Labor Relations 3

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Chapter 6Chapter 6

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Collective Bargaining: DefnitionCollective Bargaining: Defnition

• Collective BargainingCollective Bargaining  A continuing interdependent relationship that involves A continuing interdependent relationship that involves

the exchange of commitments to resolve conflicts of the exchange of commitments to resolve conflicts of interests by reaching agreements acceptable to both interests by reaching agreements acceptable to both labor and management.labor and management.

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

• Success in Collective BargainingSuccess in Collective Bargaining  Objectively: the cost of specific settlements to both Objectively: the cost of specific settlements to both

parties.parties.  Subjectively: the enhancement of the relationship.Subjectively: the enhancement of the relationship.

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Collective Bargaining: StructureCollective Bargaining: Structure

• Bargaining StructureBargaining Structure  Employee groups with preferences that affect the Employee groups with preferences that affect the

bargaining outcome.bargaining outcome.  Employees and employers affected by the bargaining Employees and employers affected by the bargaining

outcome.outcome.

• Pattern BargainingPattern Bargaining  Attempting to extend the terms of a negotiated Attempting to extend the terms of a negotiated

settlement (lead contract) from an employer to similar settlement (lead contract) from an employer to similar employers.employers.  Eliminates wage competition among employersEliminates wage competition among employers  Increases perceptions of union equity and solidarityIncreases 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 Collective Bargaining: Structure (cont’d)(cont’d)• The Bargaining UnitThe Bargaining Unit

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

 Combining bargaining units in the centralized Combining bargaining units in the centralized negotiation of a single labor agreement is a non-negotiation of a single labor agreement is a non- mandatory subject of bargaining.mandatory subject of bargaining.  Centralized bargaining of interdependent and industry-wide Centralized bargaining of interdependent and industry-wide

units increases the union’s negotiating power.units increases the union’s negotiating power.

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

 Multi-employer bargaining reduces union negotiating power.Multi-employer bargaining reduces union negotiating power.

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Collective Bargaining: Structure Collective Bargaining: Structure (cont’d)(cont’d)• Bargaining Agreements and StrategiesBargaining Agreements and Strategies

 Lock-in agreement between unionsLock-in agreement between unions  Requires each union-represented bargaining unit covered by an Requires each union-represented bargaining unit covered by an

agreement to withhold final settlement until all involved unions are agreement to withhold final settlement until all involved unions are willing to settle. Ruled unlawful by the NLRB.willing to settle. Ruled unlawful by the NLRB.

 LeapfroggingLeapfrogging  Attempts to use the most recent contracts in the industry as the Attempts to use the most recent contracts in the industry as the

starting point for extracting further concessions.starting point for extracting further concessions.

 Whipsaw bargaining strategyWhipsaw bargaining strategy  An employer’s use of the terms of an agreement with one bargaining An employer’s use of the terms of an agreement with one bargaining

unit as leverage in negotiating with other bargaining units.unit as leverage in negotiating with other bargaining units.

 Withdrawal from multi-employer bargaining groupWithdrawal from multi-employer bargaining group  An employer cannot withdraw from bargaining without the union’s An employer cannot withdraw from bargaining without the union’s

consent once bargaining has commenced.consent once bargaining has commenced.

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Negotiation Preparation ActivitiesNegotiation Preparation Activities

• Selection of the Negotiating TeamSelection of the Negotiating Team  SizeSize

 Smaller is better (no more than nine members).Smaller is better (no more than nine members).

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

 Centralized bargaining tends to expand team size.Centralized bargaining tends to expand team size.

 Member QualificationsMember Qualifications  Management: staff and line managersManagement: staff and line managers

 Union: representatives from key constituent groupsUnion: representatives from key constituent groups

 Both: members who can keep their emotions and opinions in Both: members who can keep their emotions and opinions in checkcheck

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Exhibit 6.2 Some Common Characteristics of an Effective Negotiator

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Negotiation Preparation Activities Negotiation Preparation Activities (cont’d)(cont’d)• Proposal Determination and AssessmentProposal Determination and Assessment

 Sources of informationSources of information  Recent labor negotiations settled by industry competitorsRecent labor negotiations settled by industry competitors

 Contract settlements at other company facilitiesContract settlements at other company facilities

 Records of previous negotiationsRecords of previous negotiations

 Analysis of grievancesAnalysis of grievances

 Reviewing the union’s convention proceedingsReviewing the union’s convention proceedings

 Visiting the union’s web siteVisiting the union’s web site

 Listening to employeesListening to employees

 Libraries, union research departments, databasesLibraries, union research departments, databases

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Exhibit 6.3 Practical Advice on Wording Contract Language

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The Bargaining RangeThe Bargaining Range

Union Proposal

Management Proposal

Resistance Point

Resistance Point Initial Offer

Initial Offer

Bargaining Agreement

Range

Less

More Less

More

No Settlement (Management)

No Settlement (Union)

Target

Target

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6–12

Exhibit 6.4 Bargaining Ranges for Union and Management Negotiators

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Costing Contract ProposalsCosting Contract Proposals

• Reasons for Costing ProposalsReasons for Costing Proposals  Management needs to know costs of contract terms.Management needs to know costs of contract terms.

