Analysis of a Negotiation Case Problem Definition Apparently, the Magic Carpet Airlines is suffering from direct economic consequences of federal deregulations within the airline industry. Observably, deregulation within the industry lowered entry barriers, thus ushering in intense competition. Subsequently, intense competition necessitated substantial trimming of air fares. Small airline companies like Magic Carpet Airlines were forced to revise their labor laws in order to keep their business operations afloat. Because low air fares transformed to low profits, Carpet Airlines initiated significant changes in management of its workforce. First, workers’ wage rates were reduced by up to half in relation to the diminishing profits within the airline industry.
In addition, declining profitability necessitated employees’ layoffs (Smith, 2010). In this context, employees within the airlines industry faced the challenges associated with lack of job security, and reduced wage rates. In an effort to protect workers’ labor rights and improve working conditions within airlines industry, unions’ leaders engaged in frequent negotiations with employers. In the collective bargain meetings of Magic Carpet Airlines, the employees’ working conditions under consideration during the negotiations included fringe benefits, sick leaves, job security, and employees’ seniority among others.
Situational Factors During the negotiations about workers’ fringe benefits, appropriateness of place featured as one of the influential cultural factors. After the first phase of fringe benefits’ negotiations, the negotiating parties adjourned for a lunch break. During the lunch break, Mr. Hardy, the employers’ representative approached Mr. Lee and Mr. Boaz on their lunch table. Apparently, the union leaders perceived the lunch table as an inappropriate setting for negotiations. Besides place, time emerged as another influential cultural factor. Occasionally, labor union leaders were inconvenienced by the lateness of employer’s representatives.
With respect to environmental or contextual factors, prevalent labor regulations and employer-employees’ history were influential in the negotiations (Smith, 2010). Based on historical patterns, workers are known to dishonestly take advantage of funeral leaves. Therefore, the employer is hesitant in granting employees two days of paid funeral leaves. On the other hand, labor regulations in the deregulated airline industry surfaced as a contextual factor during the negotiation process. Apparently, certain clauses in the underlying contractual agreements had to be modified in accordance with previous arbitrator’s rulings.
In this regard, both the cultural factors and the contextual factors were influential in determining the collaborative spirits of parties during the Magic Carpet Airline’s collective bargain negotiations. Issues an Range of Options One issue under consideration was employees’ seniority rights. Apparently, adjustment of labor policies by the employer necessitated the transfer of workers from one position to another. For example, some flight attendants were transferred to work in managerial capacities, while others were laid off. During the negotiations, labor union leaders fought for accrual of workers’ seniority in cases of transfers or layoffs.
Options available for this issue included either accrual of employees’ seniority, or striking of seniority rights from the contractual agreements (Smith, 2010). Another issue considered during the negotiations was wage rates. Labor union leaders wanted hourly wage rates for new flight attendants be increased from $13.00 to $15.45. In addition, union bosses asserted that hourly wages for senior employees be increased from $20.20 to $25.55. Available options for the issue included diplomatically increasing the hourly wages as demanded, or staging of workers’ strike as a means of pressuring the employer to accept the union leaders’ demands.
Powers: Types, Sources and Uses One source of power during the negotiation was collective demonstration and strikes by workers. When deliberations regarding to the hourly wage rates clause hit a dead end, labor union leaders threatened to strike. According to labor union leader Lee, union leaders failed to turn up for a negotiation meeting because they were counting casted ballots for a strike authorization vote. In this context, collective demonstration is a practical power that can be used to force employers into agreements (Smith, 2010).
Another source of power in the Magic Carpet Airlines negotiation was reverent power. On part C of the negotiation case, a federal mediator was requested and subsequently included in the negotiation process. Apparently, the federal mediator Cal Crenshaw had 15 years experience in handling of collective bargain negotiations within the airlines industry. Based on his experience, the mediator held a reverent position in negotiations. Therefore, his role in the negotiation ushered in reverent influence that brought the negotiations close to a conclusion. Reference Smith, J.
(2010) Workers’ Councils and Collective Bargaining Negotiations: Impact on Wages and Productivity. American Journal of Political Economics 50(2), 71-85.