Question

Compare and contrast the federal government negotiation process with that used by private sector organizations.

Answer 1

1. Public sector managers have almost none of the financial incentives of private-sector management to minimize labor costs. Private sector managers are likely either to own stock in their firm or know that their own paychecks depend on negotiating a cost-effective deal. Public sector administrators have incentives to see their subordinate employees paid as highly as possible because their own and their immediate staff's salaries tend to rise in tandem with those of their unionized employees.

2. In public sector bargaining unions may have advocates on both sides of the table. That is, elected officials may owe their own positions to support from unions.

3. Unlike private firms, public agencies cannot move or threaten to move their operations to areas with lower labor costs.

4. Few substitutes are available for public goods like education.

5. Unions are better organized and more likely to rely on full-time professional negotiators than are many of the public entities with which they bargain, notably small school districts. At the local level, turnover among school board membership is high with the result that union negotiators often have training and experience that their board counterparts lack

For reasons of this kind, negotiations between public employee unions and their employers bear less resemblance to private-sector bargaining