Contract Negotiation
Professor Bruce Fortado
University of North Florida
MAN 4401/6411 Labor Relations
Contract negotiation sets the rules under which the parties will live. This process has received the most attention from academics in Labor Relations. Strikes and lockouts are often portrayed as breakdowns in negotiations and typically receive attention in the press.
Therefore, grasping this subject is crucial to understanding the field. Many aspects of the process have much broader application than will be presented here in terms of one striving to move toward one’s goals in view of a counterpart’s strength.
The right of individuals to pursue their interests collectively is the ideal behind our system of labor-management relations. In order to have freedom, one must be able to influence one’s own affairs. The right to strike/lockout is a crucial piece of a free society.
Some people cringe at the costs, but strikes/lockouts represent a key check in our system of checks and balances. While critics abound, the status of the U.S. in the world speaks well for the benefits of a free society outweighing the costs. The parties themselves know what is the best agreement for them to live under. No government body or third party neutral will ever understand the situation as well as the direct parties. Strikes and lockouts help to facilitate agreement by applying pressures that bring people together from extreme positions. The managers lose their profits, while the workers sacrifice their wages. There would not be any meaningful negotiations if both parties could not impose costs on the other. In many cases, the threat of a strike is enough. Having a contract expiration deadline greatly helps the parties to reach agreements by putting limitations on posturing, stalling, bluffing, and the like. Both parties have a motivation to make compromises to avoid the mutual loses a work disruption entails.
Strikes are currently on the decline. It has been calculated that only two percent of negotiations have resulted in strikes. This two percent receives far more press than the negotiations that were peacefully settled. The amount of lost work time should not be dismissed, but coffee breaks consume more time.
Some win-win negotiations criticize the way most labor-management negotiations are conducted as “win-lose” or even worse “lose-lose.” Why are people so preoccupied with money? More than money is normally at stake: one also must consider factors such as status, pride, respect, self-esteem and face. While both sides may suffer monetary loses, this stance ignores the social and psychological factors involved.
The Substance of the Negotiations
Normally, the union will notify the management 60 days before a contract expires that changes will be sought in contract negotiations, and then notify the FMCS 30 days before the contact expiration date. What subjects are open to negotiation? There are two common scenarios. Often, the parties will do a complete contract negotiation every three years, and may reopen a select number of sections in the interim years in addition to wages. When the parties are negotiating the “complete book,” there are some subjects that are mandatory for employers to discuss, some are permitted, and a few are illegal.
The general categories covered under “wages, hours and working conditions,” have

legally been spelled out in greater detail. The Supreme Court gave guidance in what falls in each category in the Borg-Warner case (1958). The mandatory subjects include, among others, all forms of compensation (rates of pay, wages, incentives, bonuses, etc.), hours (shifts, overtime, etc.), drug testing, and subcontracting or relocating of union members’ work. The permissive subjects include among others the pension benefits of retired workers, use of the union label, prices in the cafeteria, continuance of the past contract, employment of strike replacement workers, child care, employee representatives on the corporate board, and plant closings. The prohibited subjects include the closed shop, hot cargo clauses and discriminatory treatment. In short, unions normally can only make progress on the mandatory issues when they have some leverage in terms of the threat or reality of a strike. Employers sometimes offer concessions in the permissive category, such as a union officer being placed in the corporate board, in return for union concessions on mandatory items, such as wages and job classifications.
Some Important Concepts
Walton and McKersie (1965) described several important concepts The Behavioral
Theory of Labor Negotiations.
Distributive Bargaining = Negotiations over a fixed pie. What one side gains, the other loses (cars, homes, labor-management, etc.). One must be careful with information. One may be taken advantage of if you are too open. Yet, no agreement may be reached if you are too secretive. This is often depicted as “win-lose” process. It is competitive, however, both sides may leave feeling satisfied and respect his/her counterpart.
Integrative Bargaining = A better solution is said to exist for both sides. This is often termed a “win-win” process. Here one needs open communication, innovative ideas/brainstorming, and trust to succeed. This is sometimes termed problem solving or collaboration. Since there are normally some monetary issues, and a degree of risk is always involved that one will be taken advantage of, pure integrative situations are rare.
