HRM 4570 ILR Homework 2
Rain Ashbell
11HRM4570ILRCh7.1BargainingOnlineLecture2019-20audio.pptxChapter 7 Part 1
Bargaining
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Hi Class, Welcome to Industrial and Labor Relations. Today we are going to discuss Chapter 7 Part 1 Bargaining
Bargaining between unions and employers is one of the three very important processes of U.S. labor relations. The goal of this chapter is for students to understand the behavioral, strategic, and legal aspects of collectively bargaining contracts in U.S. labor relations. The chapter also includes discussions of the important practical elements of bargaining, including preparation, costing, and the timeline of the negotiation process.
1
7-2
Sketch the steps of the bargaining time line
Define the different types of bargaining structures
Discuss the determinants and importance of bargaining power
Explain the legal parameters of the U.S. bargaining process
Learning Objectives
The learning objectives of Chapter 7 Bargaining are as follows
Sketch the steps of the bargaining time line
Define the different types of bargaining structures
Discuss the determinants and importance of bargaining power
Explain the legal parameters of the U.S. bargaining process
2
7-3
Outline the four sub processes of bargaining, their purposes, and their tactics
Understand the pressures for changing from traditional to integrative bargaining, and why this is difficult
Learning Objectives
Outline the four sub processes of bargaining, their purposes, and their tactics
Understand the pressures for changing from traditional to integrative bargaining, and why this is difficult
3
Collective Bargaining
Please click on the video and watch what is collective bargaining.
4
7-5
U.S. union contracts usually include the following subjects:
Compensation
Personnel policies and procedures
Employee rights and responsibilities
Employer rights and responsibilities
Union rights and responsibilities
Dispute resolution and ongoing decision making
Introduction
Through the process of collective bargaining, employers and unions negotiate terms and conditions of employment, and put these terms into written contracts, also called collective bargaining agreements. In the United States these contracts are legally binding and typically last one to five years, with a three-year duration being the most common.
U.S. union contracts usually include the following subjects:
Compensation: wages, benefits, vacations and holidays, shift premiums, profit sharing. Compensation items might also be referred to as economic issues, and the other areas are called administrative or language issues.
Personnel policies and procedures: layoff, promotion, and transfer policies, overtime and vacation rules
Employee rights and responsibilities: seniority rights, job standards, workplace rules
Employer rights and responsibilities: management rights, just cause discipline and discharge, subcontracting, safety standards
Union rights and responsibilities: recognition as bargaining agent, bulletin board, union security, dues checkoff, shop stewards, no strike clauses
Dispute resolution and ongoing decision making: grievance procedures, committees, consultation, renegotiation procedures
5
7-6
The preparation stage usually begins at least several months before bargaining begins, or even 18 months before the start of a particularly large, complex, or pattern-setting negotiation; it usually involves the following stages:
1. Assembling a team
2. Collecting information
Preparing to Bargain
The longest portion of the time line of a negotiation process is the preparation stage.
The preparation stage usually begins at least several months before bargaining begins, or even 18 months before the start of a particularly large, complex, or pattern-setting negotiation; it usually involves the following stages:
In Stage 1, Assembling a team—for the employer team, managerial roles typically determine bargaining team responsibilities, whereas union bargaining committees are usually elected by the rank and file.
In Stage 2, Collecting information
6
7-7
Collecting information
The information from employer and union form the basis to determine five essential things
Interests
Options for achieving interests
External benchmarks of fairness
The other side’s interests
Best alternative to a negotiated agreement
2. Collecting information
When Collecting information— Managers might collect external benchmarking data on labor costs and other items, and should also review the organization’s financial performance and strategic plans. The union negotiating committee will likely survey the rank and file to identify common concerns and goals, and also consult with its national union. Both sides should also conduct thorough reviews of how the expiring collective bargaining agreement has performed. Areas of the contract that have created problems, such as high levels of grievances, should be noted. These pieces of information form the basis for each side to determine the following five essential things, from which, both bargaining teams develop targets, priorities, and strategies:
Their interests (what they are really concerned about)
Options for achieving their interests
External benchmarks of fairness
The other side’s interests
Their best alternative to a negotiated agreement (BATNA)
7
BATNA Best alternative to a negotiated agreement
Please click on the video and watch What is BATNA or Best alternative to a negotiated agreement ?
