Bargaining Zone Framework Initial offer Target point Resistance point Contract zone (or settlement range) Essence of negotiations involves

trying to deduce opponent’s resistance point wo/divulging own

trying to induce opponent to change resistance point if negative K zone

Positive K zone doesn’t guarantee settlement Room for agreement exists, but parties have to find it

2

Distributive Bargaining and the Settlement Range

Bargaining Power Power is motivational force that induces parties to

compromise goals in order to reach agreement Sources of U Bargaining Power

Er Ability to Pay Product market characteristics that improve Er’s ability to pay

labor cost increases by passing them on to consumers as higher prices wo/losing market share to rivals Industrial concentration and administered pricing (esp if few

substitutes) Geographic limitation (if unionized Ers have little fear of nonU Ers

coming into industry – true of construction at point in time) Regulatory rate setting Government contracts

Productivity

Bargaining Power Sources of U Bargaining Power

U Ability to Make Er Pay Organization of relevant work force (esp if hard to substitute for U labor) Appropriate bargaining structure

Mngt Ability to Take Strike Ability and willingness of mngt to take strike is major source of barg power

Timing Er more resistant during off-peak periods; if timing can’t be controlled, may be offset

by stockpiling Technology

if highly automated, easier to operate wo/strikers, e.g., telephone industry Availability of replacements

supervisors, hired replacements – depends on state of labor market and skill level of strikers

Competition ability to take strike increases if no adequate substitutes – note that industrial

concentration both increases Er ability to pay and ability to take strike

5

The Bargaining Environment: Examples from the Grocery Industry (see also Table 7.1)

6

Table 7.4: The Four Subprocesses of Labor Negotiations

7

Attitudinal Structuring Is negotiation subprocess for managing

relationships. • Creates social contract rather than written contract.

Close personal interaction between labor and management negotiators that occurs during bargaining process provides opportunity for the parties to build trust and respect.• And therefore move toward more cooperative and less

conflict-laden relationship.

8

Intraorganizational Bargaining Subprocess of bargaining process that takes place within an

organization—both within union and within management. Results from presence of diverse interests within constituency

of negotiator. Diversity of interests is very visible on union side because

unions are political institutions. But also occurs within management:

• Top management is particularly concerned with bottom line financial impact.

• Human resources professionals worry about principles that are affected or established.

• Supervisors are interested in how work gets done. • Negotiators want an agreement.

Good Faith Bargaining Requires honest attempt by both Er and U to

reach agreement Good Faith in Conduct

NLRB examines “totality of conduct” to determine whether good faith bargaining has taken place

Does not obligate either party to make any particular concession or agree to any particular proposal

Good Faith Bargaining Subjects for Bargaining

Mandatory “Effects bargaining”—managerial decisions are not

mandatory bargaining items, but the effects of those decision on workers, such as layoff order or severance pay, can be mandatory items

Permissive General rule is that neither party may negotiate to

impasse over non-mandatory subject

Illegal

11

Table 7.3: Examples of Mandatory and Permissive Bargaining Items

Good Faith Bargaining Duty to Furnish Information

Frequently, data relevant to negotiations available only to Er, subject to certain conditions Er must provide U w/necessary info

Whether info is ‘relevant’ may depend on reasons Er gives for barg positions E.g., if Er rejects wage increase due to sales decrease,

U can compel Er to provide sales info Er’s financial data must be produced only if Er claims

inability to pay Note that unwillingness to pay is not same as inability to pay

Good Faith Bargaining Duty to Furnish Information

One law firm advises: “If your Co is unionized, you should exercise due caution during collective bargaining negotiations to avoid uttering the ‘magic words’ that might trigger that onerous and undesirable obligation” Contrast this approach to ‘open book management’

