Leverage (negotiation)

In negotiation, leverage is the power that one side of a negotiation has to influence the other side to move closer to their negotiating position. A party's leverage is based on its ability to award benefits or impose costs on the other side. Leverage has been described as "negotiation's prime mover," indicating its important role in bargaining and negotiation situations. Individuals with strong leverage can sometimes overcome weak negotiating skills, whereas those with poor leverage have a reduced likelihood of being successful even if they have strong negotiating skills.

In order for a negotiating side's leverage to work in their favor, the threats or promises they put forth must be perceived as credible by the opposing group. This does not mean that the threats and promises have to be based in facts, but the opposing group must believe that a specific threat or promise can be carried out and that it would make them better or worse off compared to the other side.

Leverage can be measured qualitatively in terms of how much one side has to lose from not coming to an agreement. Generally, the side or group that is most in need of an agreement has the least amount of leverage. The side or group that is willing to walk away (when this is a possibility) has the most amount of leverage.

A key aspect of leverage is that it is dynamic. This means that it can change as more information is gathered or the situation evolves. A hostage situation is a prime example of how leverage can be dynamic. Early on in a hostage situation, control is held by the hostage takers; they have the greatest leverage: the lives of their hostages. However, as the situation evolves, effective hostage negotiators can gain leverage, take control, and eventually free the hostages.

There are three types of leverage: positive leverage, negative leverage, and normative leverage.

Positive leverage is a negotiator's ability to provide things that his or her opponent wants. Positive leverage is based in the ability of one party to satisfy the needs of another party. The power from positive leverage comes from the opportunity to provide or withhold the needed item or action. The strength of this type of leverage is determined by the other alternatives available to the opposition (often referred to as the "BATNA" or the best alternative to a negotiated agreement). If there are others who can also fulfill the opposition's needs, then the leverage is weakened since the opposition can go elsewhere to receive what they need.

In politics, an example of positive leverage is logrolling, or vote trading. Legislators will promise to vote the way that another legislator wants on one issue in order to gain their opponent's vote on another issue.

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