I hope that we can all agree that if you want your next negotiation to turn out the way that you want it to, you need to prepare for it. Now, that’s easy to say, but as we all know, it’s actually fairly hard to do. It turns out that the key to successfully preparing for a negotiation is that we have ask the right questions. In order to do that, we need to know what questions to ask.
What Do I Want From This Negotiation?
The first question that we need to ask ourselves will require that we set an ambitious but realistic target. When setting this target, there are three traps that we need to watch out for. First, avoid being one of those under-aspiring negotiators who sets a target that’s too low. If you do, you may end up feeling like the victim of the “winner’s curse,” which describes the disappointment we feel when the other side immediately accepts our first offer in a negotiation. The fact that the other side is eager to accept your first offer suggests that you aimed too low and failed to engage in adequate negotiation preparation.
At the same time, you don’t want to be an over-aspiring negotiator, either. When you aim too high and the other side refuses to make significant concessions, you will be left without a deal no matter how good your negotiation styles and negotiating techniques are. A third problem arises when you engage in so little negotiation preparation that you don’t know what you want. In this case, negotiators often view the other party’s good-faith proposals with suspicion or disappointment.
Determine What Your Alternative to Reaching Agreement Is
Let’s face it, we are not always able to reach an agreement with the other side of the table during a negotiation. To improve your odds of meeting a realistic but ambitious target, you will need to determine what your best alternative to a negotiated agreement, or BATNA, is. Determining your BATNA will help you know when it’s time to walk away and pursue your best alternative. What you need to understand is that a BATNA assessment involves the following three steps:
- Identify all of the plausible alternatives you might pursue if you can’t reach a deal with the current party.
- Estimate the value associated with each alternative.
- Select the best alternative, which is your BATNA.
For somebody who is looking for a job and is engaged in negotiation preparation for a particular hiring negotiation, the first step would involve identifying their other possible job opportunities as well as other alternatives, such as staying at their current job or applying to graduate school. The second step would involve evaluating the monetary and non-monetary value of each alternative, including likely salary, benefits, responsibilities, engagement with one’s work, quality of life, and so on. This type of analysis should lead the person who is looking for a new job to identify the alternative that they prefers.
Determine What Your Reservation Value Is
Once the work that you’ve done to prepare for the negotiation has helped you identify your BATNA, you are in a position to calculate your reservation value, also known as a reservation price, which is your walk-away point in the upcoming negotiation. In a price negotiation, this might be a particular number. In an integrative negotiation where multiple issues are at stake, your reservation value might be expressed as a package, such as the lowest salary, benefits, and responsibilities you’d accept to take a certain job. Your knowledge of your reservation value will help you avoid two mistakes: (1) accepting a deal that’s worse than your BATNA or (2) rejecting a deal that’s better than your BATNA.
Assess The Other Side’s BATNA
It turns out that when you are engaging in negotiation preparation, it’s not good enough to only look at your own needs and wants. To improve your odds of a mutually beneficial deal, you also need to figure out how much the other side may be willing to give. To do this, you need to analyze their BATNA.
Ask yourself, “What will they do if our negotiation ends in impasse?” This will lead you to contemplate the other side’s reservation value. As an example of this, a job seeker might conclude that the hiring organization is likely to have other qualified candidates waiting to take the job for a relatively low salary. If so, the job seeker might recognize that he won’t be able to push the hiring manager very far in a salary negotiation. Conversely, a job seeker might be aware that they are one of the only appealing candidates for the open position—in which case, they may be able to drive a tough bargain.
What All Of This Means For You
Getting the best deal out of your next principled negotiation is going to require a great deal of work on your part. This work is going to start with preparing for the negotiation. In order to do a good job of preparing for a negotiation, you are going to have to make sure that you have the answers to the most important questions. This means that you are going to have to know what those questions are.
A critical question that you need to answer is to determine what you want to get out of the negotiation that you’ll be participating in. You are going to have to set a goal for this negotiation and you’ll have to make sure that it’s not too high and not too low. Not every negotiation turns out the way that we want it to and so going in you are going to have to have a clear view of what your BATNA is. Knowing this will allow you to know when it’s time to walk away. In addition to your BATNA, you are also going to want to know your reservation value. This will tell you the the lowest acceptable value that you are willing to take. After you’ve evaluated all of this for your side, you still have to determine the other side’s BATNA. Knowing this will allow you to have a better chance of getting the deal that you want.
Negotiation preparation needs to be conducted with a clear-eyed view of the playing field. The more rational and methodical your negotiation preparation process is, the better your negotiation results are likely to be.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: What action do you think that you should take once you have determined what the other side’s BATNA is?
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What We’ll Be Talking About Next Time
When we enter a negotiation we generally have one goal in mind: we want to reach a deal with the other side. It is our assumption that the other side of the table has the same goal in mind. However, there will be situations in which this may not be the case. As a negotiator, we need to understand that the other side may at times be negotiating in bad faith. We have to be able to both realize this, and know how best to deal with the situation.