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Leadership & Strategy: Negotiating a Union

Oct. 1, 2013
Leaders who negotiate skillfully can avoid a lot of headaches and proactively stave off financially draining workplace conflicts. 

The hour for the first shift approaches, yet no workers are arriving, lunch pails in hand. 

In fact, inside the plant is silence. The break room is empty, the machines are idle. 

Outside is a different story. Workers line the sidewalks in front of the factory, picket signs in hand. 

The scene is the same from shop to shop, from industry to industry. When negotiations break down, work stops. Money is lost. Employees become disgruntled. Good will crumbles. 

See Also: Lean Manufacturing Leadership Best Practices

In early September, Hyundai Motor Co. (IW 1000/56) ended a weeks-long series of shutdowns that cost the South Korean carmaker about $921 million in lost production. The 46,000 unionized employees in South Korea implemented partial strikes starting in August over contract negotiations initiated in May. 

While walkouts are among the worst-case scenarios, any time negotiations are involved, there is risk.

A work stoppage for any length of time -- a day, a week, a month -- can be difficult to overcome in the books, on the production line and even at the water cooler. 

Leaders who negotiate skillfully can avoid a lot of headaches and proactively stave off financially draining workplace conflicts. 

"We view negotiation too often as a competition," says George Siedel, a professor of business administration and business law at the University of Michigan's Ross School of Business who teaches MBA and executive MBA courses on negotiation and dispute resolution. 

Mutual Gain

Instead, leaders who can listen and find a mutually beneficial solution, he says, are more likely to emerge successfully from negotiations.

He promotes the concept of "mutual gain" as outlined in the cornerstone book "Getting to Yes: Negotiating Agreement Without Giving In" by Roger Fisher, William L. Ury and Bruce M. Patton. The idea is to use collaboration to create alternative options. 

That's why what really separates a good negotiator from a great one is if that person has "the ability to look at the deal from the perspective of the other side," Siedel says. 

This allows the negotiator both to work toward a solution of mutual gain and to glean more information about the other side's needs. 

"In a negotiation, information is power," Siedel says. 'The side that can gather the most information about the other side has more power."

One tool Siedel encourages his students -- many of whom are executives at companies in the U.S., Italy, Brazil and Hong Kong -- to use is debriefing: sitting down after a negotiation with the bargaining team to analyze the process and determine how to be more strategic in the future. 

While an opponent will never say, "If you'd have done this, you could have gotten a million dollars," Siedel says, the insight has aided him in numerous negotiations. 

"I think that's where companies fall short. There's a great learning opportunity," Siedel says. "The problem is you're tired. You want to move on. That's the place where companies can really create value." 

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The simple idea allows negotiators to simulate the process and get feedback outside of the high-stakes environment of the negotiation room and develop new strategies on how to achieve their best alternative to the negotiated agreement. 

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