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Busting the Myths About Lack of Leverage:

Six Tips for Improving Your Position in Negotiations

by Preston Michie

Some people believe you can’t do anything about leverage:  Either you have it or you don’t.  You need the job.  You want that car.  You owe the money.  It may seem like there is little you can do.

This is nonsense.  Even from a position of weakness, you can create leverage in a negotiation, weaken the other side’s leverage, or enhance your own.  Here’s how.

Leverage is the ability to influence the outcome of a negotiation.  In simple terms, the more the other side needs to deal with you on your terms, the more leverage you have.  Leverage is usually a function of the costs to the other side of not dealing with you.

In other words, the other side’s B.A.T.N.A. (Best Alternative To a Negotiated Agreement) is a key to defining your leverage.  You can assess your net leverage by asking a few simple questions:  What’s likely to happen to the other side if there is no deal?  Can they live with that?  What’s likely to happen to me?  Is that OK with me?

Regardless of how you answer these questions, you can usually improve your position through several simple techniques.

First, assess your leverage, which can come in a variety of forms.  Sometimes, people don’t know that they have leverage.  Can you pay cash?  That’s leverage.

The fact that you are customer willing to buy creates leverage.  Simply answering an ad, applying for a job, and visiting a used car lot create leverage.  Woody Allen once said, “Eighty percent of success is showing up.”  The mere fact that you are willing to deal creates leverage.

Second, assess the other side’s leverage.  If you’re not sure about their leverage (or whether they know they have it), ask questions designed to gain strategic information.  One way to do this is to ask open ended questions about the negotiation, such as “What is wrong with this idea?  Why?  Why not?  What if we ...?  What is your reaction to ...?

Third, be prepared.  Preparing for a negotiation improves leverage, increases the odds of a better outcome, and distinguishes mediocre negotiators from skilled.  This includes doing your homework on price, terms, and conditions for similar deals as best you can.  Information is power, aka leverage.

Fourth, know your walking point.  If you’re prepared to walk, no matter how unreasonable that may seem to the other side (who may test your willingness to walk if your B.A.T.N.A. is not good), you gain leverage.  At worst, they have to start over with someone else.

Fifth, if you have leverage, no matter how slight, make it clear to the other side that you know you have it.  Unless you and the other side know you have leverage, you really don’t.  Conversely, there is no money in telling the other side that they have leverage.  Never, ever tell the other side how much you need this deal.  You may be telling them that they have leverage they didn’t know they had.

I’ve seen people give away advantage in negotiations by discussing their worries.  Worry tells the other side about issues for which you are likely to be risk averse.  These are likely to be addressed, but you may pay a high price to solve your problems if you make too much about them.

Sixth, when unexpected “stuff” happens during the negotiation, act like you planned it.  A famous commercial for deodorant nicely illustrates the point, “Don’t let ‘em see you sweat.” 

Negotiations never go quite the way you planned.  You should expect that.  It’s naïve to think otherwise.  Don’t let your feathers get ruffled by unexpected, negative events.  When stuff happens, you must be flexible enough to modify your strategy accordingly. 

When you overreact to a surprise, particularly a disastrous development, you transfer leverage to the other side in the form of information.

When you just “grin and bear it, even when you think you’ve just lost everything, the other side may not realize their advantage.  They may take pity on you and not go for the jugular out of respect.  Most likely, if they are at all experienced in negotiations, they’ve been there.

I’ve seen some very skilled negotiators act like things just got better, instead of worse.  It’s powerful stuff, even if the bravado is faked.

Courses that improve negotiation skills:

© 2006 Preston Michie.  All other marks are the property of their respective owners. All rights reserved.