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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
ALLAMA IQBAL OPEN UNIVERSITY
ASSIGNMENT NO.2
HUMAN RESOURCE MANAGMENT
Topic: COLLECTIVE BARGAINING PROCESS.
SUBMITTED TO: SIR MUHAMMAD ASIF SB.
ROLL # 508195455.
SUBMITTED BY: ASAD HUSSAIN.
CELL # 03335174447
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
ACKNOWLEDGEMENT
All praises to Almighty Allah, the most Gracious, the most Beneficent and the most Merciful,
who enabled me to complete this assignment.
I feel great pleasure in expressing my since gratitude to my teacher, for his guidance and
support for providing me an opportunity to complete a productive research study of my
topic
“COLLECTIVE BARGAINING PROCESS”.
My special thanks and acknowledgments to Chaudhry Mohammad Akram, President OGDCL
Labour Union for providing me all relative information, guidance and support to compile the
practical study at OGDCL Pakistan.
I will keep my hopes alive for the success of given task to submit this report to my honorable
teacher Mr. MUHAMMAD ASIF SB, whose guidance; support and encouragement enable me
to complete this assignment.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
EXECUTIVE SUMMARY
This assignment is a research-oriented activity, which represents both the theoretical and
practical implication of the topic. In the first section of this assignment, I explain the theoretical
aspect of the topic and all major parts has been explained which are involved in the method of
collecting primary data for research in business in business research. For empirical study, I
select OGDCL Pakistan. And compare their ways of the collective bargaining process for research
in business instruments.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
CONTENTS:
Title page…...………………………………………………………………………… 1
Acknowledgement………………………………………………………….. ……. 2
Executive summary……………………………………………………………….. 3
Contents...……………………………………………. …………………………….. 4
COLLECTIVE BARGAINING PROCESS……….…………………………………….. 5
Collective bargaining process comprises of five core steps……… 5
Bargaining Form And Tactics …………………………………………………. 7
Characteristics of Collective Bargaining ……………………………….. 9
Importance of Collective Bargaining………………………………………. 10
Levels of Collective Bargaining……………………………………………….. 12
Bargaining Dead Locks…………………………………………………………… 14
Practical Study of the organization………………………….……………… 15
Introduction……………………………………………………..…………………… 15
Case Study with respect to the topic.…………………………….......... 17
Conclusion & Recommendations.…………………………………………… 21
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
TOPIC: - COLLECTIVE BARGANING PROCESS
Collective Bargaining Process
Collective bargaining generally includes negotiations between the two parties (employees’
representatives and employer’s representatives). Collective bargaining consists of negotiations
between an employer and a group of employees that determine the conditions of employment.
Often employees are represented in the bargaining by a union or other labor organization. The
result of collective bargaining procedure is called the collective bargaining agreement (CBA).
Collective agreements may be in the form of procedural agreements or substantive
agreements. Procedural agreements deal with the relationship between workers and
management and the procedures to be adopted for resolving individual or group disputes.
This will normally include procedures in respect of individual grievances, disputes and
discipline. Frequently, procedural agreements are put into the company rule book which
provides information on the overall terms and conditions of employment and codes of
behavior. A substantive agreement deals with specific issues, such as basic pay, overtime
premiums, bonus arrangements, holiday entitlements, hours of work, etc. In many companies,
agreements have a fixed time scale and a collective bargaining process will review the
procedural agreement when negotiations take place on pay and conditions of employment.
The collective bargaining process comprises of five core steps:
1. Prepare: This phase involves composition of a negotiation team. The negotiation team
should consist of representatives of both the parties with adequate knowledge and skills for
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
negotiation. In this phase both the employer’s representatives and the union examine their
own situation in order to develop the issues that they believe will be most important. The first
thing to be done is to determine whether there is actually any reason to negotiate at all. A
correct understanding of the main issues to be covered and intimate knowledge of operations,
working conditions, production norms and other relevant conditions is required.
2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A
process well begun is half done and this is no less true in case of collective bargaining. An
environment of mutual trust and understanding is also created so that the collective bargaining
agreement would be reached.
3. Propose: This phase involves the initial opening statements and the possible options
that exist to resolve them. In a word, this phase could be described as ‘brainstorming’. The
exchange of messages takes place and opinion of both the parties is sought.
