Negotiation Analysis

Abstract
There is an elephant in the room. Working capital in the form of excess inventory has had a debilitating effect on my business over the past ten months. Although the numbers speak loudly and the issue is agreed upon by business leadership and cross functional teams, the actual plan to get the inventory back to meeting goals and business requirements (demand) is not in place.

I chose to eat the elephant. In order to do this, I needed to use negotiation skills to get the leadership team partnership and agreed upon vision and strategy. Once this was secured, I need a team of influential, get-the-job-done managers throughout the company to come together as one voice.

I have written on my issue awareness, strategy to partner, tactics used to incite the business and working plan to execute.

Changing Two Decades of Culture

One year ago, I took a new job with the mission of improving business processes for an $8 billion Agricultural company. As I invested my time in relationship building and complete understanding of current state of business, I discovered a gaping issue that affected all business areas and ultimately, our business unit’s bottom line. The issue is excessive working capital in the direct form of excess physical inventory. The business numbers easily state the issue and once a month the leaders meet to discuss why and how to correct for the next month.

My company is culturally driven and very people oriented. In many cases this is a positive. In this case, we have turned it in to a crutch. Triage and additional resources are not the answer to sustainable solutions. Sometimes you have to take two steps backward before you can move forward with confidence. As a lean continuous improvement agent, the issues are like having an elephant in the room in all meetings. The material flow and excess of inventory is affecting our day-to-day processes as well as all other corporate focuses. You would think that with an excess of inventory we would have everything we need to build a tractor. That would be a mistaken assumption. Not only are we swimming in inventory, it is not the “right” inventory for daily needs. The businesses costs in expediting freight for the right parts as well as additional warehousing are excessive. Although I am in it to win for the business, there is also the minor detail of lost gain share for employees and null bonus for me.

If inventory is not reduced and product invoiced in the next couple of months, someone high up in my company is going to have to take the hit and most likely be terminated in the name of failure. We have battled the issue since October 2010 with ongoing monthly promises to shine the light at end of tunnel. The light, to date, is simply the freight train coming straight at us. It is time to fix.

In order to get the leadership on board, I broke the goals in to more swallow-able bites. Following is the agenda that I have followed to implement change, through negotiation: 1) Formal, static, schedule for tractor production a. This insures that material planners know what they will need and when 2) System schedule reflects dates for tractor production b. Stop driving from spreadsheets 3) Re-engineer material handling processes c. Always know where materials are (transact in system) 4) Upgrade systems to support performance indicators d. Capacity planning e. Material planning f. Warehouse planning

Although on paper it makes complete sense to me and even some of the leaders in the business who have been firefighting and driven by tribal knowledge, rather that trusted processes, for years, the negotiations that ensued are all about funding, timing, business resource commitment and change management. In the end consensus is required or sustainable solutions cannot be execute or maintained.

Prior to starting the negotiations, I needed to strategize the right team. Since this is an organization that has not practiced accountability through planning and project management, I made sure that the team was not only determined, but that roles, responsibilities and hierarchies were also understood.

Each position had a role and responsibility slide, outlining expectations. Once all people and positions were assigned and defined, I had the team sign off, stating that they understood their position. This is the first step in establishing the three properties of commitment “a high degree of finality, a high degree of specify and a clear statement of consequences” (Lewicki, R. J., Saunders, D. M., Barry, B., & Minton, J. W., 2003, p.113). For instance:

With the team in place, we started on the pre-planning. Meeting expectations are also a part of accountability. Remember, at this point in time, we are all aware of the issue. We need to agree on the strategy, timeline and execution plan. It is critical that we all understand the problem and root cause in the same manner. If manufacturing thinks it is a material handling issue and material handling thinks it is a vendor issue and purchasing think it is a manufacturing issue, the team will enter the solution table with very differing ideas on what to execute.

The initial meetings took place with the steering committee only. We needed to agree on the next steps forward. I was intent on getting an outside consultant on board as a benchmark to help us identify gaps in what we currently had and recommend strategic solutions. It took 3 meetings to convince the group that outside help is not intimidating, nor do we have to do what they say, they are just a sounding board. They will point out the things we did well and the things we can improve on. Once the team agreed, it was fun to watch them pitching other business processes that could use some outside eyes.

In order to pull in an outside resource, we needed to have very exact requirements. The steering committee met with the business owners of different functions to truly understand their pain points, map business processes and identify gaps. It was eye opening for many of us, even those

that had been with the company for decades. The final result of these meetings is an RFP (Request for Proposal) document. Once again, this document required review and sign off. It is critical in a business that runs on immediate needs (firefighting) to make sure they have skin in the game and accountability to the vision.

Tactically, I was very dependent on strengthening my position throughout this process. “Building one’s own resources, including expertise, finances and alliances…persuasive rationales” was critical to succeeding. And, although the leaders were present that had implemented the current dysfunctional solutions over year’s past, I was determined not to have to resort to weakening my opponent. In order to maintain a long term working relationship, I needed them to come to redirect their goals on a new vision.

Many years ago, I had an epiphany that “treat others as you would like to be treated” is actually not the best tactic. Treat others as they would like to be treated is far more important, meaning you have taken the time to understand their values and goals. In addition, “the decision makers must apply the same standards of fairness and equity … that they would demand of others” (Lewicki, R. J., Saunders, D. M., Barry, B., & Minton, J. W., 2003, p. 375). SO, in order to win over the do-ers of the past, I spent most of my time making sure that their actions and decisions in the past were validated. The reason for the requirement for change now is that the business has grown and the solutions need to grow to support them.

