Organisational behaviour

Negotiating techniques: BATNA

BATNA stands for ‘best alternative to a negotiated agreement’. Whenever you negotiate with another party, there is a chance that the negotiation may break down and that you will have to fall back on some alternative course of action

The acronym BATNA refers to the "best alternative to a negotiated agreement." When you negotiate with another party, there's always the risk that the conversation may break down and you'll have to resort to a different strategy. This alternative line of action is your BATNA. Effective negotiation requires a firm understanding of ## What it is and what the opposing party's BATNA is.

When to use it

● To receive a better deal anytime you negotiate anything, such as a raise or the purchase of a home.
● To assist your company with complex discussions, such as acquiring another company or resolving a labor issue.

Origins

People have been bargaining with one another since the dawn of civilisation, and much academic research has been done over the years to determine the characteristics that lead to a successful negotiated solution in a corporate setting. Researchers Roger Fisher and William Ury coined the term BATNA in their 1981 book Getting to Yes: Negotiating Agreement Without Giving In. While the concept of knowing your fall-back position in a negotiation was not new, the BATNA label proven to be a very effective means of focusing attention on the most important aspects of a negotiation. It is now a pretty common term.

What it is

You must know your BATNA in order to negotiate properly. This is your 'walkaway' option, which you will use if the negotiations fail and you cannot reach an agreement with the other side. It is sometimes very clear what the BATNA is; nevertheless, it is not always so. Assume you've invented a new consumer product and are having trouble negotiating a fair price with a major grocery chain. Is selling it through a smaller supermarket chain your best option here? To sell it on the internet? Or to cancel the product launch entirely? There are other additional factors at play, including non-quantifiable factors like your personal reputation.

How to use it

According to Fisher and Ury, calculating your BATNA is a straightforward technique that can be used to every negotiation: ● Make a list of actions you might take if you can't come to an agreement.
● Improve some of the most promising concepts and turn them into viable possibilities.
● Pick the one option that appears to be the best.

It's important to note that a BATNA is not the same as a 'bottom line,' which negotiators sometimes use to avoid making agreements in which they concede too much. A bottom line is designed to serve as a last checkpoint, but it also has the potential to steer you in one direction. In contrast, when you use the concept of a BATNA, you think about the broader options you have to achieve your desired goals rather than the specific goals of a specific negotiation. This gives you more flexibility and allows for significantly more innovation than a predetermined bottom line.

Negotiation dynamics You'll know when to walk away from a negotiation if you know what your BATNA is. It's also crucial to consider the other party's BATNA. If you're trying to negotiate terms for a new job with an employer and you know there are other qualified candidates on the short list, the company's BATNA is to hire the next person on the list.

The problem is that you often don't know what the other party's BATNA is – and it's often in their best interests for them to keep it hidden. The concept of an EATNA – a 'Estimated Alternative To a Negotiated Agreement' – is a handy form of BATNA that applies in the (common) circumstances where one or both parties are unsure what their best alternative looks like. In a judicial battle, for example, both parties are likely to believe they can win; otherwise, they wouldn't be there.

Should you tell the other party about your BATNA? There are advantages to disclosing it if it is powerful because it forces the opposing party to face the reality of the negotiation. If your BATNA is weak, it's usually advisable not to reveal it — you may occasionally 'bluff' your way to a better result than you would otherwise.

Top practical tip

The key to thinking through your BATNA is that it does not force you to take a specific path. People frequently start a negotiation with predefined positions (such as a specific price) reinforced by specific interests (fears, hopes, and expectations), which frequently results in the discussion breaking down and both parties losing out.

As a negotiator, your task is to look beyond the positions that were initially conveyed, uncovering and exploring the interests that led to these positions. This frequently necessitates some ingenuity and openness on both sides in order to extend the parameters on which they believe they are bargaining.

Top pitfalls

While thinking through the intricacies of a negotiation and attempting to predict the other party's BATNA is beneficial, the biggest mistake is not knowing your own BATNA. In a business setting, for example, you may be subjected to internal pressure from colleagues to reach an agreement, which may entail agreeing to terms that are unfavorable. You can prevent being in an embarrassing situation by being clear about your BATNA in before and discussing it to colleagues.

Overconfidence in your knowledge of the other party's BATNA is a related problem. Do you truly know how serious an employee is considering taking a competitive firm's offer if he comes to you asking for a raise? Naturally, you'll have an intuitive understanding of his preferences, which will influence your negotiations, but if you convince yourself that he's not serious about leaving, you risk undervaluing your offer and losing a terrific guy.