Bargaining has been a very primitive phenomena and is extensively used in attaining something which is not possible in a direct deal. A number of factors like the relative importance of the deal, cohesion shown by the parties towards reaching an agreement, negotiation skills and the power exhibited by the parties drive the bargaining scene. If a party is at advantage in the current scenario, then it may not enter into bargaining at all. Similarly, the same holds true for the other side. If the deal is very necessary, then both sides can agree on a common price which more or less is divided between the two sides and paid accordingly.
Moving towards the question whether bargaining power is always shifted in the favour of employer, I feel it is not the case always. It is true that the employer always has an upper hand in such cases but due to various factors like competency of the employee, shortage of talent in the market, economic, societal factors etc., the employee too enjoys some power and can execute them when time permits.
The Darrell Hair case is very different. He was an international umpire who had been enjoying the elite status in ICC. After the ball tampering fiasco, he was reprimanded by the media of most of the cricketing nations excluding England, Australia and New Zealand. Now, since most of the nations including the Asian ones were against him, ICC might have seen the benefit of banning him to save its face in spite of being right according to the cricketing rules. Again, here Hair having served at the top for a long time, offered the bargain in order to evade the forthcoming decision which was imminently awaiting him. He understood that he had some support with him and could leverage that to get a good deal. But ICC was not interested in his bargain and instead banned him. Had he been having a greater support, I don't think there would have been any chance of him getting reprimanded for this. So, a lot of external factors came into play here rather than the competence of Mr. Hair.
Posed with a similar situation, it is natural to go for such non-negotiable offer. But what matters is whether the employer is interested in it. If I get into such situation, then it's possible that I make such offer. During normal times, it depends upon my affinity with my employer and the kind of work that I do. If both are very favourable, I might not make such offer at all.
Faced with such kind of situation as that of Mr. Hair, I would not have any doubts in rejecting the offer if my employee offers this. But in other scenarios, I would like to bargain till I see that the cost of bargain is more than the replacement of such employee.
While the ongoing discussion in the class Saurabh had raised the issue of bargaining power saying that IIT Mumbai was at the receiving end following the rejection of offer letters by Infosys. According to my views there is very little probability of the employer being at the receiving end i.e the bargaining power to be shifted in favour of the employee. As discussed by my friends earlier in many posts this can happen in some situations where the organization has no substitute or replacement for the current service offered by the individual. The main reason for my view is as discussed in class by Sir that the market would regulate itself as in the case of IIT Mumbai where there would been a limited applicant pool for Infosys next year. Hence for the current scenario an employer would in most cases have the benefit of replacing the current employee making such an offer.
In the case of Darrel Hair the employer ICC disclosed the confidential non-negotiable offer by Hair thereby making his case negative in front of media and people. He was not allowed to officiate in any of the following matches until the end of his contract. Later Hair resigned on 22 August 2008 in order to take up a coaching role without any terms and conditions. So, we saw a shift in the bargaining power from employer to the employee in the example where the employee was never at the receiving end.
Darrell Hair was able to make a non-negotiable offer only because he had been one of the best and respected umpires for 16 long years. He was in the elite panel of the umpires in ICC. Now I would make an similar offer to an employee if I am indispensable to the organisation and have sufficient skills at that point in my career which don’t have any replacement in the job market. Also it wouldn’t matter to me whether the employee acknowledges the offer or rejects it as I would have a lot of options to choose from.
If I would have received such an offer from my employee then I would have accessed the value & contribution of employee to the company in the present and the future. Also I would have definitely seen whether the current job contribution could be replaced from either within or outside the organisation. If the overall contribution would be significant and losing such an employee would affect the organisation significantly then I would have tried to see whether further negotiations would be possible with the employee or not.
Before starting on with the actual issues I would like to quote the definition of Bargaining Power. “Bargaining Power is defined as the capacity of one party to dominate the other due to its influence, power, size, or through a combination of different persuasion tactics, when they enter into any kind of negotiation”
Darrel Hair exercised his bargaining powers in sending the Non-Negotiable Offer to his employers ICC. In a very similar way both employees and employers since long have been exercising their bargaining powers to bring themselves in a more profitable and much better position as compared to their current state of affairs.
Now taking on each question on individual basis:
Is “Bargaining Power” always shifted in the favor of the employer and is individual always at the receiving end?
I don’t agree with the statement that bargaining power is always shifted in the favor of the employer and the individual is always at the receiving end. Rather, the bargaining power keeps shifting between the employee and the employer based upon various economic and legal factors surrounding the employee relation system. The advent and implementation of new technologies also impacts the shift in the bargaining power and many a times puts the individual on the beneficiary side. The main force that defines the shift in Bargaining Power is “Who amongst the employee or the employer is in the demanding position”. Usually the shift in bargaining power is towards the individual when he knows that there is a lot of dependency on him (due to his skills, his repo in the team and with the client) or he has some better offers in hand.
Based on the email, what are your observations on "bargaining power" in the context of individual - organizational relationship?
Darrel Hair is well known in his field and comes amongst the Elite panels of umpires. He considered himself to be in a strong and demanding enough position to send the e-mail entitled "The Way Forward" asking for US$500,000 from his employer ICC. This was an ironical situation as the position of Hair was relatively weaker than his employer ICC as neither did he possess any such skills that could not be easily replaced and neither did he have any other option in hand on the basis of which he could bargain with ICC. The results of this offer were clearly visible when ICC banned Hair from officiating in international matches. What we observe from this case is that one party should exercise its bargaining powers over the other only when the other party is in the real need for the first one. Relating to the organizations, neither the employees nor the employers should practice their bargaining powers unless they are in a position strong enough to do so.
