Chapter 6: Process of Collective Bargaining

Preparing charter of demands, general practices, issues to be included,

right to participate in decision making processes, strategies applied by
managements, union responses, negotiation process, collective
agreement (duration, nature, and implementation), merits and demerits
of collective bargaining.

PROCEDURE OF COLLECTIVE BARGAINING

Developing a Bargaining Relationship

One of the very important facets which need to be considered before

studying the process of collective bargaining is “Understanding and
developing of a good Bargaining relationship”. This step consists of three
activities mainly;

(1) to decide who or which union is to be recognized as the

representative of the workers for bargaining purposes
(2) to decide what should be the level of bargaining
(3) to decide what should be the scope and coverage of issues
under collective bargaining.

(1) Recognition of the bargaining agent. In those

organizations where there is a single trade union, that union
is generally granted recognition to represent the workers. But
where there is more than one union , any of these criteria may
be used for identifying the representative union , namely:
 (a) Selection of the union by a secret ballot

(b) Selection through verification of membership by some

government agency if required.

(c) Bargaining with a joint committee of all major unions.

(d) bargaining with a negotiation committee in which different

unions would be represented in proportion to their verified
membership

(e) Bargaining with a negotiation committee which consists of

elected representative of every department of the organization
selected by secret ballot, irrespective of their union affiliations.

The secret ballot system is widely used in countries like United States,
West Germany, etc. In India some trade unions have supported this
method but some have opposed it. If the secret ballot or verification
conducted by an independent statutory authority indicates that any
particular union has got an absolute majority of eligible employees, it
should be given recognition as the Sole Bargaining Agent, and the other
unions may be given the right to represent their member’s grievances.

2. Levels of bargaining. Collective bargaining is possible at all levels,

such as
· At the level of the enterprise,
· It may be at the level of the industry in a particular region.
· At the level of the entire industry in the country, that is, at
the national level.
From the point of view of an individual establishment, enterprise-level
bargaining is generally useful in the sense that the settlement is tailored
to the conditions of that organization. In most of the South East Asian
countries, the enterprise level Bargaining is predominant.

2. Scope and coverage of collective bargaining. Though in many

organizations bargaining is struck only by specific issues like wage
increase, bonus, or seniority, promotion, etc., yet it is considered
advantageous, both for the management and the trade unions, to cover
as many issues of interests to both parties as possible. Now a days the
orientation of collective bargaining is changing from conflict to co-
operation and there by building an atmosphere of trust, progress and
social welfare. For example: union must strive for larger scope and
coverage like wages and service conditions for contract labor, temporary,
part time employees, trainees etc.

The Collective Bargaining Process Variation:

The negotiation process has been visualized in different ways. Collective

bargaining procedure can be compared with the poker game in which the
highest points go to those who combine deception, bluff and luck and
have the ability to come up with a strong hand whenever they are
challenged by there counterpart. They further think that the process of
negotiation is similar to an exercise in politics where the relative strength
of the parties stems from decisiveness and that it resembles with a
debate. They are also of the view that both the parties on the bargaining
table become entirely flexible and willing to be persuaded only when all
the facts have been presented.
However with the increasing maturity of collective bargaining,
there has been enlargement of the rational process. In addition several
other factors also influence the negotiation process. Among these factors
some are mentioned below:

· Objectives of the parties.

· Kind of experience, knowledge the parties have.

· The Industrial legislation of the concerned country.

· The personalities and training of the negotiators.

· The history of the labor relations in the enterprise.

· The size of the bargaining unit and

· The economic environment.

