PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2009 Cengage Learning. All rights reserved. Negotiating the Labor Agreement Chapter 6

© 2008 Cengage Learning. All rights reserved.6–2 Collective Bargaining: Definition Collective BargainingCollective Bargaining  A continuing interdependent relationship that involves the exchange of commitments to resolve conflicts of interests by reaching agreements acceptable to both labor and management.  Interest dispute: a dispute over terms and conditions of employment. Success in Collective BargainingSuccess in Collective Bargaining  Objectively: the cost of specific settlements to both parties.  Subjectively: the enhancement of the relationship.

© 2008 Cengage Learning. All rights reserved.6–3 Collective Bargaining: Structure Bargaining StructureBargaining Structure  Employee groups with preferences that affect the bargaining outcome.  Employees and employers affected by the bargaining outcome. Pattern BargainingPattern Bargaining  Attempting to extend the terms of a negotiated settlement (lead contract) from an employer to similar employers.  Eliminates wage competition among employers  Increases perceptions of union equity and solidarity

© 2008 Cengage Learning. All rights reserved.6–4 Exhibit 6.1Possible Structures for Collective Bargaining StructureExample 1.Single employer—single union Single location Multiple locations ABC Manufacturing Co.—UNITE General Motors—UAW 2.Single employer—several unions Single location Multiple locations Johnson Metal, Buffalo, New York—all crafts and industrial unions General Electric—IBEW and IUE 3.Multiple employers—single unionTrucking Management Incorporated— Teamsters 4.Multiple employers—several unionsAssociation of General Contractors of North Alabama—Birmingham Trade Council

© 2008 Cengage Learning. All rights reserved.6–5 Collective Bargaining: Structure (cont’d) The Bargaining UnitThe Bargaining Unit  NLRB determines the appropriate bargaining unit (ABU) for negotiating purposes.  Combining bargaining units in the centralized negotiation of a single labor agreement is a non- mandatory subject of bargaining.  Centralized bargaining of interdependent and industry-wide units increases the union’s negotiating power.  Diversified (conglomerate) companies are less affected by union negotiating power.  Multiemployer bargaining reduces union negotiating power.

© 2008 Cengage Learning. All rights reserved.6–6 Collective Bargaining: Structure (cont’d) Bargaining Agreements and StrategiesBargaining Agreements and Strategies  Lock-in agreement between unions  Requires each union-represented bargaining unit covered by an agreement to withhold final settlement until all involved unions are willing to settle. Ruled unlawful by the NLRB.  Whip-saw bargaining strategy  An employer’s use of the terms of an agreement with one bargaining unit as leverage in negotiating with other bargaining units.  Withdrawal from multi-employer bargaining group  An employer cannot withdraw from bargaining without the union’s consent once bargaining has commenced.

© 2008 Cengage Learning. All rights reserved.6–7 Negotiation Preparation Activities Selection of the Negotiating TeamSelection of the Negotiating Team  Size  Smaller is better (no more than nine members).  Parties may attempt to match the size of the other team.  Centralized bargaining tends to expand team size.  Member Qualifications  Management: staff and line managers  Union: representatives from key constituent groups  Both: members who can keep their emotions and opinions in check

© 2008 Cengage Learning. All rights reserved.6–8 Exhibit 6.2Some Common Characteristics of an Effective Negotiator Able to say no effectively. Has integrity and the ability to inspire confidence in his or her judgment ability. Able to plan effectively and conduct research necessary to become thoroughly knowledgeable about bargaining issues and trends. Able to discern the bottom line interests of other parties. Even-tempered and able to tolerate conflict and ambiguity. An excellent communicator (i.e., able to speak, write, and listen effectively). Self-confident and pragmatic (able to establish realistic bargaining expectations and accurately assess the benefits, costs, and risks of insisting on specific settlement terms). Good physical and mental stamina. Able to understand the short- and long-term implications of specific bargaining proposals on the parties’ interests. Understands the importance of face saving and is willing to provide opportunities to the other party to do so (or conversely, knows when to take advantage of such opportunities when offered by the other party). Willing to take calculated risks in order to achieve desired bargaining outcomes without seriously jeopardizing constituents’ best interests. Knows how and when to ask relevant questions and interpret the other party’s responses (even no response to a question or action may, in fact, represent a meaningful response). Has a sense of humor to relieve stress or establish rapport with the other party. Always laughs with the other party, never at the other party.