 Union needs to estimate the value of management Union needs to estimate the value of management proposals.proposals.

• General Costing ApproachesGeneral Costing Approaches  Preparation of employee background data.Preparation of employee background data.

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

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

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Collective Bargaining BehaviorCollective Bargaining Behavior

• Bargaining ApproachesBargaining Approaches  Distributive bargainingDistributive bargaining

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

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

 Integrative (win–win or interest-based) bargainingIntegrative (win–win or interest-based) bargaining  Both bargaining parties seek to satisfy each party’s Both bargaining parties seek to satisfy each party’s

substantive interest while strengthening their relationship.substantive interest while strengthening their relationship.

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

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Collective Bargaining Behavior Collective Bargaining Behavior (cont’d)(cont’d)• Strategies and TacticsStrategies and Tactics

 Using persuasive Using persuasive arguments and objective arguments and objective evidenceevidence

 Painting a picture of the Painting a picture of the loss or gainloss or gain

 Summarizing bargaining Summarizing bargaining progressprogress

 Presenting a bargaining Presenting a bargaining proposal in writingproposal in writing

 Listening carefully for Listening carefully for nonverbal cuesnonverbal cues

 Using a bargaining caucusUsing a bargaining caucus

 Use of positive Use of positive reinforcementreinforcement

 Linking issues (package Linking issues (package proposals)proposals)

 Matching concessionsMatching concessions

 Splitting the differenceSplitting 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 ModelThe Bargaining Power Model

• Chamberlain and Kuhn’s Concept of Bargaining Chamberlain and Kuhn’s Concept of Bargaining PowerPower  A party’s power is defined as equal to the other A party’s power is defined as equal to the other

party’s cost of disagreement divided by their cost of party’s cost of disagreement divided by their cost of agreement to the first party’s terms.agreement to the first party’s terms.

 Assumptions:Assumptions:  Both parties are rational and use the same approach to the Both parties are rational and use the same approach to the

costing of proposals.costing of proposals.

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

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

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Factors Afecting Bargaining PowerFactors Afecting Bargaining Power

• Prevailing economic conditionsPrevailing economic conditions  Unemployment rateUnemployment rate  Labor supplyLabor supply  Sales volumesSales volumes

• Bargaining partiesBargaining parties  GoodwillGoodwill  Public imagePublic image

• Governmental interventionsGovernmental interventions

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Factors Afecting a Union’s Factors Afecting a Union’s Disagreement and Agreement CostsDisagreement and Agreement Costs

• Financial SupplementsFinancial Supplements  Strike payStrike pay  Other outside compensation earned or received by Other outside compensation earned or received by

strikersstrikers

• Public AidPublic Aid  Welfare paymentsWelfare payments  Unemployment compensationUnemployment compensation  Charitable organizationsCharitable organizations

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Factors Afecting Management’s Factors Afecting Management’s Agreement and Disagreement CostsAgreement and Disagreement Costs

• External Competition FactorsExternal Competition Factors  Ability to pass on increased costs to customersAbility to pass on increased costs to customers  Global competitionGlobal competition  Governmental regulations and controlsGovernmental regulations and controls

• Company-Specific FactorsCompany-Specific Factors  Low inventories and high demandLow inventories and high demand  Loss of customers to competitorsLoss of customers to competitors  High fixed and variable operating costsHigh fixed and variable operating costs

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Internal Factors Afecting Bargaining Internal Factors Afecting Bargaining PartiesParties • Intraorganizational BargainingIntraorganizational Bargaining

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

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Ethical and Legal Considerations in Ethical and Legal Considerations in Collective BargainingCollective Bargaining

• Unacceptable negotiating tacticsUnacceptable negotiating tactics

 Emotional manipulationEmotional manipulation

 Misrepresenting informationMisrepresenting information

 Inappropriate information gatheringInappropriate information gathering

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

 Misrepresenting information to your opponent’s Misrepresenting information to your opponent’s constituentsconstituents

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

• Conformance to Professional Standards by Conformance to Professional Standards by NegotiatorsNegotiators

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

 To convince the parties involved that they are To convince the parties involved that they are effective negotiators.effective negotiators.

