Negotiating Tips, Business Negotiation, Negotiation Tactics April 29, 2011

Negotiation tactic: understanding authority


Authority is important in business negotiations. After all, when you are negotiating a deal, you want to be dealing with someone who is able to see the deal through. If not, the agreement may not be enforced or may even be changed later.


It would be ideal if all parties negotiating have the power and authority to conclude a deal. However, at times, companies may send a junior executive to a negotiation, without empowering him or her to conduct business. If you are faced with this situation, it is not enough to just ask: Have you got the authority to make a deal?


As we recommend for every negotiation, do your homework before approaching the table. To deal with authority issues, Karrass recommends:

  • Knowing the history of the company (or individual) as much as possible
  • Having the confidence to question the level of authority
  • Understanding the other party's organizational structure
  • Finding out prior to negotiation what is involved in an approval process
  • Being prepared to walk out if the authority is not there


A tactic that is often used is authority escalation, meaning that one of the parties tries to pass the approval to a higher level forcing the other party to re-negotiate. It is a test of wills and power levels.


In the end, it boils down to decision-making power. As Dr. Chester L. Karrass writes:

You cannot negotiate effectively unless you think about the decision-making process of the other party.


What do you do when faced with limited authority or with your authority being questioned?

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CASE MANAGER at THE JACKSON LABORATORY

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BUSINESS DEVELOPMENT MANAGER at THE M.K. MORSE COMPANY

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CHIEF ENGINEERING MANAGER at EXXONMOBIL

THIS WAS VERY EFFECTIVE WITH A STRONG FOCUS ON BOTH-WIN NEGOTIATING.

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SENIOR ANALYST at BLUE CROSS/BLUE SHIELD OF MICHIGAN

THE KARRASS CLASS WAS THE SINGLE BEST TRAINING CLASS/SEMINAR I HAVE EVER ATTENDED. EVERY TIME WE DID AN EXERCISE IT TAUGHT YOU WHAT TO DO DIFFERENTLY NEXT TIME. THANKS.

Kim C.
PROCUREMENT at AMERICAN EXPRESS

THIS PROGRAM HAS GREATLY INCREASED MY CONFIDENCE AND ABILITY TO NEGOTIATE FOR MYSELF AS WELL AS MY COMPANY.

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SENIOR STRATEGIC BUYER at HALLMARK

THE NEGOTIATING CLASS WAS VERY INFORMATIVE. THE INSTRUCTOR PROVIDED AN INSPIRATIONAL MESSAGE THAT CAN BE APPLIED TO EVERYDAY LIFE.

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INTERNATIONAL SOURCING at FMC TECHNOLOGIES

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VICE PRESIDENT at GE

PRIOR TO THIS CLASS I FELT AS THOUGH I WAS GETTING EATEN ALIVE BY INTERNAL NEGOTIATIONS WITH SALES REPS. NOW I FEEL PREPARED TO CHALLENGE WHAT THEY ARE SAYING AND BET TO THEIR REAL NEEDS.

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PLANNER at HONEYWELL

MANY PEOPLE FAIL TO ACHIEVE THEIR POTENTIAL BECAUSE THEY DON’T SEE THE OPPORTUNITIES TO NEGOTIATE A WIN/WIN AGREEMENT WITH THEIR COLLEAGUES. THIS CLASS IS AN EYE OPENER TO THIS DYNAMIC..

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CONTRACTS MANAGER at HEWLETT-PACKARD
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