to position held in the company
- Power is a function of status of individual
- Ability to influence others is derived from
status/position
Different kinds of negotiating
power
- Legitimate power may be respected or not by the
opposition
- Including someone with legitimate power might be
taken as a way to intimidate other party.
Referent power
 Attributed to strength of character
 Also the degree to which one is admired
 Such power gives one ability to positively influence
people through strength of personality
Expert Power
 Derived from one’s knowledge of specific discipline
(expertise)
e.g. Financial Director, Marketing, IT etc.
 Skills and knowledge place them in position to make
critical decisions regarding the organisation-they have
information power
Coercive Power
 An individual’s ability to threaten, cajole or coerce
someone into conforming is evidence of coercive
power
 Experienced negotiators avoid coercion power , it can
hasten breakdown in negotiations and lead to
industrial action
 The best way to apply it is to put in questions form,
‘’Have you considered the impact of your wage
proposal on job security?’’
Reward Power
 Stems from individual’s ability to provide rewards for
desired outcomes
 Rewards include monetary and non-monetary
 Negotiators to avoid indicating approval of particular
points made by the opposition
 They concede vital ground by nodding, or verbally
agreeing
Reward Power
 Also they should repeat the mantra “Do not take my
silence as approval.’’
 Negotiators switch between these powers depending
on tone and context of proceedings
External factors that impact on
negotiations
- Economic climate
- Socio-political conditions, and
- Technology
- Attitude about risk
- Government business relation
- Corporate structure: American companies tend to have a
lead negotiator who speaks for the entire group. Many
Asian cultures, including the Japanese and Chinese, favor
consensus and teamwork when reaching a decision.
Economic climate
 The following have an impact on negotiations:
- Inflation
- Economic growth rates
- Comparative levels of wage settlements
- Macro-economic policies
Time and timing
 The choice of time for holding discussions should be
fixed according to mutual convenience.
 The time should be adequate for the smooth exchange
of ideas through different stages of negotiation
 Exchanging initial views
 Exploring possible compromise
 Searching for common ground
Time and timing
 Securing agreement
 The time to prepare for negotiation and the time for
implementing the agreement should also be carefully
fixed for action before and after the meeting.
 To be effective, negotiations should be timely. This
means that the negotiation should be done before it is
too late so as to secure an agreement.
Five key questions to consider in
term of timing
 Is it the right time to make a deal?
You might also want to consider the economic cycle. If
the economy is strong, it may not be the right time to
sign a long-term agreement with a management
consulting company, as it is likely to have many clients
and be less inclined to make a special offer
Five keys questions to consider in
term of timing
 What happens as time goes by?
When considering long-term business relationships and
economic business cycles, a quick rule of thumb is
this: if your power is expected to diminish over time
(e.g., the market is moving from a seller’s to a buyer’s
market) make a longer-term agreement; if your power
is expected to increase, make a shorter-term
agreement
Five keys questions to consider in
term of timing
 What is the right sequence of topics?
By exploring various options, you can plan the best
sequence for the meeting’s agenda
Five keys questions to consider in
term of timing
 What is the right timing for offers, counteroffers and
concessions?
when is the right moment to propose closing the deal? If we
do it too early in the process, it may look like a concession
(e.g., saying “let’s split the difference”) that the other party
may refuse while also learning that we are prepared to
make a big concession. However, if we wait too long to
make a proposal, we run the risk of appearing uninterested
in a deal or trying to back the other party into a corner
(especially as a deadline approaches), provoking the other
party’s anger and unwillingness to accept other solutions
Five keys questions to consider in
term of timing
 When is the right time to request a time-out?
A time-out or caucus can be a very effective tactic for
shifting the momentum, while helping you rethink
your approach and rebuild your confidence
Quick questions and answers
 What is the perfect balance in term of percentage, between
talking and listening
 What is the best balance between questions about your
partners and comments about yourself?
 What is the best thing to do if your partner doesn’t seem
interested in a topic you have raised in small talk?
 Which is better: to keep talking as long as possible about
one topic or to change the topic frequently?
 Should you try to stay be enthusiastic if your partners
doesn’t not seem interested in a small talk
Discussion case study
 What can realistically be done in situations where you
are negotiating from a less powerful position(also
termed as asymmetric negotiation?
 Suggested answer: Good BATNA and resources (
access and mobilization), collecting information,
strategy development
More on Power tactics
Soft power
 Soft Power Defined
 Soft power is denoted by the efforts to shape
someone’s perspective through the use of positive
persuasion. Magnification occurs by shaping the
preferences of others through appeal and attraction.
Its usage is employed in an attempt to mold the other
negotiator’s perspective by cajoling him. Soft power is
distinguished from hard power by the lack of coercion
used to accomplish goals
To offset usage of soft power:
 Be mindful of implementing your negotiation plan
 Observe how your plan is being impacted by this
strategy
 As long as your plans are on track, continue to be
gracious
 If the plan is attacked, be prepared to ‘go hard’
 Use threat of ‘going hard’ to suggest possible impasse
Hard power
 Hard power is denoted by a user’s attempts to
persuade by using coercion in an effort to influence
the other negotiator. Coercion can be in the form of
intimidation, bullying, bribes, threats, or other
perceived negative actions to influence someone
 To combat this type of power:
 Have a succinct plan for the negotiation
 Adopt fearless demeanor
 Play tough guy (i.e. bad cop) role
 Make concessions judiciously, deliberately, and slowly
 Bonus – Use hidden higher authorities for leverage