Managing expectations is an important part of any deal. Successful deal makers work to ensure that when a negotiation is concluded, all sides feel satisfied with an agreement. Studies show that satisfied negotiators are more likely to uphold the terms, and more importantly ‘spirit’, of an agreement. As contracts may not cover every possibility, having partners who will work with you equitably to reach a ‘win-win’ outcome is invaluable.
A satisfied counterpart is also more likely to seek you out again for future deals, providing greater potential for future value creation. Satisfaction also increases the likelihood of a counterpart approaching future deals in a cooperative manner.
People develop expectations due to a wide range of factors, often feeling justified in holding them throughout a negotiation. Once a negotiation has concluded, deal makers will often make comparisons of the outcomes to their expectations going in. Consequently, although you feel you’re offering a fair deal, a counterpart may disagree due to comparison against their pre-conceived expectations.
A skilled negotiator manages these expectations instinctively. For example, a salesman mentioning their company isn’t offering as many discounts as they used to, lowers expectations of receiving one.
A negotiator\’s reaction to an opening offer also influences expectations, where a vocal or physical response can help to handle expectations about the ZOPA (Zone of Possible Agreement). Appearing eager to reach an agreement may indicate willingness to settle for a deal with more value for the other party so as to close off negotiations swiftly. It\’s easy to see how an aggressive negotiator would take advantage of this.
One common negotiation mistake is that of making an extreme concession, which often leads the other side to expect another. How would you feel if you saw a £10,000 car and the salesman immediately indicated that he would sell it for £5000? Most people questions the originally purchase price and try to push the price down further.
Similarly, agreeing to the other side too quickly also causes problems; deal makers often feel as though they have ‘left money on the table’ in their haste to accept an offer. Contrast this to those who ponder the decision for longer, who often feel that they’ve gained a better deal. In theory, this suggests that the satisfaction of other deal makers is reduced by agreeing to an offer too quickly. Mitigate this by ‘thinking it through’, showing that maximum collective value has been achieved.
A \’win-win\’ negotiator works to measure the satisfaction of their counterparts as part of their positive outcome scenario. Unbalanced results negatively affect the satisfaction of deal makers, increasing the importance of pursuing an equitable arrangement. Being modest about the outcome of a deal is not only good manners, it\’s also good business. Don\’t be afraid to congratulate other deal makers for their skills.
Being modest about your hand is an important skill, especially when you\’re in a position of strength. By stressing an importance on equity and fairness for all parties, you can increase satisfaction for all involved. When a conclusion is reached, detailed explanations for unappealing decisions also enhance perceptions of fairness.
Expectations are an important part of negotiation, acting as an extra party at the table and can work for, or against you during deal making. By managing expectations in your next negotiation, you can change the outcome of the immediate negotiation, as well as deal maker attitudes towards you in the future. Managing expectations increases the likelihood of a \’win-win\’ outcome in negotiations, and increases value creation.