2. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. CHAPTER EIGHT BARGAINING Once a union is organized by a group of employees and recognized by the employer through the process outlined in the previous chapter, the next goal of the employees is for the union to negotiate a contract with the employer. This chapter discusses the behavioral, strategic, and legal aspects of collective bargaining contracts in U.S. labor relations.

3. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-3 LEARNING OBJECTIVES To understand….. 1.How union contracts are negotiated. 2.The four subprocesses of bargaining (distributive bargaining, integrative bargaining, attitudinal structuring, and intraorganizational bargaining), their purposes and tactics. 3.The legal parameters of the U.S. bargaining process. 4.The determinants and importance of bargaining power. 5.Different types of bargaining structures. 6.The typical bargaining timeline.

4. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-4 THE FOUR SUBPROCESSES OF LABOR NEGOTIATIONS

5. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-5 DISTRIBUTIVE BARGAINING AND THE SETTLEMENT RANGE

6. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-6 DISTRIBUTIVE AND INTEGRATIVE BARGAINING

7. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-7 THE INTEGRATIVE BARGAINING CIRCLE CHART

8. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-8 ATTITUDINAL STRUCTURING Is a negotiation subprocess for managing relationships. Creates a social contract rather than a written contract. The close personal interaction between labor and management negotiations that occurs during the bargaining process provides the opportunity for the parties to build trust and respect. And therefore move towards a more cooperative and less conflict- laden relationship.

9. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-9 INTRAORGANIZATIONAL BARGAINING Is the subprocess of the bargaining process that takes place within an organization—both within the union and within management. Results from the presence of diverse interests within the constituency of a negotiator. A diversity of interests is very visible on the union side because unions are political institutions. But also occurs within management: Top management is particularly concerned with the bottom line financial impact. Human resources professionals worry about the principles that are affected or established. Supervisors are interested in how work gets done. Negotiators want an agreement.

10. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-10 IN GOOD FAITH OVER TERMS AND CONDITIONS OF EMPLOYMENT The NLRA specifies that it is an unfair labor practice both for employers and unions “to refuse to bargain collectively” where… “To bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any questions arising there under, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession” [section 8(d), emphasis added].

11. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-11 BARGAINING ITEMS Three classes of bargaining items (the Borg-Warner doctrine): Mandatory: wages, hours, and terms and conditions of employment. Permissive: everything not in the other two categories. Illegal: items that violate the law, such as a closed shop policy, racial discrimination, or sub-minimum wages. Also, effects bargaining—managerial decisions are not mandatory bargaining items, but the effects of those decision on the workers, such as layoff order or severance pay, can be mandatory items

12. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-12 EXAMPLES OF MANDATORY AND VOLUNTARY BARGAINING ITEMS INSERT BOX 8.10

13. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-13 FOUR MAJOR EXAMPLES OF BAD FAITH BARGAINING Unilateral change is when the employer changes wages, benefits, or other terms and conditions of employment without first bargaining with the union. An employer can only make unilateral changes in mandatory items after it has fulfilled its bargaining obligation by bargaining to an impasse. Direct dealing occurs when an employer illegally tries to circumvent and undermine a union by interacting directly with the employees with respect to bargaining issues. Refusing to provide information occurs when an employer fails to provide requested information to the union that is necessary for representing the workers effectively. Surface bargaining occurs when an employer or a union appears to be going through the motions of bargaining but is not sincerely trying to reach an agreement.

14. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-14 BARGAINING POWER AND THE BARGAINING ENVIRONMENT Many labor relations outcomes reflect differences in relative bargaining power between labor and management. Bargaining power is “the ability to secure another’s agreement on one’s own terms” which intern depends on the relative costs of agreeing and disagreeing. If management calculates that it is more costly to disagree to a union’s proposed contract terms and therefore endure a strike, then management will accept the terms. Unions face the same calculation.

15. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-15 The Bargaining Environment: Examples from the Grocery Industry INSERT BOX 8.12

16. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-16 BARGAINING STRUCTURE The appropriate bargaining unit is defined during the NLRB representation election process (recall Chapter 7). This unit is the “minimal unit” for collective bargaining. Once certified, however, multiple units can be combined into a single, larger bargaining unit for the purposes of negotiating a contract if the parties agree. The resulting organizational structure for the collective bargaining process is called the bargaining structure and ranges between decentralized and centralized structure.

17. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-17 Bargaining Structures

18. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-18 The Bargaining Timeline

19. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-19 Contract Costing Example Contract Change: All workers with at least five years of seniority will receive an extra week of paid vacation annually. Costing this Change: 200 workers  5 days  8 hours  $10.00 per hour  1.5 per hour = $120,000 per year (1) (2) (3) (4) (5) Number of workers affected. There are currently 200 employees with at least five years of seniority so assume 200. Each workers get five extra days of vacation per year with this contract change. Standard working day is eight hours. Need to replace each vacationing worker with another employee. Assume that the average hourly wage for all employees in the bargaining unit is $10 per hour. Overtime premium. When existing employees work extra to take the places of vacationing employees, they are working overtime and receive time and a half.

20. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-20 PUBLIC SECTOR BARGAINING The four subprocesses and other aspects of collective bargaining are similar in the public sector, but there are some special differences which include: Greater restrictions on the allowable bargaining subjects. Sunshine laws: bargaining must take place in public. Multilateral bargaining: elected officials, taxpayer groups, and other outsiders can be influential in bargaining. End run: unions can try to make an end run around management by appealing to a more favorable authority figure (e.g., the mayor).

21. McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. C8-21 Resistance to Changing Bargaining Relationships from Adversarial to Integrative