Negotiating the Future

Best Practices in Joint Action

2005 Hawaii ADR Conference "Mending Broken Bonds"

Barry BluestoneCenter for Urban and Regional PolicyNortheastern University

October 2005

In the Good Old Days Unions blossomed

• Massive monopolies -- little competition• No global competitors to speak of• Huge establishments• Routine work• Taylorism dominated the factory floor

• In this environment, unions found it easy to organize workers … and millions joined. There was little non-union competition to worry about

Powerful Unions

By the mid-1950s, 36% of America’s workforce were members of unions

No one crossed picket lines No firm dared hire striker replacements Unions had political clout because of their

numbers Unions won unprecedented wage and

benefit improvements

Traditional Workplace Contract

AIF/COLA Wage Formula “Fringe” Benefits Seniority Protection Grievance Machinery Work Rules/Job Classifications Union Security Clause Management Rights Clause

Traditional Contract Worked Wonders in the Post-War Period

AIF-COLA Wage Formula provided massive dose of consumer demand

Fringe Benefits provided great security Seniority, grievance machinery, work rules,

union shop did the same -- gave sense of security

And so, American workers went out and spent their incomes generating record GDP growth rates

The Fly in the Ointment: The Management Rights Clause

As long as there was little foreign competition, consumers would buy whatever American companies produced even if prices rose, quality was shoddy, and real innovation was lacking

Management could make all kinds of mistakes without their companies or workers bearing the cost

But with rising foreign competition, the Glory Days were numbered

Management now needed labor to help boost productivity, raise quality, and bring forth innovation

The old management rights clause actually stood in the way of these changes

The New Competitive Reality

Hot-paced, high flexibility, incredibly competitive marketplace

Global competition Dominance of Wall Street Smaller scale operations in larger scale

enterprises -- Merger Mania with downsizing

New skills needed to prosper

TrumanEisenhowerKennedyJohnsonNixon FordCarter

-600

-500

-400

-300

-200

-100

0

100

$ b

illions

4749515355575961636567697173757779818385878991939597990103YEAR

U.S. Trade BalanceExports - Imports (Goods)

Reagan BushClinton Bush W.

TrumanEisenhowerKennedyJohnsonNixon FordCarter

2%

4%

6%

8%

10%

12%

14%

16%

Perc

ent

4748

4950

5152

5354

5556

5758

5960

6162

6364

6566

6768

6970

7172

7374

7576

7778

7980

8182

8384

8586

8788

8990

9192

9394

9596

9798

9900

0102

0304

Imports as % of GDP

Reagan BushClinton

1929 Import/GDP Ratio

Bush W.

TrumanEisenhowerKennedyJohnsonNixon FordCarter

0%

5%

10%

15%

20%

25%

30%

35%

Perc

ent

4749515355575961636567697173757779818385878991939597990103YEAR

Manufacturing Employmentas Percent of Total Non-Farm Jobs

Reagan BushClinton

Imports as a % of GDP

Bush W.

Union Strength Wanes

Today, only about 13% of American workers belong to unions -- only 9% in the private sector

Firms hire replacement workers The public sector “privatizes” services Union political clout on the decline (e.g.

NAFTA, labor law reform) New workers harder to organize

United States: Trends in Union Membership

10

15

20

25

30

35

4019

3019

3219

3419

3619

3819

4019

4219

4419

4619

4819

5219

5619

6019

6419

6819

7219

7419

7619

7819

8019

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

03

Year

Perc

ent o

f Em

ploy

ed L

abor

For

ce

United States: Private Union Membership v. Public Union Membership

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Year

Perc

ent o

f Em

ploy

ed L

abor

For

ce

Public Sector

Private Sector

Age Composition of Union Membersin the U.S. 2002

Percent of Employed Age Group Workforce

Total, Age 16+ 13.3%

Age 16-24 5.2%

Age 25-34 11.2%

Age 35-44 14.3%

Age 45-54 18.6%

Age 55-64 17.4%

Union Membership by Occupation in 2003

OccupationUnion Membership as % of Employment

Sales and related occupations 4.0%

Food preparation and serving related occupations 4.1%

Legal Occupations 4.8%

Computer and mathematical occupations 5.2%

Business and financial operations occupations 6.1%

Art, design, entertainment, sports, and media occupations 7.5%

Architecture and engineering occupations 7.8%

Life, physical, and social science occupations 9.0%

Healthcare practitioner and technical occupations 12.3%

Production occupations 17.5%

Installation, maintenance, and repair occupations 18.9%

Transportation and material moving occupations 20.1%

Construction and extraction occupations 21.7%

Protective service occupations 36.1%

Education, training, and library occupations 37.7%

Can we Rebuild the Union Movement in America?

