Introduction to Management

Fourth edition

by Richard Pettinger

Employee relations: a note on collective bargaining


This note is adapted from previous editions of the book. The subject of collective bargaining remains important both in terms of workplace staff management, and also in developing an understanding of how the present state of HR and employee relations has arisen in particular organisations. Collective bargaining is additionally a major issue in the development of staff management practice, and has been used as the main instrument in the formalisation of working relations across the great majority of UK industrial, commercial and public service sectors at some point over the years.

Collective bargaining is the term used to describe the traditional process by which agreements between employers and employees, or their respective representatives, are made. Agree­ments may be at national, regional, local, sectoral, or plant and unit level. This may involve very senior and highly trained personnel at sectoral or national levels, and elected lay representatives at local levels.

Collective bargaining is an integral part of UK HR and employee relations management. It has been used extensively as a significant strategic approach to the management and resolution of industrial and workplace conflict; and its influences remain to the present in:

  • many parts of manufacturing and distribution;
  • mainstream public services;
  • the air, sea, road and rail transport sectors;
  • any organisation where there are more than one single set of terms and conditions of employment.

Collective bargaining is concerned with making and delivering agreements on all aspects of employment practice. Of particular importance are:

  • terms and conditions of employment;
  • pay rates and pay rises;
  • changes in working hours and practices;
  • job and work descriptions and volumes and quality of work carried out;
  • working hours;
  • health and safety at work;
  • redundancies and lay offs;
  • the relationship between technology and employment;
  • training and development.

In this context, two separate strands of the bargaining process can be identified: the substantive, or what is to be negotiated; and the procedural, how it is to be done, and how procedures and other regulatory instruments are to be used.

It is clear thus far that collective bargaining is based on mistrust and conflict - a fundamental divergence of interest between employers and employees. At stake, initially, therefore, is a basis on which the two can agree to cooperate together at all. This is made more difficult or extreme where there exists a long history and tradition of workplace conflict. Collective bargaining is a strategy and structure for the management of this conflict.

It is vital to understand that collective bargaining is largely behavioural, and that the ritualised nature of labour relations and bargaining is expected by all those involved; and that failure to recognise and satisfy the formalised patterns of behaviour can lead to escalation of conflict, rather than its resolution.

Much of the process is therefore stylised and ritualised, and anyone who wishes to operate it effectively must understand the importance of this. The purpose must be to use the instruments and the language involved to gain workplace agreements that at least contain conflicts that are inherent.


Behavioural Theories of Labour Relations

Walton and McKersie (1965) distinguish four inter-related processes.

  • Distributive bargaining: The resolution of conflicts of interest. This is the classical collective bargaining process. It concludes a consideration of the costs, benefits and opportunities afforded by each side of an industrial dispute; the ability and strength of each party concerned; and the bargaining position, tactics and postures to be adopted. The process consists of presenting the opponent's standpoints and likely responses to particular moves; the use of tactics which influence the opponent's perceptions; the manipulation of the opponent's perceptions of his own position of strength, either by changing his views of the value of his own demands or by changing his view of the unpleasantness or unacceptability of the other side's proposals; presenting the costs of the dispute to one's own advantage; setting deadlines, 'final dead­lines', 'final final deadlines', and so on; and manifesting all of this in a degree of commitment that is necessary to ensure victory in the dispute. Finally, in such a situation it may or may not be necessary to demonstrate that one side has won at the expense of the other; in such cases, forms of words and other face saving formulae may need to be devised.
  • Integrative bargaining: This is the process by which common or comple­mentary interests are found and is the means by which problems are resolved in a way that is in the interests of all parties concerned. In this way, both sides gain; the purpose therefore is not to conduct a dispute but to find means of resolving it in the interests of all concerned. The confrontational postures and stance indicated above do not form part of integrative bargaining. The process adopted rather uses a problem-solving model - that is, the identifying of the issue or matter of concern; searching for alternative solutions and extrapolating their consequences; and from this, choosing a preferred course of action.
  • Attitudinal structuring: This is the process by which each side influences the attitudes of the participants towards the other. In this situation attitudes are formed and modified by the nature of the orientation that each party has towards the other and towards the matter in hand. This may either be competitive, whereby the parties are motivated to defeat or win the other over to their own point of view; individualistic, in which the parties concerned pursue their own self-interests without any regard for the position of the other; or cooperative, whereby each party is concerned about the other as well as its own position. An extreme form of this may be a form of collusion, whereby the parties concerned form a coalition in which they pursue a common purpose, possibly to the detriment of other groups within the organisation.
  • Staff relations: The final matter to be considered here is the form of intra - organisational style of staff relations, that is concerned to maintain a balance and equilibrium about the organisation; and to prevent issues from arising that affect this balance. The main part of this process is to ensure that people understand the true nature and strength of their own position; to ensure that people's expectations are met; and to ensure that the two are compatible.