8
7-9
3. From these, both bargaining teams develop targets, priorities, and strategies.
4. Creating a strike contingency plan is another important aspect of bargaining preparations.
5. Sixty days before the existing contract expires, or 90 days in the health care industry, the parties provide official notification to each other and to the Federal Mediation and Conciliation Service that they intend to negotiate a new contract. The bargaining teams then Establish a schedule of bargaining sessions and set ground rules.
Preparing to Bargain
In stage 3, From these, both bargaining teams develop targets, priorities, and strategies. Extensive checklists for both employer and union negotiators are available to help guide preparation activities.
In stage 4, Creating a strike contingency plan is another important aspect of bargaining preparations.
In stage 5, Sixty days before the existing contract expires, or 90 days in the health care industry, the parties provide official notification to each other and to the Federal Mediation and Conciliation Service that they intend to negotiate a new contract. The bargaining teams then Establish a schedule of bargaining sessions and set ground rules.
9
7-10
Figure 7.1 - The Bargaining Time Line
Figure 7.1 shows The Bargaining Time Line
10
7-11
An appropriate bargaining unit is defined during the representation process. This unit is the minimal unit for collective bargaining.
Once certified, multiple units can be combined into a single larger bargaining unit for the purposes of negotiating a contract if the parties agree. The resulting organizational structure for the collective bargaining process is called the bargaining structure.
If the parties agree, the multiple units combines into single larger bargaining unit for negotiating a contract
Bargaining Structure
An appropriate bargaining unit is defined during the representation process. This unit is the minimal unit for collective bargaining.
Once certified, multiple units can be combined into a single larger bargaining unit for the purposes of negotiating a contract if the parties agree. The resulting organizational structure for the collective bargaining process is called the bargaining structure.
If the parties agree, the multiple units combines into single larger bargaining unit for negotiating a contract
11
7-12
Figure 7.2 - Bargaining Structures
Figure 7.2 shows four types of bargaining structures.
12
7-13
Employers prefer decentralized bargaining structures to have local unions compete against one another for jobs (this is called “whipsawing”) and to tailor contracts to local situations.
Unions are generally believed to prefer more centralized structures because they can consolidate their power and prevent whipsawing by negotiating uniform contracts (this is called “taking wages out of competition”).
Bargaining Structure
The conventional wisdom is that in many situations, employers prefer decentralized bargaining structures to have local unions compete against one another for jobs (this is called “whipsawing”) and to tailor contracts to local situations.
Unions are generally believed to prefer more centralized structures because they can consolidate their power and prevent whipsawing by negotiating uniform contracts (this is called “taking wages out of competition”).
13
7-14
The bargaining structure in the United States is typically decentralized;
the leading explanations for this appears to be that employers have been able to use their greater bargaining leverage to force more decentralization
both firms and workers like the flexibility and opportunities for employee involvement in decision making allowed by decentralized bargaining structures.
Bargaining Structure
The bargaining structure in the United States is typically decentralized; the leading explanations for this appears to be that employers have been able to use their greater bargaining leverage to force more decentralization and also that both firms and workers like the flexibility and opportunities for employee involvement in decision making allowed by decentralized bargaining structures.
14
7-15
Pattern bargaining: The union bargains exclusively with the target company until an agreement is reached
Sequential bargaining process is an informal way of achieving more centralized bargaining structure
Pattern bargaining can help unions take wages out of competition, but there are also intraorganizational bargaining reasons.
Before the 1980s pattern bargaining was a prominent feature of collective bargaining in many industries
Bargaining Structure
Another type of bargaining structure is pattern bargaining in which the union bargains exclusively with a target company until an agreement is reached. The target settlement is then used by the union as a pattern for subsequent negotiations in the industry;
this sequential bargaining process is an informal way of achieving a more centralized bargaining structure.
Pattern bargaining can help unions take wages out of competition, but there are also intraorganizational bargaining reasons.
Before the 1980s pattern bargaining was a prominent feature of collective bargaining in many industries
15
Pattern Bargaining
Please click on the video and watch an example of pattern bargaining.
16
7-17
When determining the desired bargaining structure, labor and management negotiators face a trade-off between power and responsiveness
Decentralized bargaining can be more responsive to local needs
Issues are more homogeneous and the negotiators are close to their constituents
As negotiations become more centralized, the number of issues increase
Bargaining Structure
When determining the desired bargaining structure, labor and management negotiators face a trade-off between power and responsiveness.
Compared to a centralized bargaining structure, decentralized bargaining can be more responsive to local needs because the issues are often more homogeneous and the negotiators are close to their constituents; however, decentralized bargaining can also reduce labor’s bargaining power.
