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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

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Bargaining Zone Framework

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    1. 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

    3. 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

    4. 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.

    9. 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

    10. 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

    12. 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

    13. 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’

    14. 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”

    15. 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

    16. Ch. 7 Internet Exploration Go to the NLRB website (, 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?

    17. 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

    18. 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

    19. 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

    20. 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

    21. 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

    22. Figure 7.1: The Bargaining Timeline

    23. 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.,