Best alternative to a negotiated agreement (BATNA)
Best Alternative to a Negotiated Agreement (BATNA) is a key concept in negotiation strategy that refers to the best course of action a negotiating party can take if discussions fail to yield a satisfactory agreement. Originating from the work of Harvard researchers Roger Fisher and William Ury in their 1981 book "Getting to Yes," BATNA serves as a benchmark for evaluating proposed deals and helps parties understand their options before entering negotiations.
A clearly defined BATNA can enhance a negotiator's position by providing a backup plan, enabling them to avoid unfavorable terms and consider creative solutions. The process of establishing a BATNA involves three steps: listing possible alternatives, developing those options into realistic actions, and selecting the most effective option. This preparation fosters confidence during negotiations, allowing parties to better assess offers and decide when to walk away from unsatisfactory deals. Conversely, lacking a well-defined BATNA can leave negotiators vulnerable and overly optimistic about their options. Overall, understanding and defining a BATNA is crucial for effective negotiation in various scenarios, such as salary discussions, property transactions, or legal agreements.
On this Page
Subject Terms
Best alternative to a negotiated agreement (BATNA)
In business and finance, the best alternative to a negotiated agreement (BATNA) refers to a negotiating party's preferred course of action if talks break down and a deal cannot be reached. The BATNA is the standard against which a proposed agreement should be judged.
A well-defined best alternative to a negotiated agreement can give a negotiating party a strategic edge during talks. There are three steps to determine the best alternative to a negotiated agreement.
By knowing their options, negotiators with clear BATNAs can determine whether an offer is satisfactory or unsuitable.
Overview
The best alternative to a negotiated agreement is a part of negotiation strategy, or the art of making deals. The term was devised by Harvard researchers Roger Fisher and William Ury in the 1981 book Getting to Yes: Negotiating Agreement without Giving In.
Through a negotiation, two parties attempt to come to an agreement that benefits both sides. A BATNA can be used for any kind of negotiation, including a pay raise, job offer, house or vehicle purchase, or lawsuit.
Parties should carefully consider their options before entering into negotiations. A BATNA provides a negotiating party with a benchmark to measure potential offers. It presents the party with a backup plan if negotiations fail.
Parties with clearly defined BATNAs will be more prepared to evaluate the possible outcome of negotiations. A best alternative to a negotiated agreement offers protection. By having a BATNA in mind, the parties involved are less likely to accept a deal with unfavorable terms or turn down one that may better serve their interests. It allows negotiators to explore creative solutions to come to a mutually satisfactory agreement.
An unknown or ill-defined BATNA leaves negotiators vulnerable. Parties who are overly optimistic may think they have several alternatives. For example, a person might turn down a job offer if he does not get the salary he requested, believing he can move elsewhere, go back to school, or enter a different industry. A negotiator may also not fully consider the consequences of not agreeing to a deal. In the same example, the party looking to reject the job offer may not account for the costs of moving, tuition, or starting at entry level in a new industry.
In their book, Fisher and Ury laid out three steps to determine the best alternative to a negotiated agreement. First, a negotiator should make a list of available options in case no deal is reached. Second, the party should develop the best options into realistic alternatives, the actions that can be performed if talks fail. Finally, the negotiator should review the alternatives and select the best one.
By taking the time to establish a strong BATNA, a party can exercise confidence during talks. Negotiators can work to improve the terms of the deal to their benefit. Conversely, negotiators can also gauge when it is time to walk away from an agreement that does not meet their interests.
The best alternative to a negotiated agreement serves as a critical line of defense for negotiators. The tactic is a measuring stick for evaluating offers, and it provides another strategy if negotiations fall through.
Bibliography
"BATNA Explained – Best Alternative." Negotiation Experts, www.negotiations.com/articles/best-alternative/. Accessed 11 Dec. 2017.
"Best Alternative to a Negotiated Agreement (BATNA)." Business Dictionary, www.businessdictionary.com/definition/best-alternative-to-a-negotiated-agreement-BATNA.html. Accessed 11 Dec. 2017.
"Best Alternative to a Negotiated Agreement (BATNA)." Investopedia, www.investopedia.com/terms/b/best-alternative-to-a-negotiated-agreement-batna.asp. Accessed 11 Dec. 2017.
Burns, John (Jack) S. "Conflict and Negotiation." Organizational Leadership: Foundations and Practices for Christians, edited by Jack Burns, et al., InterVarsity P, 2014, pp. 171–96.
Fisher, Roger, et al. Getting to Yes: Negotiating Agreement without Giving In, 3rd ed., Penguin Books, 2011.
Luecke, Richard. Harvard Business Essentials: Negotiation. Harvard Business P, 2003.
Spalek, Seweryn J. "Crisis! What Crisis? How to Overcome It with BATNA!" Project Management Institute, 2007, www.pmi.org/learning/library/best-alternative-negotiated-agreement-strategy-7271. Accessed 11 Dec. 2017.
Subramanian, Guhan. "What Is BATNA? How to Find Your Best Alternative to a Negotiated Agreement." Harvard Law School Program on Negotiation, Sept. 5, 2017, www.pon.harvard.edu/daily/batna/translate-your-batna-to-the-current-deal/. Accessed 11 Dec. 2017.