Although several negotiators may attempt to bluff or outsmart the

opposite group, others seldom think of using these tactics. While some
bargainers may attempt to dictate the contract on a unilateral ground,
others visualize that this process is eventually self defeating. While some
negotiators may come together with excessive unrealistic proposals,
others may have quite realistic ones. In some negotiations , there may be
in each side implicit faith in the counterpart while in others there may
prevail a climate of mutual distrust, suspicion and even hatred, in view
of the past adverse labor relations. Moreover if the objective is to obtain
solution to there mutual problems, the parties are likely to conduct the
negotiation on the ground of rationality and fairness. However if the
objective is to “put management in its place” or to “weaken or to even
destroy the union”, the process of negotiation may take quite different
forms. Thus several factors operate causing variations in the conduct of
collective bargaining negotiations.
“Militant unions vs. irrational management”, “Rational unions vs.
oppressive management”, “Progressive union and progressive
management”-There can be many permutations and combinations and
results of the bargaining process would vary depending on these.
Notwithstanding the variations in collective bargaining process, in
recent days it is characterized by rational discussions based on facts. In
modern collective bargaining process the low level of behavioral patterns
such as emotional out burst, tricks, distortion of facts,
misrepresentations and deceit are largely avoided. The labor and
management representatives have realized that these elements cause
unhealthy labor relations and increase the possibility of industrial
conflict. Implicitly, one of the goals of collective bargaining is to promote
a rational and harmonious relationship in the organization. Accordingly,
the negotiators should have qualities of patience, trustworthiness,
friendliness, integrity and fairness. Each party should share the attitude
of self assessment and consider that the other party may not necessarily
be wrong all the time. If such an open attitude is developed in both the
parties, the negotiation process is likely to become successful.

There are generally four broad stages in the negotiation process

(1) preparation for negotiation

(2) negotiation stage
(3) signing the agreement
(4) follow up action

PREPARATION FOR NEGOTIATION

Prior to the actual bargaining sessions, enough care should be taken by
both the parties to have a thorough preparation for the negotiations. This
has become a pre – requisite to collective bargaining in view of several
reasons. Consultation with the lower level members of their respective
organizations can help both the parties to obtain valuable information
and evolve specific bargaining table approaches. The consultation
process also increases the morale of the two organizations. Again the
technical assistance of legal and public relations experts can also be
utilized gainfully in the collective bargaining process. Finally care should
be taken to preplan with mutual consent the meeting places, ground
rules relating to transcripts of the sessions , publicity releases, the
payment system of union representatives and allied issues.

(a) Negotiations may commence at the instance of either

party – the workers or the management

While some management bide their time till trade unions put forward
their proposals, others resort to what is known as positive bargaining
by submitting their own proposals for consideration by the workers
representatives. If the parties already have an existing contract, it
specifically mentions that either party proposing changes in the
existing agreement should notify the other party. The nature and extent
of such changes must be notifies usually 30 to 90 days prior to the
termination of the contract.

(b) Union team

Careful selection of a Union bargaining team may make a significant
contribution to the successful outcome of a particular series of
negotiations. The negotiators must have sufficient training to participate
and must have an understanding of the total business operation. The
most popular and apparently effective bargaining body consists of the
following persons:

(1) Persons with extensive knowledge and experience an

industrial relations/personnel management function;
(2) Representative from the finance area; and
(3) Members with analytical capabilities.
 (4) People with good communication and convincing skills.

If the negotiating body consists of such people from various fields, the
combined effort yields sufficient information and expertise. It is not
essential for the number of representatives of the employers’ side and the
workers’ side to be equal as decisions is not taken by a process of voting
by the majority. However, it is advisable to keep the team strong and
balanced. As far as possible, a committee should be kept small, for large
numbers on both sides become unwieldy. In such cases they may
concentrate on a discussion of individual grievances or problems than on
the real agenda/issues. The chief negotiator evolves a strategy of action
and of the tactics to be adopted during the negotiations. It is necessary
that the roles to be played by each member of the team are properly pre-
assigned and each member knows when to take over the discussions. It
is good to have proper meetings amongst the team members on the
agenda and other points which can be anticipated. The process is called
as internal negotiations and it is advisable to have internal negotiations
before and during the collective bargaining process.

(c) The Agenda

There is a need to develop proper and clear agenda so that meaningful

discussion can be held. It is further required that proper framework
should get evolved for fruitful discussions. This helps in adequate
preparation for the various items to be discussed. It saves time as issues
are identifies at the outset and preliminary discussions are already done.
It helps both management and union to determine who should be
present in the negotiation sessions.

