The Intelligent Negotiator (6 page)

Your next step is to evaluate your non-settlement options or, in other words, the best arrangements you could obtain
for yourself if you were unable to reach any agreement in your upcoming bargaining sessions. Roger Fisher and William Ury, in their classic negotiating guide
Getting to Yes,
described this point by the term BATNA—your Best Alternative to a Negotiated Agreement.
¹
The Intelligent Negotiator uses BATNA as his or her
bottom line.
Refuse to enter into a negotiated deal that is worse than the circumstances you would have without any accord. Never go below your bottom line.

What Non-Settlement Options Are Available to You?

Examine your non-settlement options, such as these: Ask yourself how much do you want the terms you hope to obtain from the other side? What alternatives can you live with if no present accord is achieved? How satisfactory would these alternatives be in comparison to what this opponent could provide?

For instance, you want a promotion, a higher salary, and better long-term career opportunities than your present situation allows. And you’ve just been offered a job at a competitive company in another city. Are you willing to relocate to obtain a preferable position? Would you be willing to consider a different industry or an entirely different occupation if you could stay where you are and receive better long-term opportunities than you now have? Are you willing to return to school full- or part-time to obtain the skills you need to enter new occupations? What other firms could offer you suitable employment? Could you seek a transfer to another position within your present company that might preclude your need to look elsewhere?

By diligently searching for acceptable non-settlement options, you can enhance your bargaining power with respect to your present adversaries. The better the external alternatives you develop for yourself, the greater the bargaining freedom you will possess when you are in the thick of the bargaining encounter.

What Non-Settlement Options Are Available to Your Opponent?

Once you have developed an appreciation of the different settlement and non-settlement options available to you, and have identified your bottom line, try to place yourself in the shoes of your
counterpart.
Ask yourself what options would be available to the other side if it failed to reach a deal with you. Many negotiators fail to evaluate the options available to their opponents. This is a critical oversight, for your bargaining power is determined by these factors. Comparing your bottom line with your opponent’s bottom line is the best way to measure bargaining power. If your non-settlement options are better than those of your adversary, you have greater bargaining power—and vice-versa.

Several years ago, a close friend told me about a significant corporate dispute in which he was involved. He explained the factual circumstances and acrimonious bargaining history, and said he was beside himself and didn’t know how to proceed. I asked what would happen to his firm if no agreement were achieved. He replied that they would be bankrupt. When I asked how bad that would be, he was shocked. I asked whether his company could go through bankruptcy reorganization, and he said they
could. I then asked what would happen to the opposing corporation if no agreement were achieved. He said he had no idea. When I urged him to think about this carefully, he indicated that they would also be bankrupt. I asked whether they could reorganize, and he replied negatively. His firm was the other company’s main client, and if their relationship was severed, the other corporation would be out of business. My friend finally appreciated the bargaining advantage he possessed, by virtue of the fact that his non-settlement alternative, while not pleasant, was substantially preferable to the negative impact a non-settlement would have on the opposing party.

T
IP

When Intelligent Negotiators measure their own bottom line against those of their counterparts, they often undervalue their own options and overvalue those of the other side. It is human nature to become intimately familiar with our own circumstances. We often dwell on the negative aspects of our situations, assuming our counterparts are aware of those matters. When we are upset, we even magnify the negative factors that affect us. When we attempt to evaluate our opponents’ circumstances, however, we tend to do the opposite. We see the strengths the other side possesses, and often miss the negative pressures affecting that party. When you evaluate the circumstances affecting the other side, try to look behind the facade being projected and speculate about the problems likely to be influencing that side. What hidden pressures may be driving the other party? How much does that side need what you can provide?

No matter what the balance of power, Intelligent Negotiators project their strengths and conceal their weaknesses. What you must ask yourself when preparing for bargaining is not what weaknesses you actually possess, but what weaknesses you have that your opponent is likely to recognize. Think about the impression the other side has of your situation. If you do a good job of hiding your problem areas, you should be able to create an image of greater strength.

When comparing settlement and non-settlement options, always include the transactional costs associated with both alternatives. What are the financial and emotional costs of agreement, and what are the economic and psychological costs associated with no agreement? Even when the monetary transaction costs may be relatively equal, other considerations may lead you to favor a negotiated resolution.

The fact the underlying situation will be resolved now instead of months from now may provide financial and/or emotional relief. On the other hand, a bad settlement is almost always worse than a preferable non-settlement, because of the post-settlement “buyer’s remorse” experienced by those of us who consent in haste to poor agreements.

Felicia Brown realizes that present employment market considerations enhance her bargaining position. Unemployment in the Metropolis area is low, and businesses are finding it hard to attract skilled workers. She thus thinks she can get at least $60,000 elsewhere if she rejects the Andersen offer, and has decided not to accept an Andersen salary below $62,000 or $63,000. By examining job announcements for similar firms, Felicia believes she should be able to get Andersen to cover the cost of at least some of her training programs and agree to three weeks of vacation.

Felicia is aware of the number of network manager positions available, and appreciates the difficulty Andersen would have finding a proficient person if she turns them down. Even though she does not want to apply for many of these vacant positions, due to the extended hours and high stress situations involved, she knows that Andersen has to compete for people who might be willing to work for larger firms if the employment terms were sufficiently generous. Felicia thus appreciates the fact that Andersen probably needs her services more than she needs their job.

