labor relations paper 3-5 pages

A useful framework for understanding the negotiation process refers to the bargaining zone, which is illustrated below. During preparations for negotiation, both sides are likely to attempt to define three critical points. For the organization, the bargaining zone and its three immediate points include:

1. the employer’s maximum limit

2. the employer’s expectation

3. the employer’s desired limit.

For example, the organization might have a zero increase in wages and benefits as a desired result (also known as management’s “target point”). But, it also recognizes that this desired result is unlikely and so what it expects is to have to provide a modest increase in wages and benefits totaling perhaps 4 to 5 percent. But is preparations are done thoroughly, managers also know the maximum amount they are willing to pay, which might be as high as 7 or 8 percent (management’s “resistance point”). Note that, in this example, management would rather suffer through a strike than pay more than an 8 percent pay increase.

On the other side of the table, the labor union also defines a bargaining zone for itself that includes three points. These three points include:

• the union’s minimum acceptable limit on what it will take from management (the union resistance point: the settlement level below which the union will strike)

its own expectations about what management is likely to agree to

the most it can expect to get from management (the union target point).

For instance, the labor union might feel that it has to provide a minimum increase of 2 to 3 percent in wages and benefits to its members. They expect a settlement of around 5 percent but would like to get 9 or 10 percent. In the spirit of bargaining, they may make an opening demand to management as high as 12 percent. Hence, during the opening negotiation session, labor might inform management that it demands a 12 percent wage and benefit increase. The employer might begin by stating emphatically that no increases should be expected. Assuming, however, that some overlap exists between the organization’s and the union’s demands and expectations in the bargaining zone (a positive settlement zone), and assuming that both sides are willing to compromise and work hard at reaching an agreement it is likely that an agreement will in fact be attained.

Source: Ricky Griffin and Ronald Ebert, Business, 6th ed. Reprinted by permission of Prentice-Hall, Inc., Upper Saddle River, N.J.