Publications

Interest-Based Bargaining (1995)

Interest-based, or “win-win” bargaining, is receiving serious attention from many negotiators, both union and management. However, although many are discussing it, actual examples of interest-based bargaining are still rather rare. Not surprisingly, both labor and management find it difficult to embrace some of the changes associated with interest-based bargaining in an atmosphere of scarce resources.

What is interest-based bargaining?


The foremost difference between interest-based and traditional approaches to negotiations is the underlying assumption each party brings to the process. Interest-based bargaining is rooted in the idea that the fundamental interests (or concerns) of labor and management typically complement one another. For example, both parties want the employer to excel at what it does. This differs sharply from the traditional view which assumes that the parties’ fundamental interests conflict with one another despite their ability to find some common ground.

Indeed, traditional collective bargaining is largely based on the premise that the outcome of negotiations creates winners and losers, and both parties use any available leverage to make sure they are the winners. Collective bargaining laws in both the public and private sectors are written to embody this assumption. They regulate the parties’ use of power by restricting the use of “weapons” such as strikes, lockouts, and discharges of union activists. Those who explore the unconventional idea of “win-win” negotiations need to understand that the differing interests of labor and management are not easily reconciled to both sides’ satisfaction. The resolution of issues may be especially difficult in the public sector in an era of tightening budgets and shrill attacks on AFSCME and public workers.

Nonetheless, in spite of such barriers, a small but growing number of parties have successfully implemented interest-based relationships. AFSCME Council 24, the Wisconsin State Employees Union, has recently completed negotiation of their fourth contract using a “consensus-based” process. Council 8 recently negotiated their agreement with the City of Cincinnati, Ohio, using an interest-based process. This followed successful uses of “win-win” by Council 8 at Ohio University and O’Bleness Hospital, both in Athens, Ohio. And, with little fanfare or elaborate process, a number of AFSCME affiliates successfully use labor-management committees to resolve issues on the basis of interests. Health care benefit changes and health and safety issues are among the most common of the difficult issues that labor-management committees have tackled over the past decade.

In redesigning government processes, especially those based on Total Quality Management (TQM) or High Performance Workplace (HPW) theories, it is likely that collective bargaining will become less confrontational and more interest-based. In some cases, interest-based bargaining has led to joint involvement in quality initiatives. In other cases, involvement in quality initiatives has spilled over to the bargaining relationship, leading the parties to use interest-based processes and consensus building techniques with increasing frequency.

Interest-based bargaining goes by a host of names such as “consensus bargaining,” “problem-solving negotiations,” “win-win,” “mutual gains,” “collaborative bargaining,” “principled negotiations,” and others. In Getting to YES, Negotiating Agreement Without Giving In, Roger Fisher and William Ury define five characteristics of interest-based negotiations:

  1. Bargaining over positions is avoided;
  2. People are separated from the problem;
  3. Focus is placed on interests, not positions;
  4. Options for mutual gain are invented; and
  5. Objective criteria are used to select the appropriate resolution to an issue.

Essential to understanding interest-based processes is a thorough grasp of the distinction between a position and an interest. In short, a position, or proposal, is a party’s chosen solution to a particular problem, or goal; it may be one of many alternatives that meet a party’s needs. An interest is the basic need or concern that is addressed by the proposal.

For example, in 1992, the Connecticut Department of Labor was seeking to reorganize its operations. The reorganization abolished some jobs and created new ones. Because most affected employees did not qualify for the new positions, the reorganization posed a threat to the economic and employment security interests of Council 4 and Local 269 members. Accordingly, the union was tempted to take a position opposed to the reorganization.

Instead, Council 4 agreed to support the reorganization in exchange for a promise of no layoffs and implementation of a “win-win” process to negotiate all aspects of the reorganization. Using the interest-based process, the parties agreed to provide training to affected staff in order to qualify them for the new, higher paying jobs. The result was a pay increase for members who had initially feared layoffs. By not taking a position opposed to the reorganization, Council 4 was able to meet the real interests of its members: employment security and career progression. The employer was able to implement its reorganization without union opposition. The result: both parties “won.”

How does interest-based bargaining work?


Some interest-based bargaining techniques are familiar to experienced negotiators. Traditionally, after proposals are presented, union and management negotiators request the other party to justify their position. Good negotiators who carefully listen to this justification can respond to the stated interest of the other party in a manner which also achieves his/her own interest. Often, this is the method by which many issues are resolved.

The identification of interests is also at the center of formal interest-based processes. However, rather than starting from proposals and seeking justification, the interest-based process starts from the justification (the identification of interests) and leads to the joint development of proposals. Once alternative proposals are identified, the parties, often using objective ranking criteria, select the alternative that ranks highest.

In the case involving Council 4, the employees’ interests were in remaining employed and in achieving career progression. The employer’s interests were to increase productivity and improve service to the public. These interests do not conflict; to the contrary, employees share the employer’s interest in enhancing productivity and quality service while the employer shares (or is, at worst, indifferent to) the employees’ interests in employment security and career advancement. By identifying interests and jointly developing proposals that satisfy those interests, the parties were able to “invent” a mutual gains option.

Usually, parties undertaking interest-based bargaining use a facilitator to assist them throughout the process. Bargaining is often preceded by substantial joint training. Council 24 and Wisconsin’s bargaining representatives received training from the U.S. Department of Labor at the outset of their process. Subsequently, mediators from the Wisconsin Employee Relations Council (an independent state agency) served as facilitators. Council 8 underwent extensive training provided by Commissioners from the Federal Mediation and Conciliation Service, who also served as process facilitators. Although the process and training differed to some extent, the core principles and practices used in Wisconsin and in Cincinnati were very similar.

