Be a better negotiator by having a "BATNA"

Many people enter negotiations under the self-limiting belief that they don’t have a BATNA. Others enter negotiation with a false sense of security. And even when negotiators have a well-formed BATNA, they’re often unsure how best to leverage it Image: Shutterstock

It’s something many negotiators agonize over. Sometimes they don’t even think they have one.

It’s your BATNA, or your “best alternative to a negotiated agreement.” In other words, it’s what you’re left with if a given negotiation doesn’t work out, your default state.

Your BATNA is critical, as it determines your leverage in life’s most important negotiations, such as a job offer or the sale or purchase of a house, and in everyday dealings in business. If you feel pretty good about your BATNA, you’re more likely to “stick to your guns” and not negotiate as hard. If you’re not thrilled about your default situation, you may be much more willing to concede certain terms in the negotiation to make it work.

Despite the importance of the BATNA, people often are at a loss as to how to define it, improve it, flaunt it, or perhaps hide it. Many people enter negotiations under the self-limiting belief that they don’t have a BATNA. Others enter negotiation with a false sense of security. And even when negotiators have a well-formed BATNA, they’re often unsure how best to leverage it.

Following the dos and don’ts below will position you to understand, sharpen, and leverage your BATNA to reach the best outcome in any negotiation.

Don’t panic if you think you don’t have a BATNA.

If you only get one job offer or one bid on your house, you might not think you have a BATNA. In reality, you always have a BATNA and must make the distinction between having a BATNA and not liking your BATNA. For example, you may not wish to remain at your current job (your BATNA), but if a job offer you’ve received doesn’t include what you see as fair compensation, it may be best to keep looking for new opportunities, especially if it’s early in your search.
Do be proactive about your BATNA.

Think of your BATNA like a plant; it needs to be nurtured. If you’re seeking a job, make sure you’re networking and going to recruiting events, so you’ll be able to weigh a job offer in the context of other potential opportunities. If you’re looking for a supplier, talk to as many as possible that fit your broad criteria. Don’t be passive when it comes to developing your BATNA.

Don’t lie when asked about your BATNA in a negotiation.

It’s very likely the other party will ask about your BATNA. If they do, don’t claim to have offers you don’t actually have. That’s unethical and will likely ruin your credibility with the other party and, possibly, others. Instead, follow the advice below.

Do signal that you have a BATNA, without showing your whole hand.

The other party will probably ask you about your BATNA. Rather than revealing exact details, such as the compensation another employer has offered, say something like: “I have other options I’m intrigued by. But I prefer to talk about what it would take to work things out with you.” That keeps the focus on the current discussion and prospective relationship.

Also read: How to negotiate situations that feel hopeless

Don’t start a bidding war.

If you’re fortunate enough to have multiple offers, don’t play them off one another—although a negotiation where price is the main term, such as a home sale, may be an exception. One manager I know had his top-choice employment offer rescinded when the company discovered he was engaging them and another firm in a bidding war. As tempting as that kind of behavior may be, it’s shortsighted and can result in a worst-case outcome. Don’t go there.

Do share your top choice and target terms.

Telling your top-choice company—or supplier or other counterparty—they’re your Number One can promote goodwill and expedite the negotiation. If you tell them they’re your top choice, and they agree to your terms, accept the offer on the spot. If they don’t agree, tell them you need more time to “think it through,” and then do that, while weighing your BATNA, including other in-hand or likely offers.

Don’t forget to be gracious.

Appreciation matters. If a party makes you an offer, thank them genuinely for it. If you have more than one offer, remind yourself how fortunate you are to be in that position, and consider releasing some of them so you don’t waste people’s time. This also could open up space for other candidates.

I hope these dos and don’ts come in handy for your next negotiation, whatever it may be. I hope you get what you want. And if you can’t, then I hope your best alternative is truly the best one it can be.

This article originally appeared in Quartz.

[This article has been republished, with permission, from Kellogg Insight, the faculty research & ideas magazine of Kellogg School of Management at Northwestern University]