Is That All You Got?

How many times have you walked out of a situation and said ” I did not get ANY of the things that I wanted!” If this has happened, you walked in without knowing your BATNA.

BATNA stands for Best Alternative To a Negotiated Agreement. It’s your backup plan; your plan B. Quite simply, when you walk into a negotiation environment, you need to have your BATNA: (1) researched, (2) mentally available and (3) prepared to offer. BATNA helps you to determine when to walk away from a situation; without losing your shirt (or your pride) in the process. Applying BATNA reminds me of the lyrics from that hit by Kenny Rogers called “The Gambler“. It goes like this:

“You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
Know when to run”

What are you willing to settled for IF the situation is not meeting your requirements?

Consider;

  • If your boss does not agree with your initial request for a pay raise, what amount are you willing to settle for?
  • If the team doesn’t like your initial suggestion, what can you offer in its place?
  • If the husband, wife, partner or teenager doesn’t like the olive branch that you offer, what are you prepared to offer it it’s place? What can you live with?

What will leave you feeling okay with the compromise that needs to be made going forward?

That’s your plan B or BATNA.

As stated in the Harvard reference book below “Always know your BATNA before entering into any negotiation. Otherwise, you don’t know whether a deal makes sense or when to walk away”

So how do you know what your BATNA (or Plan B) is? Do your situational homework and ask yourself the questions below;

  1. If I can’t get what I want (preferred course of action), what am I willing to accept?
  2. Is what I’m willing to accept within ZOPA (Zone Of Possible Agreement)? This is where you need to have some idea as to what is acceptable to the other party. After all, what good is a BATNA if it’s not doable between the parties involved? This means it’s not on the table at all.

Here’s another good reason for knowing your BATNA. It’s the point at which you would say no to a proposal. That’s assuming you want to be fair to yourself (as it relates to the situation of course).

Granted, this conversation FEELS like one geared for sales. In actuality, it is a standard technique for any negotiation scenario (sales, union negotiations, consultative price haggling, family compromises, etc). Knowing what you can live with before you enter the negotiation arena is priceless.

2 reference points are below.

Let me know your thoughts.

Think this article is groovy? Make it AWESOME with a click of the mouse!!.

—————————————————>

BATNA = (Best Alternative To a Negotiated Agreement)

In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. (Wikipedia)

NEGOTIATION

Harvard Business Essentials

ISBN-10: 1591391113



—————————————————

Leave a Comment

10 Comments

Leave a Reply

Profile Photo Charles A. Ray

This is sage advice – and something that too many people completely ignore when they enter into negotiations. If you don’t have a fallback position, saying no, which is also an alternative that has to be considered, often comes off as looking petty.

Reply
Profile Photo Dannielle Blumenthal

Very interesting subject. What I always wonder is, what are the things you need to have in hand before you walk into the room in the first place? Are there not certain things that have to be within your control first? Examples – control of the money, knowledge of the technology, pre-agreement (from the “pre-meeting”)…what else?

Reply
Profile Photo James E. Evans, MISM, CSM

@Dannielle

The “things you need to have in hand before you walk into the room in the first place” would be scenario specific. In order for them to be negotiable, the items would have to be available for negotiation in the first place. This would probably exclude controlled items. Knowing which items are controlled versus uncontrolled would involve doing the necessary homework.

Can you elaborate on your examples (e.g., control of the money, knowledge of the technology, pre-agreement (from the “pre-meeting”?). I’m not sure if I understand your application.

As always, good discussion from you Dannielle. Thanks – James.

Reply
Profile Photo Dannielle Blumenthal

thanks. OK here is a scenario to illustrate:

Employee is going into annual review and wants to negotiate a raise. Why should the boss engage in this conversation? Employee must have some leverage other than “Because I did a good job,” correct? So in general – what kind of leverage do you need to enter into a negotiation in the first place?

Thanks, I really wonder about this kind of thing. It is fascinating actually.

Reply
Profile Photo James E. Evans, MISM, CSM

@Dannielle

Thanks for the scenario. In this case, the employees BATNA would or could be;

  1. To work for another employer/competitor who is willing to pay at the desired rate. In other words, you are saying no to a continued work relationship under the current pay scale.
  2. Ask Why. Determine the reasons why the employer is unwilling to provide a raise. Is it lack of skills? The employee may need to grow their skill set and revisit. Is the company strapped for cash? The employee may need to look at negotiating other compensation chips (e.g., corner office, better parking space, work-from-home). This is called value creation through trades.
  3. Let the pay raise increase go and return to work.

You also ask “what kind of leverage do you need to enter into a negotiation in the first place?” The best one is to learn the employer’s BATNA. Reviewing annual reports or public filings would give a glimpse of their finances. Contacting sources within the industry can tell you of any impending corporate mergers, bankruptcies or issues.These could be reasons for the employer saying no; or yes. It’s just good to know.

Reply
Profile Photo Erica Bakota

Danielle’s comment is valid- in this economy, it may be apparent to the supervisor that the employee will not leave and work for another employer. So if it is clear that one is going to stay, why should the boss engage in this conversation? Even if the employee has done a good job the supervisor may not see a reason to grant this request.

Reply
Profile Photo James E. Evans, MISM, CSM

@Erica.

Your observations, while valid, tend to answer themselves. Erica, you say, “in this economy”. This comment indicates that the “situation specific” aspect of BATNA analysis has been applied. In other words, leaving a job, under the current economy, would not be the best option. But the high-level BATNA analysis still needs to be performed. If leaving the job is not a viable option; others options need to be examied. This would be part of the “situational homework” mentioned in my original post dated September 2, 2011 at 10:00pm.

Reply
Profile Photo James E. Evans, MISM, CSM

@ T. Jay.

Not familiar with the “Nash equilibrium.” After a cursory review, via Wikipedia, the Nash Equilibrium is based on the negotiation state remaining unchanged. Reference states that “If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium” That is not always the case when BATNA is applied. If one party finds value in the opposite parties value proposition, this can change the dynamics of the negotiation. This appears to run counter to the Nash equilibrium. Again, this is after a cursory glance. Thanks. James.

Reply