Best Alternative to a Negotiated Agreement Details

When two parties negotiate, it is always best practice to have the best alternative in mind to the discussion's main point. This represents a secondary gain with which the party would be reasonably satisfied should it prove impossible to achieve the main objective. Just as both parties in a negotiation have differing aims, both parties' best alternatives will be different. As the secondary aims generally represent a compromise, they may be more acceptable to the other party than the original demand.

In any negotiation, both parties should always have an acceptable best alternative to discuss if the negotiation stalls over the main point. In negotiations, the best alternative can take many forms depending on the subject of the negotiation. For example, in a meeting between an employer and a union over a wage increase, the employer may not be willing to increase pay but may offer longer holidays instead, while the union may accept a shorter working day if it cannot achieve higher pay. Other alternatives may include referring to a third party, suspending talks, or changing the negotiators.

A skillful negotiator will always have the best alternative in mind when they open negotiations; this best alternative gives them power and confidence, which come when a negotiator knows that they have options. A clearly defined best alternative helps a negotiator set a reservation point, at which they will break off negotiations because neither the main nor alternative aim will be met. In a negotiation, there is also a Worst Alternative to a Negotiated Agreement.

Best Alternative to a Negotiated Agreement Example

Mary is selling a car and wants $10,000 for it. Ideally, from her point of view, any negotiation would be about the details of the sale at this price, but she has the best alternative, in that she would be willing to accept $9,500 if the buyer pays in cash. Andrew is interested in Mary's car but wants to pay only $9,000. However, he might be willing to pay a little more if Mary has the car checked by a mechanic.

The two original positions - Mary wanting $10,000 and Andrew only willing to pay $9,000 - are not a basis for negotiation as the two positions are irreconcilable. The two best alternative positions are not the same for each of them but are sufficiently close to enable a conversation to begin. The outcome of any negotiation depends on the relative strength of the two parties.

In our example, if Mary is in no hurry to sell her car, then she may not need to fall back on her best alternative. She can wait for another buyer to come along, but she may agree to the lower offer if she needs the money. Meanwhile, if there are many similar cars available, Andrew may stick with his offer of $9,000, knowing that the market is saturated.