Negotiating and deciding are two different functions. A negotiator explores, tests and works within a set of boundaries. A decision-maker sets those boundaries and takes responsibility for the outcome. When both functions sit with the same person, an important lever may be lost: the ability to refer to a higher authority that sets the limits.

In SMEs, it is common for members of the management team to lead important negotiations themselves, simply because of how the business is structured. This cannot always be avoided. In my experience, managers in smaller companies often feel almost obliged to do so: out of habit, from a desire to lead by example in difficult or important projects, or out of respect for the other party. That said, what really matters is that they recognise the risks involved.

I want to look at this from two different perspectives. One is that of Raymond Saner, a Swiss negotiation expert and Professor Emeritus at the University of Basel, whose book The Expert Negotiator takes a practical, process-oriented approach. The other is Thomas Schelling, the Nobel Prize-winning economist, whose work represents the strategic, game-theoretical perspective.

Saner writes about the importance of separating of problem-solving and decision-making. What is common practice in diplomacy, he argues, also works in business. The idea is to divide the work and bring senior management into the process, if at all, only once the groundwork has been laid; in other words, to get the ball over the line. This not only keeps senior management out of the day-to-day detail, but also reduces the risk of reputational damage if the negotiations for whatever reason fail. The prerequisite, however, is that the negotiators have a clear mandate in the form of limited authority within which they can cautiously explore a solution that works for both sides, as Saner puts it.

Now for the other perspective. In his seminal work The Strategy of Conflict, Thomas Schelling describes a paradox: the ability to bind oneself can be a source of bargaining power. If you can credibly show that you cannot give way, you shift the burden of concession to the other side. One way to do this, Schelling argues, is to use negotiators with limited authority.

Saner and Schelling point towards the same organisational principle, but for different reasons. For Saner, a clear mandate protects senior management and separates problem-solving from decision-making. For Schelling, it can be a source of bargaining power. This is the heart of ‘negotiating vs deciding’: when the person negotiating also has the authority to make the final decision, they cannot use a higher authority as a reason to hold their position. From a negotiation perspective, a limited mandate is therefore not a weakness, but an organisational tool, provided it is credible, consistently applied and respected at every level.

But commitment comes at a cost. Restricting your own freedom of action means accepting that negotiations may not end with an agreement. That makes it all the more important to assess the potential consequences of walking away in advance and to know whether you can genuinely live with them.

The greatest threat arguably comes from within your own organisation. When negotiations hit a standstill, an obvious next move is to escalate: ‘Let’s call your boss then.’ If senior management signals flexibility in that conversation, it has undermined the negotiator’s mandate. Not just in this deal, but potentially also in future negotiations with the same counterpart. It also means that the leadership team is now negotiating at the table, the very place the mandate was meant to keep it away from in the first place.

This is why a clearly defined negotiation process matters, particularly when the stakes are high. It is also where negotiation becomes a leadership skill. The task of senior management is not to negotiate better, but first and foremost to define mandates, protect them and stand firm when faced with attempts to escalate.

Does this mean that the boss should never negotiate personally? No. I have seen too many SMEs where such a rigid position simply clashes with the organisational and practical realities of everyday business. But negotiating personally carries risks, and the more important the negotiation, the more aware you need to be of them. Senior management does not have to stay away from the table. It does, however, need to decide deliberately which role to take at which table, and always know whether it is negotiating or deciding.