Wage Negotiations

Recently The Irish Times published an article which predicted a 10 percent wage increase for 2016! Hard to believe but unions will be delighted reading this. However the article was based on the experiences one of the major recruitment agencies in Ireland. Now recruitment agencies have an interested to get wages increased as their fees are normally a percentage of the wage of the selected candidate. A ten percent wage increase would increase their fees with ten percent as well.

The economic growth of 6.5 percent in 2015 indicates that the economy is strongly growing and in 2015 the majority of companies increased their wages with an average of 2.5 percent. With the economy growing again in 2016 pressure to give further wage increases is growing.

Since the collapse of the National Wage Agreements and it is back to local bargaining. A lot of managers would have little experience in local bargaining. Here are some golden rules to apply if wage bargaining is to be an issue: -

1.       Do not negotiate if you do not have to. In most small and medium size companies there is no union recognition and no agreement with the union that new salaries have to be negotiated. So if you do not have an agreement with a union, your industry is not under Employment Regulation Orders or Registered Employment Agreements do not negotiate even if the unions would like to have a place at the table.

2.   Setting the agenda. Many companies have been caught out by starting talks and not sorting out the agenda and procedure. You could be making a far reaching deal with the union officials only to be confronted with the fact that the union members have the final say on it and reject it. The already far reaching deal has to be renegotiated to include even more concessions. Set up and organise a clear agenda and procedure under which the negotiations take place. Make it clear that what happens when a deal is negotiated and if the union insists that their members have the final vote before it can be accepted, maybe your management board has to have the final vote on it as well and can reject it as well as too far reaching. 

3.   Setting your own objectives. Establish what wages increases you can afford and define three possible settlements from your company’s point of view: the ideal or best possible deal, a realistic or best possible settlement and the worst, though still acceptable settlement. Before setting these objectives make sure you know where your company’s stands compared to other companies in areas such as salary, benefits, compensation, economic growth etc. Know your salary levels compared to your industrial sector and regional salary levels. Is your company paying above or below the average salary levels in your industrial sector and region? Are your benefits and compensation par with other industries? Most likely unions will start negotiating with companies they perceive as easy targets to set a trend in wage negations. Always focus on your own situation and make it clear to the union that your company cannot be compared to these easy targets.

4.   Preparing the case. Once the objectives have been defined, it is necessary to put a case for negotiation together. The bargaining process is one in which attitudes are swayed by a complex mixture of facts, logic, interest, fears and pride. Preparation involves consideration of the information which will be needed to support the case being made. It is essential to consider this from the other party’s view point. Try to establish the unions and employees objectives at the wage negotiations. Try to find out what they negotiated at other companies. Hold a mock bargaining round and let some managers play devil’s advocate, examining your company’s position and probing the company’s arguments for weak points and prepare your answers for the real event.

5.   Communicate. Before, during and after the wage negotiation keep communicating with your staff, in particular your managers, supervisors and team leaders regarding the company’s point of view and needs. Make sure that your managers and supervisors are all aware of these essential points which will ensure the company’s survival. I do not mean to give away the bargaining plan, however, keep them abreast of what you can do regarding wages and benefits and if union objectives are in the interest of the company. Very often only the union communicates effectively with employees during this phase and this will lead to high and unrealistic expectations and difficulties with staff once an agreement is reached.

These are just a few of the practical personnel solutions regarding wage negotiations. There are many more issues to address and many pitfalls to watch out for.