Everything you need to know about collective bargaining. Collective bargaining refers to a process by which employers on the one hand and representatives of employees on the other, attempt to arrive at agreements concerning the conditions under which employees will contribute and be compensated for their services.
According to the ILO, collective bargaining involves “negotiations about working conditions and terms of employment between an employer or one or more employees’ organisation with a view to reaching agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment relations with one another, fix a large number of detailed conditions of employment, and during its validity, none of the matters it deals with can in normal circumstances be given a ground for a dispute concerning an individual worker.”
1. Definition of Collective Bargaining 2. Meaning of Collective Bargaining 3. Scope 4. Objectives 5. Principles 6. Process and Levels 7 Popular Methods
8. Importance 9. Types 10. Structure 11. Need 12. Techniques 13. Functions 14. Advantages 15. Collective Bargaining in India 16. Strategies
17. Negotiation Skills 18. Pre-Requisites 19. Trends 20. Factors 21. Problems 22. Suggestions 23. Future.
Collective Bargaining: Meaning, Scope, Process, Types, Techniques, Pre-Requisites, Advantages, Problems and Other Details
- Definitions of Collective Bargaining
- Meaning and Elements of Collective Bargaining
- Scope of Collective Bargaining
- Objectives of Collective Bargaining
- Principles of Collective Bargaining
- Process and Levels of Collective Bargaining
- Popular Bargaining Methods
- Importance of Collective Bargaining
- Types of Collective Bargaining
- Structure of Collective Bargaining
- Need of Collective Bargaining
- Techniques of Collective Bargaining
- Functions of Collective Bargaining
- Advantages of Collective Bargaining
- Collective Bargaining in India
- Strategies of Bargaining
- Negotiation Skills
- Pre-Requisites of Successful Bargaining
- Trends in Collective Bargaining
- Factors Obstructing Collective Bargaining
- Problems of Collective Bargaining
- Suggestions for Better Functioning
- Future of Collective Bargaining
Collective Bargaining – Definitions of Collective Bargaining according to Michael J. Jucious, Richardson, Dale Yoder and Edwin B. Flippo
Collective bargaining is an effective tool for resolving industrial dispute through negotiation with the management. In the workplace workers face problems relating to low wages, long hours of work, low incentive etc.
Such problems cannot be solved individually by workers neither they can individually attract the attention of the employer. In such a situation the individual workers collectively, with the assistance of the work group representative negotiates and bargains with the management representative for their better conditions.
The workers collectively place their demands before the management and the problems are solved through bilateral decision, negotiation and workers are granted concession for their demands. Prof. Allan Flanders describes collective bargaining as “a power relationship between a trade union organization and the management organization. The agreement arrived at is a compromise settlement of power conflicts.” The more power and strength of the employees group determine the extent of bargaining capability.
Collective bargaining is based upon give and take approach where decisions are arrived at through amicable, mutually acceptable agreement between the employees/ management and the employer over work related issues.
Michael J. Jucious has defined collective bargaining as “a process by which employers, on the one hand, and representatives of employees, on the other, attempt to arrive at agreements covering the conditions under which employees will contribute and be compensated for their services”.
Richardson says, “Collective bargaining takes place when a number of work people enter into negotiation as a bargaining unit with an employer or a group of employers with the object of reaching agreement on conditions of the employment of the work people”.
The International Labour Organization(ILO) has defined collective bargaining as “negotiations about working conditions and terms of employment between an employer and a group of employees or one or more employees’ organizations with a view to reaching an agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment relations with one another; fix a large number of detailed conditions of employment, and derivatives validity, none of the matters it deals which can in normal circumstances be given as a ground for a dispute concerning an industrial worker”.
Collective bargaining is based upon mutual cooperation, understanding and ensures harmonious relationship between the workers and the management and aims at protecting the interest of both workers and the management.
According to Dale Yoder’, “Collective bargaining is essentially a process in which employees act as a group in seeking to shape conditions and relationships in their employment”.
Collective bargaining is the term used to describe a situation in which the ‘essential conditions of employment are determined by bargaining process undertaken by representatives of a group of workers on the one hand and of one or more employers on the other.
According to Edwin B. Flippo, “Collective bargaining is a process in which the representatives of labour organisation and the representatives of business organisation meet and attempt to negotiate a contract or agreement which specifies the nature of the employer-employee union relationship.”
In the words of Flippo, “Collective bargaining is a process in which the representatives of a labour organisation and the representatives of business organisation meet and attempt to negotiate a contract or agreement, which specifies the nature of employee-employer-union relationship.”
Please understand that collective bargaining is a voluntary process under which the representatives of both employers and labour enter into an agreement. Also note that the process does not stop as soon as a bargain is reached at between the employer and the trade union.
It is a continuous process because the contract is only the beginning of collective bargaining. Bargaining requires an efficient and permanent arrangement for negotiations. No temporary or one-time arrangements can make the bargaining process successful.
Collective Bargaining – Meaning and Elements
The Encyclopedia of Social Sciences defines collective bargaining as “a process of discussion and negotiation between two parties, one or both of whom is a group of persons acting in concert. The resulting bargain is an understanding as to the terms and conditions under which a continuing service is to be performed. . . . More specifically, collective bargaining is a procedure by which employers and a group of employees agree upon the conditions of the work.”
According to the ILO, collective bargaining involves “negotiations about working conditions and terms of employment between an employer or one or more employees’ organisation with a view to reaching agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment relations with one another, fix a large number of detailed conditions of employment, and during its validity, none of the matters it deals with can in normal circumstances be given a ground for a dispute concerning an individual worker.”
Both the above definitions are comprehensive and contain the essential elements of collective bargaining.
More specifically, the essential elements of collective bargaining may be described as follows:
(1) Collective bargaining is the process in which the terms and conditions of employment and working conditions are determined jointly by the employer(s) and workers/union(s).
(2) The term “collective” generally denotes the workers’ side, although a group of employers may be involved in the bargaining. The workers are mostly represented by their unions.
(3) Existence of employer-employee relationship is a necessary condition in collective bargaining.
(4) The main purpose of collective bargaining is to determine the terms and conditions of employment and to specify the rights and obligations of the parties involved.