4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage
comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the drafting of agreements
take place.
5. Settlement: Once the parties are through with the bargaining process, a consensual
agreement is reached upon wherein both the parties agree to a common decision regarding the
problem or the issue. This stage is described as consisting of effective joint implementation of
the agreement through shared visions, strategic planning and negotiated change.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
Bargaining Form And Tactics
A collective bargaining process generally consists of four types of activities-
Distributive bargaining
Integrative bargaining
Attitudinal restructuring
Intra-organizational bargaining
Distributive bargaining
It involves haggling over the distribution of surplus. Under it, the economic issues like wages,
salaries and bonus are discussed. In distributive bargaining, one party’s gain is another party’s
loss. This is most commonly explained in terms of a pie. Disputants can work together to make
the pie bigger, so there is enough for both of them to have as much as they want, or they can
focus on cutting the pie up, trying to get as much as they can for themselves. In general,
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
distributive bargaining tends to be more competitive. This type of bargaining is also known as
conjunctive bargaining.
Integrative bargaining
This involves negotiation of an issue on which both the parties may gain, or at least neither
party loses. For example, representatives of employer and employee sides may bargain over
the better training programmed or a better job evaluation method. Here, both the parties are
trying to make more of something. In general, it tends to be more cooperative than distributive
bargaining. This type of bargaining is also known as cooperative bargaining.
Attitudinal restructuring
This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility
between labor and management. When there is a backlog of bitterness between both the
parties, attitudinal restructuring is required to maintain smooth and harmonious industrial
relations. It develops a bargaining environment and creates trust and cooperation among the
parties.
Intra-organizational bargaining
It generally aims at resolving internal conflicts. This is a type of maneuvering to achieve
consensus with the workers and management. Even within the union, there may be differences
between groups. For example, skilled workers may feel that they are neglected or women
workers may feel that their interests are not looked after properly. Within the management
also, there may be differences. Trade unions maneuver to achieve consensus among the
conflicting groups.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
Characteristics of Collective Bargaining
1. It is a group process, wherein one group, representing the employers, and the other,
representing the employees, sit together to negotiate terms of employment.
2. Negotiations form an important aspect of the process of collective bargaining i.e., there
is considerable scope for discussion, compromise or mutual give and take in collective
bargaining.
3. Collective bargaining is a formalized process by which employers and independent trade
unions negotiate terms and conditions of employment and the ways in which certain
employment-related issues are to be regulated at national, organizational and
workplace levels.
4. Collective bargaining is a process in the sense that it consists of a number of steps. It
begins with the presentation of the charter of demands and ends with reaching an
agreement, which would serve as the basic law governing labor management relations
over a period of time in an enterprise. Moreover, it is flexible process and not fixed or
static. Mutual trust and understanding serve as the by products of harmonious relations
between the two parties.
5. It a bipartite process. This means there are always two parties involved in the process of
collective bargaining. The negotiations generally take place between the employees and
the management. It is a form of participation.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
6. Collective bargaining is a complementary process i.e. each party needs something that
the other party has; labor can increase productivity and management can pay better for
their efforts.
7. Collective bargaining tends to improve the relations between workers and the union on
the one hand and the employer on the other.
8. Collective Bargaining is continuous process. It enables industrial democracy to be
effective. It uses cooperation and consensus for settling disputes rather than conflict
and confrontation.
9. Collective bargaining takes into account day to day changes, policies, potentialities,
capacities and interests.
10. It is a political activity frequently undertaken by professional negotiators.
Importance of Collective Bargaining
Collective bargaining includes not only negotiations between the employers and unions but also
includes the process of resolving labor-management conflicts. Thus, collective bargaining is,
essentially, a recognized way of creating a system of industrial jurisprudence. It acts as a
method of introducing civil rights in the industry, that is, the management should be conducted
by rules rather than arbitrary decision making. It establishes rules which define and restrict the
traditional authority exercised by the management.
Importance to employees
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
1. Collective bargaining develops a sense of self respect and responsibility among the
employees.
2. It increases the strength of the workforce, thereby, increasing their bargaining capacity
as a group.
3. Collective bargaining increases the morale and productivity of employees.
4. It restricts management’s freedom for arbitrary action against the employees.
Moreover, unilateral actions by the employer are also discouraged.
