Scenario #3: Negotiation: Thawing the Salary Freeze
I. Introduction
This scenario depicts a negotiation between labor and management. For an
Organizational Behavior or Management course, this vignette will stimulate a
discussion on negotiation skills and, potentially, ethics. Instructors of HR-related
courses will find this vignette useful in discussing the labor-management
negotiations process.
II. Learning Objectives
1. To assess students’ understanding of the negotiation planning process and
effective execution.
2. To analyze a negotiation and identify effective and ineffective strategies and
behaviors that occurred during the negotiation.
3. To have students identify key issues related to labor-management negotiations
and the legal and managerial implications, therein.
III. Scenario Description:
Overview: An upper management executive of a magazine publishing company,
JBL Publishing, is negotiating with a Union representative regarding production
workers’ contract. The main issues are salary increases, health benefits, and
flexible work schedules. The Union representative is irate, because she just found
out, prior to this meeting, that the executive board has received enormous bonuses
for the year, at the same time they are refusing to budge on salary increases for
the production workers.
Profile:
 Katherine Knudsen has a degree in Marketing and Management and a law
degree. At JBL Publishing she is Vice President of Production, managing
operations and production. In addition to overseeing these departments,
Katherine handles all contract negotiation and labor relations.
 Alisa Jackson holds a Bachelor of Arts degree in Sociology. She has
been a union organizer and representative for over eight years, with
efforts focused on re-negotiation at the local level. Alisa has a
renegotiation success rate of 95%, winning better terms in one or more
categories per contract. The renegotiation with JBL publishing is her first
in the printing industry.
References: The references included in the DVD are:
 Bargaining Zone for Negotiation (PPT 3-3)
 Concepts in Negotiating (PPT 3-5)
 Integrative Bargaining Strategy (PPT 3-6)
 Key Negotiator Behaviors (PPT 3-11)
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Back History: Knudsen and Jackson have been meeting and talking frequently
regarding the contract renegotiation for the unionized labor force working in the
printing press/production building. Jackson is a new representative for Local
1087, coming from an airline workers union where there were always very tough
negotiation meetings. Knudsen has been the VP of Production at JBL for 10
years and has negotiated all the contracts over that time.
The renegotiation thus far has addressed the following issues:



A 7% wage increase for workers with seniority
An improved benefits package across the board
More personal days and schedule flexibility to accommodate family needs
Knudsen has said flat out “no” to the wage increase – the company has a salary
freeze for all employees – labor and management included. Knudsen has slightly
improved the health package and is considering the schedule issues.
Scene Set-up: Jackson has called an immediate meeting. She wants to discuss the
executive bonuses and win more money for the union employees.
Scene Location: Knudsen’s Office; JBL Publishing; Wednesday 3:00pm
The Meeting - Summary: Alisa described her surprise that executives were
receiving large bonuses when Katherine had said there was no money for salary
increases. She immediately threatens to go the newspapers with this perceived
inequity. Katherine explained that the money allocated for bonuses was based on
last year’s performance even though the checks were cut this year. Alisa comes
close to accusing Katherine of not disclosing this information that she feels is
pertinent to the current contract. Katherine explains that it is not pertinent to the
current contract because that money was budgeted last year and does not pertain
to this year’s cash flow situation. Alisa then pursues the option of reallocating
the bonus money so that the workers may receive a share of the money currently
allocated only to upper management. Katherine agrees to draft a bonus
distribution plan and present it to Alisa within the week. The two shake hands
and are gracious to each other at the conclusion of the meeting.
Afterthoughts – Summary: Katherine admits that the executive bonuses were
more relevant to the current negotiation than she let on. She had held out on
mentioning the bonus distribution option because she represents the company and
didn’t want to have to do that unless it was absolutely necessary because that was
the only concession she had to make. Alisa’s threat to go to the press to disparage
the company concerned Katherine but she did not want give up too much. Now
that they will create a bonus-sharing plan, Katherine says she will work very hard
to make that solution work because she recognizes the value of hourly workforce
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to the revenue of the company and strongly believes in working towards a fair
solution that will reward the employees if the company does well.
Dossier: The specific artifacts included in the DVD are:
1. Email Summary of Knudsen and Jackson’s previous meeting
2. Email sent to Jackson re: the ‘sweet deal’ JBL Execs will be receiving
3. Excerpts from previous contract
IV. Discussion Questions:
The References and related Discussion Questions may be found in PowerPoint slides 3-1
to 3-12.
Learning Objective #1: To assess students’ understanding of the negotiation planning
process.
1. The “Bargaining Zone for Negotiation” (PPT 3-3) shows where the potential area
of agreement may be. However, without planning and determination of one’s
initial offer, target point, and resistance point, a negotiator may be at a
disadvantage during the negotiation.
What evidence of planning was
demonstrated by Alisa and Katherine?
See answer for #2
2. For both Alisa and Katherine, describe how planning impacted their ability to
successfully negotiate.
Alisa received an email from a friend saying that he heard that executives
at JBL Publishing were receiving large bonuses. She planned to use this
information as leverage in the negotiation process as well as threaten to
talk to the newspapers about the perceived inequity. This strategy did
work to Alisa’s advantage because it caused Katherine to concede on the
distribution of future management bonuses. She also insinuated that
Katherine was engaged in an unfair labor practice because she did not
bargain in good faith when she did not disclose the executive bonuses.
This approach was not that effective because Katherine took it personally
and could have ceased or significantly hindered future negotiations.
From the “Afterthoughts” it was clear that Katherine had investigated
every option that she would have during the negotiation process. Because
she did not have much, she did everything she could to not give-in to the
union’s demands. Katherine’s plan was to focus on the exact issue the
union asked for – salary increases – instead of finding alternatives that
would satisfy the union. Katherine’s plan was successful in that the union
representative seemed satisfied with the tentative agreement, did not ask
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for more, and did not intend to go to the newspaper to create bad press for
the company.
Learning Objective #2: To analyze a negotiation and identify effective and ineffective
strategies used and behaviors that occurred during the negotiation.
1. What aspects of the distributive and integrative bargaining approaches (see PPT
3-5 & 3-6) did Katherine demonstrate during the negotiation? Justify your answer
with examples from the scenario.
While in the end Katherine supports an integrative approach that is fair to
all employees, she initially takes a distributive approach because she
wants to give in to the union as little as possible. She does not mention
other alternatives and “hides” behind financial logistics by saying the
money that is being paid was from a different pool of money. An
integrative approach is characterized by discussing the various options that
would create a win-win outcome from the beginning.
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1.
A.
B.
C.
What strategy should Katherine take?
Continue to clarify
Apologize for omission
Change subject
Katherine should continue to clarify the situation. Apologizing for the
omission may make her appear guilty of an unfair labor practice by not
bargaining in good faith. If she changes the subject she will also appear to
be insincere in her bargaining and it will avoid the issue the union is most
concerned about.