(5) The agreement arrived at during the course of collective bargaining may cover only a single subject or several subjects together. The agreement may be in the form of a written document or merely a mutual understanding.
(6) The process of collective bargaining may be confined only to the employer and workers without any intervention from outside, or it may be regulated by legislation or other governmental measures.
Collective Bargaining – Scope
CB is dynamic in nature and not static.
(i) Modus operandi for regulation of employment conditions.
(ii) Facilitation of solving industrial sickness problems.
(iii) To find a solution to retirement and old age benefits including pension and fringe benefits to the working and retired workers.
(iv) To facilitate adjustment of wages and employment conditions to economic and technological changes in the industry.
(v) To develop a system of industrial jurisprudence by introducing civil rights in the industry.
Collective Bargaining – 5 Important Objectives
Collective bargaining aims at determining mutually beneficial terms and conditions of employment.
1. To foster and maintain cordial and harmonious relationship between the employees and the employer.
2. To protect the interests of both the employer and the employees.
3. To keep the third party intervention at bay.
4. To promote industrial democracy by providing opportunity to the workers, to voice their problems employment related issues.
5. To prevent industrial dispute and to resolve conflict and disputes.
Collective Bargaining – 4 Main Principles
The principles for efficient functioning of the collective bargaining process for unions as well as management are as follows-
i. The process should provide scope for union leaders to educate the management about the desires and grievances of employees, and in contrast it should also provide a scope for the management to explain the economic constraints in not accepting the proposals of unions.
ii. Both union leaders as well as the management should approach collective bargaining with a view to find best possible solutions and not with a concessional approach.
iii. Both parties should have respect for each other and should also have the power to enforce the terms of agreement mutually agreed upon.
iv. Both parties should have the spirit to abide by the laws applicable for collective bargaining at the state and national levels.
Collective Bargaining– Process and Levels
The process of Collective Bargaining involves six major steps:
1. Prepare for negotiations.
2. Identify bargaining issues.
4. Reaching the agreement.
5. Ratifying the agreement.
6. Administration of agreement.
According to Walton and Mc Kersie, any settlement may have one or all the elements namely:
(i) Intra-organisational bargaining.
(ii) Attitudinal bargaining.
(iii) Distributive bargaining.
(iv) Integrative bargaining.
(i) In Intra – organisational bargaining, employer’s and Union’s representatives discuss the general demands/strategies and arrive at a consensus of approach among them, before parties meet at the bargaining table.
(ii) Attitudinal bargaining implies an orientation or an approach to the concept of Collective Bargaining as an on-going relationship rather than a piece meal/adhoc settlement.
(iii) Distributive bargaining – Herein one party gains and the other loses. For the management labour is a cost and must be curtailed. For labour, they must with as many concessions/demands as possible. It is, therefore, a zero sum game i.e., one party’s gain is another’s loss.
(iv) Integrative Bargaining – This is perhaps most desirable as it aims at expanding the size of cake with both parties getting continuously bigger share. In such bargains, productivity aspects are taken into account and by a process of mutual problem solving; the sum total of gains can be increased.
Collective Bargaining may be conducted at three levels:
(i) Plant level e.g., TISCO and Tata Workers Union (Jamshedpur).
(ii) Industrial level (Several units in same industry unite for Collective Bargaining).
(iii) National level (e.g. between INTUC and Managements of Tea Plant, Indian Tea Association and representatives of HMS).
Collective Bargaining – 5 Popular Collective Bargaining Methods
The methods are:
1. Complicit based-each party uncompromising takes a hard line and resists any overtures for compromise or agreement.
2. Armed Truce – Each party views the other as an adversary. Although they are adversaries, it is recognised that our agreement must be worked out under the guidelines specified, by the law
3. Power bargaining – Each party accepts the other party with the knowledge that a balance of power exists. It would be non-productive to pursue a strategy of trying to eliminate the other party, in the relationship.
4. Accommodation – Both parties adjust to each other. Positive compromises / flexibility and tolerance are used, rather than emotion and raw-power. It is claimed that most managers and union leaders have engaged in accommodation, for the bulk of union management bargaining issues.
5. Co-operation among both – Each side accepts the other as a full partner. This means that management and the union work together, not only or everyday matters, but in such difficult areas as technological change / improvements in quality of work life and business decision making.
Collective Bargaining– Importance
1. Enhances mutual understanding – Collective bargaining enhances mutual understanding and cooperation between the management and employees.
2. Promotes industrial democracy – It provides opportunity to the employees to place their problems before the management for resolving. It enables them to participate in the negotiation process. This ensures industrial democracy.
3. Benefits both the employer and employees – Collective bargaining process benefits both the employees and the employer as the agreement arrived at is through negotiation where both the employees and the employer gain something and loose something.
4. Quick and easy settlement of dispute – Collective bargaining helps in quick and easy settlement of dispute. The employee and the employer’s group can make prompt arrangement to negotiate over issues that require prompt settlement. It also does not require any third party intervention.
5. Improves employee morale – Collective bargaining provides opportunity to employees to participate in negotiation and decision making process. This improves the morale of the workers.
6. Enhances the status of working class – Collective bargaining that offers industrial democracy enhances the social and economic status of the workers.
Collective Bargaining – 4 Types of Bargaining Activities: Distributive Bargaining, Integrative Bargaining and a Few Others
There are four types of bargaining activities:
1. Distributive Bargaining:
In this type of bargaining, one party gains and the other loses. Economic issues like wages and bonus, etc. are come under this bargaining. Self- interest is given precedence over organisational interest.
2. Integrative Bargaining:
In this type of bargaining, both parties may gain, which implies a win- win type of bargaining. Here productivity aspects are considered. When the question of survival arises in front of both parties, then this type of bargaining will give fruitful results.
3. Attitudinal Structuring Bargaining:
This process of bargaining helps in shaping the attitudes of both parties and brings about attitudinal change in them. It also helps in developing an environment of mutual trust and confidence with respect to each other.
4. Intra-Organisational Bargaining:
In this type of bargaining, both parties discuss general strategies and arrive at a consensus decision which is expected to improve the overall performance of the organisation.
