2ND ASSIGNMENT COLLECTIVE

BARGAINING PROCESS

ALLAMA IQBAL OPEN UNIVERSITY

ASSIGNMENT NO.2

Topic: COLLECTIVE BARGAINING PROCESS.

SUBMITTED TO:
SIR
MUHAMMAD
ASIF SB.
ROLL # 508195455.
SUBMITTED BY:
ASAD HUSSAIN.
CELL # 03335174447

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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”

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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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.

Title page…...……………………………………………………………… 1

 Acknowledgement…………………………………………………. 2

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 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

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

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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 negotiation. In this phase both the

employer’s representatives and the union examine their own situation in

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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

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described as consisting of effective joint implementation of the agreement

through shared visions, strategic planning and negotiated change.

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

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they can focus on cutting the pie up, trying to get as much as they can for

themselves. In general, 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

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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.

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

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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.

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

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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

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.

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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.

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

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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

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

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bargaining, it emphasizes the point that bargaining levels need not be

mutually exclusive

Bargaining Dead Locks:-

Strikes:

1. There is a chance of strike after labor 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 labor 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.

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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

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.

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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 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

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Our mission is to become a competitive, dynamic and growing Company,

rapidly enhancing our reserves through world class work force.

MAIN PRODUCTLINE

• Crude Oil

• Gas

• Sulphur

MAJOR ACTIVITIES

• Exploration & Development of Oil & Gas Resources.

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.

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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 labor 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.

Labor Demand

At this situation, labor can demand the incentives and other reasonable

facilities because the labor is far away from their families and home. There

are following demands of labor:

• Living facility.

• Life insurance facility.

• Safety measures.

• Medical facility.

Charter of Demand Submitted to the Management

The above mentioned demands of labor 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

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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

Labor 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 decide any thing in favor

or against OGDCL labor / workers of remote areas.

Strikes are to be taken

Due to this situation labor 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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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 Labor 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:-

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SWOT analysis table for OGDCL

STRENGTHS WEAKNESSES

 Highly Skilled People  Political Influences

 Vast Experience  Target Customer is limited
 Partner are the biggest  Market model is not scalable

Players in the market

 First mover advantage  Third party dependence
 High market cap and  Inadequate Financing

revenue
OPPRTUNITIES THREATS

 Great positioning in the  Technology

market
 Expanding into vertical  Fear of unproductive wells

market
 Few substitutes  Vast Market
 New Entrants  Customers have more

 High international Market opportunities in global

market

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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 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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