BATNA: Best Alternative to a Negotiated Agreement
The Basic Idea
Imagine you’ve received an exciting job offer from a great company, and you’re being offered a salary of $75,000. While this salary is higher than your previous job, you have a hunch that there may be better options out there, and higher salaries to meet your coveted skills and experiences. You decide you’ll negotiate with your new bosses a little bit more, take their best offer into consideration, and then decide if you’d like to proceed with accepting the job.
This negotiation trajectory seems typical: you look at the final offer of the company and then peruse your alternative options, seeing if you can do better elsewhere. However, what if knowing your alternatives from the get-go could actually raise the final offer of this company? How could knowing your other options initially make you a stronger contender in the original negotiation?
Herein lies the concept of BATNA: Best Alternative to a Negotiated Agreement. Determining your BATNA means knowing your best potential course of action if a given negotiation does not work out. Knowing your BATNA in advance of a given negotiation makes you a more confident negotiator, and a more attractive potential investment to your opponents. Ultimately, knowing your BATNA will empower you to make the rational choice: accept any terms better than your BATNA, and reject any terms worse than it.
If you have not thought carefully about what you will do if you fail to reach an agreement, you are negotiating with your eyes closed.
– William Ury and Roger Fisher,William Ury and Roger Fisher
