Collective Bargaining Negotiations and the Risk of Strikes

When collective bargaining negotiations collapse, the threat of a strike often looms large. We offer strategies for avoiding strikes and, when they do occur, getting parties back to the bargaining table.

By Katie Shonkon / Negotiation Skills

Collective bargaining negotiations help level the playing field between individual employees and management by enabling employees to organize and find strength in numbers. But when collective bargaining negotiations fall apart, the result can be a devastating strike.

To take just two examples, back in 1988, the  Writers Guild of America (WGA) strike lasted five months and cost approximately $500 million in lost revenues and wages. The 1994 Major League Baseball (MLB) players’ strike led to the cancellation of the season and led owners and players to lose an estimated $1 billion in the years that followed.

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Usually, disputing parties would do better to remain at the negotiating table than to head for the picket lines. Yet many negotiators fail to recognize this fact until it’s too late.

Causes of Strikes

A number of factors contribute to strikes and prevent parties from reaching agreement in collective bargaining negotiations:

  • Overconfidence leads negotiators on both sides to believe their cases are stronger than they really are, while underestimating the other side’s willingness to stand firm. When one side doubts the other side’s claims, a strike becomes even more tempting.
  • Fairness concerns cause negotiators to reject deals that would leave both sides better off. We sometimes are even willing to pay good money to punish those who treat us unfairly.
  • Agents at the bargaining table can have incentives that are misaligned with the interests of those they represent in collective bargaining negotiations. At times, elected union representatives may be more concerned about appearing to “stand firm” than with working out a deal with management, for example.
  • Viewing negotiation as a competition to be “won” keeps us focused on distributive negotiation at the expense of integrative bargaining, and stands in the way of an agreement that will satisfy everyone’s interests.
  • Incremental commitment to a strike can make it difficult to end one. When the decision to “hold out for a few more days” is repeated, a strike can last for months, even years. Economists have long advised us to ignore our past investments of time, money, and other resources when making decisions about the future. Yet such “sunk costs” weigh heavily on us. The decision to cut our losses can be extremely difficult to make.

How to Defuse a Strike Using Collective Bargaining Negotiations

Strikes often end up being a waste of everyone’s time and money. To avoid or end a strike in collective bargaining negotiations, follow these five steps and enhance your negotiation skills:

  1. Avoid extreme demands. When talks get heated, it’s tempting to draw a line in the sand. But making firm demands is usually a mistake. When you do so, you prevent yourself from considering alternative proposals that might meet your needs just as well. To make matters worse, demands increase the tendency to escalate commitment to a strike.
  2. Take the other party’s perspective. Far too often in negotiation, we assume we fully understand the other side’s interests and goals. This is especially true in competitive situations such as competitive bargaining negotiations, where we tend to fall back on stereotypes. By looking for nuances in each other’s positions, we can open up opportunities to brainstorm the types of creative solutions we propose below.
  3. Get an outside opinion. When collective bargaining negotiations get heated, third parties can add a degree of rationality and impartiality to the proceedings. Before going on strike, seek advice from a disinterested adviser, such as an industry expert. Ask for an objective critique of your plans and encourage your expert to offer alternatives.
  4. Make it a “virtual” strike. In the midst of the 1994 baseball strike, Harvard Business School professors Michael Wheeler and James K. Sebenius proposed a novel solution, which unfortunately wasn’t followed: resume the MLB season, but do not allow owners and players to receive their revenues and pay. Rather, deposit these funds into an escrow fund to be disbursed only after the dispute was resolved. Presumably, the money rapidly accumulating in escrow during this “virtual strike” would motivate both sides to reach a deal. By building virtual-strike clauses into their contracts during collective bargaining negotiations, unions and management could create a situation in which strikes would not destroy long-term value to either side.
  5. Structure contingencies. Contingent contracts are an innovative tool for resolving negotiators’ differences of opinion about the future. When you add a contingency clause to your deal, you place a bet on how events will unfold. For example, if parties disagree about how large profits from a certain revenue stream would be, they could stipulate two different profit-sharing formulas based on their different predictions, and then see how the future plays out.

What advice would you add from your own experiences with collective bargaining negotiations?

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