Keys to Economic Success in a Global Economy

Consistent improvements in PRODUCTIVITY

Constant attention to QUALITY

Continuous INNOVATION

Without improved productivity, quality, and innovation, firms fail, workers suffer … and unions disappear

Is there a new role for unions in this new hot-paced, highly competitive, global

economy?

“Enterprise Compact”

Joint Productivity Targets AIF/COLA for Basic Pay & Benefits Joint Pricing Policy Joint Quality Standards No Layoff Policy Profit-sharing/Gain-sharing ALL DECISIONS BY JOINT ACTION

Case StudiesFrom Reform to Revolutionary Change

HealthEast/Children’s/Woodwinds Hospital Circus Circus Hotel Casino Bechtel Nevada Test Site Quaker Oats - Cedar Rapids Ford Cleveland Engine Plant #2 César Chávez High School Magma Copper Company

Best Practices at Health East/Children’s Hospital/Woodwinds

Goals: Cooperative work environment; cut costs

Adoption of Interest Based Bargaining (IBB) in contract negotiations

Labor-management joint committees established throughout hospital facilities

Extensive training in IBB in order to use IBB principles universally in joint labor-management committees

Special Letter of Agreement between parties used to design the work environment at the new Woodwinds Hospital based on joint labor-management committees and IBB

Best Practices at Circus Circus Goals: Reduce grievances; improve service quality

Creation of joint labor-management steering committee to oversee training in problem-solving

Develop “Roles, Rights, and Responsibilities” and Team Building and Problem Solving Training to transform traditional adversarial relationship between supervisors and shop stewards

Institute Initial Resolution Process so that supervisors and shop stewards solve problems before they become formal grievances

Establish joint “Train the Trainers” workshops to provide training for supervisors and shop stewards without the need for third party experts

Develop new disciplinary contract language to boost quality of service

Best Practices at Bechtel Nevada Goals: Reduce jurisdictional disputes; improve

productivity

Creation of the Alliance between Bechtel and Building Trades to foster a more cooperative labor-management relationship

Development of Continuous Improvement Teams

Adoption of Interest Based Bargaining (IBB)

All constituencies given training in IBB

Work Assignment Dispute Resolution Process (WADRP) adopted by parties to resolve union jurisdictional disputes

Under WADRP, representatives from disinterested crafts make final and binding decisions on jurisdictional disputes involving two or more unions

Development of common work rule language for all building trades under the Alliance

Best Practices at Quaker Oats Goals: Empower work teams; boost productivity

Parties establish, alongside their traditional contract, a Supplemental Partnership Agreement (SPA)

Joint Labor-Management Team governs plant

Under the SPA, team-based work systems instituted throughout plant: 64 self-managed work teams

Floor supervisors are team members -- part of triad of supervisor, union steward, and team leader

Joint monitoring of key plant success indicators On-going training in soft skills, team skills, conflict resolution,

and leadership development

Teams conduct regular self-assessments

Best Practices at Ford Cleveland Engine Plant #2

Goals: Joint control of production floor; save the plant

Joint UAW-Ford team develops the Conceptual Agreement committing both parties to “Best in Class” Quality and Cost

A new Simulteam of salaried and hourly workers is selected to design the new operating model for the plant

The Simulteam engages in extensive benchmarking of competitors’ practices to inform the design of the new model

The Simulteam is made responsible for interviewing new employees for the plant and recommending new hires

Under the joint agreement, every employee receives 120 to 150 hours of training

Best Practices at César Chávez H.S. Goals: Empower teachers and support staff; Improve school quality

Use of Interest Based Bargaining in negotiations

Adopt and adapt Saturn Plant principles to design work systems at new high school

Parties jointly design site-based school governance structure

Joint selection of new school principal and other staff at the school

Best Practices at Magma Copper Goals: Joint management of company; save the company

Joint Union Management Coordinating Committee (JUMCC) established to redesign production processes and entire labor-management relationship at mine

Revolutionary 15 year contract with 7 year no-strike clause

Traditional contract “put on the shelf” -- to be used only if parties lose trust in the partnership

Sharp reduction in work rules to boost productivity

Gainsharing plan to reward workers for productivity improvements

“Voice of Magma” joint meetings produce new charter for company to solidify commitment of managers and workers to work teams and work redesign

Final Thoughts

Key “Learnings” fromthe Case Studies

Key “Learnings”

To be successful, joint processes must be developed in the context of collective bargaining, not separate from it.

Beware of the “Quick Fix” -- Real joint partnerships take time to generate

Successful programs begin at the top, but must be diffused right down to the rank and file

Successful programs are “institutionalized” -- the process becomes an integral part of the organization

Sustaining the joint process is critical -- programs tend to hit plateaus and can deteriorate

Prospects for a New Union Future

Unions become part of the New Economy solution, not part of the problem

In response, Unions find greater popular support for the union agenda

American workers begin to show new desire to join unions

Union membership grows rapidly Union political clout regained American democracy reaches a new level