Human Resource Management 14th Edition by Robert Mathis,Sean Valentine,John Jackson

Exercise 3

Just Let Them Strike
Detonation Media is a successful gaming software firm located in California that is responsible for many successful software titles. Despite these achievements, the company is currently experiencing a backlash from many of its unionized employees about various compensation issues. Almost 50% of Detonation's employees are members of the Software Engineers Guild, which has enabled workers to develop a unified voice about their concerns. Another major problem is that many professionals have been working for the organization for some time without a contract, an unacceptable situation in an industry known for high burnout and corporate layoffs. This current state of affairs has encouraged union representatives and employees to picket the organization in an effort to rally support for better working conditions.
Making matters worse is the current volatility of the industry. Software companies have experienced labor disputes, and the industry as a whole is suffering from a gradual downturn in the economy. To many, these trends foreshadow changes at Detonation, none of which are viewed positively by employees. Lower wages, reduced control over the workplace, and increased dissatisfaction are some of the likely outcomes. One superstar software developer, Tetsui Wakatanabe, has even threatened to leave the company to start his own software firm (taking key Detonation employees with him) if negotiations between management and the Software Engineers Guild break down further.
The situation has gotten even worse because the original compensation-based concessions offered to employees cannot be met because of weak sales projections. It is therefore up to Detonation's general counsel and lead negotiator Carol Lee to work with the union's lead negotiator Dan Hontz to try to find some middle ground. This could be quite difficult given that the company is offering considerably smaller pay increases over the next three years compared to amounts originally proposed, all of which will not be implemented on a retroactive basis. In addition, management wants to move compensation away from a revenue-sharing approach to profit-sharing, shifting more risk to employees.
Ultimately, Carol and Dan couldn't reach an immediate deal that would satisfy all parties involved. After discussing the situation with CEO Emilio Teti several times, Carol was surprised by his reaction to recent negotiations. He wanted to offer no additional concessions and dared union members to strike. Carol left his office trying to figure out how a win-win solution could be identified for both the employees and the company. 49
QUESTIONS
1. Should CEO Emilio Teti stick with his proposed plan to reduce the original concessions offered to unionized employees? Should no concessions be offered?
2. Does changing compensation from a revenue-sharing approach to profit-sharing represent a viable business strategy?
3. How else might the Software Engineers Guild and Detonation Media reach a fair deal for employees?