Within eight days of each other Bill Shorten and ACTU head, Sally McManus, have called for changes to the enterprise bargaining regime which is a central feature of Labor’s own Fair Work Act. Whilst we will no doubt hear more on this these statements would be chilling to many an employer who regards the current system as stacked against them.

To be fair, finding the right balance in a system which directly effects wage outcomes is difficult. But Labor’s legislation cemented collective bargaining as a central platform for agreement making and did away with a statutory regime to make individual agreements. In doing so unions were given the best legislative platform to date to compel employers to bargain – even with a union that has a minority membership interest in the business.

Mr Shorten cites low wage growth to make the case for change amidst greater productivity. The wages-work bargain is unfair it seems. Conversely employers will tell you that the “productivity lemon” has been well and truly squeezed from enterprise bargaining with little or no incentive for unions to countenance genuine trade-offs. In its inception back in the 1990s, enterprise bargaining presented an opportunity – to move away from inflexible centrally set terms and conditions to outcomes which better reflect the needs of the enterprise. It paved the potential for “win-win” outcomes. But no more. If macro data points to increased labour productivity, the nexus between this and collective bargaining will be very tenuous.

To this extent there is universal acceptance of a system unable to meet the needs of the workplace today and certainly not the future. If no agreement is reached, the status quo typically remains. In negotiations, speak the “Best Alternative to a Negotiated Outcome” for a union and employees is the status quo being the existing enterprise agreement. Very often, the genesis of these agreements were struck when the business was in a very different place – many years ago and when current competitive conditions were beyond contemplation.

Enterprise bargaining, once an opportunity is now an exercise in managing risk. This involves stemming the tide of increasing labour costs and avoiding claims which, for instance, prevent outsourcing or mandate third party involvement in legitimate business decisions. But there’s more. The system relies on a game of leverage. Unions can organise industrial action to effectively coerce employers to agree. Employers can lock employees out in response. Neither are very constructive in the long run. Ms McManus is calling for greater ease to take industrial action and tighter controls on employer lock outs. Mr Shorten wants to shut down the Fair Work Commission’s (limited) ability to terminate old enterprise agreements – which provides employers with a precious opportunity to remove outdated and restrictive clauses albeit not without a contested hearing process usually over some months.

So, inherent in the thinking of both Labor and the ACTU is a re-setting of the legislative levers of leverage which drive bargaining outcomes. For employers more of the same but worse. Employers will make agreements palatable in the short term only because the short term cost of the bargaining process (industrial action) is too high. Rational economic outcomes are thus easily distorted. Of course in the medium-long term the cost of making an agreement becomes intolerable. Restructuring, outsourcing, and offshoring become part of an inevitable ‘solution’ for employers.

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In his book Bargaining with the Devil, Harvard Professor Richard Mnookin probes the challenges and options available when negotiating with “a devil” – anyone you perceive as a harmful adversary. The Devil Brad

“The devil” is usually a traditional “power-based” negotiator who is win/lose orientated, adopts extreme positions, makes small concessions, and uses threats as a key tactic to enhance negotiating leverage. Sound familiar?

Power or “positional-based” negotiations have dominated Australian workplace relations and remain a feature of enterprise bargaining – in a system which, to be fair, legitimises the threat and reality of industrial action. Continue Reading Bargaining with the devil: in whose interest?

ColourIn 1993, the Keating government passed laws to move Australia towards a “system based primarily on bargaining at the workplace, with much less reliance on arbitration at the apex” (Laurie Brereton MP, Minister for Industrial Relations, 28 October 1993).  The embrace of enterprise bargaining instead of industry-wide, centralised wage fixation was to be the end of a creaking “Australian settlement” that had been overtaken by modern values and economic reality.

Enterprise level bargaining has undoubtedly been a positive move away from the system that preceded it.  Nevertheless, over 20 years since its introduction, an observer might feel skeptical about the promise of agreements that would be tailored to the needs of individual workplaces and their employees, under which “employees and employers alike can and will benefit”.   Continue Reading What lies beyond enterprise bargaining?

Retail, like other industries, is facing challenging times. As we mentioned in our recent ‘HR Now’ blog, employers are facing a world characterised by:

  • continuous change – including rapid digitisation and globalisation of service offerings,
  • doing more with less – this is especially so in retail, where customers continue to demand more value for lower expenditure, while wage costs continue to rise, and
  • the emergence of ‘retailtainment’ – not just engaging with customers in-store, but using tools like brand ambassadors to get customers interested and in the mood to buy. The name of the game is to create a ‘customer experience’, which goes beyond merely the hard sell.

What does this mean for employers in the industry? There are three key issues facing retail employers in the next 12 months: Continue Reading The top 3 HR issues in the retail industry

Leverage in collective bargaining negotiations is so important in a regulatory framework which condones its use.

When does an employer in a collective bargaining negotiation in a tough environment typically close the deal? So often, the employer’s capitulation point arises where the cost of industrial action (and any other pressure which is applied) is perceived to outweigh the cost of making the agreement. One cost reflects the need to alleviate what is short term pain, but often with longer term consequences. The other is one which whilst not felt immediately, becomes increasingly burdensome over the long term. Continue Reading How’s your leverage? The bargaining equation

In our article about the 7 lessons for successful bargaining, we wrote that successful bargainers seek to control the bargaining agenda. They do so with a view to achieving their ultimate goals. But we also wrote that successful negotiations also involve planning in advance for BATNA [Best Alternative To a Negotiated Agreement] and fallout. A key challenge in achieving change, especially when it comes to the human beings involved in workplaces, is how to deal with a situation that isn’t panning out as hoped. Do you have adequate contingency plans? Continue Reading Flying through change – knowing and planning for contingencies

Last year, we wrote about the 7 lessons for successful bargaining which highlighted that “tit for tat” communications rarely lead to a successful bargaining outcome.  We regularly see that leading the communication agenda with employees is imperative in achieving any workplace change including enterprise bargaining.

Unfortunately, some union officials see enterprise bargaining as a fight between the union and the employer. Invariably the ‘campaign’ arrives.  Flyers put a spin on what’s happening inside and outside the negotiation.  Employers feel compelled to react and this plays into the ‘tit for tat’ game that the union thrives on. Continue Reading Achieving change – active employee engagement is crucial

This week we suggested a ‘kitchen table’ letter for a client in the midst of a bargaining impasse and a swirl of industrial action.

The kitchen table letter is one sent to the home of employees. Its aim is to ‘speak’ directly to the employees and potentially others in their family.

It reminds us of a manufacturer that bargained for most of last year. A ‘kitchen table’ letter was a small but important part of the mix. Continue Reading The Bargaining Coach: Lessons from a brave manufacturer