Both the employers and the employees should devote a great deal of
Time to the preparation for the negotiation. The necessary data may have
to be collected, from various sources like inside, outside the organization.
An area survey of what other organizations are doing for similar issues
can provide us with important benchmarks. This kind of surveys can be
done with the help of experts in the field of industrial relations.

As a part of home work, the demands of the management should

be analyzed and classified into three categories:

· Demands which possibly be met;

· Demands which may be rejected;

· And demands which call for hard bargaining.

An appraisal of the cost of implementing the proposals if they are

accepted maybe worked out. The union team should carefully
formulate their charter of demands; thoroughly study the implications of
the unions demands; and think of the arguments and the counter
arguments during the bargaining.

THE NEGOTIATION

Methodology for bargaining – by objectives

Methodology for bargaining is very important in negotiating process. It

will help the negotiator to develop those personal and managerial
(administrative) qualities of preparedness, knowledge, ability, sensitivity,
timing, analytical abilities, composure and patience. These qualities
develop as a result of observation, experience involvement and conscious
individual effort and experience.
 As a bargaining methodology it is desirable to list all the
bargaining items, whether introduced by the employer or the employee
that the parties will consider during the course of the collective
bargaining negotiations. These bargaining items could be separated into
two parts –
· The cost or financial items

· The other for non cost or non financial items.

After listing the items priority rating can be determined for these items
based on its value or importance relative to all other items on the
agenda. The range of the objectives could be decided, which could be like

Ø Realistic: The realistic goal is what both the parties

fully expect that it is achievable, logical and based on facts.

Ø Optimistic: The optimistic goal for particular item

would be what the negotiator thinks can be achieved. But
the negotiation process might have to go through various
odds and conditions may not be favorable.

Ø Pessimistic objectives. The pessimistic goal would be

a possible outcome if everything did not go as well as
expected, but definitely within the acceptance range of the
party.

The above mentioned negotiation range is perceived by both the parties

and adequate efforts are made accordingly.
All these objectives are a strictly confidential part of the negotiators blue
print of goals and should be treated as such and never revealed to the
opposing bargaining representative.
 This methodology provides a systematic framework for
approaching collective bargaining negotiations. Some advantages to
collective bargaining negotiations result from the use of the methodology
by objectives.

ADVANTAGES

(1) It gives the negotiating team a real sense of direction and tangible
goals (objectives) by which team members may measure their progress
during negotiations.
(2) It provides a more meaningful basis for data preparation, because
positions and goals are specifically identified.
(3) The team has a ready reference, easy to scan blue print that
provides a confidential guide to strategy and tactics for all cost and non
- cost bargaining items, individually and/or collectively.
(4) The identification of not just one goal but a range of possible
settlement goals on each bargaining item requires by its very nature a
more detailed and careful analysis.
(5) It provides a better means of evaluating past negotiations as a useful
experience base from which to launch a more effective plan for the next
round of negotiations.
(6) It provides the parties individually with a safe and effective
mechanism for delegating authority their bargaining teams.

