“Collective Bargaining”
Learning Objectives
Understand
√ The meaning, concept & types of collective
bargaining
√ The various theories on collective bargaining
√ The tactics or strategies in collective
bargaining
“Collective Bargaining”
Structure
8.1
8.2
8.3
8.4
8.5
8.6
Introduction
Meaning & Concept of Collective Bargaining
Functions of Collective Bargaining
Structure of Collective Bargaining
Nature of Collective Bargaining
Content of Collective Bargaining
“Collective Bargaining”
Structure
8.7
8.8
8.9
8.10
8.11
Types of Collective Bargaining
Bargaining Theories
Elements of Collective Bargaining
Collective Bargaining Process
Conditions for Success of Collective
Bargaining
8.12 Summary
“Collective Bargaining”
Introduction
Collective bargaining is a process of joint
decision making
& basically
represents a
democratic way of life in Industry, It establishes a
culture of bi-partism & joint consultation and a
flexible method of adjustment to economic technical
changes in Industry.
It helps in establishing industrial peace without
disrupting either the existing arrangements or the
production activities.
“Collective Bargaining”
Meaning & Concept of Collective Bargaining
Collective bargaining has been defined as “ a
process of discussion & 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 & 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 work.
“Collective Bargaining”
Meaning & Concept of Collective Bargaining
It is argued that collective bargaining is primarily
political rather than an economic process. It is a power
relationship between a trade union
and
management. The agreement arrived at is a
compromise settlement of power conflicts. It is joint
administration
synonymous
with
joint
management.
Marxists view collective bargaining as a class
struggle between capital & labour in capitalist
societies.
“Collective Bargaining”
Meaning & Concept of Collective Bargaining
There are three concepts of collective bargaining with
different emphasis & stress.
The marketing concept views collective bargaining
as the means by which labour is bought & sold in the
market place.
Collective bargaining is an exchange & economic
relationship. The concept focuses on substantive
content of collective agreement like pay, hours of
work, bonus or fringe benefits.
“Collective Bargaining”
Meaning & Concept of Collective Bargaining
The government concept views collective bargaining
as a constitutional system or rule making process ,
which determines relation between management &
trade union representatives.
Here collective bargaining is seen as political & power
relationship.
The industrial or managerial concept of collective
bargaining views the institution as participative
decision making between employees & employers on
matters in which they have vital interest.
“Collective Bargaining”
Functions of Collective Bargaining
1] establishing rules of the work place
2] determining the form of compensation
3] standardizing compensation
4] determining priorities on each side
5] redesigning the machinery of bargaining .
It is claimed that collective bargaining serves two
interests of employers
i] by establishing wages that are more or less
standard , major cost of labour is taken out of
competition; ii] collective bargaining contributes to
management control
“Collective Bargaining”
Structure of Collective Bargaining
Regularized patterns of union management
interaction constitute the structure of Collective
bargaining.
This structure has bargaining levels, units, forms
and scope.
Bargaining can be on national, district, company,
plant or sub-plant basis. Bargaining units are
workmen for whom the exercise is conducted. It could
cover all or only manual, office or a particular craft
like only fitters.
“Collective Bargaining”
Structure of Collective Bargaining
Bargaining forms are formal, where agreements are
Written; or informal where they are oral & informal.
Bargaining scope concerns with the number of
subjects that are covered in a particular negotiation.
Categories or elements of bargaining exist when the
there is a national multi employer bargaining
[ common in Europe] or second, where there is a
single employer / enterprise level bargaining { in US
& Japan].
“Collective Bargaining”
Nature of Collective Bargaining
Collective Bargaining can exist & function if
1} employees identify a common purpose and
organize & act in concert; 2} management is prepared
to recognize their organization which restricts their
ability to deal with employees individually.
Thus are there are five principal characteristics in
bargaining
i] group relationships, ii] continuous & evolutionary,
iii] interacts with socio economic climate, iv] it is
mostly private, v] varies from setting to setting.
“Collective Bargaining”
Content of Collective Bargaining
Collective Bargaining is among other things a rule
making or norm creating process of a bilateral kind.
These rules can be procedural
to
include
negotiation
of
contracts,
modification, renewal, or termination. Facilities for
union workers to conduct union activities.
or substantive.
to include economic or market relationship,
government relationships & work place relationships.
“Collective Bargaining”
Types of Collective Bargaining
Conjunctive or distributive bargaining has the
function of resolving pure conflicts of interest. It
serves to allocate fixed sums of resources & hence
often has ‘win lose’ quality. The relationship here is
forced one as labour’s gain in increased wage results
in owner’s loss in higher costs.
Integrative bargaining
is concerned with
solution of problems confronting both parties. It
serves to optimize potential for joint gains & often
has ‘win win’ quality. Productivity bargaining is an
example.