2. Why does Katherine offer to show her pay stub?
A. Proof of salary freeze
B. Exert power
C. Change subject
She wants to make it clear and irrefutable that salaries of management
have not been raised either.

5. Why didn’t Katherine offer this [bonus distributions] earlier?
A. Just thought of it
B. Just persuaded
C. Was stonewalling
Katherine didn’t want to offer her only point of leverage too soon because
she had nothing else to offer. Therefore, she held out on this solution until
she absolutely had to – she was stonewalling.
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2. What aspects of the distributive and integrative bargaining approaches (see PPT
3-5 & 3-6)) did Alisa demonstrate during the negotiation? Justify your answer
with examples from the scenario.
Alisa’s goal is to get more money for the workers she represents. While
initially she tried for salary increases, she was open to other alternatives.
Her approach of threatening the management and accusing them of
withholding information, however, was not indicative of an integrative
approach because she focused on the person, not the problem.

4. What should Alisa argue?
A. To split bonus money
B. Union will strike
C. Get better benefits plan
The union could strike on a mandatory issue, which salary and benefits
are. This, however, would emphasize the union’s position, rather than the
common interests of both parties. Offering to split the bonus money
would present an alternative solution that would meet the needs of the
employees (more money) and prevent a disgruntled workforce. If
Katherine had outright rejected the idea to split the bonus money,
threatening to strike may be the only alternative. Getting a better benefits
plan was already in the works.
3. What is the superordinate goal (see PPT 3-5) in this situation? How would a
discussion of this goal aid the negotiation process?
The superordinate goal is the company’s success. If the company is not
successful, neither management nor the union will have jobs. Establishing
a common goal will aid the negotiation process because the ideas and
issues discussed should be linked to the company’s ultimate success.
Therefore, data and information presented during the negotiation as to
how salary increases, management bonuses, benefits, etc. will benefit the
company directly will have the most impact on the negotiation outcome.
Learning Objective #3: To have students identify key issues related to labor-management
negotiations and the legal and managerial implications, therein.
1.
Katherine discussed a potential solution (bonus sharing) that had not previously
been discussed before. Is this an example of “unlawful circumvention” according
to labor laws? Why or why not?
No, because she was discussing this with the union representative. If
Alisa had been an employee who was not explicitly representing the
union, this would have been a case of unlawfully circumventing the union.
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2. Assume Katherine refused to make a concession to Alisa’s request. According to
the National Labor Code, could Alisa organize a strike?
Yes, because the two parties were negotiating a new contract and salary
and benefits are “mandatory subjects” that have to be bargained in good
faith.
3. Refer to the “Key Negotiator Behaviors” (PPT 3-11). Assume you are
representing management (like Katherine in this scenario). What exactly would
you do in this situation? Indicate a specific example for each of the key
negotiator behaviors.
Answers will vary. Students should identify opportunities to use an
integrative approach.

1. Katherine is accused of lying. She should:
A. Demand apology
B. End negotiation
C. Refute accusation
This is an example of a person, not problem oriented behavior. Katherine
should refute the accusation and indicate that personal attacks will not
facilitate the negotiation process.

6. In this negotiation….
A. JBL gave too much
B. JBL gave too little
C. Nothing was resolved
Katherine and Alisa seemed pleased with the outcome of the negotiation.
It seems that both parties were bargaining in good faith and would come
up with a mutually beneficial solution.
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