What Level of Authority Should You Have?

Most negotiators ignore the fact that having limits on their authority can make their jobs easier – it's a source of negotiating power.

A negotiator with limits becomes harder to deal with. They can say "no" gracefully – someone else is saying it. That someone else can be a procedure, a policy, a budget, an engineering standard, or maybe a regulation that can't be changed.

Often one person's limits can become the other person's problem. If you and I are negotiating and I have limits to my authority, it is up to you to figure out a way around them. You are forced into a choice: either accept the deal at my limits or make a lot of work for yourself, and maybe get no deal at all.

If you challenge my lack of authority by taking the problem to a higher authority, other apprehensions set in. Now you must take on my boss, or their boss, or the legal department, or the engineering staff – all of whom represent new relationships and a greater degree of preparation on your part. Also, if you do go to higher levels, there is always a chance the party you are negotiating with will get angry.

There is greater strength in not having authority than in having it. A person going into a negotiation needs to ask, "What limits do I want imposed on my authority?" Well chosen limits can make a big difference in the outcome of your negotiation.

Negotiating: Breaking An Impasse

You did everything right, yet you find yourself at an impasse with the other party.

What do you do now??

Too many negotiations break down for the wrong reasons. Impasses are not always caused by world-shattering issues or great matters of economics. Many breakdowns are the result of simple things like personality differences, fear of loss-of-face, troubles within the organizations, a poor working relationship with the boss, or the sheer inability to make a decision.

Any consideration of how to break an impasse must take into account the human factor. It may not be what you do, but how you do it that becomes the critical factor. Here's several moves that may be useful in averting or breaking an impasse:

1. If the impasse involves money – offer to change the shape of the money. A larger deposit, a shorter pay period, or a different payment stream works wonders – even when the total amount of money involved is the same.

2. Change a team member or the team leader.

3. Eliminate some of the uncertainty. This can be done by postponing some difficult parts of the agreement for renegotiation at a later time when you have more information.

4. Change the scope of risk sharing. A willingness to share unknown losses or gains may restore a lagging discussion.

5. Change the time scale of performance. Maybe it’s OK to complete 60% over 4 months rather than 3 months. It might be easier to start slower and still complete the job within the desired timeframe.

6. Assure satisfaction by recommending grievance procedures or guarantees.

7. Move from a competitive mode to a cooperative problem-solving mode. Get engineers involved with engineers, operations people with operations people, and bosses with bosses.

8. Change the type of contract: fixed price, indexed or scaled price, time and materials, percentage of savings, percentage of increased sales, and percentage of profit created.

9. Change the base for calculating percentages: a smaller percentage of a larger base or a larger percentage of a smaller but more predictable base may get things back on track.

10. Create a list of options or alternatives that need to be discussed. Or change the order of discussion.

11. Suggest changes in the specifications or terms.

Impasse breakers work because they re-engage the other party in discussions with his or her organization and team members. These icebreakers help create a climate in which new alternatives can be developed. Surprisingly, sometimes the introduction of new alternatives has the effect of making old propositions look better than ever.

Try to pre-plan a face-saving way to reopen discussions should an impasse occurs. If you set the stage before the impasse sets in, you are in a better position to handle the problem.

Negotiating: Agreements - Understandings - Procedures

A procedure is a way of doing something.

An understanding is an expression of mutual viewpoint and attitude on an issue.

An agreement is a conclusive commitment to mutually acceptable terms.

You're probably wondering what difference all this makes. After all, isn't a deal a deal?

When you're negotiating it is not enough merely to reach an agreement. Even when two parties have the best intentions, agreements break down for a variety of reasons. Breakdowns occur because those responsible for implementing the agreement often do not understand the common viewpoints, attitudes, and backgrounds that brought about the agreement. Sometimes the breakdown occurs because neither party knows how to make the agreement work or how to prove that it is or is not working.

A good agreement should not only spell out the work and dollars involved, but also the understand behind the written words and a procedure for measuring cost in the event that additions or deletions of work occur. A poor contract would leave us bickering about whether the quality level achieved met our verbal understanding and whether costs were being accumulated fairly.

The next time you are in a negotiation, better say to yourself, "It is not enough just to reach agreement on terms. Are there any understandings and procedures that ought to be laid out in detail right now, while they are fresh in our minds?"