Negotiating the Labor Agreement Chapter 6 Negotiating the Labor Agreement

Collective Bargaining: Definition Continuing interdependent relationship that involves the exchange of commitments to resolve conflicts of interests Conflicts concern terms and conditions of employment Success in Collective Bargaining Objectively Subjectively MGMT 523 – Chapter 6

Negotiation Preparation Activities Selection of the Bargaining Team Size Member Qualifications Proposal Determination and Assessment Recent labor negotiations settled by industry competitors or other facilities Records of previous negotiations Analysis of grievances MGMT 523 – Chapter 6

Costing Contract Proposals 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 MGMT 523 – Chapter 6

Effective Negotiators Has the ability to say no effectively Has integrity and the ability to inspire confidence Is able to plan effectively and conduct research Can discern bottom line interests of other party Is even-tempered; able to tolerate ambiguity and conflict Is an excellent communicator and listener MGMT 523 – Chapter 6

Effective Negotiators (cont.) Self-confident and pragmatic Has good physical and mental stamina Understands short- and long-term implications of proposals Is willing to take calculated risks to achieve bargaining goals Asks relevant questions and interprets other party’s responses Has a sense of humor and uses it to relieve stress MGMT 523 – Chapter 6

Bargaining Agreement Range No Settlement (Management) The Bargaining Range Management Proposal Resistance Point Initial Offer Bargaining Agreement Range Less More No Settlement (Management) No Settlement (Union) Target MGMT 523 – Chapter 6

Bargaining Approaches Distributive bargaining The negotiation process is a win-lose exercise Each party relies on its bargaining power Mutual gain (win-win or interest-based) bargaining Both bargaining parties seek to satisfy each party’s substantive interest Strengthens their relationship MGMT 523 – Chapter 6

Strategies and Tactics Using persuasive arguments and objective evidence Painting a picture of the loss or gain Presenting a bargaining proposal in writing Listening carefully for nonverbal cues Use of positive reinforcement Linking issues (packaging multiple proposals) Matching proposals Splitting the difference MGMT 523 – Chapter 6

The Bargaining Power Model BP = OCD/CA 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 Factors Affecting Bargaining Power Prevailing economic conditions Bargaining parties Governmental interventions MGMT 523 – Chapter 6

Factors Affecting Agreement and Disagreement Costs Union Financial Supplements Public Aid Management External Competition Factors Company-Specific Factors Intraorganizational Bargaining MGMT 523 – Chapter 6

Ethical and Legal Considerations Immoral or Unethical Behaviors Bribing opponents Stealing opponents’ confidential information Demeaning or humiliating opponents Surreptitiously observing opponents Self-Dealing Conformance to Professional Standards by Negotiators MGMT 523 – Chapter 6

Good 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 Conduct Violations of Good Faith Bargaining Types of Bargaining Issues (subjects) MGMT 523 – Chapter 6

Examples of Mandatory Subjects All wage issues (hourly, piece rate, differentials, bonuses, etc.) Health care issues (premiums, carriers, etc.) Retirement plans Clothing or tool allowance Hours of work Job issues (duties, qualifications, etc.) Performance issues (promotion criteria, evaluation methods, etc.) Employee testing procedures (e.g., drug test) MGMT 523 – Chapter 6

Management 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 MGMT 523 – Chapter 6

Union 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 MGMT 523 – Chapter 6

Other Bad Faith Bargaining “Pleading Poverty” Totality of Conduct Doctrine’ Boulwarism Surface bargaining Dilatory tactics Imposing unreasonable conditions Unilateral changes Commission of ULPs MGMT 523 – Chapter 6

Managerial Rights Management Rights Reserved Rights Doctrine The discretionary freedom of management to decide about and direct the operations of the firm Reserved Rights Doctrine Management retains all rights to manage the firm except those rights restricted by the terms of its labor agreement with labor MGMT 523 – Chapter 6

Successor Employer Bargaining Obligations Legal duty to bargain with an existing union if there is substantial continuity of operations Successorship Clause A clause requiring the present owners to obligate subsequent owners to continue the labor contract MGMT 523 – Chapter 6

Bankruptcy A bankrupt firm can abandon the terms of a labor contract if the firm: Seeks to make a fact-based proposal to the union to modify the contract Provides relevant information to the union Bargains in good faith Needs to modify the contract to reorganize the firm and treats all parties fairly Has a balance of equities favoring modification of the contract MGMT 523 – Chapter 6

Violations of the Duty to Bargain in Good Faith Legal Remedies A cease-and-desist order that halts further ULPs A requirement to post written notices of employee basic rights and pledge to cease ULPs Require employer to take affirmative actions that restore employees’ rights and remove the effects of past practices MGMT 523 – Chapter 6