Robert Collard Scott Rafferty Han DJ SullivanJosh Dunford Sun Cynthia Nguyen Kristine Taylor Adam Baxter Company/Local 190 Final Case Debriefing Analysis I. Introduction In the heated exchange of difficult business disputes, the need to navigate negotiation strategies becomes paramount to any successful business venture. The need to understand the aspects of emotional exchanges that shift from Interest, Rights, and Power as both sides tango in Distributive or Integrative approaches represent the core of modern academic research in negotiations. Whether engaging in zero-sum game Distributive approaches or a value-adding Integrative focus, the crux of good negotiations still calls for a need to build trust. This paper represents a debriefing case study analysis of Adam Baxter Company (ABC) with its opposing labor union Local 190, both sides simulate actual negotiations that took place between Hormel and Local P9 in the mid- 1980s. Unlike real life negotiations where intense emotions dangerously lace rational decision-making, our case study allows both sides of our opposing teams to reflect on our mistakes during the negotiation and also to provide hindsight to the dispute between Hormel and Local P9. Following these thoughts, we have organized our paper as follows: Part I is the Introduction, II elaborates on a more theoretical discussion of Interests, Rights, and Power in the Distributive versus Integrative framework, Part III provides an in-depth 1 or to find new employees for replacement. They wanted wages to increase in order to restore the pay cuts they had received a few years earlier. there was little legal recourse if the company chose not to rehire current workers. Rights. Thus. Local P9 had almost no power in this negotiation except to strike. They were driven by emotions and wanted a specific outcome that did not take into account their substantially weaker power position. control of financial resources. Hormel’s management also knew they had the upper hand in negotiations because of the prevailing business friendly climate that favored corporate rights to labor. II. Lastly. Part V concludes. and Power Our negotiation has a historical basis in Hormel and Local P9’s contentious battle so a discussion of their dispute is needed first.discussion of the pivotal role of trust in the negotiations. Located in the then union friendly city of Austin. they did not pursue a more integrative approach during the negotiations. Hormel had one interest throughout the negotiation with Local P9 and that was to reduce wages. Part IV summarizes the lessons learned in our negotiations and hindsight on Hormel and Local P9. Local P9 had exactly opposite interests as Hormel. offer specific wages. Interests. Unfortunately. While in the process of creating a new contract. Local P9 felt they had the right to ask for increased wages in the negotiation of their expiring contracts because Hormel was profitable and did not need any more belt-tightening from its employees. Lastly. Hormel’s management and Local P9 were established partners for many decades prior to the bitter wage negotiations of 1985-86. Hormel had all of the power in this negotiation due to their position. 2 . and ability to move production to other facilities. Minnesota. It appeared that neither party was interested in solving the issue in an integrative approach. this led to both parties relying on power. Local P9 may have been more willing to discuss interests initially but retaliated severely after Hormel’s insultingly low second offer.The actual negotiation between Hormel and Local P9 was resolved through use of a very powerbased approach by both sides. Local P9’s power move made it very difficult to return to interests as the strike prolonged and Hormel was standing strong. Local 190 3 . or most important issues. Given the final resolution of Hormel and Local P9’s dispute. It appeared that Hormel’s management knew they were going to drop wages long before the new contract negotiation even began. Hormel was able to reap the benefits of a power-based approach and the outcome was ultimately in their favor. The negotiation began with Local 190 and ABC both revealing their key interests. related to the negotiation. The final wages they paid employees was $10. The power move by Hormel resulted in a similar power move by Local P9. resulting in a strike.69. Use of a power-based approach at such an early stage was a dangerous move for Local P9 because they used up their biggest leveraging chip in the negotiations. Round One of our negotiation was resolved through a mostly interests-based approach to resolving the dispute which was taking place. However. Hormel had made an offer just slightly below the union’s desired rate but Local P9 quickly rejected this first offer and was unwilling to budge.25. our negotiations followed a similar path. lower than the initial offer of $10. Hormel was unwilling to discuss or consult with the union before the decision to drop wages was made. Local P9 did not have a lot of options and were almost required to use a power-based approach as Hormel was unwilling to make concessions. Hence.67/hour because of the Me-Too-Clause while ABC’s BATNA was $10. Local 190 was not interested in using power during the negotiation and focused on using an interests-based approach to keep the new plant locally. Three facts lead to the clause to favor ABC’s management team: the wording was too ambiguously written. Additionally. and future wage increases. Luckily.69/hour. Both sides taking an interests-based approach to the negotiation resulted in a much more integrative agreement in Round One of the negotiation. This is no surprise considering ABC’s and Local P9’s BATNAs were linked.may have had some additional power in round one due to the legal contracts that were already in place. This led ABC to have even more power in the negotiation through legitimacy since it was now legal to make Local P9’s wages be close to the other unions’ wages. and that other ABC unions’ wages were lower. bonuses. Although there was a bargaining zone. However. ABC’s good BATNA led them to have more power during the negotiation and thus negotiate a wage lower than $10.69/hour. the negotiation became purely distributive