When we enter into a negotiation, our goal is to be successful. What that means is that we want to be able to reach an agreement with the other sides that meets our needs no matter what negotiation styles or negotiating techniques are being used. In order for this to happen, we need to take the time to prepare for our next negotiation. However, that is easier said than done. In order to prepare properly, we need to understand exactly how we need to spend our time.
It’s All About Preparing Properly
The one thing that I hope that we all realize is that when an important negotiation is looming, “winging it” is never the right thing to do. The best negotiators engage in doing thorough negotiation preparation. That means taking plenty of time to analyze what they want, their bargaining position, and the other side’s likely wants and alternatives. Negotiators should engage in a careful self-assessment prior to negotiating. There are two main questions that we should be asking ourselves as part of our negotiation preparation:
- What do I want?
- What is my alternative to reaching agreement?
Ask Yourself What Do I Want?
The first question requires us to set an ambitious but realistic target. When setting a target, there are three traps that we should watch out for.
First, you’ll want to avoid being an under-aspiring negotiator who sets a target that’s too low. If you do this, you may end up feeling like the victim of the “winner’s curse,” which describes the disappointment we feel when the other party immediately accepts our first offer in a negotiation. The fact that the other party is eager to accept your first offer suggests that you aimed too low and failed to engage in adequate negotiation preparation.
On the other hand, you don’t want to be an over-aspiring negotiator, either. When you aim too high and refuse to make significant concessions to the other side, you will be left without a deal.
A third problem arises when you engage in so little negotiation preparation that you actually don’t know what you want. In this case, negotiators often view the other party’s good-faith proposals with either suspicion or disappointment.
Know What Your Alternative to Reaching Agreement Is
If you want to improve your odds of meeting a realistic but ambitious target, you will need to determine your best alternative to a negotiated agreement, or BATNA. Determining your BATNA will help you know when it’s time to walk away and pursue your best alternative. 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 example, if you were a a job seeker who was engaged in negotiation preparation for a particular hiring negotiation, the first step would involve you identifying other possible job opportunities as well as other alternatives, such as staying at your current job or applying to graduate school. The second step would involve assessing 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 you to identify the one alternative that you prefer.
Take Time To Calculate Your Reservation Value
After your negotiation preparation has helped you identify your BATNA, you are in a position to calculate your reservation value, or reservation price, which is your walk-away point in the upcoming negotiation. In a price negotiation, this might be a specific number. In an integrative negotiation where multiple issues are at stake, your reservation value might be expressed as a complete 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 types of common mistakes: (1) accepting a deal that’s worse than your BATNA or (2) rejecting a deal that’s better than your BATNA.
Understand Your Counterpart’s BATNA
When performing negotiation preparation, it’s not sufficient to only look at your own needs and wants. To improve the odds of reaching a mutually beneficial deal, you also need to figure out how much the other side may be willing to give. In order 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 think about the other side’s reservation value. For instance, a job seeker might conclude that the hiring organization is likely to have other qualified candidates waiting to take the job for a lower salary. If so, the job seeker might recognize that they 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 tougher bargain.
What All Of This Means For You
In order to be successful in your next principled negotiation you’ll need to prepare for it. The challenge that all negotiators face is that just exactly how best to prepare for a negotiation has never been made clear to most of us. We know that in order to get the deal that we want out of the negotiation, we need to go in with the right information. However, just exactly what that information is can be unclear to us. What we need is guidance as to how best to prepare.
Negotiators should never go into a negotiation just hoping for the best. Instead, we need to determine what we want out of the negotiation and what alternatives we might have. In every negotiation we need to make sure that we don’t ask for too little or too much. We also have to make sure that we don’t go in unprepared. During a negotiation we need to always make sure that we know what our alternatives to reaching an agreement are. After we do this, we can calculate the reservation value which is the point at which we would walk away from the negotiation. Negotiators don’t just have to determine their negotiating position, they also have to take the time to calculate the other side’s BATNA.
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. Negotiators need to understand how to go about preparing for a negotiation so that they will go in prepared to get the deal that they desire. Follow these suggestions and your next negotiation may turn out to be a success.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: How much time should a negotiator allocate in order to prepare for a negotiation?
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What We’ll Be Talking About Next Time
When we enter into a negotiation, it is our goal to use our negotiation styles and negotiating techniques reach an agreement with the other side. Although we may never say it, we expect that agreement to be fair for both sides: nobody is going to be taking advantage of anyone else. However, as the negotiation moves along, we may start to have some doubts. We may start to wonder if the other side is treating us fairly. In fact, we may wonder if this is really a fair negotiation. How can we tell?