Chapter 8 - The negotiations process & strikes. The main contents of the chapter consist of the following: The four subprocesses of negotiations, management''s wage objectives in negotiations, the dynamics of management''s decisionmaking process, union and worker involvement in negotiations, the cycle of traditional negotiations, strikes, strike activity, the role of strategy in negotiations and strikes.
Chapter The Negotiations Process & Strikes McGrawHill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGrawHill Companies, Inc. All rights reserved 1 3 8 3 The Four Subprocesses of Negotiations • Walton and McKersie argued that there are four subprocesses of bargaining within the negotiation of any collective bargaining agreement: Distributive bargaining Integrative bargaining Intraorganizational bargaining Attitudinal structuring 1 4 8 4 Distributive Bargaining • Distributive bargaining involves negotiations in which one side’s gain is the other’s loss It is a winlose or zerosum bargaining • Wages are an example: If management grants a wage increase, workers gain financially at the expense of shareholders This type of bargaining leads to conflict • Unions try to make management agree by threatening a strike, while management may threaten layoffs 1 5 8 5 Integrative Bargaining • Provides gains to both unions and management A “winwin” negotiation Labor and management both gain when they resolve problems that impede productivity and organizational performance The introduction of new technology can provide an avenue for integrative gains, since it works best with appropriate changes in work practices 1 6 Why Integrative Bargaining Can Be So Difficult 8 6 • Integrative issues contain the promise of joint gains • But the parties are simultaneously confronted with how to divide any joint gain Thus, integrative bargaining prompts the occurrence of distributive bargaining Integrative solutions are sometimes blocked by labor and management’s disagreement over how to divide the productivity gains 1 7 Integrative and Distributive Bargaining Involve Different Tactics • Integrative bargaining is difficult because parties send confused signals to each other They both require very different tactics • In distributive bargaining, demands are overstated, information withheld, and a tough image projected • In integrative bargaining, an open exchange of information and airing multiple voices Integrative bargaining can also be difficult since the problems that impede productivity are not always obvious 8 7 1 8 8 8 Intraorganizational Bargaining • Occurs when there are different goals or preferences within either side Unions commonly experience differences between senior and junior members Senior members want higher pensions while younger workers prefer upfront wage increases Surface bargaining, or “shadow boxing,” occurs when a representative lacks authority 1 9 8 9 Attitudinal Structuring • Negotiations involve uncertainty • It’s difficult to anticipate how much strike power each side possesses Attitudinal structuring is the degree of trust the sides feel toward each other If both sides share a high degree of trust, integrative bargaining is easier • If both sides work together amicably, their “perspectivetaking ability” is greater and integrative bargaining is more likely to succeed 1 10 8 10 Management’s Objectives • The development of wage targets is the heart of the internal management planning process in the early stages of negotiations The negotiating team must recommend targets that reflect top management’s goals If they are rejected, the team loses influence and credibility with top management 1 29 8 29 The Hick’s model of strikes 1 30 8 30 Some of the Sources of Miscalculation • Ashenfelter and Johnson posited that union members have unrealistic expectations of a strike’s outcome Even though managements and union leaders understand the consequences Strikes may occur when union members and leaders have diverging expectations of the strike outcome 1 31 8 31 Behavioral Sources of Strikes • Strike rates are consistently higher in industries that are not integrated into the community Mining and longshoring are examples • These workers often have their own subculture • They are often distant from population centers • Their work involves harsh physical labor 1 32 8 32 Militancy as a Cause of Strikes • Strikes may also occur as a result of militancy of the work force or union Strikes occur more frequently during business upturns • This is contrary to the Hicks model, which predicts that settlements should be higher during upturns • Marxist theorists argue that the procyclical movement in strike frequency demonstrates that conflict is a product of the bargaining power held by labor • It is very difficult to predict the settlement point or causes of an impasse 1 33 8 33 Strike Activity • The number of strikes and lockouts annually between 1975 and 2005 