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

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The Legal Duty to Bargain in Good The Legal Duty to Bargain in Good FaithFaith• Good Faith BargainingGood Faith Bargaining

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

• Totality of ConductTotality of Conduct

 NLRB assesses a party’s overt behavior and intent in NLRB assesses a party’s overt behavior and intent in deciding the merit of an unfair labor practice charge.deciding the merit of an unfair labor practice charge.  Parties are not required to reach a settlement, agree to a Parties are not required to reach a settlement, agree to a

specific proposal, or make a concession.specific proposal, or make a concession.

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The Legal Duty to Bargain in Good The Legal Duty to Bargain in Good Faith (cont’d)Faith (cont’d) • Sources of Violations of Good Faith BargainingSources of Violations of Good Faith Bargaining

 The nature of the bargaining issuesThe nature of the bargaining issues

 Specific bargaining (Specific bargaining (per seper se) violations) violations

 Totality of conductTotality of conduct

 Successor employer bargaining obligationsSuccessor employer bargaining obligations

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Type of Bargaining SubjectType of Bargaining Subject

• Categories of Bargaining IssuesCategories of Bargaining Issues  Illegal SubjectsIllegal Subjects

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

 Mandatory SubjectsMandatory Subjects  Issues that directly affect wages, hours, and terms and Issues that directly affect wages, hours, and terms and

conditions of employment.conditions of employment.  Issues that can be bargained to impasse (neither party will Issues that can be bargained to impasse (neither party will

agree to a change of position on the issue).agree to a change of position on the issue).

 Voluntary (Nonmandatory or Permissive) SubjectsVoluntary (Nonmandatory or Permissive) Subjects  Items that do not directly affect terms and conditions of Items that do not directly affect terms and conditions of

employmentemployment—cannot be bargained to impasse.—cannot be bargained to impasse.

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Exhibit 6.7 Some Mandatory Subjects of Bargaining*

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Specifc Bargaining ViolationsSpecifc Bargaining Violations

• Management Management Per SePer Se ULPs ULPs  Refusing to meet with the union to negotiate Refusing to meet with the union to negotiate

proposals.proposals.

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

 Reaching a bargaining impasse on a nonmandatory Reaching a bargaining impasse on a nonmandatory issue.issue.

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

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Specifc Bargaining Violations (cont’d)Specifc Bargaining Violations (cont’d)

• Union Union Per SePer Se ULPs ULPs

 Insisting on a closed-shop or discriminatory hiring Insisting on a closed-shop or discriminatory hiring clause.clause.

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

 Refusing to negotiate a management proposal Refusing to negotiate a management proposal involving a mandatory subject. involving a mandatory subject.

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Specifc Bargaining ActionsSpecifc Bargaining Actions

• Totality of Conduct DoctrineTotality of Conduct Doctrine  If the actions of a bargaining party constitute a pattern If the actions of a bargaining party constitute a pattern

of misconduct within the totality of the circumstance of of misconduct within the totality of the circumstance of negotiations, the NLRB can charge that party with an negotiations, the NLRB can charge that party with an unfair labor practice.unfair labor practice.

• BoulwarismBoulwarism  Refusal by one party to consider any modification of Refusal by one party to consider any modification of

its original bargaining proposal unless, in its view, the its original bargaining proposal unless, in its view, the other party offers significant facts to the contrary in other party offers significant facts to the contrary in rebuttal.rebuttal.

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Specifc Bargaining Actions (cont’d)Specifc Bargaining Actions (cont’d)

• Other Bad-Faith Bargaining ConductOther Bad-Faith Bargaining Conduct  Surface bargainingSurface bargaining

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

 Dilatory tacticsDilatory tactics  Procrastinating, unreasonable delay, avoiding meetings, and Procrastinating, unreasonable delay, avoiding meetings, and

other evasive actions that impede the progress of bargaining.other evasive actions that impede the progress of bargaining.

 Imposing unreasonable conditionsImposing unreasonable conditions  Stipulating overly restrictive measures that interfere with the Stipulating overly restrictive measures that interfere with the

process of bargaining.process of bargaining.

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Specifc Bargaining Actions (cont’d)Specifc Bargaining Actions (cont’d)

• Other Bad-Faith Bargaining Conduct (cont’d)Other Bad-Faith Bargaining Conduct (cont’d)  Unilateral changes in conditionsUnilateral changes in conditions

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

 Commission of unfair labor practicesCommission of unfair labor practices  Committing ULPs to discourage union support or taking Committing ULPs to discourage union support or taking

actions that affect large segments of the bargaining unit.actions that affect large segments of the bargaining unit.

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Managerial RightsManagerial Rights

• Management RightsManagement Rights  The discretionary freedom of management to decide The discretionary freedom of management to decide

about and to direct the operations of the firm is about and to direct the operations of the firm is derived from:derived from:  The property rights of the owner.The property rights of the owner.  The laws of agencyThe laws of agency—the legal —the legal responsibility of managers to responsibility of managers to

act as agents for the owner.act as agents for the owner.