Would you be able to make similar non-negotiable offer to your employer in any point of time in your career?
I might also make such a Non-Negotiable offer in future to my employer depending upon the position I would hold in the organization. If I feel that the skills I possess are very crucial for the organization and losing me as an employee can prove to be harmful for them, and I am being underpaid according to the industrial standards for the same, I may exercise my “Bargaining Powers” and initiate the non- negotiable offer. Also, if I would ever have a better job opportunity in my hand, I would certainly negotiate with my current employer.
If you were to receive a similar one time non-negotiable offer from your employee, how would you handle this issue?
If I were to receive a similar one time non-negotiable offer from my employee, I would analyze the complete situation and determine the rationality behind the offer being put forward by the employee. I would ask my lawyer to examine properly both the contract we made with the employee while hiring him and the non- negotiable offer given by him. I would also evaluate the level of dependency the organization has on that employee and the level of impact this would have on my business. In addition to this I would try to find out ways in which the work can be carried on even if the employee leaves. Would determine the amount of cost I would have to incur in case the employee leaves and in case I accept his offer and ask him to stay back. Based on these criteria, I would take my decision of whether to accept the offer or not. And if possible, I would also try to further negotiate more on the offer with the employee.
One who is able to shift it in its court there lays the power. It is not necessary that it will be at the cost of either individual or the organization. The bargain is a mutual agreement by both the parties which may be a compromise or both the parties may be satisfied at the end.
From the employee’s point of view, he may ask for salary hike, higher incentives, promotions, foreign projects or any another personal favour. Now how much bargain can be made depends upon many factors. One among crucial factors is the type of industry and the uniqueness of the job which decide the bargain power. For example if the cost of replacing the employee is not much and another one can be trained easily and paid less, then the power lies with the employer and vice-versa. I believe the market conditions also play a vital role. Also the culture of the organization holds an important place under such circumstances. The terms and conditions should be explicitly mentioned in order to make the end of relationship a pleasurable experience. But whenever one party tries to make use of the situation in one’s favour, then the problems arise.
I think that I will be able to make a non-negotiable offer to my employer in my career but that will depend upon my priorities and will be determined by the situation and corresponding risk evaluation.If my employer gives me any such offer then I will properly evaluate it and estimate the offering.
For example : in the case of nuclear deal, the way India prioritized the givings and takings gives a very nice example of power of bargain as to how we were able to manage the Indo-US relationship and still get our share of bargain.
Of all the other major factors which determine the relationship between the employer and the employee, most important is the power equation between them. It might seem undesirable to use a strong word like ‘power’ when we are talking about the employment relationship but yes, I strongly believe that the balance or rather imbalance of bargaining or negotiating power is very much contextual here. The question is – “Who is in the driver position? “. The answer lies in finding for whom the stakes are higher – the employee or the employer. Generally, it is indeed the employer who is safely positioned in terms of making the offers and deciding them too. This is very obvious as the employer has many resources at his disposal and losing few of them should not really matter to them as it is generally taken into account as the inherent cost of business. But the stakes are higher for the employee as it is, especially in the current scenario, much more difficult to find the same job or the same salary in other organizations. Having said this, i also admit there are exceptions where this equation no longer holds good. Take an example of a movie star – he charges an amount of his choice and more often than not is the one making all the bargains and offers irrespective of the business the movie does. Same goes for a star cricket player for whom there are two or three clubs ready to shell out lot of money to take him in. Also, the case where we have labour unions and employee is a part of that. There the stakes are higher for the employer as well as the treatment to the employee can trigger different reactions in the union. Whether i would be able to make such an offer to my employer in my career depends on various factors. First and most important of them would be the chances of getting the similar or better jobs in other organizations without any hassles. If i see my chances and prospects in other organizations better than the current one, i might be able to make such offer. Even being able to do that does not ensure me actually doing that as it also depends on how satisfied i am in my current job – both personally and professionally. Receiving a similar one time non-negotiable offer from one of my employee would make me think a little. First of all, i would try to know the reason for this action and try to get a clear picture of the whole issue which triggered this. If the issue can be pacified by talking to the individual no other action is required but in case the issue is big and involves other complications related to the organization, it would need to be taken seriously. I would try to measure the relative worth of the individual in my organization to get an idea of how crucial he or she is to the business. This would include assessing the cost of replacing the individual and cost of accepting the offer. Then i would assess the dependencies of the projects he or she is currently involved in and might have been in future too. Then, last but not the least, i will have a look at all the legal options which are available and then having all this information appropriate action would be taken.
Bargaining power is a concept related to the relative abilities of parties in a situation to exert influence over each other. If both parties are on an equal footing in a debate, then they will have equal bargaining power, such as in a perfectly competitive market. In a competitive market, negotiation and bargaining become synonyms.
Ideally, negotiation results in win-win situation for both the parties. However, most of the times bargaining results in favour of only 1 party.
On 4 November 2006, Hair was banned from officiating in international matches by the ICC following a two-day meeting held by the ICC. The announcement was made by ICC President.
However, The ICC restored Hair to the Elite Umpiring Panel. This showed the weakness on part of ICC and gave Hair the bargaining power to set terms and conditions of the offer.
Though the Employer has a major role to play in the making of the employment contract, employee always has the option to negotiate the terms of the contract and leave or join the job depending on the availability of another offer. Therefore employer ability to effect the terms of the contract is influenced by availability of requisite personnel with the desired skill set for the job while that of employee is influenced by the alternative earning option available to him.