because it was based solely on wages. If an agreement could not be negotiated. it was difficult for each party to keep interests at 4 . but only had a BATNA of $8.67/hour and $10.69/hour. the wages of the top three competitors were lower than ABC’s wage offer. Local P9 would go on strike and ABC would hire cheap labor to replace those union workers. The final round of negotiations was a heated dispute. there was no chance of Local P9 to negotiate a wage increase. During Round Two. there was a positive bargaining zone between $8. Local 190 was also willing to make some concessions related to worker autonomy and the escalator clause in exchange for concessions by ABC related to wages. Therefore. it seemed as though there was no bargaining zone. Local P9 wanted wages higher than $10.69/hour. it hurt Local P9 to resort to their BATNA. In our simulated negotiation. a union strike leader. ABC/Hormel seemed to have more power since their plant could still run without Local190/Local P9. ABC’s BATNA was significantly better than Local 190’s BATNA and ABC had the ability to follow through with any power threats made. in the actual agreement. a meatpackers union. In the actual negotiation. However. As in the actual negotiation. The power distribution between the actual negotiation and the simulated negotiation were quite similar. One difference is that in the simulated negotiation. In both cases. ABC still retained slightly more power since resorting to their BATNA would not cease production. Local P9 was not supported by the larger meatpacking union.the center of the negotiation and both parties eventually resorted to rights and power in a last attempt to come to force an agreement. etc. it was difficult to focus back on interests as each side became more competitive and emotional. Once both parties resorted to rights and power. Also. neither side was bound by anything. thus ABC was in a much stronger power position. we did not have as many external factors influencing the negotiation (town support. The absence of a positive bargaining zone made it impossible to end the dispute and focus solely on interests since neither party had similar interests. Although ABC’s and Local P9’s BATNAs were the same. whereas it had less of an effect (and perhaps even a positive effect) for ABC to resort to their BATNA. but instead chose to not use an integrative approach for their negotiation. Since each side resorted to power moves too quickly instead of focusing on mutual interests.). 5 . the negotiation quickly escalated to a power dispute and it is obvious from the real-life negotiation that Hormel had much more power than Local P9. we were bound by the instructions as to what we were negotiating for and the limits of the negotiation. This made Local P9’s cause less legitimate and further led to their decrease in power. While both parties had their obvious negotiation goals. III. they had to defend the Me-Too-Clause 6 . Because of this shared interests approach. The first negotiation between ABC and Local 190 started out with a high level of trust. we will discuss the state of the trust between the two parties during each negotiation. the changing contexts between negotiations. This goes to show that it is important to identify which party in the negotiation has more power as well as the importance of knowing one’s BATNA. The more distributive nature of the second negotiation (wages). Dissecting the Role of Trust in Negotiations The trust factor between ABC management and Local 190 was fluid throughout the entire negotiation process but definitely deteriorated during Round Three. In the following section. there was a healthy level of trust between the two parties. and the factors that impacted trust during the negotiations. power played a large part in the outcome of the negotiation. as well as case-established context. both parties started from a position of mutual interest in keeping workers in the factory and ensuring they were happy. made it much more difficult to start the negotiation with the same high level of trust between the two parties. and it was much easier to come to an integrative solution. From the Local 190 perspective. perhaps both Hormel/ABC and Local P9/Local 190 would have reached a satisfactory agreement for both parties.Both during the actual negotiation and in our simulated negotiation. If each party was able to stay focused on interests and had been more willing to increase their negotiating margin. In the beginning. The result of these dynamics was that both parties quickly headed towards a negotiation about rights and power instead of potential mutual interests. In the third negotiation. ABC used their power play of threatening a layoff of all employees and rehiring all non-union employees. by virtue of the fact that ABC had placed barbed wires around the perimeter of the factory. Soon after. 7 . there was a complete lack of trust from both parties. which further inhibited the ability for both parties to develop strong trust in each other. In actuality. this collaborative approach disappeared quickly when discussing layoff notice period and rehiring policies. while Local 190 used their power play of striking and shutting down ABC’s new plant. Local 190 considered this use of the clause a violation of good faith. It was at this point that both parties realized that a solution could not be reached. a provision they felt was put in place to protect workers’ wages but the management team were now using to decrease wages. both ABC and Local 190 feigned interest in establishing a mutually beneficial outcome and establishing shared interests. where both parties moved to a position of power and trust was quickly destroyed between the two parties. However. but at the cost of avoiding the most important issues. lower priority issues for both parties were resolved relatively quickly. and Local 190 declared strike with management acknowledging and accepting the action. the clause was a tool they did not necessarily want to use but became a power play as time became a transactional cost constraint. From management’s perspective.in the contract. and put them into a defensive position where trust could not be easily restored. This approach allows us to come to agreements in the first two negotiations. When it came time to negotiate the actual contract renewal. but we were still able to have a good dialogue that was sincere in trying to reach an agreement. Whereas Hormel/Local P9 started out with very little trust and expressed no real interest in fostering an integrative negotiating approach. 