Power comes in many forms, but the most obvious form is based on “no.” The less you need the other person (you can say “no” easily), the more you can ask for. The same is true when the other needs your cooperation a lot (i.e. it’s difficult for them to say “no”).
There are several mistakes that negotiators make around this form of power. First, they take it for granted by assuming they either they have it or they don’t. Second, when they do think they have it, they use it like a blunt weapon: “take my offer or I walk.” Third, when they don’t have it, they assume that the negotiation is over. Talking about these three mistakes and how to avoid them requires that I explain a bit about “alternatives” and how they impact your potential to say “no.”
Alternatives is a common negotiation term in the field that refers to the possible outcomes one can achieve without the cooperation of your negotiating counterpart. The best of these alternatives is commonly called a BATNA (best alternative to a negotiated agreement). Your BATNA is the best possible outcome for you should no agreement be reached with your current counterpart. The same is true for your counterpart. (Go here for a more academic description of BATNA.)
So, before you decide whether to say “yes” or “no” to an offer, I should compare it with my BATNA.
So, the first mistake I mentioned earlier (either I have ‘no’ power or I don’t) is based on the assumption that you cannot improve your BATNA. This is not true. Skilled negotiators will spend time assessing their alternatives and then seeing how they can improve them. Let me give an easy example. Let’s say that I work at a government agency and I want a raise. I prepare for that negotiation by writing down all the reasons that I deserve a raise. Then, I enter that negotiation, present my reasons, and my boss says, “no.” Have I done the best that I can?
Many negotiators already know that one additional strategy here is to look for other jobs before entering into this negotiation. If you can show your boss another offer that presents you with a better package of pay and benefits, then there is a greater push for him to grant you a raise. If he doesn’t, then you can always go to the other job which is better. So, this is a simple example of how one could improve your BATNA to get a better result from a negotiation.
On the other hand, it is also an example of the second mistake I mentioned earlier (using your alternative like a hammer). Bosses may take your job-seeking as a sign of disloyalty and it is unlikely that they will appreciate being pushed into giving you a raise. So, we need to find a better way of using our BATNA so that we don’t harm relationships.
The first way to do that is to build the best possible relationship with your counterpart before or during the negotiation. (Before is better especially with bosses as I mention in Getting Past ‘Yes, Boss’.) A second method is to explore all possible means of meeting your needs before you bring out your BATNA. Using our example, if the boss can’t give you a raise, can they improve your health plan, give you a housing, car, or education allowance, fund training opportunities for you, and so on? The point is to try your hardest to find a solution that is better than both your BATNA and that of your counterpart. Doing so keeps the interests of the organization at the same level as yours so that they know you’re being caring as well as selfish. It’s always important to have consistent and visible intentions.
The third mistake (I give up because my BATNA is not good) is more difficult. Sometimes, your BATNA just isn’t strong and you can’t improve it very much. However, this doesn’t mean that you just have to say “yes.” The key here is to remember that your negotiating counterpart will always say “yes” to a deal that gives them more value than saying “no.” So, as above, building up a good relationship and exploring different possible options is always a good route to follow.
Finally, when your counterpart doesn’t want to negotiate, sometimes you can change their mind by lowering their BATNA so that they are more likely to say “yes.” A union’s ability to go on strike is one such example. When workers strike, the company loses money, so it makes it more desirable for the company to negotiate to avoid the strike.
Again, this should be used as a last resort because everyone loses when there is a strike and sometimes the results can be disastrous for all parties. The story of the labour strikes at Hostess provide a good example. Read this analysis of the strike and why it went bad as well as this story about the final result of the bankruptcy that followed).void the strike.
To summarize then, develop your ‘no’ power by improving your BATNA. While it establishes the minimum you can expect from your negotiation, don’t use it like a hammer. Always start by building relationships and exploring possible deals that are better than both parties’ BATNAs. Using your hammer, or shrinking the other side’s hammer, can work but it can also make the negotiation more adversarial and result in all parties losing.