CHAPTER 11

(LABOUR RELATIONS: A SOUTHERN PERSPECTIVE)

TRADITIONAL NEGOTIATION
 BACKGROUND OF TRADITIONAL NEGOTIATION
DEFINING THE CONCEPT NEGOTIATION
• SALAMON (1987) DEFINED LABOUR MANAGEMENT NEGOTIATION AS:
 THE INTERPERSONAL PROCESS USED BY REPRESENTATIVES OF MANAGEMENT AND EMPLOYEES AND UNIONS, WITHIN THE VARIOUS
INSTITUTIONAL ARRANGEMENTS OF COLLECTIVE BARGAINING IN ORDER TO RESOLVE DIFFERENCES AND REACH AGREEMENT.

• SALAMON (1987) CHARATERISED NEGOTIATION BY THE FOLLOWING FACTS:

 IT IS UNDERTAKEN BY REPRESENTATIVES ON BEHALF OF THEIR PRINCIPALS,

 THE PROCESS IS DESIGNED TO RECONCILE DIFFERENCES BETWEEN THE PARTIES INVOLVED,

 THE OUTCOME IS DEPENDENT, AT LEAST IN PART, ON THE PERCEIVED RELATIVE POWER RELATIONSHIP BETWEEN THE
PRINCIPALS.

• NEGOTIATION AS TRADITIONALLY PRACTICED IS A PROCESS OF GIVE AND TAKE. IT ENTAILS:

 DEMAND

 OFFER AND COUNTEROFFER

 GRANTING OF CONCESSIONS

 EVENTUAL ACHIEVEMENT OF A COMPROMISE SOLUTION

 ISSUES WHICH TRIGGER NEGOTIATION
• NEGOTIATIONS MAYBE CONDUCTED TO RESOLVE DIFFERENCES REGARDING THE DISMISSAL OF
SINGLE EMPLOYEE OR THE INTENDED RETRENCHMENT OF A GROUP OF EMPLOYERS, OR TO
SETTLE A GRIEVANCE BROUGHT BY AN INDIVIDUAL.
• MAJOR NEGOTIATIONS ARE CONDUCTED TO DETERMINE WAGE LEVELS AND CONDITIONS OF
SERVICE AND TO RESOLVE OTHER IMPORTANT ISSUES.
• NEGOTIATION WILL BE UNDERTAKEN WITH EVERY DISPUTE WHICH ARISES AND WILL HAVE TO
CONTINUE SHOULD A STRIKE OR LOCKOUT OCCUR
 CONFLICT AND POWER IN THE NEGOTIATION
PROCESS
SOURCES OF CONFLICT
 THE EMPLOYER LIKES TO BE IN CONTROL AND TO MAKE ALL IMPORTANT DECISIONS; BUT EMPLOYEES
CONTINUALLY CHALLENGE THIS MANAGERIAL PREROGATIVE.

 EMPLOYEES WANT TO BE INFORMED ON ALL ISSUES AFFECTING THEM; WHILE EMPLOYERS WILL CLOSELY GUARD
INFORMATION, OFTEN AS A SOURCE OF POWER.

 EMPLOYERS MAY BELIEVE THAT EMPLOYEES DO NOT HAVE THE INTERESTS OF THE ENTERPRISE AT HEART;
EMPLOYEES EQUALLY BELIEVE THAT THEIR INTERESTS ARE NOT IMPORTANT TO THE EMPLOYER.

 EMPLOYERS MAY PLACE THE INTEREST OF THE ENTERPRISE , SHAREHOLDERS AND EXECUTIVES ABOVE THOSE OF
WORKERS WHILE WORKERS WANT, AT THE VERY LEAST, TO RECEIVE EQUAL CONSIDERATION.

