CB Ir

Block III
Collective Bargaining
128
UNIT 10 COLLECTIVE BARGAINING
Objectives
After going through this unit, you will be able to:

 understand the meaning and concept of collective bargaining;
 explain the structure and processes of collective bargaining;
 describe the types of collective bargaining and bargaining theories.
Structure
10.1 Introduction
10.2 Meaning and Concept of Collective Bargaining
10.3 Functions of Collective Bargaining
10.4 Structure of Collective Bargaining
10.5 Nature of Collective Bargaining
10.6 Content of Collective Bargaining
10.7 Types of Collective Bargaining
10.8 Bargaining Theories and Models
10.9 Elements of Collective Bargaining
10.10 Summary
10.11 Self Assessment Questions
10.12 Further Readings
10.1 INTRODUCTION
The term “collective bargaining” originated in the writings of Sidney and Beatrice Webb,
the famed historian of the British labour movement, towards the end of the nineteenth
century. It was first given currency in the United States by Samuel Gompers. Collective
bargaining is a process of joint decision-making and basically represents a democratic
way of life in industry. It establishes a culture of bipartism and joint consultation in
industry and a flexible method of adjustment to economic and technical changes in an
industry. It helps in establishing industrial peace without disrupting either the existing
arrangements or the production activities.
10.2 MEANING AND CONCEPT OF COLLECTIVE

BARGAINING
Collective bargaining has been defined in the Encyclopaedia of Social Sciences, as “a
process of discussion and 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 and conditions under which a continuing service is to be performed. More 129
Collective Bargaining specifically, collective bargaining is a procedure by which employers and a group of
employees agree upon the conditions of work.”1 Stevens 2 defines collective bargaining
as a ‘social-control technique for reflecting and transmitting the basic power relationships
which underlie the conflict of interest in an industrial relations system.’ The definition
emphasises important characteristics of collective bargaining, that it is concerned with
the application of power in the adjustment of inherent conflicts of interest. The Webbs
described collective bargaining as an economic institution, with trade unionism acting
as a labour cartel by controlling entry into the trade.
Prof. Allan Flanders has argued on the other hand, that collective bargaining is primarily
a political rather than an economic process. He describes collective bargaining as a
power relationship between a trade union organisation and the management organisation.
The agreement arrived at is a compromise settlement of power conflicts. In Flanders’
view collective bargaining is joint administration, synonymous with joint management.
Collective bargaining has been described by Dubin as “the great social invention that
has institutionalised industrial conflict” and by the Donovan Commission as “a right
which is or should be the prerogative of every worker in a democratic society.”It may
be defined as: a method of determining terms and conditions of employment and
regulating the employment relationship which utilises the process of negotiation between
representatives of management and employees intended to result in an agreement which
may be applied across a group of employees.
Marxists contend that collective bargaining is merely a means of social control within
industry and an institutionalised expression of the class struggle between capital and
labour in capitalist societies. It is a method by which management and labour may
explore each other’s problems and viewpoints, and develop a framework of
employment relations and a spirit of cooperative goodwill for their mutual benefit. It
has been described as a civilised bipartite confrontation between the workers and the
management with a view to arriving at an agreement.
In brief, it can be described as a continuous, dynamic process for solving problems
arising directly out of the employer-employee relationship.
There are three concepts of collective bargaining with different emphasis and stress,
namely, marketing concept, governmental concept, and the industrial relations or
managerial concept. The marketing concept views collective bargaining as the means
by which labour is bought and sold in the market place. In this context, collective
bargaining is perceived as an economic and an exchange relationship. This concept
focuses on the substantive content of collective agreements i.e., on the pay, hours of
work, and fringe benefits, which are mutually agreed between employers and trade
union representatives on behalf of their members. The governmental concept of collective
bargaining, on the other hand, regards the institution as a constitutional system or rule-
making process, which determines relation between management and trade union
representatives. Here collective bargaining is seen as a political and power relationship.
The industrial relations or managerial concept of collective bargaining views the institution
as a participative decision-making between the employees and employers, on matters
in which both parties have vital interest.
10.3 FUNCTIONS OF COLLECTIVE BARGAINING

Collective bargaining serves a number of important functions. It is a rule making or
130 legislative process in the sense that it formulates terms and conditions under which
labour and management may cooperate and work together over a certain stated Collective Bargaining
period.
It is also a judicial process for in every collective agreement there is a provision or
clause regarding the interpretation of the agreement and how any difference of opinion
about the intention or scope of a particular clause is to be resolved. It is also an executive
process as both management and union undertake to implement the agreement signed.
John Dunlop and Derek Bok have listed five important functions of collective bargaining:
(i) establishing the rules of the workplace; (ii) determining the form of compensation;
(iii) standardising compensation; (iv) determining priorities on each side; and (v)
redesigning the machinery of bargaining.
According to Flanders (1974) collective bargaining serves two employers interests.
One is market control. By negotiating pay and conditions that are more or less standard,
employers effectively take the costs of one of the most important factors of production
out of competition. The second interest served by collective bargaining is a contribution
to managerial control.
10.4 STRUCTURE OF COLLECTIVE BARGAINING

Collective bargaining ‘structure’ refers to the regularised patterns of union- management
interaction, or the network of institutionalised bargained relationships.
Every bargaining structure comprises of bargaining levels, bargaining units, bargaining
forms, and bargaining scope.
Bargaining levels, for example, may be on a national, district, company, plant or sub-
plant basis. Bargaining units, on the other hand, relate to the groups of employees,
which are covered by a particular set of bargaining arrangements and collective
agreements.
For instance, in one organisation or industry all manual workers may be covered by
the same collective agreement, while in another organisation or industry different
categories of manual workers may have their own separate agreements. Similarly,
there may be separate agreements covering manual and non-manual employees.
Bargaining forms describe whether the agreements are written or formal, on the one
hand, or are unwritten and informal on the other. Bargaining scope is concerned with
the range of subjects covered in a particular negotiation.
It is possible to identify two distinct categories or elements that may exist within collective
bargaining structures.
First, there are national multi-employer bargaining arrangements; second, there is single-
employer enterprise or organisational-level bargaining.
National multi-employer bargaining has been particularly a feature of collective bargaining
approach to industrial relations in some countries. Such a system leads to negotiations
at industry and/or organisational levels. This practice in most West European countries
generally refer to multi-employer agreement, negotiated between national trade unions
and employers’ associations, which covers employees of a given description in a
specified industry or sub-industry.
Single-employer organisational bargaining (enterprise bargaining) may exist as the only
or predominant form of bargaining structure in some industries or countries. Both the 131
Collective Bargaining USA and Japan are characterised by their emphasis on single- employer organisational
bargaining. It is important to recognise that organisational bargaining may not be confined
exclusively to one level but may itself be layered at a combination of levels. For example,
there may be company level bargaining on general conditions (such as pensions, holidays,
and other conditions which are to apply to all employees), plant or site-level bargaining
on pay (which may then vary in relation to site performance or local labour markets)
and department- level bargaining (determination of the employees’ actual working
arrangements).
10.5 NATURE OF COLLECTIVE BARGAINING