(a) Opening the negotiation

Give all the participants including yourself three or four minutes to settle
down; to gather papers together and wait for any potential latecomers.
Before doing this, the management must at the outset, make sure that
the union leaders, with whom the negotiation is going to take place, are
really the representatives of the workers. Having exchanged the
appropriate social greetings the management may ask the trade union
side to present their case. Normally management representatives act as
the chairman of proceedings. Once their leading spokesman has begun
the initial statement of his position, we are unlikely to interrupt him even
if we feel certain that he has made an error on a factual point.
Management representatives may listen carefully and observe the
reactions of the other members of the trade union side; in particular the
little nods of agreement or supports, on those points about which they
feel strongly agreeable.
In this opening phase of the negotiations, management must
expect the speeches to be long and prepared with emotional language.
The union spokesman has to convince his own members present and
those on the shop floor that he did his best. Unions often take an
aggressive initial stand and it is a poor strategy on the part of the
management team to be equally aggressive or impatient. Before reply to
the management, the union must have time and inopportunity to explore
the differences and unanimity of opinion. While giving the first reply to
the management, union may be borne the following points in mind:
(1) The number of points which can be communicated should be
kept to a minimum. It is better to repeat and assert the same point
using different language than to try to cover too much ground. Use
plain language and avoid the use of jargons.
(2) Do not get bogged down in prolonged discussion of one or
two of the items raised by the trade union side. Deal with all the
points if necessary those items must be grouped together.
(3) Address your remarks to the main spokesman. Loud
shouting and bad temper are not substitutes for a good case well
presented.
(4) Identify the areas of agreement because this gives the
impression that progress is being made. Have you left yourself with
enough room in which to bargain subsequently?
 (5) Will the first statement be made solely by the chief
spokesman or could it be made by certain other members of your
team? Are there some more members who can contribute as well?
(6) Even if the management team feels that there is no hope of
reaching an agreement, managements case may be presented in a
broad outline. Management may remember that their contact with
the trade union is a continuing one. One should not worry about
too much of carry over of these negotiations for the next sessions.
This would give adequate time to analyze the situation.

(b) The Middle Period

The transition from the first to the second phase of the negotiations is
often blurred. Speeches will tend to become much shorter and less
formal. These will sound more natural. Contributions may be made by
others and thus gradually number of participants will increase.
The management’s negotiator may encounter a problem of
maintaining unanimity in public within his own bargaining team. A
member of the bargaining team who frequently allows public expression
of differences in the conference room may soon be displaced. It is
essential that a real team spirit is maintained throughout the
negotiations.
The middle period may contain one or more adjournments made at
the request of either party. These can be used to:
(1) allow the other party to evaluate either new offer or new
information;
(2) consult with or report back their group;
(3) Settle things down; and
(4) Prevent negotiating fatigue.
Management need not be afraid to suggest or ask for an adjournment, it
is not a sign of weakness. Be careful not to be seen to abuse the
adjournment. The skilled use of this time is one of the most important
hallmarks of an experienced negotiator. During the middle period of the
negotiations both sides, and in particular management may decide to
release new information, if relevant. At this time one can take the
calculated risk of assessing the way this information will be received and
handled by the opponent. The use of information is a tactic and its
adoption requires both skill and experience.
(c) Concluding the Negotiation
The experience negotiator keeps on bargaining as long as the other party
continues to do so in good faith and there appears to be a chance of a
settlement. But management should not concede everything just to do a
settlement. There is always a reasonable point beyond which the
management representatives do not bargain and this point must be
recognized. conceding a point in favor of the opposite party should never
be done in the manner of succumbing. Once it becomes clear that a
certain point has to be conceded, the giving party must see – and
mention – that the concession is being made on an explicit appreciation
of such and such valid points made out by the opposite party. This way
the concession granted does not remain a one- way traffic, it also earns
goodwill and quite possibly, a reciprocal concession from the opposite
party.
Concluding the negotiation involves a decision making crisis. This
is the point at which personal anxiety about the nature of settlement
may show itself. A wide range of factors may interfere. Even if the
management case is very strong and this is accepted by the trade union
side, concession will be still made partly because of the face to face
situation and partly because the relationship within the organization
between management and the trade union is a continuing one. Anxiety
may be caused because a failure to reach a mutually acceptable
settlement involves recognizing the realities of power and conflict which
in part lay hidden during the negotiations.
 The greatest danger when concluding negotiations is that the
outcome is never clearly stated. Industrial relations are full of examples
of meetings where each side is left with different impressions of the
result. Often the proceedings are informal. Records of discussions are
not generally left, but the matters on which agreement is reached are
carefully noted.
Reaching an agreement may be comparatively simple. The acid test
is the successful implementation and maintenance of that agreement.
Another aspect to be considered is the communication of the outcome of
negotiations. How much and how should it be communicated. Further
how widely this should be circulated taking into consideration the
problems of timing and comprehension which are likely to be
encountered.
This, in brief, is a sequence of interaction between two parties
which takes place on countless occasions throughout industry and
which is an essential component of industrial relations. For union and
management the following procedures should be adopted during
negotiations:

