Labor Relations week 2
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IPPT_Ch07_Budd6e.pptxChapter 7
Bargaining
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1
Learning Objectives
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 United States bargaining process.
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.
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Introduction 1
United States 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.
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Introduction 2
But how are all of these issues negotiated?
Lots of variation: goals, tactics, stress, emotions, etcetera.
But commonalities, too.
Prepare-explore-agree-implement.
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The Bargaining Time Line
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Preparing to Bargain 1
Bargaining preparation can be time-consuming and extensive
Each side needs to collect enough information 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 (B A T N A).
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Preparing to Bargain 2
From these, can determine targets, priorities, and strategies.
And then you are ready to schedule negotiating sessions with the other side.
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Bargaining Structure 1
The organizational structure for the collective bargaining process.
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Bargaining Structure 2
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.
But can labor’s bargaining power can be lower because the strike threat is weaker.
Centralized bargaining can increase labor’s bargaining power.
But the number of issues increase and it’s harder to find solutions to idiosyncratic local issues.
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9
Bargaining Power and the Bargaining Environment 1
Negotiators are situated in a complex environment that provides opportunities and constraints
What happens at the bargaining table reflects differences in bargaining power between labor and management.
“the ability to secure another’s agreement on one’s own terms”.
Strikes are the most important way for unions to impose disagreement costs on employers.
Need to understand the bargaining environment to assess relative bargaining power.
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Bargaining Power and the Bargaining Environment 2
Examples from the Grocery Industry.
Table divided into two columns shows the examples of the dimensions from the grocery industry. Column 1 lists three dimensions and column 2 lists their corresponding examples.
| Dimension | Examples |
| 1. Legal | Grocery stores can legally hire replacement workers during strikes. Grocery store wages are anchored by the level of the minimum wage. Unions cannot block the introduction of new technologies like scanners. |
| 2. Economic | Grocery store employees can be easily replaced in a loose labor market (high unemployment), and it may be difficult for workers to find work elsewhere. Increased grocery store competition with restaurants and discount retailers reduces the grocery industry’s ability to pass costs to consumers, and gives customers alternatives during a strike. Technological change reduces demand for skilled meat cutters and makes it easier for grocery stores to find replacement workers. |
| 3. Sociopolitical | Unions can lobby against zoning permits for discount retailers that bring increased product market competition. The community might support a strike if it sympathizes with the plight of part-time grocery workers. |
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Bargaining Power and the Bargaining Environment 3
Examples from the Public School Teachers.
Table divided into two columns shows the examples of the dimensions from the public sector. Column 1 lists three different dimensions and column 2 lists their corresponding examples.
| Dimension | Examples |
| 1. Legal | Depending on state law, the school district might not have a legal obligation to collectively bargain, and teachers might not have the right to strike. Some key working and operational conditions might be set by state law, such as tenure protections, the number of instructional days per year, and student testing requirements. |
| 2. Economic | State-mandated teacher certification might shelter teachers from labor market competition while also making it harder for teachers to leave their state to find teaching jobs. Traditional school districts might face competition from private schools, online schools, and charter schools (note: this is also a sociopolitical issue because lawmakers determine the types of alternative schools to approve and fund). |
| 3. Sociopolitical | Unions can work with parents and other community members to lobby for increased taxpayer funding. Taxpayers may revolt if taxes are too high. Teachers unions are under attack from conservative groups for protecting poor teachers and opposing pay-for-performance. School board members are elected. |
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At the Bargaining Table 1
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.
Labor negotiations as theater (front stage, backstage)
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.
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At the Bargaining Table 2
This dramatic structure applies equally well to the grievance procedure.
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.
Outside third-party assistance (mediators).
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At the Bargaining Table 3
Bargaining in good faith
N L R A requires negotiators to bargain “in good faith”.
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At the Bargaining Table 4
Examples of bad faith bargaining:
Unilateral change: Occurs when an employer changes wages, benefits or other terms of employment without first bargaining to an impasse with the union.
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.
Surface bargaining: Occurs when an employer or a union goes through the motions of bargaining but does not sincerely try to reach an agreement.
