negotiation

1. 1
LS 2: Negotiation
● Definition:
– “…the interpersonal process used by representatives of management
employees, within the various institutional arrangements of collective
bargaining, in order to resolve differences and reach agreement”
Salamon
– Negotiations often used interchangeably with collective bargaining
– Fine distinction between the two terms
– Collective Bargaining is the broad all encompassing process that
includes negotiations
– Negotiations is what happens in collective bargaining

3. Collective bargaining is the process of negotiation during
meetings between reps and their employer, often to improve pay
and conditions. The collective bargaining process allows
workers to approach employers as a unified group.
● The aim of collective bargaining is to reach an agreement
between employers and workers. Members can contribute to
discussions by talking to their reps while negotiations take place.
● Workplace bargaining and negotiating is also a golden opportunity
to build a strong local union. Claims and agreements are a great
way of recruiting new members and getting more members
involved in the union.
3

4. 4
Negotiation
● Features of negotiations:
– It is an explicit and deliberate event
– It is concluded by representatives on behalf of
principals
– Process is to reconcile differences between parties
involved
– The outcome is dependent on the perceived power
of the parties involved

5. 5
Things that effect Negotiation
A. Environmental factors that may affect negotiations:
1. Economic policy: a laissez-faire approach will allow free collective
bargaining
–Regulation will bring more legislative control to the process
2. Monetary policy: refers to interest rates & inflation determines
economic growth and if growth is robust then negotiation aggressive
Decline in growth then bargaining power of unions decline and
negotiations will be passive
–High inflation will lead to high wage demands.
4. Incomes policy: Relates to corporatism where the government puts a
check wage demands and price increases to control inflation and
unemployment

6. 6
5. Fiscal Policy: level of taxation and redistribution of
income. The extent that companies and individuals
are taxed
–Higher taxation may see tougher negotiations
–Redistribution through welfare benefits may narrow
the range of negotiations
–Government may encourage employee development
through tax concessions

7. 7
B. Micro-economic Factors
– Supply and demand of labour. As labour supply increases unions
power decreases and vice versa. Negotiations strengthened or
weakened as a result
– Labour market competition: large number of employers compete for
labour in a tight labour market. Labour’s hand will be strong in
negotiations
– Competitive product market: labour cost will be kept low and union
hands will be weak
– Company profits: if companies are making huge profits then unions
may demand more at negotiations. Companies may also be willing to
offer more
– Government Policy: Legislation may force or structure collective
bargaining. Enforce agreements

8. 8
– Political influences: Prominent during the apartheid period when
workers for e.g. demanded labour day and 1st May as paid
holidays
– Social influences: Minor influence but could take the form of
attitude and social manners
– Technological influences: Especially if technology replaces
labour, unions will demand consultation and or negotiations
– Demographics: age, gender, education, urbanisation, will all
influence negotiations

9. – Age: a youthful workforce is interested in personal
development. Demands training & development and more
militant negotiation
– Women sensitive to discrimination, sexual harassment, &
women’s rights
– Educated workforce may have different demands such as job
enrichment
– Urbanisation: greater population density allows for more
unionisation. Demands will also focus on social issues and
community issues
9

10. 10
Effects on the ext. environment:
– Negotiations can affect the environment
– Higher wage demands may contribute to inflation
– Collective agreements reached may encourage legislation in
the area
– Harsh employers may be boycotted by certain communities
● Media:
– Can affect negotiations in a positive or negative way depending
on how information is dispersed
– Opinions and standpoints of the parties can be shaped through
the press

11. 11
Conflict and Power in Negotiations:
– Bargaining and negotiations arise out of the need to
share scarce resource
– Need to give up power or share some power
– Differences in goals values and ideologies
– All of this creates conflict that become the issues of
bargaining and negotiations

12. 12
Some of the issues that may give
rise to conflict:
1. Wages: disagreement on the level of wages set
2. Decision making: employees continually challenge management’s
right to manage
3. Disclosure of information: employee want to be informed about the
issues that affect them & management withholds information
4. Poor stakeholder management: Other interest get met before
workers: e.g. shareholders, senior management
5. Dull boring work with no scope for development
6. Different perspectives: employers promote company and employees
concerned about family and community
7. Ineffective communications

13. 13
Handling conflict:
1. Unitarists base their arguments on postulations that workplace
conflict is an avoidable feature of relationships between
employees and their managers. They claim that as long as
managers continue interacting with employees, they are likely to
quarrel.
According to unitarists, both managers and employees share a
common interest of making sure that their organisation grows steadily,
and thus when a crisis occurs within the organisation, it would not
lead to insolvency of the organisation (Ross & Bamber 2009).
Hence, the conflict that emerges between the parties is a result of
personality muddle, poor communication, poor promotion practices, or
inappropriate recruitment. Unitarists hold that to avoid such conflicts,
the management team ought to identify the actions that might lead to
conflicts and avoid implementing them.