8 . they started from a Power position by taking action and lowering wages without consulting the union. Much of the breakdown in trust between Hormel and the Local P9 can be attributed to the fact that neither party started from an interest position in their negotiation situation. On Hormel’s end. Hormel management defended their actions and signaled their intentions by saying it was within their Rights outlined in the current contract to make the cuts that they did. without regard to prior wages and compensation from thereon. and maintain a civil and respectful dialogue throughout the process. The Hormel/Local P9 situation had many situational factors that stood in stark contrast to how our ABC/Local 190 negotiation played out. This continued even during the third negotiation when there was not much trust between the parties. the ebbing of trust between Hormel and Local P9 followed almost the same path. During the Hormel/Local P9 negotiation there was a clear distrust between both parties. and there was no effort to negotiate from a position of mutual interest that could have led to an agreement. While this was in their Rights. the ABC/Local 190 negotiations almost always started from a position of interests. the fact that they took unilateral action was a power move by management. regardless of the level of trust in the room.Similarly. It was not until they had an extended period of factory inactivity and the workers were feeling the squeeze that they actually talked about any kind of mutual Interests the two parties may have. This was a late shift to mutually focus on employing the factory with union workers and getting the plant to run at full capacity. framing Hormel as a bad actor in the situation. for this reason. IV. they could have entered the negotiation with higher levels of trust and greater motivation to take an integrative and collaborative approach to the situation. Both Hormel and the Local P9 could have made efforts to build trust within their situation. despite the contrasting approaches. The Local P9 attempted to generate a power position by hiring an outside public relations firm to generate bad publicity. they were a house divided in that there were fractures in the local union base. but their actions leading up to the contract negotiation prevented them from being able to achieve this. Had both parties been smarter and more cognizant of the consequences of their actions leading up to the contract negotiation. Insights on Strategic Errors and Hindsight 9 . In addition. with dissenters being marginalized and no opportunity for a diversity of opinion among the leadership. the way the case is written requires both parties to eventually take a power position. doing so unilaterally without the consultation of Local P9. Hormel’s actions leading up to the negotiation also poisoned the well and prevented an atmosphere of trust. Although both of our groups approached the negotiation with the intent of being as integrative as possible. Both groups felt that there were few concessions that could be made and. the negotiations eventually digressed to power negotiation style and tactics.The similarities between the Hormel/Local P9 and ABC/Local 190 negotiations is that. During the contract period. resorted to power tactics to attempt to swing the negotiation into their favor after an integrative strategy failed to create an acceptable outcome. the company’s management leveraged a clause in the contract to lower employee wages. The key strategic error made by ABC was unwillingness to give up a few benefits to reach an integrative solution. During the course of the negotiation. which made it a dispute negotiation that was embroiled in greater emotions. ABC tried to reduce worker’s benefits in each of the five issues but did not have the equal things to offer. Both teams unanimously agreed that another ABC important strategic error in all three rounds was that they refused to break the restrictions in the case in order to come to an agreement that was integrative. By Round Three. Because of the company’s strong financial position. Local 190 made a key strategic error in the second round when they backed down on the negotiated wage. Local 190’s team was not persuaded by ABC’s arguments at all. ABC deployed strategies that were effective coercions to Local 190’s demands. They also relied too much on the financial statements to support their opinion in all three rounds. Round two was a strictly distributive negotiation and Local 190 was attempting to claim as much value as possible. it was clear that Local 190 felt animosity toward management. Second negotiation was strictly distributive. However. ABC used low industry wages and arbitration as effective threats in a power move. they offered stock options and thus was able to take more concessions from the union. In the first round. BATNAs were also tied in this last round. Local 190 was willing to deviate from their negotiated restrictions in Round One and Two. in the last moments of the negotiation Local 190 reduced the price they demanded due to opponent 10 . Local 190 was perhaps too willing to go on strike and not negotiate a deal. The first negotiation seemed very integrative. In the first round. which made it tough. While in the second round. But in Round Three. the decision to wage a campaign against Hormel was Local P9’s strategic error that put them in a difficult position from the very beginning. Based on our experiences and hindsight. they made a clear power move that proved to be ineffective. 