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At the Bargaining Table 5
Bargaining items are classified into three categories:
Mandatory bargaining items: whatever is required to negotiate as specified by the relevant law.
N L R A: wages, hours, and terms and conditions of employment.
Permissive bargaining items: Everything that is not mandatory or illegal.
Bargaining is not required over these issues.
Not protected if you strike over these issues.
Illegal bargaining items: Those that would violate the law, such as payment of wages below the legal minimum.
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Examples of Bargaining Items
Mandatory
Wage reductions or increases
Bonus plans
Health insurance payments
Work schedules and vacations
Seniority provisions
Just cause discipline provisions
Grievance arbitration
Food prices in the company cafeteria
Lie detector and drug tests
Cell phone usage policy
Subcontracting
Effects of plant closings
Permissive
Union representation on the board of directors
Drug and alcohol screening for applicants
Benefits for retirees
Interest arbitration
Bargaining unit expansion
Contract ratification procedures
Plant closings
Employee parking policy
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Bargaining Subprocesses and Strategies 1
Collective bargaining is complicated because:
Employment relationship conflict is mixed motive: A mixture of conflicts of interests and shared opportunities for mutual gain.
So need distributive and integrative (win-win) bargaining.
The employer-employee union relationship is a long-term, ongoing affair.
So attitudinal structuring is significant.
Both employers and unions have constituencies with diverse interests.
So intraorganizational bargaining is present.
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Four Subprocesses of Labor Negotiations
Table divided into three columns summarizes four subprocesses of labor negotiation. The column headers marked from left to right are: subprocesses; focus; and where the subprocess occurs.
| Subprocess | Focus | Where the Subprocess Occurs |
| Distributive Bargaining (“claiming value”) | Resolving Conflicts of Interest; Often Adversarial | At the Bargaining Table Between Labor and Management Negotiators |
| Integrative Bargaining (“creating value”) | Solving Joint Problems (That Do Not Involve Conflicts of Interest) by Creating Solutions for Mutual Gains; Often Collaborative | At the Bargaining Table and in Brainstorming Sessions Between Labor and Management Negotiators and their Committees |
| Attitudinal Structuring (“relationship building”) | Managing Attitudes and the Overall Labor-Management Relationship; Often Trust-Building | At the Bargaining Table Between Labor and Management Negotiators, But Spilling Over to Others |
| Intraorganizational Bargaining (“internal negotiations”) | Achieving Consensus Within Each Group; Often Complex | Away from the Bargaining Table within Each Organization |
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Bargaining Subprocesses and Strategies 2
Distributive bargaining
Negotiation used to resolve conflicts of interests.
Also referred to as zero-sum bargaining.
The classic vision of collective bargaining.
Union and management negotiators demanding more.
Important to be realistic when assessing your B A T N A.
Maybe a better term is “most likely alternative to a negotiated agreement” (M L A T N A) to prevent the parties from being anchored by unachievable alternatives.
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Distributive Bargaining and the Settlement Range
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Bargaining Subprocesses and Strategies 3
Integrative bargaining
Seeks to unify the common interests of the parties to a negotiation.
Joint problem solving that relies heavily on trust and full communication.
Also referred to as:
Win-win bargaining.
Mutual gains bargaining.
Interest-based bargaining.
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Distributive and Integrative Bargaining
Table divided into three columns compares distributive and integrative bargaining based on 14 key dimensions. Column 1 notes features of distributive bargaining. Column 2 notes the list of key dimensions. Column 3 notes features of integrative bargaining.
