Some of the vital skills needed in life are bargaining and negotiation skills for the purpose of settling disputes since disputes may arise at the work place, at home, at schools or even at the community and the national level. Disputes are not always bad since they may lead to progress while solved. Some of the institutions that solve disputes are courts, regulations and also traditions. This means that every person or group needs to have bargaining and negotiating skills for disputes to be settled at the group or the persons favor. An explanation of the process of negotiating and bargaining between NHLPA, a hockey team union and NHL, the owners of the hockey team helps in understanding this concept.
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In the presented case, NHL and NHLPA are bargaining towards are leveraged agreement between the team and the union. Essentially, the union is interested with a better salary that increases with the increasing market performance. The negotiating and bargaining presented has a long history since it was started in the 1950s before the union was formed. However, the successful formation of the union led to a better bargaining power where several incidences of successful negotiations were witnessed.
In the case at hand, NHL came up with several proposals that were meant to increase competition in hockey by aiding small uncompetitive teams to become more competitive. Although the proposal seemed sensible at first, it was somehow delimiting the union because the three proposals laid down by NHL did not favor NHLPA. For example, the team owners wanted to come up with a tax system that would tax the large teams where tax obtained would be used to boost smaller teams. The rest of the proposal seemed to affect the new entrants since it was meant for curbing what they made and limit their mobility at earlier times in their career in order to reduce player bidding.
Through bargaining, the two parties came up with an agreement where the payroll taxes were removed from the proposals. However the team owners won the third proposals where the union allowed NHL to restrain the salaries of runaway players. While this settled the matter for a short time, the team owners felt that the union had outwitted it since it removed payroll taxes and allowed rockie player’s salary to be based on performance. On the other hand, the union felt that the decision of the union owners to restrain the salaries of run way players was delimiting them. Because of this, the two parties needed a renegotiation (Hout, 2006).
In this renegotiation, the two parties should reach an agreement since lack of coming up with an agreement means that the season will be cancelled and there will be no games. One of the barriers to reaching into a conclusive agreement was the fact that the persons representing the two parties were not good communicators. In most cases, the two would end up not coming up with a reasonable agreement. The other barrier was the lack of the team owners to display the real costs incurred by the team and the real revenues earned by the team. Because of this, the team failed to understand why the team owners wanted to cut their salaries. When an audit was done, there was also no proper communicating of the results of the audit results.
Bettman and Goodenow are the ones that represent the two parties. As a result, they are the ones that are supposed to overcome any barriers for the benefit of all groups. As seen in the report, the team owners were billionaires that would not be affected by any decisions made by the two. On the other hand, the hockey players had earned enough revenues during their sports career and were only being motivated by the love of the game. With this reasons in mind, the two ought to realize the situation and overcome any barrier to avoid any loss that would result if they do not come up with a conclusive agreement.
In this negotiation, both parties had their powers and weaknesses. The teams as represented by the union had the power of the union. As seen earlier, negotiation was not favorable for the team since they did not have a union. On the other hand, the team owners’ claim that the costs were higher and the revenues were higher created a powerful bargaining end for NHL.
However, every team had a limiting side in this negotiation. Earlier on, the union had threatened to call a strike if NHL failed to come up into an agreement. This was taken seriously by the team owners where the union won leading to an increased salary. At that time, the team’s BATNA was higher than that of the union owners since its decision to strike was made at the right time before the beginning of important games. However, the current situation was tough since the costs incurred by the hockey teams lowered their BATNA meaning that they had to reconsider their bargaining stand. For the team owners, their failure to disclose the information about the revenues and costs earned by the teams fully limited their bargaining power.
In negotiation, a BATNA or a best alternative is a situation where two negotiating parties has a number of alternatives to chose from, which will influence the best decision that will close a deal or will cause a walk away. As seen earlier the team owners were billionaires, meaning that money was none of their problem. In fact, the high costs being incurred by the teams in relation to revenues were not inviting. Because of this, the owners could do away with the hockey business without any harm on their side. On the other hand, the team players had earned a considerable amount of income in their career meaning that they could force a better agreement through strikes.
However, the problem with the current agreement for the players is that it is not as favorable as the other since NHL is ready to cancel the remaining games in the season.
The bargaining method used in this case is integrative bargaining since every party is trying to consider the plea of the other party. The party uses integrative bargaining in the hope that an agreement that does not harm either of the two parties is reached upon. This is what is known as a win-win situation.
As seen in this case, the parties would have reached into an agreement earlier before the season was canceled if the two parties had communicated effectively. In addition, if the parties being represented in the bargaining process would have spoken out like they did after the season was canceled, an agreement would have realized early enough.
Hout M. (2006). Negotiating on thin ice: The 2004-2005 NHL dispute (A). [Class Handout].