Benefits & Pitfalls of Collective Bargaining

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  • 0:02 Collective Bargaining…
  • 0:28 Benefits
  • 1:08 Pitfalls
  • 2:27 HR Strategies
  • 3:39 Lesson Summary
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Lesson Transcript
Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

This lesson defines collective bargaining and explains the pitfalls versus the benefits. It also discusses how HR managers can implement strategies to effectively negotiate collective bargaining agreements.

What Is a Collective Bargaining Agreement?

A collective bargaining agreement is a legally binding contract between an employer and a group of employees regarding specific employment terms and conditions. Some of the terms and conditions can include retirement savings packages, severance packages, medical and other health benefits as well as compensation and vacation awards. There are several advantages and disadvantages of a collective bargaining agreement.

Collective Bargaining Benefits

Collective bargaining agreements can be mutually beneficial for both the employer and the employee. Some of the advantages include:

  • Greater communication between employees and the employer
  • Clearer expectations of the employer and employees
  • Increased job security for employees
  • Fewer stresses from layoffs or reduction in benefits
  • Cuts down on the perception of favoritism in the workplace

Since the agreement is a legally binding contract, employees have greater confidence that the terms and conditions will be carried out by the employer. The terms of the agreement must be followed by both the employees and the employer for the collective bargaining agreement to work as planned.

Collective Bargaining Pitfalls

From the perspective of both the employer and employee, there can be several disadvantages associated with collective bargaining agreements. The contract is generally in effect for multiple years before any new negotiations or changes can take place. There may be employees who do not agree with all of the terms or who have special circumstances that would not fit into the common needs of the majority. Exceptions to general terms are not usually considered or included in collective bargaining agreements.

Collective bargaining agreements can also remove some of the management power from the workplace. When the agreement is geared toward employee conditions and terms, management may not be able to make changes to the agreements. As a result, employees may not respect management as much as they did before the agreement was in place--especially if the employees realize management has limited powers or authority.

Another disadvantage is the option for equal pay for all employees across the company. This condition of the agreement can be frustrating for employees who have worked for the company for a longer period of time since they may believe that they should be paid more based on tenure and experience. However, if equal pay for all employees is a condition of the collective bargaining agreement, all employees will receive equal pay, and this can have a negative impact on the organization's valuable employees.

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