How are cooperative problem-solving methods different from traditional bargaining?


Chapter Thirteen

Union-Management Cooperation Many labor relations practices are adversarial—organizing, bargaining over wages, disputing contract interpretations, and the like. But many argue that both unions and managements can achieve improved outcomes through cooperation. The catalyst for cooperation is often the financial exigency of the employer and the specter of potentially large job losses.

This chapter explores variations in union-management cooperation and their effects, including interest-based bargaining, community-based labor- management committees, employee involvement programs, gainsharing, and work and organization redesign. In reading this chapter, consider the following questions:

1. How are cooperative problem-solving methods different from traditional bargaining?

2. Can a cooperation program violate labor laws? 3. What are some results of cooperative programs? Are they equally likely

to lead to successes for both unions and managements? 4. What types of cooperation programs are in current use by employers

and unions? 5. Are union-management cooperation programs sustainable in the long



A succession of economic cycles has influenced outcomes for labor and management. Labor supply and union power have been altered by sev- eral waves of immigration. The Railway Labor Act, Norris-LaGuardia Act, and Wagner Act strengthened labor’s ability to organize. The Taft- Hartley Act and Landrum-Griffin Act increased employer power. At various points, new production technologies substantially reduced the

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need for lower-skilled union members. Today global competition affects the survival of some employers and the jobs of a diverse set of workers. During the past 40 years, industries that virtually monopolized domestic markets, such as steel, motor vehicles, consumer electric and electronic products, textiles, shoes, and software, now either need to be globally competitive or may no longer exist in the United States. Foreign competi- tors benefited from investment, technology transfer, and, particularly, lower wages for unskilled workers that boosted their productivity or lowered costs at a faster rate than was the case for domestic producers. Some of this was due to unions’ abilities to increase wages and some to employers’ failures to invest in technology. Both groups were respon- sible for not attending to the way work and production were organized as foreign producers implemented new and improved methods. 1 Some companies failed and local unions were decimated, while others sur- vived and prospered. In most cases, companies and unions in basic industries that have survived have changed their approaches to each other considerably.

Organizing and the Evolving Bargaining Relationship U.S. employers have traditionally fought unionization. Even some employers in heavily unionized industries have implemented active union avoidance programs by fighting new organizing, shifting produc- tion from unionized plants to new greenfield operations , and reducing investment in unionized plants. 2

Adversarial relationships carry over from organizing to bargaining and implementing contracts. The union needs bargaining successes for its officers to be reelected and for the union to avoid decertification. The legal specification of mandatory bargaining issues increases the union’s emphasis on immediate economic issues and turns emphasis away from employer and union survival issues. As noted earlier, managers have generally been judged on their ability to avoid unionization or to limit its impact. In dealing with the union, managers tend to view a cooperative relationship as one in which the union has an insignificant role in deci- sion making. 3 Thus, neither party’s leaders are initially motivated to seek cooperation.

Evidence also suggests that unions win initial certification because employees are interested in exercising their voices in the employment rela- tionship. But to management, coordinating with unions to create opportu- nities for this to occur may seem like a legitimization of union efforts.

1 J. Hoerr, And the Wolf Finally Came (Pittsburgh: University of Pittsburgh Press, 1989). 2 T. A. Kochan, H. C. Katz, and R. B. McKersie, The Transformation of American Industrial Relations (New York: Free Press, 1986). 3 M. M. Perline and E. A. Sexton, “Managerial Perceptions of Labor-Management Cooperation,” Industrial Relations, 33 (1994), pp. 377–385.

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Preferences of Management and Labor Management seeks the highest profit level it can achieve through investing its capital. It makes investment decisions that shift resources from product lines with lower returns to those with higher profits. To do this, it needs to be able to adapt. From an unconstrained standpoint, it would prefer to open, close, and retool plants as needed; hire labor on a flexible basis; and adjust wage rates to meet changing product market conditions and to respond to shifts in the labor market.

