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

TOPIC: - COLLECTIVE BARGANING PROCESS

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 2ND ASSIGNMENT COLLECTIVE BARGAINING PROCESS

Collective Bargaining Process

Collective bargaining generally includes negotiations between the two parties (employees

representatives and employers 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

negotiation. In this phase both the employers representatives and the union examine their own

situation in order to develop the issues that they believe will be most important. The first thing

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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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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 partys gain is another partys

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,

distributive bargaining tends to be more competitive. This type of bargaining is also known as

conjunctive bargaining.

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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.

Characteristics of Collective Bargaining

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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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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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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 managements 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.

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.

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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 nations 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

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.

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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.

Bargaining Dead Locks:-

Strikes:

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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 issues.

PRACTICAL STUDY OF THE ORGANIZATION

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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

promote Pakistans 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

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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.

REVIEW OF THEORETICAL & PRACTICAL SITUATION

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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.

Charter of Demand Submitted to the Management

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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.

Managements 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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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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STRENGTHS WEAKNESSES

Highly Skilled People Political Influences

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

in the market
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 Customers have more

High international Market 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

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.

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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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