ranged from less than 14 to 381 • Approximately twothirds of all strikes concern negotiations for a new contract The remaining onethird are generally shorter strikes over other issues during the term of the agreement The time lost due to strikes has averaged below .5% per year, and was at an alltime low in 2001 and 2002, and thence began to rise • Strikes now occur in about 5% of all negotiations 1 34 8 34 Public pressure as a bargaining tactic 1 35 8 35 The Role of Strike Replacements • Management has the right to hire temporary replacements • They can hire permanent replacements if they so notify the union and the newly hired employees Striker replacement increases the duration of the strike, and signals management’s intent to bargain hard In 1997, threats of permanent replacements were in 12% of negotiations surveyed by the FMCS That number declined to about 10% in 2000 1 36 8 36 First Contract Negotiations • Onethird of all new bargaining units never reach an agreement Strikes occur in 9.5% of first contracts, versus 3.5% of contract renewal cases Striker replacements were used in 31% of first contracts that were threatened by managements • Compared to only 9% of contract renewal negotiations where this threat was made 1 37 Public Pressure as an Alternative or Complement to a Strike • Union strike leverage declined in recent years Due to permanent replacements, outsourcing, or other tactics Some unions recently used public pressure to strengthen their bargaining leverage Slowdowns are also used by unions, with mixed results 8 37 1 38 8 38 The Role of Strategy in Negotiations and Strikes • The Role of Management Strategies Management strategies have a major effect on the negotiations process • Investment and product decisions affect bargaining power and negotiation strategies • The company’s overall human resource strategy has an effect on negotiations – particularly employee attitudes 1 39 8 39 In Airline Negotiations • After September 11, 2001, airlines experienced large losses Four of the largest carriers filed bankruptcy and cut thousands of jobs • Many subsequent airline labor negotiations were contentious Northwest hired replacement mechanics • American Airlines avoided bankruptcy when workers negotiated concessions • Southwest illustrates the links among strategies, human resource policies, and labor negotiations While the average airline negotiation takes 17 months, Southwest averages just 6 months 1 40 8 40 The Role of Union Strategies • Steel industry bargaining reveals how union strategies can influence negotiations • With the rise of global trade, the U.S. steel industry has struggled By 2003, 37 steel companies filed bankruptcy • Including the second and third larges producers – LTV and Bethlehem • Bankruptcy provided management with a way to reduce "legacy" costs and pension obligations • At some steel companies, a conciliatory relationship emerged between labor and management in an effort to remain competitive Initiatives included incentive pay and gainsharing programs 1 41 8 41 The Persistence of Historical Relationships • The drop in passenger traffic following September 11, 2001 ushered in a new era in airline labor relations Yet a surprising degree of continuity in patterns ensued in the year following the attacks • Southwest stressed its good labor relations • Alternatively, carriers such as United and American requested deep concessions • This suggests that patterns persist even in the face of a changing bargaining environment 1 42 International Comparisons of Strike Activity • The United States is not alone in experiencing a decline in strike activity Australia and Ireland, which rivaled the U.S. in strike activity, are also experiencing a decline Strikes in the U.S. are tactical bargaining tools • In many other countries they have more political undertones In some countries unions or strikes are outlawed 8 42 1 43 8 43 Summary There are four subprocesses of bargaining distributive, integrative, intraorganizational, and attitudinal structuring Traditional negotiations involve a complex cycle • Both sides engage in extensive preparations, including labor market studies, wage formulation, and polling of members by unions The United States experienced a low rate of strike occurrence over the previous twenty years .. .Chapter The Negotiations Process & Strikes McGrawHill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGrawHill Companies, Inc. All rights reserved... credibility of its threats They try to get the other side to decrease their bottom line Each tries to assess the other’s “real” positions 1 26 8 26 InterestBased Bargaining: An Alternative to Traditional Negotiations. .. Provides gains to both unions and management A “winwin” negotiation Labor and management both gain when they resolve problems that impede productivity and organizational performance The introduction of new technology can provide an