15/5/2015 41 Comments
Written by Tobias Henz
You have probably heard people ramble that “Negotiations are everywhere”. To the ears of an avid future leader like you, browsing the web to learn more about leadership skills, such rambles may sound trivial. But have you ever tried getting people to define what a negotiation actually is? You have probably spotted as many definitions as you can spot stars in the sky. Some people may refer to Win/Win versus Win/Lose negotiations, some think about a power play or distribution game, confuse negotiating with haggling, or simply find negotiating too uncomfortable to even come up with a clear definition. Defining negotiating is difficult.
Among the many attempts to define and characterize the negotiation process one can find Jim Camp’s approaching, reading: “Negotiation: the effort between two or more parties to reach an agreement, each party having the right to veto.”
Let us look at this definition in more detail. While the sentence's first half describes a negotiation as an effort between two or more parties to reach an agreement, can be found in virtually every description of negotiating, and may be what you would've come up with as a first attempt when asked to define the negotiation process, it is the second part that I have experienced to be crucial: each party has the right to veto. Exploring the importance of this notion, it is immediately obvious that we need to look at two things: your right to veto, as well as the other party's right to veto. Your own right to veto indicates that you should pay attention to what happens if you exercise that very right to veto.
When you walk away from negotiating a deal on a car, or a deal on a gym membership, or the salary of your potential new job, your desire to get a new car, to get a gym membership, or to get a neat salary on your job does not suddenly disappear. In contrast, you still want these things, and walking away might seem like a bad idea. If you were badly prepared for that negation in the first place, that is. If you were better prepared, you would have an alternative solution ready. Well prepared negotiators always have a well developed BATNA, a best alternative to a negotiated agreement, up their sleeves, and keep it ready in their minds. If you have a good alternative to the deal you are negotiating currently, perhaps at a different car dealership, at a different gym or with a different potential employer, suddenly, it is quite possible for you to walk away from the negotiation, exercising your right to veto. Having that option gives you a great deal of wind in your sails, allowing you to sail the potentially tough waters of your negotiation with more stride, security and bargaining power. After all, you have nothing to lose by vetoing, instead you can always win your BATNA, which of course you have taken great care to develop into a truly desirable alternative. If your current negotiation is turning out no better than your BATNA, even after putting a reasonable amount of effort into bringing it beyond said BATNA, don't waste any more time on it but take your leave. You're not obliged to reaching a deal in this negotiating, and you can comfortably fall back to your BATNA.This emphasizes the importance of developing and understanding your BATNA, as well as having it visible: both before your inner eye and for the other party, using its power to educate them about your walk-away option rather than imposing a threat on them.
While the latter requirement is largely a question of your communication skills in the potentially dense setting of a given negotiation and thus needs to be practiced and refined many times, ideally with someone listening in and giving you honest and detailed feedback whenever possible, there is a great deal you can do to improve the visibility of your BATNA before your inner eye while preparing the negotiation. Whenever possible you should actually negotiate your BATNA in as much detail as possible, having a specific option to walk away to, rather than the abstract notion of 'other possible deals out there'. From that, it is also obvious that it is almost always a good idea to negotiate a least preferable option first, for instance the price for a car that would do for you, but isn't your absolute dream car, to have an alternative when going for the negotiation that matters most. Moreover, recent research suggests that as long as your BATNA is a preferred alternative given the current state of the ongoing negotiation, you should try to think about it in as much detail as possible: have that one job at company C with the benefits X,Y and Z and the salary s in mind rather than 'one of the jobs at this or another company'. Psychologists call this technique 'unpacking', and being able to unpack of course requires you to actually know the details of an alternative. Unpacking will boost your power at the negotiation table to get an even better deal out of the negotiation you are currently in. One word of caution though: as soon as having negative thoughts about your potential BATNA, either because you don't actually have a good one, or because your current deal already looks better than the BATNA you started the negotiation with, you should stop unpacking and focus your efforts on refining the current deal.
In sum, when preparing for a negotiation you should make sure to have a detailed and realistic BATNA, and make sure to unpack it before your inner eye whenever the thought of it seems appealing - and you should never negotiate your most desirable deal first. Beyond considering your own ability to veto and to gain bargaining power through developing and alluding your BATNA, you will ultimately still need to consider the other side of the coin: the other person's right to veto, and with that, their BATNA. We will leave the detailed discussion of the consequences of the fact that not only you, but other the other party have the option to walk away at any given time during the negotiation process to an upcoming Tidbit. At the very heart of our proposed approach will be the idea of giving the other party a reason to stay at the negotiation table: “If you don't give them anything to win, they may as well walk.”
See you back next week for “Negotiations and the right to veto II: If you don’t give them anything to win they may as well walk”!
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