Some of the leader’s strategies included puffery, information exploitation and even nondisclosure. AS the new person on the team, it is easy to be buffaloed in to the reasons why

the current solution and subsequent processes are the only option and will cause mass upsets throughout the business if replaced. There is also power in numbers and allegiances that have formed over years that needed to be dealt with. Finally, the rabbit hole approach, as I call it, which is a form of distraction, was used often. I am not sure that this was a negotiation tactic, however. I actually call it business ADD (attention deficit disorder). There are so many issues (shiny nickels) that we cannot decide which one to pick up.

The best and only approach to respond to my partners tactics was to keep plodding along, steadily and with the right questions. By asking questions, oftentimes focused on the successes of the past, you can incite the team to come to the right conclusions, and finally consensus. “If a bargainer treads on another’s self-image—in front of a boss or colleague, or even privately—his or her demands are likely to be rejected” (Lewicki, R. J., Saunders, D. M., Barry, B., & Minton, J. W., 2003, p.231). It is critical to help others save face, even at the cost of extending the negotiation timeline to show sensitivity and onboarding. I will admit that I have also had continuous meetings with the Project Director, and Director of Operations, in the facility. It does not take long to realize that if the leader is on board the grass is a little easier to plow through. I am fortunate to have a leader that I associate to a weed-whacker. If there is transgression or conspiracy (very tall grass), he takes the initiative to indirectly (but with very concrete goals) address the protestors, shortening the grass and easing the path forward. Good leaders have a knack at doing this. They can sweep in and out, unbeknownst yet very effective.

Currently, we have agreed on the issue, the team that is needed to address them, the root cause and the approach to solution. We have formalized our RFP (request for proposal) and sent to 6 vendors, with two remaining as very viable options. We have agreed that our current systems do not support our processes and we are in the process of upgrading them to be compliant and sustaining. The manufacturing facility started setting a 4 day, static schedule. The material planning team is able to perform to this, but this will have to increase in the future to leverage long lead time vendors. Sometimes we need to walk before we run! There are weekly report-outs to team leadership from the steering committee weekly.

I have learned and grown through this process! Some of the key take-aways that will remain will include being able to separate the people from the problem. In a tight culture, this is sometimes difficult and can affect relationships as well as outcomes. Also, since I was not given a solid timeline or directive by my management, I was able to be patient and take the time to understand that the other parties want where their allegiances were and what their tactics. Also, I really tried to stay focused on the war and not all of the battles. There were alternative solutions proposed for some of the battles that got the job done and kept us moving towards the ultimate strategy. Knowing when alternatives were sufficient and the impact on the party proposing the solution was invaluable. In other words, although I was fully aware of my BATNA, I stayed focused on the other party’s BATNA, sometimes allowing us to back down form a rigid position (rock and hard place) and continue towards the ultimate vision.

Many years ago, I was tagged with a high IQ with a relatively low EQ. Sort of a waste of brain power if you can’t get the parties involved to understand and commit. I have learned that valuing and then molding the other party’s ideas and goals are at the core of successful negotiation. This is not to say that you have to pursue all paths and never say no. It is however the mindset that I have developed and really grown through this unit.
AS my husband and I have raised our children, I have always said that there is always a reason for their bad behavior. They may be tired, hungry or struggling with something that happened at school. I also take pride on reprimanding the action and not the person. I was truly lacking those skills at work. The success of my negotiations in the past was due to a fool-proof business case that my leaders desired and mandated. As a leader in a new organization, I did not have the track record of success nor the alliance with my leaders to lean on this tactic. I had to win the parties and their commitment to the requirements and strategy. It is far more rewarding when you succeed!

I like problem solving. I pride myself on seeing the solution clearly before I even enter negotiations. I will continue to develop my skills at winning over the opponents and slowing down my reactions. Although I can curb my verbal thoughts from splaying. I believe my body language gives away my conflicting thoughts sometimes. The greatest concept that I have taken away from this class and I will continue to employ is knowing my BATNA and my opponent’s BATNA. This simple thought process is key to so many negotiation tactics. It allows you to be prepared with the right questions to lead the strategy. It also allows you to pick your battles and compassionately work with your opponents. I will carry with me the understanding that “the

best you can accomplish without the negotiation” and “a clear strong BATNA may be reinforced by additional safety measures” (Lewicki, R. J., Saunders, D. M., Barry, B., & Minton, J. W., 2003, p.427). Although I always feel like I am going in to a negotiation with a full understanding of the optimal outcome for me and the other parties, it is the process of finding common ground and shoring up the alternatives that will result in a win-win.

I will continue to improve my BATNA-quotient, the key take-away for me in expanding my emotional intelligence. I have made a career of change management, through natural attrition to the key elements that drive business process improvements and paradigm shifts. I believe that my personal reputation for integrity and persistence and tenacity will continue to enhance partnerships. I look forward to creating perceived expertise through negotiation and subsequent execution wins in my new company. I am excited to replace my assumptions that everyone sees the same glaringly obvious solution that I do with comprehensive persuasion, compromise and win-wins!

References
Lewicki, R. J., Saunders, D. M., Barry, B., & Minton, J. W. (2003). MBA6260: Negotiation for results. New York: McGraw Hill Custom Publishing.