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Negotiation Between a Hospital and the Union

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    1. Introduction

            This paper seeks to analyze and discuss how to resolve a conflict negotiation between a hospital and the union.  The employees are trying to get what they considered a fair contract versus the hospital who thinks the employees are already fairly compensated and also the fact that the hospital is going through budgetary constraints.  The parties involved are the hospital and their team which includes the CEO (Chief Executive Office), CFO (Chief Finance Officer) and the company lawyers.  The union representing the employees and their team consisted of union delegates and their leader.  The negotiation strategy to use is the interest based strategy or win-win strategy.  It is a collaborative process and therefore we are hoping the parties actually end up helping each other.  The union wants a 3% increase every year for the duration of the contract.  The hospital wants concessions in some areas and 2% increase for the duration of the contract.

    2.  Analysis and Discussion

     2.1 Do they have to go into negotiation?

         The need whether they will go to negotiation is determined by their best alternative to a negotiated agreement) (BATNA).  If there is no urgency to negotiate then the parties would less likely negotiate.  So how we will know if there is need to negotiate.  It they will not for example conclude a new agreement, what will happen to their relationship?  Will the union continue to enjoy salaries and other benefits that they presently enjoy?  Does it matter to them if there is new concluded agreement?  Based on the case facts, it would not logical to assume that union will go into negotiation since case fact implies that the management is actually willing to give 2% increase, only that the union could not take.  Hence we must assume that if the union will not accept the 2%, the negotiators of said union can invoke their right to go on strike and going on strike will force the employer to stop operation because no employees will simply be not working during strike.  The next question is: Could the union indefinitely do this?  Will it be advantageous to them?  The answer to this question must be balanced with the realism.  Going on strike could cause temporary disruption of operation and if the employer would not be able to resolve it, all the employees could possibly losing employment and these may not be the thing that the employees are ready to face, to lose employment.

          It is therefore a balancing act on the part of the union representative and the union leaders to really make a decision whether to go to negotiation or not and since they are representing the interest of the employees they must really consult their constituents and present the alternatives but they could only bargain if they believe it would be unfair if not given to them.  To determine their fairness of the of the of their claim they must have a basis and so with the with offer of management.  As to how they will determine they must need a standard before they go into negotiation.

            But what is the standard to determine fairness of their positions?  They could use another company in the same industry.  They should know how the employees in the same industry are receiving their salaries and benefits.  This is of course with the presumption that their company is as big or as profitable with other companies in the industry.  To know this they could ask for the financial statement of the of company and allow them t make comparison with other companies in the industry whose financial statements are normally available to the public.  This is the so called benchmarking on their part

            Now let us go to the side of the hospital.  Why will it go to negotiation?  Every company wishes to exist and continues serving its customers, its stockholders and other stakeholders of the business.  It can of course only do so under given parameters.  It must earn income to give then sufficient return to stockholders who of course have their opportunity cost in going into business.  This means that they want a return to their investment more they would have earned when they just have placed in their money in other from of investments but there are time that business conditions would not be doing well because of course in external and internal factors which the union will also has to undertand in the fairness of the rate in increase should be finally resolved.

           Hence, the company is going into negotiation because it believes that it has the change to explain to the employees of its concerns and may even take advantage the opportunity to let the employees know how they are important to the company and how they could be of helping attain the corporate objective so request for increase in the forthcoming negotiation and even in the future to come could really be granted or not.  Since case facts provide that the parties are into interest-based negotiation we must presume that the company felt the need to really go into negotiation.

    2.2 Knowing positions and interest of the parties and the issue

    2.2.1 The hospital

         Case facts provide that the company thought the employees are already fairly compensated and also the fact that the hospital is going through budgetary constraints.  The hospital wants concessions in some areas and 2% increase for the duration of the contract.  It appears that the hospital is asking concession from the union because of financial problem in its budget.  A typical company values the contribution of its employees hence salaries and benefits given to employees are not only their legal obligations to the employees but it also views the same as way of increasing level of performance.

    2.2.2 The union

            Case facts say that the employees are trying to get what they considered a fair contract versus the hospital.  Hence, it wants a 3% increase every year for the duration of the contract.  It appears that the union feels that the 3% increase every is fair.  As how it based it’s the fairness of its position could be an issue in the negotiation that it may want to discuss with management.  Hence management is asking concession of 2% increase per year; it appears that management has the willingness to talk under an interest-based negotiation.

