In the “The Knowledge Workers’ Strike” case, the main topic of discussion is a negotiation between the Software Engineers Guild (SEG), a workers union for programmers in the gaming industry, and Detonation, a large virtual game producing company. The SEG is nearly half of Detonation’s employees and they are trying to rally together to get better pay and benefits (regarding revenue sharing, etc). On the other hand, Detonation is trying to shift its workers to profit sharing, rather than revenue sharing.
Workers have begun picketing because the contracts have lapsed and the SEG and Detonation have seemed to reach an impasse. Main Problem While, there are sub-issues, the main issue boils down to the agreement on the terms of the contract. Within the contract are several criteria that each side is vying for. On one side, the SEG is trying to fight for better wages due to the nature of their careers with tight deadline after tight deadline and non-stop coding schedules. It also would like a bigger piece of the pie, so to speak.
One of the SEG’s major criteria is to extend its jurisdiction over the internet gaming segment in addition to the PC and console games. Significance The significance of the problem is fairly substantial because about half of Detonation’s work force is in the SEG and if they strike or walk, this would have a large impact on the company. Some of the outcomes of a strike include: continued delay of major projects or a complete halt or discontinuation of new product launches (i. e. Couch Nijas 2), loss of workforce for Detonation and loss of jobs for SEG in tough economic conditions.
The bottom line is for SEG jobs are at stake, while for Detonation, productivity and an end result of less profit is at stake. These are two big concerns for each party throughout the negotiation. View Points & Prior Offers From Detonation’s point of view, the gaming industry is beginning to feel the effects of the economic downturn and its numbers are beginning to slip. That being said, they are concerned about sales and profits and would like to shift the union from revenue sharing to profit sharing. Due to the delays cause by the renegotiation of the contract, Detonation has been nvestigating the idea of buying enough time to move the internet gaming segment from union workers to nonunion workers. Previous Offers During the second to last round of negotiations, Detonation offered the SEG a 5% increase in pay and benefits each year for the next three years. With this offer, the company also wanted to transition the SEG from revenue sharing to profit sharing. SEG was not in complete agreement with this offer because it did not want to migrate to profit sharing and it also wanted to extend its jurisdiction to games made for the internet as well as those for PCs and consoles.
This is the point where the two parties involved in the negotiation reached an impasse. The contract lapsed and layoffs occurred in other major firms in the industry. This sparked interest from both parties to resolve contract disagreement and find a solution. The next round of negotiations took place and an agreement was still not reached, but each party gained insight of possible areas to bend for a “give and take” situation for the next possible round to hopefully reach an agreement. The first offer on the table came from SEG.
They stated that they would be willing to accept the last offer of a 5% pay and benefit increase for the next three years that Detonation put on the table, with a few provisions. The conditions being that the pay increases would be retroactive to the end of the last contract, there would be no shift from revenue sharing to profit sharing and they would receive jurisdiction over internet games with budgets of $150,00 or more. Stating this as the initial offer, allowed Detonation to realize that the SEG was willing to take partial jurisdiction on internet games and willing to negotiation certain conditions of the contract.
While willing to negotiate, the SEG made it very clear to the company that it had the support from the big players of the programming staff and would not hesitate to make moves if an agreement was not reached. This showed Detonation the SEG’s alternative that if they do not like they offer, they will walk (to some extent). Detonation countered, also offering up information to the SEG on it’s current state. The offer was decreased from the initial offer back in December. Detonation was now offering only a 2% increase in the first year, 4% the 2nd and 5% in the 3rd with no retroactivity.
Since this was an unexpected drop from the first offer, the SEG made it clear that it would not agree with that offer and had other options in mind (i. e. walking and taking the programmers to start of their own company). No agreement was made but a lot of insight was given to the Detonation party for how to approach the next round. New Approach Detonation now had additional criteria to use to re-think its approach. The main issue was that internally, Detonation was not necessarily on the same page as to how to move forward in the negotiation process.
While the counsel had clearly realized there were other ways the offer could be cut, a quid pro quo type of deal, the main influencer (Emillio) thought that Detonation should play hardball and breakdown the SEG. Emillio was not thinking of the negative aspects of playing hardball: if they strike, he would have to replace the workforce and in a short amount of time, the strain on the relationship that occur and the issues that would arise in future negotiations based on the current approach.
Bits of information were given throughout the case, some of which has been previously mentions, that brought me to the next best offer that could be made by Detonation to the SEG to hopefully resolve the conflict and result in a signed 3 year agreement. Having insight into Detonation’s counsel’s thought process, allowed me to note that the percentage increases in pay were not as big of a concern to the company then some of the other issues like eventually migrating to profit sharing, etc.
That being said I took criteria from each side and tried to meld them into one offer that both sides could hopefully agree on. Each side would give a little on certain aspects that were not its main concern in order to gain a little on important criteria. Recommended Offer The strongest offer that I could create based on the information that was given is as follows: SEG would give up a small percentage in salary (Detonation to offer 4% 1st year, 4. % 2nd year and 5% 3rd year – reflecting current market numbers) to gain jurisdiction to internet games with budgets of $150,000 or higher and Detonation gives additional salary (an increase from the last offer of 2%, 4%, 5%) and extends the SEG’s jurisdiction to include internet games in order to keep them working and producing great product and move them to profit sharing in year 3. With this option on the table, neither party is truly giving up any of it’s important (make of break) criteria.
Instead, by hopefully finding common ground, both parties benefit in the long run: SEG workers continue to have their jobs and receive pay and benefit increases and extend their jurisdiction to the up and coming internet gaming segment while Detonation keeps its valuable work force, will move to profit sharing by year 3 and has bought itself some time to look into the nonunion workforce (if need be). To me, this is a win-win situation. With the other options the parties were offering, each option was a win-lose where the offering party wins and the opposing party loses (obviously).
Throughout the beginning process of this negotiation, both parties were not expanding the pie and only seeing which way they could slice it so that way they get the best piece. With this type of mindset, the parties were bound to reach an impasse and quite possibly never reach an agreement, which still may happen. The alternatives to my offer would be that SEG would strike and the lead programmer would take his team and create his own start up and Detonation would lose half of its workforce and have to replace them with nonunionized workers.
Each alternative could still happen, but are they really the best options for both parties? If you would analyze the other issues that could come up from the alternatives and the additional time and resources it would take to complete the alternatives, they might not seem like such viable options anymore. Additional information such as, financials, costs, timelines, etc. would be needed to objectively analyze the alternatives to decide if they would be worth while. Based on the information given, my recommended offer seems to be a win-win for both parties and the most feasible option currently available.