Arriving At Collective Bargaining Agreements

This lesson will discuss the processes by which public sector employers and unions negotiate with each other to arrive at collective bargaining agreements. The two approaches which are most commonly used in public sector contract negotiations—traditional collective bargaining and interest-based bargaining (IBB)—will be compared and contrasted. In addition, the manner in which unions attempt to supplement negotiation efforts with political activities on behalf of their members, and the limitations on those political efforts, will be examined.

At the end of this lesson, you should be able to:

Describe the steps union and management negotiators take in preparing for collective bargaining negotiations.

Describe at least four basic legal obligations that unions and employers have regarding collective bargaining.

Describe at least five important characteristics of a traditional collective bargaining process.

Describe at least five important characteristics of an interest-based collective bargaining process.

Identify at least three problems which may arise from use of the traditional collective bargaining process.

Identify at least three problems which may arise from use of the interest-based bargaining process.

Identify three external political approaches unions may utilize to influence the results of public sector collective bargaining negotiations.

Summarize the most important restrictions the Hatch Act imposes on the political activities of federal government employees.

Define and describe each of the key terms and concepts listed below.

The Traditional Collective Bargaining Process

Traditional collective bargaining is essentially an adversarial process in which the employer and the union are represented by negotiating teams which meet one or more times to discuss proposals as to what wages, hours, and working conditions of the bargaining-unit employees should be. (Note: in the federal sector, due to the more limited scope of permissible collective bargaining, negotiations are confined to working conditions.) The negotiating teams continue to meet and bargain about their proposals until either an agreement results or the parties reach an impasse (i.e., a deadlock in which neither party is willing to make any further compromises or concessions).

If a settlement is reached, the terms of that settlement are spelled out in a collective bargaining agreement. If negotiations result in an impasse, the parties might proceed to an impasse-resolution procedure, such as mediation, fact finding, or binding arbitration, or, if permitted, the union might go on strike (strikes and impasse-resolution procedures will be discussed in more detail in Lessons 11 and 12).

The essence of traditional collective bargaining is that it assumes an adversarial relationship between the union and the employer. This does not necessarily mean that the parties should, or actually do, harbor hostile feelings toward each other. It simply means that each party is expected to conduct itself solely to advance its own interests with no regard for the interests of the other party. The presumption is that if each party is essentially equal in power, and represented by competent individuals, a fair collective bargaining agreement is likely to result.

Because traditional collective bargaining is considered to be an adversarial process, union and management negotiators often think of bargaining results in terms of winning and losing (win-lose). This suggests that for one party to “win" by obtaining its bargaining goal on a particular issue, the other party must “lose" and not obtain its goal. This approach to bargaining creates a situation where each party’s constituents (the employees in the union’s case and elected officials and/or the general public in management’s case) place tremendous pressure on its representatives to “win" the negotiations. Despite the fact that compromises are essential to reaching a collective bargaining agreement, these constituents may view any such concessions as a “lost battle."

Traditional Collective Bargaining (continued)

Another important feature of traditional collective bargaining is that it is positional. This means that union and management negotiators prepare for collective bargaining by taking a position on each subject of bargaining to be discussed and then presenting each of these positions to the other side. For example, the union may decide that its initial position on wages will be a six-percent increase in each of the next three years, while the employer’s position may be a two-percent annual increase.

It is important to understand that the development of positions by union and management negotiators is not simply a matter of deciding exactly what the party’s constituents need or want. In traditional bargaining, it is assumed that the other side will take an opposite position on many issues and that the final resolution will be some compromise between the initial proposals of each side. Therefore, parties usually present an initial position that is significantly more favorable to them than they actually expect to receive. A simple example of this might be a county government which would like to see employees contributing 10 percent of the cost of employer-provided health insurance premiums making an initial demand to the union that employees contribute 50 percent of the cost of the premiums.

Another important feature of traditional collective bargaining is that relevant information possessed by one side is usually tightly controlled and only shared with the other side if it is favorable to the party possessing it or if disclosure is required by law to facilitate good-faith bargaining. Such information might be substantive—such as the average annual pay raises given in recent years by similar employers in the region—or strategic—such as the “true" goals of the parties as opposed to their inflated initial bargaining positions (this is not unlike the bluffing strategy common in poker).