Collective Bargaining – Structured at 3 Levels: The Plant Level, Industry Level and National Level
It is generally structured at three levels, namely:
1. The Plant Level:
In this level bargaining is done between the management and employees of the plant and local issues, such as work rules, safety, security, shift timings and working hours, etc. are considered in the plant.
2. Industry Level:
In the industry level, negotiation is between the apex level of management and the unions and here agreements are of broader in scope. It discuss about the wages, pensions and insurance plans of the employee.
3. National Level:
The scope of such type of negotiation is much wider. Such type of an agreements is not common in our country.
Collective Bargaining– Need
The system of collective bargaining originated in response to unilateral decisions made by management on issues relating to the employees. Such unilateral decisions, sometimes, used to cause wide-ranging discontents among employees. Therefore, in order to replace such a system of decision making, a bi-lateral decision making in the form of collective bargaining was evolved. In its present form, collective bargaining serves a number of purposes.
1. Collective bargaining provides platform for management and employees which places them at par so far as negotiations are concerned. Therefore, any outcome of the negotiation is perceived as mutually beneficial to each other and has better acceptability among them.
2. It is a pragmatic and democratic process for regulating terms and conditions of employment in which employees feel a part of decision-making process. This feeling develops better understanding among them, increases trust, and mutuality of interests with the organization.
3. Because of development of better understanding between employees and management, collective bargaining may be used to adopt a more flexible approach towards employment conditions in dynamic environment. In a static environment, conditions once settled work for much longer period.
However, in dynamic environment, such conditions have shorter life span and changes may be required in organizational processes to meet environmental needs leading to change in work situations and matching employment conditions. Change in employment conditions can be brought more amicably through collective bargaining as compared to alternative methods.
4. Collective bargaining provides opportunity for speedy implementation of decisions regarding terms of employment as both the parties are involved in decision-making process. A participative decision making, particularly on issues of contentious nature, provides in-built mechanism for implementation of decisions.
Collective Bargaining – 6 Important Techniques: Standardization, Restriction of Membership, Hire Union Members Only, Limit the Output and a Few Others
Employees and employer, with differing interests must work together, if their respective goals are to be attained. Yet, the very fact of differing interests creates an atmosphere of opposing forces, which inhibits desirable cooperative efforts. In organised industrial life, ways must be sought to minimise tensions, and promote bargaining. Here collective bargaining is the cornerstone of congenial industrial relations and of constructive peace. It helps to bring the unreserved cooperation between employees and employer by minimising the lacuna between the varying interests of union and management.
Collective bargaining is opposite of individual bargaining which takes place between organised groups of employees with either a single employer or multiple employers. Collective bargaining is a technique used for compromising the conflicting interests of employees and employer. It is called collective because the employees as a group select representatives to meet and consult with management. Collective bargaining helps in ironing out many differences between workers and management.
Ghosh has described some techniques of collective bargaining. Collective bargaining is a device of selling the services of union members in the best possible market and at the highest possible price. Although trade unions insist on preserving the free enterprise system and maintaining competitive controls in the labour markets, many of the techniques used in collective bargaining introduce monopolistic factors into that process.
Unions hope to develop and maintain a monopoly of available labour supplies. Since unions have initiated and advanced collective bargaining and since management has little to offer in the way of a positive programme of demands, unions have done more to shape bargaining techniques than managements.
Standardization is one such technique that means the establishment of a uniform minimum price for each class of work. Unions insist that bargaining can be effective only if workers in any one job are guaranteed a specified minimum wage per piece or per month.
2. Restriction of Membership:
Unions seek to limit number of members in the union and to limit employment to unionists. Under open union practice, anyone who is acceptable to the employer is allowed to join the union. But under closed union practice, unions set such severe conditions for membership that very few can qualify.
As a result, unions have limited the available labor supply in a given occupation to the present members of the union. Unions may restrict membership by setting initiation fees at a high level, or by imposing limitations based on sex, religion or nationality. The closed union practice is anti-social and an undemocratic device.
3. Hire Union Members Only:
Unions attempt to ensure that only unionists get the available work and that employers do not have a choice as to hire union members or non-members. To attain this end jurisdictional limitations are imposed. Jurisdiction may be either industrial or geographic. Under the system of industrial jurisdiction, all work of a certain types are allocated to the members of a certain unions.
Under the system of geographic jurisdiction a specific area is defined in which only the members of a specified local union may be used for such work. These limitations are used as protection against the competition from other unionists either in different trades or in the same trade in other localities.
Union power and control in the enforcement of jurisdictional limitations is generally exerted through picketing at the entrance of the offending establishment and the union makes the public aware of the union’s case. This aims to prevent the employer from carrying on his normal business activities and union members controlling the supply of labour.
In all collective bargaining the unions seek recognition that means an agreement with the employer to recognize the union as the representative of the employees.
4. Limit the Output:
Unions attempt to control or limit the output of their members with a view to putting pressure upon the management.
5. Limit the Supplies of Labour:
Unions seek to restrict the supplies of labor. Unions refuse to work for the employers who do not come to terms with the union.
6. Shop Systems:
There are certain types of shop systems for collective bargaining such as open shop, exclusive bargaining agent system, preferential shop, union shop, agency shop and closed shop.
(i) Open shop- The absence of any recognition is open shop. Under the open shop, no distinction is made between union members and those workers who are not members. No collective bargaining exists, as the employer does not recognize any union as representative of employees.
(ii) Executive bargaining agent- Under this system, management recognizes the union as an agent for its members and further agrees that it will recognize no other union as the bargaining agent.
(iii) Preferential shop- Under the preferential shop form of recognition, the management will provide the first chance for employment to union members.
(iv) Membership recognition system- Under maintenance of membership form of recognition, all employees who are members of the union must maintain their standing in the union they are discharged.
(v) Union shop- In this system, all employees must be members of the union. The management may employ non-unionists, but they must join the union when they become employees.
(vi) Agency-shop system- Under the agency shop, all employees in the bargaining unit must pay dues to the union recognized as the bargaining agent although they do not have to join that union.
(vii) Closed shop- Only union members are employed. This form of recognition provides the greatest union control of labor supplies.
