SUPPOSE you are engaged in a difficult negotiation. Your counterpart is driving a hard bargain, and you are beginning to feel that you are going to have to settle for less than you would like. What can you do?
The answer depends on your Best Alternative To A Negotiated Agreement (Batna).
Negotiation is a consensual process, based on mutual agreement. You do not have to accept any offer unless you choose to. You can always say no. But if you do say no, you must find another way to satisfy your interest.
In everyday parlance, we use the terms "option" and "alternative" interchangeably. In the negotiation context, however, it is important to distinguish between options and alternatives.
An option is a possible solution to a negotiation. During a negotiation, there is often a range of options available to satisfy your interests. But if you and your negotiating counterpart cannot agree on one, you may have to look elsewhere for an alternative to satisfy your interests.
For example, suppose you are negotiating for a salary increase with your current boss. You and your boss have a number of options available: he can offer you a large increase, no increase, or an increase of any figure in between. He can offer you various combinations of benefits in lieu of an increase. Any of these options can lead to an agreement.
If you and your boss cannot reach an agreement, you still have a choice: you can resign. You can find a position with another company, change careers, resume your studies, retire early or start your own business.
You may not like any of these choices, but one is your Batna. Your Batna is critical for a number of reasons:
It gives you confidence. Your Batna is like a safety net - if you can get a better outcome in the negotiation, take it; if not, walk away from the table and go with your Batna. It guarantees that you will not be worse off by negotiating.
It is a benchmark. Most of the time, your Batna is not very different from an option on the negotiating table. For example, it may be an offer for a position with another company at $3,500 per month and you are negotiating with your boss for a similar position at a comparable salary. Knowing your Batna gives you an idea of what a realistic option should be.
It must be realistic. Your Batna is something you could and would really do if the negotiation fails. Bluffing - claiming to have a Batna that does not exist - can be risky. If you tell your boss that the other company has offered you $1,000 more, he just might say: "A thousand dollars more? You should take it!" Make sure your Batna is for real.
It can be improved. Most people assume their Batna is fixed. For example, suppose your Batna is an offer for a position at $3,500 per month. All things being equal, you would not accept an offer for less than that salary. If your company offers you $3,600, you take it; if it offers you less, you go with the other company.
But what if the other company increases its offer to $3,800, plus insurance coverage and a transportation allowance? Or you get an offer from a third company at $3,900? Now you can confidently ask your current company for more, knowing you can beat their previous offer of $3,600. Once you determine your Batna, see if you can improve on it.
Note that your counterpart also has a Batna. You may be able to estimate what it is by anticipating his alternatives. Be aware that he may have some idea what your Batna is as well. Perhaps he knows what his rivals pay their employees.
While Batnas can be improved, they can also be made to appear less attractive.
The idea is to improve your Batna and suggest that your counterpart's is weaker than he thinks it is.
Of course, you need to be subtle and tactful about this. You also need to understand that your counterpart may use this tactic on you. However, if your Batna is strong enough and realistic, you can resist this.
Understanding your Batna is an indispensable part of planning for your negotiation. A strong Batna ensures that you will not settle for less than you can get elsewhere, and gives you confidence that you can reach a more favourable agreement during a negotiation.