Source: D Walton and A McKersie (1965) A Behavioural Theory of Labour Relations McGraw Hill .


The ‘rules’ of collective bargaining

The rules of collective bargaining are as follows. These rules each and collectively underline the nature of mistrust and the potential for conflict inherent.

  • The first offer or claim is always made on the basis that it will be rejected (if for any reason it is accepted straight away, it generally causes resentment rather than instant satisfaction).
  • There then follows a process of counter-offer and counter-claim, with each party working its way gradually towards the other.
  • The content of the final agreement is usually clearly signalled before it is made; and the basis of what is genuinely acceptable to each party is signalled also.
  • Serious disputes occur either when one side is determined not to settle; or when there is a genuine misreading of the signals
  • Settlements reached are normally couched in positive terms in relation to all concerned, to avoid the use of words such as 'loss', 'loser', 'climb-down' and 'defeat', which have negative connotations for anyone associated with them, and tend to store up resentment for the future, and polarise attitudes for the next round of negotiations.

The following standpoints in the bargaining process may be usefully identified.

  • It may be necessary to settle with one group or part of the workforce, at the expense of others.
  • It may be possible to resolve problems to the satisfaction of all concerned It may not be possible to satisfy everyone.
  • It may be necessary to take a hard initial stance to try and persuade the other party to revise its expectations.
  • It may be necessary to build informal contacts on the part of both/all parties to try and establish what the real outcomes demanded by each are.

Part of the function of the process is also to structure the attitudes of each party towards the other, and to try and build impressions of honesty, trust, openness, firmness, reasonableness and fairness, as necessary. A fundamental credibility must also be established in terms of delivering anything that is finally agreed; and this applies both to employees and their representatives, as well as the employers and managers.


Objectives of bargaining systems

Within this context, collective bargaining systems have three specific objectives.

  • To provide the means for agreeing the price of labour.
  • To provide a means of industrial governance, and workplace rules and regulations.
  • To provide a means for controlling the stresses and strains inherent in any work situation.

Formal and informal bargaining systems

There are both formal and informal systems to be considered. The former is constituted with agenda, objectives, purposes, outcomes, deadlines and time­scales; the latter is the means by which the former is oiled, and consists of corridor meetings, contacts and networks that enable the formal system to function. Public services, municipal and local authorities, and multinational companies tend to have both sophisticated formal procedures, and highly developed networks also.


Work organisation traditions

There are histories and traditions of work organisation to be addressed also, either through the reformation of bargaining activities, or through the effective management of a wide range of employees' representatives and multi-unionism. All this has its origin in the differentiation of occupations, demarcation, restrictive practices, and barriers to occupational entry, devised by groups of workers to protect their trades and give them a measure of exclusivity; and allowed to grow by employers, partly because their need for staff was over­whelming, and partly also because they had no alternative to offer.


Employee expectations

There are employee expectations that have either to be met, or under­stood and dealt with. In the immediate past, employees have expected an annual percentage pay rise and improvement in conditions, devised partly to offset the effects of inflation: the 'annual pay round' is a feature of the industrial West. There have also arisen concepts of 'pay leagues', whereby a given occupation would offer terms and conditions of employment in relation to other occupa­tions - to alter these 'leagues' generated resentment on the part of those occupations which perceived themselves to be moving down the 'table'. So there is an expected percentage annual pay rise which has to be managed within the confines of the bargaining process; and closely related to this is the general concept of the 'going rate' for a job - the anticipation that, by joining a particular occupation, a known range of benefits will be forthcoming.


Conclusions

The purpose of illustrating the nature of collective bargaining is to ensure that the material is known and understood as a key form of organisational behaviour in some sets of circumstances and situations. In many cases it is clearly not a rational approach to the overtly effective management of staff and employee relations; and it is easily perceived as diluting the effectiveness of the overall HR and staff management approach. However, in many organisations, it is the best that can be expected in given and present sets of circumstances. Anyone wishing to reform it has therefore to have something to put in its place, and whatever is proposed must satisfy the conditions of:

  • meeting the expectations of the staff;
  • building trust;
  • managing conflict;
  • delivering the key results required on pay and terms and conditions of employment;
  • delivering and managing consultation;

as well as providing the basis for effective co-existence and co-operation in organisations, sectors and occupations where there is a long history and tradition of workplace conflict and bad HR and employee relations. This is not to say that it cannot be done; and the history of collective bargaining has shown that there are better ways; but the strategic approaches required are often beyond the willingness of any organisation in practice.

Richard Pettinger
November 2006