© 2008 Cengage Learning. All rights reserved.6–9 Negotiation Preparation Activities (cont’d) Proposal Determination and AssessmentProposal Determination and Assessment  Sources of information  Recent labor negotiations settled by industry competitors  Contract settlements at other company facilities  Records of previous negotiations  Analysis of grievances  Reviewing the union’s convention proceedings  Visiting the union’s web site  Listening to employees  Libraries, union research departments, databases

© 2008 Cengage Learning. All rights reserved.6–10 Exhibit 6.3Practical Advice on Wording Contract Language Whenever possible, use common words, terms, or phrases that are easy to read and understand. Consider the types of individuals who will use the contract (e.g., employees, managers, union representatives, arbitrators) and write contract language with this audience in mind. Anticipate questions or circumstances that might arise in implementing the intent of the proposal and include contract language that would answer or address such issues or concerns. Use consistent terminology throughout the contract to refer to the same concept or item to enhance consistency of meaning and interpretation. Write concisely using only the words necessary to clearly convey the meaning or intent of the contract clause. Use appropriate section numbers or headings to organize contract language by specific bargaining subjects or topics. Use numbered lists to highlight criteria or factors relevant to a particular subject (e.g., steps in a grievance procedure, promotion eligibility criteria). Be clear and specific when specifying time frames or numbers (e.g., length of employee probationary period, length of regular work shift or break-time, effective and expiration time and date of the contract). SOURCE: Marc Boulanger and Brian H. Kleiner, ‘‘Preparing and Interpreting Collective Bargaining Agreements Effectively,’’ Management Research News, 26 (2/3/4), 2003, pp. 193–197.

© 2008 Cengage Learning. All rights reserved.6–11 The Bargaining Range Union Proposal Management Proposal Resistance Point Initial Offer Bargaining Agreement Range Less MoreLess More No Settlement (Management) No Settlement (Union) Target

© 2008 Cengage Learning. All rights reserved.6–12 Exhibit 6.4Bargaining Ranges for Union and Management Negotiators

© 2008 Cengage Learning. All rights reserved.6–13 Costing Contract Proposals Reasons for Costing ProposalsReasons for Costing Proposals  Management needs to know costs of contract terms.  Union needs to estimate the value of management proposals. General Costing ApproachesGeneral Costing Approaches  Preparation of employee background data.  Calculation of cents-per-hour wage increase and its roll-up effect on associated time-based benefits.  The cost of some items (e.g., funeral leave) can be difficult to precisely estimate.

© 2008 Cengage Learning. All rights reserved.6–14 Collective Bargaining Behavior Bargaining ApproachesBargaining Approaches  Distributive bargaining  Negotiation process is a win-lose (zero-sum) exercise in which one party must lose something in order for the other party to win.  Each party relies on its bargaining power to come as close as possible to the other party’s resistance point.  Mutual gain (win-win or interest-based) bargaining  Both bargaining parties seek to satisfy each party’s substantive interest while strengthening their relationship.  The effect of bargaining power is reduced by advance agreement on how bargaining proposals will be evaluated.

© 2008 Cengage Learning. All rights reserved.6–15 Collective Bargaining Behavior Strategies and TacticsStrategies and Tactics  Using persuasive arguments and objective evidence  Painting a picture of the loss or gain  Summarizing bargaining progress  Presenting a bargaining proposal in writing  Listening carefully for nonverbal cues  Using a bargaining caucus  Use of positive reinforcement  Linking issues (packaging multiple proposals)  Matching proposals  Splitting the difference

© 2008 Cengage Learning. All rights reserved.6–16 Exhibit 6.5Some Strategies and Tactics for Use in Distributive Bargaining Undermine the other party’s position. Offer initial proposals well removed from your party’s resistance point. Concede slowly from initial bargaining positions. Attempt to appear firmly committed to bargaining proposals. Threaten the other party’s key interests to impose pressure. Offer to reward key interests of the other party. Seek opportunities to delay negotiations as a means of imposing time pressure. Seek to maximize the perceived value of your party’s concessions. Threaten to withdraw a proposal if it is not accepted within a reasonable time. Schedule marathon bargaining sessions to wear down the other party’s resistance or concentration level. Make a final offer.

