The point of an agent is to get as much money as possible for a player, so as Hendo's agent, sure, shoot for $12M, but know that you'll get bargained down much lower. As a GM, your job is to acquire as much talent on a team as possible for as little money as possible. James, Wade, and Bosh were all worth the max at the time, but since Riley could sign each of them for less, of course he's then not going to offer the max to each one, otherwise they wouldn't fit on his roster. Same principles apply here, if you offer Hendo too much, then other talent wouldn't fit on this roster. Our cap would be full, and we couldn't fill out our team with other solid players, only old veterans or undrafted rookies.
Even if you for some reason value Hendo at $11M, you start the negotiations at the QO of $4.3M. You let them come back to you with a number, and hey what do you know, they were asking for $8.5M a year for 4 years. Since that was the number you initially hoped for, now you know that you can get them for much lower than their initial counter offer. You then tell them $5M for 5 years. They would then ask for $8M. You keep going back and forth, getting them to drop a little each time. You then say $5.5M, they say $7.5M for 4 years. You then give them a choice, say the best you can do is $7M for 3 years, or $6M for 3 with an chance to opt out if you out earn your contract. Done deal.
Now, if you had started the negotiations at $8M, then they would have countered with Tyreke money at $11M. Now don't scream "deal!" right there, because they expect the final offer to be much lower. But since you've given yourself less wiggle room, you have to counter at $8.5M. The back and forth will ultimately end up around $9.5M for 4 years, and you just cost your team 3.5M in cap space. If you applied that same philosophy with Al Jefferson, then he would've gotten his $15M per year instead of $13.5M.
By negotiating from a position of weakness instead of strength, you would have $5M less to deal with to improve your team. As I said before, the point of a GM is to make his team as strong as possible, so having that extra $5M gives you much more flexibility to make a signing or trade.
But before you become SA in training, I think you have a bet to settle with JGib first