Collective Bargaining

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Chapter 6

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Collective Bargaining: Definition

Collective Bargaining

A continuing interdependent relationship that involves the exchange of commitments to resolve conflicts of interests by reaching agreements acceptable to both labor and management.

Interest dispute: a dispute over terms and conditions of employment.

Success in Collective Bargaining

Objectively: the cost of specific settlements to both parties.

Subjectively: the enhancement of the relationship.

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Collective Bargaining: Structure

Bargaining Structure

Employee groups with preferences that affect the bargaining outcome.

Employees and employers affected by the bargaining outcome.

Pattern Bargaining

Attempting to extend the terms of a negotiated settlement (lead contract) from an employer to similar employers.

Eliminates wage competition among employers

Increases perceptions of union equity and solidarity

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Exhibit 6.1 Possible Structures for Collective Bargaining

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Collective Bargaining: Structure (cont’d)

The Bargaining Unit

NLRB determines the appropriate bargaining unit (ABU) for negotiating purposes.

Combining bargaining units in the centralized negotiation of a single labor agreement is a non-mandatory subject of bargaining.

Centralized bargaining of interdependent and industry-wide units increases the union’s negotiating power.

Diversified (conglomerate) companies are less affected by union negotiating power.

Multi-employer bargaining reduces union negotiating power.

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Collective Bargaining: Structure (cont’d)

Bargaining Agreements and Strategies

Lock-in agreement between unions

Requires each union-represented bargaining unit covered by an agreement to withhold final settlement until all involved unions are willing to settle. Ruled unlawful by the NLRB.

Leapfrogging

Attempts to use the most recent contracts in the industry as the starting point for extracting further concessions.

Whipsaw bargaining strategy

An employer’s use of the terms of an agreement with one bargaining unit as leverage in negotiating with other bargaining units.

Withdrawal from multi-employer bargaining group

An employer cannot withdraw from bargaining without the union’s consent once bargaining has commenced.

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Negotiation Preparation Activities

Selection of the Negotiating Team

Size

Smaller is better (no more than nine members).

Parties may attempt to match the size of the other team.

Centralized bargaining tends to expand team size.

Member Qualifications

Management: staff and line managers

Union: representatives from key constituent groups

Both: members who can keep their emotions and opinions in check

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Exhibit 6.2 Some Common Characteristics of an Effective Negotiator

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Negotiation Preparation Activities (cont’d)

Proposal Determination and Assessment

Sources of information

Recent labor negotiations settled by industry competitors

Contract settlements at other company facilities

Records of previous negotiations

Analysis of grievances

Reviewing the union’s convention proceedings

Visiting the union’s web site

Listening to employees

Libraries, union research departments, databases

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Exhibit 6.3 Practical Advice on Wording Contract Language

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The Bargaining Range

Union
Proposal

Management Proposal

Resistance Point

Initial Offer

Bargaining
Agreement
Range

Less

No Settlement
(Management)

No Settlement
(Union)

Target

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Exhibit 6.4 Bargaining Ranges for Union and Management Negotiators

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Costing Contract Proposals

Reasons for Costing Proposals

Management needs to know costs of contract terms.

Union needs to estimate the value of management proposals.

General Costing Approaches

Preparation of employee background data.

Calculation of cents-per-hour wage increase and its roll-up effect on associated time-based benefits.

The cost of some items (e.g., funeral leave) can be difficult to precisely estimate.

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Collective Bargaining Behavior

Bargaining Approaches

Distributive bargaining

Negotiation process is a win–lose (zero sum) exercise in which one party must lose something in order for the other party to win.

Each party relies on its bargaining power to come as close as possible to the other party’s resistance point.

Integrative (win–win or interest-based) bargaining

Both bargaining parties seek to satisfy each party’s substantive interest while strengthening their relationship.

The effect of bargaining power is reduced by advance agreement on how bargaining proposals will be evaluated.

