Sometimes in negotiation, we’re forced to deal not only with the issues on the table but also with concerns about status. One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation, tried to acquire Federated Department Stores, the parent company of the prestigious department store Bloomingdale’s. A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer—and had to declare bankruptcy shortly thereafter.
BATNA
Best Alternative to a Negotiated Agreement. The true measure by which you should judge any proposed agreement. It is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept. (Roger Fisher and William Ury, Getting to Yes [Penguin Books, 1991], 100-01)
The following items are tagged BATNA.
When We Expect Too Much
How often have you heard a friend or colleague refer to a contract as being “in the bag,” only to find out later that the deal didn’t go through? There always turns out to be a good reason a negotiation fell apart. Yet the fact remains that most negotiators are overconfident about their chances of reaching agreement. A common cognitive bias, overconfidence causes us to have unrealistically high expectations of success, in negotiation and in many other aspects of life.
Are you afraid of commitment?
Adapted from “Overcoming Stage Fright: How to Prepare for a Negotiation,” by Michael Wheeler (Professor, Harvard Business School), first published in the Negotiation newsletter.
Many negotiators grow anxious as they approach the bargaining table, a reaction that puts them in good company with other distinguished professionals. Laurence Olivier’s stage fright almost ended his acting
Learning from the Soda Wars
This past November, in an unusual move, Costco, the largest wholesale club in the United States, removed Coca-Cola products from its shelves and posted messages telling shoppers that Coke products would not be available until the company lowered its prices.
To Avoid Disaster, Plan Ahead
In the midst of the recent financial crisis, accusations of greed on Wall Street have sounded across the globe. Greed may be a significant factor in the collapse of credit markets, but it’s not the only one. Overlooked in cries to punish the “bad apples” is the role of a mistake that virtually all negotiators make: ignoring how our short-term decisions will affect us and others in the future.
Making the First Move
Should you make the first offer? Few questions related to negotiation have yielded more attention and debate. The conventional wisdom among some: Don’t make the first offer, or risk “showing your cards” and perhaps unknowingly giving away some of the bargaining zone.
Should You Go Dutch?
Most everyday auctions are English: they begin with an opening bid, continue with ascending bids, and end when the bidding stops. But for some assets, the seller opens at a very high price, then moves down rather than up if all bidders are silent.
What Makes Negotiators Happy?
The question above may seem silly. Getting more of what we care about seems the obvious answer. Yet negotiators often don’t know how to accurately assess a good outcome; instead, they rely on outside indicators to determine their satisfaction, for instance by comparing their outcomes to those of others. Your negotiated annual salary of $100,000 appears quite different if you learn that others in your position are earning $110,000.
Is Your Agent Faulty?
Top executive pay attorney Joseph Bachelder was representing a client who’d just been chosen as a company’s next CEO. After a first session with the board’s representative to hammer out a compensation package, Bachelder took his client aside and informed him that he would get everything he wanted from the negotiation, according to the Wall Street Journal.
When Their Agent is the Problem
The benefits of hiring an agent are well known. Yet negotiation experts often overlook the ways in which you can use the other side’s agent to your advantage.
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