Enterprise bargaining needs better negotiation, not more conflict

The recent Fair Work Commission decision to increase the minimum wage by 4.75 per cent is a reminder that workplace negotiations matter, writes Max Reisner.

As workers seek relief from cost-of-living pressures and businesses face rising costs, many organisations will soon find themselves back at the bargaining table.

And the stakes are high. Australia lost more than 1.3 million working hours to industrial action across more than 200 strikes in the past year – the highest level in almost a decade.

But behind those numbers are real people living with uncertainty.

Drawn-out enterprise bargaining negotiations come at a cost to everyone involved – companies lose money, workers are left in limbo, and communities can be impacted by disrupted or reduced services.

It’s a frustrating situation, and I’m not here to argue about who is right or wrong.

But as a behavioural economist who advises companies and teaches negotiation at Bond University, I’ve seen how human psychology shapes the way people negotiate – and how understanding it can help both sides reach better outcomes, faster.

At the end of the day, we’re all humans who can get emotional, defensive, and reactive – and sometimes, we make decisions that aren’t rational.

What I see in my courses from a range of industry professionals is what often plays out in union negotiations.

These negotiations aren’t just Company X versus Union Y.

They are people negotiating with people – and both sides bring their emotions, assumptions, and biases into the room.

Here are three common problems I see in enterprise bargaining negotiations, and how behavioural science can help.

Extreme anchoring extends conflict

When General Motors and the United Auto Workers were negotiating a few years ago, the union requested a 40 per cent pay rise and a four-day work week.

The company’s counteroffer was 6 per cent. Is it any surprise it took months to close that gap?

In behavioural science, this is called anchoring.

The first number put on the table has a powerful effect on the rest of the negotiation and often determines the tone of the conversation.

The problem is that extreme anchors often backfire.

One side starting with a number that feels disconnected from reality can create a perception that they’re not taking the negotiation seriously, and the result is a loss of trust.

It’s like being on holiday and someone asking $100 for a T-shirt you know is only worth $10 – you start to question the value of negotiating at all.

But in enterprise bargaining, you can’t just walk away and choose another option. People’s livelihoods are on the line, and an agreement must be reached.

Extreme anchoring rarely helps either side.

Huge demands from a union can set unrealistic expectations – suddenly, even a reasonable pay offer from the company can feel disappointing or unfair.

Once people start believing 40 per cent is a possibility, anything less feels like a loss.

Alternatively, a low offer can quickly become a rallying point – “The CEO earns millions, and they’re offering workers just 1.5 per cent?”

Both sides should use anchors that feel justified, reasonable, and credible.

Light-touch anchoring is arguably more effective – an extreme number isn’t necessarily more influential.

Both sides benefit from a speedy resolution – union representatives can tell members they secured a strong deal fast, and businesses can save time, legal costs, and management resources.

Most importantly, people spend less time living with uncertainty.

Focus is too often one-sided

One major misconception in negotiation is that focusing on your own outcome gets better results.

Truly great negotiators spend more time understanding the other side, because the fastest way to get what you want is by giving the other side what they want.

Unions and businesses ultimately share a key goal – people coming to work motivated, productive, and feeling fairly compensated.

A powerful move in negotiation theory is agreeing on that shared goal before getting into the details.

The rest, at least in theory, becomes a conversation around data:

• What are competitors paying?
• What is projected inflation?
• What revenue pressures exist?

Negotiation works better when both sides stop seeing it as a battle to win and start treating it like a problem to solve together.

Confirmation bias turns negotiations into ego battles

We all tend to look for evidence that confirms what we already believe – it’s called confirmation bias, and it undoubtedly sneaks into negotiations.

If you walk into the room thinking:

• “The CEO is greedy.”
• “The union just wants conflict.”
• “Management doesn’t care about workers.”
• “Union reps are being unreasonable.”

... then every action is filtered through that lens.

A delayed email becomes disrespect, a counteroffer becomes proof of bad faith, and a tough question becomes a personal attack.

The negotiation shifts from joint problem solving to a battle of individual egos.

That’s when things deteriorate if people stop listening to understand and start getting defensive.

Behavioural science tells us that when people feel attacked or threatened, emotion takes over, often at the expense of rational thinking, and both sides get trapped in a cycle they’re creating together.

The union escalates pressure because management appears unresponsive, and management becomes more defensive because they see the union as aggressive.

Each side then points to the other’s behaviour as proof they were right all along – confirmation bias in action.

One useful strategy can be engaging a neutral third party early in negotiations – something we rarely see in EBA discussions.

This means that by the time Fair Work steps in, the parties are often at a stalemate.

A neutral party can help move the conversation away from “us versus them” and back towards understanding, common ground and data-based discussions.

And that’s a win for all involved – because these negotiations matter.

In a cost-of-living crisis coupled with a productivity downturn, they are vital for the health and wellbeing of workers, our communities and our economy.

Max Reisner is a behavioural economist and negotiation coach at Bond University, who advises major Australian organisations on multimillion-dollar enterprise bargaining negotiations.

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