Negotiation of cost reduction target
Group leaders were expected to negotiate their group’s cost reduction target.
These negotiations were part of a hierarchical negotiations process, which was a mixture of informal and formal communications.
Given the informality of some of the process, it is difficult to describe its exact sequence.
The division managers were responsible for setting the cost reduction targets at both the division and group levels.
The critical player in setting these targets was the plant manager, who had access to detailed information about what was happening on the factory floor and at the division level.
The plant manager would act as the conduit between the factory floor and the divisional manager, helping him or her identify realistic stretch targets for each group.
Once the informal targets were established, the groups entered formal negotiations to fine-tune the targets and commit to them.