11 . Local 190 feared that ABC could force a strike and cause them to lose big on the deal. Local 190 focused on how the success of the company was a result of treating the employees well. By tying compensation and other benefits to high output and industry leading performance. Local 190’s most successful strategy in the first round that impacted the remaining negotiations was focusing on the interests of ABC Company and presenting them as mutually compatible. the key strategic error made by Hormel Management is their excessive display of power. The union expected the company to be much more aggressive because they believed ABC was in a much more powerful position.bias. their best move was to hire replacement. Although this provoked the workers more. Local 190 was able to frame the negotiation in a positive way for both parties. Skipping an interests-approach and turning to a power move made an integrative solution extremely difficult. it was the best that Hormel could do once trapped in a power strategy. rather than a friend and were unwilling to negotiate. They put themselves in the position as an enemy of the workers. From the negotiation stand point. This enforced their strength to negotiate with the union. By hiring Ray Rogers and publicly attacking the company. They showed disinterest at the beginning of the campaign and made the workers very angry and eventually led to a poor result. In contrast. they should try to maintain the relationship with the employees by showing understanding and empathy.The greatest problem with Local P9’s power strategy was they overestimated the power they actually had. and decided to negotiate a deal instead in order to take the remaining positions left in the factory so at least some members were able to retain employment. fueled by the emotional rhetoric of Ray Rogers. Our strategy recommendation for Hormel is to stop the campaign in the beginning before the workers got really mad. Prolonging the strike and the negotiations was only hurting the union members. Local P9 suffered from severe overconfidence bias. If they were really in a bad financial position (although they actually weren’t) and had no choice but to cut wages and incentives. however. At that time period. Local P9’s best move in the negotiation was ending it. which was to abandon Hormel completely and leave all of the union workers without a job. Instead. Local P9 considered their BATNA in the situation. Hormel should offer alternatives for workers if they intended to take some benefits from the workers. If they told the 12 . they should kindly inform the employees to gain their support. Local P9 actually had much more limited power. they must be sure that they actually have that power. They thought they had the power to inflict significant financial harm and public relations damage that would persuade Hormel to accept their offer. maybe workers care more about their security rather than wage. They should not act like they did not care about the welfare of the workers. When a party undertakes a power strategy. The strike had gone on for too long and there was no progress being made. They should think from the workers’ stand point and find out workers’ interest. Local P9’s choice to wage a publicity war against Hormel made two parties who should have been allies turn into enemies. Hormel would have been much more receptive to this approach because it would have avoided bad publicity and the loss of productivity caused by a strike. Rather than going on a strike. If they had better understood their position they would have realized that the strike was likely to hurt them more than Hormel. Local P9 should have implemented an integrative strategy. Our strategic insight for Local P9 is that they should be cognizant of the nature of their unrealistic expectations and uncontrolled emotions. By focusing on the interests. Even if wages were conceded. the workers could have come to understand the company’s situation and be willing to help the company.workers that the company considered them valuable and would like to provide alternatives to satisfy workers’ interests. Each party could have come to understand the situation of the other. To avoid the drama and damage that resulted from the unsuccessful campaign. allowing them to obtain a better outcome than what was initially offered. Local P9 should have made a greater effort to determine their BATNA along with Hormel’s. they could have potentially identified parts of the deal that were integrative. focusing on the interests of both parties. This new strategy could have avoided the political and emotional rancor of these negotiations. Before taking any action. other aspects such as improved working conditions could have been gained. An issues based approach instead of a power approach would have significantly helped to maintain the important 13 . the union would be more willing to negotiate and eventually come to a common agreement. Local P9 should have come to the bargaining table and focused on the interests of both parties. they would have been much better off than a strike and lost jobs. we learned that an Integrated approach can easily digress into a Distributive approach where everyone suffers prohibitive losses. While Local P9 would likely not have claimed a great deal of value based on the powerful position of Hormel. Local P9 must remain united with the international union. Conclusion The experience of negotiating between ABC’s management and Local 190 provided many insights into complicated multi-party dispute negotiations. The international union is much larger and has influence over all of the Hormel unions along with other meatpacking unions. The intergroup conflict that existed between the international union and Local P9 significantly weakened their negotiating power. That is one of the greatest effects of an integrative solution. That leverage with other groups would have given Local P9 much more power in the negotiation. however. It would also improve their position in future negotiations to potentially extract greater concessions from Hormel. 14 . Rights. To ensure that they have as much power as possible. An Interest. It becomes important to gain more experience from and to study dispute negotiations better in order to prevent undesirable outcomes. Knowing that the negotiation was based on the historical one between Hormel and Local P9. The union should only turn to power as a last resort. then Power approach is the preferred strategy to achieve an Integrated approach. V.relationship between the employer and the employee.
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