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Collective Bargaining Behavior (cont’d)

Strategies and Tactics

Using persuasive arguments and objective evidence

Painting a picture of the loss or gain

Summarizing bargaining progress

Presenting a bargaining proposal in writing

Listening carefully for nonverbal cues

Using a bargaining caucus

Use of positive reinforcement

Linking issues (package proposals)

Matching concessions

Splitting the difference

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Exhibit 6.5 Some Strategies and Tactics for Use in Distributive Bargaining

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Exhibit 6.6 Some Strategies and Tactics for Use in Win–Win (Mutual Gain) Bargaining

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The Bargaining Power Model

Chamberlain and Kuhn’s Concept of Bargaining Power

A party’s power is defined as equal to the other party’s cost of disagreement divided by their cost of agreement to the first party’s terms.

Assumptions:

Both parties are rational and use the same approach to the costing of proposals.

Either party will accept the other party’s proposal if it costs that party more to disagree than to agree.

Bargaining power “costs” can be estimated precisely and aren’t subject to drastic and sudden change.

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Factors Affecting Bargaining Power

Prevailing economic conditions

Unemployment rate

Labor supply

Sales volumes

Bargaining parties

Goodwill

Public image

Governmental interventions

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Factors Affecting a Union’s Disagreement and Agreement Costs

Financial Supplements

Strike pay

Other outside compensation earned or received by strikers

Public Aid

Welfare payments

Unemployment compensation

Charitable organizations

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Factors Affecting Management’s Agreement and Disagreement Costs

External Competition Factors

Ability to pass on increased costs to customers

Global competition

Governmental regulations and controls

Company-Specific Factors

Low inventories and high demand

Loss of customers to competitors

High fixed and variable operating costs

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Internal Factors Affecting Bargaining Parties

Intraorganizational Bargaining

Negotiations that occur within each bargaining party as negotiators attempt to achieve consensus within their respective parties.

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Ethical and Legal Considerations in Collective Bargaining

Unacceptable negotiating tactics

Emotional manipulation

Misrepresenting information

Inappropriate information gathering

“Bluffing” – making false promises or threats with no intention to execute them

Misrepresenting information to your opponent’s constituents

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Ethical and Legal Considerations in Collective Bargaining (cont’d)

Conformance to Professional Standards by Negotiators

To obtain the best possible settlement benefiting their party’s interests.

To convince the parties involved that they are effective negotiators.

To communicate honestly and respectfully so as to enhance the continuing labor relations relationship.

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The Legal Duty to Bargain in Good Faith

Good Faith Bargaining

Each party must demonstrate a sincere and honest intent to reach a labor agreement and be reasonable in their bargaining positions, tactics, and activities.

Totality of Conduct

NLRB assesses a party’s overt behavior and intent in deciding the merit of an unfair labor practice charge.

Parties are not required to reach a settlement, agree to a specific proposal, or make a concession.

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The Legal Duty to Bargain in Good Faith (cont’d)

Sources of Violations of Good Faith Bargaining

The nature of the bargaining issues

Specific bargaining (per se) violations

Totality of conduct

Successor employer bargaining obligations

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Type of Bargaining Subject

Categories of Bargaining Issues

Illegal Subjects

Violate the law and, if included in a contract, are unenforceable.

Mandatory Subjects

Issues that directly affect wages, hours, and terms and conditions of employment.

Issues that can be bargained to impasse (neither party will agree to a change of position on the issue).

Voluntary (Nonmandatory or Permissive) Subjects

Items that do not directly affect terms and conditions of employment—cannot be bargained to impasse.

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Exhibit 6.7 Some Mandatory Subjects of Bargaining*

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Specific Bargaining Violations

Management Per Se ULPs

Refusing to meet with the union to negotiate proposals.

Implementing a wage change without consulting the union (unilateral change in a mandatory item).

Reaching a bargaining impasse on a nonmandatory issue.

Refusing to furnish information necessary for the union to carry out its duty to bargain.

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Specific Bargaining Violations (cont’d)

Union Per Se ULPs

Insisting on a closed-shop or discriminatory hiring clause.

Refusing to meet with a legal representative of the employer about negotiations.

Refusing to negotiate a management proposal involving a mandatory subject.

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Specific Bargaining Actions

Totality of Conduct Doctrine

If the actions of a bargaining party constitute a pattern of misconduct within the totality of the circumstance of negotiations, the NLRB can charge that party with an unfair labor practice.

