In a business negotiation, do you want full or limited authority?
Let’s start with a definition. Full authority means that you have the sole responsibility for making decisions while limited authority means you have to consult with others...
“From a strategic standpoint, you are better off with limited or no authority rather than full authority,” writes Dr. Chester L. Karrass in his book, In Business As In Life, You Don’t Get What You Deserve-You Get What You Negotiate. This point seems counter intuitive, because we think that authority equals power, and having more power generally favors your side in a negotiation. But having full authority is NOT the same as having more power.
When you have full authority, you do not have an “out.” The decision to proceed is yours alone, and may place you at a disadvantage. When you have full authority you also tend to pressure yourself to make a quick decision.
Limited authority is a source of strength, according to Dr. Karrass, because you can indicate to the other party that there are external forces that don’t allow you to reach agreement right now. You will be able to get more time if you need it, because you need to consult with others. The following limits affect your authority level:
- Government regulations and/or legal requirements
In sum, if you have the full authority, build in ways to think and do not pressure yourself to reach agreement quickly. If you have limited authority, find the strength in your position so that you are able to gain concessions from the other party.
How do you prefer to negotiate—with full or with limited authority?
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