    2.2.3 The issue:

    How to resolve the conflict given the positions and interest of the parties?

    2.3 The negotiation strategies

             With the determination that of the need to go into negotiation the next thing to answer is: How will they prepare to negotiate?  Maiese, (2003) said that effective planning is crucial to meeting negotiation objectives.  But before the parties able to reach a stable agreement, specific events must take place before the parties ever come to the table.  Maiese (2003) therefore suggested observing several pointers.

             First, the parties must frame the problem, and recognize that they have a common problem that they share an interest in solving.  She said that frames are the conceptions that parties have of the situation and its risks and they allow the parties to begin to (Maiese, 2003) (Paraphrasing made).

            It is given that the parties must be willing to go negotiation because they could see a good chance of resolving their conflict.  Their frames should match.  Both must value the company they are in.  The union values the company because they see long term employment in the company while the management values the business because they value the long term viability of the business in terms of meeting its goals providing sufficient returns to stockholders or owners.

            Second, negotiators must also determine their goals, anticipate what they want to achieve, and prepare for the negotiation process in the early stages of framing.  Hence, the parties must define the issues to be discussed and analyze the conflict situation.  It is a lesson to learn that negotiators can appeal to research or consult with experts to help them develop a complete list of the issues at stake in many cases.  This is of course followed  by the parties assembling  all the issues that have been defined into a comprehensive list, which then determine the negotiation agenda (Maiese, 2003) (Paraphrasing made).

             The representatives of both the union and the hospital should define the issues to be discussed.  Their negotiation should not be focus on the amount of increase they are willing give and to get but their interests should made clearer among them.  Issues like how the viability of the business and the amount of benefits than it could fairly give to employees as compared to other firms in the industry should sound interesting to both parties since they are after the fairness of the increase.  Goals for the negotiation may be both short term and long term.  .If the union values the long term employment of the company they will under understand the company in under financial constraint if insisting on their position of 3% will undermine the short term viability of the company.

            Third, negotiators often exchange and negotiate the list of issues to be discussed in advance and that there should be consultation between negotiators prior to actual negotiation to permit them to agree on the agenda of issues to be discussed, as well as the location of the negotiations, the time and duration of the sessions, the parties to be involved in the negotiations, and techniques to pursue if negotiation fails.  In addition, negotiators should also agree on principles that will guide the drafting of a settlement, the procedures to be used in negotiations, and the formula by which a general agreement is to be reached (Maiese, 2003) (Paraphrasing made).

           Before reaching the decision of either party, the parties must be provided with financial data of the company and the consequences of giving the unions demand for 3% increase may be explained if management chooses such option.  Management could explain that its cash flow might suffer if the 3% will be given.  The location of the negotiation may be material issue between the union and management as well as the time and duration of the meetings.  The unions must feel that management is willing to talk to them.  For them to meet outside the company premises might be an encouraging thing since so that union members may not feel that even their entry to the premises is being under the control of management.

          They could also agree that they would take at least two companies in the same industry which they will use as standard.  As to the procedure it could include the process of the negotiation and who should talk first and how many minutes will be used by each party.

           Another issue that could be used by either the management or the union is the inflation.  If management can say that they were no increase in inflation and that the company did not increase prices, it could strengthen position.  On the other hand if present year’s inflation rate is higher than last year and then union might convince management about their desire to have 3% increases.  There could be really a variety of issues and the parties are not limited to back up their arguments with facts.

           Fourth, following the assembling of issues on an agenda, the negotiators must prioritize their goals and evaluate the possible tradeoffs among them.  After the negotiators have known their goals and positions, which is  must, they need now to identify the concerns, desires, and fears that underlie their substantive goals “(Maiese, 2003) (Paraphrasing made).

            The negotiators must prioritize their goals since they will agree that they will only have limited time to discuss these things during the negotiation.

          The union may for example be convinced by management that the three percent (3%) will be made contingent company’s earnings in coming years.  On the part of management, it may convince the union to just ask for better performance before they could give the increase desired.  By doing this the parties actually expand the pie.

