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Wage Portion of Negotiation

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Aaron Matthews is the human resources director for Molloy's Metals, Inc., a manufacturer of machined metal components used in the automotive and aircraft manufacturing and servicing industries. Among the company's 129 employees is a group of 78 machinists who constitute the core of the company's business. Without their work, there would be no business. They are represented by a union, and the contract is coming up for renegotiation in one month. Times have substantially changed since the last contract was negotiated four years ago. The industry has become much more competitive, and many competitors have closed shop or moved overseas, and many overseas competitors have sprung up. Molloy's has traditionally been among the highest paying within the competitor group and could afford to be because of its high productivity. Today, however, productivity alone may not be enough to save the company. Some reduction in the wage scale and bringing in lower paid, less experienced workers may be necessary to remain competitive. The union has indicated that it is strongly against any wage cuts and would vigorously fight any arrangement that brought in lower paid workers to do their jobs. They seem to be determined to strike rather than to concede too much to management. As you prepare for the upcoming negotiations, you wonder just how you should approach the negotiations.

As a consultant to Mr. Matthews, what steps would you advise him to take to get ready for the negotiation, and what other factors should be considered? Be specific about what you would recommend. In your recommendation, consider the following:

What are the objectives the company should pursue for negotiation?

What is the appropriate information that should be sought to prepare for the wage portion of the negotiation?

What is the negotiation style that should be followed?

How would you deal with the possibility of a strike?

In addition, analyze the situation and recommend at least one additional issue/consideration for the negotiation.

Conduct Web and other research as appropriate to identify areas of concern in planning for and managing a negotiation. Prepare your recommendation in the form of a memo of approximately three pages.

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What are the objectives the company should pursue for negotiation?

The main objective of the negotiation is to come out with a win-win solution, wherein the company is able to convince the union workers for wage cuts and make them agree to bring in low cost workers and still maintain a healthy relationship with the workers. In other words, the negotiation should focus on convincing the union workers for working on reduced wages as per current industry scenario by highlighting the "bigger picture" of the industry and longer term implications of such decision. My recommendation to the negotiation team pursuing the negotiation will be to focus on the objective of driving the attention of the union workers towards the longer term benefits for the organization as well as union workers by adhering to company's terms and conditions. To summarize, a win-win situation for longer term benefits of both the parties should be the major objective of the organization.

What is the appropriate information that should be sought to prepare for the wage portion of the negotiation?

The most important piece of information that the negotiating team should prepare for the wage portion as well as the overall negotiation is industry trends, current and historical information about wage structure of the industry. This will help in convincing the union leaders about the ongoing competitive wages in the industry and how the competitive forces are forcing companies to resort to a lower wage structure and use of low cost labor.

This information has to be presented in relation to the declining competitiveness of the company vis-a-vis other ...

Solution Summary

What is the appropriate information that should be sought to prepare for the wage portion of the negotiation?

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