HRM 6304 Unit III PP

HRM 6304, Labor Relations and Collective Bargaining 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

3. Critique the concept of collective bargaining. 3.1 Identify mandatory benefits included in a bargaining package. 3.2 Discuss possible market factors that impact the negotiation process.

Required Unit Resources Chapter 5: Why and How Unions Are Organized, pp. 198–242 Unit Lesson As you may have noticed, our objective for this unit’s lesson is to critique the concept of collective bargaining. If we continue our line of thought, comparing collective bargaining to the divorce process, you will have a better understanding of the process and, therefore, will be better prepared to make such a critique. We have all heard horror stories related to negotiations (e.g., violence, vandalism, fraud) and bitter divorce battles. Aggressive and bad behavior does happen in negotiations, but there are also consequences for such behavior. We will discuss the process and possible consequences in this unit. Let’s review. We have decided it is time to negotiate our relationship because it has changed in the past 3 years and is no longer working for us. Consequently, things are a little tense between us, so it is time to take the next step. We want to maintain a good relationship, but, at the same time, we each have certain issues that must be resolved to our satisfaction if we want to maintain any sort of relationship in the future. We have researched our current position and have given each other notice.

As I mentioned, we want to maintain a good relationship, and, as you know, that requires good communication between both parties as we work through the negotiation process. As part of this good communication, it is wise to establish rules of engagement early on so that both parties clearly understand what acceptable behavior is and what unacceptable behavior is. For example, we both want to be clear that honest information is essential to successful negotiations. Lying or falsifying documents is not acceptable behavior. Hiding assets is also not

UNIT III STUDY GUIDE Organization of Unions

Communication word cloud (Ibreakstock, n.d.)

HRM 6304, Labor Relations and Collective Bargaining 2

UNIT x STUDY GUIDE Title

acceptable behavior. In some divorce processes, a spouse will hide assets in order to reduce the final asset valuation. If I hide the fact that I own an apartment in New York, I reduce my total assets, thereby reducing the amount of alimony and child support I will have to pay. I create a picture misrepresenting my true value and potential to pay. Some organizations also try to underplay their ability to pay in order to justify not increasing wages or not providing increased benefits. However, if an organization states that they cannot pay an increase in wages, they must turn over their financial reports to the union for review. We want to be clear that threats or intimidation of any kind is not acceptable. In a divorce case, you will often see one spouse insisting that the other will never see the children again if they do not get what they want. This is an unacceptable practice in our negotiation process. While we are establishing our rules, we also want to establish subjects of bargaining. For example, in the collective bargaining process, there are mandatory, illegal, and permissive subjects of bargaining. Some subjects, such as wages, hours, and conditions of work, are mandatory subjects for bargaining. Illegal subjects would be things that are considered illegal, such as discrimination or pay below minimum wage. Permissive subjects are everything else that is not mandatory or illegal. In the divorce process, our mandatory subjects of bargaining would be subjects such as child custody and visitation, child support, and alimony. Of course, if we have a prenuptial agreement, that would also be a mandatory subject to discuss. We could establish illegal subjects for the divorce process as former sexual encounters or arrest records, and permissive subjects are everything else. For example, a permissive subject might be the distribution of the family heirlooms or family pets. Other areas we will want to establish are acceptable timelines and consequences for not meeting those timelines as well as consequences for not reaching an agreement. Collectively, we need to decide on a reasonable estimation for resolving our negotiation. Is it reasonable to reach an agreement in 4 weeks, 6 weeks, or even 8 weeks? Is it unreasonable to drag the process out for 6 to 8 months? What are our options if one party violates our rules? What is the next step if we cannot reach an agreement? Are we willing to consider mediation and arbitration? The collective bargaining process and the National Labor Relations Board (NLRB) guidelines easily answer some of these questions. For example, all parties are expected to bargain in good faith, which means honestly—no bullying, no falsification of documents, and no hiding of assets when it comes time to discuss ability to pay. It also means working toward a successful resolution and not stalling or dragging out the process. Depending upon the former contact and the estimates changes, contract negotiations might take 2 weeks, or they may take 5 weeks. Depending upon how well we communicate and work together, negotiations may take longer, but at some point, negotiations have to end in an agreement. Just as in a divorce case, negotiation is costly for both parties. Swift resolution is in the best interest of both parties. Management is losing time from other duties by attending the negotiation meetings, and union representatives are taken from their other duties to participate in the negotiation process. Lengthy negotiations can lead to increased tension and potential conflict. Additionally, as a part of the collective bargaining process, if one party violates our agreed-upon rules, we have the option to file an unfair labor practice complaint against that party. If an unfair labor practice is filed, then the NLRB will review our negotiations; then, the NLRB has the option to modify and finalize the collective bargaining agreement. Both parties will have to live with the modifications for the duration of the contract (3 to 5 years). Both management and the union can commit an unfair labor practice, so both parties are equally able to violate the rules. Just as in a divorce process, both parties have the opportunity to play dirty. Making accusations and tarnishing reputations are common among disputing divorce parties and would be considered an unfair labor practice in the collective bargaining process. As I mentioned previously, we need to agree that if we cannot come to a collective agreement and/or if we reach an impasse, we will try mediation prior to going to arbitration and prior to staying at a state of impasse. An impasse is when two parties cannot reach a mutually satisfying agreement. As you may recall from your readings, mediation is a third party working toward resolution, but the resolution is not binding. A mediator tries to find common ground between the two parties, and from that common ground, the mediator can work toward an agreement that both parties can live with. Arbitration, on the other hand, is binding. An arbitrator works with both parties and ultimately makes the final decision as to what the agreement will consist of. In our divorce analysis, the arbitrator may be the judge who decides what the final divorce decree entails. If collective bargaining goes to mediation or arbitration, both union and management agree who will preside over the meetings, and both share in the costs. Today, many people go through mediation while working on

