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Jan 29, 2013

Lessons learned from the NHL lockout

Takeaways from the recent NHL labour disputes
By Brian Smeenk
    
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The lockout of NHL players by the league's owners led to much more reporting about labour negotiations than we would normally see in the media. While the parties have finally made a deal, it's still worth considering what lessons we can learn from this negotiation that might be applied to less glamorous ones.

Lesson 1: If the employer is demanding monetary rollbacks, expect a long work stoppage.
Any experienced labour negotiator knows that one of the toughest things to achieve is a major rollback of salaries or benefits. Nobody wants to earn less than before. And unions hate to deliver less to their members. So, if management needs to achieve rollbacks, they need to expect that a long work stoppage is highly likely. Here, the NHL owners reportedly sought huge rollbacks, including a reduction of the players' share of revenue from 56% to 50%, new salary caps, reduced pension liabilities and more. Both parties likely knew it was going to take a long time to resolve these issues.

Lesson 2: Sometimes work stoppages are necessary.
They may be necessary when the parties are simply so far apart in their bottom line positions that economic pressure needs to build in order to drive them towards the right outcome in the circumstances. Sometimes it's necessary to test the other party's resolve. That's why labour negotiations have often been called "economic warfare". It's really a war of economic attrition. As economic pressures build on both parties, it causes them to reassess their true bottom lines. There's nothing that focusses a party's attention like the prospect of imminent economic annihilation, or even serious economic damage. It seems that both parties in the NHL dispute needed to experience this — and inflict it on the opposite party for a while — in order to get to a deal they could all live with.

Lesson 3: It's hard to make a deal when you're not talking.
One thing that was remarkable about this negotiation was the lengthy periods of time that elapsed between across-the-table bargaining sessions. And a number of the bargaining sessions reportedly consisted of nothing more than the laying down of strident positions by one or both parties. While that could be explained by Lessons 1 and 2 to some extent, experienced labour negotiators and mediators know that, usually, the longer you can keep the parties talking, the more likely you are to find solutions. And the more likely you are to understand and avoid the predictable costs of learning Lessons 1 and 2 the hard way. To paraphrase Mark Twain, real experience is indeed the best teacher, but it's also the hardest and costliest. One has to think that if negotiators could have been less positional and more problem-solving in their approaches, a settlement might have been reached more quickly.

Lesson 4: Mediators can help - if the parties have confidence in them.
Another remarkable thing about this long dispute, at least from what we read in the media, is how little use the parties seem to have made of mediation (although mediation was used in to close the deal). Mediation is used to a much greater extent in Canadian labour negotiations than in American negotiations. Indeed, in most Canadian jurisdictions, mediation or conciliation is a mandatory step before one can legally engage in a lockout or a strike. Canadian labour negotiators have developed a high level of confidence in the ability of experienced mediators to help them "get to yes". But the NHL negotiation was conducted under American labour laws, using American institutions and protocols. Perhaps the parties did not have confidence that mediators could help them sooner to bridge the gaps in their positions. If mediators don't have the parties' confidence, they can't be effective. But one wonders if greater reliance on good mediators might have helped the NHL and the players get to a deal sooner.

Lesson 5: Eventually there will be a deal - but at what cost?
While Lessons 1 and 2 tell us that sometimes costly work stoppages are inevitable, nonetheless the name of the game is to achieve the best available deal with the least damage possible to your side. Posturing and positional bargaining is not normally the best way to achieve that. Rather, parties can achieve their goals more effectively when they:

  • thoroughly understand the interests and real needs of both parties - why it is that they want what they want;
  • investigate alternative approaches to achieve both parties' needs;
  • understand the costs of not achieving a deal, for both parties;
  • be willing to stay at the bargaining table for as long as it takes;
  • use the best mediators to help explore positions without having to alter yours; and
  • employ the best labor negotiators available, who can use their experience from many other situations for your benefit.

This article was re-published from the e-bulletin, H R Space, with the permission of the law firm Fasken Martineau DuMoulin, LLP, as well as the publishers of Northern Exposure, a blog written by the law firm's lawyers. Northern Exposure is produced in conjunction with HRHero.com. You can read more Northern Exposure blog posts at http://blogs.hrhero.com/northernexposure. Fasken Martineau is one of the world's leading international business law and litigation firms. You can learn more about it and its publications such as H R Space at www.fasken.com.

    
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