People & Skills
Negotiation For The Public Sector – Know Your BATNA

We have been looking here at the need for negotiation skills amongst many people in public sector organisations. We explained why negotiation is often critically important during the delivery or contract management phase of contracts, where it may not be the procurement professionals who lead – or are even involved at all – in those supplier negotiations.

We are focusing on the issue of principled negotiation versus bargaining, as the vast majority of important negotiations in the public sector fall into the first category. We have also explained that “Getting to Yes”, the book from Fisher and Ury of the Harvard Negotiation Project, is still the best introductory book on negotiation that we know. That book describes five basic elements of principled bargaining:

– Separate the people from the problem.

– Focus on interests, not positions.

– Invent options for mutual gain.

– Insist on using objective criteria.

– Know your BATNA (Best Alternative To Negotiated Agreement)”

Having covered the other principles here, here and here, we are now onto perhaps the most important – knowing (and indeed developing) your BATNA. The BATNA can be considered as the action that the negotiator (or their organisation) will take if the negotiation does not achieve the desired objectives. What exactly will we do if we can’t get what we want from the supplier, for instance.

It is easy to see why this is so vital. If your BATNA is strong, you can go into a negotiation knowing that you can push hard for your goals, and that there is a reasonable alternative if the other party is unreasonable or simply is too far away from your position to reach agreement. On the other hand, a BATNA that is not attractive puts the negotiator into a weak position, with a temptation to agree to a poor negotiation outcome.

Yet despite the importance of the BATNA, it is remarkable how many times in our experience negotiators start the process without a good BATNA or without even considering it. And note that the BATNA should be developed before we go into the heart of the negotiation process. Whilst it may be developed and improved during the process, really we don’t want to start with the BATNA looking weak or unclear.

Where buyers do not really think about this, we often see a typical negotiation with the buyer simply using basic threats – “we’re a big powerful organisation / this is a big contract for you, so you must do what we say”. When the supplier simply says “no”, the buyer is left making empty threats, or trying to bully the supplier without any real negotiation power or leverage.

Making threats like that without really wanting to carry them through, or even being able to carry them through, is one of the worst ways to behave in a negotiation. The parallel with bringing up children is strong. Imagine you tell your small son or daughter “if you don’t eat your vegetables, we won’t go to the park”. Then when they refuse to eat, you give way and take them anyway – you are then on the slippery slope to a badly behaved child who knows how to manipulate its parents! Threatening a supplier, then not following through, is an exact parallel.

So your BATNA must be realistic and something that ideally you are reasonably happy to actually follow though. That identifies some constraints . There is one very basic BATNA that is often used by procurement people – “we will terminate the contract if you don’t agree to our demands”.

But this is often not really an effective BATNA. Even in the private sector, it is often very difficult for a buyer to do that, and in the public sector, where contracts and process are more formalised, it may be almost impossible. and even if you can terminate –what then? Do you have another supplier lined up? So in many cases we may have to think of more subtle BATNAs if the negotiation is to be successful.

Luckily, there are ways of identifying and developing your BATNA in pretty much every negotiation situation. And having got to this point, we’ll leave some further thoughts for another day; this is such an important issue, it deserves some further discussion!