In traditional collective bargaining, the loss of exclusive control of information by a party is presumed to give an advantage to the other party. For example, suppose a union representing municipal police officers conducted a wage survey of unionized police departments indicating that the average annual increase for officers in the region over the past three years was 2.5 percent. Suppose further that the union has already proposed an annual increase of 6 percent. Clearly, if management was made aware of the survey results, the union’s position would be weakened.

To further illustrate the point, suppose that union negotiators representing county employees become aware that the elected county commissioners had directed its negotiators to agree to whatever was necessary to preserve a requirement that all county employees become and remain county residents. Armed with this information, the union might be able to successfully negotiate significant economic gains from the county in return for preservation of the residency requirement. On the other hand, if the union did not know how important the residency requirement was to the employer, it might believe management’s “bluffs" that there was little flexibility for compensation improvements and that it did not consider the preservation of the residency requirements important enough to exchange for union economic gains.

Traditional Collective Bargaining (continued)

What actually occurs at the bargaining table in traditional collective bargaining? While there is no one sequence of events that occurs in all cases, most often the bargaining committees of each party spend a significant amount of time and effort prior to actual negotiations drawing up their initial bargaining positions. This process usually includes:

identifying specific problem areas under the previous collective bargaining agreement that need to be changed;

researching pay, benefits, and working conditions that prevail in the employer’s geographic area or are in effect for similar government entities;

examining the public sector employer’s current and future budgetary revenues and expenditures;

identifying desirable changes that could be made in compensation or working conditions;

determining “bottom line" bargaining positions, as opposed to initial exaggerated proposals to be made to the other negotiating team; and

prioritizing the various issues to be discussed.

Once this groundwork has been completed, the parties often hold an initial meeting to discuss procedural matters, such as how long negotiating sessions will be, where they will be held, and who will pay for any meeting expenses. After these preliminary matters are resolved, actual negotiations begin with each side submitting to the other their initial bargaining positions.

After initial proposals have been presented, the parties most often begin discussing their proposals issue by issue and giving justifications supporting their positions (for example, management might argue that “We can’t afford to give you more than a two-percent raise."). If agreement is not forthcoming, one party will usually propose a compromise position on one or more issues, accept the other side’s position on some issues in exchange for a compromise on others, or declare that it intends to stick by its original proposals.

In traditional collective bargaining, persuading the other side to agree to your position is usually a function of the relative power of the parties and the persuasive ability of the parties’ spokespersons to present their positions as reasonable and fair. If a party has little bargaining power—for example, if there is little employee support for striking—it is unlikely to persuade the other party to agree to many of its demands even if they are reasonable and the other side can afford them. In situations where bargaining power is more even, the ability to persuade the other party that a position is reasonable or that a compromise is appropriate is critical to reaching a total agreement. However, this does not guarantee that the parties will deal with each other in a straightforward matter. In traditional collective bargaining, the parties more often attempt to get their way by disguising their actual position (bluffing) than by honest compromise that gives each party some, but not all, of what it wants.

Some Features Of Interest-Based Bargaining

In recent years, interest-based bargaining (IBB) has become more common as an alternative to traditional collective bargaining. Interest-based bargaining relies on the idea that the parties need to identify their real interests in the collective bargaining process and then attempt to find ways to achieve as many of these interests as possible collaboratively, rather than as adversaries. The ultimate goal of interest-based bargaining is for both parties, rather than just one, to “win" at the bargaining table.

The collaborative and “win-win" philosophy of interest-based bargaining distinguishes it from traditional collective bargaining. In interest-based bargaining, the union and management negotiators act more like a single team focused on solving problems with the best possible solutions, rather than like competitors for a single prize which only one can win. As a process, the initial stage of interest-based bargaining involves identifying the interests of each party concerning each area of substantive bargaining, followed by joint brainstorming sessions designed to find solutions that satisfy as many of the interests of both sides as possible. The parties then evaluate the proposed solutions, regardless of whose idea they were, to determine which ones best satisfy the parties’ interests. This may result in one proposal being deemed to be satisfactory to both parties or, if not, spur the parties to attempt to develop modified or new solutions that will be more satisfactory.

