It’s a New Year – Time to Negotiate
With 2020 in the rearview mirror, it’s time to relearn or refine one particular skill you can never be too good at – negotiation! Many (most?) people believe they know how to negotiate. We were among them at one time. But as they say, sometimes you don’t know what you don’t know. After years of studying the research on negotiating, and decades actually negotiating, making countless mistakes, and learning from many of them, we’re excited to share our knowledge with you. Each month we will present a new topic to assist you in your negotiation journey. Negotiation is not just a business skill – it is a life skill. The better you’re able to negotiate, the better quality of life you’ll have, be it business, friendships, family, or love.
One of the most important concepts in negotiation is understanding your BATNA. The acronym stands for “Best Alternative To a Negotiated Agreement.” The concept (and acronym) originated out of the Harvard Program on Negotiation (PON). So what does it mean? Ask yourself this question: If I do not get a deal with the person I am currently negotiating with, what’s the best situation I can get elsewhere? Why is this important? Because what you can get elsewhere is what you use to weigh every offer you receive from your current negotiation counterpart. Case in point: You have two job interviews. At job interview number one, you are offered a job with an $80,000 salary. You head to job interview number two. What is your BATNA at this point in time? In other words, if you are not offered a job at interview number two, what is your “best” alternative? Answer: Take job number one for $80,000! Suppose at job interview number two, they offer you a similar job with a $75,000 salary with all else being equal. Do you take it? No. You exercise your BATNA and accept job number one for $80,000. Your BATNA (job number one) is better than the offer currently on the table. Suppose at interview number two, you are offered $85,000 – do you take it or go with your BATNA? All else being equal, job offer number two at $85,000 is better than your current BATNA (which remains job offer number one at $80,000).
Always know your BATNA going into a negotiation. Moreover, always be working to improve your BATNA. BATNAs are dynamic – circumstances change and so do your alternatives. But what if you do not have a BATNA? Answer: You ALWAYS have a BATNA, even if it is the status quo. When people claim to not have a BATNA, what they typically are saying is that they don’t like their BATNA – that they do not have a good BATNA. Part of the problem is the word “best” – it’s hard to pick your “best” alternative if all you have are poor alternatives.
The acronym “CARD” (created by yours truly;) was developed to help negotiation students better understand their alternatives. CARD stands for “Credible Alternative, Readily Doable.” Imagine you are playing a card game. You look at your hand – all your alternatives outside of your current negotiation – and decide which is the best “card” (i.e., alternative). This is the card you then used to weigh against offers in your current negotiation. Like a BATNA, a CARD is 1) external to the current negotiation and 2) must be realistic, that is, objectively possible (a wish is neither a BATNA nor a CARD). Here’s an example: Suppose you’re unemployed and only have a single job interview with little hope of another in the near future. What is your CARD? (i.e., what will you do if you don’t get a job offer?) Answer: remain unemployed. Many people say their CARD is that they will “get a better job offer!” That may be your wish but it is not your CARD if the facts and circumstances dictate otherwise. But you can improve your hand of CARDs. Perhaps apply for a scholarship for that Masters you were thinking about. Talk to a friend who is looking to start a new venture and needs your skills. Find out if the vague offer of a job from Aunt Sally was serious! More options = more confidence in the negotiation and a better hand of CARDs.
Knowing your BATNA/CARD will help you improve your negotiation skills. Each month we’ll highlight game-changing negotiation skills for you to work on. Your negotiation journey begins here. See you next month!
Linda L. Barkacs