 EMPLOYEES OFTEN DO NOT ENJOY THEIR WORK BECAUSE THEY CANNOT DEVELOP; EMPLOYERS MAY ENJOY WORK
AND EXPECT THE SAME ENJOYMENT FROM EMPLOYEES.
 CONFLICT AND POWER IN THE NEGOTIATION
PROCESS
METHODS OF HANDLING CONFLICT
• METHOD OF HANDLING CONFLICT MAY BE DIVIDED INTO TWO TYPES:
1. NON-CONFRONTATIONAL APPROACHES, SUCH AS:

 AVOIDANCE

 WITHDRAWAL

 SUPPRESSION

 SOOTHING

2. CONFRONTATIONAL APPROACHES, INCLUDE:

 MAJORITY DECISION MAKING

 BARGAINING OR COMPROMISE

 INTEGRATIVE PROBLEM SOLVING

 NEGOTIATION PROCESS
FACTORS CONTRIBUTING TO THE SUCCESS OF THE NEGOTIATION
PROCESS
INDIVIDUAL SKILLS, INTERACTIONS AND PERCEPTIONS
• THE DEGREE OF SUCCESS ACHIEVED DURING A PARTICULAR NEGOTIATION WILL DEPEND ON:
 THE SKILLS OF THE NEGOTIATIONS
 WILLINGNESS OR PERCEIVED WILLINGNESS OF EITHER PARTY TO ENGAGE IN COERCIVE ACTION
 THEIR PAST RELATIONSHIP
 THE AMOUNT OF TRUST EXISTING BETWEEN THE NEGOTIATORS.

POWER AS THE ULTIMATE DETERMINANT

FACTORS CONTRIBUTING TO THE SUCCESS OF THE NEGOTIATION PROCESS

STRATEGIES FOR GAINING POWER

DURING NEGOTIATION PROCESS THE PARTIES MAY GAIN POWER IF THEY:
 SET RELATIVELY HIGH GOALS AND COMMIT THEMSELVES TO THESE

 HAVE THE SUPPORT OF THEIR CONSTITUENTS OR PRINCIPALS

 CAN MAKE THE OTHER PARTY LOOK BAD

 ENSURE THAT TIME IS ON THEIR SIDE

 ARE WILLING TO TAKE RISKS

 HAVE SUFFICIENT INFORMATION AND SKILL

 CAN CREATE DOMINANCE (PARTICULARLY BY DISPLAYING KNOWLEDGE AND SKILL)

 MAINTAIN CONTACT WITH CONSTITUENTS AND PRINCIPALS

 EXPERTISE OF NEGOTIATOR
• THE MOST IMPORTANT QUALITIES REQUIRED BY A NEGOTIATOR ARE:
 SENSITIVITY TO THE NEEDS, FEELINGS AND PERCEPTIONS OF ALL CONCERNED

 A READINESS TO LISTEN PARTICULARLY TO THE OTHER SIDE

 THE ABILITY TO INTERPRET SILENT MESSAGES SUCH AS FACIAL EXPRESSION

 DISCRETIONARY JUDGEMENT (E.G. KNOWING WHEN TO STAND FIRM, WHEN TO STAND FIRM, WHEN TO
CONCEDE AND WHEN TO USE PARTICULAR ARGUMENTS

 FLEXIBILITY – BEING WILLING TO ADOPT DIFFERENT STRATEGIES AND APPROACHES

 ABILITY TO PRESENT A PERSUASIVE, REASONED ARGUMENT

 GOOD COMMUNICATION SKILLS

 THE ABILITY EARN RESPECT OF THE OTHER PARTY

 PREPARING FOR NEGOTIATION
SELECTION OF THE NEGOTIATOR(S)
SINGLE PERSON OR A NEGOTIATION TEAM
• A MANAGEMENT NEGOTIATION TEAM COULD CONSIST OF THE PRODUCTION MANAGER, FINANCIAL MANAGER, THE COMPANY
SECRETARY AND ONE OR TWO FOREMEN.
• THE UNION TEAM MAY CONSIST OF AN ORGANIZER, ONE OR TWO OFFICIALS AND SOME SHOP STEWARDS.
• THE PREFERRED PRACTICE IS TO KEEP THE TEAM AS SMALL POSSIBLE.
• WHEN THE NEGOTIATION TEAM IS TOO LARGE IT MIGHT INCONVENIENCE NEGOTIATIONS AND MAKE IT MORE DIFFICULT TO REACH
CONSENSUS.

