Analysis of Bargaining Processes in Employment Relations at University

This report delves into the concept of bargaining within employment relations, highlighting its significance in managing labor and minimizing conflicts. It categorizes bargaining into centralized and decentralized models, exploring their respective advantages and disadvantages. Centralized bargaining, often involving government and trade unions, offers benefits like wage standardization and reduced disputes, but may lack flexibility and hinder individual business improvements. Decentralized bargaining, empowering departmental managers, fosters flexibility and improved communication but can lead to inequalities and coordination problems. The report emphasizes that an organization's size and structure should determine the most suitable bargaining approach to maintain stability and productivity. It covers steps of collective bargaining process, advantages and disadvantages of centralised and decentralised bargaining.

Running head: CENTRALISED AND DECENTRALISED BARGAINING
CENTRALISED AND DECENTRALISED BARGAINING
Name of the Student
Name of the University
Author note

1CENTRALISED AND DECENTRALISED BARGAINING
Executive Summary:
Aim of the assessment is to understand the usefulness of bargaining process in the
employment relations of any organisation. Collective organisation process has been classified
into two categories according to the experts. Both the parts have been discussed according to
the advantages and disadvantages of the processes. The assessment concluded that every
organisation must employ bargaining process according to its size so that balance within that
organisation remains stable and the organisation remains productive.

2CENTRALISED AND DECENTRALISED BARGAINING
Table of Contents
Introduction:...................................................................................................................3
Concept of Bargaining in Employment Relations:........................................................4
Steps of Collective Bargaining Process:....................................................................5
Centralised Bargaining:..............................................................................................5
Advantages of Centralised Bargaining:.................................................................6
Disadvantages of Centralised Bargaining:.............................................................7
Decentralised Bargaining:..........................................................................................7
Advantages of Decentralised Bargaining:..............................................................8
Disadvantages of Decentralised Bargaining:.........................................................8
Conclusion:....................................................................................................................9
References:...................................................................................................................11

3CENTRALISED AND DECENTRALISED BARGAINING
Introduction:
The sustainability of any business depends on the management of labour and
employment in the workplace. Structure of labour management and employment relations
construct the pathway of fewer amounts of conflicts in industrial relations of any organisation
(Hirsch et al., 2014). Issue associated with labour management are the issues related with
industrial relations and employment relations embedded in the core structure of an
organisation. Progress of any organisation can occur effectively minimising the negative
effects caused by different industrial and employment issues associated with each and every
operation level of the organisation. Resolution system is a concept that manages industrial
relations and notifies the employees of their job roles (Hessami and Baskaran 2015). Various
organisations operate in various fields, consisting of different employees coming from
different background. Therefore in order to manage the industrial and employment relations
properly within an organisation, one resolution system is not enough.
Sometimes it is observed that resolution systems of an organisation incorporate many
disputes that ultimately affect industrial relations and employment relations (McBride,
Hebson and Holgate 2015). Due to discontent among employees certain negative impacts
occur in the organisation, like strikes actions and others. These disputes in resolutions can be
eliminated through different approaches (Townsend, Wilkinson and Burgess 2013). One of
the common approaches is collective bargaining that allows both the employer and the
employee to negotiate a satisfactory employment relationship and to reduce any kind of
labour disputes.
Purpose of this assessment is to find out the effectiveness of bargaining in industrial
and employment relations. The advantages and disadvantages of two kind of bargaining
process have been discussed in the following assessment.

4CENTRALISED AND DECENTRALISED BARGAINING
Concept of Bargaining in Employment Relations:
Terms and conditions of employment relationships are built on the basis of
negotiations (Pekarek and Gahan 2016). This process of negotiation between the employer
and employee is called bargaining. Bargaining comes into play when there is a substantial
amount of dispute in the resolution system of an organisation. Various conflicting interests
are reconciled through collective bargaining (Dahl, Le Maire and Munch 2013). Bargaining
process constructs the labour relations of an organisation by recognizing the goals and
objectives of the organisation and realising general and mutual interests.
The process of bargaining in an organisation depends on the structure of bargaining,
since the information about indirect and direct members of labour accord are detailed in the
structure (Addison, Portugal and Vilares 2015). The structure is also helpful roles and
outcomes of the management and unions are reflected through it. Often it has been seen that
employers and unions prefer the centralised model of bargaining and the employees prefer
decentralised model of bargaining (McBride, Hebson and Holgate 2015).
The bargaining is a process of negotiation, where employers and employees present in
a group to negotiate various terms and conditions. Through the negotiation process scopes for
compromise, discussion and mutual exchange increase (Cazes, Khatiwada and Malo 2012).
In the process of resolving an issue, the bargaining process follows an exclusive
format that starts with a proper presentation of demands of the employees, channels through
analysis and discussions between the authority and union of employees and ends with the
formation of an agreement which develops the regulations for management of employees for
a certain period of time (Bailey and Peetz 2013). Bargaining is a dynamic process that keeps
changing at certain intervals. The process is complementary as well as continuous. Both the
parties of negotiation have some requirements from the other parties, like employees require

