Adapted from “Innovation in Labor Relations,” first published in the Negotiation newsletter.
In 2004, a team of MIT and Harvard researchers published a study of a bold initiative by health-care giant Kaiser Permanente and its many unions to restructure their relationship. Given the recent spotlight focused on collective bargaining, beginning with a very public battle in Wisconsin, it’s worth revisiting how this union-management negotiation unfolded.
The scope of that endeavor, led by Susan C. Eaton, Robert B. McKersie, and Nils O. Fonstad, was daunting. Eight national and international unions were involved, along with 26 locals; 33 separate contracts governed more than 400 facilities spread across eight states. The goal was to reach a comprehensive agreement with all the unions that was fair economically and, from a management perspective, both efficient and farsighted. Talks took place in a highly politicized atmosphere, given public alarm over rapidly rising health insurance costs. Nevertheless, the parties reached agreement.
According to the researchers, much of the success was due to Kaiser’s and the unions’ acceptance of interest-based negotiation. This isn’t a new concept, of course. Its roots go back at least as far as Richard E. Walton and Robert B. McKersie’s classic model of collective bargaining between unions and management. Walton and McKersie identified the interplay of competitive and cooperative agendas, warning that a single-minded focus on “who gets what” can threaten opportunities to expand the pie for everyone’s benefit.
It has taken years, however, to get some companies and governments and their employees to move beyond simple hardball approaches. Goodwill is necessary but hardly sufficient. In the case of Kaiser Permanente, researchers credited factors such as up-front training in interest-based negotiation for all parties, the creation of “common issues committees” to foster effective coordination and communication, frequent open-ended brainstorming, plus strong leadership and trust.
Interest-based negotiation on this scale requires serious investments in time, money, and personal reputation, but as the Kaiser Permanente experiment demonstrates, the payoffs can be huge.