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Preparing For Labor Negotiations: An Overview

by Kenneth M. Lynn
July 2002

This article is courtesy of HR.com, a website committed to making the lives of HR professionals and business managers easier.

As a member of four national negotiating teams for the U.S. Postal Service, I remember the excitement, apprehension, and activity that preparing for the negotiations generated. Negotiating with multiple unions at one table creates an environment where management is required to understand both the individual union issues and those issues that transcend the entire table, such as jurisdiction issues.

Our pre-negotiation process generated reams of information and reports from field operations. This was critical in developing negotiating scenarios and costing out their outcomes. As a consultant in private practice, I have found that while HR practitioners often approach negotiations with concern, they often turn over the responsibility to professionals from outside the organization who may not fully understand the culture, environment, and the history of the labor contract.

While I feel there is a place for consultants and labor attorneys at the table, I believe it is working with management after undertaking a pre-negotiation process that creates a clear vision of potential outcomes based on the organization's experience with the contract. In my experience, many organizations do not do the preparation work that will allow them to be successful in negotiating subsequent contracts.

The First Steps

Preparation for any negotiation should start with a number of steps designed to develop your negotiating strategy.

Review of Previous Negotiations

Start the process by reviewing union agendas from previous negotiations. The process of reviewing the notes or minutes of previous negotiations will allow the HR Professional to study the arguments made by both sides and review the answers given in respect to the arguments. This is especially useful if the HR Professional was not present at the last contract negotiation. It is very helpful at this point to begin developing an indexed contract review and negotiating strategy book.

Reviewing the plusses and minuses of past negotiations, including the tactics, timing, concessions and gains often provides the best learning experience and predictor of future behavior on the part of the union. Any settlement agreements or any "side agreements" should also be reviewed along with any oral or written commitments made during the prior negotiations and since the last contract.

One of the priorities for the HR Professional should be to follow up on all of the agreements and commitments to determine whether or not they were carried out by management and what operational impact they had on the organization. Often times side agreements or settlements can be included into the next base agreement rather than becoming negotiating issues.

A review of the key issues in the last negotiation is critical. Included in the strategy development should be an assessment of those issues and whether or not they will surface again. It is far easier to develop strategies to deal with each of these issues prior to the negotiations than it is to deal with them at the table.

A review of the personalities that were involved in the last negotiations is important. Who were the dominant personalities and will they be involved in the next negotiations? A review of those personalities with the negotiating team and the development of strategies to deal with their absence or presence can make a big difference in dealing with their influence at the table. It can often times lead to a strategy that opens doors that were once closed.

Review of Operating Experience During the Life of the Last Contract

The manner in which the contract impacted the efficiency and effectiveness of the organization is a measurement that is critical to the negotiating team. This is the place where the HR Professional's relationship with operations management and line supervision can really pay off. Asking the right questions that drive to the contracts impact on operations, quality and productivity provides data critical to the creation of scenarios and outcomes that will enhance the value of the contract to management. A mistake often made by labor relations specialists is asking general input from operating management and accepting lack of input as evidence that the contract may not need modification. A solid approach to generating useful data is a section-by-section discussion facilitated by the HR Professional and attended by the operating management staff.

A good cross check for the HR department and a next step is an analysis of the grievance and arbitration experience during the life of the contract for each article or section in the contract. This data compared to supervisory input will create a profile of the operational problems in the contract.

Consideration of the Unit for Bargaining

A key consideration for management is the construction of the bargaining unit. This is often a choice that management can make in respect to the benefits they may derive from joining other employer groups for bargaining purposes. This is a unique consideration for each employer and should be based on the negotiating track record, composition of the union, cohesiveness of the employer bargaining unit, and the potential leverage of any employer group being considered. If the employer has more than one contract with the same union, another consideration is an evaluation of the pros and cons of a single employer and multi-facility bargaining group. This often takes an assessment of the union's interest in bargaining this contract within a multi-employer or multi-facility framework.