© 2008 Cengage Learning. All rights reserved.6–17 Exhibit 6.6Some Strategies and Tactics for Use in Win-Win (Mutual Gain) Bargaining Set realistic bargaining objectives. Clarify the interests underlying each party’s proposals on specific issues. Use brainstorming to generate alternative proposals. Identify the bargaining subject where the parties share mutual interests and those subjects where the parties’ interest may conflict. Exhibit empathy toward the other party’s interests and concerns. Identify and mutually agree on objective standards for evaluating the merits of specific bargaining proposals. Open negotiations with a clear statement of your party’s intent to negotiate cooperatively Ask questions to clarify the substantive content or intent behind specific bargaining proposals. Share objective information about specific bargaining subjects with the other party. Seek to incorporate as much of the other party’s proposal as possible into your party’s counterproposal on a bargaining subject. Explain how or why your party’s proposal meets an important need or interest of the other party. Openly discuss perceived obstacles or barriers to achieving a voluntary settlement Minimize emotional outbursts. Avoid strategies or tactics that might undermine your credibility as a negotiator or damage the level of mutual trust and respect.

© 2008 Cengage Learning. All rights reserved.6–18 The Bargaining Power Model Chamberlain and Kuhn’s Concept of Bargaining PowerChamberlain and Kuhn’s Concept of Bargaining Power  A party’s power is defined as equal to the other party’s cost of disagreement divided by their cost of agreement to the first party’s terms.  Assumptions:  Both parties are rational and use the same approach to the costing of proposals.  Either party will accept the other party’s proposal if it costs that party more to disagree than to agree.  Bargaining power “costs” can be estimated precisely and aren’t subject to drastic and sudden change.

© 2008 Cengage Learning. All rights reserved.6–19 Factors Affecting Bargaining Power Prevailing economic conditionsPrevailing economic conditions  Unemployment rate  Labor supply  Sales volumes Bargaining partiesBargaining parties  Goodwill  Public image Governmental interventionsGovernmental interventions  Jaw-boning  Cooling-off periods

© 2008 Cengage Learning. All rights reserved.6–20 Factors Affecting a Union’s Disagreement and Agreement Costs Financial SupplementsFinancial Supplements  Strike pay  Other outside compensation earned or received by strikers Public AidPublic Aid  Welfare payments  Unemployment compensation  Charitable organizations

© 2008 Cengage Learning. All rights reserved.6–21 Factors Affecting Management’s Disagreement and Agreement Costs External Competition FactorsExternal Competition Factors  Ability to pass on increased costs to customers  Global competition  Governmental regulations and controls Company-Specific FactorsCompany-Specific Factors  Low inventories and high demand  Loss of customers to competitors  High fixed and variable operating costs

© 2008 Cengage Learning. All rights reserved.6–22 Internal Factors Affecting Bargaining Parties Intraorganizational BargainingIntraorganizational Bargaining  Negotiations that occur within each bargaining party as negotiators attempt to achieve consensus within their respective parties.

© 2008 Cengage Learning. All rights reserved.6–23 Ethical and Legal Considerations in Collective Bargaining Immoral or Unethical BehaviorsImmoral or Unethical Behaviors  Bribing opponents  Stealing opponents’ confidential information  Demeaning or humiliating opponents  Surreptitiously observing opponents  Self-Dealing  Giving in to union demands that may harm the company in the long-term to preserve short-term performance bonuses

© 2008 Cengage Learning. All rights reserved.6–24 Ethical and Legal Considerations in Collective Bargaining (cont’d) Conformance to Professional Standards by NegotiatorsConformance to Professional Standards by Negotiators  To obtain the best possible settlement benefiting their party’s interests.  To convince the parties involved that they are effective negotiators.  To communicate honestly and respectfully so as to enhance the continuing labor relations relationship.

