Interest-Based Bargaining: Purpose, Process, and Pros & Cons

Introduction to Interest-Based Bargaining

The collective bargaining process is rarely dull or unexciting. Every now and then, there is significant tension as one of the participating parties comes to the realization that it will fail to reach the expectations of its constituents. From time to time, there is significant eagerness and passion as resourceful options emerge with the potential to generate mutual gains. On different occasions, apparently minor or routine issues of contract terminology or working conditions have the potential to become fiery and tense depending on how they are addressed (Kochan and Lipsky, 2003).

Interest-based bargaining is founded on the identification and determination of mutual interests rather than the resolution of specific bargaining demands. It can be defined as a problem-solving process conducted in a principled manner that generates effective solutions while simultaneously enhancing the bargaining relationship.

Also referred to as integrative bargaining, this is a negotiation approach in which parties work together to obtain a win-win solution to their disagreement or difference of opinion. This strategy emphasizes the development of mutually beneficial settlements based on the interests of those in dispute. These interests consist of the needs, requests, concerns, and uncertainties significant to every party—they are the fundamental reasons why individuals become involved in conflict. Interest-based bargaining takes into account the potential for the parties' interests to be combined in ways that generate mutual value or expand the outcome. The potential for integration exists only when there are multiple issues involved in the negotiation, because the parties must be able to make concessions across issues for both sides to be satisfied with the final outcome (Sprangler, 2003).

The main emphasis of this bargaining strategy is to realize mutual bargaining interests, with the primary purpose of articulating choices and solutions for mutual achievement and gain. Rather than using proposals and counter-proposals as methods of reaching agreements, participants in the bargaining process use active listening, brainstorming, process checking, consensus decision-making, and matrix building to facilitate the settling of issues. A fundamental objective of interest-based bargaining is to build a relationship for the future grounded in trust, understanding, and mutual respect (Snell et al., 2015).

Key Processes of Interest-Based Bargaining

There are four key processes encompassed in interest-based bargaining. First, after reaching an understanding of their own needs, goals, and interests, the parties attempt to comprehend the real requirements and objectives of their counterparts. This is accomplished through open dialogue in which positions are shared freely rather than hidden or withheld. Second, the parties create a free flow of information by disclosing their true goals, listening carefully to their counterparts, and working toward a mutual solution that incorporates both positions. Third, the parties emphasize the common ground between them and work to reduce their differences. The distinct objectives of every party must be taken into account as part of a collaborative effort to achieve a broader goal. Fourth, the parties seek solutions that address and satisfy the goals and objectives of each of them.

The results of interest-based bargaining are measured by the degree to which the goals and objectives of each party are met. In particular, if one party aims to gain more than the other, then the negotiation will be difficult and ultimately unproductive—successful interest-based bargaining requires that both parties genuinely aim for a shared win (Kennedy, 1999).

Advantages of Interest-Based Bargaining

One of the key advantages of interest-based bargaining is that both parties involved end up benefiting—both sides arrive at a win-win outcome. Within the labor or workplace setting, management is able to attain flexibility, harmony among the workforce, and increased prospects for implementing challenging proposals such as multiskilling and pay-for-performance, along with security of labor supply. This means that management is not required to establish alternative facilities in the event of a work strike. Unions, in turn, are able to achieve greater employment stability for their membership, skills development, a stronger voice in decision-making, and enhanced employability of union members (Kennedy, 1999).

There is also the advantage of easing tensions. The interest-based bargaining model is one that is responsive: prominent negotiators function more as facilitators of dialogue and therefore allow for a more democratic set of negotiations. Beyond the participatory component, the parties are dealing with issues rather than simply defending their positions, and as a result work in a more cooperative manner. Notably, both parties are encouraged to consider what is best for the other party, not merely for themselves.

Another benefit is that the spirit of collaboration can extend beyond the formal collective bargaining discussions into the life of the contract. As a result, issues that arise during the contract period can more often be addressed in an accommodating manner, since the parties have already established a foundation of mutual gain during the contract discussions. In this way, grievances that might otherwise have proceeded to arbitration can instead be resolved cooperatively. Although this will vary across different settings and depends on the nature of the grievance, there is little doubt that when parties are committed to a cooperative approach, their new impetus is to determine whether they can resolve an issue without resorting to legal action or conflict. Success is measured differently—not by wins and losses, but by acceptable resolution of matters (Boniface and Rashmi, 2006).

Moreover, this model creates the ability to address and resolve issues that could not previously be considered. This is beneficial because the parties are inclined to attempt a range of things knowing that the other party is equally willing (DiGiovanni et al., 2006).

References

Boniface, M., & Rashmi, M. (2012). Interest based bargaining: Innovating from the basics. International Journal of Business and Social Science, 3(9).

DiGiovanni, N., Brown, M., & Boston, J. (2006). Implementing mutual gains (interest-based) collective bargaining. Morgan, Brown, & Joy, LLP.

Kennedy, B. L. (1999). Interest-based collective bargaining: A success story. Industrial Relations Center.

Kochan, T. A., & Lipsky, D. B. (Eds.). (2003). Negotiations and change: From the workplace to society. Cornell University Press.

Snell, S. A., Morris, S., & Bohlander, G. W. (2015). Managing human resources. Nelson Education.

Sprangler, B. (2003). Integrative or interest-based bargaining. Beyond Intractability.