[Note: One should not simply label negotiations one enjoyed as integrative and those that one did not enjoy as distributive. One should think in terms of the goals or the tactics used in the negotiation as being either integrative or distributive.]
Intraorganizational Bargaining = This refers to the bargaining that goes on within the same team prior to the negotiation sessions and in the caucuses during the negotiation sessions. The bargaining within one’s own team can be quite heated. Each person wants to be heard, recognized, and has high expectations for the other team member’s conduct.
It is often easier interacting with the other side, because you expect less of them.
Attitudinal Structuring = This refers to managing relationships. These are non-issue related statements that shape ones action orientation: including among others, feelings regarding toughness/softness, trust, credibility, friendliness/hostility and beliefs about legitimacy

Bargaining Power = The ability to move toward your goal in view of your counterpart’s strength (Chamberlain and Kuhn, 1967).
Bargaining power should be thought of as a relative concept:
Costs of Agreement Costs of Agreement
(Self ) _________________ :: (Other) ________________
Costs of Disagreement Costs of Disagreement
For example, if a union member loses $1,000 in wages for a week long strike, while management loses $50 million, the workers can be said to have bargaining power.
There are two fundamental paths in negotiation (Stevens, 1963):
(1) make your counterpart reluctant to remain at his/her position
(2) show your counterpart that your position is not so bad (an education process: provide justifications, compare it to others, ...)
The relevant costs and benefits fall into three general groups:
(1) monetary issues (the tangibles)
(2) social issues
(the intangibles)
(3) psychological issues
For example, one should consider factors such as:
- loss of face with one’s constituency
- pride in beating the other
- character checks (Pork Chop Hill- being concerned over the future implication)
- credibility/reputation It is easier to close a mind than to open one.
Bargaining Structure
Bargaining structure plays an important role in determining the party’s options in maneuvering to obtain his/her goals. Defining this complex concept is almost as slippery as defining love. Roughly, we will be concerned with (a) how decisions are made in a union setting and (b) where the decisions are made. In other words, we will examine the locus (location) of decision-making. Perhaps the easiest way to grasp this is by looking at the most complex arrangement first.

There are four potential building blocks of bargaining structure. We will start with the lowest level and move progressively upward
Informal Work Groups = job design and social factors / informal and involuntary
Election Unit = Determined by the NLRB
Negotiation Unit = Corporate and Union Structure
/ formal and involuntary
/ formal and voluntary
Unit of Direct Impact = Economies of Industry and tradition/ informal and voluntary
GM
Ford
Informal Work Group (Fractional Bargaining)
Election Unit (Plant Portion of the Contract)
Negotiation Unit (Company Contract)
Chrysler
Steel
Unit of Direct Impact (Pattern Bargaining)
Rubber
You can think in terms of multiple tiers of decision-making. One might think of the percentage wage increase being determined via pattern bargaining, the absolute wage change on a company wide basis, the local (plant) conditions are set at the election unit level, and very specialized accommodations will be made at the work group level. When one thinks in terms of making centralized decisions, the costs of disagreement will be high if an agreement is not reached. When one conversely makes a decision in the local work group, a high degree of concern can be devoted to local concerns and peculiarities.
The degree of centralization-decentralization has implications for administrative efficiency (specialists and fewer negotiations), stability (the number and size of strikes/lockouts), bargaining power, union organizing, inflation, expression of individual interests, and adjustment to technological change. People will only consent to centralization if the gains outweigh the lost of freedom of action and the lessened attention given to local issues. Getting the proper mix of general versus local considerations is no easy task, especially since conditions change over time. If problems are not directly addressed at one level, the frustrations may change form and surface at another level of the bargaining structure. This could make resolution even more difficult.
There have been shifts in the decision-making processes of many parties over time. The early objective of many union leaders was to centralize negotiations, so they could better match the power of their employers. Over time, more attention was given to accommodating local goals, while at the same time attempting to maintain power. This is what resulted in the multi-tier decision making process described above. As we entered the massive shift termed restructuring and re-engineering in industry during the 1980s-

date, great changes have been introduced. In general, pattern bargaining has eroded.
