The Negotiator Magazine

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One factor that makes collective bargaining encounters different concerns the political nature of union officials. They are elected leaders who generally hope to be reelected. Management officials occasionally forget this critical factor and embarrass their union counterparts publicly. Political persons who are embarrassed in front of constituents will almost always try to punish those who put them in this position. It thus behooves management negotiators to work to avoid such circumstances. If they have bad news for labor representatives, they should share it with them privately. They may take them outside the bargaining room or call them on the telephone. The union leaders understand managerial constraints, and appreciate being given this information away from the eyes of unit members. They may then put on a show for their constituents at the bargaining table, but will ultimately yield to firm demands they believe to be necessary. Corporate agents should let them play this role during the public sessions, recognizing that it will make it easier for them to give in later.

Another critical factor concerns the impact of anchoring. When one side begins with a generous initial offer, the other side is unlikely to appreciate this largess and respond in kind. It instead begins to think it will do better than expected, and it begins with a less generous opening offer. When I was in graduate school studying collective bargaining, I asked a friend who had been a local union president what would happen if company negotiators began with a beneficial first offer. He reacted with displeasure and suggested that such behavior would probably generate a work stoppage. Once the rank-and-file employees learned of the munificent management offer, they would raise their expectations and anticipate far better final terms. This factor may have generated the cancellation of this year's National Hockey League season. The team owners were clearly concerned about rising labor costs, and they demanded a specific division of revenues between the players and themselves. They apparently hoped to give the players no more than 54 percent and retain 46 percent for themselves. Instead of initially offering the players union 48 or 50 percent and allowing that side to talk them up to 53 or 54 percent, they apparently began with an offer in the 53 percent area. The players and their negotiators understandably thought they would be able to get something in the 58-60 percent range. The parties reached a stalemate that could not be resolved before the entire season was lost. It thus behooves management negotiators to begin with offers that are sufficiently parsimonious to give them bargaining room once the serious talks begin. This allows the political union negotiators to talk them up and take credit for the gains they achieve.

Negotiating parties occasionally encounter difficult topics that neither side can concede without a substantial loss of face. How can such issues be handled without the need for a win-loss result? If the term is not crucial, they can resort to constructive ambiguity. They may include language pertaining to this topic that actually says nothing coherent. Both sides are then able to claim that they did not give in. If the issue subsequently arises they can try to resolve it themselves under less difficult circumstances. If they are unable to achieve a mutually acceptable outcome, they can invoke the contractual grievance-arbitration procedures and ask an outside neutral to decide the matter. The losing party then has someone to blame - that pointed-headed arbitrator - and the labor and management representatives can continue with their relationship without unnecessary acrimony.

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April 2005