CHIEF NEGOTIATOR
• IT IS CUSTOMARY TO APPOINT A CHIEF NEGOTIATOR WHERE NEGOTIATIONS ARE TO BE CONDUCTED.
• CHIEF NEGOTIATOR IS APPOINTED CHOSEN ON THE BASIS OF HIS OR HER EXPERIENCE, HIS OR HER EXPERTISE AND HIS
HER KNOWLEDGE OF BOTH HIS OR HER OWN ORGANIZATION AND THE OTHER PARTY. HIS OR HER TASK IS TO:
 COORDINATE AND LEAD THE NEGOTIATION TEAM

 GET TO KNOW THE OTHER PARTY

 ADVICE HIS PRINCIPALS IN PREPARING AN OBJECTIVE STRATEGY

 ARRANGE AND LEAD MEETINGS

 CONTINUALLY REPORT BACK AND REFER TO HIS PRINCIPALS

 WITHIN LIMITS, REACH DECISIONS DURING NEGOTIATIONS ON BEHALF OF HIS OR HER PRINCIPALS
 OBTAINING A MANDATE

• BEFORE ANY PREPARATION FOR NEGOTIATION CAN COMMERCE, THE CHIEF NEGOTIATOR OR
NEGOTIATION TEAM SHOULD OBTAIN AN INITIAL MANDATE FROM THE PRINCIPALS.
• THE UNIONS SHOULD OBTAIN A MANDATE FROM THEIR CONSTITUENTS.

• FOR THE UNION NEGOTIATORS IT WOULD ENTAIL BRINGING A MANAGEMENT DEMAND TO THEIR
MEMBERSHIP OR ESTABLISHING THE NEEDS AND DEMAND OF THEIR MEMBERS.
• MANAGEMENT NEGOTIATORS WILL OBTAIN DIRECTION FROM THEIR PRINCIPALS AND BROADLY
ESTABLISH THE SIZE OF THE PACKAGE WHICH THE PRINCIPALS ARE PREPARED TO OFFER.
• A MANDATE IS NEVER ABSOLUTE, AND IT MAY CHANGE AS PREPARATIONS AND NEGOTIATIONS
PROGRESS.
 INFORMATION GATHERING

• IN PREPARATION FOR THE ACTUAL CONDUCT OF NEGOTIATIONS INFORMATION SHARING MAY PROVE THE KEY TO
SUCCESS.

• NEGOTIATION TEAM SHOULD HAVE ALL THE NECESSARY INFORMATION AS ITS DISPOSAL BEFORE NEGOTIATIONS
COMMENCE.

• THIS INCLUDES INFORMATION RELATING CURRENT CONDITIONS, ITS OWN ORGANIZATION AND THE OTHER SIDE.

TYPES OF INFORMATION GATHERING

• CURRENT CONDITIONS

• STATISTICAL INDICATORS
• ORGANISATIONA POSITION
 CURRENT CONDITIONS

IN WAGE NEGOTIATIONS, ECONOMIC CONDITIONS ARE PARTICULARLY IMPORTANT. NEGOTIATIONS

NEED TO TAKE THE FOLLOWING INTO ACCOUNT:
 INFLATION LEVELS

 COST OF LIVING CATALOGS

 LEVELS OF ECONOMIC ACTIVITY

 BUSINESS CYCLES

 INDUSTRY TRENDS

 ECONOMIC FORECASTS

 UNEMPLOYMENT LEVELS

 LABOUR MARKET

 CURRENT TRENDS IN WAGES AND PRICES

 WAGES NEGOTIATED IN RELATED UNDERTAKINGS

 HOUSEHOLD AND MINIMUM SUBSISTENCE LEVELS

 WAGE DETERMINATIONS AND ARBITRATION AWARDS

 STATISTICAL INDICATORS
THE FOLLOWING STATISTICAL INDICATORS ARE FREQUENTLY USED DURING SUBSTANTIVE
NEGOTIATIONS:
CONSUMER PRICE INDEX:
 THIS REFLECTS THE INCREASED PRICE OF GOODS AND SERVICES USED BY AN AVERAGE FAMILY AND IS CALCULATED BY
TAKING APPROXIMATELY 600 CONSUMER GOODS AND SERVICES.
 IT IS USED THE INFLATION RATE AND TO ADJUST PRICES AND WAGES.

