Win-Win Negotiation Badly Executed

This case study discusses some of the critical errors that can be made in a Management and Union Labour negotiation, where Management were trying to achieve a win-win negotiation.

In trying to create win-win negotiation agreements, one of the biggest mistakes made by negotiators is to deal with the issues on an issue by issue basis. This often results in a 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.

Greenhalgh (2001) suggests that there are seven key steps to an ideal negotiation process:

1. Preparation: deciding what is important, defining goals, thinking ahead how to work together with the other party.

2. Relationship building: getting to know the other party, understanding how you and the other are similar and different, and building commitment toward achieving a mutually beneficial set of outcomes.

3. Information gathering: learning what you need to know about the issues, about the other party and their needs, about the feasibility of possible settlements, and about what might happen if you fail to reach agreement with the other side.

4. Information using: at this stage, negotiators assemble the case they want to make for their preferred outcomes and settlement, one that will maximize the negotiator's own needs.

5. Bidding: the process of making moves from one's initial, ideal position to the actual outcome.

6. Closing the deal: the objective here is to build commitment to the agreement achieved in the previous phase.

7. Implementing the agreement: determining who needs to do what once hands are shaken and the documents signed.

QUESTION: USING THE ABOVE 7 KEY NEGOTIATION STEPS ANALYZE THE CASE STUDY OF BAYOU STEEL