Page 119 - DMGT519_Conflict Management and Negotiation Skills

Unit 5: Role of Power in Negotiation

Notes
breakdown in negotiations because invariably, conflicting monetary issues arise that
result in a showdown between the two parties. Negotiating on an issue by issue agenda
does not present the opportunity to make concessionary trade-offs between the different
issues.
For example, in January, 1993, management and labour of Bayou Steel in Laplace, Louisiana,
sat down to negotiate a new contract. Neither side dreamed that these talks would lead to
a strike. Each side believed that they had built a solid relationship. Management went into
the negotiations thinking and believing that if they used a win-win negotiation concept,
they would increase and enhance the relationship between the shop floor and management.
Even Ron Farraro, president of United Steel Workers of America did not conceive of the
possibility that talks would collapse into a strike, and that a negotiated contract would be
reached with little or no difficulty.
Management of Bayou Steel enlisted the help of two facilitators from the FMCS (Federal
Mediation and Conciliation Services) to guide management through a win-win style
negotiation with its workers. The president of Bayou said that the facilitators helped them
identify each side's objectives and concerns, and led him to believe that they had in effect,
resolved 90% of the contract issues.

The facilitators set up an issue by issue agenda. They left the economic issues such as
incentives, base pay, overtime, and vacation time as the final issues to be discussed.
Management believed that they had correctly addressed the employees' concerns about
these pay issues.

However, union members became suspicious about management's good intentions to
take a win-win approach. They began to believe collectively that this negotiation approach
by management was a disguised ploy meant to undermine their position, especially on
the economic issues.

At first, negotiations went relatively well and as predicted. Yet, as the economic issues
were placed on the table for discussion, the situation quickly turned upside down into a
hard nosed bargaining negotiation. Management attempted to stay the course with a win-
win approach, but this no longer washed with the union. Can you guess what happened?
That's right – union members walked and went out on strike.
By using an agenda to address the format of the contract negotiations, Bayou Steel failed
to consider that any single issue could be so divisive. As the economic issues rose to the
foreground of the talks, Bayou Steel no longer had leeway in considering trade-offs. They
literally painted themselves into a corner because of their structured of agenda items.
We need to be able to compare and contrast all the issues collectively, and by order of
relative importance. Package or multiple offers offer a greater latitude in finding creative
solutions as it gives us more to work with, as opposed to dealing with issues on a one-on-
one basis through a pre-designed agenda. Planning and using a Concession Strategy
effectively can give one side a big power advantage over the other. So be careful to plan
your agenda wisely.
Question:
Analyse the case and discuss the case facts?
Source: http://www.icmrindia.org/casestudies

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