This Month's Topic:
Skilled negotiators manage expectations prior to and during a negotiation. Some managers do this instinctively while others need to spend time thinking about the best approach. For example, in the month prior to salary negotiations with employees, managers may broadcast the message that this has been a difficult year for the company. After having their expectations lowered, some employees may be satisfied to receive even a small cost-of-living raise.
Here are some ways to manage the expectations of your negotiation counterparts:
Temper Your Reaction to Opening Offers: Your reaction to an opening offer can also influence your counterpart's expectations. By reacting with a surprised look, a laugh, or a flinch, you can lower your counterpart's expectations about the feasible bargaining zone. Conversely, by appearing very cooperative or particularly eager for agreement, you may raise your counterpart's expectations.
Manage Your Concessions: One common negotiation mistake is to escalate expectations by making a steep concession that could lead the other side to expect another. Imagine that you're bidding on a house that has been on the market for some time at a high list price of $390,000. You like the house but start with a low offer: $300,000. In response, the seller offers a slight reduction from the list price: $385,000. Hoping to bridge the gap, you make an offer close to your bottom line: $340,000. The seller may misinterpret this move and believes that you can easily make another $40,000 jump. Rather than quickly agreeing to your offer, the seller might escalate her expectations regarding likely outcomes.
Pace Yourself: A related mistake is to agree to your counterpart's demands too quickly. Adam Galinsky and Victoria Medvec of Northwestern University, Vanessa Seiden of Chicago-based Ruda Cohen and Associates, and Peter Kim of the University of Southern California studied reactions to initial offers in a negotiation. They found that negotiators whose initial offers were immediately accepted were less satisfied with their agreement than were negotiators whose offers were accepted after a delay-even if the former group reached better final outcomes than the latter group. Those whose initial offers were immediately accepted were more likely to think about how they could have attained a better outcome than were negotiators whose offers were accepted after a delay.
Delay Agreement: As these results suggest, you can actually make your counterpart less satisfied by agreeing too quickly. In fact, by delaying agreement and even asking for additional concessions, you may be able to make your counterpart more satisfied with a deal.
* May 23, 2011, Program on Negotiation Newsletter at Harvard Law School: Adapted from "Is Your Counterpart Satisfied?" by Maurice E. Schweitzer, first published in the Negotiation newsletter, April 2006.