Often enterprise bargaining ends with a deal brokered in circumstances of crisis. Perhaps industrial action and a union media campaign are now viewed as too distracting or expensive. Perhaps management discontent with long negotiations has brought frustration to the fore, and an instruction to negotiators to “end it, get a deal, any deal”.
In these circumstances an employer might have no choice but to “take” the price of whatever deal is being offered – the financial price, the price of new conditions of employment, additional restrictions on operating the business, etc. The cost of continuing the bargaining process is viewed as outweighing the cost of the deal.
Contrast this with an employer who has thoroughly prepared for enterprise bargaining negotiations. This employer knows where their leverage and that of unions and others lies. Their contingency planning is comprehensive. Their communications are insightful and explain their case for change, and the communication channels are well defined and effective. They know their legal options and have been working towards an end goal before enterprise bargaining even started. They have thought through the gains they want to achieve and the pain they are willing to go through to achieve them.
This employer might be under pressure – but they are not in crisis. They will agree to a new enterprise bargain if, and only if, the deal meets their minimum requirements. This employer is a “price maker” – they choose whether to do the deal and the price they pay for the deal because they are not desperate for any deal. And the price paid reflects the value of the deal to the business, wages are based on appropriate indices such as skill level and market forces, productivity gains and the like.
How does an employer become an enterprise bargaining price maker?
The key to success is simple but not easy. It means preparation, investment in planning, and disciplined execution. It means understanding early the cost of the process versus the cost of the deal and recognising the long-term nature of the latter.
We have worked with many clients that have achieved excellent enterprise bargaining outcomes that were previously thought too ambitious. The key was the front end planning that created a path to success and instilled confidence in the approach to achieve it.