Thus, whenever the market conditions are not favorable, employer has higher bargaining power and vice versa. But even when the market conditions are not favorable, some employees whom the employer regards as critical has a strong bargaining power.
My making a similar kind of offer will depend on the following factors
If I am the employer, then I would accept the offer if there is no other employee to fill his position. Normally this situation does lasts for long because most of the organizations groom junior employees to take the charge in future. I may negotiate the offer and if it is not favorable then will reject the offer.
Before starting the discussion I would like to quote the guiding principle of International Labour Organisation. Its guiding principle is that "labour is not a commodity" to be traded in the same way as goods, services or capital, and that human dignity demands equality of treatment and fairness in dealing within the workplace.
Earlier the industry used to look out for bright people, try to bargain the offers it can make to bring them in. But lately the employers have the liberty of having many employees: hundreds or maybe even thousands. If the company thinks of laying off an employee then it thinks of it as retrenchment cost.
Lately the bargaining power has seen a drastic shift towards the employer from the employee. Trying to think in the lines of an employee whose only source of income is his job, it has become very difficult for them to even think of bargaining. The current economic slowdown has worsened the situation even more.
When I joined my company (a PSU), I joined with a batch of 40 employees. We were pre-assigned our postings and other related offers the company provided us. Only after serving the company for 2 years and rising up the ranks, I usually put forward by preferences ( which I had profoundly reasoned with myself) and used to get the deal. The major driving forces were scarcity of professionals in the field and competitive salary and perks offered by the private players.
But in the back of my mind I also know that this situation does not prevail in most of the other sectors. I might not get a similar chance after I pass out and get a job. To overcome this problem I think the best strategy as an employee would be to keep on building on one’s competencies and try to be ahead of the crowd. But it is easier said than done.
Now coming to the situation when I am on the receiving end, I would like to first convince the employer of the cons of me losing the job. Then the next step would be to sit back and think of the risk-return of giving in. Then only my obvious course of action can be determined.
Bargaining power is a concept related to the relative abilities of parties in a situation to exert influence over each other. If both parties are on an equal footing in a debate, then they will have equal bargaining power.
Here in this episode, bargaining power might increase or decrease just because of the simple reasons as follows:
1. As is known to everyone, Darrel Hair ws one of the few umpires in the elite panel of ICC. So because of that, he is in strong position to negotiate his offer to make it more lucrative. 2. Darrel Hair , again as known to everyone, has been accused for his favoritism for teams like Australia.(Highlighting the Chucking incident of M.Murlitharan of Sri Lanka which shook the cricketing world and first time raises the question about the integrity of the apostolic umpires). In this case Mr.Hair might have not been in the strongest of the bargaining position.
Answer to question 2 also comes form this: My position as a performer has been unquestioned so far, keeping that in mind I will like to leave the profession/organisation/team on a high. Why? Just because you are in a strong position to bargain not only for your current employer but also your future employer. I like Cricket so again I will take an example from my favorite sport. Had Saurav ChandiDas Ganguly retired when he was at the nadir of his career, he wont have been able to book a spot in his Ranji team as well(That actually happened), But because, he decided to call it off on a high(Got a century against Australia in his last test series) , he was not only able to garner a lucrative offer form a sports channel for commentator, but also got a hearty farewell.
Just extending the flow, I will extend this to answer the 3rd question. It must be remembered, that BCCI too gave the chance to Saurav ganguly to retire, when there was severe pressure on him, India were losing matches as tress keep losing thier foliage in the twister, and Ganguly was at the lowest level of his first class career. Had he accepted that offer, as I mentioned earlier, he might not have been able to bargain with his future employer. SO it depends, if I am on highway, then I will definitely take a detour, but If m on sideways, then I am on crossroads, with every chance of being run Over. :D
Please levae comments if you make some sense out of my post. Cheers!
We have heard of companies firing people during recession or bad times, but does any one has heard of company firing people during good times? I had seen few cases in my previous organization related to this. A person with 6 years of IT experience joined the company with great aspirations. He was acting as a team leader and was very good in handling his work. He also made few revolutionary changes for the betterment of the application. After around 1 year, he was given an onsite opportunity. He refused the opportunity owing to family reasons and also had some location constraints as the client was in Arab country. He was a permanent employee and according to contract he has to be given a notice before firing him, but the company gave him a non negotiable offer of either to go onsite or resign immediately and leave, irrespective of all the good work done by him. Also a condition was put if he resigns he has to vacate the flat immediately which was allotted to him on subsidized rate by the company. The person resigned finally and was extremely disappointed, but didn't knew what to do. This incident shows that companies do not consider anything when it comes to their profit, irrespective of external conditions good or bad.
If you were to receive a similar one time non-negotiable offer from your employee, how would you handle this issue?
Well, we cannot consider just the present scenario of supply and demand or whether the employee is replaceable or not. The employer can also take it as a sign of strength or weakness, wherein if he bows down now and agrees to the demands of the employee now, he may be prone to or rather subject to such future demands or rather threats where the employee will keep threatening about leaving, since he would believe that he has hit upon the employer's Achilles Heel (Weak Point).
Taking cue from this, other employees may start doing the same and this may start off a trend. So the employer may at times stand ground and refuse to budge. We see this often where strikes lead to no result and in fact the organization may be ready with a new workforce by the time you can be back.