More talks regarding local concessions were held with the managers playing plant off against plant to see who would concede more to save their jobs, given that some plants were inevitably going to be closed (e.g. Maxwell House in NJ and Jacksonville).
Historically, why did people engage in “pattern bargaining?” When one had the same percentage wage increase, or the exact same absolute increase, one obtains comparable wages. Employers may be relieved to take wages out of the competitive equation by having them equalized across an industry. The union in order to succeed must take control of the labor supply and then strive to raise and equalize wages. When favorable settlements have recently been publicized, negotiators will naturally cite them to further their objectives. When the news is unfavorable, the negotiators will talk about how those settlements reflect very different situations.
During the late 1970s, many people blamed inflation as being fueled by pattern bargaining and COLAs. Given that inflation was brought to a halt by means other than wage and price guidelines, one seldom hears about cost-push inflation anymore. Few union workers were fully COLA protected. The best contract often provided 50% COLA protection from inflation.
During the rapid inflation of the 1970s, the rubber workers fell far behind their brothers who had COLA clauses. The URW engaged in a 17-week strike to get a hefty catch-up and a COLA. As the rubber industry entered the 1980s restructuring, non-union plants were opened in the south, and plant-by-plant strikes were taken to obtain concessions. Concerns about job classifications, work rules and adversarial relations at times were even more important than the wage levels. During this period, many unions took cuts in return for new investment in plant and equipment as well as restrictions on subcontracting. Still, many union jobs were lost. In recent years, the use of nontraditional workers (leased, temporary and part-time) has become a major concern.
Certainly patterns can and have been broken. When Chrysler neared bankruptcy in the 1980s, concessions were obtained from the UAW that broke the old pattern with
GM and Ford. Saving the company and the workers jobs were more important than maintaining the pattern. While the labor costs were equalized for the US automakers, the unions did not control costs overseas. This proved troubling in many industries as transport costs fell, and the infrastructures in many foreign countries improved sufficiently to support competitive plants. Given that equal pay for equal work is a core value of every union, having a company paying less, or new workers on lower pay scales
(i.e. the airline industry), creates long-term stresses. U.S. unions must strive to eliminate such discrepancies. Nevertheless, organizing outside the U.S. and Canada seems unlikely.
Various Tactics
Many strategies are two-edged swords that both managers and union leaders can adopt depending on the situation. Whipsawing refers to a divide and conquer strategy. One might also call it a domino theory, were one domino falls, setting off a chain reaction. A union selects one employer, probably the most profitable one, to start with. The threat of a strike will be used, and possibly actually be acted upon, to obtain a favorable settlement. The healthiest employer will not want to lose business during a strike to his competitors, and the settlement may well be affordable. Business that is lost in such

strikes may not entirely return after the strike is over. For example, UPS did not regain all of its customers after the 1997 Teamster strike. Once a favorable settlement is achieved, the union moves on to the next healthiest employer, and then the next, asking for the same settlement. This is how patterns were first established. In the auto industry, the UAW typically started with GM or Ford.
Employers can counteract whipsawing by forming an employer association . For example, various mine owners formed the Bituminous Coal Owners Association
(BCOA). If one member of the association is struck, the other may lockout their employees. Alternatively, financial compensation may be provided to the struck firm.
During the 1980s-date restructuring, many employers employed whipsawing. For example, General Tire took strikes at individual plants and progressively divided and conquered its unions to obtain concessions. The employer had enough inventory, and production from other non-stuck plants, to endure lengthy strikes.
The terms doublebreasting and greenfields have been used to refer to having new nonunion operations in addition to union operations. Doublebreasting was first seen in the construction industry. The term is an analogy to the two parallel rows of buttons on a sports coat being like having parallel union and nonunion contractors working for the same employer. Greenfields refer to the new industrial plants being constructed in rural settings, marking a shift away from the old urban plants where unions organized during the 1930s. When you have both union and nonunion facilities, there is a long-term threat that resources and work will be progressively transferred to the nonunion sector.
