This post is the fourth in an eight part series focusing on negotiation preparation.
What is BATNA you ask? Your BATNA is the Best Alternative To No Agreement. In other words, it is your back-up plan if you are unable to reach an acceptable agreement in a negotiation situation.
BATNA is the driving force behind any successful negotiator. If you have other options, you will not feel pressured to make a deal that is past your resistance point, or the point you should walk away. Not knowing your BATNA can significantly weaken your negotiation position. Identifying your BATNA, on the other hand, can strengthen your position. You can use it as leverage when working with the other party to get them to up the ante.
The first step toward using your BATNA as a negotiation tool is identifying it in the planning stage. Ask yourself the following questions so that you can identify your BATNA in the next negotiation you are anticipating:
Have you researched your other options?—Sometimes we spend so much time focusing on the negotiation at hand that we forget to adequately research the alternatives available. What can then happen is that we mistakenly overvalue our BATNA and may walk away from a situation that we later find was better than another option. The flip side of this is that you don’t even consider the alternatives and therefore think that the current negotiation the only option. This not only weakens your negotiation position, but you may later realize your mistake and “buyers remorse.”
What is the value of the relationship?—In some cases, coming to an agreement with one party, that is less than ideal, can be valuable in other ways that are not quantifiable. You may be building the bridge of trust so that future deals are possible. An example of this may be a salesperson who wants an “in” at a company to become a supplier. He might initially concede to a smaller commission on the first order in hopes that the company will became a repeat customer and the discount will be worth the money initially lost.
How much time and energy have you spent putting this deal together?—Opportunity cost is often a consideration that many overlook. If it is your time that you spend researching, preparing, etc. it didn’t really cost you anything, right? Not exactly, you need to consider how much your time is worth. If you make $30/hour at your job, make that the hourly rate you apply to the time spent. If you spent 10 hour preparing for a deal, it has already cost you $300!
Spending time working on a deal can cost you other invaluable resources as well that you cannot easily monetize, like spending time with the family. For example, you plan to spend $10,000-$10,300 on a car. You find the car you want, at the cheapest place in town, for $10,300. Based on your past car negotiating experience, you anticipate that talking down the sales staff to $10,000 will take you about six hours. Instead of spending the majority of your Saturday haggling for three hundred bucks, you opt for the slightly more expensive car and precious family time.
Now you know the steps to identify your BATNA in the planning process. The next step in the negotiation planning process we’ll cover in this series deals with Goal Setting. To follow the next steps in this series, sign up to automatically receive new posts using your RSS Reader.
Previous Posts in the Negotiation Preparation Series
Planning to Succeed: Negotiation Preparation Part I
Define Issues and Interests: Negotiation Preparation Part II
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