Collective Bargaining – 12 Important Functions
Collective bargaining plays an important role in preventing industrial disputes, settling industrial disputes and maintaining industrial peace by performing the following functions –
(a) Achieve an efficient functioning of the organisation.
(b) Lay down fair rates of wages and other norms of working condition.
(c) Secure a prompt and fair redressed of grievances.
(d) Establish uniform conditions of employment.
(e) Increase the economic strength of employees and management.
(f) Promote the stability and prosperity of the company.
(g) It provides a method of the regulation of the conditions of employment of those who are directly concerned about them.
(h) It provides a solution to the problem of sickness in industry and ensures old age pension benefits and other fringe benefits.
(i) It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced.
(j) As a vehicle of industrial peace, collective bargaining is the most important and significant aspect of labour management relations and extends the democratic principle from the political to the industrial field.
(k) It creates new and varied procedures for the solution of problems as and when they arise.
(l) It builds up a system of industrial jurisprudence by introducing civil rights in industry. In other words, it ensures that management is conducted by rules rather than by arbitrary decisions.
Prof. Dunlop is of the opinion that collective bargaining is:
(i) A procedure which determines the quantum of compensation which employees should receive and which influences the distribution of economic ills.
(ii) A method of settling disputes during the pendency of an agreement and of determining after it expiry whether a dispute should be re-opened and whether a strike or a lockout should be resorted to or not.
(iii) A system which establishes services and administers many of the rules which govern the workers’ place of work.
Collective Bargaining – 7 Advantages
It is sometimes claimed that in non-industrialized countries settlement of wage issues through collective bargaining – especially on a national or industry wise basis – can be an obstacle to a wage policy to promote specific economic objectives because wage rates are not necessarily fixed on criteria designed to promote specific economic and social objectives (other than as compensation for cost of living increases), and that they often tend to reflect the bargaining strength of the parties or the supply and demand conditions of labor.
With some exceptions (such as Japan) wage increases through collective bargaining in Asia pay little attention to productivity, individual or group performance and to skills. However, collective bargaining has many advantages which have been claimed for it as a means of resolving differences between management and employees, though it has made little positive contribution to higher productivity and higher earnings by linking pay to performance and skills.
The collective bargaining has several advantages and disadvantages:
Advantage # 1. Settles Issues through Dialogue:
Collective bargaining has the advantage that it settles issues through dialogue and consensus rather than through conflict and confrontation. It differs from arbitration because the latter represents a solution based on a decision of a third party, while arrangements resulting from collective bargaining usually represent the choices or compromises of the parties themselves.
Arbitration may invariably displease one party because it usually involves a win/lose situation, and sometimes it may even displease both parties. Collective bargaining agreements often institutionalize settlement through dialogue. For instance, a collective agreement may provide for methods by which disputes between the parties will be settled.
This has the distinct advantage that the parties know beforehand that if they are in disagreement there is an agreed method by which such disagreement may be resolved.
Advantage # 2. Collective Bargaining Encourages Employee Participation:
Collective bargaining is a form of participation. Both parties participate in deciding what proportion of the ‘cake’ is to be shared by the parties entitled to a share. At the end of an agreed term labor again insists on participating in deciding what share of the fruits of their labor should be apportioned to them.
Collective bargaining is a form of participation also because it involves a sharing of rulemaking power between employers and unions, and this has eroded areas that in earlier-times were regarded as management prerogatives, e.g., transfer, promotion, redundancy, discipline, modernization, and production norms.
However, in some countries such as Singapore and Malaysia, certain subjects such as promotion, transfer, recruitment, termination of employment on grounds of redundancy or reorganization, dismissal and reinstatement, and assignment of duties within the scope of the contract of employment, are regarded as management prerogatives and outside the scope of collective bargaining.
But collective bargaining suffers from the drawback that it seldom deals with how to enlarge the “cake”, as the way of increasing the share of each party without eroding competitiveness.
Advantage # 3. Guarantees Industrial Peace:
Collective bargaining agreements sometimes renounce or limit the settlement of disputes through trade union action or lock out. Therefore collective bargaining agreements can have the effect of guaranteeing industrial peace for the duration of the agreements, either generally or more usually on matters covered by the agreement.
Advantage # 4. Social Partnership:
Collective bargaining is an essential feature in the concept of social partnership towards which labor relations should strive. Social partnership in this context may be described as a partnership between organized employer institutions and organized labor institutions designed to maintain non-confrontational processes in the settlement of disputes which arise between employers and employees.
Advantage # 5. Generates Mutual Trust:
Collective bargaining has valuable by-products relevant to the relationship between the two parties. For instance, a long course of successful and bona fide dealings lead to the generation of trust. It contributes towards some measure of understanding by establishing a continuing relationship. Once the relationship of trust and understanding has been established, both parties are more likely to attack problems together rather than each other.
Advantage # 6. Stabilizes Union Membership:
In societies where there is a multiplicity of unions and shifting union loyalties, collective bargaining and consequent agreements tend to stabilize union membership. For instance, where there is a collective agreement, employees are less likely than otherwise to change union affiliations frequently.
This is also of value to employers, who are faced with constant changes in union membership and consequent inter-union rivalries, resulting in more disputes in the workplace than otherwise.
Advantage # 7. Improves Industrial Relations:
As between unions on the one hand and employers’ organizations on the other, collective bargaining improves the industrial relations climate in the following ways:
(a) It acts as a means of exerting influence on the employer or the employee, as the case may be, where the unreasonable position of one party results in a deadlock. The employers’ organization or the union, as the case may be, has an interest in exerting influence on its respective members; the maintenance of the relationship between the two parties is seen as important to issues well beyond the current dispute.
Both parties know that the current dispute is only one of many situations which are likely to arise in the future, and that a good relationship needs to be maintained for the overall benefit of their respective members.
(b) The entry of a union and employers’ organization into a dispute facilitates conciliation or mediation. Sometimes one or both parties are able to divorce themselves from the main conflict, or from their position as representatives of their members, and mediate with a view to narrowing the differences and finding compromise solutions.
