The Role Of Power In Business Negotiating

Negotiation Background

Low power positions in an office environment is very common during the early days of our career. The power positions generally improve with career growth. However, in case of family relationships that are based on emotional ties, power positions are often fixed, especially in an Asian context, where there is a stronger sense of loyalty and lifelong dependency. Among all my negotiation experiences the one that is most memorable was a negotiation with my family on an investment option. My family owns a small business venture that we jointly run alongside our professional jobs. Administration of family businesses have both upsides and downsides, however in our case, the upsides often outweighed the rare downsides. Last year, my family was looking at making an interesting real-estate investment decision from the profits our business had made. This investment, which was a joint venture in India with another well-known third party, required an initial down payment of approx. 1M SGD.

The expected returns from the project, including the price appreciation on the property, was around 26%. Usually, it is the elders of my family who analyse and evaluate various options before making any decision. Somehow this investment decision seemed too risky to me and I felt that they decided in haste without considering the downsides of the markets. Being risk averse, the collective returns from other safer investments seemed more attractive to me. I initiated a discussion with them to explain other available options and the elders very patiently listened intently to what I had to say. But as the discussion progressed, they thought I was being my usual risk-averse self and countered every point I made by relating it to my lack of experience in the field.

Power dynamics and negotiation outcome: Negotiations are extremely complicated in a cultural context where families often interact in a hierarchical manner and where arguments with elders are considered very offensive. Being the youngest and hence the one with the lowest power position the discussion got sensitive as I stood by what I believed was a better decision. I had to strike a delicate balance between my openness and the statements I was making. I realized that the only way to overcome my low power was to take a data driven approach. I had already done all the groundwork to understand the market trends, factors that affected property appreciation, the cost of the project we were trying to implement, resale value and a sensitivity analysis of recent percentages increases in neighbouring land value. While it was easy to reach out to some of my family members, it took me a long time to bring in all those who were involved for a discussion. I presented all the facts to my family and whenever I was faced with contradictions I made sure that I listened to their side of arguments and also empathised with their feelings. It was very important to manage emotions as I had to ensure that the long-term relationships remain intact, as any harsh move would derail the entire discussion. I toiled for a week to make everyone understand that I was not against the project, but my concern was the riskiness involved in this investment.

Once this was understood, one of my family members proposed an idea of bringing in another party so that the down payment is reduced, and the risk sharing is improved. They also agreed to invest the remaining amount in one of the safer options I had proposed earlier and to redesign the project by catering to the future market trends. This way we could turn around an originally distributive problem to an integrative one while ensuring that relationships remained unimpaired. Reflecting on this negotiation, I realize that the entire experience could have been much smoother had I leveraged on some tactics to increase the power I could portray. Analysis and takeaways Negotiate over interests and not positions Effective negotiators get past stated positions and understand the underlying interests (A. Davis & Malhotra, 2007).

In this case, being in a low power position, it was imperative for me to reiterate the significance of the collective family interests to gather support. Moreover, the non-judgemental attitude of my family made the negotiation frictionless.

Power of Information

There are four horsemen of power in a negotiation and the second horseman is information (Galinsky & Schaerer, 2017). A data driven approach of negotiation enabled me to make persuasive agreements. I understood the reasons that led my family to look at that particular investment, and the sensitivity analysis made it easier for me to describe the downsides of the proposal. Don’t try to beat the other side The most successful negotiations entail the possibility of mutual value creation through cooperation and trying to beat the other side results in losses for both parties (A. Davis & Malhotra, 2007).

As the negotiation progressed, we as a family realized that each one’s underlying motive was the welfare of the family and all of us preferred reaching a mutual outcome without conflicting each other. Handling negative emotions Looking back, I realize that my emotions were heavily influenced by my family’s reaction to my proposal, even pushing me to an aggressive mode. According to (Leary, Pillemer, & Wheeler, 2013) emotions are contagious, and ones’ own outlook strongly influences other people’s moods and behaviour. Considering my low power position, I decided to be more empathetic, thereby containing emotional outbursts. According to Fisher and Shapiro (Fisher & Shapiro, 2005), when strong negative emotions are anticipated in a discussion, it is important to proactively stimulate positive emotions in a negotiation. I made an initial mistake of not attempting to create positive emotions, which led to heated arguments.

Referent Power

The personality of a person forms the basis for this power. The behavioural style and likeability of a person can appeal to common interests (Lewicki, Saunders, & Barry, 2015). I was able to leverage on the likeability and impression my family held of me to influence their decision.