As negotiations become more centralized, the number of issues increases, labor and management negotiators become further removed from their constituents, and it is more difficult to tailor local solutions for specific problems.
17
7-18
Negotiators are situated in a complex environment that provides opportunities and constraints
What happens at the bargaining table reflects differences in relative bargaining power between labor and management.
Bargaining power is “the ability to secure another’s agreement on one’s own terms.”
This ability depends on the relative costs of agreeing and disagreeing
Bargaining Power and the Bargaining Environment
Negotiators are situated in a complex environment that provides opportunities and constraints
What happens at the bargaining table reflects differences in relative bargaining power between labor and management. Bargaining power is “the ability to secure another’s agreement on one’s own terms.” This ability depends on the relative costs of agreeing and disagreeing; the side that can impose greater disagreement costs on the other will be in a more powerful position.
18
7-19
A critical reason that U.S. labor law protects workers’ efforts at forming unions and engaging in collective bargaining is to balance bargaining power between a company and a group of employees.
Strikes are the most important way for unions to impose disagreement costs on employers
A union with strong strike leverage can impose significant costs on management through a strike
Bargaining Power and the Bargaining Environment
A critical reason that U.S. labor law protects workers’ efforts at forming unions and engaging in collective bargaining is to balance bargaining power between a company and a group of employees.
Strikes are the most important way for unions to impose disagreement costs on employers,
so relative bargaining power is closely related to a union’s strike leverage; a union with strong strike leverage can impose significant costs on management through a strike, and labor in this situation has strong bargaining power relative to the employer, resulting in contract terms favoring the employees; the reverse is true if a union has weak strike leverage.
19
7-20
Analyzing relative bargaining power includes identifying the important elements of the bargaining environment
Diverse set of external influences on labor and management as a contract is negotiated
The dimensions of the bargaining environment apply equally to the private and public sectors
Overpaid workers can be replaced by others willing to work for less
Bargaining Power and the Bargaining Environment
Analyzing relative bargaining power—or strike leverage—consists of identifying the important elements of the bargaining environment. The bargaining environment is the diverse set of external influences on labor and management as they sit at a bargaining table negotiating a contract.
Diverse set of external influences on labor and management as a contract is negotiated
The dimensions of the bargaining environment apply equally to the private and public sectors
Overpaid workers can be replaced by others willing to work for less
20
7-21
There are at least two key differences between the public and private sectors:
1. Although some services can be privatized or outsourced, essential services must still be provided. Public sector management does not have the option of moving to a different location in search of lower labor costs.
2. Public services are not bought and sold in economic markets; instead the levels of services are ultimately determined by voters, taxpayers, and elected officials in the political arena.
Bargaining Environment: private and public sectors.
The dimensions of the bargaining environment apply equally well to the private and public sectors.
There are at least two key differences between the public and private sectors:
1. Although some services can be privatized or outsourced, essential services must still be provided. Public sector management does not have the option of moving to a different location in search of lower labor costs. This places an important constraint on the business strategies available to public sector managers.
2. Public services are not bought and sold in economic markets; instead the levels of services are ultimately determined by voters, taxpayers, and elected officials in the political arena. This heightens the importance of the sociopolitical dimension of the bargaining environment.
These differences lead some to argue that public sector collective bargaining should be prohibited because public sector unions are too powerful. The evidence, however, does not support the contention that public sector unions have unlimited bargaining power.
21
7-22
These differences lead some to argue that public sector collective bargaining should be prohibited because public sector unions are too powerful.
The evidence, however, does not support the contention that public sector unions have unlimited bargaining power.
Bargaining Environment: private and public sectors.
These differences lead some to argue that public sector collective bargaining should be prohibited because public sector unions are too powerful.
The evidence, however, does not support the contention that public sector unions have unlimited bargaining power.
22
7-23
Negotiators need to use their communication, relationship-building, and problem-solving skills to reach an agreement that both sides find acceptable.
Most labor negotiations involve the renegotiation of an expiring contract, and this contract anchors the negotiations.
At the Bargaining Table
Once at the bargaining table, negotiators need to use their communication, relationship-building, and problem-solving skills to reach an agreement that both sides find acceptable.
Most labor negotiations involve the renegotiation of an expiring contract, and this contract anchors the negotiations. For starters, the side that wants to change the contract traditionally makes the opening proposals that mark the beginning of bargaining. From there, proposals are considered and counterproposals are made until an agreement is reached.
