Negotiators don’t necessarily derive their power from the relative size of their organisations. In fact, many negotiators fall into the trap of being scared by a seemingly “bigger” opponent on the other side and end up striking deals that belie their significance to the other side. As I have written before, these deals can be commercially ruinous.
In fact, they derive their power from the incentives and sanctions that they have at their disposal. The problem that negotiators face when deploying their power, exerting their leverage as I once heard it described, is that some incentives seem relatively indivisible. They have one enormous “chunk” of a concession and then it’s over to threats and counter-threats – never a place where nice people like to be!
This can be where creativity comes to the negotiator’s aid. A great negotiator is able to create flexibility for themselves in a negotiation by having a list of both “wish list” items and a good strong list of meaningful concessions. These can be used to improve the deal on offer (for both sides, by the way) or enable the other side to accept a difficult deal by offering a late “face-saving” concession. Remember that the other party often has to be able to “sell the deal” into their organisation.
Another way of ensuring that you walk into a negotiation with a spring in your step is to have an alternative. One of the most difficult negotiations you will ever have is the one with the sole supplier; or the only buyer; or the technical guru who knows your system inside out and who has just attended a Scotwork course! IBM procurement used to have (they may still do, for all I know) a policy that they would always dual-source – even if the alternative supplier was more expensive or less technologically adept than their main supplier. The company never wanted to be totally reliant on just one source.
I was struck by a recent newspaper article in which I read that the well-known Edinburgh-based investment management company, Baillie Gifford, will soon be opening an office in Dublin – subject to approval from the Central Bank of Ireland. It is thought unlikely (note the signal – “not impossible”) that the majority of 1000-plus HO staff currently based in the company’s head office will relocate to Dublin but, on the other hand, the company wants to protect its EU-based clients’ business post-BREXIT.
Though many companies have already followed suit, there is one that rigorously poo-poos the idea that such a move is necessary. Somerset Capital Management does have an office in Singapore as well as London, but resolutely refuses to do anything other than start a new Dublin-based fund. There will be no office opened in Dublin, or anywhere else in the European Union I dare to suggest.
Wondering why? Well, the name of one of their three founding partners may give a clue.
Jacob Rees-Mogg.