© 2008 Cengage Learning. All rights reserved.6–25 The Legal Duty to Bargain in Good Faith Good Faith BargainingGood Faith Bargaining  Each party must demonstrate a sincere and honest intent to reach a labor agreement and be reasonable in their bargaining positions, tactics, and activities. Totality of ConductTotality of Conduct  NLRB assesses a party’s overt behavior and intent in deciding the merit of an unfair labor practice charge.  Parties are not required to reach a settlement, agree to a specific proposal, or make a concession.

© 2008 Cengage Learning. All rights reserved.6–26 The Legal Duty to Bargain in Good Faith (cont’d) Sources of Violations of Good Faith BargainingSources of Violations of Good Faith Bargaining  The nature of the bargaining issues  Specific bargaining (per se) violations  Totality of conduct  Successor employer bargaining obligations

© 2008 Cengage Learning. All rights reserved.6–27 Nature of Bargaining Subjects Categories of Bargaining IssuesCategories of Bargaining Issues  Illegal Subjects  Violate the law and, if included in a contract, are unenforceable.  Mandatory Subjects  Issues that directly affect wages, hours, and terms and conditions of employment.  Issues that can be bargained to impasse (neither party will agree to a change of position on the issue).  Voluntary (Nonmandatory or Permissive) Subjects  Items that do not directly affect terms and conditions of employment—cannot be bargained to impasse.

© 2008 Cengage Learning. All rights reserved.6–28 Exhibit 6.7Some Mandatory Subjects of Bargaining* *The subjects listed are not intended to represent an all-inclusive list of possible mandatory bargaining subjects.

© 2008 Cengage Learning. All rights reserved.6–29 Specific Bargaining Violations Management Per Se ULPsManagement Per Se ULPs  Refusing to meet with the union to negotiate proposals.  Implementing a wage change without consulting the union (unilateral change in a mandatory item).  Reaching a bargaining impasse on a nonmandatory issue.  Refusing to furnish information necessary for the union’s carry out its duty to bargain.

© 2008 Cengage Learning. All rights reserved.6–30 Specific Bargaining Violations (cont’d) Union Per Se ULPsUnion Per Se ULPs  Insisting on a closed shop or discriminatory hiring clause.  Refusing to meet with a legal representative of the employer about negotiations.  Refusing to negotiate a management proposal involving a mandatory subject.

© 2008 Cengage Learning. All rights reserved.6–31 Specific Bargaining Actions “Pleading Poverty”“Pleading Poverty”  Claiming the inability to pay for a union proposal requires the employer to furnish information validating its claim to the union.  Limits on the duty to furnish financial information:  The union must request the information.  The union can request only relevant information.  The information must be furnished promptly and in a useful form.

© 2008 Cengage Learning. All rights reserved.6–32 Specific Bargaining Actions (cont’d) Totality of Conduct DoctrineTotality of Conduct Doctrine  If the actions of a bargaining party constitute a pattern of misconduct within the totality of the circumstance of negotiations, the NLRB charge that party with an unfair labor practice. BoulwarismBoulwarism  Refusal by one party to consider any modification of its original bargaining proposal unless, in its view, the other party offers significant facts to the contrary in rebuttal.

© 2008 Cengage Learning. All rights reserved.6–33 Specific Bargaining Actions (cont’d) Other Bad-Faith Bargaining ConductOther Bad-Faith Bargaining Conduct  Surface bargaining  Going through the motions of bargaining without the sincere desire to reach an agreement.  Dilatory tactics  Procrastinating, unreasonable delay, avoiding meetings, and other evasive actions that impede the progress of bargaining.  Imposing unreasonable conditions  Stipulating overly restrictive measures that interfere with the process of bargaining.

© 2008 Cengage Learning. All rights reserved.6–34 Specific Bargaining Actions (cont’d) Other Bad-Faith Bargaining Conduct (cont’d)Other Bad-Faith Bargaining Conduct (cont’d)  Unilateral changes  Changing in terms of a mandatory employment issue (e.g., wages and benefits) before bargaining it to impasse.  Commission of unfair labor practices  Committing ULPs to discourage union support or taking actions that affect large segments of the bargaining unit.

