Principle 5 of Principled Negotiation: Know Your Best Alternative to a Negotiated Agreement (BATNA)

Introduction:

One of the principles or strategies of principled negotiation is knowing your best alternative to a negotiated agreement, hereafter referred to as BATNA. This note will discuss the meaning of BATNA, its essence, and how to identify or develop your BATNA.

Meaning of BATNA:

This is the most advantageous alternative a negotiating party can take if negotiations fail and an agreement cannot be made. It is like a backup plan if negotiation fails.

According to Fisher and Ury [1], BATNA is “the standard against which any proposed agreement should be measured. That is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.”

According to the Course Manual on Alternative Dispute Resolution by the Ghana School of Law, “Your BATNA is what you will get outside the negotiation. It is what you will get if you leave the negotiation without an agreement.”

Essence of BATNA:

One essence of having a BATNA is that it protects you from accepting unfavourable agreements during negotiation. If you do not have a backup or fallback plan on what to do if negotiations fail, you may have to accept whatever agreement that is proposed during negotiation because you have no alternatives.

Second, a strong BATNA enhances your bargaining power. It allows you to push for better terms because you have a viable alternative if the negotiation fails. Without a strong BATNA, you are more likely to make concessions with the hope of getting a negotiated agreement. According to Fisher and Ury [1],

It is easier to break off negotiations if you know where you’re going. The greater your willingness to break off negotiations, the more forcefully you can present your interests and the basis on which you believe an agreement should be reached.

Third, it can be used as a standard against which any proposed agreement is measured [1]. The existence of such a standard lets you know if you are getting a good deal or not. For instance, in a negotiation to sell a car, your BATNA could be that if the buyer does not agree to your desired price, you can sell the car to another interested buyer or trade it in at a dealership. By comparing the proposed agreement to your BATNA, you can determine whether the offer on the table is better than your alternative. If the buyer's offer is lower than what you could get elsewhere, you would reject it and pursue your BATNA instead.

While the above three points focus on the essence of having a BATNA from your perspective, understanding that the other party has or may have one can also help you predict which agreements they are more likely to accept or reject. If the other party has a weak BATNA—which you can determine by considering their alternatives if negotiations fail—they are more likely to compromise.

Identifying or Developing Your BATNA:

According to Fisher and Ury [1], generating possible BATNAs requires three distinct operations:

1. Inventing a list of actions you might conceivably take if no agreement is reached. For example, in a dispute on the dissolution of spousal property, you may make the following list:

1. If negotiation fails, we can try mediation.
2. If mediation fails, we can try arbitration.
3. If arbitration fails, I will have to commence a civil suit.

2. Improving some of the more promising ideas and converting them into practical alternatives.
3. Selecting, tentatively, the one alternative that seems best.

Once you have selected the best alternative, use it as a standard to judge every offer.

Conclusion:

Sometimes, negotiations do not produce a negotiated agreement. Consequently, before negotiating, it is essential to develop your best alternative to a negotiated agreement (BATNA). This alternative increases your bargaining power, ensures you do not accept an unfavourable agreement, and gives you a standard by which you can measure the offers made by the other party.