Labor Relations and Collective Bargaining Eighth Edition

1. Michael R. Carrell & Christina Heavrin Labor Relations and Collective Bargaining Eighth Edition www.prenhall.com/carrell PART II: The Collective Bargaining Process CHAPTER 5 Negotiating an Agreement © 2007 Prentice Hall Inc. All rights reserved

2. Chapter Outline The Bargaining Process Bargaining Techniques Impasse Bargaining in the Public Sector

3. Labor News Northwest Airlines Threatens Union With Replacement Mechanics On August 11, 2005 Northwest Airlines announced that it had 1,500 trained and ready replacement workers should the Aircraft Mechanics Fraternal Association Union decide to strike. When? Only nine days before the current contract would expire. How? Management contacted mechanics laid off by other airlines, Northwest also had 1,500 replacement flight attendants ready should its own flight attendants call a sympathy strike. Why? The company hoped to convince union members that a strike could cost them their jobs – and thus avoid a strike. Cause? Northwest claimed it needed$176 in wage & benefit concessions from the union to avoid filing for bankruptcy --- which had already claimed United and US Airways, Delta Airlines.

4. The Bargaining Process People who bargain Union representatives National agreements - large negotiating teams Team members represent different levels of the union Local agreements - comprised of ex-officio members, a chief steward or grievance committee member Craft unions include business agent Industrial unions include international representative Final settlement usually must be approved by membership Management representatives Top management, including policy makers, labor relations staff, and some line executives Labor relations adviser and negotiator used for multi-employer bargaining

5. People who bargain (cont.) Negotiating skills Must understand their own positions well as the other party’s positions on each bargaining issue. Listening and communication skills Personal integrity and courage Figure 5-1: UAW-Ford National Negotiating Committee The Bargaining Process (cont.)

7. The Bargaining Process (cont.) Preparation and choice of bargaining items Analysis - data is gathered and bargaining items are identified NLRA provides that bargaining shall include rates of pay, wages, hours of employment, and conditions of employment 3 categories of bargaining subjects - Borg-Warner Mandatory - a party may insist on its inclusion and the other party cannot refuse to discuss it Permissive - a party must withdraw itself from bargaining if the other party does not voluntarily agree to discuss it Illegal - violates public policy or inconsistent with NLRA

8. The Bargaining Process (cont.) Preparation and choice of bargaining items Analysis (cont.) Mandatory items Legal impasse occurs when parties cannot agree At impasse, employer can impose its final offer Examples of mandatory items in the realm of compensation pensions and insurance benefits stock purchase plans profit-sharing plans merit wage incentives Christmas and other bonuses company housing, meals, discounts Examples of mandatory items in the realm of conditions of employment employment security union security job performance management-union relationships

9. The Bargaining Process (cont.) Preparation and choice of bargaining items (cont.) Analysis (cont.) Permissive items Concessions seldom made on permissive subjects Cannot bargain to impasse Examples of permissive items Performance or indemnity bonds Management’s right to have an impact upon internal union affairs Illegal items Examples of illegal items Violations of public policy Items inconsistent with the NLRA Separability clause

11. The Bargaining Process (cont.) Preparation and choice of bargaining items (cont.) Analysis(cont.) Sources of bargaining items Unions introduce new items to be discussed Management reacts to proposals Union surveys membership to identify issues Analysis of issues brought as grievances Recent contracts negotiated in same industry

12. Preparation and choice of bargaining items (cont.) Planning - effective negotiators: Anticipate issues critical to both parties Prioritize objectives & establish realistic settlement ranges Prepare overall strategy for negotiations that reflects the needs of both parties Develop an agenda that arranges issues in a logical order for discussion Incorporate in written ground rules The Bargaining Process (cont.)

13. The Bargaining Process (cont.) Negotiation sessions: Ground rules established by parties Where, when, how often, and how long to meet Size of bargaining teams Each side designates a leader Exchange initial proposals Separate economic and non-economic issues

14. Negotiation sessions (cont.): Posturing - monologues wherein both parties present demands Common aspects of bargaining that may be anticipated include: Interdependence Concealment of real bargaining objectives from other party Packaging items Throwaway items Caucusing Flexibility Compromise Saving face The Bargaining Process (cont.)