(c) Collective bargaining often leads employers’ organizations and trade unions to establish links, and to look for and increase areas of common agreement. This in turn ensures to the benefit of their respective members.
Collective Bargaining In India
Collective bargaining has not made much headway in India for a number of reasons:
i. Favorable conditions for the development of collective bargaining are not prevailing in India. We do not have strong trade union movement in India.
ii. There is no parity of strength as between trade union and management. In India at the unit level bipartism and at the industry and national level tripartism prevails.
iii. A host of laws prescribing labor-management behavior have been enacted through such mechanism as wage boards, statutory fixation of wages, payment of bonus and other employment conditions the scope of collective bargaining has been severely curtailed.
The following steps are suggested to make collective bargaining more successful in India:
i. Trade union movement should be strengthened.
ii. One union in one industry should be encouraged.
iii. Compulsory adjudication of disputes should be abolished.
iv. Compulsory recognition of representative union is necessary.
v. Government should encourage the parties to settle their disputes through bipartism.
Collective Bargaining – 4 Different Strategies: Distributive, Integrative, Productivity and Concessionary Bargaining
The actual bargaining process and the events that take place during negotiation depend to a great degree upon the relationship between management and the union. Depending on the strength of the employer and the union and on the degree of co-operation, a number of different bargaining strategies may be employed as distributive bargaining, integrative bargaining, productivity bargaining, and concessionary bargaining.
Distributive bargaining takes place when labour and management are in disagreement over the issues in the proposed contract, such as wages, benefits, work rules and so on. This form of bargaining is known as win-lose bargaining, because gains of one side are achieved at the expense of the other.
The mechanics of this process are shown in the Fig. 13.1:
The union’s initial offer on an issue (such as – a wage rate) is generally higher than they expect to receive; the resistance point is the minimally acceptable level; the target point is realistic and achievable. For the employee, these points are basically reversed.
Management’s resistance point is a ceiling, or upper limit, on a particular issue; its initial point is the low end of an issue to be used to begin negotiations; its target point is in the general area that management would like to achieve. The settlement range lies somewhere between the resistance points of labour and management. If both sides are unable to come to terms on a particular issue or issues, a bargaining impasse results.
The purpose of integrative bargaining is to create a cooperative negotiating relationship that benefits both parties. In this type of bargaining, both labour and management win rather than face a win-lose situation. One popular form of integrative bargaining is jointly sponsored, labour management Quality of Working Life (QWL) programme.
A recent example is the Ford Motor Company-UAW programme called Employee Involvement (EL), a QWL programme designed to strengthen plant productivity and quality through enhanced job satisfaction and co-operative labour-management relationships.
One of the primary purpose of productivity bargaining is to improve the effectiveness of the organization by eliminating work rules and inefficient work methods that inhibit productivity. Getting labour’s agreement to eliminate old ineffective work habits is not easy.
Some unions fear that this form of bargaining will eventually lead to unemployment and a weakening of the union’s power base. Despite the reluctance of various unions, many changes have been made to improve productivity, signifying a shift from distributive to productivity bargaining.
4. Concessionary Bargaining:
During 1980’s, many companies were facing the problems of plant closing, mass layoffs, bankruptcy etc. To solve their problems, many employers sought agreements from their unions to freeze and in some cases reduce economic rewards such as – wages, benefits and paid vacations, holidays and sick leave.
Unions reluctantly agree. Concessionary, or give back bargaining has been common in both manufacturing and services industries, but most prevalent in those industries with the greatest financial difficulties.
In the history of Management, collective bargaining has proven to be an effective method for setting differences between labour and management. Most negotiations (about 98 percent) end in a signed contract that is agreeable – although not necessarily favourable – to both sides, management and labour generally recognize that continuous, dispute-free operations are important to preserve harmonious labour relations and maximize the goals of the employee and employer alike.
During the course of negotiations sometimes serious conflicts do occur. Management and labour may simply be unable to reach accord over certain issues dealing with wages or other contract provisions.
When negotiations break down or when the existing contract expires and the union and employer have been unable to reach an agreement, a bargaining impasse results. Should this occur, there are three options.
The parties may ask for assistance in settling the dispute from an impartial third partly called a mediator.
The Union may exert a show of force so that their demands will be accepted.
The employer may also show force through one of several pressure techniques.
Collective Bargaining – Negotiation Skills and Negotiation Strategy
For being successful in collective bargaining, negotiators must have negotiation skills which are as follows:
1. Analytical Skill:
Negotiators should have analytical skill so that they can analyze the real problems and issues involved in collective bargaining. Identification of real problems is necessary because employees may have numerous issues out of which only few of these may be relevant for thorough negotiation. Based on identification of the real issues, the negotiators may be able to know the areas in which negotiators of both sides can help each other.
2. Communication Skill:
Negotiators must have communication skill so that they can communicate clearly and effectively to the other side during the negotiation. Misunderstandings may occur during negotiation if the negotiators do not state their viewpoints clearly. Further, they must put viewpoints based on logical reasoning.
3. Listening Skill:
Along with communication skill, the negotiators must have listening skill too. Negotiation is a two-way communication in which communicating and listening are equally important. If the negotiators have listening skill, they can take care of not only of spoken words but also the gestures associated with these words and can derive true meaning of what has been said.
4. Interpersonal Skill:
Negotiators must have interpersonal skill to maintain a good working relationship with those involved in the negotiation. Negotiators with patience and the ability to persuade others without using manipulation can maintain a positive atmosphere during a difficult negotiation.
5. Problem-Solving Skill:
Negotiators should have problem-solving skill so that they can seek a variety of solutions to problems. Instead of focusing only on the ultimate goal of the negotiation, the negotiators should also focus on solving the problem, which may be a source of negotiation breakdown, to benefit both sides of the issue.
6. Decision-Making Ability:
Negotiators should have the ability to act decisively during the negotiation. It may be necessary during a bargaining arrangement to agree to a compromise quickly to end a stalemate.
7. Emotional Maturity:
Negotiators must have emotional maturity so that they can keep their emotions in check during the negotiation. Generally, a negotiation on contentious issues tends to be frustrating. Therefore, there is a possibility of emotional outburst which must be controlled. In absence of this, there is a chance that the negotiation will not progress further and the entire exercise of negotiation goes in waste.
