Leveraging Power From BATNA Essay

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Leveraging the Power of BATNA

Leveraging Power from BATNA

In this case example, the transactions and the relationships among the original owners of a cottage and the new third party owner appear to have deteriorated into a zero sum condition and the parties have assumed positions characteristic of a distributive bargaining relationship (Honeyman, 2010).

Information as a source of power. Strategic advantage in a distributive bargaining situation is often a function of how much information each party has with regard to the other party's objectives, desires, and orientation to negotiation. Unlike integrative bargaining, where no information is left on the table, a party to a distributive bargaining situation assumes that each party will guard their information carefully in an attempt to retain whatever power may be gleaned from it. And a party to a distributive bargaining situation also assumes that the other party will try to get as much information from his opponent as possible.

Goal clarity as a source of power. To a substantial degree, distributive bargaining power depends on clarity about the several key points in a negotiation situation. The single most important point is goal clarity. There are two aspects to goal clarity. One is identifying and recognizing where the goals of the two parties may overlap. This sweet spot, called ZOPA, or the zone of possible agreements where interests and options for both parties overlap, has the potential to be very powerful, even for distributive bargaining. The second is BATNA -- BATNA stands for the best alternative to negotiated agreement. The parties also need to identify their own walk away values. Having clarity about the value of each of these key transition points in a negotiation situation fosters the power to know when to stand firm and when to concede in order to most effectively influence the course of the negotiation.

BATNA: Letting the court sell the property. It is rational to assume that the new third party owner has no interest in keeping the property, or at least that is the conclusion to be drawn from the improvements, and one can further assume that the confidence of the third party is derived, at least in part, from his belief that the improvements will help to sell the property. Letting the court force the sale of the land is likely to result in a lower price than the two parties would get if they could agree on a plan of improvement and sell the property together. Regardless, the court is unlikely to be interested in helping the new third party owner recoup his sunk costs. One has to assume that the new third party owner is playing at a game of King Solomon. The new third party owner stands to lose invested capital and control if the court is allowed to force the sale of the property.

Bracketing: Another negotiation strategies. An alternative approach in distributed bargaining is to generate bracketed offers that are then posed to the other party. A bracketed proposal is linked to conditions by which the other party can respond. Typically, a bracketed proposal provides a range of values, usually dollar amounts, within which the party suggesting the bracket see his terms enclosed. There are several ways that the third party can respond to bracketed offers. Several are listed below:

Walk away. Stop the negotiations because the terms are signaling something completely out of range.

Wait and see. Accept the proposal and wait to see what the proposer does next.

Consider only absolutes. Treat the proposal as though an absolute offer had been made and ignore the bracket figures or conditions.

Revise the brackets. Consider your settle point and propose different brackets that cover your point.

Accept & modify. Agree to one of the brackets and revise the other to better meet your conditions or terms.

For the case example, the owner and the new third party owner could exchange a series of bracketed offers. Like all good bracketed offers, this one includes an undercurrent of emotional persuasion, which is provided below.

Persuasion: Logical and emotional argument. One bracket is that if the new third party will agree to sell the property to the other half owner at a fair market rate -- which now includes improvements -- then the third party will retain more control than if the court forces sale of the property, stand to recoup his sunk costs, avoid the cost of litigation with the other half owner, and be free of the property that he does not, after all, wish to retain.

Call his bluff. I might also suggest to the new third party owner of the property that I am going to sell my interest in the property. I might look at potential purchasers who seem to have either plans or attributes that the new third party owner will find distasteful. For instance, I could show the house to large families with many children and pets. Even though I have no personal objections to large, noisy families with active pets, many people might not consider them to be optimal neighbors. Certainly, this tack could backfire in a serious way. For one, I might become entangled in a bid for the house for which I have no interest. Second, people I show the house to have a right to expect that I am showing them the house to them in good faith. I could be setting myself up for a lawsuit in which the wronged party claims some type of discrimination, inappropriately interpreting, as they have, my back-peddling as bias.

The powerof position. If the parties meet together in a physical location, there are a number of non-verbal techniques that can be used during the negotiation session that can skew the direction the negotiations take. Where one sits at the table or in a room in which people have gathered to dispute or negotiate can have profound nonverbal influence and communicate in substantive ways to those present in the room. In the game of poker, there is an expression: "Change your seat, change your luck" (Williams, n.d.). Experienced mediators recommend that people in negotiation, particularly mediators, choose a seat positioned to best help them meet their purpose at the gathering. Sitting at the head of the table causes the mediator to direct remarks to you, but sitting in the middle of the table, particularly among a larger group of people, gives you a measure of control over the table (Williams, n.d). Sitting on the opposite side of the table from the decision maker of the other party fosters opportunity for both rapport and influence (Williams, n.d.). If the goal is to create a caucus, sitting between the mediator and the other party can help to focus interactions on the issues and the facts, while reducing opportunity for the parties to direct hostile or intimidating looks at each other.

Other nonverbal communication strategies. Eye contact is perhaps the most potent way of communicating nonverbally. So, too, is posture. Mirroring the body posture and gestures of others has empirically been found to reduce hostility and open the path to greater communication between parties in close proximity, as people would be in a negotiation meeting.

Threats to generate concessions. There is an old adage that "threats loom larger in the human mind than do equivalent gains" (Shell, 2006, p.103). The strength of a threat can be assessed by consideration of which party has the most to lose if no deal transpires. The party with the most to lose, obviously, has the least leverage. When the prospect of a threat becomes a feature in negotiations, then the purpose of the negotiation changes, such that, the goal becomes to change the situation so that the other party has more to lose and you have the least to lose. It is also possible to alter the situation so that the other party has less to loose and you have more to lose, or the situation can be changed so that both parties serve to lose if the status quo continues. One course of action, that truly takes advantage of the leveraging power of BATNA, is to substantively change the circumstances. It may not commonly be possible, but you can change your circumstances so that you can seek alternatives to a negotiated agreement that do not require the other persons' cooperation.

Naturally, the new third party owner would rather put his money into improvements in the property and hiring a good real estate agent than he would re-directing that money toward legal defense. A threat of litigation could act as a strong deterrent to hostile or isolating steps on the part of the new third party owner. Also, the original half-owner could signal that he was going to go to the media about the potential development efforts of the new third party owner. The new third party owner is likely to want to avoid the attention of the press, and the subsequent censorship of neighbors and members of the community who have an interest in…[continue]

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