Managing Expectations of the Other Party in Negotiations

Many people enter into negotiations with expectations. Often times a natural initial tendency is to be position based with a view that the world is clearly black and white. That type of approach typically leads one to the conclusion that I am right with my position.  Expectations are biased as a result of initial perceptions. 

Peaceful Resolutions suggests that people (separating people from the problem) interests (focus on interests instead of positions), options (need for a variety of options before deciding what to do), and criteria (there must be some objective standard for consideration) need to be evaluated to work towards a solution.   This includes expectations and perceptions related to the actual outcome.   A great reference for examples can be found in Getting to Yes from Fisher, Ury and Patton.

In this article from the Harvard Law School Program on Negotiation the program staff present an excellent example of two people each buying a car for $30,000.  One had an expectation to buy the car at $29,000 and the other had an expectation to buy the car at $31,000.   Clearly the one that had an expectation to buy the car for $31,000 perceives a great deal, while the one that had an expectation to buy the car for $29,000 perceives this was not such a great deal. 

Let’s take this a step further into another negotiation.  In this instance I might suggest party “A” is at 50 and party “B” is at 100.   Each has done their homework and each has reasons based on the facts to believe their starting position is correct.  However, “A” has stronger facts and law regarding the issue. Before entering into a discussion “A” has reviewed the facts and law and as result has prepared six options.  These options provide party “A” with numerical values of 45, 50, 55, 60, 65 and 70.  “A” discussed the alternatives with everyone involved in the case and the ultimate decision maker on his side.   The ultimate decision maker has indicated that the best alternative to a negotiated agreement (BATNA) is 70.  This is as far as “A” is allowed to go to seek an agreement.  “A” can live with 70, but really feels 60 is where this negotiation should concluded.  Each option reviews through the facts and applying different logical criteria based on court cases results in the numerical values presented.   “B” has reviewed the facts and understands the weaknesses of his position based on the facts applied to the law.   “B” has come to the discussion with his value of 100, and is prepared to discuss the issue.

“A” researches “B” on social media and makes inquiries about “B” to others in order to further develop a good working relationship with “B” when they begin discussions.  “A” also explored what could be potential interests of “B” beyond his numerical position.  “A”  discovered quality of the product as an strong interest by “B” as well by inquiring with third parties. “B” shored up his position and came into the discussion prepared to discuss his position knowing he had some very real weaknesses.

“B” agreed to meet at “A’s” location.  They work to develop a good working relationship before entering into the discussion.  “A” makes sure to have a pleasant environment where they will not be interrupted and she has supplied appropriate snacks, water and coffee.  She scheduled the meeting to begin at 9 am since she knows “B” is more of a morning person.   She scheduled the meeting for two hours even though she believes it should only take an hour.  She did this to remove any time pressures. 

After substantial small talk, she asks “B” if he would like to begin by asking “B” how “B” came up with 100.   “B” explains how he came up with 100.  “A” asks probing questions in an inquisitive manner, but is not judgmental.  “A” truly presents a genuine interest in understanding why “B“ is at 100 and how strongly “B” feels this appropriate.  “A” is able to summarize “B’s” key points better than “B” was able to explain his position.   “B” feels truly listened to.  

“A” proceeds to present the facts and various analogies associated with law to “B”.   This is not presented in an adversarial manner, but rather in an educational manner as a lawyer may educate a judge.  “B” is asked if the facts and law presented at various points in the discussion would be favorable to “A .   “B” understands and concedes this several times by indicating “yes”.   After some discussion “A” asks “B” what “B” might deem as a reasonable way to resolve the case.   “B” truly believes the weight of the facts and law are in “A’s” favor, but not wanting to concede to much up front suggests the number 80.   This is a significant succession, but less than half way.   “B” knows that his position is week, but he is hoping to possibly split the difference and allow some room for movement if “A” rejects his offer.

“A” reflects and has a choice to proceed with a counter offer of 45 to 70.   How can “A” keep “B” happy and yet set reasonable expectations?   “A” indicates that she has met with her team and the ultimate decision maker. Depending on how the interactions took place through the relationship building, listening and education phases, “A” presents from one of the six numerical recommendations from 45 to 70. By reacting with surprise or disbelief “A” may indicate that this just won’t work given the facts and law.   This helps lower ”B’s” expectations.  It is important not to encourage “B” so that “B” can lower his expectations.

“A” realizes based on the interactions during the discussions that a number lower than 50 or remaining at 50 will be counterproductive in this instance.  Wanting to show some movement she presents her fact pattern for how she can offer 55 with a reluctance to proceed higher.  At this point “A “also offers other considerations relating to timing, quality, other potential impacts tangential to this one issue taking into account the interests of “B” that arose during the discussions.   “B” has an interest in the other considerations given the homework done by “A“, and with his interests have been drawn out during the discussions.  B proceeds with a counter offer of 70.   

This offer is at the BATNA level for “A”.  We are now at point where a resolution may take place since we are at the zone of a possible agreement (ZOPA) .   However, “A” is not done.   “A” explores additional considerations relating to timing quality and other potential impacts tangential to this issue and shares that her ultimate decision maker has indicated that he thinks the final decision should not be any higher than 60.   “B” wanting to resolve the issue and have closure agrees to 60 as a way to resolve this issue considering all of the facts, the law and his other interests being addressed relating to timing, quality and other potential impacts tangential to this one issue.

“A” commends “B” for being well prepared relative to his position and also for being flexible given the facts and law in this case.  “B” understood that “A’s” decision maker really wanted to be no higher than 60 and wants to preserve this relationship for future considerations.  Considering points made by “A” after listening to “B”, “A” incorporated changes addressing timing, quality and other potential impacts tangential to this one issue.  This is why 60 is a good solution for both parties in this instance.

What happened here?

“A” did her homework on “B” relating to relationship building (building a relationship and learning about “B” through social media and other contacts)

“A”  developed six alternatives with her team and came to the discussion with what the ultimate decision maker wanted to have happen given the facts and law as well as the BATNA in case the negotiations broke down.

“A” was always honest, but not totally transparent with “B”.   This allowed “A” to work effectively with “B” to resolve the issue.  “A” did not share her BATNA with “B”.  “A” did share the desire of her ultimate decision maker not to exceed 60. This was honored by ”B” given all of the considerations.

“A” not only focused on the facts and law, but also explored and used other areas of interest relating initially to quality, and from discussions over the course of the negotiations was able to address interests relating to timing and other potential impacts tangential to this issue that became apparent during the discussions.

“B” new his position was week based on the facts and law, but “B” also had other and longer term interests that “A” addressed as part of the negotiations.

In the end economic and social considerations of the parties needed to be addressed.  “A” had the stronger position, but “A” also came prepared to develop a good working relationship, to truly listen to “B”, and to educate “B” relative to the strengths and weaknesses involved.  The educational elements addressed economic and social considerations to allow “B” to make the decision he did and still save face.  This brought both parties to a win-win situation.  The perception of fairness by both parties was critical to coming to a workable solution.

Michael Gregory, ASA, CVA, MBA is an expert in conflict resolution dedicated to making thought-leading entrepreneurs and executives more successful. Michael’s books, The Servant Manager: 203 tips from the best places to work in America and his NEW BOOK Peaceful Resolutions: A 60-step illustrated guide to conflict resolution are available at http://mikegreg.com/books.   Free resources are available online at www.mikegreg.com. Check out the blog.  Contact Mike directly at mg@mikegreg.com or call (651) 633-5311.