8. Collaborative Approach:
Negotiators should have collaborative approach. They should believe in win-win approach instead of win-lose approach. After all, a negotiated agreement tends to be beneficial to both parties of the negotiation. Win-win approach of negotiators of both the parties creates goodwill among them which is beneficial for long term.
Negotiation strategy is the approach of action to achieve a specific objective in a negotiation with another party or parties. There are different negotiation strategies- avoiding, accommodating, compromising, and competing. Adoption of a particular strategy depends on the concern for each party of the negotiation- self and other party. If concern for self is high, the behaviour will be assertive at the negotiation table and if concern for self is low, the behaviour will be unassertive.
Similarly, if concern for other is high, the behaviour during the negotiation will be cooperative.
In the light of this pattern of concern, the following negotiation strategies may be adopted:
i. Accommodating Strategy:
When concern for other is high but concern for self is low, accommodating strategy is suitable. Accommodating strategy might be adopted due to selfless generosity or realizing that the stand of the negotiators is not right. When the accommodation is adopted due to generosity, the person who is adopting this may feel that negotiation outcome is more important to other party or it may result in cordial relationship between the two.
Accommodation is also relevant when competing is likely to become too costly for the person who is accommodating. Therefore, opting for a lose-win situation after a long run-up, the person feels that the accommodation is a better alternative. However, to make accommodating effective, the other party should show equal generosity to maintain cordial relationship. In its absence, the self-esteem of the first party may go down which may be a negative aspect.
ii. Compromising Strategy:
When concern for self as well as concern for other is in mid-range, compromising strategy is quite suitable. This strategy is based on ‘give and take approach’. Compromise is a well-accepted mode because neither party is a definite loser nor a distinct winner. Compromise may be effectively used when the goal object may be divided in some way among the competing parties. In cases where this is not possible, one group may yield to the other something of value in exchange for a concession of value.
Both parties then give something up. In a compromise situation, the outcome depends primarily on the relative strength of the parties. In situations in which one of the parties is much stronger than the other, little actual compromising may occur, and one side dictates the other.
iii. Collaborating Strategy:
When parties to the negotiation have high concern for self as well as for other, collaborating strategy is very effective. Collaboration involves working with other party to find solutions that would satisfy both the parties. In this mode, underlying concerns of both the parties are explored in depth, their disagreements on the issues of the conflict are examined, and resolution is arrived at by combining insights of both the parties.
This results in a creative solution as both the parties are open to respect the concerns of each other without harming anyone’s interest.
Collaboration is quite useful when party’s concern for negotiation outcome is very important and it cannot be compromised. Further, collaboration is also useful when parties are to- (i) understand each other’s point of view and test one’s own assumptions on the issues of the negotiation; (ii) merge insights that different people bring to solve the problem based on their background; and (iii) work out hard feelings that interfere with interpersonal relationships.
iv. Competing Strategy:
Competing strategy is relevant for a situation in which concern for self is high but concern for other is low. In a competitive situation, there is win-lose outcome, that is, only one party can win at the cost of the other. The negotiating parties take very rigid stand. In such a case, outcome of the negotiation depends on the relative bargaining power of the parties.
However, this strategy is not good for the parties concerned because it may generate apathy between the parties. Therefore, before adopting this strategy, the parties must analyze the cost of winning or losing because, sometimes, a win itself may be costly in the long run.
v. Avoiding Strategy:
When each party to the negotiation has low concern for self as well as to other or one party is eager to negotiation but the other party is not that eager avoiding strategy works well. The party which is not eager to negotiation may try to find alternative to negotiation to solve the issues or get more time to collect relevant information about the issues.
It may be mentioned that formal negotiation between two parties indicates that there are differences between the parties. This is the reason that many organizations prefer to consult employees informally when there is any change in HR practices.
Collective Bargaining – 12 Important Pre-Requisites of Successful Bargaining
To make the collective bargaining successful, its pre-requisites are:
(a) Employer’s Recognition of the Trade Union – The management has to recognize one of the trade unions as the workers’ representative, so that the bargaining can take place.
(b) Bargaining Must Precede Other Measures – The workers have to wait for the results of bargaining before they go in for strikes, etc. Similarly, the management cannot declare lockout or take any unilateral action.
(c) Discussion Issues – Normally the topics for discussion include the different wage matters, overtime, holidays, leave, forms of work, service termination, disciplinary issues, grievance procedure, labour participation in different functions, suggestion scheme, etc. Since a field to be covered by bargaining is its basic subject, it is not possible to have a water-tight compartment in this respect in the initial stages.
(d) Employers’ and Employees’ Attitude Calls for a Change – Both the workers and management should be quite clear that the approach of collective bargaining does not imply litigation as is the case with adjudication. Resorting to such an approach itself means that both the parties have a firm determination to sort out differences of their respective viewpoints in a peaceful way.
(e) Top priority to Plant Level Bargaining – It is desirable that collective bargaining is practised at plant level. The representatives of the employees and employers must have a firm resolution to have an agreed solution to their individual matters.
(f) Negotiations on Differences – Both the parties should negotiate on their points of differences or demands with the sale purpose of making an agreement.
(g) Reliance on Facts and Figures – In order to make the negotiations result into success, the workers and the management agents must rely on facts and figures to substantiate their claims.
(h) Giving Up of Unfair Labour Practices – Neither of the two parties should resort to any unfair labour practices, otherwise the collective bargaining cannot move as desired.
(i) Written Agreement – When both the sides agree, the final decisions should be incorporated in a written agreement. It should include the validity of the agreed matters as also its review from period-to-period. Flexibility is one of the essentials of the agreement.
(j) Progress Review – Regular meetings should be held between the agents of both the sides to watch the progress of the agreement Implementation, to effect any required changes, adjustments and amendments in the agreement.
(k) Respect of Agreement – Both the parties must respect the agreement and see that it is implemented in a fair and justifiable manner.
(l) Arbitration Provision – The agreement must include an arbitration clause. Whenever the parties have any differences pertaining to the interpretation of the terms and conditions, the arbitration clause can be resorted to.
