Friday, July 20, 2012

Yale and the Unions

I usually write about constructive, win-win approaches to negotiation that build trust and lead to sustainable agreements that both sides are happy with.  This isn't just because I'm a nice guy but because in most negotiations that's the optimal approach to take.  Today, however, we're going to look at a negotiation that may well have been won (a term I rarely use with respect to negotiations!) by an application of strong-arm tactics.

Yale University recently agreed a new contract with Locals 34 and 35, representing its office and blue-collar workers.  Both sides, naturally, expressed happiness with the agreement, with Yale's President expressing pleasure at the positive relationship Yale has built with its unions and how Yale will continue to be able to attract top-quality staff and the unions cheering the "unprecedented" raises, maintenance of free comprehensive healthcare, and guarantees of interviews for union employees for new job openings.  Local 35 even got a "no layoffs" clause, which its own members could scarcely believe.

By all outside accounts, the unions -- whose workers are already paid well above the norm -- captured the lion's share of the value in this negotiation.  Yale union workers may now be the best-paid university staff in the nation, with very high job security and unsurpassed benefits.

Some of the success no doubt came from conventional, even value-creating, negotiating tactics.  Yale has had difficult labor relations in the past and has a strong interest in avoiding strikes or street demonstrations.  Yale also wanted a four-year contract instead of three and was willing to pay more in wages to get it.

But there is also indication that the unions may have found an external power lever and used it to great advantage.

Last August the unions backed a slate of Aldermen (all with strong union ties).  The unions called this an attempt to rebalance power between the Mayor and the Aldermen (their view was that the Board of Aldermen was largely controlled by New Haven's Mayor); others called it a union takeover that might lead to the Aldermen acting in the best interests of the unions rather than of New Haven.

In discussing his success, Local 35 President Proto allegedly said, "Right now we control 20 out of 30 seats on the Board of Aldermen.  The University is planning to build two new residential colleges.  Any brick they want to lay down has to get approval from the new supermajority on the Board."

Mr. Proto has said he was misquoted (the newspaper originally modified the quote online and then reconsidered and stated it was confident the quote was correct).  But let's take an academic look at this and do two things.  First, let's assume for the sake of discussion that the unions supported a slate of candidates for Alderman with the explicit intention of holding up Yale by linking the union employment contracts to (ostensibly independent) decisions by the Board of Aldermen over whether to grant Yale building rights for two new colleges.  Second, let's suspend our views on whether this would be ethical or even legal if it were shown to be true.

What remains is a textbook example of one party gaining leverage in a negotiation by securing the ability to harm the other party in an unrelated area.  In simple terms, the unions worsened Yale's BATNA from "strikes and protests" to "strikes, protests, and Yale can't build the residential college buildings it needs."  Worse, for Yale, this isn't a single bullet.  Yale will presumably need regular approval from the Aldermen for various developments.  A four-year contract may provide some breathing room, but I would expect to see Local 35 workers getting a high percentage of construction jobs on new contracts.

We tend to look at negotiations somewhat in isolation.  That is, while we're aware of potential effects on relationships and reputation we tend to think about each negotiation as a self-contained exercise that focuses on the interests relevant to what is under discussion.  The negotiation between Yale and its unions is a reminder that we have to broaden our view of possibilities.

That's not to say that we should do what the unions are alleged to have done, but rather that we need to consider a broader range of possibilities.  For Yale, this could have meant recognizing the potential for the unions to add government leverage to the negotiation and looking for ways to mitigate that.  More broadly, however, negotiators need to cast their nets wide when thinking about parties that might be brought to the table, levers of power that might be pulled (for or against them) and tactical and strategic moves the other side might be considering.  I'll be looking at some examples of this in the coming weeks.

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