© 2008 Cengage Learning. All rights reserved.6–35 Managerial Rights Management RightsManagement Rights  The discretionary freedom of management to decide about and to direct the operations of the firm is derived from:  The property rights of the owner.  The laws of agency—the legal responsibility of managers to act as agents for the owner.  Reserved Rights Doctrine  Management retains all rights except those rights restricted by terms of its labor agreement with labor. –Short-form management rights clause –Long-form management rights clause

© 2008 Cengage Learning. All rights reserved.6–36 Successor Employer Bargaining Obligations Successor EmployerSuccessor Employer  Has a legal duty to bargain with an existing union over the terms of a new labor agreement if there is substantial continuity in the operation of the purchased firm as determined by:  Percentage of union employees retained.  Change in the location of the firm.  Type of customers served.  Products produced.  Processes and technology used.  Previous managers retained.

© 2008 Cengage Learning. All rights reserved.6–37 Successor Employer Bargaining Obligations Successorship ClauseSuccessorship Clause  A clause in the labor contract requiring the present owners to obligate subsequent owners to continue the labor contract upon assumption of ownership.

© 2008 Cengage Learning. All rights reserved.6–38 Collective Bargaining and Bankruptcy The Bildisco DecisionThe Bildisco Decision  A bankrupt firm can abandon (or seek modification of) the terms of a labor contract if:  The firm seeks to make a fact-based proposal to the union to modify the contract.  Modification is necessary to reorganize the firm and treats all parties fairly.  The firm provides relevant information to the union.  The firm bargains in good faith over the modification.  The union rejects the modification without good cause.  The balance of equities in the case favor modification of the contract.

© 2008 Cengage Learning. All rights reserved.6–39 Legal Remedies Associated with Violations of the Duty to Bargain in Good Faith Remedial Orders of the NLRBRemedial Orders of the NLRB  A cease-and-desist order that halts further ULPs  A requirement to post written notices of employee basic rights under the LMRA, ULPs, and the respondent’s pledge to cease ULPs  A requirement to take affirmative actions (make-whole remedies) that restore employees’ rights and remove the effects of past practices:  Reinstatement, back pay, restoration of seniority  Resumption of bargaining (in good faith)

© 2008 Cengage Learning. All rights reserved.6–40 Contract Ratification RatificationRatification  Union negotiators are typically only authorized to reach a tentative agreement on contract terms.  Indicates union members approval of, but not necessarily satisfaction with, contract provisions. Factors Affecting RatificationFactors Affecting Ratification  Alternative employment opportunities  Degree of satisfaction with proposed settlement  Perception of effectiveness of representation by union  Internal union politics  Communication problems  Endorsement by negotiating team

© 2008 Cengage Learning. All rights reserved.6–41 Key Terms Collective bargainingCollective bargaining Interest disputeInterest dispute Pattern bargainingPattern bargaining Bargaining unitBargaining unit Non-mandatoryNon-mandatory Centralized bargainingCentralized bargaining Multi-employer bargaining unitMulti-employer bargaining unit Degree of labor intensivenessDegree of labor intensiveness Lock-in agreementLock-in agreement Whip-saw bargaining strategyWhip-saw bargaining strategy Coordinated bargainingCoordinated bargaining Bargaining rangeBargaining range Resistance pointResistance point Cents-per-hour costCents-per-hour cost Roll-up factorRoll-up factor Jobs Bank programJobs Bank program Distributive bargainingDistributive bargaining Mutual gain bargainingMutual gain bargaining Resistance pointResistance point Win-win bargainingWin-win 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 Inability to payInability to pay Totality of conduct doctrineTotality of conduct doctrine

© 2008 Cengage Learning. All rights reserved.6–42 Key Terms (cont.) BoulwarismBoulwarism Management’s rightsManagement’s rights Reserved rights doctrineReserved rights doctrine Short-form management’s rights clauseShort-form management’s rights clause Long-form management’s rights clauseLong-form management’s rights clause New employerNew employer Successor employerSuccessor employer Successorship clauseSuccessorship clause Contract ratification processContract ratification process Funeral leave policyFuneral leave policy