“Collective Bargaining”
Bargaining Theories
Walton & McKersie Theory
The theory views collective bargaining as interaction
of four processes
1] distributive bargaining applying to situation
where union & management goals are in conflict
{ wages bargaining}
2] Integrative bargaining on the other hand applies to
common goals of the two parties , where both stand to
benefit [productivity bargaining]
“Collective Bargaining”
Bargaining Theories
Walton & McKersie Theory
3] attitudinal structuring is the means by which
bargaining parties cultivate friendliness, trust,
respect & cooperation.
4] intra organizational bargaining where focus is on
interaction between the union & management.
These four sub-processes interact to shape the final
outcome of bargaining as well as long term
relationship between two parties.
“Collective Bargaining”
Bargaining Theories
Bargaining Range Theory
This theory propounded by Prof Pigou explains the
process by which the two parties fix the upper level [
wage demanded by labour] and lower level [ wage
offered by owners]. Then there are several rounds of
negotiation by which labour reduces the demand &
owners hike the offer.
Each party has its limit up to which it will concede.
The exact point of settlement depends upon
negotiation skills & comparative strengths of the
two parties.
“Collective Bargaining”
Bargaining Theories
Chamberlain Model
Chamberlain Model focuses upon the determinants
of bargaining power & the ways changes in these
determinants lead to settlement in the majority of
the collective bargaining situations.
Bargaining power is ability to secure your opponent’s
agreement to your terms.
Willingness of a party to agree or disagree with
opponent’s terms depends upon its perceived cost of
agreeing & disagreeing.
“Collective Bargaining”
Bargaining Theories
Chamberlain Model
If management finds that its cost of agreeing is
more than the cost of disagreeing, it will be
unwilling to agree. Union’s willingness is also
determined by the same comparison.
This model has a number of implications :
a] at least one party must perceive cost of
disagreement to be more than the cost agreement,
b] one’s bargaining power is relative in that it
depends upon the size of wages one is asking [ or
offering].
“Collective Bargaining”
Bargaining Theories
Chamberlain Model
c] misjudgment of the maximum offer of the
employers [minimum demand of the union] or the
commitment of the parties to irrevocable positions can
result in strike, even though the range for mutually
acceptable settlement exists.
d] the compromise offers [ demands ] and the
approach of the bargaining deadline, both tend to
move the parties towards agreement.
“Collective Bargaining”
Bargaining Theories
Chamberlain Model
e] the model allows for coercive tactics, which increase
your opponents cost of disagreeing and for persuasive
tactics which reduce your opponent’s cost of
disagreeing.
f] the economic environment, the state of micro or
macro economy and industry structure can affect
the bargaining power of the two parties..
“Collective Bargaining”
Bargaining Theories
Hicks Bargaining Model
Hicks model focuses on the length & cost of work
stoppages. He proposed that unions & managements
balance the costs and benefits of work stoppages when
making concessions at the bargaining table.
The central idea is that there is a functional relation
between the wage that one or other party will accept &
the length of the strike that would be necessary to
establish that wage.
“Collective Bargaining”
Bargaining Theories
Hicks Bargaining Model
There is a particular wage that the employer would
prefer if union is not in the picture. Employer will
consider more wage than that he wanted initially to
offer, to avoid a strike and up to a point his
concessions will rise with the length of the strike he
anticipates.
A primary difference between the Hicks model and
the bargaining range theory is that Hicks model
pinpoints a precise wage settlement while the range
theory does not.
“Collective Bargaining”
Elements of Collective Bargaining
1. Issues for consideration – initially union
recognition and union security
come up for
consideration. Thereafter issues that come up are
wages, fringe benefits, working conditions, personnel
matters such as promotion, transfer, discharge &
dismissal.
2. The procedure for consideration : the bargaining
machinery & procedure for consideration of various
issues differ in relation to whether two parties
conduct bargaining themselves or involve third party
like government.
“Collective Bargaining”
Elements of Collective Bargaining
3 Collective agreements and their implementation :
The bargaining agreement may be described in a
number of ways. It is a compromise between the self
interest of the two parties that they have agreed upon
as guide on to their relationships on certain matters
for specified period of time .
“Collective Bargaining”
Elements of Collective Bargaining
3 Collective agreements and their implementation :
The pattern of the agreement depends upon
a] the scope of legislation of the country;
b] the level at which the agreement is negotiated and
industry to which it is to apply , and
c] the government policy towards labour & industrial
relations & propensity of the parties to bargain with
each other.
“Collective Bargaining”
Elements of Collective Bargaining
3 Collective agreements and their implementation :
In India there are three types agreements
a] the voluntary agreement which are the result of
direct negotiations between the parties , & parties rely
on themselves for their implementation
b] settlements , which are collective agreements
backed by the intervention of government agencies
and
c] consent awards , agreements reached when the
matters in dispute are under reference to industrial
tribunals / courts.
“Collective Bargaining”
Collective Bargaining Process
The bargaining process includes preparation of
initial demands, negotiations and settlement.
Preparation allows each bargaining team
determine bargaining objectives
defend its proposals
anticipate the opponents demands & moves
to
Preparation for negotiations is a comprehensive ongoing job for both the management & the union.
