This is an excerpt from our article: Negotiating success and building your BATNA
When negotiating, identifying, and actively building a “Best Alternative To A Negotiated Agreement” or “BATNA” is important to both understand your own negotiating position and to help you build negotiating confidence. Think of your BATNA as a set of job alternatives, in case one of the other alternatives does not work out.
When changing jobs, at some point, compensation negotiations will be required. The most important element to a successful compensation negotiation is building a strong BATNA. Here is how to do it:
Start by pursuing similar jobs at multiple companies. It is important to build credible alternatives. This is you BATNA set.
Do primary research to determine typical compensation for similar jobs in similar markets. It is worth paying for this information.
When working with the company recruiter, ask them for the standard salary range for the intended role. You would be surprised what they will tell you.
Upon receiving the offer, consider asking for more money. Utilize your BATNA knowledge as the foundation for the compensation challenge. Remember, receiving an offer is a tell. It means they want you and you meet or exceed their hiring requirements! Well done!
Remember, compensation has a few different levers, like salary, bonus pool, ownership potential, benefits, and signing bonus. You will need to weigh each form of compensation.
In most companies, the recruiter is your main interface. They will likely have some leeway to negotiate salary. Beyond the leeway, they will need to get approval from the hiring manager or others in the leadership chain. DON’T FEEL BAD FOR NEGOTIATING, or, worry that you may look bad. If you have a well-researched BATNA, you will look good for advocating for yourself with thoughtful reasoning. They want employees like that!
When possible, do not share your current compensation. This is giving up important information that helps the recruiter more than it helps you. In a number of states, it is illegal for recruiters to ask for salary history. In the states where it is still legal, recruiters may ask. At most, only share your salary range. But only do so after you ask and the recruiter discloses the position salary range. This is a fair quid pro quo. This position salary range information will help you negotiate when the time comes. Remember, most salary increases, promotions, and bonuses are based on a percent of base comp. You only get to negotiate for your starting base comp once. It is worth asking for more! The position salary range can help you in two ways.
If the offered salary is at the top end of the range, you should ask to start in a higher position. You don't want to be close to the cap when you start a new job.
If the offered salary is below the top end of the range, this gives you negotiation room to ask for more base compensation.
Endeavor to understand the incentives of the agents involved with hiring you. The recruiter is more of a broker, they are incented to fill a position based on the job description. The hiring manager is like a buyer, they are incented for longer-term hiring position quality. The hiring manager “lives” with the hiring decisions after the recruiter does their job successfully. The hiring manager likely has accountability for a hiring budget. It is important to appreciate the agents’ subtle incentive differences.
Ultimately, the company will come back with a counteroffer. You will need to decide if it’s worth it or whether you should pursue the BATNA. Be objective! Never feel boxed into to a single alternative. You should always know your "walk away" scenario. Always be professional. All communication should be clear, concise, and with appreciation. If you end up not taking the offer, you want to leave them wishing you had!
Is a phantom BATNA ok? Meaning, is It ok to manufacture a fictional offer as a BATNA? Be careful. a) never make an untrue statement. Your credibility is most important. b) part of a BATNA is for your own psychology and confidence. c). your primary research may suggest market compensation. This could be used as an alternative in a seller's employment market.
In a related article, we discuss the use of BATNAs when making a car purchase. Car buying, especially when auto financing is involved, is surprisingly complex. This article provides an approach to cut through the complexity: Cutting through complexity: A car buying approach.
Some people feel uncomfortable with negotiating. This is unfortunate. Good negotiation leads to better outcomes for all. Good negotiation is a form of good communication, where all parties express their key preferences. This creates a better platform for productive, long-term relationships. Focusing on your BATNA is the foundation of good negotiation and a productive, long-term relationship.