5. Effective collective bargaining machinery strengthens the trade unions movement.
6. The workers feel motivated as they can approach the management on various matters
and bargain for higher benefits.
7. It helps in securing a prompt and fair settlement of grievances. It provides a flexible
means for the adjustment of wages and employment conditions to economic and
technological changes in the industry, as a result of which the chances for conflicts are
reduced.
Importance to employers
1. It becomes easier for the management to resolve issues at the bargaining level rather
than taking up complaints of individual workers.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
2. Collective bargaining tends to promote a sense of job security among employees and
thereby tends to reduce the cost of labor turnover to management.
3. Collective bargaining opens up the channel of communication between the workers and
the management and increases worker participation in decision making.
4. Collective bargaining plays a vital role in settling and preventing industrial disputes.
Importance to society
1. Collective bargaining leads to industrial peace in the country
2. It results in establishment of a harmonious industrial climate which supports which
helps the pace of a nation’s efforts towards economic and social development since the
obstacles to such a development can be reduced considerably.
3. The discrimination and exploitation of workers is constantly being checked.
4. It provides a method or the regulation of the conditions of employment of those who
are directly concerned about them.
Levels of Collective Bargaining:-
Collective bargaining operates at three levels:
1. National level
2. Sector or industry level
3. Company/enterprise level
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
1. National level:-Economy-wide (national) bargaining is a bipartite or tripartite form of negotiation between union confederations, central employer associations and government agencies. It aims at providing a floor for lower-level bargaining on the terms of employment, often taking into account macroeconomic goals.
2. Sector or industry level:- Sector oral bargaining, which aims at the standardization of the
terms of employment in one industry, includes a range of bargaining patterns. Bargaining may be either
broadly or narrowly defined in terms of the industrial activities covered and may be either split up
according to territorial subunits or conducted nationally.
3. Company/enterprise level:-The third bargaining level involves the company and/or
establishment. As a supplementary type of bargaining, it emphasizes the point that bargaining
levels need not be mutually exclusive.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
Bargaining Dead Locks:-
Strikes:
1. There is a chance of strike after labour negotiation if bargaining demands of employee
are not met by the management.
2. The right of employees to strike in support of their bargaining demands is protected by
the Landrum-Griffin Act.
3. A lawful labour dispute may result work stoppage by employees, which may not
violation of an existing agreement between management and the union.
Lockouts:
1. After expiry of collective bargaining agreement, when employers desires to hold
economic pressure on union to settle a contract on terms favorable to the
employers, by law, employer can lock out its employees.
2. It also is a legal for a company to replace the locked outworkers with temporary
replacement in order to continue operations during the lock out. However, the use of
permanent replacement is not permissible.
Third party involvement: A bargaining dead locks produce when the parties fail to
reach at the stage of settlement. Litigation/third party involved to resolve the issue
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
PRACTICAL STUDY OF THE ORGANIZATION
Now I would like to compare theoretical aspects with practical aspects, which I have studied at OGDCL Pakistan.
INTRODUCTION TO OGDCL PAKISTAN
Office Venue:-
OGDCL House, Plot No.3, Sector F-6/ G-6, Jinnah Avenue, Blue Area, Islamabad.
Voice: 051-9209811-18, Fax:-051-9209792
Regional Offices:-
OGDCL Regional Offices are located in Karachi and Multan. Besides this OGDCL has its Liaison
Offices in Hyderabad, Sukkur, and Quetta for operational activities. The company head office is
located in Islamabad but carrying out exploration in all the four provinces of Pakistan.
Historical Perspective :-The Oil & Gas Development Company Limited (OGDCL) was
created under an Ordinance in 1961, to undertake comprehensive exploratory program and
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
promote Pakistan’s oil and gas prospects. In July 1989, OGDCL was off-loaded from Government
Budget, making it a self-financing entity. And In 1997, it was converted into Public Limited
Company and is now governed by the Companies Ordinance 1984. In Nov 2003, the GOP
divested 5% of its shares in the company through an initial Public Offering (IPO). The company is
now listed on all the major stock exchanges of the country.
OGDCL holds the largest share of oil and gas reserves in the country, i.e. 48% of total oil and
34% of total gas reserves. Its percentage share of the total oil and gas production in Pakistan is
52% and 23% respectively. On the basis of its activities since inception, the company has made
60 discoveries.