5CENTRALISED AND DECENTRALISED BARGAINING
better pay structure from the employers and the employers require better labour from the
employees. The process elevates industrial democracy within an organisation, using
understanding and collaboration between different operational bodies.
Steps of Collective Bargaining Process:
Bargaining process follows 5 general phases. These phases are preparation,
discussion, proposal, negotiation and settlement (Van Wanrooy et al. 2013.). In preparation
phase, negotiation team from both the parties have been developed the topics of negotiation
have been finalised by examining the situations of respective parties and raising the issues.
Discussion phase is associated with preparation of terms that will guide the negotiations
(Traxler and Brandl 2012). Proposal phase is related with the beginning statements related
with the issues and issue resolving proposals. In bargaining phase, both negotiation parties
present their requirements and discuss how to resolve the conflicts providing benefits for both
groups. Finally settlement phase comes, where one or several beneficial decisions have been
taken and the issues are completely resolved.
Centralised Bargaining:
Bargaining process can be categorized into two sectors, centralised bargaining and
decentralised bargaining (Boeri 2014.). Social bodies are the channels for conduction of
centralised bargaining process. These social bodies are government, employer and trade
union groupings and more. Individualism is a part of centralisation or centralised bargaining
process ((Pries and Seeliger 2013). Reaching to an agreement with a collaborative and easy
approach, cost reduction associated with the negotiation and ease of application of decisions
is the procedures to obtain individualism (Brue, McConnell and Macpherson 2016).
However, smaller enterprises are avoided in this approach as the financial pressure has been
neglected in this bargaining process.

6CENTRALISED AND DECENTRALISED BARGAINING
Centralisation combines the employers and union of employees together in a more
focused way (Cazes, Khatiwada and Malo 2012). To eliminate the disputes in wages,
employment relations and industrial relations, the importance of greater responsibility is
reflected through this process and it helps to set the terms and conditions for the organisation
(Hirsch et al., 2014).
Application of centralisation in condition of work, employment relations and wages
by the government creates awards (Jimeno and Thomas 2013). An example of this approach
can be given from the central bargaining system of Australia from 1904 to 1990 (Dahl, Le
Maire and Munch 2013). Awards can be defined as legal agreements on the basis of least
wages and good working conditions for the employees. This is the result of combination of
submission of both employers and union of employees.
Advantages of Centralised Bargaining:
There are various advantages of centralized bargaining process. The process provides
a fix in wages that elevates workers’ equality and degree of justice of work (Hessami and
Baskaran 2015). Economy management can be well maintained by any organisation due to
more control over wage system and balance in employment relations. Introduction of awards
within almost every sector in the organisation reduces the disputes among employees
(Addison, Portugal and Vilares 2015). Wide scale implementation of this process increases
the cost efficient benefits to the organisation and makes the employee training more efficient
and it also causes dilution in the power of individual employee (Faia and Rossi 2013). Powers
of abusive employees are reduced through this process. Main advantage of the process of
collective bargaining that it significantly reduces the amount of strikes performed in the
organisation. In this case this bargaining provides the employees protection in their work
sectors as the end of the bargaining results in an agreement creating benefits for both
employers and employees. The process also provides stability and security to the employees

7CENTRALISED AND DECENTRALISED BARGAINING
as probability of unlawful termination reduces and the employees of an organisation have a
well constructed support system.
Disadvantages of Centralised Bargaining:
Flexibility of this bargaining system is not appropriate comparing to its theoretical
model. The bargaining process for large organisations and for small organisations is almost
comparable, which reduces the distinguishable components (Townsend, Wilkinson and
Burgess 2013). Individual businesses are not being provided with enough opportunities, so
that the organisation can make improvements in their employment and industrial relations
and increase their productivity and profitability. Favours are achieved only by the large
organisations due to availability of enough resources and capital (Jimeno and Thomas 2013).
Amount of incentives for management participation is since the decisions are made outside of
the organisation (Traxler and Brandl 2012).
Decentralised Bargaining:
Decentralisation means the distribution of responsibilities and authorities to the
management at low level by the management of high level (Pekarek and Gahan 2016). As an
opposition of centralisation the decision is made by the managers associated with each
department or division regarding the whole organisation (Boeri 2014). Any issues within the
organisation can easily be found out since each department have the allowance to determine
the issues and take decisions to counter them. Organised economies contain decentralisation.
Involvement of lower level authorities allows the functional level managers to enhance their
performance and increases their freedom of work. Due to the collaboration of high level
managers with low level managers, reduction occurs in the decision making time for an
organisation (Dahl, Le Maire and Munch 2013). Allowance of more people into the decision
making system of an organisation creates opportunity for more innovative input in the

