Determine Your BATNA

In order to negotiate better, you must determine what your BATNA is prior to negotiating. BATNA, first coined by Fisher and Ury, stands for “best alternative to a negotiated agreement.” If you are unable to reach an agreement with the other party, what is your next best option? Knowing your BATNA helps you to decide at what point the deal the other side is offering you is no longer beneficial to you. Remember, the whole point of negotiating with someone is to get something better than what you would get without negotiating. So, you should consider sealing a deal only if you are able to come out ahead.

For example, let’s say you own a small advertising agency and are looking for a seasoned account executive for one of your largest accounts. You are in the process of negotiating an offer with the leading candidate. Generate a list of as many alternatives as you can think of for not hiring this candidate and then pick the one option that seems to be the best. Bear in mind that you have a stronger position if your BATNA is to hire a freelancer who used to be an employee of your company until a permanent employee is hired. This person would require little or no training since she is familiar with how your company does things and would be able to produce work immediately. If, however, you have no other prospects in mind, have to advertise the position to generate resumes, and the official start date of the project is next week, you have a weaker BATNA.

Once you have determined your BATNA, you should consider the BATNA of the other party, keeping in mind that the party with the stronger BATNA tends to be the more powerful party in the negotiation process. If the prospective candidate you are interested in hiring has another job, she has a more powerful BATNA than if her second best alternative is to remain unemployed for an indefinite amount of time until another suitable job is offered. If both parties have strong BATNAs, the best solution may be to not negotiate with each other and instead negotiate with other parties or not at all.

Generate Options That Meet Interests of Both Parties

Once you have figured out what the opposing party really wants, you can start to develop a list of creative options that meets the interests of both parties. Remember, if you meet only your own interests, you risk alienating the other party and the possibility that they will lose their patience and walk away. You may want to consider Fisher and Ury’s suggestion of holding a brainstorming session with five to seven colleagues off-site with a facilitator to generate a comprehensive list of ideas. Have the facilitator display the ideas on an easel or whiteboard and record all ideas mentioned, realistic or not. Remind all participants that all ideas should provide a win-win solution for both sides. The unrealistic ideas can be tossed out when the group meets again before the negotiation to select the best ideas that will be discussed during the negotiation.

Make sure that all the ideas selected meet the following basic human needs that motivate the positions people choose so that you can reach mutual agreement more quickly:

. Risk reduction and security—job security.
. Sense of belonging—fitting in at home and at work with specific roles and responsibilities.
. Economic security—being able to afford basic necessities (food, shelter, etc.).
. Recognition and approval—feeling valued for accomplishing challenging work.
. Control over one’s life—managing, organizing, and running one’s life in the desired way.

Consider this next example:

Employee: Thank you for agreeing to meet with me to discuss my raise for next year.

Boss: I want you to know that I think you are an asset to my company and I appreciate everything you do around here. I think your review went well this year, and I have decided to give you an 8 percent raise for all your hard work.

Employee: I appreciate the 8 percent but I have to say that I was hoping for 15 percent.
Boss: Please tell me why you were hoping for 15 percent.
Employee: Well, I really like my job but it’s expensive to keep my kids in day care from 3:30 to 5:30 every day. I was hoping for a 15 percent raise so that I can keep up with the rising costs of day care.

Boss: I’ll tell you what I can do. What about letting you work flexible hours? Maybe you could work from 6:30 A.M. to 3:00

P.M. each weekday with a 30-minute lunch. This way you can still work 40 hours a week and be home in time to take care of your kids when they come home from school. Not only would you get to spend more quality time with your kids, but you also wouldn’t have to send them to day care.

Employee: Wow, that’s a great idea. The 8 percent raise sounds fine. Thank you.

The boss was able to meet his own needs of wanting to give his employee a raise of 8 percent and those of his employee by solving his day-care cost increase problems, leaving both parties feeling that they had won.

Use Objective Standards

In order to convince the other party that what you are asking for is fair and reasonable, try to use objective standards whenever possible. If you are in the negotiation process with a prospective candidate, you will want to pay her as little as possible and she will want to earn as much as possible. Rather than feeling that the other party is trying to rip you off and haggling back and forth, the easiest solution is to use an independent objective standard. Independent objective standards may include market value, replacement cost, depreciated book value, competitive prices, precedents for similar cases, scientific judgment, professional standards, moral or ethical standards, or government standards. You can also speak to experts in the field to learn what is considered fair market value for whatever goods or services the negotiation is about. Using objective standards can reduce the amount of time it takes to conclude a negotiation because they are more likely to be accepted by the other party as a fair and reasonable offer.

If the other party offers to pay or accept a specific amount, always ask how they arrived at that specific number. Did they use an objective standard? If so, which one? If not, suggest one be used in order to eliminate bias and be fair, and to create a win-win situation for both parties. If they are unable to provide you with details for how they arrived at that amount and refuse to budge, you should seriously consider to agree to disagree and not negotiate. If, however, the price seems fair and is based on a trustworthy objective standard, be willing to be open-minded when confronted with a reasonable offer. Think about the following example:

Doctor: I am pleased to tell you that I met with everyone you in terviewed with and would like to extend you an offer of $45,000 per year as your salary.

Employee: How did you arrive at that amount exactly?


Doctor: Well, we think it is a very fair salary. According to our human resources department, the average salary paid to pediatric nurses with your level of experience in this city is $43,789. Not only do we pay slightly more than average, but we also offer additional benefits. While most doctors offer their nurses two weeks of vacation, we would give you three. You would also be able to begin contributing to your 401(k) plan immediately rather than waiting for six months as in many other offices. Additionally, the vast majority of our nurses have been with us for more than 10 years. The average tenure at our office for nurses is 14.5 years. And every year for the past five years, we have been working with a market research firm to conduct an employee satisfaction survey. According to last year’s results, 92 percent of our employees are either satisfied or very satisfied with their jobs, 94 percent with the benefits, and 90 percent with their bosses. We really value our employees here and I think they recognize that.

Employee: Sounds like once nurses are hired at your office, they don’t want to work anywhere else.
Doctor: Exactly. We have one of the highest retention rates in the city for nurses.
Employee: Well, now that you explained how happy your employees are, I think I would like to work here as well.
Doctor: I’m glad to hear it. I’ll notify the human resources department and have them send your paperwork by the end of the day. You should receive it by the end of the week.