| Distributive Bargaining | Integrative Bargaining | |
| Conflict of Interest | Conflict | Common Interest |
| Distributing a Fixed Pie | Imagery | Integrating Interests to Increase the Size of the Pie |
| Positions | Focus | Interests |
| Of Minor Importance, Hindered | Trust | Critical, Facilitated |
| Tightly Controlled | Information | Free Flowing |
| Lead Negotiator Only | Participation | All Members of Negotiating Teams |
| Manipulating Perceptions of Positions, Increasing Costs of Delay | Tactics | Brainstorming, Using Objective Criteria |
| Winning Gains For Your Side Through Bargaining Power | Benefits | Creating Joint Gain and Stronger Relationships |
| Too Aggressive? Harmful to the Relationship? How to Innovate? | Risks | Selling Out? Giving up Too Much? |
| Stress | Difficulties for Negotiators | Giving up Control, Selling Results to Constituents, Time Consuming |
| How to Prevent Adversarial Tactics from Damaging the Relationship? | Question Marks | How to Distribute the Increased Gains? |
| Positional Bargaining | In Sum | Joint Problem Solving |
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The Integrative Bargaining Steps
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Bargaining Subprocesses and Strategies 4
Attitudinal structuring: activities that occur during negotiations also shape the participants’ attitudes toward each other
Intentionally or otherwise.
Table divided into two columns summarizes distributive and integrative bargaining and attitudinal structuring. The column headers are marked as: distributive and integrative bargaining and attitudinal structuring.
| Distributive and Integrative Bargaining | Attitudinal Structuring |
| Produce a written contract | Creates a social contract that reflects the attitudinal quality of the relationship between labor and management |
| Are subprocesses for managing transactions | Is a subprocess for managing relationships |
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Bargaining Subprocesses and Strategies 5
Intraorganizational bargaining: bargaining process that takes place within an organization
Intraorganizational bargaining occurs because of the diverse interests within the constituency of a negotiator.
It is more visible on the union side of the collective bargaining process.
But is also important on the management side.
Occurs in varying ways.
Might include both distributive and integrative bargaining tactics.
“everyone needs a victory speech” at the end.
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Reaching Agreement 1
Successful negotiations conclude with a tentative agreement
An agreement is only tentative because union negotiators must obtain formal approval before the settlement becomes official (maybe management negotiators, too).
Negotiations are usually settled at the last minute.
Settling earlier risks leaving the audience dissatisfied and suspicious that the negotiators have not fought for their interests as strenuously as possible.
It takes three agreements to achieve one agreement, an agreement within each party as well as one across the table
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Reaching Agreement 2
If the contract is not ratified or approved, the negotiators might return to the bargaining table to negotiate a revised contract, or a strike or lockout might occur.
Once a contract settlement is signed, it is legally binding.
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Public Sector Bargaining
Similar to that in the private sector
Need thorough preparation.
Bargaining structures range from very decentralized to centralized.
Negotiations involve dynamic mixtures of the four subprocesses.
Unique aspect: Multilateral bargaining: Negotiations between more than two parties
Raises the possibility of an end run.
Unions can appeal for support directly to other groups, who can pressure the management officials at the bargaining table.
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Continuity and Change 1
In both the private and public sectors:
Collective bargaining has traditionally been adversarial yet professional.
Collective bargaining has become increasingly divergent.
A number of employers have tried to tackle labor cost issues through a forcing strategy.
Aggressive distributive bargaining tactics force weakened labor unions to grant significant wage, benefit, and work rule concessions.
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Continuity and Change 2
Concession bargaining has been a prominent feature of labor relations in many industries since the 1980s
The most aggressive forcing strategies have often involved strikes and the use of replacement workers to take the place of striking workers.
Situations witnessed an escalation in conflict that risked violence, continued distrust, and unanticipated costs to the employer.
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Continuity and Change 3
Chaining a bargaining relationship between an employer and union from adversarial to integrative highlights issues of change management and leadership
Negotiators often express frustration with both the personal costs and the organizational costs of adversarial bargaining sessions.
Management negotiators rate the integrative approach higher than the traditional approach
Union negotiators prefer traditional bargaining.
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Resistance to Changing Bargaining Relationships from Adversarial to Integrative
Table divided into two columns summarizes general and change-specific reasons for resistance to change. The column headers are marked as: Resistance to change factors and application to labor negotiations.