The essential characteristic of collective bargaining is that employees do not negotiate
individually and on their own behalf, but do so collectively through representatives.It
can only exist and function in the following circumstances:
 If employees identify a commonality of purpose, organise and act in concert.
 If management is prepared to recognise their organisation and accept a change
in the employment relationship which removes, or at least constraints, its ability
to deal with employees on an individual basis.
Joseph Shister has opined that collective bargaining can best be analysed by listing its
principal characteristics.
He lists five characteristics; (i) collective bargaining involves group relationships; (ii) it
is both continuous and evolutionary; (iii) it interacts with the socio-economic climate;
(iv) it is private, but at times involves government action; and (v) it varies from setting
to setting.
In collective bargaining, the employer does not deal with workers directly, but he deals
with a collective authorised institution. It is an institutional mechanism for:
a) fixing up the price of labour services;
b) establishing a system of industrial jurisprudence; and
c) providing a machinery for the representation of individual and group interests.
It covers the entire range of organised relationship between union and management,
including negotiation, administration, interpretation, application and enforcement of
written agreements. It sets forth joint understandings as to policies and procedures
governing wages, rates of pay, hours of work and other conditions of employment. It
is recognised as the central institution or ‘heart’ of industrial relations in all democratic
nations.
Collective bargaining is essentially a multi-dimensional institution. It is also an important
means of extending industrial democracy to employees within the workplace. Several
conditions are necessary for its emergence and survival. These include freedom of
association for employees to organise into trade unions, which are independent both of
their employers and of the state, employer recognition, bargaining in good faith, and
mutual acceptance of the agreements entered into by employers and employees.
For Clegg, collective bargaining covers both the negotiation and the administration of
agreements. He holds that collective bargaining is the principal influence on union
132 behaviour. He identifies six dimensions of collective bargaining as: extent, level, depth,
union security, degree of control and scope. Further, he argues that the dimensions of Collective Bargaining
collective bargaining are themselves mainly determined by the structures of management
and of employers’ organisations.
10.6 CONTENT OF COLLECTIVE BARGAINING

Collective bargaining is among other things a rule-making or norm-creating process of
a bilateral kind.
Collectively bargained rules are of two kinds, namely, procedural and substantive.
Procedural rules, as the term implies, set out the procedures that govern the behaviour
of the employer and the union. They cover all procedural matters relating to negotiation
of contracts, their modification, renewal or termination. It also includes in it the facilities
to be extended to the union officials in order to enable them to bargain.
Substantive rules, on the other hand, do not regulate the relationship between groups,
but between individuals. They are concerned with the substance of the agreements,
which the union and managements work out. The three different kinds of relations
which are regulated by substantive rules are: (i) economic or market relationship; (ii)
governmental relationship; and (iii) work-place relationship.
10.7 TYPES OF COLLECTIVE BARGAINING

There are two types of bargaining exercises. One is known as conjunctive or
distributive bargaining and the other integrative or cooperative bargaining. Though
both aim at joint decision-making, their processes are dissimilar. Distributive bargaining
has the function of resolving pure conflicts of interest. It serves to allocate fixed sums
of resources and hence often has a “win-lose” quality. In distributive bargaining, the
relationship is a forced one, in which the attainment of one party’s goal appears to
be in basic conflict with that of the other. It deals with issues in which parties have
conflicting interests and each party uses its coercive power to a maximum extent
possible. In such a situation, one party’s gain is the other’s loss. Wage bargaining is
an obvious example of distributive or conjunctive bargaining. In contrast to the win-
lose syndrome of distributive bargaining, integrative bargaining is concerned with the
solution of problems confronting both parties. It is a situation where neither party
can gain unless the other gains as well. Integrative bargaining has the function of
finding common or complementary interests and solving problems confronting both
partners. It serves to optimise the potential for joint gains and hence often has a
“win-win” quality. It makes a problem-solving approach in which both the parties
make a positive joint effort to their mutual satisfaction. Productivity bargaining is an
instance of integrative bargaining.
Activity 1: Browse through web resources and explain a collective barganing

process that has taken place in an industry.
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10.8 BARGAINING THEORIES AND MODELS
A number of bargaining models have their roots in social psychology. Some theories or
models range from descriptions of what occurs at the bargaining tables to complex
theories that make extensive use of mathematical and economic models. A brief
description of simple collective bargaining models is as follows:
Walton and McKersie Theory
Walton and McKersie view collective bargaining as four sub-processes – distributive
bargaining, integrative bargaining, attitudinal structuring, and intra- organisational
bargaining. Distributive bargaining applies to situations in which union and management
goals are in conflict. Integrative bargaining, on the other hand, refers to bargaining
issues that are not necessarily in conflict with those of the other party.
Attitudinal structuring is the means by which bargaining parties cultivate friendliness,
trust, respect, and cooperation. The final sub-process in Walton and Mckersie’s Theory
is intra-organisational bargaining wherein the focus is on interaction between the union
and management. These four sub-processes interact to help shape the final outcome of
collective negotiations as well as the long- term relationship between union and
management.
Bargaining Range Theory
Bargaining range theory has its roots with the late Professor A.C. Pigou. Pigou’s
bargaining range theory explains the process by which labour and management establish
upper and lower wage limits within which a final settlement is made. The Union’s upper
limit represents the union’s ideal wage.
Management will offer a wage that is well below that acceptable to the union. From
these two extremes, the union and management teams will normally proceed through a
series of proposals and counter proposals. The union will gradually reduce its wage
demands while the employer will raise its wages offer. Both sides, however, have
established limits as to how far they are willing to concede, and in the process establish
a sticking point. According to this theory, the exact settlement point will depend on the
bargaining skills and strengths of the union and management negotiators.
Chamberlain Model
Chamberlain’s model focuses upon the determinants of bargaining power and the ways
in which changes in these determinants lead to settlement in the majority of collective
bargaining situations. Chamberlain defines bargaining power as the ability to secure
your opponent’s agreement to your terms. Thus a union’s bargaining power can be
defined as management’s willingness to agree to the union’s terms or demands. But
what determines the willingness (or unwillingness) of management to agree to the union’s
terms? The answer, according to Chamberlain, depends upon how costly disagreeing
will be relative to how costly agreeing will be. That is:
management’s perceived cost of disagreeing with the union’s
terms (MCD)
Union’s bargaining = ———————————————————————
power (UBP) management’s perceived cost of agreeing with the union’s
terms (MCA)
If management estimates that it is more costly to agree than to disagree (that is, if the
134 union’s bargaining power is less than one), management will choose to disagree and
thereby reject the union’s terms. If, however, management judges that it is more costly Collective Bargaining
to disagree than to agree (that is, if the union’s bargaining power is greater than one),
management will choose to agree.
Management’s bargaining power can be similarly defined:
union’s perceived cost of disagreeing
Management’s with management’s terms (UCD) (2)
bargaining power (MBP) = —————————————————————
union’s perceived cost of agreeing with management’s
terms (UCA)
Once again, if the union believes that it is more costly to agree than to disagree, the
union will disagree with management’s offer. Whenever the denominator is greater
than the numerator in equation (2) – that is, whenever the management’s bargaining
power is less than one – the union will choose to reject management’s offer. Conversely,
if the union judges it to be more costly to disagree than to agree, the union will choose
to agree. In other words, when management’s bargaining power is greater than one,
the union will be willing to accept management’s offer. The union’s costs of disagreeing
and agreeing can be defined similarly to those of management.
The Chamberlain bargaining power model has a number of salient implications:
(a) at least one party must perceive disagreement to be more costly than agreement in
order for the agreement to occur; (b) one’s bargaining power is relative in that it depends
on the size of the wage increase one is asking for or offering; (c) misjudgement of the
maximum offer the employer will make (or the minimum offer the union will accept) or the
commitment of the parties to irreconcilable positions may result in a strike even though a
range of mutually acceptable settlements exists; (d) compromise offers (and demands)
and the approach of the bargaining deadline both tend to move the parties toward
agreement; (e) the model allows for coercive tactics (which increase your opponent’s
costs of disagreeing) and for persuasive tactics (which reduce your opponent’s costs of
agreeing); (f) the economic environment, including both the state of the macro economy
and industry structure can affect the bargaining power of the two parties.
Hicks Bargaining Model
The Hicks bargaining model focuses on the length and costs of work stoppages. Hicks
proposed that union and management negotiators balance the costs and benefits of a
work stoppage when making concessions at the bargaining table. Each side makes
concessions to avoid a work stoppage. The central idea is that there is a functional
relation between the wage that one or the other party will accept and the length of
strike that would be necessary to establish that wage. There is a particular wage that
the employer would prefer if the union were not in the picture. He will concede more,
however, in order to avoid a strike and up to a point, his concessions will rise with the
length of strike he anticipates. A primary difference between the Hicks model and
bargaining range theory is that the Hicks model pinpoints a precise wage settlement
while the range theory does not.
10.9 ELEMENTS OF COLLECTIVE BARGAINING