Employees are generally assumed to be risk-averse, while employers are assumed to be risk-neutral. This means employers are looking for the highest rate of return, consistent with the risks they expect to encounter, while employees are assumed to accept lower pay if they can simultane- ously reduce unemployment and other risks. Employees are risk-averse not because they have an inherent dislike of risk but rather because their skills are often occupationally specific, and perhaps specifically tailored to their present employer’s requirements. Thus, their human capital is not diversifiable. They depend on continued employment, often with their present employers and in their present occupations, to be able to earn a sat- isfactory return. Employees are also interested in improving their economic outcomes, particularly when the employer is able to help them do so.

Levels of Cooperation and Control Given the way mandatory bargaining issues are defined in the labor acts and employers’ antipathy toward organized labor, managers have sought to retain as much control of the workplace as possible. Labor has generally been reluctant to seek shared responsibility for decision making given its adversarial role and the economic concessions it might have to make to gain a greater say in decision making. Both employers and unions began to consider cooperation during the 1980s in situations where companies or facilities were in extremis.

In some situations, in return for economic concessions, unions have won greater claims on the rights to control processes and share in profits. Provisions have been negotiated to increase the proportion of employees’ pay that is at risk, usually to help ensure employer survival and increase employment security. The effect of participation in gaining rights can flow along two dimensions: control and return rights. Control rights involve the degree to which labor participates in organizational decision making. Unionization, in itself, introduces a degree of control rights because the employer can no longer unilaterally decide wages, hours, and terms and conditions of employment. At the extreme, control rights would include works council arrangements (as in Germany—covered in Chapter 17) and representation on corporate boards of directors. Return rights begin with wage payments and progress through incentive plans, profit-sharing and gainsharing programs, and ultimately to employee stock ownership of the

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enterprise. 4 Conflicts over control rights and unions’ general disinterest in broader return rights, the historical antipathy of employers, and adver- sarial relationships in bargaining have made the creation of joint problem solving difficult.

This chapter explores initiatives in union-management cooperation to jointly accomplish their separate goals. Part of this is done through inte- grative bargaining during contract negotiations and part through devel- oping ongoing cooperative relationships. Many cooperation experiments are initiated through side letters in the contract or through agreements to suspend contract provisions to experiment with new methods.


Integrative bargaining is a set of activities leading to the simultaneous accomplishment of nonconflicting objectives that solves a common prob- lem for both parties. 5 Conflict occurs when parties have different goals and either the need to share resources or task interdependencies block one party’s goal attainment if the other party pursues a certain course. 6 For example, shared resources may be available hours of work, and different goals may be overtime premium earnings for the union and high profits for management. One party’s accomplishment will interfere with the other party’s goals. Integrative bargaining occurs when one party’s goal will not block the other party’s goal. Parties may not immediately know integra- tive issues that might emerge from a failure of distributive bargaining to achieve the goals the parties desired.

Two major types of integrative solutions may alleviate this conflict. The first is a situation in which both parties experience an absolute gain over their previous positions. For example, in the 1980s, auto workers at Ford achieved permanent job security in return for new work rules to reduce costs. Second, integrative bargaining may involve both parties’ sacrificing simultaneously (in distributive bargaining, one’s gain is the other’s loss). 7 Steel industry wage concessions in the early 1980s reduced labor costs enough in several situations to induce employers to invest in new technol- ogy, thus lengthening the likely employment of many steelworkers.

Change processes in union employment situations require that certain conditions exist. Increasing internal or external pressures felt by both parties should lead to the consideration of new joint ventures. Multiple

4 A. Ben-Ner and D. C. Jones, “Employee Participation, Ownership and Productivity: A Theoretical Framework,” Industrial Relations, 34 (1995), pp. 532–554. 5 R. E. Walton and R. B. McKersie, A Behavioral Theory of Labor Negotiations (New York: McGraw-Hill, 1965), p. 5. 6 S. M. Schmidt and T. A. Kochan, “Conflict: Toward Conceptual Clarity,” Administrative Science Quarterly, 17 (1972), pp. 359–370. 7 Walton and McKersie, Behavioral Theory, pp. 128–129.