Change-Specific Reasons for Resistance to Change
General Reasons for Resistance to Change
| Resistance to Change Factors | Application to Labor Negotiations |
| Inertia | Inertia |
| Difficult to try something new. | Strong tradition of adversarial negotiations in labor relations. |
| Timing | Timing |
| Not a good time to try something new. | Difficult to change style or form in the middle of negotiations. |
| Surprise | Surprise |
| Sudden and unexpected occurrences can cause a negative reaction. | Management or labor might unilaterally develop a new approach and propose it to the other side without warning. |
| Peer Pressure | Peer Pressure |
| Group norms might sharpen resistance to change | Strong anti-union or anti-management group sentiment can reinforce suspicions about the other side’s motives for change. |
| Self-Interest | Self-Interest |
| A specific change might be harmful to a certain person or group. | The more powerful side might see a different bargaining style as weakening their position. |
| Misunderstanding | Misunderstanding |
| Incomplete or false information about a proposed change might cause resistance. | Some view integrative bargaining methods as giving up power and selling out. |
| Different Assessments | Different Assessments |
| Different people might value elements of a change differently. | Management emphasis on efficiency; labor emphasis on equity and voice. |
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The Bargaining Time Line 1 - Text Alternative
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The diagram shows the bargaining time line between an employer and a union.
Table divided into four columns shows the bargaining time line between an employer and a union. The column headers marked from left to right are: Stage; time; employer; and union.
| Stage | Time | Employer | Union |
| Preparation | Several months prior to bargaining | Assign bargaining team and responsibilities | Elect bargaining committee and determine responsibilities |
| Preparation | Several months prior to bargaining | Conduct external benchmarking or data collection | Identify membership concerns and goals |
| Preparation | Several months prior to bargaining | Review experience under current contract and fit with corporate strategic and financial goals | Review current contract |
| Preparation | Several months prior to bargaining | Prepare strike contingency plan | Discuss issues with the national union |
| Preparation | Several months prior to bargaining | Develop bargaining proposals and agenda, targets, minimums, strategies; anticipate other side | Develop bargaining proposals and agenda, targets, minimums, strategies; anticipate other side |
| Preparation | 60 days before deadline | Notify union and F M C S of intent to bargain | Notify employer and F M C S of intent to bargain |
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The Bargaining Time Line 2 - Text Alternative
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Table divided into four columns shows the bargaining time line between an employer and a union. The column headers marked from left to right are: Stage; time; employer; and union.
| Stage | Time | Employer | Union |
| Bargaining | During the 60 days before deadline | Establish ground rules | Establish ground rules |
| Bargaining | During the 60 days before deadline | Multiple negotiating sessions and internal caucuses | Multiple negotiating sessions and internal caucuses |
| Bargaining | During the 60 days before deadline | Contract costing | Contract costing |
| Bargaining | During the 60 days before deadline | Reach tentative agreement | Reach tentative agreement |
| Bargaining | During the 60 days before deadline | Prepare debriefing materials for managers; strike preparations if needed | Debrief membership; conduct contract ratification vote; obtain national union approval; strike preparations if needed |
The employer and union sign a new contract if the settlement deadline, current contract expiration date, is reached.
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Bargaining Structure - Text Alternative
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The four types of bargaining are as follows:
Decentralized bargaining
Multisite bargaining
Industrywide bargaining
Pattern bargaining
In decentralized bargaining, workplace managers and the members of a local union meet at a bargaining table and negotiate the terms of employment at the workplace.
In multisite bargaining, the managers of Company A and three or more local unions meet at a bargaining table and negotiate the terms of employment at Company A.
In industrywide bargaining, the managers of multiple organizations in an industry such as Company A, Company B, and Company C and the members of various local unions meet at a bargaining table to negotiate the terms of employment in the industry.
In pattern bargaining, the managers of Company A and the members of a local union or unions meet at a bargaining table to negotiate the terms of employment at Company A. Then, the managers of Company B, which is in the same industry as Company A, and the members of a local union or unions meet at a bargaining table to negotiate the terms of employment at Company B based on the employment contract terms at Company A.
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The Integrative Bargaining Steps - Text Alternative
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These steps are as follows:
1. Identify the issue.
2. Understand everyone’s fundamental interests.
3. Brainstorm options for satisfying these interests.
4. Create standards based on the following questions: Is the option feasible? Does it satisfy the interests? Is it acceptable to constituents?
5. Apply the standards to the options.
6. Finalize solution.
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