Negotiation between USBU and the companys management - Case Study Example

Negotiation The recent negotiations between USBU and the company's management drew to a successful conclusion with each side reaching a compromiseand finding some middle ground on most issues. While there was general agreement on both sides, management missed many of its objectives, especially in the very important area of wages and bonuses. On this issue management was forced to give up a larger pay raise than they had anticipated or agreed to by the team. One of the causes of this was a failure by the team to set a ceiling on the wage hike prior to the negotiations. This placed the team at a disadvantage by being forced to negotiate a term with no goals in mind. On most other issues the management team was forced to give in to Union demands and meet their goals. On the issues where the management team had set a goal and an acceptable limit, the team did not encounter the problem of giving up too much or gaining too little. As an example of a successful negotiated compromise was the agreement reached on superannuation. The management team had set a goal of 3%. The Union had demanded 15%. While this gap seems extremely wide and would appear to be irreconcilable, part of the reason was due to management's overly aggressive goal. Management wished to leave the superannuation at the existing level of 3%. This was probably unrealistically low when confronted by the Union's demand of a level 5 times that amount. However, management had had the foresight to set a more realistic acceptance level of 9%. This was the agreement that was eventually reached. Offering 4% and accepting no more than 8% may have better served management. The initial offer of 4% would have been viewed as an increase instead of the maintenance of the old rate, and the Union might have been more willing to negotiate towards that level rather than insisting on negotiating towards their 15%. The issue of wages was another source of contention as the Union asked for an unreasonable 15% plus increases linked to the consumer price index (CPI). This was later reduced, but it became generally accepted that it was a key Union demand. This excessive demand was not helpful when management was only offering 1%. The final agreement was for 1.5%, which was considerably higher than managements offer. However, management had expressed no limit on wages or bonuses. This was further exemplified by the Union's demand of a 12% bonus as contrasted to management's offer of 5%. Management was coerced to reach an agreement of this point and had set no acceptance level. The negotiated bonus was 12%, exactly what the Union had demanded. This level may have been reduced if management had set a ceiling and negotiated some of the other soft points in the contract that did not impact the bottom line. The problem was that the priorities were all set with similar importance, which left this priority ill defined. In other areas management totally acceded to the Union's demands. The issue of hiring and staffing was agreed to on the Union's original terms. The goal of management to retain discretion in the hiring of new employees was given up. Management also gave up their ground on the issue of training. Management's original goal of utilizing an outside third party consultant to reach an agreement on how best to implement the training requirements and program was discarded and the Union was able to get nearly all of its original demands. These were issues that the management team could have been more adamant about holding their ground and using the issue to get a more favourable agreement on the more important issues of wages and bonuses. In retrospect, the management team could have been better prepared by setting acceptance levels that could have been agreed upon on wages and bonuses. Failing to have a goal resulted in giving into the Union's demands. In addition, the management team could have made a more realistic offer in the areas of wages, superannuation, hiring, and training. By only offering the pre-existing policies the Union perceived the process as management offering nothing. This resulted in a contentious standoff in which management was forced to give an unreasonable amount. The Union team had firm demands in all areas and had a single mind set as to what they would accept. This allowed them to remain consistent in their demands and their negotiating. Both sides were fair and negotiated in good faith. It must be remembered that the process is adversarial. Disagreements and refusal to move is not a sign of bad faith. If there was any bad faith it was on the part of management for not offering a clear and realistic starting point. The management team wanted to reach an agreement, but their failure as a team to have a well thought out plan with firm objectives limited their ability to negotiate. While they had all the necessary abilities to work well as a team, they had no clear objectives. It would have been helpful to have entered the negotiations with a clear strategy for the process. A better laid plan would have resulted in fewer concessions to the Union negotiators. In addition, there were instances when the management team was willing to concede an issue for what seemed like only the sake of reaching an agreement with no consideration for the financial impact on the company. Having performed this exercise as a member of the management team there were some important lessons that have been learned. Be prepared with a firm set of offerings, goals, and acceptance levels that are clearly understood by the entire team. When possible, the initial offerings should be a realistic minimum and somewhat in excess of the existing agreement. Team members should fully consider the impact that their agreement will have on the organization that they are representing. Issues should be prioritised more definitively so the team would be able to give up more on the less important issues. The team should have a well laid out strategy for negotiating rather than doing it spontaneously. If these lessons had been implemented by the management team before the negotiations, there would have been a more favourable outcome. A real world scenario would have placed considerable pressure on both sides to reach a more favourable agreement for the groups that they were representing. Management would have had to be more sensitive to the issues of cost in the way of wages and bonuses. This would of course be offset with the ability of the Union team to threaten a job action or a strike. In addition, other variables such as the financial health of the company and the state of the economy would be taken into account. These external pressures could give the management team or the Union representatives more leverage. Read More