Establish Firm and Appropriate Aspiration Levels: Those Who Want Better Deals, Get Better Deals

By now you know your bottom line and your non-settlement options, as well as those of your opponents. It is time to establish your aspiration level. Begin the process by asking yourself: What do I hope to achieve through this bargaining encounter? How well can I possibly hope to do?

As stated above,
Persons who want better deals get better deals.
So set your goals high. If you think in terms of your bottom line, you are unlikely to obtain terms any more generous than that initial level. When in doubt, raise your goals. If your new objectives seem unattainable, take the time to develop arguments supporting them. Do not
open discussions until you feel personally comfortable with your elevated objectives. This will enable you to exude an inner confidence that undermines a less prepared opponent’s belief in his or her own position.

When I teach negotiation courses, I regularly notice the same phenomenon. Individuals who begin a bargaining encounter with lower expectations achieve their reduced objectives and are pleased with their results—until I announce the terms attained by other negotiators who had set higher goals. On the other hand, people who begin an interaction with elevated goals may be unable to obtain everything they want, causing them to doubt the degree of success they have achieved. Only after the group results are disclosed do these people appreciate how well they have done. The irony of this situation is the fact that people who always set minimal goals get those terms and are more pleased with their results than are more adroit colleagues who establish higher objectives but fall slightly short of their targets.

If you always or almost always get what you initially hope to achieve when you enter bargaining interactions, you should begin to raise your aspiration levels, initially, by 10 to 15 percent. If you try to double or triple your planned goals, you are likely to fail and return to your old tendencies. If you continue to get everything you seek, raise your objectives again in 10 to 15 percent increments until you begin to occasionally fall short of your targets. At this point, you can be confident that you have learned to establish appropriately elevated aspiration levels.

Almost every year, a third-year law student comes to my office to discuss an impending negotiation. The student has received an employment offer from a smaller law firm that does not have a definite compensation policy. The partner has merely indicated that the firm has
“competitive salaries.” The student is scheduled to have lunch the next day with the hiring partner to discuss the salary to be paid. My conversation with these students is almost always the same:

P
ROFESSOR
C
RAVER
: Have you asked classmates who have received offers from comparable firms what salaries they have received?

S
TUDENT
: Yes. One is getting $80,000, another $78,000, a third $73,000, and a fourth $69,000.

P
ROFESSOR
C
RAVER
: When the partner asks you if you know what similar firms are paying new associate attorneys, casually mention the $80,000 and $78,000 figures and become silent. Look at the partner with confident anticipation.

S
TUDENT:
Should I mention the lower salaries paid by the other two firms?

P
ROFESSOR
C
RAVER:
No. Wait and see whether the partner wishes to do so. Most firms don’t like to admit that they are not comparable to the higher paying firms, thus there is a good chance the partner will not discuss the other two firms.

What is the minimum salary you hope to obtain?

S
TUDENT:
I would really like to get at least $70,000 to $72,000, if possible.

P
ROFESSOR
C
RAVER:
You should be able to get the $80,000 being paid by the first firm you mentioned.

S
TUDENT:
I couldn’t possibly do that well!

P
ROFESSOR
C
RAVER
: If a classmate was able to get that salary at a similar firm, you should be able to do so. Try to enjoy your lunch tomorrow. I know you are going to do well.

The student begins to contemplate the $80,000 figure and departs. Several days later, he returns to my office looking somewhat dejected.

P
ROFESSOR
C
RAVER:
How did your meeting with the hiring partner go?

S
TUDENT:
Not so well. I only got $78,000.

P
ROFESSOR
C
RAVER:
That’s great! I didn’t think you would do that well.

S
TUDENT:
I don’t understand. You said I should be able to get $80,000, and I only got $78,000.

P
ROFESSOR
C
RAVER:
You had to think $80,000 to get the $78,000. If you had gone to lunch hoping to get only $70,000 to $72,000, you would probably have accepted $70,000—and possibly even $68,000.

Only at this point does the student begin to appreciate the importance of a high and firm aspiration level. Had the student not expected to obtain the $80,000 salary, he could not have hoped to get the $78,000 figure achieved. The student might even have gone below his initial $70,000 to $72,000 goal.

When multiple item negotiations are involved, an Intelligent Negotiator establishes specific aspirations for
each
of the items being exchanged. If you only create overall aspirations or provide goals for some items, when you get to terms for which you have no real objectives, you are likely to cave. You have not developed set reference points for these items, thus you have no touchstones to guide your actions when they address them. Adroit adversaries can exploit this lack of item-specific preparation by seizing these terms after the other issues have been resolved.

As she prepares for her meeting with the Andersen vice-president, Felicia’s confidence level begins to rise. She initially hoped to get at least $60,000, but now thinks she may be able to get $63,000 or $64,000. She believes she can definitely obtain three weeks of vacation, and can probably get Andersen to pay for most of her training classes as well as give her the time off to attend those classes. She will try to get either the possibility of an annual performance bonus or the promise of a salary reassessment after her first six months of employment.