If you missed Part One, click here to read.
Higher Authority (HA): the person building the deal is not the person who signs it off. HA is standard negotiating practice for good reason. But as much as it’s a powerful tool, HA can also be a deadly pitfall.
Strategic power:
The HA’s responsibilities in strategic negotiation are relationship, environment and strategy. Their role is to continually move the relationship towards its longer-term goal and use that relationship to define an appropriate environment for each major negotiation. For example in the 2010 dispute between BA and its staff, the fractious relationship between Willie Walsh and the Union leadership, created a competitive environment for negotiations, leading to a stalemate. Within weeks of him being replaced a deal was made, not by the new CEO himself, but by virtue of the open and trusting environment he created.
Strategic pitfall:
The HA agrees the negotiation strategy, but does not build the deal. Never allow an HA to get drawn into the negotiation itself. Once an HA steps in, it’s hard to step out, and the power to govern the relationship evaporates. Going forwards, the HA will no longer be seen as a figure of authority, but as a legitimate target to engage into the negotiation by the dealmakers on the other team.
Avoiding the pitfalls:
If escalation is being used as a tactic, always feed back through the dealmaker. If an HA understands the role but still gets involved the negotiation it’s because they don’t have confidence in the team to do the best deal. If that’s the case, recognise it and address it. Don’t compromise your future by working around it.
USE FOR: Building a relationship that sets the right environment
ENSURE: HA agrees the strategy but never makes the deal