Boulwarism

Refusal by one party to consider any modification of its original bargaining proposal unless, in its view, the other party offers significant facts to the contrary in rebuttal.

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Specific Bargaining Actions (cont’d)

Other Bad-Faith Bargaining Conduct

Surface bargaining

Going through the motions of bargaining without the sincere desire to reach an agreement.

Dilatory tactics

Procrastinating, unreasonable delay, avoiding meetings, and other evasive actions that impede the progress of bargaining.

Imposing unreasonable conditions

Stipulating overly restrictive measures that interfere with the process of bargaining.

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Specific Bargaining Actions (cont’d)

Other Bad-Faith Bargaining Conduct (cont’d)

Unilateral changes in conditions

Changing in terms of a mandatory employment issue (e.g., wages and benefits) before bargaining it to impasse.

Commission of unfair labor practices

Committing ULPs to discourage union support or taking actions that affect large segments of the bargaining unit.

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Managerial Rights

Management Rights

The discretionary freedom of management to decide about and to direct the operations of the firm is derived from:

The property rights of the owner.

The laws of agency—the legal responsibility of managers to act as agents for the owner.

Reserved Rights Doctrine

Management retains all rights except those rights restricted by terms of its labor agreement with labor.

Short-form management rights clause

Long-form management rights clause

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Exhibit 6.8 Example of a Long-Form Management’s Rights Clause

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Successor Employer Bargaining Obligations

Successor Employer

Has a legal duty to bargain with an existing union over the terms of a new labor agreement if there is substantial continuity in the operation of the purchased firm as determined by:

Percentage of union employees retained.

Change in the location of the firm.

Change in type of customers served.

Change in products produced.

Change in processes and technology used.

Previous managers retained.

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Successor Employer Bargaining Obligations (cont’d)

Successorship Clause

A clause in the labor contract requiring the present owners to obligate subsequent owners to continue the labor contract upon assumption of ownership.

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Collective Bargaining and Bankruptcy

The Bildisco Decision

A bankrupt firm can abandon (or seek modification of) the terms of a labor contract if:

The firm seeks to make a fact-based proposal to the union to modify the contract.

Modification is necessary to reorganize the firm and treats all parties fairly.

The firm provides relevant information to the union.

The firm bargains in good faith over the modification.

The union rejects the modification without good cause.

The balance of equities in the case favor modification of the contract.

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Legal Remedies Associated with Violations of the Duty to Bargain in Good Faith

Remedial Orders of the NLRB

A cease-and-desist order that halts further ULPs

A requirement to post written notices of employee basic rights under the LMRA, ULPs, and the respondent’s pledge to cease ULPs

A requirement to take affirmative actions (make-whole remedies) that restore employees’ rights and remove the effects of past practices:

Reinstatement, back pay, restoration of seniority

Resumption of bargaining (in good faith)

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Contract Ratification

Ratification

Union negotiators are typically only authorized to reach a tentative agreement on contract terms.

Indicates union members’ approval of, but not necessarily satisfaction with, contract provisions.

Factors Affecting Ratification

Alternative employment opportunities

Degree of satisfaction with proposed settlement

Perception of effectiveness of representation by union

Internal union politics

Communication problems

Endorsement by negotiating team

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Key Terms

Collective bargaining
Interest dispute
Pattern bargaining
Whipsaw bargaining strategy
Lock-in agreement
Coordinated bargaining
Leapfrogging
Bargaining unit
Nonmandatory
Centralized bargaining
Multi-employer bargaining unit
Degree of labor intensiveness
Bargaining range
Resistance point
Target point

Package proposal
Cents-per-hour cost
Roll-up factor
Walton & McKersie’s four bargaining processes
Distributive bargaining
Integrative bargaining
Interest-based bargaining
Intraorganizational bargaining
Good faith bargaining
Illegal bargaining subjects
Mandatory bargaining subjects
Mid-term bargaining
Good faith bargaining impasse
Voluntary bargaining subjects

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Key Terms (cont’d)

Inability to pay
Totality of conduct doctrine
Boulwarism
Reserved rights doctrine
Short-form management’s rights clause
Long-form management’s rights clause
New employer
Successor employer
Successorship clause
Contract ratification