Fri, April 12, 2024

The death of compromise: UAW strike and government shutdown

Anyone who has been paying any attention to our federal government in recent years has probably noticed that if the art of compromise is not dead, it is surely either on life support or terminally ill. While it has been about forty years since I took a course in negotiation during my MBA program at Duke University’s Fuqua School of Business from the great Dr. Roy Lewicki, a number of the lessons from that course, and other lessons I have learned from negotiations in the years since, continue to stick with me. In particular, the lesson that has been reinforced most is that a negotiation should result in a “win-win;” that is, get the best possible deal for yourself, while also working to ensure that your counterpart is also satisfied with the solution.

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Unfortunately, there are two current, ongoing examples, in which one or both sides are not working toward a “win-win,” and therefore, not making much progress toward the resolution of the conflict. Let’s take a look at both of these and see how we can learn not to have our organizations emulate their negotiations.

The first big negotiation that has been dominating the news cycle for the past couple of weeks is the United Auto Workers (UAW) strike against the “Big Three,” Ford, General Motors (GM), and Stellantis, formerly Chrysler American automakers. The UAW began unprecedented, simultaneous strikes against all three automakers on September 15, after the prior four-year labor deals with each expired.

The initial strikes were at one facility for each company: a Ford assembly plant near Detroit, a GM factory in Missouri, and a Stellantis Jeep plant in Toledo, Ohio. As of this past Friday (September 22), the UAW expanded its strikes against GM and Stellantis to 38 parts distribution centers, while it did not expand its strike against Ford, citing an improved contract offer.

In my opinion, the UAW is the side that is making the most serious mistakes that are reducing the chances for a “win-win” resolution. The first major issue is that the UAW has chosen to negotiate in the media, and in doing so, making its demands public. By doing so, the UAW has painted itself in a corner in that it will look like a “loser” if it “settles” for anything less than the 40% raise they are demanding over the next four years, along with a 32-hour work week and the return of defined pensions. UAW President, Shawn Fain has made himself the “face” of the UAW and ultimately, he has tied his personal success to the outcome of these negotiations, rather than necessarily doing the best for his workers.

UAW President, Shawn Fain

The other problem the UAW has is that it’s valuing a short-term win without protecting their workers’ long-term viability. Despite President Biden’s plan to join the picket line on Tuesday, another mistake because politicians should not choose sides in a market-based economy, his administration is also pushing electronic vehicles (EVs), which will likely have a long-term negative effect on the workers. So, while pushing for higher short-term wages may make Fain look good, he should be doing something to protect his workforce from the reduction of jobs that will likely take place due to EVs.

The other big negotiation in the news right now that will likely affect all of us is the specter of a federal government shutdown that will occur if Congress does not vote to fund the government into the next fiscal year, which starts on Sunday, October 1. In this case, both sides appear to be clearly at fault, with each working to make the other side “lose” because of an impending election approaching in 2024.

First, the Democrats are holding fast to increased spending and hoping the Republicans will be blamed for the shutdown. This was the same tactic they attempted during the debt ceiling negotiations, but they finally had to fold and are now taking credit for a “bi-partisan” solution that they were clearly against. On the other side, the more far-right House Freedom Caucus, like the UAW, is negotiating in the media and is taking a very hard stance that is really leaving no room for compromise, not only with Democrats, but also with the more moderate Republicans.

Therefore, they are creating a scenario which, in order not to “lose,” will create a government shutdown and cause what they see as a principled fight to be a negative situation for many Americans. While some believe the principle of the Freedom Caucus may be best for the long-term economic viability of the country, its method of negotiation will never allow them to get there. They are leaving no room for an interim step that might be palatable to all sides and best for the country.

Unfortunately, given the actions of various players in these negotiations, we may be in for a long UAW strike and a government shutdown. However, we can learn from these mistakes in order to have successful “win-win” negotiations in our future.  Here are some important lessons we can learn:

  • Don’t negotiate in public or in the media: When the parameters of your negotiations become public, it will be harder to move off your position as your constituencies will expect you to “win” and have the other side “lose.” As a great example, see how Atlanta Braves General Manager, Alex Anthopoulus never leaks anything to the media and discourages players and their representation from doing so as well. This typically results in a contract that both sides see as a win.
  • Balance the short-term and long-term for both sides: Too often in negotiations (see UAW), one side or the other or both, tend to overvalue what they “win” in the short-term. Big pay raises in short term can risk the employer’s long-term viability. In the case of the Freedom Caucus, achieving their long-term goal will require them to sacrifice some in the short term.
  • Always Allow Your Counterpart to Save Face: As long as you can achieve the result you desire, do not flaunt it over your counterpart. Hopefully, they were able to achieve something they wanted as well and both sides can “claim victory.” As an example, take a look at the settlement between UPS and the Teamsters, in which both sides were able to laud what they achieved.

We can only hope that compromise is not dead. For our organizations and for our country to flourish, we need to find consensus solutions that allow us to move forward.

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