Another critical difference between traditional collective bargaining and interest-based bargaining is that interest-based bargaining is not positional. The negotiating parties do not develop proposals separately from one another, and then discuss these separate proposals at the bargaining table. Rather, the parties first share their interests and then attempt jointly to develop proposals that will meet those interests.

A third significant difference between traditional and interest-based collective bargaining is that in the latter information relevant to bargaining is openly shared, rather than controlled and concealed for tactical advantage. Clearly, this requires the parties to approach each other on the basis of honesty and trust. It is presumed in interest-based bargaining that developing the best proposals to meet the interests of both parties depends on the parties having access to as much accurate information as possible, regardless of the source.

An Example of Negotiations Under The Two Models

A rather simplistic example of how negotiating wages might occur under traditional versus interest-based collective bargaining is presented below:

In traditional bargaining, a union negotiating with a government employer might propose that wages be increased by eight percent annually, based on its understanding that most comparable employers are giving employees four-percent annual wage increases. The union’s assumption in making the higher demand is, first, that management will propose a much lower wage increase, and that the end result will be a compromise of around four percent. The union also hopes that it might “get lucky" and persuade management to compromise at a five-percent annual increase.

Management may well respond to the eight-percent demand with a proposal for a one-percent increase. Even if management is actually aware that four percent is the amount given by comparable employers, management might argue that one percent is appropriate because of budgetary shortfalls, falling employee productivity, or taxpayer resistance. The union may counter with claims that the most comparable employers are actually giving six-percent increases or that the union received substandard increases in its last agreement and needs to make up for past lost wages. The amount the parties eventually agree on will most likely be determined by which party has more bargaining power (i.e., the ability to impose its will on the other) and how good a job each party does in presenting persuasive arguments to the other.

In interest-based bargaining, on the other hand, neither party would come to the bargaining table with a predetermined position on annual pay increases. The parties would first attempt to identify their interests with respect to pay. For example, they might agree that the amount of pay not exceed what the government entity’s budget can realistically afford; that it be enough to keep the government entity competitive in recruiting and retaining employees; that it be enough to make employees feel that they are receiving a fair return for the work that they perform; and that it not be so much that the employer must cut back on fringe benefits. The parties would attempt to jointly identify which of these interests were most important, and what criteria proposed solutions would have to satisfy. They would share information related to pay, such as the government employer’s budget and revenue and expense projections, the cost of living in the area, and wage increases given by other employees. They would then brainstorm to develop proposals to satisfy the various interests and, most likely, agree on a proposal that most closely meets the needs of both parties.

Final Comments on Traditional and Interest-Based Bargaining

The advantages and disadvantages of traditional collective bargaining versus interest-based bargaining are discussed in the textbook and will not be repeated here. However, a few additional comments might shed light on what actually occurs in the bargaining arena. While the interest-based approach might sound like the best approach in theory, unfortunately, it is often the case that the parties do not have the time or money required to utilize a pure interest-based approach (Interest-based bargaining can require significantly more time, and thus money, than the traditional approach.). And sometimes the parties simply do not trust each other sufficiently for such an approach to be successful.

In many practitioners’ experience, the parties can often obtain greater success in bargaining through combining aspects of the traditional and interest-based approaches. In such cases, the parties may need to develop and present positions to focus the negotiations and thereby speed the process along. Also, on some issues where the parties are very far apart, they may be unable to develop proposals which satisfy mutual interests and allow both sides to “win." On the other hand, many practitioners argue that it is essential, even in primarily traditional collective bargaining, to attempt to develop positions only after considering the likely interests of the other party to see if some type of a “win-win" solution is possible.

Moreover, if both sides are open and honest with information relevant to bargaining, there may be a better chance of reaching a “win-win" solution. This kind of trust also can carry over to the day-to-day dealings that will occur after the contract is settled. Concealing information and presenting deceptive rationales to the other party may result in a party obtaining a short-term “win" in a new collective bargaining agreement, but any advantages from that win may be lost during the years that the contract is in effect. It also could come back to haunt that party when the next round of negotiations comes around.