HRM 6304, Labor Relations and Collective Bargaining 3

UNIT x STUDY GUIDE Title

the final divorce settlement because it is significantly cheaper than working though divorce attorneys, and, in some states, mediation is required prior to the final divorce decree—especially if children are involved. Unions and management can save money as well by going through mediation if it comes to that point. The collective bargaining process takes time. Each party wants to present their best case and negotiate the best solution; therefore, effective communication is essential between the two parties and all those involved in the process. There will be offers and counteroffers and more offers and more counteroffers until terms are reached that both parties can live with for the next 3 to 5 years. Each party needs to be patient and ready to counter the offers with counteroffers. The more prepared each party is, the less time the negotiations will take. Less time means less money for both parties. The process will run more smoothly when both parties establish rules of engagement, conditions of the process, and next steps when an agreement cannot be reached. In the next unit, we will look at some tactics used during negotiations (both effective and not-so-effective tactics) and different ways to build trust.

Reference Ibreakstock. (n.d.). Communication plan word cloud concept. (ID 178709706) [Illustration]. Dreamstime.

https://www.dreamstime.com/communication-plan-word-cloud-concept-white-background- communication-plan-word-cloud-concept-image178709706

HRM 6304, Labor Relations and Collective Bargaining 1

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

4. Discuss union avoidance strategies. 4.1 Define the goals and strategies of unions. 4.2 Discuss reasons and methods businesses use to avoid unionization.

8. Interpret the laws that affect unions.

8.1 Explain the various labor relations acts and laws that influence labor management and unions. Required Unit Resources Chapter 3: Legal Influences, pp. 91–121 Chapter 4: Unions and Management: Key Participants in the Labor Relations Process, pp. 135–187 Unit Lesson Welcome to Unit II. As you will recall from Unit I, we are comparing a collective bargaining agreement to the divorce process. As such, we have decided to change our current relationship because our contract has run out (marriage has ended). At the same time, though, we want to remain on good terms. We have started the pre-bargaining stage of the collective bargaining process by selecting our teams (i.e., those who will represent our best interests). We have begun to collect data to present our case in an informed and professional manner. Just as partners in the marriage give notice of their intent to divorce by serving each other a written notification, management and the union must also notify each other that they intend to negotiate a new contract. Each must notify the other—as well as the Federal Mediation and Conciliation Service—in a minimum of 60 days prior to the end of the contract that they intend to negotiate a new agreement/contract. This notification is typically in writing as a matter of record. When we are collecting data to present our best option(s), it is best to review all earlier documents such as the former contract or, in the case of a divorce, any signed prenuptials. We want to review what is no longer working for us and why we want to make changes. Like most business decisions, if we want to strengthen our case, we also want to offer solutions. We want to gather the information we need that will support our

