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MMH250 Workplace Conflict Resolution
Information for Union Official (Taylor)
The scenario has been adapted from Fells & Sheer (2019) for the purposes of the
MMH250 A2 assignment. The people, organisation and content is completely fictional.
Background Information
ColdFusion is a company that makes ice creams. There are about 100 full-time employees involved in
the production of the ice creams.
There is one major union – the General Workers’ Union – that represents all these workers. The
relationship between the company and the union is reasonably good: they have had disagreements in
the past but typically resolve them through compromise.
The management at ColdFusion wants to increase productivity in the ice cream factory and wants to
introduce a productivity reward scheme. The managers realise that unless they get the workforce to
willingly accept the reward scheme it will not work. The Human Resource Manager (Alex) has been
given the task of getting the union’s agreement to the scheme. The union official has indicated that
the production employees will be interested in agreeing to the introduction of a scheme provided the
details can be worked out.
Introducing a productivity reward scheme is complex.
There are three main issues to sort out:
1. How is the size of the reward to be determined?
2. What should be the period over which any reward is based?
3. How should the reward be given?
These three issues need to be resolved if a productivity scheme is to be introduced.
You (Alex) and the union official have agreed to meet and see if you can reach agreement.
If agreement is not reached on a productivity reward scheme then the company expects that
productivity (and profit) will not increase, and the workers will get only their previously agreed annual
increases of 1.5% per year.
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Negotiating Instructions
You will negotiate in the role of the Union Official (Taylor) representing employees at ColdFusion.
You will need to prepare before the meeting to understand your role and plan your negotiation
strategy.
The union official has all the background information that is contained on this sheet and has been
given the same negotiating instructions.
End of common information.
The Productivity Reward Scheme: The Union Case
You have previously negotiated a 1.5% per annum increase in wages for your membership at
ColdFusion. Your members are happy with this increase as at many workplaces the increases have
been only 1%. They would obviously welcome a productivity reward scheme, but you believe that they
would prefer to just carry on as things are rather accept than a scheme that does not really benefit
them. So although a productivity scheme would be really desirable, it is ok if an agreement is not
reached (although not the best option).
If a scheme is to be introduced then it has to be one that benefits the employees and the union.
This means
• it has to be related to production, not other aspects of the company performance
• the contribution of the production workers must be properly recognised
• all production workers must benefit individually
The ideal arrangement, from the union’s perspective, is a scheme whereby productivity rewards are
based on output of the production workers as a whole, are paid as extra to normal wages, and are
paid quarterly so as to provide your members with a nice, regular bonus.
The union wants the workers to be treated fairly and this means that productivity should be based on
the efforts of the production workers as a whole. Improved output comes only because workers find
ways of working together to overcome management’s poor decisions, lack of raw materials or
machinery breakdowns.
To equate productivity rewards to workers with dividends to shareholders is not acceptable because
company performance can go down for reasons outside of the workers’ control; the workers should
not forgo their productivity bonus if, for example, sales are down due to a poor marketing campaign.
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On the other hand – though you are not sure if you should mention this in the negotiations – at the
membership meeting there was quite a bit of support when someone said, ‘if the shareholders get a
pay-out for doing nothing, then we should get a bonus at the same time for working hard’.
The union is opposed to management measuring the performance of individuals to determine their
pay – this sets worker against worker. It means managers can just reward their favourites. What you
don’t want is any system which looks like ‘big brother’ always watching how hard the workers are
working. The union fears that if some element of pay is based on individual performance then, in time,
all of a worker’s pay will be performance-based and that won’t be acceptable at all.
Clearly, the productivity reward has to be as a payment in addition to normal salary. Wages are low
enough as they are, and workers want the reward for their hard work to appear in their bank accounts.
Some might want to take extra holidays or other time off but if this is the arrangement for everyone
then it will be too hard to organise and, in the end, workers won’t get what they want, so it won’t
seem like a reward.
The union central office realises the importance of increasing productivity and has developed a new
policy. Under this policy, the union would agree to productivity payments based on overall company
performance providing that a joint committee was set up. This committee would then enable the
union to review the company’s productivity performance and finances. Your union is aware that
companies might well like the idea of company-based productivity schemes but won’t like the idea of
a joint review committee, so for now, the union tends not to share this new policy with companies.
You are not sure whether to mention any of this in this negotiation.