Define by describing both Interest Based Bargaining and Traditional or Conventional Bargaining.

Do you believe that the parties would be better advised to attempt to utilize the traditional process for collective bargaining or interest-based bargaining? Provide specific rationale in support of your answer.

What different facts would have to be present in this scenario for you to change your answer for Question 2 above? In a one to two page essay, explain what these facts are and why they would make a difference.

Traditional Collective Bargaining in its simplest definition is a progression of a negotiation or negotiations between two different parties that have a representative party for each side discuss the concerns like the wages, hours, and working conditions of employees. Now at the end or during these negotiations there are usually two likely outcomes that have contingencies associated with them. The first common outcome is an agreement or an accord is reached, if that agreement results in a settlement then a collective bargaining agreement is the next likely step. The second common outcome is a disagreement or an impasse occurs and there are no compromises that result for either side. Now if this agreement continues without a resolution there are several outcomes that can result including and not limited to: third party arbitration or mediation and even a strike can occur. The consensus attitude or mood that is brought to these types of negotiations that make them unique is that the two sides have a “its all about us and not you" (win-lose) attitude, where each side is trying to get the most out the discussions being about “what is best for all of us?" In regards to the public sector if a traditional collective bargaining negotiation occurs then these discussions are only limited to working conditions as what is mentioned under the Civil Service Reform Act of 1978.

In regards to interest-based bargaining or (IBB) there some characteristics that according to the chapter commentary, have made it a more popular alternative to Traditional Collective Bargaining. IBB plays on the same field as to put it where two sides have their respective representatives performing the negotiations, but the tone that each side brings to the discussions are very different compared to Traditional Based Collective Bargaining. In IBB, there is a shared “win-win" or “what is in all of our best interests" demeanor where the two sides attempt to work together to solve their concerns rather than stand on opposite sides of the fence.

I think that considering the fact that the current negotiations between the employer and employees of the sanitation company are at a stalemate and that time is at a premium that taking the approach of the IBB might be the most appropriate to take. The primary reason I believe that the two sides should take this approach is mainly due to the fact that time is working against them and that the current negotiations have not resolved any of the concerns of either side. At this current stage of the negotiations it seems that the two sides are acting more like competitors rather than trying to have a unbiased perspective and work for what it best for the company overall. As mentioned in the chapter commentary IBB is a change of pace that can be used when those involved need to behave with a “good for the team" attitude. A second reason that using the IBB might be appropriate is because as mentioned in the chapter commentary it allows for the two sides to approach one another on a basis of honesty and trust. Although our text mentioned that the current relationship between the employees and the employer is in good standing, strengthening that relationship is never a bad thing especially if another concern arises where these two sides need to work together to hammer out a compromise in the future.

In retrospect of using IBB as the first option to solve this brewing dilemma between the employer and employees of the sanitation company, utilizing the traditional collective bargaining format may also be a valid alternative worth considering. I believe that many of the reasons for this reversal in negotiating format would be necessary are simple in their nature.

One of the first reasons I believe that it might be a better alternative to use traditional collective bargaining as opposed to IBB is because as the dispute stands at its current state it appears that both sides have already come to the table with their predetermined positions and opinions on what they want. So since that aspect of the traditional format is already “on the table" then it might make more sense to use this method of negotiation rather than trying to go in a new direction. However it may become necessary to take that new direction if the negotiations end in a stalemate.

A second reason that it might be a better idea is the flipside of the first reason for using IBB, time or lack there of. As mentioned in the conclusion of the chapter commentary, using IBB might actually wind up taking more time to pan out the differences between the two groups since they would have to come up with new, mutual proposals to benefit both sides. By using the traditional format both sides will not have to take the extra time that might be necessary to brainstorm new ideas that would be more geared towards a win-win outcome for everyone because they have already made their respective points as to what they want.

A third reason that the company may want to use the traditional collective bargaining as opposed to the IBB approach is because the traditional method is more predictable and simplistic in its nature. If those involved in this dispute have been down this road before and they may have familiarity of how it works as opposed to a new approach of IBB, even if the end result might be detrimental to either side.

Traditional influences more of a competition mindset where as IBB is more of a teamwork mindset