ⓘ Best alternative to a negotiated agreement

                                     

ⓘ Best alternative to a negotiated agreement

In negotiation theory, the best alternative to a negotiated agreement or BATNA refers to the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. The exact opposite of this option is the WATNA. The BATNA could include diverse situations, such as suspension of negotiations, transition to another negotiating partner, appeal to the courts ruling, the execution of strikes, and the formation of other forms of alliances. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain. These other considerations are often difficult to value, since they are frequently based on uncertain or qualitative considerations, rather than easily measurable and quantifiable factors.

Oftentimes, it is even more difficult to determine the BATNA of the other party. However, the information is crucial as the BATNA determines the other side’s negotiation power. Sometimes, conclusions can be drawn by determining his/her main interests and the negotiation itself can be used to verify or falsify the assumptions. If, for example, it is assumed that a very early delivery date is of key importance to the negotiating partner, deliberately setting a later delivery date can be proposed. If this late delivery date is decidedly rejected, the desired delivery date is likely to be of great importance.

                                     

1. BATNA based tactics

Because of the importance of the BATNA for the negotiation success, several tactics focus on weakening the opponent’s BATNA. This may be achieved e.g. by striving for exclusive negotiations, delaying or accelerating the ongoing negotiations or limiting the negotiation partner to technical systems. If a negotiator is faced with such tactics it is his/her task to examine the possible consequences for the own BATNA and to prevent or counteract any deterioration of the own partys’ BATNA.

                                     

2. BATNA and the order of negotiations

The BATNA can also influence the order in which negotiations are taken up with potential contracting partners. Favourable is a sequential approach. Here one starts negotiations with the less favoured partners and proceed negotiations with the preferred option afterwards. In this way there is the BATNA of a contract with the less favoured partner.

                                     

3. Overview

The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations. Although a negotiators alternative options should, in theory, be straightforward to evaluate, the effort to understand which alternative represents a partys BATNA is often not invested. Options need to be actual and actionable to be of value, however, without the investment of time, options will frequently be included that fail on one of these criteria. Most managers overestimate their BATNA whilst simultaneously investing too little time into researching their real options. This can result in poor or faulty decision making and negotiating. Negotiators also need to be aware of the other negotiators BATNA and to identify how it compares to what they are offering.

Some people may adopt aggressive, coercive, threatening and/or deceptive techniques. This is known as a hard negotiation style; a theoretical example of this is adversarial approach style negotiation. Others may employ a soft style, which is friendly, trusting, compromising, and conflict avoiding. According to Fisher and Ury, when hard negotiators meet soft negotiators, the hard negotiators usually win their position, but at the cost of potentially damaging the long term relationship between the parties.

Attractive alternatives are needed to develop a strong BATNA. In the best-selling book Getting to YES: Negotiating Agreement Without Giving In, the authors give three suggestions of how to accomplish this:

  • Converting some of the more promising ideas and transforming them into tangible and partial alternatives
  • Selecting the alternative that sounds best
  • Creating a list of actions one might take if no agreement is reached

In negotiations involving different cultures, all parties need to account for cultural cognitive behaviors and should not let judgments and biases affect the negotiation. The individual should be separate from the objective.

The purpose here, as Philip Gulliver mentions, is for negotiation parties to be aware.

Preparation at all levels, including prejudice-free thoughts, emotion-free behavior, bias-free behavior are helpful according to Morris and Gelfand.



                                     

4. History

BATNA was developed by negotiation researchers Roger Fisher and William Ury of the Harvard Program on Negotiation PON, in their series of books on Principled negotiation that started with Getting to YES, unwittingly duplicating the game theory concept of a disagreement point from bargaining problems pioneered by Nobel Laureate John Forbes Nash decades earlier. A Nash Equilibrium is reached among a group of players when no player can benefit from changing strategies if every other player sticks to their current strategy. For example, Amy and Phil are in Nash Equilibrium if Amy is making the best decision she can, taking into account Phils decision, and Phil is making the best decision he can, taking into account Amys decision. Likewise, a group of players are in Nash Equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others.