Power: How to Use It When You Have It, How to Survive When You Don't

Don’t have time? Here’s the 3 point summary:

1. There are 5 sources of power: positive power, negative power, regulatory power, societal power, and psychological power.
2. If you don’t have the power, engage in thoughtful negotiation and be more creative. Focus on getting the most value from the negotiation, not just the relatively better part of the deal. Keep your eyes on the end goal.
3. If you do have the power, be mindful of how you use the leverage that comes with it so you don’t destroy the relationship.

Power: How to Use It When You Have It, How to Survive When You Don't

Humans are social beings and hence, influenced heavily by social norms. Consciously or subconsciously, all of our interactions include a careful assessment of the social dynamic. Power is one of the key aspects of this dynamic and one that has immense capacity to set precedents. In negotiations and conflicts, power often equals leverage.

Power dynamics can be tricky to maneuver for the simple reason that the sources of power aren’t always obvious; they don’t always manifest themselves in the predictable realms of traditional authority-subordinate relationships, financial imbalances, positional advantage, etc. Instead, these power dynamics can be complex and nuanced and these intangible sources can either elicit compliance or non-compliance in any situation..

Here are the five broad sources of power:

1. Positive power, or one’s ability to improve the circumstances of the other party, can lead to compliance due to the incentive of deriving said benefit.
2. Negative power, contrarily, is one’s ability to worsen the other party’s circumstances and cause them pain or discomfort, but still leads to compliance due to the natural tendency of the other party to self-preserve and protect themselves from the distress.
3. Regulatory power comes from the various rules, structures, standards, and roles that govern the interaction. If these norms or rules are on your side, they can lead to quick compliance because a powerful outside force will apply leverage in your favor.
4. Societal power is persuasive and comes from your ability to meet your needs through other means. It triggers social proof (other people want you, so you must be good) and scarcity (if I don’t make this deal one of my competitors will). Additionally, the need for social acceptance will lead the other party to comply to remain favorable according to societal standards.
5. Psychological power comes from your confidence in your negotiation abilities and your subject matter expertise. Higher self-assurance leads to better performance and makes what you say and do more persuasive for the other party.

 Most negotiations tend to have some sort of a power imbalance that manifests itself in one or more of the aforementioned categories.

 In any negotiation, either you hold the power, or the other party does. Let’s explore both these possibilities.

What do you do when the other party has more power than you?

Does this mean you are automatically set-up to ‘lose’ the negotiation? While it can be intimidating, the answer to that is no. With the right tools and mindset you can begin to shift the power dynamics in your favor.  

The party with power often uses threats to put pressure on the other side to extract concessions. For example, a supplier may say they will stop shipping goods if your company doesn’t agree to a higher price. In these situations, the most important thing for you to do is to test the threats. Sometimes these threats resolve themselves if enough time passes.

One of the most crucial things to analyze in a negotiation is the status quo. This is indicative of where you stand before the negotiation and can help you do a cost-benefit analysis of how much you are willing to risk. Who benefits the most if everything stays the same? If this status quo favors you, stall to see if the threat simply goes away. It’s amazing how often ominous threats seem to disappear with the passage of time. This could happen for a number of reasons. Perhaps the other party makes a tactical error or is short-sighted in their approach. Take advantage of that to flip the narrative.

If stalling doesn’t work, start paying attention to the specificity of the threat. The more precise and detailed it is, especially with regard to time, quantity or capital, the more likely it is to be legitimate. If this is the case, your best option is to negotiate. However, don’t underestimate yourself in the situation and blindly agree to the other party simply because of their apparent power over you. Instead, you must first engage in a pragmatic dissection of the problems and solutions through an in depth analysis before you resume the negotiation. Once you have done that, you can evaluate whether or not you want to call bluff. You don’t want to call the bluff in a way that insinuates that you want to lose the relationship or close to door to the negotiation entirely. What you need to say here is the deal is currently untenable to you and you are unable to adjust at this time. This gives you a way out in case the threat turns out the be legitimate. It is also beneficial to guide the conversation in a way that allows the other party the opportunity to adjust their position while saving face in case the threat is baseless. You can say something along the lines of “If things change on your end, we are interested in continuing the negotiation”. This opens the future potential communication channels and allows them the ability to come back and revise their stance on the matter. Saying ‘no’ does not always have to result in burning bridges or terminating any future conversation. To learn more about how to say ‘no’ in a constructive manner and even strengthen your relationship, tune into our episode that explores this tactic in greater depth: https://americannegotiationinstitute.com/say-no-strengthening-relationship/.