23
7-24
Labor negotiations as theater
The dramatic structure of labor negotiations makes negotiations more complex than they appear
Experienced lead negotiators often meet with each other in private with no other bargaining team members present, to explore wide-ranging options
This dramatic structure applies equally well to the grievance procedure
At the Bargaining Table
Labor Negotiations as Theater
The dramatic structure of labor negotiations closely parallels a theatrical play. The negotiators are actors and have roles, especially the lead negotiators with the leading parts. The audience for the actors’ performances is other negotiators and the negotiators’ constituents (upper management for management negotiators, union members for the union negotiators).
The audience has certain expectations of how the performance should proceed—that is, the constituents demand that their interests be strongly represented.
The lead negotiators need to put on a show. Table pounding and other aggressive tactics demonstrate the strength of the negotiators not to each other but to their constituents.
This theater takes place on the front stage of negotiations (the bargaining table) for the other members of the bargaining committee to see
There is also a backstage: experienced lead negotiators often meet with each other in private with no other bargaining team members present. In these meetings the negotiators can step out of their public roles, share information, and explore wide-ranging options.
In contrast with the conflictual bargaining of the front stage, backstage interactions can have a problem-solving flavor.
The dramatic structure of labor negotiations makes negotiations more complex than they appear because of the following reasons:
Negotiators have to decipher whether the other negotiators are putting on a show or trying to communicate a legitimate point.
Novice labor relations practitioners need to make sure they do not get swept up in the performance or get emotionally involved.
Participants need to know their roles, understand the nature of the entire performance, and wait for their opportunities out of the spotlight backstage.
This dramatic structure applies equally well to the grievance procedure. Novices should be prepared for public performances during meetings and hearings to resolve grievances, and should not take the process personally.
24
7-25
Negotiating tools
Contract costing: Used to evaluate proposals by estimating their monetary costs
Requires making projections of complex issues
Bargaining book - Each side uses three-ring binders to create a complete record of the negotiation and the minutes of each bargaining session
At the Bargaining Table
Negotiating Tools
Contract costing is one of the essential negotiating tools that participants use to evaluate proposals by estimating their monetary costs; a lump-sum bonus is perhaps the easiest proposal to cost—simply multiply the amount of the bonus by the number of employees who will receive it.
Most proposals are more complex, and their costs might depend on employee seniority, future staffing levels, and other complicating factors; contract costing therefore often requires making projections of complex issues and negotiators might disagree over these projections.
A bargaining book is another common tool for negotiators; each side uses three-ring binders to create a complete record of the negotiation, including their agenda, proposals, supporting documents, proposals and materials received from the other side, and the minutes of each bargaining session.
It can also be useful for the bargaining book to include a summary sheet that shows the status of each section (pending, agreed, or withdrawn) at the end of each bargaining session; negotiators might also receive assistance from neutral mediators.
25
7-26
Bargaining in good faith
NLRA requires negotiators to bargain “in good faith”
Good faith bargaining requires that the parties must make “a serious attempt to resolve differences and reach a common ground.”
Examples of bad faith bargaining:
1. Unilateral change: Occurs when an employer changes wages, benefits or other terms of employment without first bargaining with the union
At the Bargaining Table
The National Labor Relations Act (NLRA) requires negotiators to bargain “in good faith” [Section 8(d)]. Good faith bargaining requires that the parties must make “a serious attempt to resolve differences and reach a common ground.”
The dividing line between good faith and illegal bad faith bargaining, however, is not always clear.
Following are some of the illegal bad faith bargaining:
Unilateral change—occurs when an employer changes wages, benefits, or other terms and conditions of employment without first bargaining with the union; this includes both during contract negotiations and when a contract is in force; an employer can make unilateral changes in mandatory bargaining items only after it has fulfilled its bargaining obligation by bargaining to an impasse.
26
7-27
2. Direct dealing: Occurs when an employer illegally tries to circumvent and undermine a union by directly interacting with the employees with respect to bargaining issues
Refusing to provide information in certain situations
Such as upon request, from the union, which is necessary for representing the workers effectively
3. Surface bargaining: Occurs when an employer or a union goes through the motions of bargaining but does not sincerely try to reach an agreement
A company can use its bargaining power to achieve a favorable settlement (hard bargaining) but not to undermine the sincere pursuit of an agreement (surface bargaining).
At the Bargaining Table
Direct dealing—occurs when an employer illegally tries to circumvent and undermine a union by interacting directly with the employees with respect to bargaining issues.
Refusing to provide information in certain situations—upon request, an employer has an obligation to provide information to the union that is necessary for representing the workers effectively.
