Employees want new equipment in the quarry, while the owners think it is expensive. As an operations manager, you get squeezed in the middle. Negotiations for more money for equipment are underway.
Most negotiations take place something like this:
“I want to buy Greenland!”
“You can’t buy Greenland.”
“But I want Greenland!”
“No Trump. You don’t get Greenland.”
What a successful negotiation should look like
Let’s say you have an old gamp of a sieve where you get a breakdown on the ball bearings every two months. The guys on the floor are tired of turning on the sight, and you see with half an eye that maintaining it is not good business. But the owners will not spend money on it.
The key lies in a Find out what is the real motivation behind each party’s desire. And then appeal to it.
Take the operator as an example:
If he gets a new term, he’ll be happy, but then the crusher starts crashing every two months instead, then the operator is just as mad. His real motivation is a working day without tiring maintenance – not the sight itself.
In a successful negotiation, all parties get what they really want:
- The guys on the floor get a working day with less drudgery and higher job satisfaction
- The owners of the plant make an investment they are confident in, and receive increased returns
- You appease both parties, get less pes and increase the profitability of the work
FYI:
The case is based on the book Negotiating with giants: how to get what you want against the odds, written by one of the world’s foremost experts on negotiations.
I doubt Trump has read it, but you can, or you can read a brief summary of the techniques that help you succeed in negotiating:
Tie it to cash flow
Money flow is the oxygen of a business. More money has to come in than it goes out. If not, the company is bankrupt, over, finito, kaputt.
This is the logic when the money bag is throttled:
By stopping large purchases, less money goes out of the company. Then the gap between “money in and money out” will widen.
You need to prove how a new term will make the gap between income and expenses even wider. Prove how expensive the term you have is operating. Prove how much you lose in revenue. Only then do you play ball in the other party’s court half.
Map out these points:
- Tons of production lost
- Number of hours of lost production
- Consumption of new parts
- Number of overtime hours
Multiply the number by the cost and you’ll see how expensive it gets. An Excel sheet is perhaps the best. Then you can easily show how much money you are talking about if you continue like this for 1-2-3 years.
You know what, I’m actually going to make such an Excel sheet for you.
Download Excel sheets here:
Lost cost worksheet
Support the experts
Option 1 (as often presented):
“I have a gut feeling that the bearings break more often than they should. What do you think we should do about it?”
Option 2 (as should be presented):
“The manufacturer’s maintenance manual specifies that bearings should not break more often than every 2,000 hours. If they break more often, the engine, springs and shafts should be replaced. These parts cost almost as much as new term. What do you think we should do about it?”
It is difficult to say that an expert is wrong, since you then automatically claim that you yourself have more knowledge than the expert.
If the other party dismisses the experts, you can easily counter with the question: “Do you think we know more about the machine than the people who made it?”
Take it gradually
Preparing those on the other side of the table for the request to come is half the job. If they get the question of 1 million out of the blue, they will be caught off guard and will most likely not make the decision without thinking it through.
If you’ve built a case over time and reported downtime due to the same visibility on multiple occasions, then they already know it’s a major problem.
They may have made up their minds about the sight on their own. If you do this research and are patient, it is easier to get yes, when you first ask.
Use HSE to your advantage
You can’t keep track of every little thing that happens in the quarry, and you have to involve those who actually complain to get the right documentation. Explain to them the importance of reporting adverse events as a basis for getting new equipment.
You can use the situation as a golden opportunity to obtain documentation on how visibility affects HSE, and at the same time increase the focus on active HSE work among employees.
When the operators see that reported incidents actually have an effect on their everyday lives, HSE will also receive more focus beyond this case. In the long run, you get a safer workplace, and new equipment more often.
See it from their side
Understanding the other party is a cornerstone of a successful negotiation. If you understand why they’re saying no, you can answer that. It starts with you listening to their justifications.
“No, we can’t afford it” or “no, we’re collecting in the piggy bank” is not a good justification. Make sure you get a good rationale.
Ask questions like:
- Why can’t we afford it?
- What’s more important?
- What do we have to do on our end?
Once you have received a good justification, you can answer concretely. If you manage to counter with finances or facts, you have a much greater chance of gaining acceptance.
It’s best to go several rounds of negotiations so you have time to prepare between each. If you only have one chance, call and talk to the other party beforehand, air ideas and fish for opinions they’ve already made up.
A simple question beforehand may be enough: “What do you really think about the term?”
Word yourself right
The most important rule of all; Never get angry, or at least not while the other party is watching it. No matter how much it cooks in the cylinder head, stay calm and stick to the case.
Both in written or oral dialogue, it is important to show that you understand their side of the issue and acknowledge their point of view first. Then they will most often return the favor and hear your side of the story.
It is very simple and takes place like this:
“I understand very well that savings are the focus, and it’s obvious that you have steel control over business finances, but….. (your factual argument).”
The simple technique of confirming their side of the issue, before presenting yours, can do wonders for getting your case heard. And by that I mean heard for real, as opposed to deaf nods.
Actually being heard and understood is the first step towards gaining acceptance.
Compare to other quarries
Children are often more cunning to negotiate than we think. A well-established technique is to compare with others: “Why don’t I get ice cream when Ole gets ice cream?”
The adult variant looks something like this:
“Did you see what happened to Geir Ove in quarry X down the street? He had so much downtime due to a breakdown in ball bearings in an old term that the Public Roads Administration began to shop at the competitor. He says they will lose 40 million on it…”
Comparisons are important because they provide a fixed point. It shows that other people out in the world support your view that it’s too expensive, too easy, too foolish etc.
Download Excel sheets for negotiation meetings:
Lost cost worksheet
I myself used comparison last month, it went like this:
“Hi Gjensidige, I want to renegotiate my insurance.”
“Let me see what I can do. I’m sorry, but you already have the max discount.”
“Hmm.. why does SR-Bank say I can get it three thousand dollars cheaper then?”
“They probably have far worse conditions. Here you have maximum coverage.”
“I checked the terms everything, they’re exactly the same.”
“Eeeh, okay, let me see, if we *type on keyboard*, wait a minute, okay, we can do 2000 cheaper.”
“Fine, thank you.”
Comparison works mountains, at all ages, in all industries, in all negotiations. The more concrete, the better.
Have a sub-goal
If you see the battle is lost, you should move on to a sub-goal. You should have defined this even before the negotiation starts. Then you have something to fall back on.
For example, it may look like this:
“Okay, okay, there won’t be a new term this year. But… If it stops for more than 35 hours, or costs more than $150 in maintenance over the next year, can we buy a new one?”
It’s easier for people to commit to things far in the future. Maybe you’ll get a positive response. If you get yes verbally, make sure you get it in writing as well.
Then comes the upsell. People who have recently said yes once are more likely to say yes again. Use the chance while you have them on the slide to ask for something completely different that you also need, but which is far more affordable.
“Since we won’t get a new term this year. Can we replace the conveyor belt on the T01?”
Download free spreadsheets
Justifying your case with finances is the most important thing you can do to get new equipment into quarries. Get help with the Excel sheet created specifically for this purpose.
Download the spreadsheet below, to easily document lost revenue:
