Think Tank

Putting enterprise bargaining to work – a different approach

For many Australian employers, the prospect of another round of bargaining – or perhaps a first round for those only familiar with individual workplace agreements or awards – is not much fun. Ambit claims, unrealistic expectations, sleights of hand, rhetorical flourishes, grandstanding, flashes of temper, endless meetings, sham productivity deals, grumpy outcomes – and that’s just on the management side!

For most businesses, bargaining is a process that consumes time and resources. It also brings in union officials, injects a bit of needle into workplace relationships and eventually resets wages and working conditions, perhaps with some flexibility in return. An exercise in risk management obliged by law or industrial forces.

Conventional adversarial bargaining – the standard model in Australia and most of the Anglosphere – is characterised by win-lose assumptions and is executed accordingly. A defensive game, even when played civilly, with limited results. The new good faith bargaining provisions may introduce a bit more information and rationality, but that’s about it.

There is an alternative approach, though. It assumes that there are shared, different and competing interests in the workplace, and that the challenge for negotiators is to maximize the shared interests, trade the different ones and intelligently manage the last. It goes under several names: mutual gains bargaining, interest-based bargaining or principled bargaining.

The alternative approach also mirrors the hallmarks of great workplaces around the world: those with strong working relationships founded on trust, respect and good communications. Here the bargaining process looks like this:

  • Both bargaining teams get joint training in bargaining models and skills.
  • The parties commit to a bargaining protocol and timetable.
  • The negotiators look for flexible mandates from their constituencies or principals.
  • There should be no logs of claims – solutions must be developed in the bargaining process, not stated as positions in advance.
  • The negotiators’ job is to establish the parties’ underlying needs, and then to secure or reconcile them in negotiation.
  • Brain-storming and options-generation are part of the bargaining process.
  • So is joint problem-solving.
  • Hard bargaining also features, particularly over money matters.
  • The right to use industrial power in the final instance is acknowledged.

Bargaining should meet three tests: (1) Does it produce good outcomes, ie, does it satisfy the key needs of the parties? (2) Does it strengthen or at least maintain the relationship between the parties? (3) Is it carried out and concluded in a time-efficient manner?

Mutual gains bargaining is able to meet these measures. It is not an approach widely known or used in Australia, but where it happens it works.

Case study: Tomago   Aluminium and the Australian Workers Union, 2010

The Tomago facilitation story has been written up and published in the Journal of Industrial Relations. See Macneil & Bray "Third-party facilitators in interest-based negotiation: an Australian case study" (2013) JIR 55(5) 699-722.

Tomago is a major aluminium smelter in Australia, based near Newcastle, employing over 1,200 people and contributing product of more than $1.5 billion annually to the Australian economy. The Australian Workers Union represents about half the workforce and has been present on site since the smelters began, over twenty years ago.

Relationships between the company and the AWU and its members have been okay, but not necessarily great. There have been some legacy issues that have troubled the waters, and the last round of bargaining in 2007 was a chequered affair.

With the enterprise agreement due to expire on 31 July 2010, the company approached CoSolve in the latter half of 2009 to discuss ways of going about things differently. Options were tentatively considered. Because CoSolve only facilitates bargaining on the joint brief of the parties, we then approached the union. The site delegates gave us a bit of a hard time, pointing out some of the obstacles to the mutual gains bargaining model in their particular context.

So the parties   decided to do things in stages. First came a searching “issues and relationship review”, running over two days in November 2009 and attended   by senior management, delegates and unions officials. It was a pretty candid occasion. Key concerns were identified, one of them being a dual pay system  that had been a source of real inequity and grievance for years.

The pay issue was put into a joint problem-solving process. Reasonable headway was achieved during meetings in December and January. It was decided to put the last   yards of the problem into the next bargaining round.

In February, the parties underwent joint training in bargaining models and skills. They decided to adopt a blended approach to their imminent bargaining: a mixture of mutual gains and traditional bargaining styles. A bargaining plan was adopted.

Negotiations began in March. The process had its good and its more testing moments. Generally, though, people stuck to the problem-solving approach. Agreement was reached in late April, as per the timetable. The wage system issue was cracked as part of a comprehensive new agreement. No blood was spilt. Some people even made new friends. A new basis was established for carrying the relationship forward.

CoSolve’s role was to facilitate all of the engagements as an independent neutral. We were given latitude with the design and execution of the process, but the substance remained the responsibility of the parties. If they got a good agreement, then it was because they themselves delivered.

Facilitating productive negotiations is what we do for a living. We think we can help turn around your bargaining experience too. Contact us on (02) 9401 5654(02) 9401 5654 or at to raise any matter you may want with us or so that we can make an arrangement to meet and discuss things.

Scott Orpin, HR director, Tomago: “I have been very impressed with CoSolve’s independence, professionalism and ability to support the company, employees and the union through our round of EA negotiations. At the end of the day we would have not achieved the outcomes we have without CoSolve’s   facilitation."

Daniel Rampling, AWU Organiser: “At first the Union was apprehensive about involving CoSolve in the 2010 EA negotiations. However, after meeting with them and confirming for ourselves their neutrality, the Union decided it was worth taking the leap of  faith. I have been very impressed with the CoSolve approach, in particular their professionalism, support and unique ability to re-focus the negotiations when they were straying off track. The outcomes that were achieved in the 2010 EA would not have been obtained without facilitation.”

Write-ups of some of our earlier case studies:

Smart Workplaces

Queensland Health 

Useful pieces on interest-based bargaining:

Stepp   & Others

Stepp   & Bergel

Quality relationships are the key in Australia ...

"In all our excellent workplaces the atmosphere of mutual trust and respect was overwhelming. We became convinced that central to every excellent workplace is an understanding that to produce quality work in Australia, one must have quality working relationships. This applies particularly to workplaces with high levels of uncertainty, demanding skills requirements and turbulent markets.

It is very important to understand that when talking about relationships at work we are   not talking about friendships alone. What mattered most was the quality of   the working relationships, particularly with respect to key dimensions such  as trust, respect, self-worth and recognition. The fundamental relationships built on that magic word – trust – couldn't be over-estimated."

Simply the Best Work Places in Australia
Daryll Hull & Vivienne Read
December 2003

... and the USA

"Efforts to build an effective labor relations culture system by focusing on the quality of the relationships   among employees, supervisors and managers, and on reaching collective bargaining agreements in a timely and peaceful fashion without resort to extensive use of National Mediation Board procedures, appear to offer considerable potential for improving firm financial performance and the industry's overall service quality."

Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry
  Jody Hoffer Gittell, Andrew von Nordenflycht & Thomas Kochan
  Industrial and Labor Relations Review
  Vol 57, No 2 (January 2004)

"Higher levels of employee participation in decision making processes" are the most outstanding feature of top workplaces.

See Boedke et al Leadership, Culture and Management Practices of High Performing  Workplaces in Australia: The High Performing Workplaces Index (Australian School of Business) 2011 at p 62.