There are three elements in the system of collective bargaining:
1) Issues for Consideration: The issues pertaining to union recognition and union
security come up for consideration when the organisation of workers are weak 135
Collective Bargaining and they struggle for recognition by the employers. The issues which are generally
taken up for consideration are on several aspects of employment relationship,
such as wages, fringe benefits, working conditions, and personnel matters such as
promotion, transfer, discharge and dismissal.
2) The Procedure for Consideration: The bargaining machinery and procedure for
consideration of various issues differ in relation to whether the two parties, employers,
managements and workers and their unions, conduct bargaining on their own or
whether a third party, such as the government intervenes to bring about a settlement
between them.
3) Collective Agreements and their Implementation: The term”collective agreement”
means all agreements in writing regarding working conditions and terms of
employment concluded between an employer, a group of employers or one or
more employers’ organisations, on the one hand, and one or more representative
workers’ organisations or, in the absence of such organisations, the representatives
of the workers duly elected and authorised by them in accordance with national
laws and regulations, on the other (ILO Recommendation No. 91).
The collective 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
a guide to their relationships on certain matters for a specified period of time.
Collective agreement patterns may vary from country to country depending upon:
(i) the scope of legislation of the country where the agreement is signed; (ii) the level at
which the agreement is negotiated and the industry to which it is to apply; and (iii) the
government policy towards labour and industrial relations and propensity of the parties
to bargain with each other.
The negotiators have to decide at which level the collective agreement has to be applied:
(i) to the undertaking, plant or work site; (ii) to a particular place or an area; or (iii) to
the whole country. In some countries, negotiations at the level of a single undertaking
are considered to be more appropriate in view of the special conditions prevailing
there. The advantage of negotiating at the level of industry is that it tends to harmonise
working conditions and provides uniform benefits to all concerned.
The contents of collective agreements vary considerably from plant to plant and from
industry to industry.
Usually, they cover items relating to wages, working conditions, working hours, fringe
benefits, and job security. Legally, a collective agreement binds only the parties to it
and the persons on behalf of whom they were acting. It often happens that all workers
in a given undertaking may not belong to the union which signed the agreement, or that
they are non-unionised. Therefore, in a number of countries the law provides for
compulsory coverage of agreements or settlements on the employers and all the
employees in an establishment. The implementation and supervision of collective
agreements, in some countries, depends on the good faith of the parties. They are
“gentlemen’s agreements” without any legal sanction, for instance, in the United
Kingdom.
In India, there are three types of agreements, namely, (a) voluntary agreements, (b)
136 settlements, and (c) consent awards. Collective agreements are voluntary when they
are the result of direct negotiations between the parties and when the parties rely on Collective Bargaining
themselves for their implementation. Settlements are collective agreements that are
backed by the intervention of government agencies. Consent awards are agreements
reached between the parties when the matters in dispute are under reference to industrial
tribunal/courts.
10.10 SUMMARY
 The term ‘collective bargaining’ was originally used by the Webbs, who identified
and differentiated three major categories of trade union activity— mutual insurance,
collective bargaining, and legal enactment.
 The content of collective bargaining may be divided into two broad areas: substantive
rules and procedural rules.
 The process of collective bargaining may vary in respect of form, scope, and
depth.
 It is concerned with regulating both economic and managerial relationships.
 It is a voluntary, bipartite process; its character is determined by the managements’
and employees’ perception of the nature of their mutual interdependence.
 The bargaining structure is dynamic and varies between different industries and
organisations; however, the emphasis of collective bargaining regulation has shifted
away from multi-employer, industry-level bargaining to the organisational level in
order to respond more effectively to variations in organisational situations and
needs.
10.11 SELF- ASSESSMENT QUESTIONS

1) What is the meaning and concept of collective bargaining?
2) What are the main features of collective bargaining?
3) Give an account of various theories on collective bargaining.
10.12 FURTHER READINGS

1) Stevens, C.M., Strategy and Collective Bargaining Negotiations, p.2.
2) Flanders, Allan, Collective Bargaining, pp. 19-23.
3) Sticher, S.H., The Challenge of Industrial Relations, pp. 131-134.
4) Carrell, R.M., and Heavrin, Christina, Collective Bargaining and Labour Relations
Cases, Practice, and Law, Merrill Publishing Company, Columbus, 1988.
5) Koehan, T.A., Collective Bargaining and Industrial Relations: From Theory to
Policy and Practice, Richard D. Irwin Inc., Illinois, 1980.
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UNIT 11 BARGAINING STRUCTURE,
PROCESS, AND AGREEMENTS
Objectives
After going through this unit, you will be able to:

 explain the steps in bargaining process;
 understand the legal connotation of the word settlement and its various principles;
 identify list of items and guidelines in collective agreements.
Structure
11.1 Introduction
11.2 Bargaining Process
11.3 Settlements
11.4 Collective Agreements
11.5 Conditions for Success of Bargaining
11.6 Summary
11.7 Self-Assessment Questions
11.1 INTRODUCTION
Collective bargaining is a flexible concept. It is a natural give-and-take before the final
agreement is reached or the final settlement is arrived. It provides a mechanism for
organised relationships between management and trade unions. The heart of collective
bargaining is the process for a continuing joint consultation and adjustment of various
problems of the organisation. Basically, it is democratic and self-government in action.
It has been characterised as a form of industrial democracy and industrial government.
It is not a competitive process but essentially a complimentary one. It is a process of
social change; a peace treaty between two parties in mutual conflict; and a system of
industrial jurisprudence. Normally, collective agreements reached between the parties
broadly cover matters relating to employment and working conditions. The nature and
course of collective bargaining are heavily influenced by legal framework. Effective
administration of collective agreements is vital to the health of the union management
relationship. For some issues, collective bargaining occurs when one party’s goals
conflict with those of the other party.
11.2 BARGAINING PROCESS

