What is a BATNA (Best Alternative to a Negotiated Agreement)?

If you’ve ever read a negotiation book or taken a course, you might have heard the acronym BATNA thrown around – or maybe it’s completely new to you!

Either way, BATNA – which stands for Best Alternative to a Negotiated Agreement – is one of the most important components of a successful negotiation. Below we’ll dive into what BATNA really means and how to effectively create one for your next negotiation.

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What is a BATNA?

Put simply, BATNA is your baseline or your Plan B. It’s what happens if you don’t take the offer you’ve been given. The higher your BATNA, the more comfortable you are pushing for a really significant increase. 

For example - let’s say you absolutely love your current job. The work is interesting, the people are great, and you’re being paid well. However, a recruiter reaches out to you with an interesting opportunity. You start interviewing and eventually get an offer.

As you’re evaluating it, you’re naturally comparing it to your current role. Given that you’re very happy with it, it’s going to take a very tempting offer for you to consider leaving your job. This means your BATNA, or alternative to taking the offer, is high.

However - you might view the new offer quite differently if you hated your current job or weren’t working. This is the power of the BATNA!

Here’s another concrete example – we recently helped a very senior engineer at Google who’d received an external offer.

Because of his stock refreshers and strong performance, the individual had such high compensation at Google that there were very few opportunities that could beat what he was currently making. 

While the initial offer he received was far below what he was currently earning at Google, he used his current compensation at Google to increase it substantially – doing 4 rounds of negotiation to increase the offer by almost $600K in the four-year offer value. 

The engineer would not have negotiated anywhere near as aggressively had his BATNA been lower. Having a high BATNA allows you to more ambitiously advocate for yourself -- both in terms of compensation and also non-monetary benefits like scope, title, etc.

BATNA = Negotiation Leverage

Having a high BATNA gives you leverage – which, in the context of negotiating, we define as “having both something that the job market wants and the ability to walk away before giving it to them.” 

In other words, an employer needs to want you badly enough to give you what you’re negotiating for – and you need to feel like you can ask for it because your alternatives are so compelling!

A compelling BATNA is what gives you leverage in your negotiations with potential or current employers.

While people commonly think having multiple offers is the best way to increase your BATNA – there’s always the risk an offer may not materialize, or that the other offers will be with a company that’s less desirable or too low to use as leverage. Plus, in a tough job market, it’s harder to line up multiple offers at the same time.

At the end of the day, the absolute strongest BATNA is having full confidence in yourself and your financial prospects. This kind of leverage can take many forms, including:

How to Strengthen Your BATNA in Negotiations

1. Understand the landscape. Make a list of all of the alternatives you have in lieu of accepting this offer, then order them in terms of attractiveness to you.
   
2. Don’t decrease your leverage. If possible, avoid interviewing at your top choice companies and roles first so you can get some practice under your belt.
   
3. Avoid lifestyle creep. Keep your personal financial situation under check so you can have as much stability as possible.
   
4. Adjust your mindset. In a negotiation, you must be polite but firm. Determine your non-negotiables and stick to them. Going into a negotiation conversation with confidence (and scripts!) can greatly improve your chances of getting what you want. ‍
5. Proactively bolster your BATNA. If you’re thinking of making a big career change in the next few months, what can you do now to bolster your BATNA? For example - are there things you can do to make your current job more sustainable so you don’t need to take the first offer you get?

We recently worked with an Engineering Manager who really hated her current role and desperately wanted to leave. We worked with her to have some tough conversations to try to make the work better. One of the biggest things she was able to do was negotiate to be completely remote which makes her work-life balance much better. While she still wants a new role (and is actively interviewing), she no longer feels like she needs to leave as soon as possible, which allows her to interview more selectively.

Understand the Company’s BATNA

Companies also have BATNAs – in other words, what happens to them in the event that you choose to decline an offer. Their BATNA will likely vary by type of role and the business’s needs at the time. 

For example - let's say a startup’s only finance team member quits one month before tax filings are due. Given the timing, they'll be in a lot of trouble if they don't fill the role quickly -- so their BATNA for a new finance lead would probably be quite low. And, their willingness to pay for someone who can join as soon as possible would be quite high.

If you’re given an offer to join the company’s finance team a month before taxes are due, you’ll likely have much more leverage to negotiate than if you joined at another time of the year, or under different circumstances.

In our experience, candidates often don’t do enough due diligence to understand the company’s BATNA. 

To understand this, you need to consider the following questions: 

• How long have they been hiring for this role?
  
• Why was the role opened up?
  
• Are there any other candidates at offer stage? How do you compare to them?
  
• What sort of feedback did you receive throughout the interview process?
  
• What does the company need immediately or in the long term that you have? Or don’t have?

It’s important to note that it’s not just about how many other people are interviewing – but also about how well-positioned you are for the role.

For example, many recruiters will share with candidates that there are other folks in the recruiting pipeline for the same position to create urgency and make you feel like you need to make a decision quickly. 

Sometimes this is a recruiter tactic, but you can imagine that a company would think about a negotiation differently if you were the only candidate in the pipeline vs. if they also have 3 other top engineers in the interview process. 

When you find out this information - it can be tempting to think you have very little leverage to negotiate. However, by understanding how you’re uniquely positioned for the role, building social capital, or even learning that the company has historically struggled to fill this position, you can still prove your value and have leverage to make an ambitious ask.

You have much greater leverage in a negotiation when the company perceives their BATNA to be weak and/or you perceive your BATNA to be strong. With the right negotiation strategy, you can influence their perception and control yours!