“I couldn’t believe it,” he told me. “While I was an outside consultant, this company followed all my recommendations. Then I went full-time with them and my success rate plummeted to 50 percent. What happened?”
“Excellent question,” I responded. “The answer? Status Power.”
In short, a person’s status affects the negotiation dynamic and that individual’s ability to achieve negotiation goals.
But what do we mean by “status,” and how does it affect negotiations?
“Webster’s” defines status as a “position or rank in relation to others.”
Status power here refers to the relatively automatic influence or credibility that attaches to an individual or entity from others’ knowledge or perception of their position or rank.
When status power exists, the holder has an increased ability to influence the negotiation along with a certain level of credibility or, at least, the appearance of credibility.
Status power exists, for example, in several areas: title status, position status, and expert status.
Why? Because many use another’s perceived status as a sort of shorthand in determining how much influence and credibility to afford the holder. Let’s examine each type of status power in turn.
I used to be impressed when I found myself across from a corporate vice president. A corporate VP, I figured, was usually the No 2 person.
No longer. Why not? Because some companies have thousands of vice presidents. The reason? Title status. Corporations know most people consider company vice presidents, by definition, to be high ranking, influential, and authority-wielding individuals.
If we have a lesser title, or one perceived to be lesser, we’ll likely feel a bit intimidated. At the least, we’ll perceive that our counter-part, the vice president, will have a high level of knowledge, credibility and influence.
So what can you do? One, if you have a good title, use it. Otherwise, get one if you can. Titles by themselves generally don’t cost too much, and higher ranking-sounding titles can positively impact your negotiations.
Of course, don’t overdo it.
Many know which companies hand out vice president titles liberally. Its effect in these situations is diminished. Plus, you’ll lose credibility if your title oversells and bears little relationship to your responsibilities.
Two, reality test the other side’s titles. Find out your counter-part’s job responsibilities and how they fit in their corporate structure. Then you’ll know how to assess their legitimate influence in the negotiation.
An individual’s position also can provide negotiation power, influence and credibility. The most powerful person in the world is President George W. Bush. Not due to his title or individual qualities, although they’re part of it.
He has negotiation power because of his institutional position and what he can do with it.
Position status also partially explains the different success rate my friend, quoted above, experienced. As an outside consultant, his position power derived from his perceived independence and ability to control his own destiny, his reliance on multiple clients, and his clients’ perception that he held at least an equivalent position to theirs.
When my friend became an employee, he lost a portion of his independence and ability to control his own destiny, became formally dependent on his employer for his livelihood, and became corporately subservient to his former equal. He lost negotiation power.
Finally, experts’ status power derives from their perceived knowledge about the negotiation issues. If your counter-part considers you a trustworthy expert, your opinion will be valued and your persuasive power substantial. Consider the use of a medical specialist in a lawsuit to enhance the credibility of one side’s position in settlement negotiations.
In your negotiations, you should make sure everyone knows your team’s expertise, accomplishments and special qualifications as you start the negotiation – not at the end.
So next time you negotiate with a VP, find out how many other VPs exist in that organization. You never know, you may hold a higher rank. Especially if you’re the CEO and President of . . . your own one person shop.
Published January 26, 2001 The Business Journal