Collective bargaining is a two-edged sword; what is won may also be lost. Today’s
collective bargaining process is based upon statutory law. What makes collective
bargaining possible in this context is that both labour and management have an ultimate
harmony of interest; that is, the desire to assure that the firm for which they work – and
138
from which they are both paid – will remain in business. In order to stay in business, it Bargaining Structure,
Process, and Agreements
must be competitive with other firms.
The bargaining process includes preparation of initial demands, negotiations, and
settlement. Adequate preparation for bargaining is often the key to success – preparation
for negotiations is a comprehensive on-going job for both the management and the
union.
Preparation allows each bargaining team to determine their bargaining objectives; a
negotiating team to defend its proposals; and to anticipate the opponent’s demands.
Among the more important steps to pre-negotiation preparations are the following:
1) Coordinating preparations among persons responsible for gathering and analysing
information relevant to the bargaining process.
2) Selection of a chief negotiator and bargaining team members.
3) Reviewing previous negotiations because it provides insights into the opponent’s
bargaining tactics and probable demands.
4) Gathering data on internal operations and policies of comparable firms through
wage and salary surveys.
5) Formulate proposals and priorities.
6) Select a suitable site for negotiations.
7) Organise the relevant information in a bargaining book for easy access at the
bargaining table.
8) 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
appropriate bargaining units. The principle to be followed is that there should exist a
community of interest among the employees to be represented. Otherwise, a single
bargaining agent would find it impossible to represent all of their interests equally
well.
The first step in the collective bargaining process is establishing a relationship for on-
going negotiations and the formulation of agreements covering conditions in the
workplace. It is obvious that a great deal of effort can go into the process of establishing
a collective bargaining relationship. It is an anxiety producing process and that each
step may involve bitter conflict between the parties. Sometimes, this conflict escalates
to litigation; and sometimes it even spills over to violence. Hence, one of its objectives
should be promotion of rational and harmonious relations between employers and
unions.
The second step in the bargaining process relates to the scope of bargaining, i.e., the
matters on which to bargain. It consists of three broad categories of items – subjects
over which bargaining is mandatory, subjects considered illegal or prohibited, and
subjects on which bargaining is permitted but not required. In case of subjects, which
are mandatory, the relevant statute or common law makes it unfair labour practice or
breach of good faith to refuse to bargain over them. The second category of items in
the scope of bargaining is practices considered illegal or prohibited. These are the
matters that cannot be bargained under law. Falling between these two categories are
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Collective Bargaining items upon which bargaining is permitted, but not required. Either side may refuse to
discuss such a matter. To do so is not considered a breach of fair labour practice or
good faith.
The third step in the bargaining process is careful structuring. Many observers agree
that some structural aspects are crucial in facilitating the ability to reach agreements.
The personnel department should take the initiative of forming a negotiating team
consisting of two or three members, besides the industrial relations expert. The
management team should include representatives of the departments, a personnel
specialist, and some one competent to assess the various proposals and counter
proposals. The bargaining teams should also be balanced in terms of number of
individuals present. Both the sides should agree in advance on the timing, location, and
length of bargaining sessions.
An agenda should be prepared indicating which items are to be taken up first – economic
or non-economic. A decision must be made as to whether to treat each item separately,
or to seek to bargain an entire package at once. The task of management team should
range from formulation of management’s charter of demands to the full participation in
the actual bargaining sessions; and above all, the preparation of the draft of the settlement
and, then, the readiness to negotiate.
In absence of good faith bargaining has been found to include:
1) An unwillingness to make counter proposals.
2) Constantly changing positions in bargaining.
3) The use of delaying tactics.
4) Withdrawal of concessions after they have been made.
5) Unilateral actions over topics of bargaining.
6) Refusal to furnish necessary data for negotiations. Steps to improve the process of
collective bargaining are:
 Begin the process of negotiations with proposals, not demands.
 Avoid taking public positions for or against certain proposals in advance of
negotiations.
 Avoid taking strike votes before the process of negotiation begins.
 Give negotiators proper authority to bargain.
 Avoid unnecessary delays in beginning negotiations and in conducting them.
 Insist on offering facts and arguments.
 Make plenty of proposals to enhance the opportunities to find compromises.
Be prepared to compromise.
 Be prepared to get results gradually.
 Preserve good manners and keep discussion focused on relevant issues.
 Be prepared to stand for a long and hard strike or lockout (as the case may
be) in order to force a settlement justified by facts and arguments.
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Bargaining Structure,
11.3 SETTLEMENTS Process, and Agreements
“Settlement” as defined in Section 2(p) of the Industrial Disputes Act, 1947 envisages
two categories of settlement –
a) a settlement which is arrived at in the course of conciliation proceedings i.e., which
is arrived at with the assistance and concurrence of the Conciliation Officer, and;
b) an agreement between the employer and workmen arrived at otherwise than in the
course of conciliation proceedings.
To be valid, an agreement under the second category should be in writing signed by the
parties thereto and copies should be sent to an officer authorised for this purpose by
the appropriate Government and the Conciliation Officer. Thus, every settlement is an
agreement though every agreement is not a settlement.
A settlement arrived at otherwise than in the course of conciliation proceedings is
binding only on the parties to the agreement. It does not bind anyone other than the
parties thereto. A settlement arrived at in the course of conciliation proceedings under
the Act will be binding on all the persons employed in the establishment to which the
dispute relates on the date of the dispute and all persons who become subsequently
employed in that establishment.
In Herbertsons Ltd. vs. Workmen of Herbertsons Ltd. and Others (1977-2 SCR 15),
the Supreme Court has laid down certain principles regarding settlements. These are:
1) The numerical strength of the members of the union which is party to the settlement
has an important bearing as to whether the settlement is accepted by the majority
of the workmen.
2) A settlement reached in the course of collective bargaining is entitled to due weight
and consideration.
3) The settlement has to be considered in the light of the conditions that were in force
at the time of the reference.
4) The principle of give and take during the negotiations is to be encouraged in the
interests of general peace and well-being.
5) The settlement has to be taken as a package deal and when labour has gained in
the matter of wages and if there is some reduction in dearness allowance, it cannot
be said that the settlement as a whole is unfair and unjust.
6) A voluntary settlement has to be distinguished from adjudication. The question as
to whether or not a settlement is just and fair is not to be decided by applying the
principles of adjudication.
7) There may be several factors that influence the parties to come to a settlement as
a phased endeavour in the course of collective bargaining. By a settlement, the
labour may scale down its claims and score in some other aspects and
saveunnecessary expenses in uncertain litigation. Once cordiality is established
between the employer and labour in arriving at a settlement, which operates well
for a period that is in force, there is always a likelihood of further advance in the
shape of improved emoluments by voluntary settlement avoiding friction and
unhealthy litigation. This is the quintessence of settlement, which the courts and
141
Collective Bargaining tribunals should endeavour to encourage. It is in this spirit the settlement has to be
judged and not by the yardstick adopted in scrutinising an award in adjudication.
8) A settlement should not be highly unconscionable or grossly unjust.
9) A settlement should not be seen in bits and pieces and therefore, it should not be
held that some parts are good and acceptable, and others bad and unacceptable.
The settlement has to be accepted or rejected as a whole.
10) The settlement signed by the large majority of the workmen holds good even if the
same is challenged by the minority workmen.
In the case of Tata Chemicals Ltd. vs. Workmen (1978 II LLJ 22), there was a
settlement between the management and the union representing the majority of workmen
(arrived at by direct negotiation without the aid of the Conciliation Officer). The minority
union raised a demand regarding variable dearness allowance, which was a part of the
settlement. The Supreme Court held that the minority union can validly raise an industrial
dispute under Section 2(K) of the Act. As regards the contention of the management
that the members of the minority union are accepting the benefit flowing from the
agreement, the Court held that it is of no avail and cannot operate as an estoppel
against the minority union or its members. The Supreme Court decision, in this case,
reiterates the position that:
i) a settlement arrived at otherwise than in the course of conciliation proceeding is
binding only on the parties to the agreement;
ii) such settlement arrived at between the employer and the majority union is not
binding on the minority union which is not a party to the settlement; and
iii) the minority union can raise the dispute in respect of the demand covered by the
settlement and the same can be validly referred to adjudication.
A settlement cannot be weighed in any golden scale and the question whether it is just
and fair has to be answered on the basis of principles different from those which came
into play where an industrial dispute is under adjudication. If the settlement has been
arrived at by a vast majority of workmen with their eyes open and was also accepted
by them in its totality, then it must be presumed to be fair and just and not liable to be
ignored merely because a small number of workers were not parties to it or refused to
accept it or because the tribunal thought that the workers deserved marginally higher
emoluments than they did (Tata Engineering and Locomotive Co. Ltd. vs. Workmen,
1981 II LLJ 429 SC).
11.4 COLLECTIVE AGREEMENTS

