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Monday, 20 June 2011

Collective Bargaining

Good relations between the employer and employees are essential for the success of industry. In order to maintain good relations, it is necessary that industrial disputes are settled quickly and amicably. One of the efficient methods of resolving industrial disputes and deciding the employment conditions is Collective Bargaining. Industrial disputes essentially refer to differences or conflicts between employers and employees.
                         Collective Bargaining is a process in which the management and employee representatives meet and negotiate the terms and conditions of employment for mutual benefit. Collective bargaining involves discussion and negotiation between two groups as to the terms and conditions of employment. It is termed Collective because both the employer’s negotiators and the employees act as a group rather than individuals. It is known as Bargaining because the method of reaching an agreement involves proposals and counter-proposals, offers and counter offers. There should be no outsiders involved in the process of collective bargaining.
According to Walton and McKersie the process of Collective Bargaining consists of four types of activities:

1)      Distributive Bargaining: It involves haggling over the distribution of surplus. Various activities involved in this activity are wages, salaries, bonus and other financial issues. In this activity, both the parties face a win/lose situation.
2)      Integrative Bargaining: Also known as Interest-Based Bargaining, issues which are not damaging to either party are discussed. It is a negotiation strategy in which both the parties collaborate to find a win-win solution to their problems. This strategy focuses on developing mutually beneficial agreements based on the interests of the disputants. Issues brought up may be better job evaluation procedures, better performance appraisal methods or training programmes etc.   
3)      Attitudinal structuring: Attitudinal structuring refers to efforts by negotiators to shape their opponents' perceptions about the nature of the issues to be negotiated. By cultivating an atmosphere of friendliness, mutual respect, trust, and cooperation, negotiators can encourage their opponents to view issues largely in integrative terms and participate in joint problem solving. This activity involves shaping and reshaping some perceptions like trust/distrust, friendliness/hostility, co-operative/non-cooperative between the labour and management. When there is a backlog of bitterness between both the parties, attitudinal structuring is required to maintain smooth and harmonious industrial relations.
4)      Intra-Organisational Bargaining: It is a type of manoeuvring to achieve consensus among the workers and management. Even within the union there may be differences between different groups as may be the case with the management. Intra-organisational consensus is required for the smooth acceptance of the outcome of Collective Bargaining.

Objectives of Collective Bargaining:

  1. To maintain cordial relations between the employer and employees.
  2. To protect the interests of the workers through collective action and by preventing unilateral actions from being taken by the employer.
  3. To ensure the participation of trade unions in industry.
  4. To avoid the need for government intervention as collective bargaining is a voluntary collective process.
  5. To promote Industrial democracy.
Characteristics of Collective Bargaining:

  1. It is a group or collective action as opposed to individual action. It is initiated through the representatives of the employees.
  2. It is a flexible and dynamic process where-in no party adopts a rigid attitude.
  3. It is a continuous process, which provides a mechanism for continuous negotiations and discussions between management and the trade unions.
  4. It is a voluntary process without any third-party intervention. Both workers and management voluntarily participate in the negotiations, discuss and arrive at a solution. That is why it is known as a bipartite process where workers’ representatives and management get an opportunity for clear, face-to-face communication.
  5. It ensures industrial democracy at the workplace; it is a self-run government in action.
  6. It is a two-way process. It is a mutual give and take rather than a take home all method of arriving at a solution to a dispute.

                 Process of Collective Bargaining

Preparation for Negotiation

Identifying issues for Bargaining

Negotiation

Negotiated Agreement


Ratification of Agreement
Implementation of Agreement



1.       Preparation for Negotiation: Preparation for negotiation in Collective Bargaining is as important as the negotiation process itself. Upto 83% of the outcomes are influenced by pre-negotiation process. Such preparation is required for both management as well as the union representatives. From the management’s point of view, pre-negotiation preparation is required as:
Ø  Management should decide when and how to open the negotiations/dialogue.
Ø  Management must choose the representatives to negotiate at the negotiation table.
Ø  Draft for likely decisions should be prepared in advance so that the final agreement draft can be prepared as soon as the negotiation process is over.
From the employees’ side also, preparation is required for the following reasons:
Ø  The union should collect the information related to the financial position of the company and their ability to pay the employees.
Ø  The union must also be aware of the various practices followed by other companies in the same region or industry.
Ø  The union must assess the attitudes and expectations of the employees over concerned issues so that the outcome of negotiations does not face any resistance from them.

2.       Identifying issues for Bargaining: The second step in bargaining process is the determination of issues which will be taken up for negotiations. The different types of issues are:
ð  Wage-related issues: Include wage or salary revision, allowance for meeting increased cost of living like Dearness Allowance (D.A), financial perks, incentives etc.
ð  Supplementary economic benefits: These include pension plans, gratuity plans, accident compensation, health insurance plans, paid holidays etc.
ð  Administrative issues: Include seniority, grievance procedures, employee health and safety measures, job security and job changes.
The wage and benefits issues are the ones which receive the greatest amount of attention on the bargaining table.

3.       Negotiation: When the first two steps are completed, both parties engage in actual negotiation process at a time and place fixed for the purpose. There a re two types of negotiations:

  • Boulwarism: In this method, the management themselves takes the initiative to find out through comprehensive research and surveys the needs of the employees. Based on the analysis of the findings, the company designs its own package based on the issues to be bargained. Thereafter, a change is incorporated only when new facts are presented by the employees or their unions.
  • Continuous Bargaining: Involves parties to explore particular bargaining problems in joint meetings over a long period of time, some throughout the life of each agreement. The basic logic behind this method is that all persistent issues can be addressed through continuous negotiation over a period of time. The success of negotiations depends on the skills and abilities of the negotiators.

4.       Initial negotiated agreement: When two parties arrive at a mutually acceptable agreement either in the initial stage or through overcoming negotiation breakdown, the agreement is recorded with a provision that the agreement will be formalized after the ratification by the respective organizations.

5.       Ratification of agreement: Ratification of negotiated agreement is required because the representatives of both the parties may not have ultimate authority to decide various issues referred to for collective bargaining. The ratification of agreement may be done by the appropriate manager authorized for the purpose in the case of management, or trade executives in the case of the employees. Ratification is also required by the Industrial Disputes Act. It is important that the agreement must be clear and precise. Any ambiguity leads to future complications or other such problems.

6.       Implementation of agreement: Signing the agreement is not the end of collective bargaining, rather it is the beginning of the process when the agreement is finalized, it becomes operational from the date indicated in the agreement. The agreement must be implemented according to the letter and spirit of the provisions made by the agreement agreed to by both parties. The HR manager plays a crucial role in the day-to-day administration implementation of the agreement.

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