Good Faith Bargaining Duty to Furnish Information

In 2004 case, NLRB noted ‘inability to pay’ means that Er is incapable of meeting U’s demands Republican majority stated phrase means more than assertion

that it would be difficult to pay or that it would cause economic problems or distress to pay ‘Inability to pay’ means that Co presently has insufficient assets to

pay or would have insufficient assets to pay during life of CBA being negotiated

Ruled that statement “fighting to keep the business alive” did not mean Co was claiming inability to pay – contrasted case w/ previous Board decision (1993, 3-0, 2 R 1 D) finding Er characterization of financial situation as “a matter of survival” was claim of inability to pay

Dissent (Democrat) asserted “there are no magic words required to trigger this obligation”

Good Faith Bargaining Good Faith in Conduct

Certain categories of conduct have been held to constitute failure to bargain in good faith Imposing conditions (e.g., preconditions to beginning negotiations, such

as ceasing economic strike) Delaying meeting (or insistence of bargaining at distance from location

of bargaining unit – United Artists/Groton projectionists) Insufficient authority of negotiator “Surface bargaining”

E.g., making new, more restrictive proposals during course of bargaining No prohibition, however, on “hard bargaining” But if Er refuses to make any significant concessions, may well be taken as

indication of bad faith Withdrawal of accepted offers Unilateral changes on mandatory subjects prior to impasse

But may make changes post-impasse Bypassing U, dealing directly w/Ees

Does not mean, however, that Er may not communicate w/Ees during negotiations

Ch. 7 Internet Exploration Go to the NLRB website (www.nlrb.gov),

find the section that contains NLRB decisions, and go to the search page. Search for “surface bargaining.” What types of negotiator behaviors were ruled to be surface bargaining? What behaviors were acceptable as fulfilling the good faith bargaining standard?

Good Faith Bargaining If Er found to have bargained in bad faith, any

strike caused or prolonged by Er’s conduct will be classified as “unfair labor practice strike,” impacting reinstatement rights of strikers

Duty to Bargain – Issue Does Er have to bargain over drug testing plan?

Ees vs. applicants

Bargaining Structure Concept of Bargaining Structure

Definition Scope of Ees and Ers covered by or affected by bargaining

agreement Formal structure: negotiations unit

Ers and Ees legally bound by terms of agreement Informal structure: pattern bargaining

Importance of Bargaining Structure for Practice Defines who is protected by rights as determined by NLRB Influences probability unions will be successful in organizing Influences power of U and Er Determines diversity of interests, degree of intra-org conflict Implications for impact of strikes on Ers and public

Bargaining Structure Dimensions of Bargaining Structure

Election unit Group of Ees NLRB determines is eligible to vote in election Since composition of unit can influence outcome of election,

often contested issue

Negotiating unit E.g., if Kroger opened new store in Evansville, election unit

would vote to determine if UFCW (or another U) would represent Ees at store

If UFCW won election, store would likely be included in existing negotiating unit involving other stores in region Negotiating unit often established by consent of parties

Bargaining Structure Dimensions of Bargaining Structure

Types of Negotiating Units Single Er/Single plant

E.g., hospital

Single Er/Multi-plant E.g., Ford-UAW, master agreement and local agreements Coalition barg involves single Er and local unions belonging

to several cooperating internationals

Multi-Er association E.g., BCOA-UMWA, TMI-Teamsters

Helps to avoid whipsawing

Bargaining Structure Determinants of Formal Bargaining Structure

Economic context U seeks to take wages out of competition

Public Policy NLRB decisions encouraged centralization

Organizational Factors Centralized mngt decision-making will lead to broader structure

Trucking deregulation led to Ers whipsawing U locals, U desire for centralization re: concessions

Tactical advantages Because structure influences power

Nature of issue Master and local

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Figure 7.1: The Bargaining Timeline

Bargaining Process Video: “An Inside Look at Collective

Bargaining” Ch 7 Internet Exploration

Some unions use the Internet to publicize their bargaining goals and to keep their members informed about the status of negotiations (E.g., http://mnablog.com/2010/06/30/june-29-bargaining-update/).