(1) Be friendly in negotiation

(2) Be willing to listen
(3) Give every one an opportunity to state his position and point of view.
In this, you will uncover the person who is really insistent about a
particular problem or grievance, and know how to deal with him. If facts
disclose that there is a need for doing more than just solving the
immediate problem, go as far as justified in the circumstances.
(4) Define each issue clearly and unambiguously, and discuss it in the
light of all the available facts.
 Management and union strategies

Management strategies:

Prior to the bargaining session, management negotiators prepare

by developing the strategies and proposals they will use. Three major
areas of preparation have been identified:
Ø Determination of the general size of the economic package
that the company anticipates offering during the negotiations.
Ø Preparation of statistical displays and supportive data that
the company will use during negotiations.
Ø Preparation of a bargaining book for the use of company
negotiators, a compilation of information on issues that will be
discussed, giving an analysis of the effect of each clause, its use in
other companies, an other facts.
An important part of this calculation of the cost of various bargaining
issues or demands. The relative cost of pay increases, benefits, and other
provisions should be determined prior to negotiations. Other costs
should also be considered. For instance, what is the cost to management,
in terms of its ability to do its job, of union demands for changes in
grievance and discipline procedures or transfer and promotion
provisions? The goal is to be as well prepared as possible by considering
the implications and ramifications of the issues that will be discussed
and by being able to present a strong argument for the position
management takes.
Union strategies:

Like management, unions need to prepare for negotiations by

collecting information. More and better information gives the union the
ability to be more convincing in negotiations. Since collective bargaining
is the major means by which the union can convince its members that it
is effective and valuable, this is a critical activity. Union should collect
information in at least three areas:
Ø The financial situation of its company and its ability to pay;
Ø The attitude of management towards various issues, as
reflected in past negotiations of inferred from negotiations in
similar companies; and
Ø The attitudes and desires of the employees

The first two areas give the union an idea of what demands the
management is likely to accept. The third area is important but is
sometimes overlooked. The union should be aware of the preferences of
the membership. For instance, is a pension preferred over increased
vacation or holiday benefits? The preferences will vary with the
characteristics of the workers. Younger workers are more likely to prefer
more holidays, shorter work weeks, and limited overtime, whereas older
workers are more interested in pension plans, benefits and overtime. The
union can determine these preferences by using a questionnaire to
survey its members.
SIGNING THE AGREEMENT

COLLECTIVE AGREEMENTS: A CLASSIFICATION

Collective agreements are commonly classified under two headings –
‘procedural’ and ‘substantive’.

(a) Procedure agreements

v Procedure agreements spell out the steps by which the
industrial relations processes are carried out.
v Procedure agreements are collective agreements which relate
to:
(1) Machinery for consultation, negotiation or arbitration
on terms and conditions of employment or for any other
matters which arise between trade unions and employers.
(2) Negotiating rights
(3) Facilities for trade union officials ;and
(4) Disciplinary matters and individual workers’
grievances.

(b) Substantive agreements

These contain the ‘substance’ of any agreement on terms and
conditions of the employment. They cover payments of all kinds,
i.e. wage rates, shift allowances, incentive payments also holidays
and fringe benefits such as pensions and sick pay and various
other allowances.
(c) Mixed procedural/ substantive agreements
The distinction between ‘procedural’ and ‘substantive’ agreements
while useful, does not always apply in practice. It is possible to have
both ’substantive’ and ‘procedural’ elements in the same agreement.
There is, however, a tendency for procedural agreements to have a
separate and long term existence and consequently they are not
subject to a great deal of alteration. On the other hand, substantive
agreements are altered from time to time to take account of on-going
negotiations.