The range of subjects which may be covered by collective bargaining and agreements
is very wide. Some agreements are short and deal with only a few matters. Many,
however, are elaborate codes which cover a great many aspects of industrial relations.
In some respects, they constitute a kind of industrial legislation regulating the conditions
of employment of a vast number of employees.
The following list indicates some of the main items which are included in collective
agreements:
1) Wages, including time rates, piece rates and other incentive payments, and
142 procedures for fixing rates for new jobs.
2) Hours of work, overtime, shift working, and rest periods. Bargaining Structure,
3) Annual holidays and rates of pay for holidays.
4) Sick leave and leave of absence for other reasons.
5) Seniority rights with regard to lay-off and retrenchment.
6) Discipline enforcement.
7) Training of workers and apprentices.
8) Fringe benefits including retiral benefits.
9) Establishment of fair production standards, including satisfactory quality of output,
and methods of increasing productivity.
10) Joint consultation procedure.
11) Methods of settling grievances and disputes.
12) Prohibition of strikes and lockouts during the period covered by the agreement.
13) Duration of the agreement, and its subsequent continuation.
14) Procedure for negotiating a new agreement.
Once collective bargaining has resulted in an agreement, the provisions of the latter are
regarded as part of each contract of employment, whether written or implied. Under
the law of certain countries, the employer has no obligation to apply the terms of the
agreement to any worker in the occupations covered who is not a member of one of
the trade unions which negotiated the agreement. But in actual practice it is unusual to
differentiate in this way, and the terms of agreement are generally applied to all workers
in the occupations covered by it.
In the course of the application of the agreement disputes may arise over the
interpretation of its provisions. This may happen because the wording of a clause is
ambiguous. Some employers may apply the clause in one way, while the representatives
of the union may have intended another interpretation. To resolve such problems, many
agreements contain clauses specifying the procedure to be adopted, if disputes arise
over their interpretation.
Rules governing the collective agreement itself are laid down in the law of many countries.
For instance, in order to be valid, an agreement may have to be in writing, its duration
specified, and the rights and obligations of the parties clearly stated. Agreements may
have to be submitted or registered with some authority. In many countries the parties
are free to make their own collective bargaining arrangements without having to comply
with government regulations and are usually equally free to decide for themselves the
contents of collective agreements, provided that the terms of agreements must not be
less favourable for the workers than the standards laid down under different labour
laws.
The law may require every collective agreement to specify the obligations of the parties
to one another and contain clauses respecting its implementation and the setting up of
joint bodies to deal with differences over interpretation. Also, the law may make
provision for extending the application of an agreement to employers and workers
who are not members of the employers’ organisation or trade union which negotiated 143
Collective Bargaining it. In some countries this extension - even to a whole industry - can be effected under
legislative authority.
In India, collective agreements apply to all workers covered by a particular settlement
irrespective of their individual union status. Conflict resolution processes are provided
for by the Industrial Disputes Act, 1947. However, since state governments have the
autonomy to make enactments, there are variations in the labour-management practices
across different states.
In India, the collective bargaining contracts can be enforced under Section 18 of the
Industrial Disputes Act 1947, as a settlement arrived at between the workers and the
employers. The appropriate government may refer the dispute over a breach of contract
to a labour court or to an industrial tribunal.
Extract of ILO Recommendation No. 91
The ILO has laid down certain guidelines on collective agreements in its
Recommendation No. 91 (Collective Bargaining, A Workers’ Education Manual, 1960),
some of which are as follows:
 Collective bargaining machinery appropriate to the conditions existing in each country
should be established, by means of agreement or laws or regulations as may be
appropriate under national conditions, to negotiate, conclude, revise and renew
collective agreements.
 The organisation, methods of operation and functions of the machinery should be
determined by agreements between the parties or by national laws or regulations,
as may be appropriate under national conditions.
 Collective agreements should bind the signatories thereto and those on whose
behalf the agreement is concluded. Employers and workers bound by a collective
agreement should not be able to include in contracts of employment stipulations
contrary to those contained in the collective agreement.
 Stipulations in such contracts of employment which are contrary to a collective
agreement should be regarded as null and void and automatically replaced by the
corresponding stipulations of the collective agreement.
 Stipulations in contracts of employment which are more favourable to the workers
than those prescribed by a collective agreement should not be regarded as contrary
to the collective agreement.
 The stipulations of a collective agreement should apply to all workers employed in
the undertakings covered by the agreement unless the agreement specifically
provides to the contrary.
 Disputes arising out of the interpretation of a collective agreement should be
submitted to an appropriate procedure for settlement established either by
agreement between the parties or by laws or regulations as may be appropriate
under national commissions.
 The supervision of the application of collective agreements should be ensured
by the employers’ and workers’ organisations, parties to such agreements, or
by the bodies existing in each country for this purpose or by bodies established
ad hoc.
144
Drafting of Agreement Bargaining Structure,
The following precautions may be taken in drafting the agreement so that it could be
implemented without much difficulty:
a) Before commencing drafting of collective agreement the draftsman should try to
conceive the whole design of it.
b) Care should be taken to see that nothing is omitted or admitted at random.
c) Technical or legal terms used should be precise and accurate.
d) The agreement should be readily intelligible to laymen. There should not be any
ambiguity.
e) A well-drafted document should be clear to any person who has a basic knowledge
of the subject matter.
f) A draftsman should satisfy himself as to what he means to say, what he does not
mean to say, and what he need not say.
g) The choice of words should be appropriate to convey the meaning of the writer.
Concrete words are preferred to the abstract words and the direct word to
circumlocution. The draftsman should use no more words than necessary to express
his meaning. He should not use superfluous adjectives and adverbs or round-
about phrases. He should use familiar words with precise meaning.
h) The choice of right words is advantageous both to the reader and writer and as
such the writer should be direct, simple, brief, vigorous and lucid.
i) Words should always be used in the same sense and the active voice is preferable
to the passive voice.
j) Sentences should be clear and short.
k) Before finally passing a draft, the draftsman should reconsider it. He must be
satisfied that the draft means what he intends, that the terms are clear, definite and
understandable, and that the requirements of the law have been properly
understood.
l) Before drafting an agreement, the parties should make a thorough study of the
data on the subject to appreciate the consequences, implications, and effects in
diverse situations and reactions that may follow. An understanding of the socio-
economic structure and labour theory will also help in the proper drafting of the
agreement. The draft agreement should contain:
 names of the representatives of parties, their designations and the organisation
to which they belong to;
 reference of the union’s request for collective bargaining, preamble, and
purpose of the agreement;
 reference of all demands irrespective of whether they have been dropped,
withdrawn or cancelled;
 period of operation;
 notice period of termination of agreements;
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Collective Bargaining  dates of implementation of various items covered in the agreement; and
 provisions in conformity with the law.
m) Collective agreement as far as possible should be self-explanatory.
n) Collective agreement dealing with a number of subjects could be made clearer, if
the document is divided in a logical order in parts and paragraphs and with the use
of numbers and letters for paragraphs and sub-clauses. Logical arrangement would
also minimise the risk of omission or repetition.
Administration of Agreement
If anything is more important to collective bargaining than the contract itself, it is how
the parties apply the contract and live under it from day-to-day. Progress in collective
bargaining is not measured by the signing of an agreement, but by the fundamental
human relationships which develop during its application, interpretation and enforcement.
The administration of the contract has three basic parts: (a) the introduction of the
contract after it is signed by the parties, and training of the concerned executives in
understanding the contract; (b) contract alteration and revision during its term including
possible re-opening of negotiations on specific issues; and (c) contract administration.
11.5 CONDITIONS FOR SUCCESS OF COLLECTIVE

