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1 posts from June 2013

June 15, 2013

What is a BATNA and why do I need one?

The more easily you can walk away, the better you are able to influence the outcome of a negotiation.

At a recent workshop I presented on the subject of Business Negotiation, one of the participants planned to test her negotiation skills in a performance/ salary meeting with her boss the following week.  One important aspect of her preparation for that negotiation was to think about the alternatives for both her and her boss.

It was a good reminder that BATNA  (Best Alternative To a Negotiated Agreement) is  very important.,  especially when the other side is more powerful, such as in the typical boss-employee situation.

Best

Alternative

To a

Negotiated

Agreement

 

As part of your preparation for a negotiation you always need to consider alternatives.  What can you achieve if you do not negotiate?  This is the standard against which you decide whether to start or continue negotiation.  If your alternatives are better without this negotiation, then there is no point in negotiating.  Similarly you need to think about the other side’s alternatives and at what point they are unlikely to be willing to negotiate. 

As a reminder to consider the full range of alternatives and not just stick with the optimistic outcomes,  there are other acronyms such as WATNA (Worst Alternative to a Negotiated Agreement) and PATNA (Probable Alternative to a Negotiated Agreement) .  

Don’t worry about whether the alternatives are the maximum best or worst.  What is important in your preparation is to consider the range of alternatives for you and for the other side, as objectively as you possibly can.  

How is that different from having a “bottom line”?  A bottom line, because it is rigid, offers protection against a lower number and at the same time it may restrict your effectiveness in the negotiation.  That rigid bottom line may limit your ability to develop creative solutions that you did not anticipate in advance.  There is also the possibility that your bottom line may be unrealistically optimistic.  I often find when I am mediating that a bottom line can limit a negotiator’s willingness to listen to the other side, which certainly makes a negotiator ineffective. 

Understanding your alternatives, best, worst, and probable, allows you to measure the attractiveness of what you are discussing in the negotiation compared with what you could get if you do not negotiate.

Back to the salary discussion.  Of course, most employees would like more.  That workshop participant could just meet with her boss and tell him she wants a higher salary   or even take a broader approach and ask for better compensation,  not limited to salary. The boss also has the same opportunity to consider alternatives.  Is this the kind of job for which there are many qualified people available or is this a job where the necessary skills and experience are difficult to find?  The boss may be able to offer career-development opportunities   such as leading a project or working in an area of special interest to the employee. 

 Imagine the difference if that workshop participant researches other jobs for which she is qualified and knows what the competition is paying, or even gets a job offer at a higher amount of compensation.  Then there is a different  power dynamic  if she were to say to her boss, “I’d like to continue to work at this company.  At the same time I’ve got a job offer from a competitor at this higher amount and I need to consider the importance of that for my family.”     

Or maybe she would just chose to accept the new job offer and not negotiate with her current boss.  It is a paradox of negotiation that the more easily you can walk away, the better you are able to influence the outcome of a negotiation.

Mediator Education Program