This tends to lessen demands and enhance the chances for concessions. Further, if there is a strike, the employer will not be totally shut down. This means the employer has more bargaining power.
This analysis rests on an important organizational element that needs to be underscored. One must recognize the difference between horizontally integrated operations and vertically integrated operations. Rubber plants have historically been horizontally integrated, while auto plants have been vertically integrated. Rubber plants tend not to depend on one another, because each makes its own separate and complete product. If you remove one plant from the chain, the rest continues to operate.

Economies of scale in the auto industry historically have produced specialized plants that feed into one another. When critical plants are removed, entire chains of operations often come to a halt. This structure tends to give unions much greater bargaining power.
Having nonunion facilities will only help here if the union cannot break the chain.
A union normally wants to organize all the horizontal outlets in an industry. One must always be careful about using terms like “always,” because many situational nuances exist. Consider a situation where there are a number of large unionized grocery chains in an urban area, and a few independent stores that are not unionized. Even if the grocery chains form an employer association and conduct “coordinated bargaining,” the independents will still remain outside of the talks. In the event of a strike, the large grocery chains may well lose business to the independents. Once shopping patterns change, the customers may not come back. This threat strengthens the union’s hand.
Diversification often strengthens an employer’s hand in negotiations. Given the craft and industrial nature of U.S. unions, a diversified employer is unlikely to face the same union across all of its sites. This means a union will have great difficulty totally closing down an employer in case of a strike. Companies like General Electric are both double breasted and diversified. This makes them very difficult for a union to deal with.
The various unions at such a company can seek common contract expiration dates, send observers to sit in on the other’s negotiations, and agree to wait to settle until all the unions have satisfactory contract offers. This is called “coalition bargaining.”
Successfully executing this strategy obviously requires great effort.
This section has shown both parties can strive to alter improve their bargaining power over time via various means. However, at a given moment, one has a limited ability to alter a situation. Inventories can be built up to prepare for a strike. In pursuing such a strategy, one must always keep in mind the expense, bulkiness, and perishabilitydurability of the product. The general trend has been toward “just in time” inventories.
This means many employers are more vulnerable to work interruptions. Economies of scale have been reduced in some industries, like steel, but they remain very important in some industries, like auto. Those who are in vulnerable positions need to learn how to manage in these situations. Some industries require continuous processing in the production of certain products. These operations need cooperative labor relations or else

great costs can be incurred. Transportation costs have lessened over time, but they still provide some insulation from the lower wage costs in many foreign countries. The business cycle obviously plays a role in many negotiations, with employers holding the upper hand in downturns and the union in upturns.
Negotiation Models
Many academic models of the negotiation process have put forward. Most of them are of very limited usefulness. Consider the following example. John R. Hicks (1932) put forward the model below in his book entitled The Theory of Wages. Hicks employed the traditional economic assumptions that the parties are rational decision makers, and both have accurate information about the other side.
Wage
Wu
Ws
We
________________________________
Ts Time
1.
The employer has a wage (We) it is willing to offer in the absence of a union.
2.
The union has a wage (Wu) it would prefer in the absence of a strike.
3.
The mounting costs of a strike over time will cause employers and unions to progressively raise and lower their respective demands (the employer concession curve and the union resistance curve).
4.
The parties should be able to project the wage (Ws) where their positions will overlap and thereby reach a settlement short of a strike. A strike would only result if people were irrational or misjudged the other’s position.
This model does show people should progressively concede over time rather than upping demands. What drawbacks does this model suffer from? The parties often do not have good information. Both parties conceal information, manage the release of information and may doubt information. There are many people involved, and this model really ignores this complicating factor. Can the concession/resistance schedule be changed over time by persuasion, changing conditions or the investigation of alternatives? Can there be no possible settlement or multiple possible settlements? Moreover, this model ignores the social and psychological factors that are critical parts of many negotiations. The next model proves to be more descriptively realistic.

