In Negotiation, Start By Managing Their Expectations

Every party enters a negotiation with expectations on the outcome, the ideal result they're looking for, which tend to revolve around the most critical issues in that negotiation: the salary in a job offer, the service fee by a supplier, the commission for an agent, the sale price of a house.

As a negotiator, you can do one of three things: ignore, meet, or manage your counterpart's expectations.

Ignore: You can ignore her expectations by talking only about your own expectations or, even worse, about less important issues.  By deferring critical issues, you're planting a ticking time bomb ready to explode when you eventually get to these matters.  You're setting yourself up for failure.

"By deferring critical issues, you're planting a ticking time bomb."

Meet:  You can meet her expectations by taking her perspective, seeing how she sees the issue, and then coming up with creative options to meet mutual interests.  However, by doing so unconditionally, you may be giving up more than you should by compromising your own expectations.

Manage:  Instead of ignoring and before meeting your counterpart's expectations, start by managing her expectations.  Before you sit down to talk (or at least by the end of your first meeting), let her know approximately where you see the eventual outcome to lie.

Here are three ways how.

1. Make your own expectations clear

Make it clear from the beginning what your counterpart should expect from you. For example, before you begin the recruiting process, make it clear to the applicant that a new hire with two years of experience can expect to receive a monthly salary in the range of, say, $5,000-5,500.  If the hire is not comfortable with this range, then there would be no point in commencing the recruiting process, saving both you and the candidate valuable time and resources.

2. Emphasize objective criteria

Give your counterpart objective standards to consider.  If you're looking into a house sale, you may offer information such as "My friend recently bought a similar house in this area for $1,000,000."  If you're shopping around for professional services, you may say something like "We understand that similar professional services cost around $5,000 in your market."  For more on this topic, see More Power To Your Negotiating Punch.

3.  Provide context

If you don't want to be direct, you may prefer to provide relevant context instead (read: hints) and let your counterpart make inferences.  If you're about to pitch your business to a prospective client, you may suggest "We're one of the best firms in this industry." (inference: our fees are above market rates).  If salary review season is coming up, you may convey to your employees, "It's been a tough year for the company." (inference: don't expect a large raise).  This lets your counterpart shift her expectations upward or downward.

Direct vs. Diplomatic

You may notice that the three tips were listed in reducing order of clarity.  By making your expectations clear, you're sending a very specific message, as opposed to simply providing context and leaving a general impression.  Use these tips based on whether the situation calls for directness or diplomacy, being aware of the risks in each case.

Be Genuine and Do It Early On

As you apply these tips, be genuine.  The point here is not in bluffing, but objectively, fairly shaping the expectations of the other side.  Saying that it's been a tough year for the company just to dampen your employees' hopes is no different from disrespectful cheating.  If caught, you'll be shattering all hard-earned trust and reputation.

Finally, do it early on.  The sooner you clarify expectations on the key issues, the sooner you'll understand whether that negotiation stands a chance.  Setting the tone from the beginning, you'll be doing both parties an immense favor by preventing unpleasant, deal-breaking surprises down the road and therefore saving everybody's time.

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This is the 25th article in the series!  Stay tuned for more on dealmaking every week by clicking the "Follow" button above.  For my previous LinkedIn Pulse columns on law, dealmaking, and strategy, see this link.

Also, if you're looking for professional practice, advice, or fresh ideas on an upcoming negotiation or simply have questions, touch base with me via LinkedIn or drop me a note at [email protected], and I'll be very happy to assist.

Many thanks to Shaké Khzrtian for the choice of cover painting -- probably the toughest selection in the entire series so far.

Stepan Khzrtian (Cantab '11) is co-founder and Managing Partner of LegalLab Law Boutique (www.legallab.co) and co-founder of the Center for Excellence in Negotiation (www.cen.am).  Trained in advanced dealmaking at Harvard Law School, he has been engaged in coaching and consulting on negotiation for nearly 10 years, working with clients to successfully close deals with Fortune 500 companies and empowering officials and officers to best serve constituencies. 

He writes on law, dealmaking, and strategy.