Tactical Negotiations Skills Training: Negotiating Success

Tactical Negotiations Skills Training Negotiating Success

For both individuals and business owners, negotiations can prove to be one of the most difficult and most important things that we do. The largest purchases that most people make frequently involve very intense negotiations. The ability to gain employment, and earn promotions is also frequently influenced by your ability to negotiate. Negotiation has a very significant impact on personal, professional, and financial negotiations skills training. Because of this, it is very important to understand the parts of negotiations that are the most important, along with the parts that are frequently misunderstood.

To many people, the idea of negotiating brings up images of aggressive arguments where both sides attempt to prevail against the other in a pitched battle for power where one side wins and the other side loses. Another paradigm of negotiations skills training is one where a "win-win" paradigm requires that no deal be made unless both sides realize significant benefits. The truth of negotiation exists in-between these opposite visions.

Best Alternative To a Negotiated Agreement

The term BATNA, meaning "Best Alternative to a Negotiated Agreement" was coined by Roger Fisher and William Ury of Harvard University, and incorporates many of the ideas published by John Nash in his work on negotiations skills training. The idea incorporated in BATNA is that our ability to negotiate is heavily influenced by our alternatives if the negotiated agreement does not occur.

One way to think about BATNA is to imagine that you're looking to sell a car. If you have one buyer lined-up who will pay $2,000 for the car, then you will be very unlikely to accept less than $2,000 from anybody else unless you have negotiations skills training doubts about the original offer. Your best alternative is selling the car for $2,000 and that places you in a position of power to confidently list the car for sale at a higher price. Alternatively, if you need to raise cash very quickly and have no buyers lined-up, then you may need to accept $500 or less from the first able buyer whom you come into contact with. Thus, your best alternative exerts a tremendous degree of influence over your decisions.

How BATNA Influences Our Idea of Fairness

One of the enduring ideas of humanity is the notion of fairness. The situations that most people perceive as being unfair are those where one side has a significantly better BATNA than the other. An example of this is if you are walking across a desert, parched of desperate thirst, and run across a truck who offers to sell you a 20 ounce bottle of water for $5,000. The natural response to this scenario is that the negotiations skills training transaction is supremely unfair since the cost of that bottle to the seller is approximately one dollar. In this situation, the BATNA of the person walking through the desert is a painful death of dehydration. Alternatively, the BATNA of the seller is their lost time and the expense of driving across the desert to find somebody walking whom they can sell water.

The reason why this feels so unfair is because the alternative of the person walking is death, while the alternative of the person selling the water is simply wasted time. However, this transaction still makes both parties better off, even though it feels patently unfair. If the truck were not present to sell the high-priced water, the person walking across the desert would suffer a painful death. Even when the person driving the truck engages in what is frequently called "price gouging," he still delivers a valuable service that is critically important to the person in the desert. Thus, in what seems to be a blinding paradox, some of the transactions that appear to be the most unfair to the "little guy" are actually the most beneficial. The reason for this is because when the best negotiations skills training alternative for the "little guy" is worse that the seemingly unfair exchange, then they are far better off with the deal that feels severely slanted against them. Thus, by using legislative power to prevent exchanges that feel unfair, it is possible that we are actually condemning the people whom we think we are helping to suffer an even worse outcome.

How BATNA Influences our Negotiations

Another important thing to consider in regards to BATNA is its impact on our personal, career, business, and investing decisions. Within this insight are two levels of distinction. The first is that our alternatives influence our decisions. The second is that our negotiations skills training perceptions may differ from reality, and result in decisions that are sub-optimal. In short, it is very easy to both over-estimate and under-estimate our best alternative.

Why Our Alternatives Matter

  • The simple reason why alternatives matter so much is because we can be more confident in refusing low-quality outcomes when we have a better alternative. If you are highly educated and experienced in a field that is in demand, you do not need to take the first job offer that comes your way. If you are able to re-locate with ease, you can be more flexible in finding a new job that allows you to advance more quickly. If you are a business owner who already has a key negotiations skills training customer that generates sufficient revenue to cover your costs, you can negotiate pricing with new customers from a stronger position. If you are able to assemble investment deals that generate a high rate of return, it will allow you to walk past the traditional financial instruments that are sold for retirement planning.
  • In short, the decisions that you make are bracketed by the alternatives that you possess. By increasing the quality of your alternatives, you increase the strength of your decisions. Thus, the 'real' way that people achieve success is not just through the decisions that they make, but through developing the negotiations skills training alternatives that allow them to make high-impact decisions in the first place. Most of the best investments require some degree of capital. If you are unable to pay the monthly rent, high-impact investing is not an option. Regardless of how educated you are in decision-making, those decisions will not become available until you influence the underlying alternatives through preceding actions and decisions.

Over-Estimating the Alternatives

  • One of the things that frequently happen in high-stakes negotiations is that one or both sides will over-estimate their alternatives. This typically results in the adoption of "tough-guy" negotiations skills training techniques, and can create very large problems if the deal falls apart and the assumed alternative do not materialize. Typically this situation occurs when negotiators fail to invest sufficient research into their realistic options. The most frequent occurrences of this effect are when one side focuses on the other side's lack of options more than their own situation.
  • For example, the union frequently notes that management will be in a pinch without labor. Similarly, management frequently notes that the union members will be in trouble without their wages. The truth is that both labor and management suffer from a prolonged work stoppage. It is important to avoid taking your eye away from your own alternatives by excessively focusing on other people's alternatives.

Under-Estimating the Alternatives

  • Another way that people can run into trouble is by under-estimating their alternatives. When this happens, people will be likely to take "the first thing that comes along" instead of searching for their best option. Typically, this situation occurs when people have a low opinion of themselves and their abilities. This is not to say that ego and arrogance are in order, but that an honest assessment is critical.

In the end, understanding our alternatives is a critical part of optimal decision making. It is important to make an honest assessment of what our options look like so that we can avoid the errors of both over-estimating and under-estimating the quality of our alternatives. This is one of the fundamental keys to negotiating success in our personal, professional, and financial life.

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