Balance of Power – which way does it tilt?

Any exchange situation in which a pair of individuals (or an individual and an organisation) can engage in mutually beneficial trade but have conflicting interests over the terms of trade is a bargaining situation. So far so good...but things become a lot more complicated when one party to a bargain, or some kind of contract, has more and better alternatives than the other party. This results in one party having greater ‘power’ than the other to choose not to take the deal. Hence, it becomes more likely that this powerful party will gain more favourable terms.

What we have in this case is a classic example of how an independent contractor would react when he enjoys a good bargaining power given his place in the Elite Panel of Umpires in the ICC. Darrel Hair after a series of incidents (in which he had, by no means, acted against the laws of the profession) is under the pressure to resign before his contract terminates. What gives him this immense confidence to make this one-off non-negotiable offer is the fact that his contract is valid up to March 31st 2008 and he has done nothing against the books when he was involved in the ball tampering controversy. So the fact that he cannot be terminated on legal grounds by ICC (which I assume given the fact that Hair has done nothing against the contract) and also the position he enjoys given his expertise in profession puts him in a favourable bargaining position. Here, ICC is in the weaker position amongst the two of them because the bargaining power has shifted in the favour of the employee owing to his expertise and contractual clauses. So, one can never really say who amongst the employee or employer enjoys a higher bargaining power as the balance of power could shift either ways depending on the situation.

Also as an employee, one could make such a one-off non-negotiable offer only when he/she is highly important (to an extent irreplaceable) in the current scheme of things and also when better avenues beckon. As an employer, caught in a situation like ICC, the only way out is to explore a workaround so that you don’t lose a high performer and at the same time you don’t lose way too much on account of your weak bargaining position.