BATNA (Best Alternative To a Negotiated Agreement) is a term developed by Roger Fisher and William Ury of the Harvard Negotiation Project. In the absence of a deal, it is the preferred course of action you should take. It’s a hefty concept that can make your negotiations more successful, especially when the other side is more powerful and/or has a stronger bargaining position.
You negotiate to obtain something from another party that is more valuable than what you get by not negotiating. Knowing your BATNA allows you to understand how much it will cost you if you fail to come to an agreement.
For example, if you’re a car salesperson who is close to reaching your end-of-month quota (and that trip to Hawaii incentive) your cost of not agreeing to a deal proposed by a savvy customer will be high. Your BATNA will not be favorable, so you might be more willing to continue negotiations.
There are three keys to determining a valid BATNA:
- It must be an option that you can execute unilaterally (without any action or interaction with the other negotiating party). A BATNA is not a BATNA if it requires the participation of the opposite.
- It must be a real option. It must be something you can and would want to do (have the time, resources, and will to execute).
- Finally, it must be perceived as credible by the opposite. You may believe you will execute your BATNA, but unless the opposite also believes your BATNA’s credibility, it is useless.
Types of BATNA
1. Walk-Away BATNA
For Example, if the supplier or client I am dealing with is not willing to cooperate or negotiate fairly, I may have to get another supplier or find another client. Or, in more dire circumstances I might find another job.
2. Interactive BATNA
Interactive BATNA’s include economic, political, and social non-cooperation. An example of economic cooperation would be the boycotting of advertisers to influence the change of television programs. An example of political non-cooperation would be a filibuster or voting in a new Congress. Employees who chose to run a process or machine at specification when they know they can achieve higher quality or better performance is an example of social non-cooperation.
3. Third-Party BATNA
A third party BATNA is using a neutral third party or higher authority to resolve a situation. For example, and employee might go to their one-over-one manager, or to a human resource representative, if their immediate supervisor is unwilling to resolve a problem fairly. Mediation and arbitration are both examples of a third party BATNA. Litigation is also a third party BATNA as well.
How BATNA can be utilised as a source of power in Negotiation?
1. Identify your BATNA – and then improve it
We know that a strong BATNA drives stronger negotiated outcomes, so improving your BATNA can help improve your negotiated agreements. Create a long list of possible alternatives, and identify two or three especially promising ones. Then, work to improve them. In Jill’s car negotiation from above, she could call local used car dealerships for comparable offers or to learn more about their financing and trade-in options. Concrete information is powerful when evaluating your BATNA, and the extra energy spent researching – and even negotiating beforehand – will pay off at the negotiation table.
2. Step away to evaluate
As you know, it can be difficult to compare your BATNA to a negotiated agreement as the terms become more varied and complex. Because of this, it’s important to give yourself space to compare any offer on the table to the value of your BATNA. Think beyond just the numbers. Which deal best meets all of your interests? Evaluating more subjective interests alongside cost and money gives you a better understanding of the full value of a negotiated outcome, but those comparisons are not always easily assessed. For instance, a plaintiff needs to evaluate how much she values the certainty and closure of a $30,000 negotiated settlement if her BATNA involves taking the case to court and possibly winning three times as much.
3. Use your BATNA as a shield and sword
If the other side talks extensively about better offers, you can present your BATNA as well to show that you are also comfortable walking away from the negotiation. However, you can reassert that despite your strong BATNA, you are at the negotiation table because you think the two of you can do better together. Likewise, you can present your BATNA if the other side is downplaying your ability to get a better deal. Telling the other side about a real offer, rather than threatening to walk and find something better, allows you to present your BATNA objectively (and powerfully) as a possibility.
4. Using timing to manage a weaker BATNA
Sometimes, even with diligent research and legwork, your BATNA is not very strong. While this weakens one source of power for you in the negotiation, you can try to buy yourself more time. Request a break to think about the agreement on the table, and see if you can improve upon your BATNA or explore other alternatives in the meantime.