Truth 7. Identify your BATNA
When our sons were ages 10 and 11, my husband and I made a grave mistake in mindlessly allowing both boys to sign up for travel basketball teams. At the time, I did not appreciate the literal meaning of the word travel, but I found out quickly that for 10 weekends in a row, the entire family would be on the road and sitting in smelly gyms across the greater Midwest! Moreover, because these youth games start at the ungodly hour of 8 a.m., it became necessary to spend the night in a hotel the night before. Thus, our hotel bills started to mount perilously high.
On one occasion, the entire team had to travel to Wisconsin for two nights. Once I realized that all the families on the team were in the same position as we were, I recognized that I was in a potentially powerful negotiation position to negotiate blocks of rooms with hotels.
So, I started my research. I made an Excel list of all the hotels within a 10-mile radius of the gym. At the top of my list was a Holiday Inn that had a kids’ water park. (None of the other nearby hotels had such a perk, so this was clearly my first choice.) I called the events manager and asked about getting a good rate for this block of rooms. Normally, the room rates were well above $200 a night.
When I found the Holiday Inn with the water park, I already had a fallback option, but not an attractive one. The Comfort Inn was not as nice as the Holiday Inn, but it was cheap. Yet, it had no “kid appeal” (which potentially meant that parents would be forced to do all the entertaining). The Comfort Inn was my best alternative to negotiating an agreement with the Holiday Inn. The Comfort Inn, therefore, was my best alternative to a negotiated agreement—my BATNA!4 Having a BATNA helped me to leverage my power in the negotiation with the Holiday Inn, where we got a very good rate.
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Some time ago, a friend came to me to seek advice. Our conversation went something like this:
Friend: “I’m glad Company X made me an offer, but the offer isn’t that great. I want a higher salary, better benefits, a signing bonus, and moving expenses. My friends are all getting those.”
Me: “What will you do if they don’t improve the offer?”
Friend: “What do you mean?”
Me: “How many other job offers do you have?”
Friend: “Just this one. But it’s a good company!”
Me: “Have you ever heard of a BATNA? Your key source of power in a negotiation is your ability to walk away, which depends on your BATNA. It’s the power of alternatives.”
Friend: “I don’t have a BATNA!” (panicking)
Me: “Calm down. You do have a BATNA. You always have a BATNA. What you’re saying is that you don’t like your BATNA. It’s unattractive to you. But you have one.”
What I mean by “You always have a BATNA” is that you will always do something if you fail to reach an agreement with the other party, even if it means becoming jobless, homeless, or bankrupt. Of course, those are extreme cases. In most negotiations, people have a few alternatives that may not be ideal, but they’re tolerable.
“You always have a BATNA. What you’re saying is that you don’t like your BATNA. It’s unattractive to you. But you have one.”
To get back to the friend: His BATNA was to extend his job search indefinitely. He chose not to accept Company X’s offer because he was optimistic that some Company Y would eventually make him a better offer.
Similarly, a home seller may reject a lowball offer from an uncooperative buyer in the hope that the future will bring a better offer.
Finally, to return to hotel negotiation: If my negotiations with the Holiday Inn had not resulted in an offer that was more attractive than what the Comfort Inn offered me, I would have walked away from the table.