15. The Bargaining Process (cont.) Negotiation sessions (cont.): Exchange of proposals and counterproposals Usually get quick agreement on less important non-economic items Bargaining on economic items typically involves packaging Point of crisis - agreement cannot be reached Mediation or arbitration available to help reach agreement “The crunch” - point of no return when both sides realize that some deadline will cause no decision to become the final decision Signal that it is time for a decision or impasse

16. Negotiation sessions (cont.) Tentative agreement Must be ratified by union membership in secret-ballot vote Contract - written form of negotiated agreement May encounter problems on agreeing to language that reflects agreement The Bargaining Process (cont.)

17. Bargaining Techniques NLRA establishes boundaries of the negotiation process Parties determine techniques Has become a stylized ritual Parties sincerely attempt to resolve conflicting interests Successful bargaining lies in flexibility and in understanding and controlling the process

18. Distributive bargaining Negotiations viewed as ‘win-lose’ situation Each side wants to maximize its share of limited resources 5 key elements: 1.Target point - optimal point to conclude negotiations 2.Resistance point - maximum or minimum beyond which a proposal is unacceptable 3. Initial offer - first number offered by negotiator 4. Settlement range - range between the resistance points 5. Settlement point - agreed upon point in settlement range Bargaining Techniques (cont.)

20. Bargaining Techniques (cont.) Interest-based bargaining Used with increasing frequency Based on the idea that both parties have a fundamental mutual interest in the long-run economic success of the employer Process includes: Both sides fully share all relevant bargaining information Willingness to forgo power or leverage as the sole determinant of “winning” Brainstorming to generate new options and willingness of both parties to withhold criticism Focus on present issues and finding solutions that will work in future contracts Willingness of both parties to accept and utilize the process

21. Bargaining Techniques (cont.) Principled negotiations “Hard on the merits, soft on the people” Avoid typical haggling process Separate the people from the problem Focus on interests rather than positions People - understand attitudes and perceptions of both parties Couch proposals in terms consistent with attitudes Build a working relationship before negotiations begin Interests - attack the problems Identify interests before parties’ positions harden

22. Principled negotiations (cont.) Options - develop as many options as possible Interests of both parties can be satisfied in numerous ways Multiple options increase chance of successful compromise Objective criteria - agreement easier when the basis of agreement is a recognized criterion Bargaining Techniques (cont.)

23. Bargaining Techniques (cont.) Pressure bargaining Settlement of collective bargaining based on relative bargaining power of each party Ultimate tests of strength in negotiations Union’s ability to strike Company’s ability to take a strike Pressure tactics Good guy/bad guy Highball/lowball The “nibble” Chicken “Awfulisms”

24. Impasse Many reasons for a stalemate Interests of parties have not been reconciled One party has no intention of settling Union membership rejects proposed contract Options when impasse occurs: Third-party intervention Continue the old contract on day-to-day basis Lockout staged by employer Strike called by the union

25. Impasse (cont.) Calling a strike: “lies at the core” of NLRA Union must weigh cost of a strike versus probable benefit Unions less likely to call a strike today than in past years Strike means loss of wages and benefits, especially health insurance Strikers not entitled to food stamps Replacement workers may be hired Management response Prepare a strike plan that may entail: Shutting down operations during strike Continuing to operate using management personnel Hiring replacement workers

27. Impasse (cont.) Calling a strike (cont.) Predicting a strike Multiple causes of strikes make them difficult to predict State of the economy and political forces Failure of the parties to correctly estimate other party’s level of interest in critical factors Cost of strike Benefits stemming from a strike Why strikes occur Accident model - strikes occur due to bargaining process errors Joint strike costs - strikes occur when joint costs to both parties are relatively low Rational tactics - two parties have different information

28. Calling a strike (cont.) Types of strikes Primary strikes - strike between an employer and employees Economic strike - called to affect the economic settlement of a contract under negotiation Unfair labor practice strike - called to protest an employer’s violation of the NLRA Economic strike may become an unfair labor practice strike Rolling strike - targets one location of an employer at a time for a union walkout Location can change daily Impasse (cont.) On Strike

29. Impasse (cont.) Calling a strike (cont.) Permanent striker replacement Worker retains protection of the NLRA under both economic and unfair labor practice strikes Mackay doctrine Economic strike - strikers not entitled to reinstatement if their jobs have been filled with permanent replacements Job can be reclaimed if it is vacant or if permanent replacement leaves Unfair labor practice strike - strikers entitled to reinstatement even if the position has been filled Striker misconduct can disqualify worker from reinstatement Employers more willing to hire permanent replacements; or use them as a threat to prevent a strike Workers on strike for over one year are not eligible to vote in a decertification election.