Surface bargaining—occurs when an employer or a union goes through the motions of bargaining but does not sincerely try to reach an agreement; it is a multifaceted concept, and in each case the NLRB looks at the specific facts and the totality of conduct, including delaying tactics, unreasonable bargaining demands, failure to designate an agent with sufficient bargaining authority, withdrawal of already agreed-upon provisions, making “take it or leave it” offers, refusing to make counterproposals, and arbitrary scheduling of meetings.
A company can use its bargaining power to achieve a favorable settlement (hard bargaining) but not to undermine the sincere pursuit of an agreement (surface bargaining).
27
7-28
NLRA requires good faith bargaining over “wages, hours, and other terms and conditions of employment” [Section 8(d)].
At the Bargaining Table
Labor law also affects what is discussed at the bargaining table; specifically, the NLRA requires good faith bargaining over “wages, hours, and other terms and conditions of employment” [Section 8(d)].
28
7-29
Bargaining items are classified into three categories:
Mandatory bargaining items: Includes wages, hours, and terms and conditions of employment
Illegal bargaining items: Those that would violate the law, such as payment of wages below the legal minimum
Permissive bargaining items: Includes everything excluding mandatory and illegal
At the Bargaining Table
National Labor Relations Board (NLRB) is empowered by the U.S. Supreme Court to classify bargaining issues into the following three categories of bargaining items (called the Borg-Warner doctrine after the name of the Court’s decision):
Mandatory bargaining items—wages, hours, and terms and conditions of employment; employers and unions have an obligation to bargain over these.
Illegal bargaining items—bargaining items that would violate the law, such as closed shop provisions, policies that involve racial discrimination, or payment of wages below the legal minimum; employers and unions are prohibited from bargaining over such items. These are items that cannot be bargained over legally by either party. These issues violate a law and cannot be entered into a contract legally even if both parties agree. Examples of illegal subjects are: discrimination against a legally recognized group of people; hot cargo clauses (a provision allowing workers to refuse to handle material or goods from a struck facility or on an "unfair" list); closed shop clauses (a provision that all employee are union members before being hired-made illegal under the 1947 Taft-Hartley provisions).
Permissive bargaining item—it is the middle category that includes everything not in the other two (mandatory bargaining items and illegal bargaining items); employers and unions can bargain over permissive items if they choose; but because they are outside the boundaries of the NLRA, the NLRB cannot order bargaining on these issues, and employees are not protected if they go on strike over these issues.
29
7-30
Permissive bargaining items: Includes everything excluding mandatory and illegal
Employer and union can bargain over permissive items if they choose
BUT because they are outside the boundaries of the NLRA, the NLRB cannot order bargaining on these issues.
And employees are not protected if they go on strike over these issues.
At the Bargaining Table
Permissive bargaining items: Includes everything excluding mandatory and illegal
Employer and union can bargain over permissive items if they choose
BUT because they are outside the boundaries of the NLRA, the NLRB cannot order bargaining on these issues.
And employees are not protected if they go on strike over these issues.
30
7-31
Table 7.3 - Examples of Mandatory and Permissive Bargaining Items
Please carefully study Table 7.3 - Examples of Mandatory and Permissive Bargaining Items before taking the quiz on chapter 7 lecture note. Please note that effects of plant closing such as severance package is mandatory bargaining item, but the plant closing itself is a permissive item.
Please also note that compensation or working conditions for current employees are generally mandatory items, but compensation or working conditions for job applicants and retirees are permissive items.
31
Mandatory, permissive or illegal item?
Please take out your lecture note for Chapter 7. and take the quiz. For each of the bargaining items, please indicate if it is a mandatory, permissive , or illegal item
32
7-33
| Examples of bargaining items | Mandatory, Permissive or Illegal? |
| 1. Health insurance for retired employees | Permissive |
| 2. Change in retirement plan contributions | Mandatory |
| 3. Seniority provisions | Mandatory |
| 4. Contract ratification procedures | Permissive |
| 5. Health insurance premiums | Mandatory |
| 6. Wages below minimum wage | Illegal |
| 7. Straight time pay for overtime hours | Illegal |
| 8. Employee drug testing | Mandatory |
| 9. Subcontracting work | Mandatory |
| 10. Plant closings | Permissive |
| 11. Union representation on the board of directors | Permissive |
| 12. Pension/retirement contributions | Mandatory |
Here are the answers for the quiz. How many points did you get?
33
We have come to the end of our lecture today. If you have any questions, please feel free to email me.
See you next class!
34
