Gaining leverage in negotiations

Leverage in Negotiations

Power and Leverage in Negotiations

In negotiations, it is critical that a trading or bargaining process be determined and initiated in the soonest time agreeable for both parties. However, at this stage, negotiators must be able to establish a leverage from each other that would make one party amenable to the other's demands, and conversely, the latter must also satisfy the demands of the former. But what makes bargaining possible during a negotiation process is the presence of leverage in both parties; without this, negotiations would be more difficult and perhaps, could ultimately result to one party immediately yielding to the other party's demands.

Having leverage means the negotiator has power over the process, if not on the other party. Power is technically defined as 'gaining control or influence,' whether this is over a person or an event. Leverage, meanwhile, is synonymously defined with power, wherein a person gains a specific advantage over another person, and uses this to benefit him/her (Merriam-Webster, 2011). In negotiations, the most important source of bargaining strategy is leverage. Leverage can be sourced from any of the following three (3) major sources of power, as outlined by Lewicki et. al. (2001): (i) information and expertise, (ii) control over resources, and (iii) location in an organizational structure (functional authority) (8).

Information about possible disadvantages of the other party would enable the negotiator position himself/herself better and make this known to the other party; this information, then, becomes his leverage. Similarly, like information, resources that the other party needs could be another point of leverage that the negotiator has (supply) and the other party (demands). Given this dynamic, a trade or bargain happens, with the supplier gaining the upperhand over the party demanding the specific resource. Sometimes, leverage can be gained by virtue of the negotiator's authority in the organization s/he is in. It is not uncommon for parties to negotiate with each other, with individuals of high functional authority acting as negotiators. The authority that the individual wields is by itself already a leverage in negotiations.