Holy Negotiation, BATNA!

So much in life is negotiated, yet I find that few people are highly skilled at it.  This is of course is true in recruiting and candidate negotiations. 

I would go so far as to say that nearly everything is negotiated in life.  I negotiate with my 3 year old daughter multiple times per day (would you like to brush your teeth first, or read books first before bedtime?).  It’s a one-sided negotiation for sure, but make no mistake about it, it is very much a negotiation.  I presume when she gets to be a teenager this will become much more challenging.

One of the key errors that I see people make in negotiation is not understanding the BATNA:  The Best Alternative To a Negotiated Agreement.  In other words, what is the next best alternative for one of the negotiating parties should agreement not be reached in this negotiation?  Understanding this is the single biggest key to successful negotiation. 

In an employment setting when someone is changing jobs, the strategy should always be to understand your BATNA really well, but also what the other parties BATNA is, in order to optimize the outcome.  In a scenario when a candidate is negotiating a job offer, there are some dynamics to corporate recruiting that are helpful to consider when negotiating.

Employers generally try and interview 2-3 candidates for any given role they are trying to fill.  That said, when they make the final decision and decide on the finalist, the other 1-2 candidates (silver and bronze medalists, if you will) are generally voted off the island and no longer considered at all.  This is very important for candidates to understand.  This is rooted in human nature, hiring manager fantasy of always choosing only the best candidate (who wants to be known for hiring the 2nd or third place finisher), and the fact that most selection processes are not tightly controlled to select for competencies that actually manifest job performance. 

All of this being said, if a candidate is able to proceed to the final step in the interview process (job offer) and is actually in a position to negotiate the salary for the job, their position in the negotiation has exponentially improved from previous points in the process.  This is often counter-intuitive because most interview processes put candidates into a state of being in the weaker negotiation position and candidates don't recognize when this changes in the process.  Candidates are trying to win the job against other competitors, after all.  When you couple this with the most common negotiation mistake: underestimating one’s own position, and also the opportunity cost of a company not filling a position with an identified finalist, there is generally always room for a candidate to negotiate successfully and get more out of the deal.  Not surprisingly, I find that few candidates negotiate well in this process. 

On the flip side, savvy recruiters build an understanding of a candidate’s BATNA through the recruiting process, so they fully understand what it will take to close a candidate should that candidate be selected.  A recruiter should never extend a job offer that they don’t know will be accepted.  It is unproductive to do otherwise.  Additionally, one has to fully understand a candidate's BATNA, including the intangibles beyond salary and job scope, so as to optimize the outcome.  Sometimes the best option is to not extend the job offer.  Indeed, the most sophisticated recruiters help the candidate develop their BATNA through the process, in part by treating every interaction as an opportunity to sell the finer points of life at their organization.

When it comes to negotiation, it’s all about the BATNA.  This is true for candidates, and also for recruiters.

Comments

[Tim Ferriss]

The BATNA is an excellent -- albeit often misunderstood -- concept, and I recommend "Getting Past No" as a more practical guide to understanding it when compared to the better-known classic "Getting to Yes." I give a lecture on negotiating twice a semester on the east coast, and I have found that two questions are particularly useful for regauging BATNAs and leverage:

1. At this point, if the negotiations fail, what is the worst thing that can happen to both sides?

or more simply:

2. At this point, who has the most options?

In almost all cases, he or she with the greatest number of options will have the best BATNA and thus the most leverage. As one astute negotiator once told me: "He who cares least wins."

Happy New Year and happy negotiating.

[master law of attraction]

You made some excellent points in that last post. I find this a really interesting subject. Another guy writes really well on the matter, can’t remember his name at the moment though.

[manifest more money]

I’m so glad that I have found your post. I have been unsure of this topic for some time and you have enabled me to understand it a whole lot better. I really appreciate it. I was reading a post a while ago that helped me in the same way that yours has.

[attract wealth]

Great Post! It helped me to make sense of some of the issues with the subject. I find your style very informative and can’t wait to read more. There is another good blog on the subject that I was going through some time back.

[law of attraction community]

Amazing post.It is nice to see someone that be able to break such a tricky topic down and make it easy to understand. So thank you!

[Bob from Attract-a-Profitable-Home-Business.com]

Excellent point about a job candidate having gained great leverage in salary negotiation once an offer is made. While it would be foolish to ask for something like double the salary, an employer who makes the job offer is now vested in you, so asking for a HIGHER salary could well be in your favor.

[Rebecca]

I came to this posting by accident and found it to be quite interesting ( I love your viewpoint) and certainly pertinent at this point in time in the economy.

Thank you for this enlightning entry.