What if the other has a stronger bargaining position? - Chapter 6

How can negotiation methods be used when the other side is more powerful?

In some negotiations exist realities that are hard or impossible to change. Skillful negotiation cannot overcome all differences. The most any method of negotiation can do in a situation where the other side has more power is to protect you against making an agreement that you should reject, and help you make the most of the assets you do have so that any agreement you reach will also satisfy your interests in the best way possible. In the case that the other side has more power, the recommendation is to develop your BATNA. BATNA stands for Best Alternative To a Negotiated Agreement.

What is a bottom line?

The bottom line refers to the established worst acceptable outcome. Negotiators often use the bottom line to protect themselves against making an agreement that they would have been better off rejecting. There are certainly pros to using a bottom line. It makes it easier to resist pressure and temptations of the moment. Also, when there is more than one person on one side, establishing a bottom line ensures that no one will indicate to the other side that you may settle for less.

What are the cons of using a bottom line?

There are also high costs associated with having a bottom line. It limits the ability to benefit from what you learn during a negotiation, as it is a position that cannot be changed. It also limits the imagination by reducing the incentive to invent a special solution that would reconcile differing interests in a way that is more advantageous for both sides.

How to develop your BATNA?

BATNA is the standard against which any proposed agreement should be measured. It can protect you from accepting an agreement that is too unfavorable and from rejecting an agreement that would be good to accept. It has the advantage of being flexible enough to permit the exploration of creative solutions. Whether you should or should not agree during a negotiation depends upon the attractiveness to you of the best available alternative. You can generate BATNAs with these steps:

• Invent a list of actions you might conceivably take if no agreement is reached.
• Improve the more promising ideas and convert them into practical alternatives.
• Select the one alternative that seems best.

How does having a BATNA increase your relative negotiating power?

The relative negotiating power of two parties depends primarily upon how attractive to each is the option of not reaching an agreement. The better your BATNA, the greater your ability to improve the terms of any negotiated agreement. By knowing what you are going to do in case you do not reach an agreement, you will be more confident in the negotiation and it is easier to break off the negotiation in case that is necessary. The greater your willingness to break off the negotiation, the better you can present your interests.

Should you disclose your BATNA to the other side?

This depends on the attractiveness of your BATNA and your evaluation of the other side's thinking. If your BATNA is very attractive to you, it is in your interest to let the other side know. If the other side thinks that you don´t have a good BATNA when actually you do have one, it is better to let them know. The only situation in which you may not want to let the other side know about your BATNA is when your BATNA is worse for you than the other side thinks. In that case, informing them of your BATNA will weaken your side.

How can exploring the other side's BATNAs help you in your negotiation?

The more you can learn about the alternatives of the other side, the better prepared you are for negotiation. The other side may be too optimistic about their alternatives, in which case you may want to help them think through whether or not their expectations are realistic. It is also possible that the other side has alternatives that are much better for them than reaching any kind of agreement with you. In that case, you can try to change their alternatives so they do not have them anymore or they do not have the same value to them. Finally, if both sides have attractive BATNAs, it may be better to call off the negotiation as the best outcome may well be not reaching an agreement.

What are the negative consequences of not having your BATNA?

Without establishing a BATNA, you may be too optimistic and assume that you have many other choices in case you do not reach an agreement. Psychologically, people tend to aggregate their alternatives. They think of the sum of all their alternatives and find that more attractive than a certain agreement. However, upon failing to reach an agreement, they do not receive the aggregate of all the alternatives, they will only receive one of the alternatives.

What is meant with 'trip wire'?

'Trip wire' refers to an agreement that is just slightly better than your BATNA. It is another test that can give you an early warning that the content of a possible agreement is beginning to run the risk of being too unattractive, but it provides you with some margin in reserve. Before accepting an agreement worse than the 'trip wire', you should take a break and reexamine the situation.