The Bargaining Zone Model Walton and McKersie (1965) described this distributive goal setting model in The Behavioral Theory of Labor Negotiations. Tangible
(measurable) goals are easier to deal with in planning. Each team is depicted as meeting before engaging the other side to identify their common interests and objectives. They should set three positions: namely, an initial position (usually extreme), a target (the desired outcome), and a resistance point (a bottom line which the party is extremely reluctant to go beyond, based on resource constraints, other available options and personal preferences). When the resistance points of the two parties do not overlap, a negative bargaining zone is said to exist. When the resistance points or the targets overlap, a positive bargaining zone exists.
Negative Settlement
Range
LOW ____________________________________________________________ HIGH
Employer Employer Employer Union Union Union
Initial Target Resistance Resistance Target Initial
Position Point Point Position
Positive Settlement
Range
LOW ____________________________________________________________ HIGH
Employer Employer Union Employer Union Union
Initial Target Resistance Resistance Target Initial
Position Point Point Position
LOW ____________________________________________________________ HIGH
Employer Union Union Employer Employer Union
Initial Resistance Target Target Resistance Initial
Position Point Point Position
Looking at the above diagrams, can you identify the situations where an agreement will be reached? If so, can you go a step further and identify where an agreement will be reached? One should always ponder what a model does and does not have to offer.
First, this model shows there are instances where no agreement can be reached (at least not unless one or both of the parties move their resistance points). Second, the model is realistic in the sense people really do think in terms of opening positions and bottom lines. Third, this model does help to show the potential to lose with openness.
One could go all the way to his/her resistance point when a settlement in the middle of a

positive bargaining zone might have been viewed as “fairer.” Fourth, it shows the necessary, but not sufficient conditions, for a settlement to be reached. One can see the potential for a settlement, but one cannot guarantee the parties will settle or predict where that settlement might be. The parties might not settle even though they have a positive bargaining zone due to factors such as (a) a bad past relationship inhibits conversation and concession making, (b) people may be too ambitious and fail to get a momentum started that would result in settlement, and (c) the interactions that take place may offend one or both parties, so they lose interest in tangible matters.
In general, one would expect that the greater the area of overlap, the greater the chances for settlement. On occasion, though, when people perceive the other side is far more agreeable than expected, they may raise their goals. We assume that people will have carefully set their points and simply follow these guides in the ensuing discussions, but this is not always the case. In some labor negotiations, fellow team members recognize some of their team’s objectives are unrealistic, and instead of taking action themselves, they let the other side take the flack, and try to get their teammates to come around later behind the scenes.
Collective Bargaining by Objectives (Richardson, 1977) Multiple issue tables can be used to deal with the bargaining zones of multiple issues. The easiest issues to enter into one of these tables are monetary tangible issues. Multiple issue tables allow the team to
(1) prioritize the issues, (2) evaluate tradeoffs as package offers are made, and lastly (3) one can evaluate the negotiator based on what he achieved relative to the targets and resistance points the team set.
Evaluating a negotiator’s performance is not an easy matter. How would one compare a negotiator who went beyond numerous resistance points and came in with several targets as doing better/worse than one who came back with only resistance point type settlements? The major evaluation problem, however, remains that you never know what the other party might have settled for. Put differently, they would be foolish to ever reveal what their true target and resistance points were if they got a good deal. This would only leave ill feelings. Some shortsighted people may rub in the fact they bested you. Creating ill feelings like this is unwise if you ever have to deal with that person or his/her associates down the line. A counterpart might claim you got them to their bottom line, but you in fact will not know if this is the case. Laying it on too thick, with comments like “You sure are good at this, I would not have paid a penny more,” may make some people suspicious rather than reassure them. Perhaps it is better to look tired and say very little.
Principled Negotiation Fisher and Ury (1981) outlined the basics of principled negotiation in a book entitled Getting to Yes.
* Separate people from the problem. This means you should avoid the ego battles that can emerge in distributive situations. We must stop trying to beat the other side. One should be soft on the people. This means you manage the emotional level of the talks.
The problem should be depersonalized.

* Focus on interests, not positions. Do not look at their stated position and strive to split the difference. Try to determine what they really want to accomplish. Be tough on interests, not positions.
* Generate alternatives without judging them. Get people to toss out their ideas, even seemingly crazy ones, and record them on a black board or flip chart. Later you can try to combine or modify the ideas that were generated. “If” questions can be utilized to explore possibilities. Eventually, you will prioritize them in order of potential.
