Published in Blog
Aug 14, 2023 |
Last Updated Aug 16, 2023
For organizations with collective bargaining units, collective bargaining negotiations occur once every three years or so, depending on the duration of an organization's current agreement. It is an important event. While the proportion of an organization's costs attributable to labour will vary widely by industry, the dollar amounts involved are likely to be substantial. Across many companies and organizations, it is not unusual for the wage bill associated with the collective agreement to be in the order of magnitude of tens of thousands of dollars or typically 25%+ of revenues. In service industries, the labour bill can be even more significant.
Collective bargaining is a serious business activity with the threat of labour disruption a distinct possibility. The good news - despite the inherent threat of a potential strike, the chances of successful bargaining without a hiccup are substantial. Over 98% of all collective agreements are settled without a strike or disruption. Looked at a different way, the risk of a strike is less than 2%. Of course, on the other side of the ledger, while the risk is low the impact of a strike can be very significant.
Strikes lead to lost revenue, reduced profitability, damaged reputation, loss of good will, and cultural disruption. Any of these results can have a lasting impact on the relationship between management and the organization's employees. A strike is never a healthy thing for any organization.
Nevertheless, the most important consideration is the realization that the threat of a strike can be the most important factor in negotiations rather than the strike itself. The unions' bargaining leverage is largely the perception of your organization's vulnerability to the impacts of a strike. If a strike is seen as something that is not particularly consequential then the union has virtually no leverage. If a strike would be devastating and it is perceived to be avoided at all costs, then the union has tremendous leverage.
With this backdrop in mind, the most important element the chief negotiator needs to have is confidence.Confidence comes from being well prepared. It is the result of many hours of working to understand the collective agreement and how it is administered and interpreted. Confidence is having a clear understanding of the business' objectives, their value and what can and cannot be negotiated. Confidence is knowing the numbers. Confidence is understanding your right to manage the change needed, and the strength to negotiate any collective agreement changes needed. Finally, confidence is not being afraid of a strike, and this can only be the result of being very well prepared for any and every contingency.
Keep in mind alignment is key. Often, the most difficult challenge facing the chief spokesperson for an organization is not convincing the union representatives of the deal and how it should end up, but rather convincing the senior executive team what is the most successful agreement for the organization. It's always easier if everyone is on the same page.
Getting a solid mandate from the executive team is critical to your success as a negotiator. You should have a complete picture of what you need to secure a deal and ultimately this means the chief negotiator must know exactly what the organization needs in order for it to successfully realize its business plan. While collective bargaining can seem very transactional and perhaps tactical, in reality it is part of a process that ultimately drives important elements of the organization's overall business strategy.
Given this level of importance it is essential the executive team understands what is at stake and fully supports the negotiator's plans for achieving bargaining success. Often this is difficult because the executives have not come to realize the possibilities, good or bad, represented by collective bargaining outcomes. For whatever reasons many executives dismiss collective bargaining as being nothing more than a minor transaction. They simply fail to understand how collective bargaining fits into the larger context of the organization's business planning process. Bargaining and its outcomes are not simply a cost of doing business but rather a fundamental component of the business' overall strategy.
What do you need to succeed? If a unionized organization wants to be successful it ought to put a lot of effort into being really good at collective bargaining. Think about how someone becomes good at anything. To excel at a sport, you do not decide the week before an important game to start to practice or train. To be successful one invests time well in advance. Coaches are hired to help you hone your game. Practice to help hone your skills. Competition helps sharpen your abilities, and effort yields results. If you need resources, get them - and use them. These resources, whether hired on a temporary or permanent basis, can provide the guidance, support and bench strength required to field a winning team. Bargaining once every few years with an understaffed team is difficult when facing a seasoned union negotiator who is not only supported with a much bigger and better resourced union team but who is actively in the negotiations game several times a year.
When should you start the collective bargaining process? The best time to prepare for your renewal agreement is right after the current agreement has been negotiated. There are some first steps, often missed, that will help pave the way for the next round. The first key step is to take the time to debrief all the stakeholders who have an interest in bargaining on precisely what has just been agreed to and what the consequences are for the organization.
Start with the executive team and/or Labour Relations Steering Committee. While it is important to allow yourself to feel the confidence you have gained after you have successfully negotiated an important deal, it is equally important the executive team realizes this is part of an ongoing process. It is a process of continuous improvement geared towards enabling frontline employees and their supervisors to be more productive. One goal of bargaining should always be for the executive team to simplify the lives of workers and the people in charge of them so they can concentrate on doing the job safely and efficiently.
Following the senior group, the next important group to debrief is the frontline supervisors and managers who have to live with the new agreement. You want to win them over so they will be the agents of change as you move the culture int he direction you intended. Having just negotiated an agreement you believe will make the organization better, your next challenge is ensuring it is implemented correctly. It ought to be very clear the chief negotiator, regardless of his or her role in the organization, is not going to effect change without the frontline supervisors on her or his side.
Do not forget the other people who administer the agreement. In particular, remember the payroll department. They have to make things work. When payroll gets things wrong it can be very damaging to employee morale. On the flip side, when payroll works perfectly there is no recognition for the people who do all this work. It is simply expected. Therefore, it is important the negotiator takes the time not only to debrief the administrators but also to recognize the good work they do year in and year out.
Now flip all this around. Managing the collective agreement is an ongoing process and not a singular event. Develop and nurture your resources. Over the course of the current collective agreement, you want to create open channels with these key groups so they can give you feedback regarding what is working and what needs to be changed. Rather than waiting to the last minute, it is better to have continuous feedback so a complete picture can be formed regarding why things work or do not work. As you develop the process of managing the agreement you will essentially be on a continuous quest to identify opportunities where it can be managed better or where there is a need to negotiate a change.
It is important to directly engage with the employees. True, it is the union's responsibility as their representative to inform them regarding what has changed. However, it's even more powerful when the organization invests the time to debrief the employees on what the new agreement means for them. Too often the collective agreement is seen as the "union agreement." But it is more. It represents the terms and conditions the organization has agreed to. The wages are the wages the organization wants to pay. The organization owns the agreement. This simple change in mindset is significant, and you will be surprised how much this change can influence the culture, improve labour relations and reduce disputes down the road.
By taking these approaches, hopefully it will lead to a change in your perspective and that of management. Many years ago, (perhaps even as recently as the 1980s), it was an accepted principle in management ranks that labour relations in general, and collective bargaining in particular, were at best a "reactive" exercise. The union made demands and management reacted. In the pursuit of improving labour relations, key influencers in the field of Labour Relations realized to make the requisite changes management needed to learn how to be proactive. Successful organizations need to always be actively engaged.
We still have a way to go on this quest to understand the strategic importance of Labour Relations and Collective Bargaining. However, developing this understanding starts with the people who assume the roles as chief negotiators. If you want to be successful you are going to need to be prepared; you need to be confident; you need to have a game plan with strategic objectives; you must be adequately resourced; you must have a strong mandate and the support of the senior team; and you need to be proactive. If ever there was an opportunity for the labour relations practitioner to make a strategic contribution - this is it.
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