Power mad or powerless?

Published January 2008

Nearly thirty years ago, during the oil crisis, we watched in fascination as oil company delegates attending one of our training events spent their lunchtimes telling clients the cost of their deliveries would rise immediately. What's more, the price increase was considerable and supplies were to be strictly rationed, too.

It was a demonstration of the ruthless application of power to drive their clients into accepting very damaging terms, or risk having no supplies at all.

It remains one of the few occasions when we have met a group of executives who really felt they had all the power in their dealings with clients. The fact that they then used that power so aggressively had repercussions a year later, when supplies eased and clients were once more in a position to shop around.

Most salespeople feel powerless.

In contrast, most sellers believe the power in negotiation lies with the client. As a consequence they often make price concessions to win the business. Recent research by HuthwaiteFleming shows that such concessions may not always be necessary, as only 21% of professional buyers award contracts to the lowest bidders. Clearly price isn't the only issue they are concerned about.

But it's not hard to understand where this feeling of weakness comes from; given the client has the power to make or break the sale. Clients indicating they view a growing list of professional services as commodities have reinforced this perceived lack of power. As a consequence, sellers have responded to fee pressure by agreeing to ever-larger discounts.

In reality, many clients are only too aware that their choices are far more limited if they are to gain the full benefits of their purchases. But most have the sense to realise that it's not in their best interests to make their true position known. They recognise that power is more perception than reality - as we at HuthwaiteFleming would say, "Power is in the head". So if they can project a position of power, whilst at the same time undermining the confidence of their suppliers, they should be in a better position to drive a hard bargain.

Redressing the power balance.

Research shows that professional advisors who believe they are in a weak position usually behave accordingly. So how can we redress the balance of power?

Power comes from several sources:

• Situational power. Is there something in the current situation that provides a source of power?
• Information power. Do we have knowledge that can strengthen our position?
• Hierarchical power. Do we have power through our position in the organisational hierarchy?
• Charisma. Some people carry an aura of power that others respond to.

Clearly, our oil company executives understood and applied the situational power arising from a change in market conditions. While we may not have such a clear-cut position, conducting an analysis of our strengths and weaknesses may just reveal we have more power than we think. Giving consideration to how we project ourselves and how we control information during negotiations can also pay dividends. So, before you go into your next negotiation, give some thought to how you might be able to strengthen your position.

If you would like to know more about planning and using power in negotiations click here to download our white paper, Managing Power in Negotiation. If you do so, you may just redress the power balance in your favour.