Tag Archives: commentary

It’s all about the BATNA

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(Image courtesy Ismael Celis under Creative Commons license.)

It seems like there is a constant stream of articles being turned out about how we’re all going to be working in Amazon fulfillment centers and holding in our pee for 12 hours while we dry-swallow bottles of Aleve and live in fear of our slave-driving lower-level warehouse managers.

You can read a lot of these types of articles on sites like the Verge for some reason. (I am beginning to think of them – at least in part – as “nominally ‘tech’ but actually ‘tech pessimism'” sites.)

Meanwhile, there is another – perhaps-less-frequent but still influential – stream of articles about how companies “can’t find” good employees, they “can’t hire”, millennials want “too much” from their employers, Americans “won’t work hard” and “don’t have the necessary skills” for “the future” ™, and so on.

You can probably read these articles in the Wall Street Journal.

The NY Times, that bourgeois rag, will happily run both types of article. (Parts of its demographic hold both views, in some cases simultaneously, and hey, the ads pay either way.)

Unfortunately there is an important concept taken from business negotiation called BATNA that is almost never even mentioned in either type of article – even though it usually explains the behaviors chronicled in the article! I could almost forgive this if the writer had studied journalism and not economics (although not really), but if they have any economics or business background at all it’s just criminal.

What is BATNA though, really? Well you can read the wiki article for more information, but it is an acronym that means “Best Alternative To Negotiated Agreement”. In other words, it’s a way of thinking during any type of negotiation about questions of the form “What’s my next best option if this deal falls through?”

For example, if you are an employer with a lot of cash on the balance sheet you can afford to wait a few quarters (or years) until employee wages come down to a level you find more appealing, maybe. If you are a wage-earning employee, you probably cannot. (Not to mention that it’s probably cheaper for companies to have their PR people push articles in the WSJ about how hard it is to hire than it is to just raise wages until hiring picks up.)

P.S. Special thanks to Andrew Kraft, who gave a great talk on BATNA and other related topics a few years back at AppNexus. Without his talk, I might never have heard of this magical acronym.)

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