BARGAINING
The success of collective bargaining depends upon the following factors:
1) The union participating in the collective bargaining process must be strong,
democratic and enlightened. The weak and fragmented state of the unions,
smallness and instability of their membership, rivalries, and company formed and
dominated trade unions are some of the reasons for the undeveloped state of
collective bargaining. Collective bargaining cannot become fully effective if
management continues to regard the union as an alien outside force.
2) One of the principles for establishing and promoting collective bargaining is to give
voluntary recognition to trade unions as one of the contracting parties. It may also
have the positive benefit of improving industrial relations, production and
productivity.
3) There should be willingness to give and take by both the parties and interest on the
part of both to reach an agreement and to make collective bargaining work. The
trade unions should refrain from putting forward exaggerated demands. Both the
parties must realise that collective bargaining negotiations are by their very nature
a part of compromise process. An emphasis on accommodation rather than conflict
is necessary.
4) The whole atmosphere of collective bargaining gets vitiated, relations become
bitter and strained and negotiations more difficult, if one or both the parties engage
in unfair practices. Both the union and the management, therefore, must desist from
committing unfair practices and must have a healthy regard for their mutual rights
and responsibilities. Trust and openness are very essential for meaningful discussion.
5) Collective bargaining usually takes place when there are differences between the
146 parties on certain issues. But in order to make the collective bargaining process
more successful, it is essential on the part of the representatives of employers and Bargaining Structure,
unions to hold meetings at regular intervals to consider matters of common interest.
Such an on-going process would enable them to understand one another’s problem
better and make it easier to find solutions to questions on which their interests
conflict.
6) Effective collective bargaining presupposes an intelligent understanding of both
management and union of the needs, aspirations, objectives and problems of the
other party. Union leaders must have full knowledge of the economics of the plant or
industry concerned. Management must have a developed awareness of the nature
of the union as a political institution operating in an economic environment.
7) The effectiveness of collective bargaining cannot be attained without maturity of
leadership on both sides of the bargaining table. The negotiators should have such
qualities as experience, skill, intelligence, resourcefulness, honesty and technical
know-how. They must have the capacity to distinguish between basically important
and trivial issues. They must know when it is wise or necessary to compromise
and when it may be fatal to concede the demands.
8) Intelligent collective bargaining demands specialised training. The increasingly
technical complexity of the collective bargaining agenda requires expert professional
advice, experience and skill on the part of the negotiators.
9) Both management and the union often find it difficult to locate the men on the other
side of the table who are authorised to negotiate. For proper negotiations, it is
necessary to know the persons empowered to act for the company and the union
respectively.
Activity 1
As a union official, you are required to present a charter of demands to the
management of your company. Identify ten demands that you would incorporate in
the charter with a justification for each one, with specific reference to the company,
its business, and its employee profile.
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11.6 SUMMARY
 Collective bargaining is concerned with the relations between management
representatives and union representatives.
 It involves the process of negotiation, administration, and interpretation of collective 147
Collective Bargaining agreements concerning wages, hours of work, and other conditions of employment
for a specific period of time.
 The bargaining process includes preparation of initial demands, negotiations, and
settlement.
 Adequate preparation for bargaining is often the key to its success.
 Preparations for negotiations is a comprehensive ongoing job for both the
management and the union.
 Preparation allows each bargaining team to determine their bargaining objectives,
a negotiating team to defend its proposals and to anticipate the opponent’s demands.
 Negotiation is concerned with resolving conflict between two or more parties,
usually by the exchange of concessions.
 The final product of negotiation process is a collective bargaining agreement.
 Collective agreement or settlement is a document that often contains a large number
of provisions and clauses covering compensation, hours of work, and other
conditions of employment.
 Successful administration of an agreement depends on mutual respect among
employees, management and union.
 The success of collective bargaining depends upon voluntary recognition of trade
unions; willingness to give and take by both the parties; avoidance of unfair labour
practices by both the union and management; discussion of common issues on an
ongoing basis; maturity of leadership of both the parties; and specialised training
and skill on the part of the negotiator.
11.7 SELF-ASSESSMENT QUESTIONS

1) Discuss the various steps in bargaining process.
2) What are the conditions for success of collective bargaining in India?

Dunlop, J.T., and Healy, J.J., Collective Bargaining, Richard D. Irwin, 1955.
Whitney, F., and Sloana, A.A., Labour Relations, Prentice Hall, Englewood Cliffs,
New Jersey, 1991.
148
Bargaining Structure,
UNIT 12 NEGOTIATION Process, and Agreements
Objectives
After reading this unit you should be able to understand:
 the concept of negotiation and its importance;
 the attributes of a successful negotiator;
 the negotiation skills and formulate guidelines on negotiation.
Structure
12.1 Introduction
12.2 Negotiating Process
12.3 Negotiating Models
12.4 How and Why to Negotiate?
12.5 Negotiation Guidelines
12.6 Principled Negotiations
12.7 Preparation for Long-term Settlement
12.8 Skills and Traits of Negotiating Team
12.9 Tactics or Strategies in Negotiation
12.10 Summary
12.11 Case
12.12 Self-Assessment Questions
12.1 INTRODUCTION
Negotiations are a part of everyday life. The process of negotiating has been described
by Walton and McKersie as ‘the deliberate interaction of two or more complex
social units which are attempting to define or redefine the terms of their
interdependence.’ Gottschalk defines negotiation process as “an occasion where
one or more representatives of two or more parties interact in an explicit attempt to
reach a jointly acceptable position on one or more divisive issues.” It is an explicit
and deliberate event conducted by the representatives on behalf of their respective
parties – employers and employees. The process is intended to reconcile differences
between the parties involved. Negotiation is not simply ‘ritual’ but a process, which
allows the representatives of different interest groups to reach a mutually acceptable
settlement of an issue while, at the same time, seeking to maximise the advantage to
be gained for their interest group. Negotiating is a skill that can be learned and
improved upon by anyone.
12.2 NEGOTIATING PROCESS

“Negotiation is essentially a process of advancing proposals, discussing and criticizing
them, explaining and exploring their meaning and effects; seeking to secure their
149
Collective Bargaining acceptance, and making counter-proposals or modifications for similar evaluation”
(Dale Yoder). There are two primary purposes to negotiating in the industrial relations
context: first, to reconcile differences between managements and unions; and second,
to devise ways of advancing the common interest of the parties. Among managements
and trade unions that deal with each other on an on-going basis, negotiating may at the
outset take the character of mutual problem solving. The process involves the recognition
of the common interests of the parties, the areas of agreement and disagreement and
possible solutions, to the mutual advantage of both sides.
Dunlop and Healy 1 have pointed out that the labour contract negotiations process can
be depicted as (a) a pocker game, with the largest pots going to come up with a strong
hand on the occasions on which they are challenged or seen by the other side; (b) an
exercise in power politics, with the relative strengths of the parties being decisive; (c) a
debating society, marked by both rhetoric and name calling; and (d) a “rational process”,
with both sides remaining completely flexible and willing to be persuaded only when all
the facts have been dispassionately presented.
Careful preparation of proposals can reduce uncertainty, improve communication, and
thus contribute to effective negotiation. Better preparation provides the parties with
broader perspectives, which in turn, increase flexibility and can accelerate the negotiation
process.
12.3 NEGOTIATING MODELS

Walton and McKersie 3 proposed one of the most influential models in analysing
negotiation. They distinguished the following four systems of activity or sub- processes
in labour negotiations, each having its own functions for the interacting parties.
Distributive bargaining : The function of which is to resolve conflicts between the
parties.
Integrative bargaining : The function of which is to find common or complementary
interests.
Attitudinal structuring : The function of which is to influence the attitudes of the
participants toward each other.
Intra-organisational bargaining : The function of which is to achieve consensus
within each of the interacting groups.
While the sub-processes are related and can occur simultaneously, particularly the
integrative and distributive sub-processes, conceptually they are quite different.
12.4 HOW AND WHY TO NEGOTIATE?

Problems faced in a negotiation commonly revolve around details relating to procedure,
personality, perspective, and approach in dealing with another party.
A major part of minimising problems is simply arriving at an understanding of what is
involved in negotiation.
Needs are at the root of all negotiations. Needs are not necessarily the same for the
two sides, nor is it important that they should be. What is essential, if the negotiation is
150
to have any chance of success, is that the needs be or become compatible. Incompatible Negotiation
needs makes reaching agreement virtually impossible.
Negotiation is a mutual act of coordinating areas of interest. One party dictating to the
other is not negotiation. One party manipulating the other with no concern for the
other’s needs is a cynical travesty of negotiation. At the heart of negotiation is the
recognition that each side is entitled to its own priorities. The whole art of negotiation
lies in persuading a second party to make a commitment.
Negotiation is more a learning process than a form of instruction. Both parties are
engaged in discovering each other’s views and needs. Both are exploring possibilities
for combining energies in a new way.
Gathering information and fact-finding constitute a part of negotiating process.
Negotiation is concerned with resolving conflict between two or more parties, usually
by the exchange of concessions. It can be competitive, known as win- lose negotiations,
or it can be co-operative, known as win-win. Negotiation should be regarded as a
potentially beneficial activity for both parties. It does not always have to imply
confrontation, although it may sometimes require an element of brinkmanship.
12.5 NEGOTIATION GUIDELINES