There is a propensity to be driven by pressure or fall prey to fear in a tense negotiations and there may be the instinct to settle to avoid discomfort. Hence, it is important to remain calm so you can find an objective verification of their claims. Do your research and figure out where they’re coming from. At the same time, know your entitlements and rights. The other party can sometimes use empty threats in order to put pressure on you and it is important for you to hold your ground. This will not only ease you and help you view things in simpler terms, but also put you in a better mindset to effectively scrutinize what cards to play.

Know that threats are almost always the means to an end and are used as instruments of persuasion or intimidation. Your goal must be to determine said ‘end’. Sometimes, this can mean simply asking the other party what their final objective is. If you can resolve this through another means, this will not only abate the threat but also put both parties at ease. Always keep the core idea in mind and don’t let the other party use your psychology against you to threaten you to concede.

When you’re negotiating from a position with less power, you also need to be creative. When the other party possesses more power, they have the ability to divide the pie disproportionately and hence, the less power you have, the more creative you need to be. Focus on expanding the pie altogether by gathering as much information about the other party, yourself and the negotiation in general. This will open up your mind to various options that you can then propose. That way, even if the other party takes the bigger portion, you extract greater value from the situation.

It is also beneficial to expand your view of what is valuable. Don’t just consider the money, also consider exposure to business opportunities and new markets, risk mitigation, protection, security, deal structure and length, contingencies, personal growth, and everything in between. The list is endless. Creativity will help you look beyond a dichotomous view of the threat and allow you to broaden your potential value from the situation

It’s important to do this in a systematic way by using a guide like the American Negotiation Institute’s Free Negotiation Guide. This will help you to prepare effectively and it includes a business negotiation guide, salary negotiation guide, and a conflict management guide. Click here to download your copy.

What do you do when you have more power than the other party?

 At the risk of overusing the cliché, with great power comes great responsibility.

 Your goal should be to use this power in a way that puts you and your business in the best position, without damaging the relationship, inciting the desire for revenge, or losing credibility.

 In a past study, experimental participants were put into an fMRI machine and given the opportunity to get revenge against those that had wronged them in the past. Scientists discovered that the very thought of this flooded the pleasure centers of the brain with dopamine. People don’t take revenge because it objectively uplifts them to a better position, they take revenge because it feels good.

 In my experience, I have seen reasonable people act out of character and bully the other side just because they felt that they had been treated unfairly in the past. The bottom line is that people don’t forget. Don’t expose yourself unnecessarily by overplaying your hand in a negotiation.

Be mindful of the difference between strategy and tactics. Power may be one of your tactics in the short term but over or mis-using it can prove detrimental to your overall long-term strategy. Positional power does not always guarantee you the desired outcome in the long run. It is important to look prudentially at the situation, beyond the immediate negotiation at hand and consider the precedent and narrative you are setting not only for your business, but also for yourself. You always need to consider the relationship and you don’t want to wield your power in the way that takes an unnecessary toll on the it.

Don’t forget: power is not permanent. You may possess the power today and may not tomorrow. Make sure that the foundation you build for yourself rests on elements other than your current power position.  

It is important to remain open, be respectful and, most importantly, to listen. Often when we feel we are in a better position, we take conversation and negotiation for granted. This oversight, however, can threaten your ability to use sound negotiation skills. A study showed that people experience a decrease in compassion and empathy when they are primed to feel powerful. They listen, not to understand, but to respond. If you want something from the other party, allow them dignity. This will not only preserve and in fact, bolster, your image but earning respect will also extract better outcomes from the other party.

Power imbalances are an inevitable reality of the business world. The goal should not be to eliminate the imbalance altogether, but to maneuver strategically around it and use it to your best advantage. There isn’t a ‘one size fits all’ solution to managing power dynamics but the strategies mentioned here are highly mouldable to your unique experiences. Use them as a framework within which to to use your judgement. Regardless of whether or not you possess the power, make sure you are putting the concerns of the other party at bay. Listen, understand, and manage emotions.

For greater insight and a highly implementable toolkit, be sure to check out our negotiation and conflict management workshops. These workshops are especially designed to make your difficult conversations easier and equip you with real world skills!

Here are some more resources from the American Negotiation Institute:

• Free Negotiation Guide: Click here for access
• Top Ranked Negotiation Podcast: Negotiate Anything
• Most Viewed TEDx Talk on Conflict of 2017: Finding Confidence in Conflict
• Best Selling Negotiation Book: Nobody Will Play with Me: How to Use Compassionate Curiosity to Find Confidence in Conflict

 Happy negotiating!

Written by Kwame Christian Esq., M.A. and Nandini Malhotra, American Negotiation Institute Intern