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functionality of an organisation. Expansion of business processes through merging and new
acquisitions can be explained thoroughly by decentralisation.
Relationship standards are improved between employer and employee through this
process due to industry level dealings between these two (Van Wanrooy et al. 2013). Team
construction and workplace democracy is enhanced and thus optimization occurs in employee
participation within the organisation (Bailey and Peetz 2013). Major focus of this process is
specifically the sector of individual working. The process reduces the amount of disputes in
resolution since individual workplaces have individual modes of operation and any dispute
that is developed is solved individually (Hirsch et al., 2014).
Advantages of Decentralised Bargaining:
Main advantage of decentralised bargaining process or decentralisation is that it
constructs a flexible system that fixes the issues in employment conditions taking account of
every workplace characteristics (Faia and Rossi 2013). Communication between employees
and employers get enhanced due to the distribution of decision making ability to the low level
authority. Decision making becomes easier and fast and can be adopted within the working
sector of the organisation within a quick span of time (McBride, Hebson and Holgate 2015).
It improves the overall motivation of the employees and their co-operation. Rewards are
given to individual employee for their better productivity. Maintaining the employment, an
enhancement in the competitiveness in global context is promoted.
Disadvantages of Decentralised Bargaining:
Decentralised bargaining creates inequality between different skilled employee
groups. The difference between skilled and unskilled employee is clearly observed from here
(Brue, McConnell and Macpherson 2016). Economy management becomes difficult as the
control of government over the wages diminished. Sometimes the process cannot resolve the

9CENTRALISED AND DECENTRALISED BARGAINING
issues of disputes in industrial relations (Pries and Seeliger 2013). Wide dispersion of the
authority throughout the organisation develops co-ordination problems. Financial burden
increases in an organisation and the result of it can be seen from less involvement of small
scale enterprise (Addison, Portugal and Vilares 2015). The main disadvantage is that uniform
policies cannot be followed throughout the whole organisation as different department of an
organisation needs to follow different set of policies.
Conclusion:
Therefore, the discussion clearly explains the concepts of bargaining regarding
employment relations and industrial relations. Progress of any organisation depends on its
employees as well as authorities. Therefore, it is very important that the employment
relationship within an organisation remains balanced. Often it has been seen that many issues
generates within an organisation regarding labour wages and others that result in a strike and
affects the reputation and productivity of the company. These issues can be solved in the
primary stages with the implementation of proper negotiation which can be termed as
bargaining. Two types of bargaining process have been discussed in the report, which targets
specific size of organisations. These bargaining processes form proper negotiation regarding
every issue between the two negotiating bodies, employer and employee. In any negotiation,
generally both the negotiating parties contain requirements, which are discussed and analysed
according to the issues and ultimately a solution is developed which is beneficial for both the
negotiating parties. Centralised and decentralised bargaining processes have several
advantages and disadvantages. The small enterprises are benefited by centralisation whereas
large enterprises are benefited by decentralisation. Advantages of centralisation are
leadership and proper collaboration and decentralisation are responsibility and burden
sharing. Difference between the controls of both processes is that the first process provides

10CENTRALISED AND DECENTRALISED BARGAINING
inadequate control and the second process provides considerable control over the
organisation. Depending on the structure of an organisation the bargaining process should be
built up. The ultimate goal of this process is to balance the employment relationship within an
organisation so that no dispute remains within and the organisation does not have to face
employee problems like strikes and other issues.

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References:
Addison, J.T., Portugal, P. and Vilares, H., 2015. Unions and collective bargaining in the
wake of the great recession.
Bailey, J. and Peetz, D., 2013. Unions and collective bargaining in Australia in 2012. Journal
of Industrial Relations, 55(3), pp.403-420.
Boeri, T., 2014. Two-tier bargaining. Browser Download This Paper.
Brue, S.L., McConnell, C.R. and Macpherson, D.A., 2016. Contemporary labor economics.
McGraw-Hill Education.
Cazes, S., Khatiwada, S. and Malo, M., 2012. Employment protection and collective
bargaining: Beyond the deregulation agenda (No. 994719703402676). International Labour
Organization.
Dahl, C.M., Le Maire, D. and Munch, J.R., 2013. Wage dispersion and decentralization of
wage bargaining. Journal of Labor Economics, 31(3), pp.501-533.
Faia, E. and Rossi, L., 2013. Union power, collective bargaining, and optimal monetary
policy. Economic Inquiry, 51(1), pp.408-427.
Hessami, Z. and Baskaran, T., 2015. Has Globalisation Affected Collective Bargaining? An
Empirical Test, 1980–2009. The World Economy, 38(12), pp.1880-1911.
Hirsch, B., Merkl, C., Müller, S. and Schnabel, C., 2014. Centralized vs. decentralized wage
formation: The role of firms' production technology.
Jimeno, J.F. and Thomas, C., 2013. Collective bargaining, firm heterogeneity and
unemployment. European Economic Review, 59, pp.63-79.