MISSION STATEMENT
“Our mission is to become a competitive, dynamic and growing E & P Company, rapidly
enhancing our reserves through world class work force.
MAIN PRODUCTLINE
Crude Oil
Gas
Sulphur
MAJOR ACTIVITIES
Exploration & Development of Oil & Gas Resources.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
REVIEW OF THEORETICAL & PRACTICAL SITUATION
“If Corporation prospers, workers prosper and if corporation fails, workers fail”.
Trade Union”
Oil and gas Development Corporation was established in 1961 for the exploration of oil and gas
deposits / reservoir in Pakistan.
How Situation Occurs
The working pattern of OGDC is a different from other organizations. The oil and gas fields are
located in remote areas. Most of the unskilled labour is hired from the nearby areas, while
skilled staff is hired from all over the country. The workings conditions are tough and
frustrations of worker during stay in fields create problems for the management.
Labour Demand
At this situation, labour can demand the incentives and other reasonable facilities because the
labour is far away from their families and home. There are following demands of labour:
Living facility.
Life insurance facility.
Safety measures.
Medical facility.
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
Charter of Demand Submitted to the Management
The above mentioned demands of labour working in the remote areas of all over the country
have been summarized and then presented to the OGDCL higher management for their early
consideration. In this charter of demand it has also emphasized that the fulfillment of these
demands will help in smooth functioning of the company and for the betterment and progress
of the organization.
Management’s Action
In response to the above charter of demand which was submitted by the Labour Union
Representatives the management of OGDCL decided to have an internal meeting for fulfillment
of these demands and for this purpose management told the Union Representatives in writing
that they required two weeks time for taking any decision in this regard. But unfortunately after
the lapse of these two weeks, management did not decided any thing in favour or against
OGDCL labour / workers of remote areas.
Strikes are to be taken
Due to this situation labour union serve a three days strike notice to the management. They
said that during the strike no work will be done in field as well as in offices.
Union and Management Meeting
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
After receiving the above mentioned strike notice, OGDCL management arranged an emergency
meeting with the union representatives in OGDCL Headquarters at Sector F-6, Islamabad. In this
meeting both the stake holders (union and management) resolved these problems.
OGDCL Labour Union President Chaudhry Mohammad Akram represent the OGDCL union and
bargain very comprehensively and forced the management to accept the labour demands.
Steps That Are Taken By the Management
There are following steps which are taken by the management:
Considering the field hardships and homesickness of the non – resident workers OGDC
adopted a policy through which field workers spend 45 days in filed and is allowed 15
days off to live with their families. This helps them to regain their energies and remove
their frustration.
Management has taken the steps such as higher compensation and extended facilities
of life insurance, free medical for workers and their families, good residence and mess
facilities at work place.
The Corporation also provides all safety measures and use of helmet and needed
instruments are obligatory for the worker in the field.
SWOT ANALYSIS OF THE ORGANIZATION :-
SWOT analysis table for OGDCL
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
STRENGTHS WEAKNESSES
Highly Skilled People Political Influences
Vast Experience Target Customer is limited
Partner are the biggest Players
in the market
Market model is not scalable
First mover advantage Third party dependence
High market cap and revenue Inadequate Financing
OPPRTUNITIES THREATS
Great positioning in the market Technology
Expanding into vertical market Fear of unproductive wells
Few substitutes Vast Market
New Entrants
High international Market
Customers have more
opportunities in global market
CONCLUSION:-
From the above example we can see that how collective bargaining is formed and done. It is
legal tool for the labour to fight their rights. Management realizes that the positive role of trade
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2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS
union has helped in implementation of their policies. It considers the workers as valuable assets
of the corporation and union activities as their genuine right. The labour union feels that good
industrial relations are key to the success of any organization. Workers have the responsibility
to put their best efforts and management has to reward them by giving them fair share in the
profits and meeting their legitimate and law full demands.
RECOMMENDATIONS:-
Whereas in the past negotiations tended to be focused around a union claim, companies
adopting a human resources management approach, tend to want to set the agenda, which in
an unionized environment places unions in the position of responding to management's
demands. Congress, in its policy document 'Managing Change' sets down a strategy for a more
participative and non-adversarial style of collective bargaining within the context of the global
competitive environment for business.
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