MANAGEMENT
Background
This was our second negotiation, that being said; I thought we were better prepared to negotiate since our first negotiation went rather well and we were able to negotiate on management’s side with little or minimal counter offers from the employee side. This time however, I felt the scenario placed us on the opposite side of the spectrum in a way allowing us as management to feel what it’s like to be the underdog and have to relinquish most of the control to the employees while heavily defending why we need to reduce wages. The situation described our company of many years having to once again renegotiate employee wages and COLA dollar value being placed into an escrow account to offset employee wages when inflation occurs. After receiving guidance from a retail analyst, the goal was to maintain company profitability by lowering employee hourly wage. After reviewing the case study, our strongest skill set was to communicate to our employees why it was vital to lower their wages. I think in this situation it is of upmost importance to talk to our employees and reassure them that even though their wages need to be lowered, management and the company have their best interest at heart. As we were settled into our side of the negotiation room, we allowed the employees to plead their case as we had done on our first negotiation, but was intrigued by their response. Their rebuttal was for management to state their business as we needed something from them. At that point in time, is when I realized and felt the shift in power from management to the employees and began to reflect on our first negotiation and what they must have felt when we as management were stripping them of their entitlements. From that moment on I knew the employees had done their research, had been coached and were better prepared to give us a run for our money. Wages: Our employees as of now are earning $9.33 an hour, plus COLA in a escrow account and have merit pay based on yearly performance appraisals. Our intent was to lower employee wages to $8.00 an hour with our median at $8.55 applying a one year freeze on the COLA escrow account. Our bottom line was $9.00 dollars and hour, allowing the employees to maintain their merit pay based on yearly performance appraisals and eliminating the COLA escrow account. Again, already knowing the employees had done their homework they claimed we were low balling them! They knew what our employees in other plants were earning as well as the company’s profit margin. What they failed to realize and did not care to listen to was the reason why management had to lower their wages. Yes, the company was making money this year, but due to the consumer demand and all other company’s filing for bankruptcy we needed to make a change before our company followed the exact same pattern. This also brought us to the clause, which based the employees pay on the top thee competitors’ wages. Company profits (Exhibit A): Another main point which I really felt the workers needed to get away from was the fact that the company was at the present year still profitable. When looking at the profits the year before we had dropped and with our competitors filing for bankruptcy that profit drop could only be the beginning. I felt that part of the negotiation was a moot point. As much as we tried to backup our facts, the employees would not get off the fact that the company is continuing to profit. Then I was accused of being able to predict the future. That statement led us to our next counter. We allowed them to put their money where their mouth is. Since the workers whole heartly knew the company was going to continue to produce, we countered with $8.33 with a differed wage option, they would be able to keep the merit incentive and do away with the escrow account. The employees decided to counter our offer, if we had had more time, I believe both parties would have agreed to a figure everyone would be comfortable with. That being said, management went to arbitration. Because every negotiation is different, no matter how often we’ve addressed similar situations. We will always be negotiating with people who have different situations styles, goals and objectives, and who are coming from different circumstances and have different standards. Our main objective during this negotiation was the allocation of resources, in this case employee wages and production. One of the main points we needed to take into consideration was the ripple effect. An agreement with one party may affect business and production with another and can be influenced, with negotiations that will take place in the future. Part of our strategy involved a careful analysis of our BATNA (Best Alternative to a Negotiated Agreement). If our first offer was rejected then we had to continue with our second and third if need to. After various attempts to settle our differences, both the employees and management could not come to an agreement. The employees were set on he company’s net profit and management was set on lower employee wages in order to prevent the company’s downfall. Due to the groups disagreement we had to move to an alternative dispute resolution (ADR), which would allow management to take the employees to arbitration. We believe to have a good case when entering arbitration due to the clause. This clause would allow us to pay the employees hourly wages based on the to three competitive companies. That being said, again I believe management had a great case. I strongly believe we would have came to an agreement if we would have had a little more time. As every good negotiation needs to be properly researched, prepared and offers reviewed in a timely manner.

References
Carrell, M.& Heavrin, C. (2010). Labor Relations and Collective Bargaining-U.S and Global practices, (9th Ed.), Prentice Hall. ISBN -13 978-0-13-700900-8 USBN-10 0-13-700900-3.