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constituencies within the union and/or management would stimulate efforts to arrive at innovative procedures for dealing with joint problems. Where the normal collective bargaining process and its attention to crisis situations is used exclusively, innovation is less likely. Joint commitments are more likely when a program is seen as accomplishing important ends for both and when both are willing to compromise on goals they desire. Programs should enable early measurable progress toward goals for both parties to maintain support from their constituents. Many of each group’s members must experience benefits, and these benefits should not detract from accomplishing other important goals. Programs should be insulated from the formal bargaining process, and usual methods for distributive bargaining should continue. 8

While management may propose integrative bargaining when the effects of economic change need to be addressed, distributive reasons often underlie the overture. If a change can’t be negotiated, management may signal its intent to close a facility. Capital is far more mobile than labor. A plant can be sold and resources redeployed, but the financial bur- dens workers face, especially if the firm is the dominant employer in the area, are often very onerous. 9

Several conditions are necessary for facilitating problem solving. First, parties must be jointly motivated to reach a solution. Second, communica- tions between parties must reveal as much information about the problem as possible. Third, parties must create a climate of trust to deliberate over the issues without taking advantage of disclosed information. 10

Integrative bargaining is appropriate for both immediate and long-term problems. For example, an integrative solution may be appropriate when a contract issue causes grievances during the agreement. Rather than wait- ing until the next negotiation, addressing the problem immediately may lead to positive outcomes for both parties. On the other hand, anticipated consequences of technology changes may be long-term and may require an open-ended relationship extending beyond the contract period.

Mutual-Gains Bargaining A contract is based on the assumption that current conditions will con- tinue during the length of the agreement. By the time a situation reaches the point that both parties will suffer if the contract is not changed, each may have lost a substantial amount (e.g., employer profits and union members’ job security).

8 T. A. Kochan and L. Dyer, “A Model of Organizational Change in the Context of Union-Management Relations,” Journal of Applied Behavioral Science, 12 (1976), pp. 59–78. 9 E. A. Mannix, C. H. Tinsley, and M. Bazerman, “Negotiating over Time: Impediments to Integrative Solutions,” Organizational Behavior and Human Decision Processes, 62 (1995), pp. 241–251. 10 Walton and McKersie, Behavioral Theory, pp. 139–143.

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A climate in which both the employer and the union would be con- tinually concerned with problem solving and mutual improvement in their situations would call for a living agreement. 11 This would require that the parties determine, a priori, what types of events would trigger prob- lem solving. Where contracts typically include the possibility of reopeners based on the passage of time, this would require that certain employer and employee outcomes would trigger joint problem solving to deal with them. In Canada, Saskatoon Chemicals and the Communications, Energy & Paperworkers Union have agreed to continuous bargaining, particularly with relation to interest-based issues and work redesign. 12

In bargaining, withholding information or threatening opponents breaks down trust. It’s difficult to define and address problems straight- forwardly unless each party trusts the information the other provides. Principled negotiations require that bargaining be on the merits of the issue, providing information that would enable both to arrive at a mutually agree- able solution. 13 Trust does not occur spontaneously, however. It follows from attitudes toward trust itself, and the experience the parties have had with the perceived trustworthiness of their opponents. 14 Where a trust relation- ship doesn’t exist, the parties will need training and an opportunity to build trust in simulated relationships before beginning to bargain in situations where they are at risk. Even trained bargainers may encounter problems because their constituents are primarily interested in tangible outcomes, not necessarily the effort that it takes to build an infrastructure of trust.

FMCS Innovations The Federal Mediation and Conciliation Service (FMCS) has worked for over 25 years to develop tools that help parties improve their bargaining relationships. These tools include relations by objectives, bucket bargain- ing, and technology-assisted group solutions. While each of these will be examined separately, aspects of the three innovations may be combined in a particular bargaining situation.

Relations by Objectives Creating and sustaining a trusting relationship can be difficult because bargaining often involves both distributive and integrative issues simul- taneously. Relations by objectives programs train negotiators to take a problem-solving approach in negotiations and contract administration.

11 C. Hecksher and L. Hall, “Improving Negotiations: Two Levels of Mutual-Gains Interventions,” Proceedings of the Industrial Relations Research Association, 44 (1992), pp. 160–168. 12 L. Clarke and L. Haiven, “Workplace Change and Continuous Bargaining: Saskatoon Chemicals Then and Now,” Relations Industrielles, 54 (1999), pp. 168–193. 13 R. Fisher and W. Ury, Getting to Yes: Negotiating Agreement without Giving In (Boston: Houghton Mifflin, 1981). 14 S. C. Currall, “Labor-Management Trust: Its Dimensions and Correlates,” Proceedings of the Industrial Relations Research Association, 44 (1992), pp. 465–474.