           Fifth, after the parties have determined the relative importance of the issues, they need to decide the order in which issues should be discussed.  Various sequencing options are possible.  The could go from easy to hard, hard to easy, or simultaneously.  This is of course with particular care to the fact that different situations suggest different answers to that question, and that a negotiator or mediator prefer one approach over the others.  The parties must be aware of this (Maiese, 2003) (Paraphrasing made).

          The negotiating parties do not have the luxury of time hence, they must budget their time.  If the most important things are not discussed, they could up wasting their time amounting to lack or failure of negotiation. It must be remember that there is consequence for failure to negotiate.

           Sixth, negotiators should consult with their constituents as well as with the other side to ensure that the constituents’ needs and priorities are included in the negotiations (Maiese, 2003) (Paraphrasing made).

              The company must make it sure that it is negotiating with the with the representative who have the authority to represent the employees.  The officers which include the CEO, CFO and the company lawyers must have authority of the board of directors if the hospital is a corporation of the partners if it is a partnership

            Seventh, negotiators need to define specific targets with respect to the key issues on the agenda so that parties should try to figure out the best resolution they can expect, what counts as a fair and reasonable deal, and what is a minimally acceptable deal under different scenarios which they  must anticipate (Maiese, 2003) (Paraphrasing made).

          The union management may for example agree to a minimum agreement that there will no terminations that will be made on the employment of member the union on whatever the agreement that will be made.  Management may just agree to give just give the employees an extra bonus should financial performance will result in the coming years.

           Eight, negotiations typically involve more than one issue, so that it is helpful for negotiators to anticipate different ways of packaging issues.  One way is to balance the issues they regard as most important by being more flexible about items they deem less important, while they should also decide which items they can abandon and use as leverage to get what they really want with respect to the most important issues (Maiese, 2003) (Paraphrasing made).

             Management may be interest any increase of salaries to increase in performance, which is conditioned upon a certain level of earning.  It can propose for example that it will give in to the increase of 3% but the excess to 1% over the 2% it wants originally, should be given if the company earns a certain level of income.  This will be a solution to the problem on budget constraint.

             Ninth, Maiese (2003) said that planning for negotiation also involves the development of supporting arguments and that negotiators must be able to present supporting facts and arguments, anticipate how the other side will respond to these arguments, and respond to the other party’s claims with counter-arguments (Paraphrasing made).

            If the union can argue that they increase was not fair, they must show why in relation to a stand.  Perhaps it could get figures from similar companies in the industry that is giving better benefits.  Management on the other can show the status of company in the industry.  An industry problem could affect the performance of the company since no matter how much the company wilt try to increases profitability if the external environment does  not allow;.  Employees will understand these if there is truth the situation.  But management if it was not to use this argument must have include the topic in the agenda so that they to have respected the process.

           Finally, planning involves assessing the other party’s priorities and interests and trying to get a better idea of what that party is likely to want.  Hence, negotiators should gather background information about the other party’s current needs, resources, and interests and this can be done through preliminary interviews or consultations with those who have done business with the other party in the past.  It is also advised that negotiators need to understand the other party’s objectives (Maiese, 2003) (Paraphrasing made).

          Negotiation is an art of discovering secrets in a sense, thus there is no substitute for a thorough preparation with eagerness to find why the other party could agree with one’s interest and position.

    2.4 What could stop or restrain the parties from negotiating?

            Negotiation is the way to reaching an agreement.  But a stifled negotiation is always a possibility.  Hence, the purpose of this part of the paper is to make the parties aware what are the obstacles so the parties could avoid the same.

            A good negotiator must really the real issues involved.  The employees through the union want to go negotiation because they know that they are valued by the company and the company cannot function with out them and they have right to ask for increase in their salaries because may be earning more than usual or that it has become more difficult to live with their present salaries because prices have gone up.  The company through management goes into bargaining too because it felt that it has an obligation to keep the employees satisfied and motivated for it to continues serving customer, investors and other stakeholder.  This concept is confirmed when Maiese (2003) said that in intractable conflicts, removing the obstacles to negotiation is the critical first step in moving toward negotiated agreements and that sometimes people fail to negotiate because they do not recognize that they are in a bargaining position.  The probability is that they may fail to identify a good opportunity for negotiation, and may use other options which are not effective or they may recognize the need for bargaining but may bargain poorly because they just do not understand or they lack the  necessary negotiating skills (Paraphrasing made).