proposed solutions. In the divorce analogy, let’s say that I am the ex- wife. I have been raising our children and will continue to do so. I will want financial support from my ex- husband, but I must make a case for the amount I need and document it with data. I would love to get $10,000 a month, but is that realistic? To get what I want, I need to show it is realistic and in line with similar cases. Back to collective bargaining, if the union wants a wage increase of

UNIT II STUDY GUIDE The Law and Key Players in the Negotiating Process

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UNIT x STUDY GUIDE Title

$2.00 an hour, the union must show that the company can realistically afford the $2.00 per hour increase and that such an increase is in line with industry standards. In the Harper Container Company (HCC) case in Appendix A, there are tools to make calculations and predictions that will support the position of each party. For example, the decisions worksheet contains information such as base wages for all employees; facilities upgrade options and associated costs; and the accounting effects of altering annual leave of inventories, receivables, payables, and short- and long-term debt into future years. It gives the management team a clear picture of the company’s current financial position and the ability to see the effects on the bottom line when making adjustments for proposed changes to the various areas. This allows the team to test options and see the effects financially. For example, if the union wants a $2.00 an hour raise, the management team could plug in the increase and see the financial impact over the next 3 to 5 years. The management team could also determine what the production numbers would have to look like in order to make a profit. This tool is necessary if management wants to make the best possible decision for the company. It takes considerable time to set up the worksheet and coordinate with the financial and human resource experts—particularly in a large organization that employs hundreds of union employees or more than one union—but it is well worth the time and effort. The management team would start this worksheet by inserting figures and any associated conditions from the current contract. Associated conditions might include subcontracts, seasonal variations, and legal requirements. In the HCC case, for example, the law requires that the company make some federally mandated environmental equipment upgrades.

In the case of a divorce, let’s go back to the example of me as the ex-wife. I have an attorney who also has similar tools to determine the cost of living for future years as I continue to raise our children. After some thoughtful calculations and review of income statements, perhaps $10,000 a month is not realistic, and perhaps $7,000 a month is a better figure. Now that we have gathered the data, it is time to determine our main areas of concern, and from there, we can decide on our objectives and set priorities. We want to determine what it is we must get, what we would like to get, and what would be nice to get from the other party. Our must gets are those things we will want to fight the

hardest for, so it is very important that those areas have current and accurate data to support our position. The like to gets are those things that we would like to obtain as a result of the bargaining process, but they are not necessary for us to move forward. The nice to gets are those things that we are interested in but would concede if it moved us closer to getting our must gets. Going back to the divorce example, assuming that I will have custody of our children, I must get financial support and a guarantee that the financial support will be available until our children reach 21 years of age (unless they are in college). This is a reasonable concern because I have been raising our three children for 10 years and have been out of the workforce. Even if I could return to work, it will take some time to become trained. Regardless, it is doubtful I will reach the financial level needed to support our three children on my own in the lifestyle to which they were accustomed. My like to get is a house with no mortgage, and my nice to get would be continued gym membership and use of our time-share vacation membership. In the HCC case, each side must determine must gets, like to gets, and nice to gets. It is reasonable that management must get the facility upgrades in order to be federally compliant. Failure to do so could result in

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UNIT x STUDY GUIDE Title

costly legal fees and government fines, which will affect the company’s bottom line significantly as well as its reputation with customer stakeholders. It is also reasonable to determine that the union members must get a wage increase. As the case indicates, the HCC managers have received an annual raise of 5% plus annual bonuses for the past 3 years, whereas union members have received less and are earning less than their industry counterparts. Also, the union members are losing money by being forced to take a vacation during maintenance downtime that includes two holidays. Must gets are issues that either party are willing to fight for. In the case study, the United Chemical and Plastic Workers (UCPW) group is willing to go out on strike if they do not negotiate a wage increase in this contract. Management has the lockout option at their disposal. Both teams must support their must gets to the members and the stakeholders to the point that they are willing to stop negotiations and go on strike or initiate a lockout if necessary. Production potentially stops or becomes expensive to maintain in the case of replacement workers. Both teams need to have the data ready to support their positions on must gets. The more prepared each team is, the easier it will be to negotiate a settlement that both parties can live with. The old saying, “It is not fair!” is not good enough in collective bargaining. Supporting data is critical to success.