Ø“Bargaining Power” in terms of individual-organizational relationship
In this fast moving world where there is rampant cut throat competition all around, one needs to have more than just power to sustain. Darwin's theory of evolution said as many more individuals of each species are born than can possibly survive; and as, consequently, there is a frequently recurring struggle for existence, it follows that any being, if it vary however slightly in any manner profitable to itself, under the complex and sometimes varying conditions of life, will have a better chance of surviving, and thus benaturally selected. From the strong principle of inheritance, any selected variety will tend to propagate its new and modified form.
Now deducing our conclusions from afore mentioned hypothesis:
·As many more individual of each species are born than can possibly survive;
With growing competition, where in both the number of employers as well as employees is increasing, there is more of options available with each party but of course depending upon the market scenario. These scenarios only form the foundation stone of the bargaining power. It basically assigns a weight to one’s position and the ability to have things in his/her own way. But as already stated, it all depends upon the market. So not all employers who enter into the market sustain and neither are the employees. So it says that of the many few can only manage to survive.
·There is a frequently recurring struggle for existence;
This says that in order to reach to the bargaining position one must groom itself so as to reach to that particular position to be able to bargain. Speaking of which, if an employee struggles hard and acquires a particular skill set his presence in the company becomes indispensable and thus the employee is in a bargaining position. On the other hand if the employer is able to work hard and put his company in the “wanna – be” list naturally the employers say becomes more effective. Microsoft as we all know is one such elite company which enjoys this position.
·Any being, if it is vary however slightly in any profitable manner profitable to itself, under the complex and sometimes varying conditions of life.
From here we can deduce that all individual work towards an ultimate goal, i.e. profit making and therefore in any kind of negotiation the profit of both the parties is kept in mind. But when it comes to non-negotiable offer, here one party is solely in a much stronger position and exerts its decision on the other party. The other party in order to maintain healthy relationship may have to even agree. In the case of Darrel Hair, he have undergone quite hardship to reach to the respectable position that he is in today. And now when he is in controversy, it is due to this respect that he has over the years that he is able to make such non-negotiable offer to the ICC which they are considering. Had it been some other newbie, it would not have been the case.
·Will have a better chance of surviving, and thus benaturally selected.
Even Darwin’s theory support the above mentioned argument that once one have undergone hardship and have acquired the desired skill set, it all boils down to your position and respect. So with such background success is sure to kiss your way and with success comes recognition and such recognition earns you the bargaining power. In an animal kingdom when a living being is able to withstand the various complex and varying environment it is able to survive and thus becomes the one to get naturally selected. So the one who is able to earn that power is able to chair through any negotiation making it in his/her favor, be it the employer or the employee.
·From the strong principle of inheritance, any selected variety will tend to propagate its new and modified form.
So this brings us to a final deduction from the Charles Darwin theory of evolution. So when one is in a meritorious position he/she definitely try to make the most out of it. If an individual is in that position, a non-negotiable offer would be definitely an advantage. Same is in case of companies for the employees who are not that important to the company. Here when Darrel Hair issues such non-negotiable offer threatening that his demands be fulfilled or else he will rejoin his job is highlighting the vulnerable position the ICC is in and the advantageous position Darrel is in even after committing a blunder.
So the basic theme of the above discussion was that a comparison was carried out between Charles Darwin’s theory of evolution and the current Market Scenario. It clearly states to earn the position to be able to issue such non negotiable offer the individual needs to have earned:
üDesired Skill set
üFavorable Market Condition
üVulnerability of the Employer
üPast experiences and successes
üPosition of authority and responsibility
ØWould you be able to make such offers at any point of time in your career.
Here I would first narrate my engineering day experience. In my pre final year when the companies visited the campus of recruitment I was selected by an IT giant and it was not just me, there were other 310 who got through. It was definitely one of the major recruiters and the college was bound to maintain good relations with the company. So it was one position where we had to listen to any such demands made by the company. And one such demand was having the training conducted even before joining and that too without any pay. And we had to complete the training while simultaneously studying the course curriculum.
But in future I would like to be on the other side of the table. I would want that even my wants are considered and seriously worked for. Having gain the sufficient knowledge and expertise I am sure with the added hard work that I will put in I will definitely reach that position. Such offer would not just ensure a progressive career path but also bring in higher returns. But this will only happen if I become an asset to the company and my presence become indispensable. All it takes to become successful is loyalty and hardwork.
ØAs an employer what would you have done to tackle the situation
I am sure if the employee would have reached that position he would have put in many years of sincere effort and hard work. Incase of Darrel Hair, he was definitely an asset but since his association would still bring in more controversy its good to get rid of him. I am sure if he were a sensible guy a round table conference and continuous counseling would urge him to relax some of the claw posed by him. But in general if an employee is giving such offers, I would rate the employee’s relative worth and then judge the viability of his demand and then make a decision.
It can be observed from the given case that, in individual-organizational relationship, bargain power rests on one who is needed by the other more. In this case, ICC needs Darrel Hair's resignation more than Darrel Hair needs anything from ICC. This gives Darrel the bargain power and by virtue of which he is able to write such a mail to ICC. It can also be observed that, when one has bargain power he tends to exploit the opportunity, which is being done by Darrel in this case.