             Where intractable conflicts exist, parties often will refuse to deal with each other and will never commit themselves to the process of negotiation.  In certain extent, they will consider the other party as enemy or an adversary.  Getting parties to participate in negotiations, in said circumstances is a very difficult.  Negotiating  too early, before both sides are ready, may also fail and may make the parties not open to negotiation again for a long time, hence must observe proper timing (Maiese, 2003) (Paraphrasing made).

           Some union unions may have in their contract, sometimes called collective bargaining agreement (CBA) to time their negotiation during favorable seasons of the year like Christmas season so that the spirit could be more encouraging to negotiate.  Since confidence building measures are important, each of the parties must choose the correct timing of the negotiation because making wrong the first time could delay further negotiation.

               The parties could always become obstinate where they will not talk to each other like a minor issue on them is a still mate.  If one party is perceived by the other as not honest the other party may lose trust and the moment trust is affected every part of the negotiation will be affected and their conflict could become intractable.

           The parties must feel the need to negotiate that their BATNA or (best alternative for a negotiated agreement) must be not making them feel that is better to defer negotiation because it is not compelling.  Maiese (2003) confirmed this when she said that before they will negotiate, parties must be aware of their alternatives to a negotiated settlement (their BATNA) and that they must believe that a negotiated solution would be preferable to continuing with the status quo, that a fair settlement can be reached, and that the balance of forces allows such an agreement (Paraphrasing made).

          Successful negotiation will allow them to reach a point where each could give some concession while they take some benefits, which they authors on negotiation called the “Zone of Possible Agreement” (ZOPA).  With the union and management that are going into negotiation, it is suggested that must have some freedom make important decision and the negotiating people must be authorized by their constituents.  Maiese (2003) agreed with us by saying if the parties believe that their ideal solution is not available and that foreseeable settlement is better than the other available alternatives, the parties have a “Zone of Possible Agreement.”  What Maiese means is that  a potential agreement exists that would benefit both sides more than their alternatives do, but she cautioned that it may take some time to determine whether a ZOPA exists so that the parties must first explore their various interests, options, and alternatives (Paraphrasing made).

          Finally, the parties go into negotiation because they believe that they could help each other and they believe in cooperation that will ensure after the negotiation.  That they are interdependent is a fact they know, hence talking about their common interest are also expected to be discussed.  Maiese (2003) agreed with us when she said, “Any misunderstanding that arises between them will reinforce their prejudices and arouse their emotions.  When conflict escalates, negotiations may take on an atmosphere of anger, frustration, distrust, and hostility.  If parties believe that the fulfillment of their basic needs is threatened, they may begin to blame each other and may break off communication.  As the issue becomes more personalized, perceived differences are magnified and cooperation becomes unlikely.”

    5. Conclusion

               To resolve a conflict in negotiation starts with the desire and acceptance of the need by each of the parties.  The realization of the need is caused by acceptance that the alternative for a negotiated agreement is less preferable.  Behind of each of the positions of the parties as to rate on increase per year to be part of the contract are actually their deeper interests which must be discovered by the parties to generate understanding from both sides.  If the issue is the fairness of the increase that they deserve the parties must have at least some standard with which to compare like other firms of the same industry where the company compete, In attaining these the parties need to prepare for the negotiation and they must avoid the  obstacles to negotiation.  Preparation involves knowing what they really need and want and the willingness of the parties to discuss the same under an atmosphere of respect and cooperation with their end belief that the result of the negotiation would be stronger relationship and hence with the promise that both their needs will be met.  Knowing too the obstacles to negotiation will make them aware they could get emotional and lose their sense of fairness, practicality and their decision making skills.  Making them know the obstacles will help them avoid the same things that would disrupt them and instead lead them to more fruitful negotiation.

         The success of the negotiation of the parties depends much on their preparation and their avoidance of the obstacles as illustrated in this paper.

    Reference:

    Maiese M. (2003), What is Negotiation?, {www document}  URL             http://www.beyondintractability.org/essay/negotiation/, Accessed December       21,2006

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