Reference Rawpixelimages. (n.d.). Negotiation cooperation discussion collaboration contract concept (ID 67826554)

[Illustration]. Dreamstime. https://www.dreamstime.com/stock-photo-negotiation-cooperation- discussion-collaboration-contract-concep-concept-image67826554

Suggested Unit Resources In order to access the following resource, click the link below. The resource below provides a deeper look at contract negotiations. You will learn what it is and how labor unions and employers use it to reach agreement about wages, benefits, and more. Gregg Learning. (2017, October 13). Union contract negotiation [Video]. YouTube.

https://www.youtube.com/watch?v=d4G6GO7CzvQ A transcript and closed captioning are available once you access the video.

HRM 6304, Labor Relations and Collective Bargaining 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

3. Critique the concept of collective bargaining. 3.1 Identify mandatory benefits included in a bargaining package. 3.2 Discuss possible market factors that impact the negotiation process.

Required Unit Resources Chapter 5: Why and How Unions Are Organized, pp. 198–242 Unit Lesson As you may have noticed, our objective for this unit’s lesson is to critique the concept of collective bargaining. If we continue our line of thought, comparing collective bargaining to the divorce process, you will have a better understanding of the process and, therefore, will be better prepared to make such a critique. We have all heard horror stories related to negotiations (e.g., violence, vandalism, fraud) and bitter divorce battles. Aggressive and bad behavior does happen in negotiations, but there are also consequences for such behavior. We will discuss the process and possible consequences in this unit. Let’s review. We have decided it is time to negotiate our relationship because it has changed in the past 3 years and is no longer working for us. Consequently, things are a little tense between us, so it is time to take the next step. We want to maintain a good relationship, but, at the same time, we each have certain issues that must be resolved to our satisfaction if we want to maintain any sort of relationship in the future. We have researched our current position and have given each other notice.

As I mentioned, we want to maintain a good relationship, and, as you know, that requires good communication between both parties as we work through the negotiation process. As part of this good communication, it is wise to establish rules of engagement early on so that both parties clearly understand what acceptable behavior is and what unacceptable behavior is. For example, we both want to be clear that honest information is essential to successful negotiations. Lying or falsifying documents is not acceptable behavior. Hiding assets is also not

UNIT III STUDY GUIDE Organization of Unions

Communication word cloud (Ibreakstock, n.d.)