INFLATION RATE:
 THE INFLATION RATE IS WIDER AND MORE GENERAL THAN THE CONSUMER PRICE INDEX AND CAN THEREFORE BE LOWER.
 IN ESSENCE, IT SHOWS BY HOW MUCH MONEY HAS DEVALUED OVER A CERTAIN PERIOD AND IS CALCULATED BY TAKING ALL
PRICES INTO ACCOUNT AND EXPRESSING INCREASES ON A PERCENTAGE BASIS.

PRODUCER PRICE INDEX:

 THIS SHOWS THE INCREASED PRICE OF A REPRESENTATIVE BASKET OF GOODS REQUIRED BY PRODUCERS INCLUDING
CAPITAL AND INTERMEDIATED GOODS.

 IT REVEALS THE INCREASED IN THE PRICE OF IMPORTED GOODS MORE EFFECTIVELY AND IS OFTEN USED BY MANAGEMENT
TO PROVE AN ESCALATION IN CAPITAL AND PRODUCTION EXPENSES.
 STATISTICAL INDICATORS
GROSS DOMESTIC PRODUCTS:
 THIS STATISTIC REFLECTS THE TOTAL PRICE OF GOODS AND SERVICES PRODUCED IN A COUNTRY, BUT DOES NOT
UNRECORDED AND NON-MARKET ACTIVITY.
 IT IS USED TO MEASURE THE DEGREE OF ECONOMIC ACTIVITY IN A COUNTRY FROM ONE YEAR TO ANOTHER AND
TO COMPARE WITH THAT OF OTHER COUNTRIES.

PER CAPITAL INCOME

 INCOME PER CAPITAL REFERS TO THE AVERAGE INCOME PER PERSON IN A PARTICULAR COUNTRY AND IS
CALCULATED BY DIVIDING THE TOTAL INCOME BY NUMBER OF PEOPLE.

REAL WAGES
 REAL WAGE LAG IS THE LOSS SUFFERED WHEN PRICES RISE WITHOUT A CONCOMITANT RISE IN WAGES.
 IF THE INFLATION RATE IS 15% PER ANNUM, A WAGE OF R100 IN JANUARY WILL AMOUNT TO A REAL WAGE OF R85
BY DECEMBER.
 ORGANISATIONAL POSITION

THE MANAGEMENT NEGOTIATOR SHOULD HAVE SOUND KNOWLEDGE OF:

 THE ORGANIZATIONAL NEEDS FOR PROFIT, CONTROL, STABILITY AND EXPANSION

 THE ORGANIZATION’S PRESENT POSITION AS REGARDS PROFITABILITY

 THE RATIO OF LABOUR COSTS TO TOTAL COSTS

 THE OPERATION OF EACH DEPARTMENT

 THE PRODUCTION PROCESS

 THE MANAGEMENT STYLES ADOPTED IN EVERY DEPARTMENTS

 KNOWLEDGE OF THE OTHER SIDE

FROM MANAGEMENT SIDE FROM UNION SIDE

• IT IS ESSENTIAL TO STUDY THE UNION, TO • WILL STUDY THE COMPANY AS REGARDS

KNOW: TO:
 ITS POLICY STRATEGY AND PAST HISTORY  ITS MANAGERIAL STYLE
 ITS SUCCESSES AND FAILURES  THE INDUSTRY WITHIN WHICH IT OPERATES
 ITS PRONENESS TO STRIKE ACTION  ITS PAST HISTORY
 ITS AFFILIATIONS  ITS INTERNAL AND EXTERNAL ORGANIZATION
 THE SUPPORT IT MAY RECEIVE  THE WORK PROCESS
 ITS PRESENT POSITION AND INTENTIONS  PROFITABILITY LEVELS, WAGE STRUCTURES
AND LABOUR COSTS.