In today's world the bargain power of employee and employer shifts from one end to the other. In today’s market economy everything is driven by the demand-supply game. If the demand of the employee is high and the supply of its substitutes is scarce, then the bargain power shifts towards the employee. If the employee is dispensable and plenty of substitutes are available in the market then the bargain power remains at the employer's end. From Employee’s perspective: It is possible to make such a non-negotiable offer to employers. But for that one needs to satisfy two fundamental prerequisites, Demand: Employer must need you badly. Supply: Supply of your substitute must be rare in the company as well as in the external job market. The demand criterion would be satisfied when: You have got special/unique skill sets required by your employer. The employer's business is dependent on you and your style of working. You possess some extraordinary ability, which the company considers to be valuable. You are indispensable to the company. The supply criterion would be satisfied when: There is scarcity of the substitute for you in the company and in the job market. Effect of the non-negotiable offer: Short term: You get what you demand from the employer Long term (If you stay with the same company): In long term nobody is indispensable. There would be a time when your substitute will be available in the market or can be trained in the company. If you have shown your opportunistic tendency to the employer before then the life of your career in the company would be the life of your indispensability to the company. What to do? : As we are a part of market economy, we must consciously follow the fundamentals of it (Demand - Supply) and as a true product of the market economy, we should capitalize on the market opportunities (capitalize the bargain power as long as we have it). In the same time, when we realize that we don't have much to exploit from the current employer, without any any-type of dilemma we should jump to the place where we can exploit more. If somebody has question marks on ethical or moral ground, my answer is "market doesn't understand ethics and morality". If a company needs you it will kiss you else it would kick you out. So choice is yours.
From employer's point of view: If we receive similar non-negotiable offer from an employee, first we would assess the dispensability of the employee and the availability of its substitutes. If we find that, the person is dispensable and the substitute is available, then we would laugh saying "what an insane fellow" and reject his offer. If we find him indispensable and its substitute is scarce then we would go to the negotiation table. As nothing is unchangeable in a sane human mind, “non-negotiable” can be negotiated to “negotiable”. It depends how effectively you negotiate/convince or how quickly the employee's mindset de-crystallizes. If the employee turns out to be insanely adamant, then give him what he wants (as long as it satisfies the economical sanity). In the mean time look for a substitute and start preparing his replacement. In this case, the employer should ensure to keep the matter as confidential as possible. Because, this act of the employer if disclosed would give wrong signal to other employees and this might frustrate few for disparity and might encourage few to adopt the same non-negotiable bargain technique. Effect of yielding to the non-negotiable offer from employee: Short Term effect: The employee is retained and the business continues as usual. But this act may create dissatisfaction in other employees and might encourage others to adopt the same technique. Long term: When a similar situation occurs in future the company might again stoop to the employee’s demand. In long term this might become an expectation and general practice of the employees. This in turn might put the company in difficult situations in lot more times. What to do? : To avoid any such thing in future, the company should take adequate steps to make the organization process dependent rather than employee dependent. It should try to keep backups ready for critical positions. And come up with a process by which the replacement could be made ready very fast. This would make employees less indispensable and reduce their bargain power. It would be impractical to say that no employee can be indispensable in a company, but the company can try its best in right direction to reduce the employee’s indispensability hence the bargain power as much as possible.
All of us are quite familiar with this rather famous (infamous) incident that rocked the International cricket world. Lets us do a small synopsis of the case and analyze what you and me and the companies/organizations that employed us or would be employing us would do in a scenario.
It all started with Darrel Hair accusing the Pakistani team of ball tampering. The team protested and didn’t field itself and the match was subsequently forfeited to England.Soon the mighty players- ICC, country cricket boards like BCCI, CAB and the media world jumped to aggravate the fiasco. Then came the special letter from Hair to ICC.
Having worked with a MNC for more than 24 months and been through the initial phase of boom till the Lehman brothers collapse and then the following meltdown, I have seen a bit of the two sides of the coin.
Pre Lehman brothers collapse-The economy was on a roll. As growth forecasts and demand equations were outplaying each other, companies were expanding at an astronomical rate and then were recruiting more and more people every day. The demand for employees and resources was more than the available supply and so the sword of power was with the employees. Many of them had more than 1 offer. Hence they were making hay while the sun shone- demanding salary hikes, better profiles, onsite opportunities and other benefits. Clearly the employee was the king.
Aftermath of the meltdown-The growth juggernaut applied sudden brakes.Organization and companies started getting less and less orders and business started to suffer. They had no choice but to resort to cost cutting measures- freeze or almost no hike in pay, pay cuts including abolishment of variable pay, forced leave, sabbaticals, deferred salaries payment and even job cuts. Now the employees had absolutely nothing to say and they had to meekly accept the treatment mooted. The balance of power shifted to the employer or organization hands and so the bargaining power and they were the new kings.
Hair being a well known umpire and respected in the cricketing circles did enjoy some clout. Moreover he was in the elite panel of umpires. And hence he used the power of his position to come out with the letter.
Let’s analyze the following points with respect to real life scenario-
Would you be able to make similar non-negotiable offer to your employer in any point of time in your career?
It all depends on my position and relative worth. It depends on the experience level, my capabilities and competencies. If I am a so called critical resource or in other words my team and my organization would find it difficult to find a substitute for me, then the sword of the bargaining power rests with me. I can define the rules of the game to certain extent. Also if I have other assured avenues or opportunities like offers from other organizations, I can dictate terms to certain extent. I am stressing on certain extent because I believe most of the times, a single employee cannot make the elephant (organization) dance to his/her tune for long. Organizations because of their size and clout will find a replacement and curtail the individual’s flight. Let me remind you that even Steve Jobs, the founder of Apple was driven out by his own company.
Employer or organizational perspective
Again it all depends upon the relative value of the concerned individual to my organization. I would never want to lose a qualified, competent and valuable resource. As the employer , I would like to analyze the terms put forth and based on the criticality of the resource and the substitutability and then take the call. It also depends on what kind of organization I have, what’s its value and the economic scenario prevailing.