HRM 6304, Labor Relations and Collective Bargaining 2

UNIT x STUDY GUIDE Title

acceptable behavior. In some divorce processes, a spouse will hide assets in order to reduce the final asset valuation. If I hide the fact that I own an apartment in New York, I reduce my total assets, thereby reducing the amount of alimony and child support I will have to pay. I create a picture misrepresenting my true value and potential to pay. Some organizations also try to underplay their ability to pay in order to justify not increasing wages or not providing increased benefits. However, if an organization states that they cannot pay an increase in wages, they must turn over their financial reports to the union for review. We want to be clear that threats or intimidation of any kind is not acceptable. In a divorce case, you will often see one spouse insisting that the other will never see the children again if they do not get what they want. This is an unacceptable practice in our negotiation process. While we are establishing our rules, we also want to establish subjects of bargaining. For example, in the collective bargaining process, there are mandatory, illegal, and permissive subjects of bargaining. Some subjects, such as wages, hours, and conditions of work, are mandatory subjects for bargaining. Illegal subjects would be things that are considered illegal, such as discrimination or pay below minimum wage. Permissive subjects are everything else that is not mandatory or illegal. In the divorce process, our mandatory subjects of bargaining would be subjects such as child custody and visitation, child support, and alimony. Of course, if we have a prenuptial agreement, that would also be a mandatory subject to discuss. We could establish illegal subjects for the divorce process as former sexual encounters or arrest records, and permissive subjects are everything else. For example, a permissive subject might be the distribution of the family heirlooms or family pets. Other areas we will want to establish are acceptable timelines and consequences for not meeting those timelines as well as consequences for not reaching an agreement. Collectively, we need to decide on a reasonable estimation for resolving our negotiation. Is it reasonable to reach an agreement in 4 weeks, 6 weeks, or even 8 weeks? Is it unreasonable to drag the process out for 6 to 8 months? What are our options if one party violates our rules? What is the next step if we cannot reach an agreement? Are we willing to consider mediation and arbitration? The collective bargaining process and the National Labor Relations Board (NLRB) guidelines easily answer some of these questions. For example, all parties are expected to bargain in good faith, which means honestly—no bullying, no falsification of documents, and no hiding of assets when it comes time to discuss ability to pay. It also means working toward a successful resolution and not stalling or dragging out the process. Depending upon the former contact and the estimates changes, contract negotiations might take 2 weeks, or they may take 5 weeks. Depending upon how well we communicate and work together, negotiations may take longer, but at some point, negotiations have to end in an agreement. Just as in a divorce case, negotiation is costly for both parties. Swift resolution is in the best interest of both parties. Management is losing time from other duties by attending the negotiation meetings, and union representatives are taken from their other duties to participate in the negotiation process. Lengthy negotiations can lead to increased tension and potential conflict. Additionally, as a part of the collective bargaining process, if one party violates our agreed-upon rules, we have the option to file an unfair labor practice complaint against that party. If an unfair labor practice is filed, then the NLRB will review our negotiations; then, the NLRB has the option to modify and finalize the collective bargaining agreement. Both parties will have to live with the modifications for the duration of the contract (3 to 5 years). Both management and the union can commit an unfair labor practice, so both parties are equally able to violate the rules. Just as in a divorce process, both parties have the opportunity to play dirty. Making accusations and tarnishing reputations are common among disputing divorce parties and would be considered an unfair labor practice in the collective bargaining process. As I mentioned previously, we need to agree that if we cannot come to a collective agreement and/or if we reach an impasse, we will try mediation prior to going to arbitration and prior to staying at a state of impasse. An impasse is when two parties cannot reach a mutually satisfying agreement. As you may recall from your readings, mediation is a third party working toward resolution, but the resolution is not binding. A mediator tries to find common ground between the two parties, and from that common ground, the mediator can work toward an agreement that both parties can live with. Arbitration, on the other hand, is binding. An arbitrator works with both parties and ultimately makes the final decision as to what the agreement will consist of. In our divorce analysis, the arbitrator may be the judge who decides what the final divorce decree entails. If collective bargaining goes to mediation or arbitration, both union and management agree who will preside over the meetings, and both share in the costs. Today, many people go through mediation while working on

HRM 6304, Labor Relations and Collective Bargaining 3

UNIT x STUDY GUIDE Title

the final divorce settlement because it is significantly cheaper than working though divorce attorneys, and, in some states, mediation is required prior to the final divorce decree—especially if children are involved. Unions and management can save money as well by going through mediation if it comes to that point. The collective bargaining process takes time. Each party wants to present their best case and negotiate the best solution; therefore, effective communication is essential between the two parties and all those involved in the process. There will be offers and counteroffers and more offers and more counteroffers until terms are reached that both parties can live with for the next 3 to 5 years. Each party needs to be patient and ready to counter the offers with counteroffers. The more prepared each party is, the less time the negotiations will take. Less time means less money for both parties. The process will run more smoothly when both parties establish rules of engagement, conditions of the process, and next steps when an agreement cannot be reached. In the next unit, we will look at some tactics used during negotiations (both effective and not-so-effective tactics) and different ways to build trust.

Reference Ibreakstock. (n.d.). Communication plan word cloud concept. (ID 178709706) [Illustration]. Dreamstime.

https://www.dreamstime.com/communication-plan-word-cloud-concept-white-background- communication-plan-word-cloud-concept-image178709706