“Collective Bargaining”
Collective Bargaining Process
Among the more important steps to pre-negotiation
preparations are
• Coordinating among persons gathering
analyzing data relevant to bargaining matters
&
• Selection of chief negotiator & his team
• Review of previous negotiations & results
• Gathering data on internal operations & policies of
comparable firms through surveys
“Collective Bargaining”
Collective Bargaining Process
• Formulate proposals & priorities
• Select suitable site for negotiations
• Organize collected data into a ready reference book.
• Notify the opponent the intent to bargain by
serving required notice.
One of the most difficult aspects of the collective
bargaining process is to determine bargaining units.
There should be a community of interest among the
employees to be represented.
“Collective Bargaining”
Collective Bargaining Process
The first step is establishing a relationship for ongoing negotiations & formulation of agreements
covering conditions in the work place.
It is an anxiety producing process as at every step
conflict can erupt which can escalate
to litigation and
in worst case, to violence.
“Collective Bargaining”
Collective Bargaining Process
The second step relates to the scope of bargaining i.e.
matters on which to bargain.
Certain category of items are mandatory, they have
to be included.
Second category has subjects that are considered
illegal or prohibited ,they are avoided.
The last category contains items that are permitted
but not required. Either side can agree or refuse to
discuss such a matter.
“Collective Bargaining”
Collective Bargaining Process
The third step is careful structuring. Personnel
department takes the lead in deciding timing,
location and length of bargaining sessions.
An agenda has to be prepared of items to be agreed.
It should be decided whether the items are to be agreed
independently and signed or overall agreement is to
be signed on settlement of all the items on the
agenda.
“Collective Bargaining”
Collective Bargaining Process
An absence of good faith that will negate the spirit of
bargaining is indicated by
1. Unwillingness to make counter proposals
2. Continuous change of positions in bargaining
3. Use of delaying tactics
4.Withdrawal of concessions after they are granted
5. Unilateral actions over topics of bargaining
6. Refusal to furnish data for negotiations
“Collective Bargaining”
Collective Bargaining Process
Process of collective bargaining can be improved by
steps like
1. Begin with proposals and not demand
2. Avoid taking public positions in advance of
negotiation
3. Avoid taking strike votes during negotiations
4.Provide required authority to negotiators to
bargain
5. Avoid unnecessary delays
6. Insist on offering facts and arguments
“Collective Bargaining”
Collective Bargaining Process
Process of collective bargaining can be improved by
7. Offer multi choice by offering many proposals
8. Be prepared to compromise
9. Be prepared to get results gradually
10. Preserve good manners & keep discussion focused
on relevant issues
11. Be prepared to stand for a long strike or lockout
in order to force settlement justified by facts &
arguments.
“Collective Bargaining”
Conditions for Success of Collective Bargaining
1. The union participating in the collective
bargaining process must strong, democratic &
enlightened .
2. Provide voluntary recognition to the trade union.
This step has positive benefit of improved
industrial relations, production & productivity
3. There should be willingness to give & take by both
the parties and interest on each side to reach an
agreement .
“Collective Bargaining”
Conditions for Success of Collective Bargaining
4. Both refrain from unfair trade practice as it ruins
atmosphere of collective bargaining, sours
industrial relations & renders negotiations more
difficult.
5. Collective bargaining is required to settle
differences between the two parties. However, it is
essential that these parties meet to discuss matters
where there is common interest & agreement.
6. Intelligent understanding of the needs ,
aspirations, objectives , problems of each other
makes it easier to find solution.
“Collective Bargaining”
Conditions for Success of Collective Bargaining
7. Both sides of the bargaining table need to be
mature . The leaders should possess knowledge,
skills, intelligence , resourcefulness honesty &
technical know how.
8. The increasingly technical complexity of the
collective bargaining agenda requires expert
professional advice, experience & skill on the part of
negotiators
9. For proper negotiations it is necessary to know the
persons empowered to act for the company & union.
“Collective Bargaining”
Summary
The term ‘collective bargaining’ was originally used
by economists Webbs, who identified &
differentiated three major categories of trade union
activity. – mutual insurance, collective bargaining
and legal enactment.
The content of collective bargaining is divided into
two substantive rules & procedural rules.
“Collective Bargaining”
Summary
The process of collective bargaining may vary in
respect of form, scope and depth.
It is concerned with regulating both economic &
managerial relationships, It is voluntary, bipartite
process ; its character is determined by the
management’s & employees’ perception of the
nature of their mutual inter dependence.
•
“Collective Bargaining”
Summary
The bargaining structure is dynamic & varies
between different industries & organizations;
however, the emphasis of collective bargaining has
shifted away from multi-employer, industry level
bargaining to the organizational level in order to
respond more effectively to variations in
organizational situations & needs.
“Collective Bargaining”
The End!
In the next session we cover chapter nine on
“Productivity Bargaining.”
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