Before negotiating, make sure you have a BATNA–a practical alternative to the deal. Alternatives make it possible for a negotiator to say, “If this negotiation fails to produce what I need, I can always do…” Consider this simple example:
You are selling your house and already have an offer from a qualified buyer for $400,000. A second potential buyer has come into the picture, this one offering $375,000. You counter that second offer, asking for $449,000. As you negotiate with this second buyer, you know that you have someone ready to pay you $400,000 for the house.
In effect, alternatives give the negotiator a credible walk-away opportunity. Never accept any deal that is less attractive than your most attractive alternative.
Roger Fisher and William Ury introduced this concept, which they call Best Alternative to a Negotiated Agreement, or BATNA, in their popular book, Getting to Yes. Every negotiator should have a BATNA in his or her hip pocket. To appreciate its value, consider a more complex example, the case of an ambitious young manager, Helen, who is trying to negotiate an expanded role with her Chicago-based employer. She introduced this matter to her boss months ago, and they are now in serious negotiations.
Helen has proposed that the company move her from Chicago to Boston, where she will create a new sales district, with herself as manager. Once there, she will recruit a regional sales force, develop a new customer base for the company, and identify potential sales targets. As part of her proposal, the company will pay for Helen’s move, name her manager of its Northeastern sales district, and provide a salary and incentives commensurate with her larger responsibilities.
Helen knows that tough negotiations lie ahead. Opening a new operation in Boston will involve substantial start-up costs and business risks. But she sees the move as a great opportunity—both for the company and for her career.
Before entering into discussions with her boss and the company’s executive team, Helen does her homework.
She develops a plan for implementing her proposition, with cost and revenue estimates. Just as important, she thinks about alternatives if the company turns her down:
Alternative 1: Helen can keep her current job, which is fine for now but not something she wants to do much longer. “I plan to move up or move out within one year,” she tells herself.
Alternative 2: The manager of the Southwestern sales district is planning to retire; he has told Helen in confidence that he will support her selection as his replacement.
Alternative 3: Helen has had informal discussions with a rival company, which has been trying to recruit her for the past year. It would put her on the fast track to a higher-level job.
Always have an alternative to the deal.
In this scenario, Helen has some up her sleeve. If the company stonewalls her plan, or will only accept a weak version of it, she doesn’t have to accept its offer. She can walk away knowing that she has attractive alternatives. Assuming that the company values her as an up-and-coming employee, Helen might even leak some information about Alternative 3, the overtures she’s received from a rival company. The thought of losing her talents to a competitor might induce the company to give Helen what she wants.
Helen can negotiate from a position of strength and confidence because she has alternatives. She knows when she can walk away from an offer. Compare her savvy use of alternatives to the person who enters a negotiation with no alternatives. That person has no bargaining chips, no leverage, and no basis for confidence. Unless he can bluff his way to a good outcome, he is doomed to accept whatever deal the other side offers.
NEGOTIATING TIP: IMPROVE YOUR BEST ALTERNATIVE BEFORE GETTING INTO SERIOUS NEGOTIATIONS.
Adapted from How to Become a Better Negotiator, Second Edition by Richard A. Luecke and James G. Patterson.