30. Impasse (cont.) Calling a strike (cont.) Illegal strikes Unlawful means of conducting a strike include: Sit-down strike - takeover of employer’s property Wildcat strike - does not have approval of the union Violates a no-strike clause in existing contract Partial strike - various job actions that violate employer’s property rights Sickout - organized effort to have workers call in sick Unlawful goals that make a strike illegal Jurisdictional strike - dispute between unions over entitlements to work Featherbedding strike - pressure employer to make work for union members Recognitional strike - attempt to gain recognition for another union if a certified union already represents workers

31. Impasse (cont.) Picketing Varies according to type of union Craft unions - small number of pickets to inform members of other craft unions that a strike is in progress Industrial unions - requires active and large number of pickets Intended to discourage unskilled laborers from keeping production lines in operation Prominent U.S. strikes In various industries - telephone, steel, airlines, coal mining, Major League Baseball In various companies - Eastern Airlines, General Motors, United Parcel Service, Comair

32. Impasse (cont.) Lockout Employer may withhold employment during a labor dispute to resist union demands Defensive lockout - justified if a threatened strike caused unusual economic loss or operational difficulties Offensive lockout - used to end labor dispute on terms favorable to employer Use of replacement workers Same rules apply as those for strikes

33. No-strike, no-lockout provisions Contained in most collective bargaining agreements Unconditional bans Conditional bans Exhaustion of grievance procedure Violation of arbitration award Refusal to arbitrate dispute Noncompliance with portion of agreement Deadlocked contract re-opener Attractive to industry Impasse (cont.)

34. Impasse (cont.) Resolution of impasse Mediation - brings parties together to keep them talking, meeting Third party, has no authority to end the dispute 2005 FMCS survey of union/mgmt. leaders: mediation in greater demand today due to polarization of sides Interest arbitration – third party (arbitrator or panel) makes final and binding decision on the details of the final collective bargaining agreement

35. Resolution of impasse (cont.) Final-offer arbitration - both parties submit final offer to third party (arbitrator or panel) that has authority to select one of the proposals, but not to choose a compromise Mediation-arbitration - mediator is given additional authority to arbitrate any unresolved issues, which may make mediation more successful Fact finding – third party assembles the facts and makes them public May recommend how to end an impasse Impasse (cont.)

36. Bargaining in the Public Sector Nature of public employment Public employees provide essential services Lack of controls on public service and absence of marketplace control on their costs Difficult to assess productivity of a professional work force Elected officials represent public employers Sovereignty Doctrine limits issues addressed by bargaining

37. Limited scope of negotiations in public sector Management rights are broader than in private sector Agency shop the most common type of union security Federal law precludes negotiation about wages and benefits Type of job determines flexibility of negotiations about hours Negotiations about working conditions focus on the provision of services to the public Grievance procedure must be included, often with provision for binding arbitration Bargaining in the Public Sector (cont.)

39. Bargaining in the Public Sector (cont.) Negotiating the public employee contract Bargaining theories and processes in the private sector apply to public sector with little variation Multilateral bargaining exists in 2 forms Council form - government represented by a negotiator who returns agreement for council approval Executive-legislative form - negotiator employed by executive branch returns an agreement Agreement must be approved by both executive and legislative branches of government

40. Bargaining in the Public Sector (cont.) Negotiating the public employee contract (cont.) Open negotiations - press coverage may harm negotiating process Sunshine laws - may require bargaining to be open to public Press coverage necessary because of ultimate responsibility of the public for decisions of elected officials

41. Bargaining in the Public Sector (cont.) Right to strike Usually denied to public employees by collective bargaining statute or by court actions Arguments that support the right to strike In actuality, public employees go on strike despite laws to the contrary Strikes, or credible strike threats, facilitate final agreement Strike strength can be used as union bargaining strategy Nonessential public employees should have same rights as private-sector employees

42. Right to strike (cont.) Arguments that oppose the right to strike Public employees provide essential services Gives employees more power than elected officials Unions can compel governments to make unwise agreements Bargaining in the Public Sector (cont.)

43. Resolving impasse in public sector Public sector employer generally may implement its “last best offer” Mediation - provided in almost all states with public sector collective bargaining Mediator has no independent authority to resolve disputes Fact finding and advisory arbitration More effective because of political pressures Third party issues findings and recommendations Interest arbitration Arbitrator or panel makes a binding decision on negotiation disputes Bargaining in the Public Sector (cont.)