14. Unitarists position on employee management draws from a number
of theories. One of the theories is the theory of scientific
management devised by Taylor (Ross & Bamber 2009).
The theory holds that for managers to come up with productive
employee management strategies, they have to start by assuming
that the employees are likely to avoid work whenever they get a
chance, they have limited knowledge about the work, and are prone
to pursuing personal interests.
–Avoidance, withdrawal and suppression: using a unitarist
approach.
14

15. 2. Confrontational approach/ Pluralist: compromise,
bargaining, problem-solving: using a pluralist
approach
Pluralists hold that conflicts at workplaces are inevitable, which
contradicts the unitarists’ position who believes that it is
possible for institutions to circumvent conflict at workplaces.
Pluralists perceive business organisations as intricate social
constructions that comprise of groups of people with conflicting
interests.
Employees and the management form part of these groups
(Giles 1998). Based on the nature of the organisation’s
system, employees and management are seen to pledge to
different objectives and values. Based on this perspective,
pluralists believe that it is hard to do away with different
sources of power within a business institution.
For this reason, organisations cannot overcome conflicts.
15

16. By acknowledging that organisations are incapable of overcoming
conflicts, the pluralists consider conflict to be of significant benefit to an
organisation (Giles 1998). It acts as the conduit through which
employees present their problems.
Moreover, they posit that whenever the management senses that conflict
might erupt in an organisation, they work towards coming up with
innovative methods that would turn the conflict into a productive initiative.
Pluralists assert that learning that trade unions and shop stewards are
likely to cause trouble in an organisation leaves the management at a
better position to address the issues of employee relations in a holistic
manner.
Incidentally, workplace conflict does not only help the management to
come up with strategies for institutionalising employment
regulations but to also promote a level ground for all parties since
employees are able to stand their ground when negotiating on
contract terms (Bacon & Storey 2000). This assertion underlines the
reason why pluralists advocate for trade unions to act on behalf of the
employees when bargaining for stable working conditions.
16

17. Pluralists draw their inspirations from the systems theory
devised by Dunlop in 1958. The theory treats industrial relations as
constituents of a wider social system (Kessler & Purcell 2003).They
believe that for an organisation to succeed there has to be numerous
leaders or lines of command to make sure that one leader does not
pursue personal interests at the expense of others.
Unlike the unitarists who do not see the role of trade unions in
organisations, pluralists believe that trade unions play a
significant role in bringing sanity into an organisation. According
to pluralists, organisations are more susceptible to conflicts than
harmony. Hence, it is illogical to claim that trade unions are the root
cause of conflict witnessed in organisations (Kessler & Purcell 2003).
17

18. 18
Negotiation
● Conflict dynamic: Aggravators & moderators
– Aggravators and moderators include: history of the
relationship, use of strategies, internal cohesion
within constituents, levels of communication
between parties, existence of procedures, forums, &
3rd party institutions that regulate conflict
– In some instances more advanced integrative
approach is used for a win-win solution

19. 19
Qualities of a good negotiator:
– Sensitivity, tact, discretionary judgement, flexible, &
diplomatic
– Ability to present a persuasive and reasoned
argument
– Ability to withstand pressure and stress
– Good listener who takes heed of the other side
– Know when to stand firm & when to concede

20. 20
Negotiation conventions:
– Right of each party to state their case
– Both sides recognise the need to compromise and
the right to pursue a target
– Behaviour is gentlemanly and good manners is
always maintained
– There is an agenda, minutes are taken and there is
an opening and closing address

21. 21
● Initiation of the negotiation process:
– Traditionally unions negotiate the process by putting
across a set of demands to management
● Selection of negotiators:
– Number and size of negotiating teams will depend
on the issue and size of firm
– Usually selected on the basis of experience, skill
and knowledge
– Sometime professional help is sought.

22. 22
Obtaining a mandate:
– Both parties need to obtain a mandate from their
principals
– Mandates are not absolute as they change as
negotiations change
● Setting objectives:
– Both sides will strategize before negotiations
commence & guess as to the objectives of the other
party

23. 23
Negotiation
● Identifying the Issues:
– Once proposals and counter proposals have been
made the team will decide on issues that will be
negotiated over
● Gathering of information:
– Both parties will gather as much information as
possible to aid negotiations and to present strong
arguments

24. 24
Negotiation
● Establishing a bargaining range:
– An upper and lower level is set by parties
– This is done by parties studying the demands and
proposals of each party
● Target and resistance points:
– Target point is what the party hopes to achieve
– Resistance point is when union will go on strike or
employees lock out workers

25. 25
Costing of contracts
– management is likely to want to know what it will be
costing the company to settle at various levels
– Costing will include agreeing to benefits regarding
leave, pensions training and other fringe benefits
– This can lead to all sorts of permutations in the
counter proposals

26. 26
The conduct of negotiations:
– The opening encounter sets the climate and pace of negotiations
– This followed by argument and counter argument and an attempt to
change the perceptions of the other party
– Bargaining takes place where parties concede points or make
compromises
– Impasses may be reached and the skilled negotiators may have
manoeuvre past these
– When final offers and demands are made negotiators need to
consider them carefully
– This will be followed by threats and bluffs, which is done carefully as
parties might be called to exercise them
– Deadlocks are reached when neither party is prepared to move

27. 27
Types of agreements:
– This might be followed by a strike or a lockout
– Negotiations will finally reach a stage of agreements
● Types of agreements:
– Besides wage settlements there are several other
agreements that can be reached
– Recognition agreement: this when the company
recognises the union as a bargaining agent

28. 28
– Health and Safety Agreements: Subject to the
OHSA, management’s policy on H&S, levels of risk
within the firm, forms of monitoring the H&S of
employees
– Productivity Agreements: better utilisation of labour
on condition that increased profits are shared with
employees
– New Technology Agreements: Prevent or minimise
employment reduction
Quazi Tafsirul Islam.
Find more at www.quazitafsir.com

29. 29
Negotiation
● Implementation and monitoring of agreements:
– Part of the agreement will the setting up of
procedures to monitor agreements
– In Bangladesh all agreements are legally binding
and are enforceable through the courts
– It follows then that a party cannot withdraw from an
agreement