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The technique brings union and management members together outside a negotiating setting to mutually plan actions to reduce future conflict. The program is designed to increase the skills of union and management negotiators in communicating, mutual goal setting, and goal attainment. It assumes that improving problem-solving skills and obtaining increased information will enable each side to better appreciate the other’s positions and to specify bargaining issues. Evidence about the effectiveness of these programs is mixed, with some positive effects on the time necessary to negotiate agreements. But adverse economic conditions erase the effects, especially if the negotiator for either side changes. 15

Bucket Bargaining The bucket bargaining model is based on the idea that there are five types of issues in bargaining: minor issues, past-problem issues, change issues, discussion issues, and economic issues. The bargaining issues that emerge are screened into five “buckets”—update, repair, redesign, discussion, and economic. Figure 13.1 shows the bucket bargaining process. Bargaining begins with the update bucket and moves toward the right. The figure shows tools that are used to assist bargaining within each of the buckets. Studying how other parties have solved similar problems may reveal “best practices” that the negotiators might want to examine or adopt. Another method is to create a team with members from both parties to come up with a “straw design” that they present to the bargaining team. They don’t defend the design, but they note comments and criticisms and then modify the proposal by incorporating feedback from both sides in subsequent versions. These are labeled “wood,” “tin,” and “iron,” in turn. The iron version is not debated but is either accepted or rejected. 16

The economic portion of bucket bargaining uses established guidelines to frame the issues in the economic package, rank or prioritize them, iden- tify and define costs, identify interests of the parties, and agree on the tools for analysis. Then a straw design is developed, and the parties use their problem-solving techniques to develop standards and arrive at a solution that fits the standards. Figure 13.2 details the economic bucket process. The aim is to avoid a strictly sequential approach to bargaining and to deal first with issues that can readily be resolved and then to handle in a final reconciliation those that can’t be settled within their bucket.

Technology-Based Group Solutions Technology-based group solutions (TAGS™) provides bargainers with a net- work of laptop computers. Participants enter comments and suggestions at their keyboards that are displayed and categorized before the group.

15 R. Hebdon and M. Mazerolle, “Mending Fences, Building Bridges: The Effect of Relationship by Objectives on Conflict,” Relations Industrielles, 50 (1995), pp. 164–185. 16 K. Saunders, “Bucket Bargaining: Best Process in Interest Based Bargaining,” Labor Law Journal, 50 (1999), pp. 83–96.

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Language for proposals can be changed to reflect suggestions agreed to by the entire group. The time necessary for negotiation, a permanent record of the comments, and the ability to vote secretly all enhance the amount of information that can be transmitted quickly and enhance the ability to reach a consensus. 17

The Use and Effects of Interest-Based Bargaining The FMCS compared the results of interest-based bargaining (IBB) to negotiations where traditional methods were used. 18 The study found that unions were more likely to use IBB if they had a less experienced

FIGURE 13.1 Bucket Bargaining Process

Source: K. Saunders, “Bucket Bargaining: Best Process in Interest Based Bargaining,” Labor Law Journal, 50 (1999), p. 87.

Type issue

Core process




� Editorial � Housekeeping � Compliance

� Frame issue � Agree on tools

� Assign to individual or subcommittee � One text


Problems with � Intent � Application � Content

� Frame issue � Define interests � Agree on tools

� Problem-solving process � Best practice � Straw design � One text


Challenges to � New concepts � Restructured concepts

� Frame issue � List “why” interests � List “why not” interests

� One-party straw design � Reframing


� Permissive � Exploratory

� Frame issue � Stipulate intent



� Wages � Direct costs

See Figure 13.2

See Figure 13.2


17 For more information, see 18 J. Cutcher-Gershenfeld, T. Kochan, and J. C. Wells, “In Whose Interest? A First Look at National Survey Data on Interest-Based Bargaining in Labor Relations,” Industrial Relations, 40 (2001), pp. 1–21.

