Academic journal article Academy of Educational Leadership Journal

A Labor Negotiation Case Useful in an Introductory Business Course

Academic journal article Academy of Educational Leadership Journal

A Labor Negotiation Case Useful in an Introductory Business Course

Article excerpt


A positive relationship between management and employees is vital to every company's success. Companies seek to hire and retain competent, knowledgeable, productive workers at a reasonable cost while individuals desire pleasant working conditions, high salaries, and generous fringe benefit packages. Entities must efficiently and effectively manage its human resources to achieve its objectives. An important aspect of human resources management that business students should be familiar with is the negotiation process between labor and management to reach agreement on key terms such as wages, retirement plans, and other fringe benefits. This paper discusses the important elements of the labor negotiation process, provides examples of contract proposals made by actual companies, provides a review of relevant literature, and presents and discusses the use of a labor negotiation case designed for an introductory business course. The case involves student representatives of management and labor seeking to reach an acceptable agreement on job security, the retirement plan, life insurance, wages, and vacation time. In addition, the paper provides a statistical analysis of the extent to which the case both increases students' understanding of labor negotiation concepts and issues, as well as measuring the improvement in students' critical thinking and analytical skills, communication skills, and negotiating skills.

The process of negotiating a new labor agreement is commonly referred to as collective bargaining. Business students need a basic understanding of the collective bargaining process due to the overall economic effects it can create. In addition to specific companies and individual unions, collective bargaining agreements and labor/management relations have an impact on the general economy. Strikes and lockouts due to labor/management disagreements affect not only the company and its employees, but also customers and suppliers. In the overall economy, labor agreements can affect wage levels, prices of products and services, and unemployment levels (Leap and Crino, 1993, p. 575).

Employees may be represented by a labor union that negotiates a collective bargaining agreement with company management. Compared to non-unionized firms, companies whose employees are unionized often experience benefits in the form of higher employee morale, increased productivity, and improved relationships between management and labor (Leap and Crino, 1993, p. 613). A collective bargaining agreement, or labor agreement, is a written contract between management and labor detailing specific employment terms such as employee compensation, employee fringe benefits, training, performance assessment, termination and disciplinary procedures, and safety issues.

Employees who are not unionized must bargain individually with management to reach agreement on salary, fringe benefits, and similar employment details. Individual employees do possess considerable bargaining power when the demand for their particular skills and knowledge are high relative to the available supply of similarly qualified people in the labor market. Another consideration is how strongly management desires workers to remain non unionized. The more that management prefers to not have a union representing workers and thus desires to not potentially give up some bargaining power to workers, the more concessions they are likely to provide to individual employees during labor negotiations.

The negotiation of a new labor agreement between workers and management may occur every few years or even more often for many companies. A new labor agreement may be necessary either because most collective bargaining agreements are in effect for three years and the present agreement will soon expire, or because management may consider modifying labor provisions currently in effect (Leap, 1995, p. 241). In certain situations, labor may go on strike unless a new agreement is offered that satisfactorily meets their demands. …

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