Business Negotiation October 21, 2013

Structural Limits That Give You Leverage

Another powerful limit to authority is what I call structural limits. Company policies, procedures, specifications, union restrictions and even job descriptions can prove useful to a person who wants to say “no.”

When I worked at Hughes, a very large corporation, it was understandable that the other side might retreat when I said, “Our policy at Hughes prohibits us from doing that.” They could see that I didn’t make policy for such a big company.

What amazes me now that I have my own business is how often people accept the statement, “Sorry, I can’t do that. Company policy won’t permit it.” They tend to honor the limit, even though I personally have a large role in making policy and have a good deal of authority to change it on the spot.

The ten structural limits to your authority which follow provide a face-saving way to defend against the other party’s demands. Arm yourself or your negotiators with these subtle tools of power and they will deliver better agreements:

1. Company standard terms and conditions.
2. Procedures for approving changes.
3. Rules against revealing cost and other information.
4. Liability to third parties.
5. Methods of handling payments and billing.
6. Quality control standards and testing procedures.
7. Types of contracts permissible.
8. Insurance coverage requirements.
9. Limits on changing specifications.
10. Special committee limits such as purchasing, standards, material review, sales, pricing, source selection, negotiation review. If the committee says we have to do something a certain way, that’s what I tell the other party.

The interesting thing about these structural limits is that, though they are self-imposed, they tend to hypnotize the other side into accepting your preferred viewpoint.