Generating Data

Anyone who has negotiated contracts knows that accurate data in respect to wages and benefits is critical in developing successful outcomes. At a minimum, generation of the following analyses will provide the negotiating team with key baseline comparisons necessary during the economic discussions:

  • A wage chronology showing base, average, and key wage rates over the last 10-15 years.
  • A benefit chronology of the most significant benefit changes in the last 10-15 years.
  • Historical summary of key economic factors of the employer's company such as productivity rates, prices, production levels, sales or revenue volumes, and profits.
  • Chronology of key labor costs such as health insurance, pensions, and vacation pay costs.
  • Summary of labor unit costs including labor cost per hour for the last 10 to 15 years.
  • Recap of labor costs on a gross and hourly basis under the current labor contract. Show the cost of each element of labor.
  • Recap of the hours of work for each facility/operation:
  • Average weekly hours
  • Entire bargaining unit
  • Each work unit
  • Each department
  • Each job classification
  • Unworked paid hours on the job
  • Paid lunch periods
  • Paid break periods
  • Paid wash-up time
  • Paid time off for union business
  • Overtime hours worked for the same units
  • Premium hours worked for the same units

The comparison of this data with the estimates made during the negotiation of the last contract will provide the negotiating team with a test of its costing techniques. Techniques should be modified if large differences are generated. The generation and analysis of this data should result in a summary of the economic provisions of the present contract for quick reference during negotiations. It should also provide the negotiating team with:

  • A wage bracket reference chart with numbers of employees at each wage increment.
  • A matrix showing the number of employees in the bargaining unit according to age and service.
  • A detailed cost breakdown of key labor cost items.
  • A baseline to estimate the cost of new economic considerations at the next negotiation.
  • A baseline to generate employer based economic strategies.

Looking at the Industry

The negotiating team should also look at external factors such as other employer's compensation packages for similar work, major benefits provided by comparable employers, and recent contract settlement terms for comparable employers in the same industry and geographic area. Sometimes looking at comparable employers in other geographic areas can provide the team with favorable economic comparisons.

It is often very helpful for the HR Professional to collect data by interviewing other HR Managers. This can often provide valuable information in respect to the environment of the negotiations, unpublished practices, concessions, attitudes, and other key considerations in the negotiation of a successful contract. Sometimes other employers have implemented innovative measures that can be used by the negotiating team to facilitate the development of the contract.

Development of the Employers Strategies

The last step in the pre-bargaining process is the development of objectives for the negotiations. By the time the team has progressed through the internal assessment, data collection, and external assessment, it is generally ready to establish ranges for economic settlement, changes in non-economic terms and contract language, and any special provisions. Drafts should be generated that address all of the economic and non-economic provisions of the contract. Whether these are offered as initial or as counteroffers is a part of the strategy of the chief negotiator for management. At a minimum, changes in contract wording should be discussed with operating management to insure they capture the essence of the necessary changes.

Management should prepare the background material, data, and any arguments to support all of its proposals. Management should also prepare a rough negotiating timetable to facilitate the completion of the contract. This should include start date, available dates to meet, ideal frequency of meetings, and the timing of the offers based on past negotiations.

HR.Com

This article was provided by HR.com.
HR.com(TM) is a website committed to making the lives of HR professionals and business managers easier. HR.com offers eight communities to address the specialties within human resources, including a section on Conflict and Dispute Resolution in our Labor Relations community. Within each community, users can access articles and research, find vendors/consultants, buy products or services and join discussion groups to learn from their peers.

Biography


Kenneth M. Lynn, BA, MBA, Ph.D., has held senior positions in government and business and taught at the graduate level for over 25 years. Mr. Lynn has lead change initiatives and cultural transformations in organizations from 60 to over 100,000 employees. Through his Seattle area consulting practice, Mr. Lynn delivers services that range from strategic planning, change management and cultural transformation to interim CEO services and organizational development. The company, Communication Educators, specializes in developing team-based strategies that introduce values and practices that employees embrace as new cultures evolve. Mr. Lynn can be reached via email, through the web site or at 206-780-9223.

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