I will admit when prowling around for ideas for the blog that I sometimes get lost in the weeds of Wikipedia. Sort of reminds me of how back in the day a 9-year old me would page through volumes of the Funk & Wagnalls Encyclopedia late at night when I should have been sleeping. Note to the kids out there, that is just one example of how miserable life was before the internet, and smart phones, and Snapchat. When I have some more time I will tell you about the 13-inch TV I had to watch in college.
But back to the point, (such as it is).
While reading about a pretty interesting article on a Game Theory principle called the Nash Equilibrium, I came across a slightly less interesting but probably more relevant for the HR/Talent pros, an idea called the BATNA, or in the realm of negotiations, the 'Best Alternative to a Negotiated Agreement.'
From the 'Pedia:
In negotiation theory, the Best Alternative to a Negotiated Agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA.
The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations.
So the BATNA is kind of the fall back plan, the Plan 'B' so to speak if you are unable to reach a negotiated agreement - whether it is for the price of a new car, the starting compensation package for that new job, or if you are unable to convince your significant other that eating at Chili's does, in fact, constitute a 'night out.'
But the idea that the BATNA isn't a safety net, or a 'bottom-line' is key to the entire concept.
Usually, a bottom line signifies the worst possible outcome of a negotiation that you are still willing (or are forced to), accept. The bottom line is meant to act as the final barrier after which a negotiation will not proceed. It is a means to defend yourself against the pressure and temptation that sometimes exists to simply end a negotiation, even if the conclusion is self defeating. Although bottom lines definitely serve a purpose, they also inflexible, can eliminate more creative solutions, and decrease the likelihood of long-term satisfaction with the agreement.
Let's go back to the salary negotiation example to see the difference between the BATNA and the 'bottom-line'.
Candidate: I am looking to start at $125,000 with 5 weeks vacation.
Employer: Our offer is a starting salary of $105, 000 plus 3 weeks vacation.
Candidate BATNA - $115,000 with 4 weeks vacation
Candidate 'Bottom Line' - probably something like $110,000 with the 3 weeks.
Notice the difference between the BATNA and the Bottom Line though. The BATNA gives up a little on the salary number, but represents a gain on the vacation number. It really is a 'Best Alternative' scenario for the candidate, and not just a surrender. The 'Bottom-line' however, is more or less a total loss from a negotiation standpoint. The candidate might be able to live with that outcome, (say if their current salary was $95,000), but if they accept the bottom-line deal they are going to be immediately dissatisfied with the outcome. But if they have the BATNA defined walking in to the negotiation, then settling on it will still represent a good outcome.
It is a small, maybe even a subtle difference, but understanding the difference between the BATNA and the Bottom-line could be the key to drive better overall outcomes.
So there it is, your new word of the day - BATNA - The Best Alternative to a Negotiated Agreement.