Chapter 13 Union-Management Cooperation 437

negotiator, were in a service industry, and were dealing with a manage- ment bargaining team having internal disagreements. Union negotiators’ preference for using IBB was associated with having less negotiating experience, being male, dealing with a management team having internal conflict, and not being located in the middle Atlantic states.

For management bargainers, use of IBB was associated with pressure around new technology and with not being in construction, manufactur- ing, or service industries. Preference for using IBB was associated with less negotiating experience, a perception that the bargaining relationship is cooperative following negotiations, pressure around new technology, and not being in manufacturing, construction, or service industries.

Contracts negotiated using IBB were more likely to have increased work rule flexibility, new pay arrangements, joint committees, and team- based work systems. Most economic issues were not influenced by IBB. The greatest effect seemed to be on the ability to negotiate complex issues. There are differences in goal emphasis between union and management

FIGURE 13.2 Bargaining Economics

Source: K. Saunders, “Bucket Bargaining: Best Process in Interest Based Bargaining,” Labor Law Journal, 50 (1999), p. 52.

Core Process



� Agree on economic package � Frame issues in package � Rank or prioritize issues � Define unit cost of each issue � Define package interests � Agree on tools

Tools 1. Straw design 2. Expert panel 3. Problem-solving process � Develop options � Agree on standards � Apply standards




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negotiators who prefer to use IBB. Management negotiators are more likely to be interested in new pay arrangements and teams, while union negotiators are less likely to be interested in those issues. Work rule flex- ibility and willingness to reduce benefits were higher for union bargain- ers preferring IBB but lower for management negotiators preferring IBB. These findings raise some caution flags regarding long-term sustainability of IBB in a particular bargaining situation.


Since the early 1980s, cooperative initiatives outside contracts and inte- grative bargains within contracts have increased, enhancing firm per- formance and improving job security. An analysis of contracts involving 1,000 or more employees and expiring between 1997 and 2007 found that 47 percent included cooperative provisions. 19 Figure 13.3 shows the coop- eration continuum, while Table 13.1 shows the incidence of cooperative clauses by levels of cooperation.

Given management’s long-standing antipathy toward unions, it’s reasonable to expect collaboration only where improved performance is expected. Cooperation has been successful where communication between the parties is open, management accepts the representational role of the union, and the union is concerned about the success of the enterprise. 20

Figure 13.4 models the proposed impact of collaboration on per- formance. It suggests that the intensity of cooperation is influenced by a cooperative structure and the relative power of the union and the company as modified by organizational constraints. Over time, the labor-management relations climate also influences intensity. Changing labor-management relations, the relative power of the company, and organizational constraints lead to changes in company performance. The availability of union and company power implies they will use it to influence cooperation. Applying relatively equal power should enhance cooperation efforts where both parties prefer it as a mode for achieving important ends for each. 21 A cooperative climate is promoted by the union’s willingness to adopt an integrative bargaining approach,

19 G. R. Gray, D. W. Myers, and P. S. Myers, “Cooperative Provisions in Labor Agreements: A New Paradigm?” Monthly Labor Review, 122, no. 1 (1999), pp. 29–45. 20 R. W. Miller, R. W. Humphreys, and F. A. Zeller, “Structural Characteristics of Successful Cases of Cooperative Union-Management Relations,” Labor Studies Journal, 22, no. 2 (1997), pp. 44–65. 21 W. N. Cooke, Labor-Management Cooperation (Kalamazoo, MI: W. E. Upjohn Institute for Employment Research, 1990), pp. 93–95.

Chapter 13 Union-Management Cooperation 439

• FULL COOPERATION • Decisions on strategic issues • High-performance practices • Guarantees of employment security • Decisions on traditional issues • Committees to review mutual concerns that arise • Statement of commitment to cooperate • INTENT TO COOPERATE

FIGURE 13.3 The Cooperation Continuum

Source: G. R. Gray, D. W. Myers, and P. S. Myers, “Cooperative Provisions in Labor Agreements: A New Paradigm?” Monthly Labor Review, 122, no. 1 (1999), p. 31.

Number of Percent of Percent of Provision Contracts All Contracts All Employees

Total in sample 1,041 100.0 100.0