Bargaining Power and Individual-Organization Relationship
Based on my experience with an IT company for over 3.5 years I sincerely believe that "bargaining power" is never limited to just one party and keeps on shifting between Employer and the Employee. The reason for this tilt of power balance can be multiple like:
1) The situation of the job market - In recessionary times employer has the "power (driven by need)" to go for salary cuts. deferring joining dates, deferring promotions, layoffs etc. In boom time it is the employee who is able to exercise higher demands from its employer based on his/her market standing and other offers employee may hold.
2) Skillset and Dependency level of the individual in his/her current job - Higher the task dependency on an individual or less availability of skills he/she possess for the job inside and outside the organization, more is the ability of employee to demand better incentives and offers in exchange of work. On the other hand, Organizations always prefer to have more than one person to know about the job and through Knowledge transfer, Shadowing and Training sessions they attempt to create sufficient backup for a key resource.
However another important area is that of "External Support and Pressures".
3) A good rapport with the client that an employee serves can also serve as a significant source of "power" that an employee has over his/her employer. Further, media and government pressures can also limit the power of employer in taking measures like ending employment agreement with the employees.
In an individual-organizational relationship the "bargaining power" comes from how the above-mentioned factors work out in favor of either of the parties. It is not wrong for employee to be opportunistic and demand higher incentives or better offers when conditions favor him and that's exactly what happens in the organizations. This corresponds perfectly with a saying that "Make Hay while the Sun Shines"
In my viewpoint, although an employee may be able to make a non-negotiating offer in short run based on favorable conditions for him/her, in the long run it is the organization or the employer who would always be able to neutralize and also command the situation through use of multiple tools like performance management systems, creating backups etc.Not to forget, character certificate and background checks are also a source of power that employer possesses in his power game against the employee. A new employer is very likely to refer to old employer of the candidate for inputs on his performance. In such cases, if the employee leaves the organization by offering a non-negotiating offer which gets rejected by employer, there are chances that employer notes down such activities in employee records maintained at their end and which reflect poorly on his/her attitude.
As from all professional experience that I have and rightly pointed out by Sudip Ghosh in his post, I believe that every offer is negotiable in some way.
Coming to the case of Darrel Hair and ICC (August 22 2006 - Pakistani Vs England - Ball Tampering Issue), Darrel Hair accused Pakistani team of ball tampering. Pakistani team protested against it by not taking to the field post Tea Session in which case the match point was awarded to England. This became a source of constant media debate and pressure on ICC.In the past, there was pressure from other cricketing nations like India as well for not allowing Darrell Hair to officiate in their matches because of his proven umpiring errors against the team. Public comments made by Darrel Hair on Sri Lankan player (Muralitharan) also compounded the matters for Darrel Hair. Now Let's look at three critical factors of the case:
1) Darrel Hair made his on-field decision in ball tampering case as per defined laws of cricket 2) He was recognized as Elite panel umpire by ICC. 3) He had a valid contract with ICC till March 31, 2008.
With his back against the wall due to constant media and ICC pressure, Darrel Hair taking the support of aforementioned factors issued a non-negotiable offer to Doug Cowie of ICC demanding $5,00,000 in case ICC decides to terminate his employment contract with him. In case ICC doesn't agree to paying this amount and other conditions mentioned in non-negotiable offer, Darrel Hair would be available for services to ICC till end of his contract.
Interestingly, the case is about an employee negotiating terms for his exit which is in some way forced upon him through ICC itself. Further, it is not that his skills are not replaceable by other umpires. So in a sense, unless the contract prohibits ICC from terminating the services of Darrel Hair for any reason (which I presume wouldn't be the case) it is Darrel Hair who is in the weak position with this matter. And as the fact stands out, ICC didn't accept non-negotiable offer from Darrel Hair and banned him from officiating in international matches. Hair was reinstated him into Elite Umpiring Panel on 12 March 2008 and resigned in August 2008 to pursue his career in coaching.
Would you be able to make similar non-negotiable offer to your employer in any point of time in your career?
There are two conditions that should be met before I make a non-negotiable offer to my employer at any point of time in my career:
1) I am a key resource for the organization (perhaps irreplaceable). This means that it's in company's best interest to retain me. 2) I possess backing of an alternative lucrative opportunity / offer (to safeguard myself in case non-negotiable offer is rejected)
Unless these two exist, there will not be any weight in my non-negotiable offer.
Employer's Viewpoint
If I get a similar "non-negotiating" offer from an employee then I would first analyze the following:
1) Resource criticality and substitutability. 2) Job Agreement with the resource 3) Conditions leading to non-negotiating offer from employee.
Based on above mentioned conditions I would be in a better position to take a stand on offer from the resource. A good resource leaving the organization is never desired by the organization and so it's imperative to negotiate with that resource to come to an agreement that is beneficial for both parties.
NOTE: I am deliberately using the term resource instead of employee in the Employer's perspective to indicate what in reality a person is to an organization in eyes of the manager. There is definitely no place for emotions in such negotiations.
Thanks a lot for reading, Kindly provide me your valuable feedback / highlight any shortcomings in the text above.