 Reserved Rights DoctrineReserved Rights Doctrine  Management retains all rights except those rights restricted Management retains all rights except those rights restricted

by terms of its labor agreement with labor.by terms of its labor agreement with labor. – Short-form management rights clauseShort-form management rights clause

– Long-form management rights clauseLong-form management rights clause

6–35

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

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Successor Employer Bargaining Successor Employer Bargaining ObligationsObligations• Successor EmployerSuccessor Employer

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

 Change in the location of the firm.Change in the location of the firm.

 Change in type of customers served.Change in type of customers served.

 Change in products produced.Change in products produced.

 Change in processes and technology used.Change in processes and technology used.

 Previous managers retained.Previous managers retained.

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Successor Employer Bargaining Successor Employer Bargaining Obligations (cont’d)Obligations (cont’d)

• Successorship ClauseSuccessorship Clause  A clause in the labor contract requiring the present A clause in the labor contract requiring the present

owners to obligate subsequent owners to continue the owners to obligate subsequent owners to continue the labor contract upon assumption of ownership.labor contract upon assumption of ownership.

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Collective Bargaining and BankruptcyCollective Bargaining and Bankruptcy

• The The BildiscoBildisco Decision Decision

 A bankrupt firm can abandon (or seek modification of) A bankrupt firm can abandon (or seek modification of) the terms of a labor contract if:the terms of a labor contract if:  The firm seeks to make a fact-based proposal to the union to The firm seeks to make a fact-based proposal to the union to

modify the contract.modify the contract.

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

 The firm provides relevant information to the union.The firm provides relevant information to the union.

 The firm bargains in good faith over the modification.The firm bargains in good faith over the modification.

 The union rejects the modification without good cause.The union rejects the modification without good cause.

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

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Legal Remedies Associated with Legal Remedies Associated with Violations of the Duty to Bargain in Violations of the Duty to Bargain in Good FaithGood Faith • Remedial Orders of the NLRBRemedial Orders of the NLRB

 A A cease-and-desist ordercease-and-desist order that halts further ULPs that halts further ULPs

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

 A requirement to take affirmative actions (A requirement to take affirmative actions (make-whole make-whole remediesremedies) that restore employees’ rights and remove ) that restore employees’ rights and remove the effects of past practices:the effects of past practices:  Reinstatement, back pay, restoration of seniorityReinstatement, back pay, restoration of seniority

 Resumption of bargaining (in good faith)Resumption of bargaining (in good faith)

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Contract RatifcationContract Ratifcation • RatificationRatification

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

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

• Factors Affecting RatificationFactors Affecting Ratification  Alternative employment opportunitiesAlternative employment opportunities  Degree of satisfaction with proposed settlementDegree of satisfaction with proposed settlement  Perception of effectiveness of representation by unionPerception of effectiveness of representation by union  Internal union politicsInternal union politics  Communication problemsCommunication problems  Endorsement by negotiating teamEndorsement by negotiating team

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Key TermsKey Terms • Collective bargainingCollective bargaining • Interest disputeInterest dispute • Pattern bargainingPattern bargaining • Whipsaw bargaining strategyWhipsaw bargaining strategy • Lock-in agreementLock-in agreement • Coordinated bargainingCoordinated bargaining • LeapfroggingLeapfrogging

• Bargaining unitBargaining unit • NonmandatoryNonmandatory • Centralized bargainingCentralized bargaining • Multi-employer bargaining unitMulti-employer bargaining unit • Degree of labor intensivenessDegree of labor intensiveness

• Bargaining rangeBargaining range • Resistance pointResistance point • Target pointTarget point

• Package proposalPackage proposal • Cents-per-hour costCents-per-hour cost • Roll-up factorRoll-up factor • Walton & McKersie’s four Walton & McKersie’s four

bargaining processesbargaining processes • Distributive bargainingDistributive bargaining • Integrative bargainingIntegrative bargaining • Interest-based bargainingInterest-based bargaining

• Intraorganizational bargainingIntraorganizational bargaining • Good faith bargainingGood faith bargaining • Illegal bargaining subjectsIllegal bargaining subjects • Mandatory bargaining subjectsMandatory bargaining subjects • Mid-term bargainingMid-term bargaining

• Good faith bargaining impasseGood faith bargaining impasse • Voluntary bargaining subjectsVoluntary bargaining subjects

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Key Terms (cont’d)Key Terms (cont’d) • Inability to payInability to pay • Totality of conduct doctrineTotality of conduct doctrine • BoulwarismBoulwarism • Reserved rights doctrineReserved rights doctrine • Short-form management’s rights Short-form management’s rights

clauseclause • Long-form management’s rights Long-form management’s rights

clauseclause • New employerNew employer

• Successor employerSuccessor employer • Successorship clauseSuccessorship clause • Contract ratificationContract ratification