Some negotiators have full authority, meaning they have the ability to make all decisions without consulting with any other party. This may seem like a powerful position, but it can actually weaken your position. Counterparties can put pressure on you to agree to their terms, and it's difficult to argue when you've already established that you are the only one making the decision.
Limited authority, on the other hand, can be a valuable tool. It allows negotiators to take extra time and gives them a way to refuse terms without losing rapport. This tactic must be deployed carefully, but there are ways to turn a real or perceived lack of authority in your favor.
Pros and Cons
When properly utilized, lack of authority gives you the opportunity to stall negotiations without making an outright request. The time you spend checking the decision with a higher-up can give you and your counterparty time to consider the agreement and sharpen your counteroffers. You could encourage the counterparty to make a better offer by suggesting that you can agree to one figure yourself, but the less desirable figure would need outside approval. You can also use lack of authority to blame your refusals on a higher power and maintain your positive relationship.
This tactic can backfire. Your counterparty may want to negotiate directly with the higher authority. Portraying your boss as unreasonable may also give them a negative view of your company. If you have a genuine lack of authority, it may be necessary to try and use this to your advantage. Presenting a false lack of authority is riskier but may be useful, especially if your counterparty has limited authority. In any case, use the approach sparingly and with caution.
Take Some Responsibility
You want to limit your authority — not eliminate it. No one wants to negotiate with someone who has no influence on the contract. Find out your counterparty's limits, express your own clearly, and stick to them. Telling your counterparty that you can make a decision and then backing out undermines their trust.
Make sure that anything you take responsibility for is handled to the utmost quality. This is especially important in contract presentation. Make every detail perfect. Everything that you agreed to should be clearly outlined in the contract you present to your counterparty. Combine PDFs into one file to verify that all information is in one place. People who trust that you can handle the authority you have will be more willing to forgive the authority you don't have.
Use Tactics You're Comfortable With
Some view a false claim to limited authority as an unfair tactic. While there may be some cases in which you do have an outside authority to answer to, in others, you will need to decide how you present your level of authority to your counterparty. Claiming limited authority has risks associated, especially if you're uncomfortable. In circumstances where you genuinely don't have the power to make decisions, however, you can always view your limited authority as a source of power.
For more advice on negotiation tactics and insight into your unique business culture, join your local chamber of commerce today.
This Hot Deal is promoted by Shelby County Chamber of Commerce.
