Dynamics in a Plant Level Bargaining Process & Wage Determination.
| Author | Sarkar, Santanu |
Introduction
Back in mid 50s Laymen Allen of Yale Law School began his writing by arguing that collective bargaining be called an art as it has not yet become a science though some of the values of science could be vowed in explaining a bargaining situation (Allen, 1956). Despite that the debate over the viability of application of an efficient bargaining model (Espinosa &Thee, 1989) has emanated, does Allen's argument still reside in the real life process of wage negotiation? In this paper, the authors have examined the case of a plant-level collective bargaining between union and management to understand the role played by those factors that have easy semblances of rational behavior and yield determinate solution, and those factors for which the authors tried to seek scientific explanation in clarifying their roles. Second set off actors identified were strangely difficult to define in terms of their role in utility maximization or expected-utility maximization according to decision theory. Though the decisions made by both the parties were more or less pragmatic, the authors found it difficult to witness rational behavior as the means to decisions made at every step in a typical plant level wage bargaining situation.
This paper aims to extend the scholarship on how parties' behavior in collective bargaining situation is shaped. We know a lot by now on what determines bargaining success and the negotiated outcome. Parties' bargaining power (relative, total), mediator, union-leadership, intra-union and inter-union dynamics, employer's ability to pay (discretionary pricing power), company's market share, structure of product market, bargaining levels, industrial sector, etc., play their respective roles in determining negotiated outcome (Katz, 1993; Mishel, 1986; Amernic & Craig, 1992; Feuille, Hendricks & Kahn, 1981; Meyer, 1960). Likewise, we know how critical are bargaining horizon, initial offer, incremental increase in offer, rate at which the offer gets changed in every round, alternatives available to parties to negotiated outcome, discounts, rapport between the parties, constraints (e.g., splinter union), and arbitrator's approach to bargaining. Nevertheless, are there factors other than the previously mentioned ones in explaining negotiated outcome, especially when apparently irrational behavior appeals to scholars and invites criticisms? Is there anything hidden in the negotiation process that calls for a detailed examination? It is imperative to check if these behavioral manifestations are truly unreasonable or are falsely portrayed as irrational to reduce predictability of the party's demand or offer in subsequent rounds. This in total offers legitimate basis to warrant a thorough investigation, and so has the paper tried doing.
Method
Authors studied a case and created a narration of the bargaining experience of the parties, where they negotiated for close to six months to determine revised wage rates. Names are pseudonyms. Dates and figures are indicative and not actual. Actual names, dates, and figures are changed for confidentiality reasons. Chief negotiators have remained same in recent years and hence the necessary conviction and co-operative behavior existed between union and management. This candidness and procedural curiosity presented the authors with a unique research opportunity. For several weeks and months, the union allowed the authors to observe their preparation and negotiation sessions. Based on these observations and subsequent interviews with both the parties, an attempt has been made to explain the collective bargaining process. A total of 36 in-depth interviews and 9 participative observations were made in a span of 70 days. The objective in scrupulously reporting the repeated rounds is to undertake a critical review of the negotiations on the use of strategies of negotiated rounds. Though the authors do not claim to come with a blueprint on the strategic application of bargaining offers and counter offers by parties in determining the negotiated outcome, yet sufficient clues are generated from where scholars in future may try forming new theses.
In the ensuing real bargaining situation, the authors expounded how plant management ran on a rough patch before amicably settling the major strife with its labor. Critical analysis of what caused the disquiet and factors that contributed to stalemate are crucial to growing literature on negotiation process. Especially, by including multiple issues into the bargaining situation that else could not be noticed in ordinary circumstances, the role of bargaining strategies was examined. Rules of bargaining describe the feasible strategies and tactics that can be used by opposing sides. Self-regarding offers or low offers are repeatedly considered as the offshoot of strategic and expectation considerations.
Six Months of Dispute over Pay Increment
After a few years of serenity in the collective bargaining situation between management and union of Eastern Region Plant (ER-plant) of Rainbow Pain Ltd. (RPL), some accumulated desires of both parties have come to the surface, as the existing settlement of December 2014 approaches termination. Situation calls for a fresh contract. Nevertheless, contrary to every second wage-settlement that RPL had signed, the one that it will negotiate in the next two or three months is in all probability a far more challenging one. The settlement in 2014 was to regulate working and employment conditions alongside wage for the next 2.5 years. With the expiry of old settlement in July 2016, it was union's alacrity to sign fresh settlement. In keeping the law and the existing accord, union appealed for an early submission of their charter of demands (COD), at least two months before the expiry of 2014-settlement. The idea was to advance the dates of pre-negotiation talks and not to leave any slit amid the two settlements. Management acquiesced for speedy negotiations. It flaunted cooperation and gestured interaction. Union submitted their COD in June' 16 inviting wage raise, revision of employment terms and work-norms that they deemed fit to get company's attention. However, RPL in response issued a notice of change (NOC) (under Section 9 A of the Industrial Disputes Act, 1947 (1)). The notice sought improvement in labor productivity, revision in output, production norms, and operation methods, change in staffing patterns, work practices and job description of certain job categories as if it was the company's counter charter of demands, a tactical move, which firms normally employ in 'productivity bargaining' (Ian McGregor of British Steel).
Market volatility and successive changes in RPL's business may have prompted a valiant move, dogged by unusual 'countering' position. Still the union's disinclination was not predictable, as it has had historically a subservient opponent. Management normally used to reconcile demand one after the other to reckon item based payoff. For the first time, management showed an astounding alertness, which was an unprecedented move that turned as a setback for union. The outcome, however, was equally (though oppositely) startling. More than the union, average workers sensed uneasiness because of the NOC (Notice of Change). Grapevines on rising company's expectation triggered uncertainty alongside fear and suspicion amongst workers.
Upon realizing that the approaching negotiation would warrant more preparedness than what it has attained, RPL's tone turned softer. It had to gain union's trust. It has to settle on shared perception among workers around its stand, without being predicted as modest. Its priorities were engaging labor negotiators to segregate unpretentious mandates, and split the genuine interests from what the union demanded on paper (likely for concession bargaining). That is not all. Recognizing one union as a single bargaining agent (2) was the additional challenge since it has frustrated company's position in the past. Existence of a splinter group, particularly, when contract workers formerly accused the union for sidelining them, has upset union-management relationship. Splinter group had the required support of contract workers. The fraction alleged the union to be in connivance with RPL in keeping the contract workers outside the negotiations. So much so, one worker espoused by the splinter group raised dispute, questioning the union's representativeness. Whether the union was evocative to endorse changes in service...
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