Generally, the parties were trained in group problem-solving, consensus decision-making, and communication skills. Together they learned the concepts of interest- based bargaining and participated in exercises designed to promote discussion and understanding of how mutual interests are identified and satisfied in the process.

The structured process integral to interest-based bargaining is rarely followed rigorously. In Wisconsin, the parties quickly found that developing and applying objective ranking criteria was unnecessarily slowing them down. They ultimately adopted three general criteria that have lasted through four rounds of bargaining:

  1. Is the alternative legal?
  2. Is the alternative ratifiable?
  3. Is the alternative cost-effective?

However, when the union and management attempted to bargain their most recent agreement without facilitators, they found that the process lost some of its effectiveness. Facilitators helped get the parties back on track. Even so, the parties are using the facilitators less frequently as they gain more confidence and familiarity with interest-based bargaining techniques.

Among the most visible distinctions between interest-based and traditional bargaining is the bargaining structure itself. Traditionally, collective bargaining discussions are channelled through chief negotiators who speak for each party. Information, and any internal differences of opinion, are concealed from the other party. Each party maintains a united front.

In an interest-based process, information is freely exchanged between the parties and, often, joint labor-management subgroups are established to gather information and develop tentative agreements. Communications are open and all participants speak. Internal differences are not concealed because the process requires a consensus decision to which all parties can agree.

Both Council 24 and Council 8 found that use of the interest-based structure had a positive effect on the bargaining process and the labor-management relationship. The establishment of labor-management subgroups led to better personal and professional relationships between local officers who served on the negotiating team and their management counterparts. It also provided local leaders with a greater sense of ownership of the resulting agreement. Council 8 believes the Cincinnati contract settlement is the best it obtained with the city in the last 15 years. The process allowed for meaningful discussions of economic and non-economic issues that were previously given short shrift at the bargaining table.

Of course, in any negotiation some issues are easier to resolve than others. An interest-based process will not lead to quick resolution of a dispute over wages when an employer is in fiscal distress and employees are paid below market rates. Often, when parties cannot resolve such difficult issues, they agree to defer the issue for future discussion, or they negotiate a contingent agreement. For example, wage disputes may be resolved by agreeing that wages will increase at the rate of general fund revenue increases or according to some other formula tied to the employer’s ability to pay. Both Council 24 and 8 were able to resolve all issues using the interest-based process.

Fisher and Ury argue that the idea of the BATNA—the Best Alternative To a Negotiated Agreement—should be used in lieu of the resistance point (or “bottom line”) approach to determine when parties are at impasse. In their view, bottom lines are often arbitrarily selected and limit a party’s flexibility to explore creative settlements. Because parties negotiate to produce something better than what could be obtained without negotiating, the authors argue that final offers should be measured against the best alternative to an agreement, not against a pre-selected resistance point.

Typically, as in traditional bargaining, interest-based bargainers set aside seemingly unresolvable issues until all others are settled. At that time, each party can clearly see the disagreement in the context of a full package. If issues remain unresolved, the parties resort to the tradeoffs associated with traditional negotiations. However, it is considered a breach of the interest-based “ethic” for a party to use power, such as a strike or lockout, to resolve issues. Interest arbitration is compatible with an interest-based approach.

Who should use interest-based bargaining?


Interest-based bargaining is not for everyone. Traditional bargaining has, for the most part, worked well in both the public and private sectors. The perceived and actual risks associated with a transition to an interest-based approach may simply be too great in many situations. The interest-based process should be viewed as an effective option when used in the right places, at the right times.

To determine if an interest-based process is appropriate, labor-management parties must honestly assess their relationship and the environment in which they operate. Factors to be considered include:

  • Does each party have the authority to bargain or will negotiated agreements be subject to further review by the executive branch?
  • Legislative review of economic terms are often unavoidable.
  • Do the parties have the ability to clearly and effectively communicate? Good communication is essential to the effectiveness of an interest-based process.
  • Is training and facilitation available? Knowledge of the process and third party assistance are necessary for success.
  • Are both parties willing participants in the process? Each party must be motivated to assume the behavior changes and risks associated with interest-based bargaining.
  • Are the parties’ expectations reasonable? Parties should not expect interest-based bargaining to result in an agreement superior to one that would be obtained through traditional bargaining.
  • Does sufficient trust exist between the parties? Although Fisher and Ury argue that trust is not essential to the process, it is hard to imagine the process working in the absence of a mature relationship where the parties can rely on each others’ word.
  • Is the environment right for labor-management cooperation? An interest-based process cannot work if union or management leaders are openly hostile to the other parties’ interests or in an unstable political environment.
  • Is there internal consensus within the union (and within management) to engage in interest-based bargaining? Not everyone will agree that interest-based bargaining is appropriate. If there is substantial opposition to interest-based bargaining on either side, the process may be undermined. Similarly, if either party’s decision makers are experiencing significant challenges to their leadership, the process is not likely to work well.

Help is available


Fisher and Ury’s Getting to Yes (a Penguin Books paperback), Jonathan Brock’s Bargaining Beyond Impasse (Auburn House Publishing) and numerous articles written in trade publications are sources of additional information on interest-based processes. Assistance and training is available from regional Federal Mediation and Conciliation Service offices and from some state mediation agencies, public employment relations boards, colleges and universities, and local labor-management committees. For more information, you can also contact AFSCME’s Research and Collective Bargaining Services Department.

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