Collective Bargaining – Four Trends Evolved Over Past Two Decades: Rejection of Agreements, Public Employee Militance and a Few Others
Four trends in collective bargaining have evolved over the past two decades. The first is a marked increase in rejection of agreements by union members when their representatives have presented the negotiated contract to them for ratification.
The second is an increase in the militancy of public sector employees. The third and fourth trends deal with union avoidance and concessionary bargaining respectively.
1. Rejection of Agreements:
In earlier day’s when a contract had been agreed to by labour or management’ representatives, it used to be merely a rubber stamping activity. But today, we find an increasing number of instances where the union membership turns down the final agreement resolved through negotiations and sends its representatives back to the bargaining tables where the several reasons have been proposed.
The major reason for rejecting agreements is dissatisfaction with the size of wage and fringe benefits. Union members, like most of the work force, have suffered from the rapidly inflating cost of living. When inflation was averaging more than 12 percent a year, a union settlement of anything less translates into a lower standard of living.
Union members in recent years, therefore, have voiced their frustration over lower settlements by increasingly rejecting the contract terms negotiated by their representatives.
It can be argued that many union administrators have lost touch with the needs and desires of their constituencies. In some cases, union negotiators have fought hard to gain increased medical benefits, earlier retirement and larger pensions, only to have the agreement fail ratification. It is then that many negotiators found that the members preferred something else – such as – greater immediate wage increases.
A most disturbing reason for this rejection of agreements may be political. Rejection of the agreement may be a deliberate tactic to demonstrate unity among the rank and file membership. The union’s administrators may not actively seek ratification by members.
They may accept the rejection, and then go back to management, in effect, “See, we told you this was an inadequate offer. We know our members would not find it acceptable.” Of course, such a tactic is not consistent with good faith bargaining. Management becomes sourced by the practice.
Moreover, once management finds itself burnt by such a tactic, future bargaining will be seriously hurt. Next time around management likely to save its best offer for a later date, in anticipation of the first representative derived agreement being rejected by the membership.
Therefore, contract rejection can imply internal union political problems when the rank – ana -file members refuse to be persuaded by the union leadership what the tentative agreement is the best that can be achieved, they are revealing a lack of trust in their leadership.
2. Public Employee Militance:
Second trend indicates toward the growing militancy of public employees. This is most evident in the increasing number of work stoppages and strikes in the public sector, even in the face of state laws forbidding public-sector strikes.
As with contract rejection, twenty years ago such walkouts and strikes were rare. But times have changed in the public sector. Strikes by employees of state and local government have sometimes occurred at a rate of more than forty a month.
A major part of the explanation for this phenomenon lies in the relatively recent rise of public -sector collective bargaining, which had not been widely practiced until the late 1960s. But the inflation revenue squeeze may have been the more dominant factor in the past few years.
Inflation pushed up the price of providing government services. At the same time, proposition 12 type taxpayer revolts spread throughout the United States. The public was saying that it wanted tax cuts or at least no increases.
Yet it assumed that the level of government services could be maintained, even with inflation, by merely having public employees work harder and become more efficient. These employees did not believe that they should be expected to subsidize lower taxes by doing more work for the same or less money.
The result was around public employees who were more adamant at the bargaining table and more willing to accept a lengthy walkout than their peers of a decade or more ago.
3. Union Avoidance:
A long term response of management has been to support lobbying efforts for legislation at the state level that prohibits requiring individuals to be the member of a union as a condition of employment. Management has a vested interest in supporting such legislation, widely referred to as – “right – to – work” laws, because in states that have so-called right to work laws, the union shop is illegal.
Employees cannot be forced to join a union if they want to work for an employer, even though employees at that location are unionized. As a result, where right to work laws exist, it is more difficult for unions to survive.
But sometimes the above approach is unrealistic for many small organizations that can muster little political power. Moreover, when confronted with the fact that an organizing drive is currently under way, the management in small or large firms must make an immediate response.
Such a response tends to take the form of a counter campaign to argue the benefits of maintaining a non-union environment. This frequently means that management emphasizes what it has done in the past for its employees, the value of the individual ethic and the individual freedoms that workers relinquish when they became part of a collective bargaining unit, and the costs of unionization.
But management’s counter campaign must be carefully thought out and implemented. The information given to worker must be factual and non-threatening.
In this context, management must be careful not to engage in illegal practices as physically interfering, threatening, or engaging in violent behaviour toward organizers; interfering with the employees involved in the organizing drive; disciplining or discharging employees for any pro union activities; or promising to provide or withheld future benefits contingent on the employees decision regarding unionization.
Many companies that desire to remain non-union are engaging in activities that inform employees that joining a union is not worthwhile. Through educational programmes, these companies have tried to avoid having the campaign begin and implementing sound employee relations programmes in their organisations.
Further, these companies also have elaborated grievance procedure designed to permit the employee to settle a complaint. Companies are using audio visual devices to update the workers.
Busting Unions is becoming a profitable venture for some individuals. Armed with a variety of tactics, these consultants are working with companies and are developing alternatives to reduce the costs associated with the union. Some are running strong decertification campaigns, taking short term losses in a lockout for future gains.
Others are claiming that if the company does not regain more control, it will close down the plant and move. Moving to an area that is traditionally anti-union and where the labour costs are cheaper and expenditure for capital improvement at the existing plant approximate the cost of building a new plant, inducements for the more are evident.
4. Concessionary Bargaining:
Ever since the Chrysler workers voted to reduce their wages and benefits in order to help the ailing car manufacturer, concessionary bargaining has been snowballing. More and more companies facing a bleak financial future are turning to the unions representing their workers and are seeking drastic changes in their labour agreements. Salaries are a prime concern, but companies are also seeking concessions elsewhere.
All of the nation’s leading newspapers have published reports of unions giving back a sum of money to the company by means of cuts in wages and benefits. Most of the major industries have sought concessions. The auto workers, the teamsters, and the airlines pilots are among those whose concessions have warranted top billing.
But in many cases, these concessions on wages and benefits were made with the agreement that as the economic picture improved the unions would recover their share. Additionally, as the unions made concessions, so did management.