* Seek objective criteria to make your ultimate judgments by. What type of statistics can everyone agree are relevant? Do the parties accept some people as experts that are worthy of being consulted?
* Develop the Best Alternative to a Negotiated Agreement (BATNA) . If you are able to walk away from the talks and still meet you objectives, the talks will go more smoothly. Hence, you should vigorously pursue all of your options.
When one side is more powerful, keep inquiring about the reasons they have taken certain positions, and suggest the proper criteria to judge the equity of the proposal.
Wait a minute, is this very easy to accomplish? First, in some instances, you will be unable to separate people from the problem. People can be a large part of the problem. Statements like the one above would lead people away from carefully studying the characters and their history, which would inhibit achieving a good solution. Second, identifying the other person’s interests is a fine idea. Yet, many people go to great lengths to hide or distort this information. Further, in the case of intangibles, they may be at least partially unaware of what they want, or they may be unable to fully articulate their interests. Third, some people will have great difficulty suspending their judgment of the feasibility of alternatives. They may question spending valuable time on things that seem unrealistic. Other people will feel it is wishy washy not to have “the answer.”
Some people in the finance area may be put out by having to run cost figures on numerous scenarios, and then possibly have to do many more “what if” scenarios.
Fourth, identifying objective criteria would help, but the problem is there are no universally accepted criteria. For example, many problems have been cited with the commonly used measures of inflation like the Consumer Price Index. If the parties can agree on a statistic or an expert, objective criteria can be said to exist. However, what if they point to competing statistics or experts?
Negotiation Timeline
No negotiation will be exactly the same, but the following timeline will provide a rough idea of how things progress. Prior to engaging the other side in a negotiation, both labor and management will pick their negotiation teams. The union may seek representatives from critical areas in the bargaining unit, in an effort to insure important constituencies are not left out. The union negotiators must remember the final agreement, if one is reached, must be approved by a vote of the membership. Normally both sides pick a chief negotiator. While many people may speak over the course of bargaining, it is only

the chief negotiator that alters proposals and makes commitments. Other members of the bargaining team may be assigned special tasks, such as a note taker, watching the body language of the other side, and refining contract language.
A planning meeting will be held at an early point. The parties will agree on where they will meet, how the interactions will be recorded (minutes taken by each side, tape recording), and a schedule for the early sessions.
The union negotiation team often gathers problem areas via contacting the grievance representatives, holding group meetings or forming task forces on areas of the contract, and/or running surveys. The collective bargaining contracts of others in the industry will often be examined. The team will then prepare a plan, a laundry list of desires, or a “bargaining book.” A bargaining book includes the history of items, what was traded to get what, and what the arguments were. The parties may also collect news on recent industry settlements, and the existing local conditions at other employers, to further their arguments. The team will try to anticipate what the other side will bring up, what will be key issues for both sides, and where they will try to settle. In some instances, the management team may delay its own planning somewhat, until after the initial presentation by the union. After all the issues are on the table, it may be easier for the management team to plan. The union team often faces greater intraorganizational challenges, because of the diverse desires of various work groups. Some union leaders will let the management team wear down their most difficult groups, rather than taking the group on themselves. This means caucuses are a critical part of the ensuing bargaining process. While some may picture intraorganizational bargaining as preceding interorganizational bargaining, in fact the two processes are normally interwoven.
Opening Positions Taken together, the opening positions of the parties constitute the
“bargaining mix.” These positions, which everyone realizes are far from final bottom line positions, do much to set the tone of the upcoming talks. It will probably be viewed as dirty pool to bring up new issues later, so one should not hold back proposals during this initial phase. One must always be a bit leery about presenting one’s position first.
What if you come in at a reasonable level, and your counterpart then takes an extreme initial position? In such a case, you are working uphill. You must confront the reasons for his/her stance, stress fair criteria, and refuse to get into a losing split the difference scenario. You might want to prepare several initial positions. If your counterpart is reasonable, you can be reasonable. If he/she is extreme, you can be just as extreme.
