The Power of Finding and Using a BATNA & WATNA (Part 3 of 3)

The Power of Finding and Using a BATNA & WATNA

…Continued from Part 2:

In previous articles, we’ve discussed what a BATNA and a WATNA are, the purpose of identifying a BATNA and WATNA, some possible alternatives to consider, and two analyses that parties can use to identify their BATNA and WATNA.  This article will discuss the strategies that a mediator may use to help the parties reach an agreement through understanding their BATNA and WATNA and that the parties may use to leverage a BATNA or a WATNA in a negation. Knowing how and when to disclose a BATNA or WATNA or when a BATNA or WATNA will influence the other party’s or one’s own decisions in the negotiation will be vital to creating a strategy and effectively negotiate.  This will round out the discussion of BATNA and WATNA and will ensure that anyone entering into a negotiation will be prepared to use their BATNA and WATNA effectively.

The Mediator’s Role:

             As mentioned in an earlier article, in cases that go to mediation, a mediator may have a role to play in encouraging the parties to analyze their BATNA and WATNA analysis. However, a mediator will need to be careful to not push an analysis because they are certain it will bring an agreement, but only when doing so will best serve the parties, whether it encourages the parties to negotiate an agreement or leave the room without one.  A mediator must present the option to analyze and identify a BATNA and WATNA with the benefits and purpose of such an analysis to avoid the parties feeling as though the mediator is trying to pull them into an agreement by highlighting the flaws or weaknesses in the argument outside of the negotiation.  When deciding whether or not to suggest an analysis, the mediator may consider several factors, including:

  • Litigation in Progress: If litigation is already in progress, the parties have likely discussed the settlement in the past and will have some idea of the likelihood of success in the litigation. Therefore, the parties would probably be fairly prepared to move through an analysis.  It would be good to suggest that the parties’ lawyers discuss a BATNA and WATNA analysis before the mediation.
  • Need for Transparency: When the parties have had a chance to fully develop their interests and understand what they need and how to get there, they may be less likely to share what they believe about an alternative spontaneously during negotiation. If a mediator needs the parties to be fully honest and transparent, they will need to present the analysis in a way that encourages honesty between the parties and the mediator.
  • Desire for Leverage: Developing a BATNA/WATNA analysis will ensure that a party has an idea of what leverage they may have to negotiate with. Because of this, the parties need to have an idea of at least one BATNA and one WATNA moving into a negotiation, so a mediator should suggest a small analysis by the parties if they have not completed on in preparation.
  • Necessary for the Process: If a mediator senses that a BATNA or WATNA analysis will be necessary to move negotiations forward, it will be beneficial for the mediator to suggest the analysis earlier to make sure that the parties are prepared.
  • Close to an Agreement: The parties may be close to reaching an agreement before they come into a mediation. In cases where this is the case, a mediator may decide to not encourage the parties through a BATNA/WATNA analysis to not derail the nearly complete process.
  • Far from an Agreement: If the parties are very far from an agreement, suggesting a BATNA/WATNA analysis may help the parties see the dispute more clearly and move the parties closer to an agreement. In this case, a mediator may benefit from suggesting an analysis and moving the parties within a zone of agreement.

 

While this list is not exhaustive, it does highlight some considerations that a mediator will need to may when deciding if a BATNA/WATNA analysis will be the best course of action for the parties, as well as when to suggest an analysis.  Additionally, the mediator will need to present the analysis at a time when the parties can break out into caucus to move through the process individually.  Separating the parties while they complete an analysis will enable the parties to be more forthcoming in their analysis and come up with more opportunities and suggestions for their BATNA and WATNA.  It will also allow them to be realistic about the alternative, whereas having the parties move through an analysis together would force them to puff up their alternative and posture themselves.  However, whether the mediator suggests an analysis or not, it serves as a tool for the mediator to move the parties toward a settlement or to acknowledge their likely position in the negotiations.

 

Strategies for the Parties to Use BATNA/WATNA Analysis:

Like the strategies presented to mediators to encourage or discourage the use of a BATNA/WATNA analysis, the parties also have some options to leverage their BATNA and WATNA to their advantage and some considerations or factors that the parties must take notice of when planning for negotiation and when negotiating to ensure that the strategies implemented will produce the best result for the parties. The following strategies are organized by the strength or weakness of a BATNA or WATNA, and then suggest some strategies that a party may use when they are faced with that particular situation.

  • Weak BATNA: If a party has a weak BATNA, a negotiated agreement will be more desirable than proceeding with an alternative.
    • Be agreeable and congenial when speaking to and negotiating with the other party to try and keep the negotiations going. This strategy needs to be kept in check if the other party has a Weak WATNA or a strong BATNA, as they make take advantage of a party’s agreeableness.
    • Reconsider the bottom line. If a party has decided on a bottom line but later realizes that their BATNA is poor, it would be beneficial to reconsider their bottom line to give them a larger chance of agreement.
  • Undesirable WATNA: If a party is facing a highly undesirable WATNA, they will likely want to avoid proceeding without a negotiated settlement.
    • Similar to a party with a weak BATNA, a party with an undesirable WATNA should be more accommodating to ensure that the other party does not walk away without an agreement taking place. Again, use caution when the other party has a strong BATNA or a weak WATNA.
    • Fight to keep the relationship between the parties strong to encourage further negotiations.
    • Reconsider the bottom line. This strategy works in cases with an undesirable WATNA as well.
  • Inconsequential or Eliminated WATNA: When a party has a WATNA that is minor or has been eliminated through negotiations, they may be more willing to walk away from negotiations.
    • Threaten to leave if the other party will not meet demands. A party without a WATNA could threaten to leave the negotiation without a deal if the opposing party does not change their position to be more in line. This strategy would work particularly well when negotiation and settlement are more important to the other party.
    • Push the other party’s bottom line. Because a party feels that they may have little to lose if they do not achieve a negotiated agreement, they may push the other party to continue to renegotiate their bottom line, especially if the other party feels that they need to leave with an agreement.
  • Strong BATNA: When a party has a strong BATNA, they are less concerned with reaching a negotiated agreement and more concerned with using their position for their advantage.
    • Leverage the BATNA. A party may be able to leverage their BATNA by telling the other party what their BATNA is and saying that they are free to leave because they have this option. Similar to threatening to walk away, this option carries more weight because the opposing party not only loses the agreement but also may see some of their alternatives fade away with the suggestion of this party’s BATNA.
    • Push for a favorable agreement. Similar to pushing the bottom line, this party is in a solid position to fight for an agreement that favors them.

As discussed briefly in some of the strategies above, having an idea of some of the other party’s alternatives can be beneficial for choosing when to use certain strategies and suggestions to achieve a result that will be favorable. This can be achieved by running through a shortened analysis of the adverse party’s points to developed a rough idea of that the possible BATNA and WATNA are.  Knowing where each party stands allows the parties to negotiate effectively and understand when one party is posturing or when one party is in a good position in the negotiation.  Doing so will allow the parties to make the best decisions and walk away with or without an agreement that fits their needs.

 

Conclusion:

In every negotiation, the parties can reach a negotiated agreement, or they may leave the negotiation room to pursue an alternative that may produce a more favorable result.  While the concept of a BATNA or WATNA may seem different from normal preparation, moving through a BATNA/WATNA analysis will help the parties to their options clearly and be fully informed in a negotiation.  An analysis may be done through a decision-tree analysis or a results/costs analysis, both of which will produce a workable understanding of a party’s BATNA and WATNA.  Once a party identifies the BATNA and WATNA they can use, they can use this knowledge to achieve a favorable outcome and leave with confidence in the settlement and negotiation process.

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