Case Study

Let us consider the following scenario. It is that testy time again at RealTek Industries, where wages are to be negotiated. The wage agreement is about to expire and Harry Clarke, the HRM is to lead the salary negotiations. This is the final time he will be doing so and Harry wants to ensure his successor, Joy Burnett, understands the intricacies of the process of negotiation.

The company has had excellent financial results and profits are up. This is well known as the company has been featured in the local news during the last two financial years as one of the more profitable businesses in the community.

The majority of the staff is unionised and represented by one union, the Workers United Party or WUP. They have been the workers representative for the last 10 years.

Now let us assist Harry in briefing Joy about the process of wage negotiations. The following are among the main steps that Harry discusses with Joy as the way forward:

1. Submission of the proposal for revision of the collective agreement. It is preferable for the Company to take the lead and submit a proposal to the Union. (The person who presents the proposal is akin to the person who serves first in a tennis match. This is a psychological advantage).

In order to submit the proposal the following must be done:

a. Meetings of key personnel from all departments to examine the projections of the company, its future strategies, the various constraints which might affect the performance of the company, etc;

b. The lead negotiator must obtain information on the financial forecasts, including alternative permutations, of selected wage increases as well as the cost of possible changes in working conditions.

c. The lead negotiator has to use the financial information presented to help determine the proposed length of the collective agreement;

d. The lead negotiator also has to determine the Best Alternative to a Negotiated Agreement. (BATNA).

2. The lead negotiator must select a negotiating team and assign roles to each team member.

3. The team should engage in extensive preparation including the conduct of simulation negotiation exercises.

4. Review the counter proposal from the Union.

5. Set dates for meetings with the Union. ( It is useful for the parties to agree to a set of dates up front to allow for continuity in the negotiating process)

Questions

1. discuss the strengths and weaknesses of the process outlined by Harry Clarke in the case study at RealTek Industries
2. Highlight any key elements that are likely to be problematic
3. Indicate, with timelines, an ideal process of wage negotiations for a company