Studies show negotiators that start with extreme initial positions get satisfactory settlements more often. The greater space provides room for maneuver, it may intimidate the other side, it gives you time to learn, momentum for settlement can be created via reciprocated moves, and people are more satisfied after they get large concessions. High demands may also indicate one has the ability to go elsewhere (move a plant, substitute technology for workers, bring in replacement workers, subcontract certain work, etc.).
Realistically though, if the other party can go elsewhere, you run a big risk if you take an extreme initial position. Some people will also become so hostile after you take an extreme initial position, little can then be accomplished.
As the initial positions are presented, several important things will take place.
Some of the frustrations from living under certain contract provisions will be vented via emotional presentations. In part, these presentations are carried out to satisfy the

constituencies that brought the proposal forth. This is democracy in action. Now these groups will feel they have been heard. Some people call this stage posturing, but this is an oversimplification. While a number of these initial proposals will be dropped due to a lack of bargaining power or in exchange for other items, these items should not be dismissed or ignored as “throwaways.” Some items are brought up in negotiation after negotiation. An education process takes place. Commonly people reject a new proposal and later ask why the idea was put forward. What was once thought to be a strange idea becomes more familiar. In time, the item may be adopted. Having some items that are of less importance also allows the parties to make some concessions or create some package deals that can build momentum.
An agenda is normally formed that lays out the issues to be dealt with in the upcoming meetings. This helps both sides prepare. The negotiators normally start with the non-economic items and leave the most difficult distributive (economic) items for last. Ideally, the parties will be able to build some momentum and develop a rapport that will enable them to settle the final tough items. When a “tentative agreement” is reached on an article, both sides initial it and move on to other issues.
On one hand, it helps to focus on one item or small group of items at one time.
On the other hand, when the parties are stuck on certain items (perhaps no overlap exists in the resistance points), it may be possible to overcome the blockage via a package trade.
This is sometimes called “packaging” or “logrolling.” This tension between striving to focus on limited items to produce results and overcoming blockages with packaging constitutes a major dilemma in negotiation.
Another dilemma centers on how open to be. When one is dealing with a distributive item, it pays to be cautious with information, or you may be taken advantage of. With integrative items, it pays to be open and problem solve. Many items have aspects of both. If one is too closed, no deal may be struck. If one is too open, too much may be given away. This dilemma is often handled by the following signaling techniques.
Signaling There are two basic types of signals: namely, (1) physical and (2) positional.
Physical Signals = We often render physical body language (nonverbal communication) interpretations without being very explicit about what we are doing. One can encounter people doing things like raising his/her eyebrows, rubbing his/her forehead, cringing, the person may roll up his/her sleeves, stop writing, drop something, break a pencil, throw papers on the floor, or cross their arms. While one does get a get a general sense when things are going over well and when they are not, precise interpretations are difficult to render. Lie detectors utilize variations in pulse, heartbeat, breathing, and sometimes voice, assuming that those who lie will show heightened responses. Similarly, people often watch those they are negotiating with to see if they can maintain eye contact, if they are sweating too much, if they are fidgeting, or if they are otherwise acting in an out of the ordinary fashion. Some people have nervous habits, like moving their knee, playing with their hair, and the like. What you really need to watch for is changes in a person’s behavior pattern more than a behavior itself. People often trust physical signals more than what people say, because people have far greater difficulty controlling their physiology than they do their speech. This is especially true over longer periods.

Positional Signals = The original opening position the parties take does much to shape what can be latter done in terms of making concessions. One could envision several very different concession patterns: for instance, one might make a series of equal concessions, one might make increasing concessions, or one might make decreasing concessions. The frequency of concessions will also be noted. In general, one would expect to see decreasing concessions as one approached one’s resistance point. However, the last concession may be a larger move, indicating this is the final amount, and a worthy amount to settle upon. The early stages normally have more concessions, the speed slows as one proceeds, and nears one’s resistance point. If one gives equal or increasing concessions, the other side will probably conclude it would pay to continue until the traditional tapering off and slowing process takes place. One envisions that when a concession of a certain amount is given, the other side will either accept the offer, or offer a concession of a like amount. Most people want to avoid making a string of unreciprocated concessions (a sign of weakness). Of course, if one person started at a much more extreme position, this may not be possible. Once a concession is made, it really cannot be taken back. Nibbling is an example of a person violating this protocol by upping his/her demands at the last minute. This is not well received.