The following are the guidelines for negotiation:
 Don’t be afraid to negotiate. “Let us never negotiate out of fear. But let us never
fear to negotiate.” (John F. Kennedy)
 Don’t negotiate when you have nothing to bargain with, or when broader objectives
might be prejudiced.
 Mutual respect and trust are fundamental requirements, especially wit a win- win
strategy.
 The style of negotiation will depend in part on the qualities and skills of the parties
involved.
Skilled negotiators will conclude better deals.
 Identify the decision-maker on the other side.
 Identify the concessions you might offer and extend maximum benefit to the other
side with the least cost to you.
 Remember, concessions should always be traded, not donated. Encourage the
other side to give you concessions by setting deadlines.
 Recognise that a win-win outcome can never be assumed until the other side also
signals its compliance.
 Be firm but fair. Do not make ‘unreasonable’ demands.
 Select your team carefully, allocate the key tasks, and specify authority levels.
 Leave the other side thinking that they have won a good deal.
 In order to win the best result from a negotiation, a blend of three important
attributes is necessary: skill, aspiration, and power. 151
Collective Bargaining  You have nothing to lose by asking for a better deal.
 Most things are negotiable.
 Make specific proposals, solutions or remedies. Don’t just complain.
 Prepare fully, and with care. Preparation and planning lie at the heart of a successful
negotiation. Don’t negotiate if you are not prepared.
 Don’t negotiate unless you have something to gain. Make initial concessions small
and tentative.
 Listen carefully to the words and analyse.
 Keep the meeting on the track.
 Don’t react too unfavourably to your own mistakes.
 Make promises with caution.
 Don’t worry about the end result.
 Be prepared for a deadlock. If necessary, change the timing, the tempo, the topic,
and even the team.
12.6 PRINCIPLED NEGOTIATIONS

A process called principled negotiations was developed by the Harvard Negotiations
Project and published in a book titled Getting to Yes. The essential element of the
process is to be “hard on the merits, soft on the people.” The goal is to decide the
issues presented at the negotiating table on their merits. Under the principled negotiations
model, the first objective is to separate the people from the problem.
Attacking the problem is the second objective of principled bargaining. The parties are
to focus on interests, not positions. Once interests are identified, the third objective is
for both parties to seek as many options as possible in solving their conflicting interests.
The fourth objective in principled negotiating is to have the validity of each party’s
proposals judged by objective criteria.
The “principled negotiations” approach is highly desirable in on-going labour relations.
Unfortunately, however, it is difficult to apply principled negotiations where a party
maintains a “hard bargaining posture.” Principled negotiation is a characteristic of more
mature bargaining relationship unlike the hard bargaining approach which is frequently
found in the less matured relationship.
For success of negotiation:
 Always do your homework.
 Always feel free to ask questions.
 Listen to what other person has to say.
 Maintain an attitude of respect for your opposite at all times.
 Honour whatever commitments made.
152  Adopt a friendly tone.

 Recognise your opposite’s ego needs. Negotiation
 Display an open mind and willingness to compromise.

 Avoid coercive or pressure tactics.
12.7 PREPARATION FOR LONG-TERM

SETTLEMENT
The preparation for the long-term settlement should start from the same date when the
last agreement was signed.
Continuous collection of data on work practices, norms of productivity, grievances,
and their analysis to identify the causes, are necessary for preparing for the next
settlement. The following may serve as a checklist:
Internal Data
 Analysis of previous charter of demands and previous agreements.
 Analysis of the charter of demands raised for the current agreement.
 Collection and analysis of the record of the grievances and classifying them.
 Number of accidents stagnating at various levels, pay scales and slabs, category-
wise, age-wise and shift-wise.
 Details of existing allowances and the employees covered under each.
 Details of existing facilities and employees covered.
 Details of the labour cost and break-up of the expenditure on each item like basic
pay, dearness allowance, incentive, overtime, fringe benefits, and so on.
 Incentive plan and incentive earnings.
 Man-days data indicating the break-up in Man-days worked
– Man-days lost due to absenteeism
– Man-days lost due to strikes
– Man-days lost due to sickness
– Man-days lost due to political bandhs
– Man-days lost due to slow-down
– Man-days lost due to lockouts
 Details of overtime incurred department-wise.
 Production and productivity data
– Labour cost per tonne of product
– Labour cost as percentage of wages
– Labour cost as percentage of production per man/year
– Labour cost as percentage of sales
153
Collective Bargaining – Capacity utilisation of plants/departments
– Value added per rupee of wages
 Financial Data
– Wages to salary ratio
– Profitability
– Expansion/diversification programme
– Cost implications of demands
External Data
 Details of wages, allowances and benefits of comparable public and private sectors.
 Trend of cost of living index.
 Production and productivity data for similar organisations in India and abroad.
A collective bargaining manual may be prepared incorporating all the above information
and kept updated from time to time.
12.8 SKILLS AND TRAITS OF NEGOTIATING TEAM

Many influential writers have argued that negotiating is an art. Dunlop states that, ‘I am
inclined to believe that the art of negotiation can only be learned by experience – often
hard experience’. Successful negotiations depend upon the knowledge and skill of the
negotiators. They must, through careful preparations, become knowledgeable about
their own and the other side’s positions on the bargaining issues. They prepare and
propose workable, attainable, and realistic issues within the framework of the
negotiations. A negotiator must cultivate the technique of listening skills and the ability
to communicate clearly. A thick skin may be helpful as the other side may engage in
personal attacks at some point in the negotiations. A negotiator realises that such attacks
are often necessary in satisfying a constituency.
Attributes of a Successful Negotiator
1) Sets clear objectives
2) Does not hurry
3) When in doubt, call for a caucus
4) Is prepared
5) Remains flexible
6) Continually examines why the other party acts as it does
7) Respects face-saving tactics employed by the opposition
8) Attempts to ascertain the real interest of the other party by the priority proposed
9) Actively listens
10) Builds a reputation for having fairness and firmness
154 11) Controls emotions

12) Remembers to evaluate each bargaining move in relation to all others Negotiation
13) Measures bargaining moves against ultimate objectives

