4.3 Best Alternative to a Negotiated Agreement

Just about any book, article, or paper that you read about negotiation, at some point, will refer to a BATNA. So what exactly is it? The acronym, BATNA, stands for best alternative to a negotiated agreement. And was coined originally by Roger Fisher and William Ury in their book Getting to Yes. So you developed your framework agreement and know the direction you’re headed. You’re even prepared to make modifications as the negotiation proceeds. Before you go into a negotiation though, you should also determine your BATNA. Many negotiators give little consideration to what will happen or what they will do if the negotiation fails. They might have a list of possibilities in there head but they haven’t thought them through to determine feasibility. The single biggest mistake I see in this respect is having a list of possible alternatives either written down or in your mind. But no specific plan for which of these options or combination of options will be done if no agreement is reached. Looking at a collection of alternatives as a single whole tends to make the alternatives appear to be much better than they are. Imagine that you are a service provider negoti, in a service provider negotiation for a cleaning service agreement for an office. If you don’t get the agreement, what will you do? Are you thinking you’ll go to the other 50 companies in the building? Drop your price. Cut our services in the offer. Come back next year. Higher the competitor’s best worker. Or come back in a few months with a, with references. The reality is that you can’t and probably won’t do all of these things. You can only do one or a couple of them in combination. Which one will it be? There is tremendous power in having a good BATNA. You are less desperate, you reduce the unknowns and fears associated with not finalizing an agreement. And most importantly, you have a realistic scenario against which to compare all incoming offers. You need to have a clearly defined BATNA and compare every proposal against it, asking yourself is this better than the BATNA? If it isn’t, you are either not done negotiating or maybe it’s time to walk away. In determining your BATNA, you must consider all the possible alternatives of the agreement, you hope, of an, of an agreement that you hope to make. A high quality BATNA will go through a thorough explanation of all possible alternatives and outcomes. To do this, begin by creating a list of all possible actions you might take if no agreement is made. This list should be comprehensive and include everything you can think of, even if they seem a little outlandish at first glance. The second step is to determine a few of the most promising ideas and then develop them into practical alternatives that could realistically be implemented. The third stage is to evaluate the ideas developed in step two and select the best alternative. Once you have created your BATNA, you can judge every offer with all of its various options added against your BATNA. You have much more power here because it is much easier to break off a negotiation, or to make changes if you know where you’re going afterward. Consider also what your counterpart’s BATNA might look like. They might even disclose it to you during your information gathering. This would be extremely valuable information. This raises the question, should you share your BATNA with your counterpart? I’m afraid there is no straightforward answer to this question. This depends very much on your counterpart’s behavior, and his approach. If your BATNA is considerably better than what your counterpart is offering, then it might be in your best interest to share it with your counterpart. If however, your BATNA is worse than what they’re offering, then you would be wise not to share it. Remember, perceived power can be just as effective as real power. When the other side is considerably more powerful than you, spend even more time developing a detailed BATNA. Understand the merits of each component of your BATNA and you better be able to evaluate and dialogue about merits of the components of the agreement. Many organizations use a bottom line strategy, which I did talk about in an earlier module. This can also be effective. Employing a bottom line strategy means that those in authority over you or over your counterpart have provided the absolute lowest or highest prices that are acceptable, and perhaps some other terms. This information can certainly keep you where your counterpart from developing any agreements that would be disagreeable or injurious to your organizations. But they tend to deliv, to limit development of high value agreements. The mindset of the companies bottom line agreements is to simply do better than the bottom line. The mindset that a company is a framework agreement and bottom line strategy is one that uses creativity to seek new options and combinations that increase the value of the agreement to both sides. In this lecture, I explained the use of BATNA or best alternative to a negotiated agreement. I believe it is a wise negotiator that always has a clearly defined BATNA before beginning the writing of or the evaluation of a proposal.