Do you think the individual is always at the receiving end and the "bargaining power" is always shifted in favour of employer? Bargaining power of an individual often depends on his status, power and influence. In context of individual-organizational relationship, the bargaining power would depend largely on the “Need” i.e. who needs whom the most. Is it the employer who fears to lose business with the employee or the employee who needs a job desperately? Based on the email, what are your observations on "bargaining power" in the context of individual - organizational relationship? When the pool of suitable applicants is large, the employee has less bargaining power. If the business depends on the employee to large extent, then the bargaining power of the employee increases. Inequality of bargaining power occurs as the employer often is in a stronger position to dictate the terms and conditions and also decides how much bargaining power to give the employee. In this case, Darrell Hair realized his importance and the difference he could make to ICC, so he wrote such an email to ICC. He made the best use of his power to fulfill his interests. Would you be able to make similar non-negotiable offer to your employer in any point of time in your career? It is possible to make such a Non-Negotiable to my employer in case I realise that my “Market Value” is more than what I am getting. In order to make sure that I get (and if possible more) than what I deserve, it would be important to make such an offer to my employer. But there are certain issues which I would like to take care of before making Non-Negotiable Offer: • Am I in a position to make this offer? Am I easily replaceable in the organization? • How important is my relationship with my employer to me and how this would be affected after making the offer? • In case the offer is not accepted by my employer, what would be my course of action? Would I resign or negotiate the terms and stay with my current employer. In case I still plan to continue, would I be treated same as before.
Also, if you were to receive a similar one time non-negotiable offer from your employee, how would you handle this issue? In case I receive such an offer from my employee, the decision would depend on the same conditions: • Is the offer justified? • Is he replaceable? • Is the cost of accepting the offer more than expected profitability from the employee? • To extent will the business be affected if his position is unfilled?
Bargaining power as a concept has come into the limelight in the recent past but it has been in existence since the very beginning of mankind. This power to bargain has always showed its signs in any form of business whether in the system of barter or trade or in any form of contract. This bargaining power has always resided with individuals and organisations that have an edge over the other party in the sense that one of the parties dreadfully needs what the other party is offering. It is not always necessary that one of the parties needs something desperately, it could also be that the product is not available with anyone else or the quality of the product is the best with that particular party or as in the case of individuals the skills and experience of that person cannot be replicated. This often leads to a onetime non-negotiable offer. It is always given by that party which is in a more advantageous position as compared to the other party. In this offer, the terms and conditions of the contract are stipulated by that party and have to be accepted by the other party if the contract has to be made good.
Some examples could be as follows: 1. Generally when corporate executives switch their jobs, they are in the receiving end and they define the terms of the contract as the company requires the services of the executive. 2. People with specialized skill and knowledge are mostly in the receiving end as they are scarce in number and their services are of utmost importance like deep-sea divers, exploration experts, drillers, etc. Suceesion Planning is generally carried out in firms for these individuals. 3. When the economy is not booming or is in a recession, then the organisations are in the receiving end as the employees are at their mercy and hiring is also stopped. 4. The transfer of Christiano Ronaldo from Manchester United to Real Madrid for a staggering sum of 80 million Sterling Pounds could be termed as a non-negotiable offer in which the individual as well as the previous team both were in the receiving end.
In the above stated case, Darrell Hair could make such a onetime non-negotiable offer because he was one of the elite umpires in the ICC panel and was also one of the most experienced ones of the lot. Being one of the oldest umpires he had the capacity and audacity to make such an offer because of the following reasons: 1. ICC could not terminate his services only because of one faulty decision as the decisions take on the field are totally subject to one’s perception at that point of time. 2. The ICC could not assign him many matches further on because of the ball tampering controversy. 3. He also knew that if he retired now he could be able to save his face while ICC could also put an end to the controversy.
I would be able to make such a non-negotiable offer to my employer if I become a top executive in the corporate world or I possess some specialized skill and knowledge which are very difficult to acquire and find.
If I were to receive such a onetime non-negotiable offer from my employer I would first take into account the economic conditions of the business world. If the situation is good and the economy is not in a recession, I would look in further else I would take the offer. Then I would look into the prospects of the job being offered by the employer. If the job prospects are very good and the career path is well-defined, I would take the offer else I would look for more offers from other organisations and take up the best one.
Getting straight to the point of discussion I would like to say that it is very evident to anyone like me who has worked in the IT industry for two years that there is an unequal bargaining power between employer and employee. From whatever professional environment I have worked in I can say that the reason for this is simply that the employer has thousands of employee working for him .The loss of a single employee is of little annoyance to the employer and is, in fact, we can say as an anticipated cost of doing business in today’s world.But if you take the case of the employee I belief that he or she is at the receiving end. His job is usually the only source of income .Losing his job means losing 100% of his livelihood. Furthermore, because of the typical Indian way of living it not only puts financial pressure on him but also psychological where his peers and families have a great role to play. Moving on it is again very difficult to find a new employer than vice-versa. Normally when a person loses a job he is put of work for weeks before he ends up with a new job and furthermore being fired from a job tends to be a black mark upon the resume of the employee, but the fact that an employer has mistreated its employees in the past never seems to prevent it from finding new workers.
The labor market is not a true free market:
·A great deal of effort is required for the employee to find a new job. Even the employer incurs significant costs in hiring a new employee.
·The employer has insufficient knowledge of an employee’s true worth.
·There is the unequal bargaining power problem.
OBSERVATIONS:
Background:
The Australian cricket umpire Darrel Hair, resident in the United Kingdom is a person who seems to love controversy. He began by no-balling Sri Lanka's ace spinner Muttiah Muralitharan seven times for 'throwing' in the Melbourne Test in 1995. Umpire Darrel Hair described the spinner's action as diabolical, prompting the Sri Lankans to complain to the ICC that he had brought the game into disrepute. The Spinner Murali was later cleared by the ICC using sophisticated technology. Umpire Darrel Hair also said in his autobiography that he would not hesitate to 'no-ball' Murali at any future matches. ICC said it was unprecedented that a serving umpire would make public comments on current players.