Instead of taking a chance, assuming the other side will act in a similar manner, one can make contingent package offers. I would be willing to accept x, y and z, if you will accept p, q and r. If they say “no,” you are not considered to have moved on these items. Simply the items you bring up early on, and the amount of flexibility you show, will signal what your priorities are. If you do not concede on a point, and speak and act strongly on the matter, the other side will conclude this is a top priority and you have a narrow bargaining zone to work with.
One should see consistency in the other person’s words and actions. People often prefer using subtle signaling. It provides a zone of safety. Small, slow steps show the other side you are cautious and fear being taken advantage of. Further, some signals, especially physical ones, can be denied if the other side does not respond as you hope.
Final Offer If you are unable to make any additional concessions, you should say so.
Otherwise, the other side may make another move and they will be irritated when you do not respond in kind. You want to save a significant amount to try and seal the deal, but not so much the other side feels you have been holding out on them and there is a lot more where that came from.
Making a Commitment Making a commitment refers to an implicit or explicit pledge regarding your future course of action. Consider the following statements:
“If you don’t move on X, I don’t think we are going to get anywhere.”
“If you don’t raise your offer on X by 25%, I’m going to break off these talks in one hour
(and go to competitor Z).”
“If you will raise your offer on X by 25%, I’ll kick in 10% on Y, otherwise we will settle this in court. My offer is open until 6:00 PM.”

Language Analysis considers three properties: namely, (1) the degree of finality,
(2) the degree of specificity, and (3) a clear statement of the consequences. Statements that contain all three elements are considered far more powerful (Walton and McKersie,
1965).
Making a final offer is a special case of making a commitment. It is much like putting the ball in the other person’s court, and if bad consequences come, it is their fault.
This is all you can do. Commitments are more potent when they are made in public.
Repetition also adds weight. One generally wants to be short and to the point. You may remind the other side of past impasses and the costs. You may prepare to carry out your threats. You could foreshadow the future with small examples, such as the workers varying their output markedly shortly before a strike deadline
It should be recognized that with the power this tactic brings, there are also some risks. Providing a statement of the consequences by its very nature is threatening. You can use softer tones and say you want to avoid this, but it still may be received as a threat.
Some people say this is the final offer and then make another concession. If your counterpart has seen this, he/she may wonder about your credibility. If you can make more moves, meaning you were bluffing, you may not settle a negotiation that could have been settled. People sometimes try to back their way out by saying they have found some new information, it is for the public good, or a mediator was brought in to suggest it to save face. You may be able to avoid your counterpart from becoming committed by watching his/her level of irritation, because people may make commitments in the heat of passion. You can also pretend you did not get the message, or say you did not think he/she was serious. As suggested above, you might offer them new information or bring in a mediator, to help them extricate themselves from the corner they have painted themselves into.
As one nears the contract expiration deadline (the strike deadline), bluffing, stalling and posturing normally fade into the background. People may, however, have very different evaluation criteria. For example, some may want to maximize monetary outcomes, while other concern themselves more with the long-term relationship. In essence, both sides need to be convinced this is the best they can do.
Once a contract is agreed upon, the union team should present it to the bargaining unit. If the team is happy with the offer, they will endorse the contract. When a contract receives a vote of approval, it will go into effect. Typical contract terms are 1, 2 and 3 years. If the members of the bargaining unit are not happy with the last management offer, they may up the ante by voting to authorize a strike. This may result in further concessions, or a strike. In the two percent of the cases where a strike occurs, negotiations continue, although sometimes at sporadic intervals. In most cases, the costs of a strike will eventually bring a settlement.
The increased willingness of employers to bring in strike replacements after
President Reagan fired all the air traffic controllers in 1981 has resulted in a greater reluctance on the part of unions to strike. Later, we will examine the “inside strategies” some unions have adopted.