That women tend to earn less than men is now quite well established. Whilst the reasons why that is the case are slightly less clear, one of the more prevailing ones is down to the negotiation skills of the two sexes. Men, so the legend goes, are better negotiators and are, therefore, better able to haggle that higher salary.
Whether that legend is true or not, I don’t know, but it’s probably fair to say that we can all do better when it comes to negotiating. The standard theory of great negotiation revolves around the BATNA or Best Alternative To a Negotiated Agreement. In laymans terms, this is your next viable alternative to the position you’re negotiating for.
If your BATNA is weak, then it gives power to the other party in the negotiation. At least that’s how the theory goes. A recent study from researchers at Columbia University suggests that it’s usually better to have no BATNA than to have one that’s weak.
Show me the money
The inspiration for the study came from the Tom Cruise character in the hit film Jerry Maguire. His character was based on the real life talent agent Leigh Steinberg, whose first client was the American football player Steve Bartkowski. Against all odds, Steinberg secured a lucrative deal for Bartkowski with the Atlanta Falcons. Indeed, it was a record deal for any player at that particular time, and it was achieved despite Steinberg having no BATNA in his locker to fall back on.
The Falcons initially rebuffed the optimistic first offer by Steinberg, but still ended up signing the player for a huge fee. The researchers suggest that the lack of a fallback option forced Steinberg to be audacious as he wasn’t anchored to a low number (i.e., the weak BATNA).
The study proved this across several experiments, showing that when participants had no BATNA to fall back on, they were actually more successful in negotiations than people with weak BATNAs.
It emerged that participants with a strong backup offer entered the negotiations, they did so with a high initial offer because they reported feeling powerful as a result of their BATNA. Those with a weak BATNA however offered up a low initial offer, despite reporting that they felt more powerful than their peers with no BATNA at all. As a result, they ended up doing worse than the group with no alternative to fall back on.
The findings were replicated, even when the anchoring effect of a low BATNA was removed from the equation. When participants were told to focus on their desired target price in the negotiation rather than their BATNA, they ended up with much higher deals at the conclusion of the negotiations.
So it seems clear that having a BATNA is not the be all and end all of a good negotiation, particularly if your BATNA is particularly weak.
“Thus, negotiators who are unable to obtain strong alternatives should be wary of low anchors. In contrast, negotiators without any alternative may not have to worry about their powerlessness and instead should spend their resources on making the right first offer,” the researchers conclude.