14) Pays close attention to the wording of proposals
15) Remembers that compromise is the key to successful negotiations; understands
that no party can afford to win or lose all
16) Tries to understand people
17) Considers the impact of present negotiations on the future relationship of the parties
Attributes of Negotiating Team
 Negotiating team should consist of three to four persons.
 Leader of the team must have a good command on the language because an
extra word here and there can do irreparable damage.
 The team must have complete knowledge of the operations, material flow
and processes of the company.
 The team must know the details and implications of all the demands.
 The team must know the total historical perspective of the company, what
happened in the previous last agreement, union dynamics, and so on.
 The team must have the confidence of facing any eventuality, which may come
up during negotiations.
 The team must have the power of taking decisions.
 The team must consist of people who have confidence of the workforce and
unions.
Credibility is the most important asset it must possess in abundance.
The effectiveness of a negotiating team is not determined by its size but by its ability,
knowledge, and experience. A team well versed in tactics, strategy, and timing would
be in a better position to negotiate and would end up with a better agreement than a
team composed of inexperienced people. The most important member of the bargaining
team is its spokesperson.
Activity 1
Your company is negotiating a settlement at the present time. What economic,
legal and social factors might likely to exert some influence upon your negotiations?
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155
12.9 TACTICS OR STRATEGIES IN NEGOTIATION
The tactics or strategies to be adopted in negotiation vary depending upon the culture
of the organisation and different environmental factors, particularly the type of union
operating in an industrial establishment. But the following are some of the common
strategies to make negotiation exercise more meaningful:
i) The management has to anticipate the demands and also understand the main
directions in which the demands are going to be placed. Grant or rejection of
demands cannot be decided upon in a vacuum; it is very much relative to the time
and place of negotiation. An adequate area survey of what comparable
organisations in the region have already conceded/or in the process of conceding
is most essential. An adequate questionnaire must be drawn up, and care must be
taken to identify the organisations that are truly comparable. Generally speaking,
negotiations are best done if both the parties do their homework well. The
representatives must come to the bargaining table equipped with the necessary
information and supportive data regarding the company’s economic status and
prospects, the prevailing rates of pay and conditions of employment in comparable
industries in the local areas. The management team should take into consideration
the financial liability involved, the past agreements, and the impact of present
negotiations in future years.
ii) It is essential that a real team spirit be maintained throughout the negotiations. For
this purpose, it is necessary that the roles to be played by each member of the
team are properly pre-assigned, and each member knows when to take over the
discussions. The team must have the confidence of facing any eventuality, which
may come up during negotiations. It is good to have a rehearsal among the team
members on such points which can be anticipated to be made forcefully by the
opposite team.
iii) Any negotiation strategy should firstly separate the personalities from the problems
for arriving at a workable and desirable agreement and secondly, explore the
possibilities for harmony and compatibility. Although labour and management are
adversarial in some respects, it is also important to avoid concluding that they are
adversaries in all respects.
iv) Negotiation is a two-way traffic. The management as well as the union must gain
out of it. Hence, the management team should also present their counter- proposals.
For instance, the union pressure for wage-hike may be matched by a counter-
demand for an increase in production, reduction in absenteeism, avoidance of
wasteful/restrictive practices, and industrial peace.
v) There is a greater necessity on the part of the management representatives to give
a patient hearing to the demands of the union and not to react even if there is a
threat of strike or work stoppage. A rational well-reasoned approach can achieve
better results than an emotionally charged loud-mouthed approach.
vi) It is also a bad strategy to depute persons of low rank without authority to commit
the management on the negotiating table. Such a step may give an impression to
the union that the management does not take the negotiating process with all the
seriousness that it deserves.
156
vii) It is a good practice always to classify the various demands raised by labour Negotiation
representatives distinguishing the real from the unreal. A thorough analysis and
understanding of different items in the charter of demands will enable negotiators
to arrive at a proper judgement.
viii) It is a good tactic to total the cost of all the union proposals and to take up the
non-cost items first or items on which it is easy to come to an agreement so that a
suitable atmosphere is created for negotiating on more serious items which have
financial implications.
ix) Any negotiating strategy must result in a good agreement or settlement, the
characteristics of which are:
a) it must strike a proper balance between the various factors that go into its
making in order to ensure its workability;
b) it must be viewed as a whole and the inter-relation of its parts must be balanced
one against the other;
c) it must be based upon experience, logic and principles rather than on coercive
tactics, propaganda and force;
d) it must be fair and reasonable to the employees as regards their emoluments
and service conditions; to the management in terms of improved production
and productivity; and to the consumers in respect of better quality goods and
services; and
e) it must be complete and coherent in all respects without any ambiguity.
x) As a measure of follow-up: (a) evaluate prevailing environmental changes and
cultivate a healthy pragmatic approach; (b) train and develop rank and file working
group to inculcate in them individual effectiveness and professionalism in
negotiation; and (c) develop specific action-plans for negotiation based on
prevailing situation.
12.10 SUMMARY
 Negotiation is a goal-oriented process.
 In negotiation, preparation and planning are essential for moving in the desired
direction.
 Negotiation is a process between people, and so personal needs and feelings
have to be taken into account constantly.
 Always remember that the objective of negotiation is to come to an agreement.
 In the event of no agreement, various pressures are brought to bear upon
management by the union such as strikes, go-slow, and boycotts.
 Contract negotiation is an art and a science, but its practice is dependent upon the
issues and the personalities involved and the circumstances under which the
negotiations are conducted.
 Trust and honesty in action is central to the negotiating process. There are two
ways to negotiate: soft or hard. 157
Collective Bargaining  The soft negotiator wants to avoid personal conflict and so make concessions
readily in order to reach an agreement. The hard negotiator views any situation as
a contest and wants to win.
 The principled negotiation approach looks for areas of mutual gain and objective
standard decisions.
12.11 CASE
Manager as Negotiator
A bright young MBA fresh from one of the top management institutes took over his
father’s responsibilities as president in a manufacturing company. The company employed
approximately 1,000 persons in the production division. It had never faced with a
demand for collective bargaining. None of its employees were union members.
The new president, after three years of climbing the ladder to his position, had a
conference with three long-term employees, who explained that they and their associates
had been discussing the desirability of bargaining collectively. The employees had not
voiced any strong criticism of management, but they held several meetings and had
invited representatives of a national union to talk with them. They concluded that they
ought to try collective bargaining and hence formed a union and enlisted a majority of
production employees as members. The three representatives had been elected to the
bargaining committee in order to present a written statement to the president with a
request for a collective bargaining agreement. The three representatives handed over a
series of issues carefully spelled out by the union to the president.
The young executive received them cordially and listened carefully. He accepted their
memorandum and suggested that he would like to take time to study it carefully. He
proposed a meeting with them on Friday of the following week.
When committee members returned, the president reminded them that the company
had been careful to maintain wages and working conditions at least on a par with those
in unionised companies in the same industry and region. He expressed the opinion that
the specific proposals they had presented seemed to him quite reasonable and
appropriate. He also told them that he had been thinking of many of the same changes
and would probably have made them without their request. He was pleased to hand
them their memorandum with a notation indicating his acceptance. The committee
members were quite satisfied with the effectiveness of their negotiations and promised
to get back to the president after getting the proposals ratified by rank and file union
membership.
One week later, the president found the same group of representatives waiting to see
him. They appeared somewhat crestfallen and embarrassed. They reported that they
had gone to the membership and presented a full report of their discussions with him,
explaining his attitude, and recommended formal ratification of the memorandum as a
new collective bargaining agreement. After extensive discussion, when the motion for
ratification came up for a vote, a majority of the membership voted against ratification.
Discussion Questions
1) What is the problem in this case?
2) Why did the members refuse to ratify the agreement?
158 3) What are the guidelines to be followed in a negotiation process.

Negotiation
12.12 SELF- ASSESSMENT QUESTIONS
1) What are the tactics and strategies in negotiations?
2) Successful negotiation should no longer be viewed as an ‘art’. It is far more
appropriate today to refer to it as a “science”. Discuss.

1) Dunlop, John T., and Healy J., Collective Bargaining: Principles and Cases, Richard
D. Irwin Inc., Illinois, 1955.
2) Gottoschalk, A.W., The Background to the Negotiating Process, Gower Press,
1973
3) Thorn, J., How to Negotiate Better Deals, IBH Publishers Pvt. Ltd., Mumbai,
1992.
4) Walton, R.E., and McKersie, R.B. A Behavioural Theory of Labour Negotiations,
McGraw-Hill, 1965.
159

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Block III

After going through this unit, you will be able to:

10.2 MEANING AND CONCEPT OF COLLECTIVE

10.3 FUNCTIONS OF COLLECTIVE BARGAINING

10.4 STRUCTURE OF COLLECTIVE BARGAINING

10.5 NATURE OF COLLECTIVE BARGAINING

10.6 CONTENT OF COLLECTIVE BARGAINING

10.7 TYPES OF COLLECTIVE BARGAINING

Activity 1: Browse through web resources and explain a collective barganing

10.9 ELEMENTS OF COLLECTIVE BARGAINING

10.11 SELF- ASSESSMENT QUESTIONS

10.12 FURTHER READINGS

After going through this unit, you will be able to:

11.2 BARGAINING PROCESS

11.4 COLLECTIVE AGREEMENTS

11.5 CONDITIONS FOR SUCCESS OF COLLECTIVE

11.7 SELF-ASSESSMENT QUESTIONS

11.8 FURTHER READINGS

12.2 NEGOTIATING PROCESS

12.3 NEGOTIATING MODELS

12.4 HOW AND WHY TO NEGOTIATE?

12.5 NEGOTIATION GUIDELINES

12.6 PRINCIPLED NEGOTIATIONS

152  Adopt a friendly tone.

 Display an open mind and willingness to compromise.

12.7 PREPARATION FOR LONG-TERM

12.8 SKILLS AND TRAITS OF NEGOTIATING TEAM

154 11) Controls emotions

13) Measures bargaining moves against ultimate objectives

158 3) What are the guidelines to be followed in a negotiation process.

12.13 FURTHER READINGS

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