As if this was not enough, in the fourth Test England verses Pakistan, Hair accused the Pakistani's to have tampered with the ball and penalized them by awarding five runs to England. Pakistanis did not agree and refused to take the field after Tea resulting in the forfeiture of the Match. This is another first in the long history of Test Cricket.
While the issue was raging Umpire Darrel Hair sent an e mail on Tuesday 22nd August 2006, to Doug Cowie under the heading "The way forward" making a "non-negotiable" offer demanding five hundred thousand dollars to retire from International Umpiring. An email was leaked to the press and the motives of Umpire Hair's decisions on the field were questioned.
ICC's Chief Match Referee Ranjan Madugalle did not back Umpire Darrel Hair's ruling on the ball tempering allegation and exonerated the Pakistanis from such wrong doing.
Pakistan have stated officially that they do not want Umpire Hair to officiate in any of their matches, India have asked for him not to be considered for the Champions Trophy and Sri Lanka have long held grievances against him.
The ICC restored Hair to the Elite Umpiring Panel on 12 March 2008 while Hair resigned on August 2008 in pursuance of a coaching career.
Now my views on individual organizational relationship after going through the email was that the employee relationship game does not take place in vaccum.It generally takes place in an organizational setting, which operates under constraints imposed by factors which are external to the organization. This internal and external scenario clubs together a force that influences the relative balance of bargaining power between employers and employees. Whether the outcome of this employee relations game is biased towards employer or employee is based on the relative balance in the bargaining power.
Now the seeing Darell Hair directly demanding a non negotiable offer from the ICC brings to our mind two key level factors that influence this:
Macroeconomic Scenario:
The factors external to the environment which influences the relative balance of bargaining power between individual and organization are the economic, legal and technological factors.
Economic policies which are directed towards creating full employment and maximizing growth
Can shift the balance in the favor of the employees.
Microeconomic Scenario:
Now since I have worked in the IT industry, I could like to state some points which can lead to a scenario as it happened in case of Darrell Hair.
§Whether employees have become key resources and can inflict cost on the organization.
§Whether there’s alternate resource available to the employer.
§Whether employee is aware of his/her potential capabilities.
§Whether the employee has previously exercised his/her potential capabilities to initiate a non negotiable offer and whether it has been successful or not.
Now going through his terms of negotiation it is very clear to him what he wants from the ICC.
Now he was in a position to make this statement because of the status he had in the cricketing world as being one of the best in his field and also because of the contract that he had with
ICC till March 2008.
Frankly to me what transpired during the series was nothing more than a power game. Earlier it was Pakistan vs. Hair for the most part. Then it was also Hair vs. ICC, Hair vs. media, ECB vs. Pakistan (as they are looking for teams to replace Pakistan), Asian media vs. Australian media, white vs. brown, Elite vs. Asian and what not. Racism was brought in to context then Hair responded that he of all people was being racially discriminated so on and so forth.
Not only this after this letter was made public Darrell Hair exact comments where “This correspondence was composed at a very difficult time and was REVOKED by myself two days after a period of serious consideration”.
Now this happened after the letter was made public and comments by Malcolm speed.So I smell big time politics here where he may have been influenced by the ICC itself to draft a letter so that everyone comes out clean but unfortunately the letter got leaked and the entire plan boomeranged on them.
Would you be able to make similar non-negotiable offer to your employer in any point of time in your career?
Now making a non negotiable offer depends on the place the position and the situation where I will be in my career at the time of making this offer. Now if I have become a critical resource in my organization and I think that my leaving the organization would definitely have cost implications on the company then I would certainly go ahead and make a non-negotiable offer. Apart from that if I see any new opportunity knocking on my door with better benefits than the current job then I would again make a similar offer. If I am not able to build myself as a competentresource and do not have the talent to get new and better job offers than the idea of making a non-negotiable offer to the employer goes out of the window.
Handle the issue from an employer’s perspective:
oNow if I get a similar offer from the employee then I would first check the dependencies on the concerned employee, whether he in any way affect my production flow or services that will affect my bottom line.
oThen the next viable thing to do would be to check the terms and conditions of the concerned employee’s contract and see whether he is on firm grounds for determining a non negotiable contract.
Now there is a view point that in an IT organization creating a back up resource would make the concerned the employee lose some ground on his demands for a non-negotiable offer .Now generally when people become critical resources in an IT organization it is through years of hard work and experience in his concerned domain. Now from what I have seen in my organization is that resources leave the company within a notice of 15 days plus additional money that he has to give back to the organization for not serving a notice period of 2 months (which was in my organization). Now this situation gets interesting when the concerned competitor organization agrees to pay for the amount of money due by him to his current organization. Now most people in an IT organization seldom serve a notice period because immediately when an employee submits his resignation paper, then he is looked skepticism and disloyalty even though he is trustworthy, competent and dependant. The fear of being side-lined or alienated also comes into the picture. Similarly, there is a tendency to ignore suggestions and inputs of employees who resign from the organization. Now generally most of the employees feel that serving a shorter notice period is much better which in turn leads to the fact that building back up resources takes time and reaching to the level of competency is much for difficult for the backup resource. Even if a back up resource is engaged for the past two months with the concerned person to learn the skill set the he possesses, the backup is more often than not gets engaged in other project related activities and when the time finally comes to take up the vacant position he is not fully prepared to do it. This is how events normally pan out. Hence building back-up is one way to tackle the situation but it doesn’t always pay full dividends.
Now I would like to leave you all with the idea that no offer is non-negotiable. Every offer is negotiable in one way or the other
Kindly provide comments and feedback on my viewpoints and do correct me if I have gone wrong somewhere.
