The Power of Understanding

Increasing Negotiation and Leadership Performance through the Power of Understanding

Laws of Power 7: Invest in Social Capital

By Karen S. Walch, Ph.D.

Possession of a strong reputation is an essential cornerstone and law of classic power. The classicists point out that an investment in one’s social capital pays off when you are able to intimidate and win at all costs in a negotiation. War analogies are often used in the classic negotiation tradition to emphasize the essentials about how to instill fear and expect submission from others. World War II German Gen. Erwin Rommel, for example, is often cited as one who invested wisely in his reputation.  His cunning and deceptive maneuvering demoralized anyone who opposed him long before he even arrived on the scene – thus, his reputation preceded him. This week’s law will address the requirements and qualities of a negotiation reputation for the 21st century.

Similar to traditional notions of reputation building, a successful 21st century negotiator knows that one’s reputation is a treasure to be developed, practiced and protected. Classic power laws declare that anyone can be the master of their own fate if there is an investment in one’s reputation first.  It is necessary, as ever, to protect this rich resource because “robbers and thieves will appear from all sides” to undermine and attempt to destroy your reputation.

It is critical that negotiators never take their social wealth for granted and that it must be renewed continually.

Twenty-first century negotiators now have access to astonishing research findings and practices that can critically enhance the quality of one’s reputation and social capital. Although historical Machiavellian negotiators spoke of a social reputation, they did not have the tools to measure and evaluate this resource.

Social neuroscientists and economists now can reliably validate how social capital is created and measured through human interaction.  We are all familiar with ways to measure physical capital, which is tangible and can be observed, such as financial rate of return, NPV, currencies, etc.  However, we may all not be aware of the significant progress in the last 10 years that enhances reliable measurement of social capital.

Although social and human capital is less tangible, it is now understood to be embodied in the skills and knowledge of individuals and within groups. Social economists now recognize that concrete personal relationships and networks of relationships establish expectations which create and enforce norms of social and economic behavior.  Those individuals and interactions that can generate trust are most valued in this context.

A social reputation of trustworthiness and collaboration, for example, has considerable value in most contemporary professional or personal negotiations.  This is in sharp contrast to the classic notion of intimidation as the valued reputation.

When the problems negotiators face are interconnected and require mutual coordination for a realistic solution, those who can guide and engage with others generate a positive social reputation for themselves. Many studies conclude that this measurable social capital accounts for qualitatively different outcomes versus those who may destroy relationships as a means to get agreement.

Those individuals and groups that can aid others to move toward a mutual win outcome possess significant valued social capital for the 21st century.

A negotiator who wants to increase positive social capital is conscious of each interaction as an investment.  A qualitative investment of time in relationship management contributes to an internal coherence for negotiation partnerships or groups.  When agreements and relationships meet not only the present needs of the parties, but also enhance a sustainable future of the contract and relationships, the stock value of one’s reputation increases significantly.

Constructive social relationships impact the improvement of negotiation outcomes and result in less costly future dispute resolution.  Behaviors to share, coordinate activities and make collective decisions are required skills in order to build positive social capital.

In a mutual gains negotiation, it is not the reputation of fear that generates social resonance and cooperation, but it is attention to trust enhancing behaviors. Social resonance or positive energy and rapport within negotiation teams increase the potential for critical information sharing in a negotiation.

Many times it is the informal information that is required before an effective solution or action can be undertaken.  Because attention and time are often limited resources for us in the contemporary situation, positive social relationships are often maintained as the most effective way to gain access to vital information.

Law 7 Exercise

This week’s exercise will expand on the steps toward understanding emotional and social intelligence. Empathy, for example, is a key element of emotional intelligence that can be developed and possessed by individual negotiators.  However, this week the focus is on what happens as a result of the social interactions as opposed to what is understood within an individual person. Rapport arises, for example, only between people and is a property that only emerges as a result of the social interaction. Rapport and trust are generated and valued in the context of the web of relationships and connections between the individual negotiators.

In the contemporary interdependent economy, the complexities of the global and social market require an increased ability to gather tacit knowledge and understanding about diverse cultural practices of negotiation. A negotiator with social intelligence skills and a reputation of positive social capital will experience higher levels of satisfaction and achievement.  The following are some basic relationship management skills that have been practiced by many negotiators I have interviewed.

1. Identify how you communicate and help to develop others. Act as a mentor, give constructive feedback, provide support and recognize the strengths of other negotiators.  Record your description of how you do this for others.

2. Explore the impact of your influence. Develop behind the scenes support, anticipate the impact of your words or actions, and consciously engage the participation of other negotiators.

3. Define your conflict management skills. Orchestrate win-win solutions, address conflict, maintain objectivity, and facilitate disagreements.

4. Develop teamwork and collaboration strengths. Enjoy working with others toward a shared goal, build bonds, encourage others, solicit input and cooperate in collective goals.

Extra Credit

For more resources read, Social Capital:  A Multifaceted Perspective (World Bank Publicatitions, 2001) and Social Intelligence: The New Science of Human Relationships (Bantam, 2007).

48 Laws for 21st Century Global Negotiators: Join Thunderbird Professor Karen S. Walch, Ph.D., as she explores the laws of power for 21st century global negotiators. Each Monday she discusses one law and provides an exercise to identify and enhance individual negotiation power. Go to the main menu for the series.