In lieu of the give backs in wages and benefit, unions received concessions from management on job and income security and were given more input in the decisions – making process.
Since the economy has improved, the thrust of wage concessions has diminished. In fact, unions are now demanding that some of their give backs be returned. While there has been some increase, for the first time in modern labour history the non-union worker has fared better in salary increases.
Concessionary bargaining has placed the responsibility for labour-management relations at the source, that is, the union and the companies involved. Traditional union demands were made based on what had been demanded and achieved by the leading union.
This concept was termed pattern bargaining, or making demands based on the patterns established in other industry union contracts. However, the concessionary bargaining has reduced the input of this patterned bargaining and has placed more emphasis on a case by case issue.
Collective Bargaining – 7 Factors Obstructing Collective Bargaining
The efficient functioning of collective bargaining helps for the maintenance of industrial peace.
But, the functioning of collective bargaining is often affected by certain factors as under:
(a) The failure of both parties to devote enough time and energy to the preparations for collective bargaining.
(b) The separatist tendencies of the trade unions.
(c) The failure of some employees to accept trade unions as a permanent feature of the national economy.
(d) The non-availability of factual information.
(e) The absence of a willingness on the part of either party to assume the responsibilities which are inherent in the bargaining process.
(f) Unfair practices.
(g) The unequal strength of the parties. Both sides should be strong enough not to be shaken or intimidated or overawed by each other.
Collective Bargaining – Problems
The collective bargaining scene in India is not very encouraging. The major emphasis of both union and employers is to settle the disputes through adjudication rather than sorting out the issues among themselves.
Whatever bargaining takes place, it is limited to large plants only. Smaller organisations generally do not prefer this form of handling the issues.
Several factors are responsible for this state of affairs.
These are listed below:
1. Due to the dominance of outsiders in trade unionism in the country, there is multiplicity of unions which are weak and unstable, and do not represent majority of the employees. Moreover, there are inter-union rivalries, which further hinder the process of collective bargaining between the labour and the management.
2. Since most of the trade unions are having political affiliations, they continue to be dominated by politicians, who use the unions and their members to meet their political ends.
3. There is a lack of definite procedure to determine which union is to be recognised to serve as a bargaining agent on behalf of the workers.
4. In India, the law provides an easy access to adjudication. Under the Industrial Disputes Act, the parties to the dispute may request the Government to refer the matter to adjudication and the Government will constitute the adjudication machinery, i.e., labour court or industrial tribunal. Thus, the faith in the collective bargaining process is discouraged.
5. There has been very close association between the trade unions and political parties. As a result, trade union movement has leaned towards political orientations rather than collective bargaining.
Collective Bargaining – Suggestions for Better Functioning: According to Indian Institute of Personnel Management and The National Commission on Labour
Indian Institute of Personnel Management offered the following suggestions:
(a) There should be a progressive and strong management which is conscious of its obligations and responsibilities to the owners of the business to the employee, the consumers and the country.
(b) A truly representative-enlightened and strong trade union should come into being and should function on strictly constantly lines.
(c) There should be unanimity between labour and management on the basic objectives of the organisation and of the workers and a mutual recognition of their rights and obligations.
(d) When there are several units of the company there should be a delegation of authority to the local management.
(e) A fact-finding approach and a willingness to use new tools — for example industrial engineering — should be adopted for the solution of industrial problems.
The National Commission on Labour offered the following Recommendations:
(a) There is a case for shift in emphasis and increasingly greater scope for and reliance on collective bargaining any sudden change replacing adjudication by a system of collective bargaining is neither called for nor is practicable the process has to be gradual. A beginning has to be made in the move towards collective bargaining by declaring that it will provide the procedure of settling industrial disputes.
(b) Conditions have to be created to promote collective bargaining. The most important among them is statutory recognition of a representative union as the sole bargaining agent. The place of strikes should have in the overall scheme of industrial relations needs to be defined; collective bargaining cannot exist without the right to strike.
(c) In the absence of arrangements for statutory recognition of unions except in some states and provisions which require employers and workers to bargain in good faith it is no surprise that reaching of collective agreements has not been as unsatisfactory as it is popularly believed its extension to a wider area is certainly desirable.
Collective Bargaining – Future
In India, collective bargaining has not worked as a system or institutional framework. It has been effective in limited number of organizations and not in the industry as a whole. The major reasons for this phenomenon have been the lack of conducive climate and rigid stands adopted by both management and unions. In fact, in many cases, these stands have been responsible for major debacle for the industry.
The rigid stands taken by trade unions in late 1960s and early 1970s have wrecked the backbone of industries in West Bengal. The prolonged strike in textile industry in Mumbai in 1980s destroyed the entire industry. Similar cases have happened at the level of individual organizations. At the global level, the collective bargaining approach has started weakening.
Strategic management approach to industrial relations which has been adopted to face threats imposed by fast changing environment has put a question mark on the utility of collective bargaining and a means for determining employment conditions. Based on the findings, though experts on collective bargaining do not suggest that it will vanish altogether, they agree that it has come under pressure which seems set to continue and intensify.
Data on eighteen OECD (Organization for Economic Cooperation and Development) countries reveal that the coverage of collective bargaining is on declining trend. On this issue of collective bargaining, Brown has observed, “It is now clear that in the course of the 1980s, the coverage of collective bargaining has contracted substantially, that the scope of collective bargaining has narrowed, that the depth of union involvement has diminished, and that organizational security offered to unions by employers has deteriorated.”
The major reasons for declining of collective bargaining are growing competition in the market at global level, decline in trade union membership, growing unfavourable public opinion, emergence of decentralized bargaining, and preference of employers and employees for individualized career and compensation plan. All these have changed the traditional concept of bargaining for increased compensation and benefits to productivity-linked compensation.
In this context, Voos has observed, “It is evident that at least some unions have arrived at what is essentially a modernized productivity bargaining strategy. That is, they have been willing to renegotiate work rules and to cooperate with management to improve productivity through employee involvement in exchange for enhanced job security and a better economic package than otherwise be negotiated.”
In India too, this trend is emerging though bit slowly. Many companies and unions have adopted this approach.