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					IRConcepts
 Summer 2007
                                                                                                           A Publication of
                                                                                                           Industrial Relations Counselors, Inc.




                                                                                                           IRConcepts is published by Indus-

Exploring Ways to Improve                                                                                  trial Relations Counselors, Inc.,
                                                                                                           established in 1926 “to advance the
                                                                                                           knowledge and practice of human


Labor-Management Relations
                                                                                                           relationships in industry, commerce,
                                                                                                           education, and government.”

                                                                                                           Sydney R. Robertson


and Collective Bargaining
                                                                                                           President
                                                                                                           212-852-0403
                                                                                                           sydney.robertson@orcww.com

                                                                                                           Robert J. Freedman
At IRC’s Exploring Ways to Improve Labor-Manage-         – Skilled workers needed by business who
                                                                                                           Director of Research
ment Relations and Collective Bargaining Summit at         are nonmilitant and can take care of            212-852-0404
ORC Worldwide’s headquarters in New York                   themselves, represented by the AFL              robert.freedman@orcww.com

on March 6th and 7th, a group of experts and                                                               Industrial Relations Counselors, Inc.
                                                         – Unskilled, immigrant workers in service
practitioners in the field discussed the relation-                                                         500 Fifth Ave
                                                           industries—labor’s traditional base—for         New York, NY 10110
ship between management and organized labor
                                                           whom a more aggressive stance is an at-
in terms of its current state, the forces pressing                                                         IRC and IRConcepts are
                                                           traction, represented by the SEIU and           trademarks owned by
upon it, and the outlook for its future. This                                                              Industrial Relations Counselors, Inc.
                                                           HERE
session built on dialogue about the future of
                                                       •	 Mergers & acquisitions at a continuingly         www.ircounselors.org
collective bargaining at recent FMCS National
Labor-Management Conferences and may well                 frenzied pace, across industries and loca-
be part of a continued national dialogue and ac-          tions
tion on these matters.                                 •	 Outsourcing of both specific work and
                                                          workers
Organized labor today is a small and shrinking
part of the total workforce, and it is struggling      •	 Cost explosion of traditional employ-
at a number of levels to find a more vital role           ee benefits, particularly health care and
in the global economy. But the new forces in              pensions
that economy are equally challenging to man-           •	 Growing multiples between pay at the
agement, whether or not its own workforce is              top and bottom, which encourages union
organized. These forces, which affect compa-              militancy, and is contributing to the shrink-
nies across the spectrums of industry and size            age of the middle class
along with their workers, were identified by the       •	 The prospect of imminent change in U.S.
conference’s speakers and participants:                   political leadership, possibly reverting to
                                                          old-style political solutions for global busi-
  •	 Globalization of both business and labor
                                                          ness and labor problems
     competition
                                                     Each speaker presented his own unique perspec-
  •	 Changing nature of the workforce that
                                                     tive on how these forces are influencing today’s
     requires more educated, specialized em-
                                                     practice of labor relations and collective bargain-
     ployees to compete in the growing informa-
                                                     ing, citing different examples ranging from the
     tion economy rather than in the shrinking
                                                     shift in the basic structure of labor and manage-
     manufacturing base
                                                     ment to a new model—management and labor
  •	 Changing nature of labor from a monolith
                                                     working together in strategic partnerships to
     to a reflection of the dual labor market:
                                                     achieve agreed-upon business goals.

                                                                                                           IRC        Industrial Relations
                                                                                                                      Counselors, Inc.
    IRConcepts                                                A publication of Industrial Relations Counselors, Inc.




    The Future of Collective Bargaining as                    cases, the parties are increasingly even coming
    an Institution: Perils and Prospects                      together over nontraditional, larger joint goals
                                                              such as police and fire agreements to improve
    Joel Cutcher-Gershenfeld                                  public safety, education agreements to improve
    Professor and Dean, University of Illinois Institute of   student performance, or industrial agreements
    Industrial and Labor Relations                            to improve environmental outcomes.
    Professor Cutcher-Gershenfeld pointed out                 He pointed out that there is especially the need
    that, as a result of fundamental shifts in mar-           to educate the workforce on business realities
    kets, work, technology and society, the basic             in today’s economy. There is a parallel need for
    structure of the relationship between manage-             employers and the general public to see collec-
    ment and organized labor is shifting as well.             tive bargaining as still able to contribute to the
    A growing move to “bargain over how to bar-               stability of a middle class in society. Basic ques-
    gain”—reassessing the “rules of the game”—is of           tions arise to what extent it makes economic
    central importance in this context.                       sense to invest in education in these domains.
    He has found that about 10 percent of labor-man-          Will employers invest in educating a workforce
    agement relationships are now on a transforma-            on business issues given current high rates of
    tional path that is designed to align strategic-lev-      turnover (both voluntary and involuntary)?
    el concerns and workplace-level concerns within           Will education take place such that collective
    the collective bargaining process. That path of-          bargaining is not just seen as a private deal on
    ten integrates essential workplace innovations            wages, hours, and working conditions?
    into enabling contract language through the ap-           He concluded by pointing out that one key to
    plication of interest-based bargaining (IBB) and          more effective bargaining is communication be-
    related methods for understanding fundamental             tween and within the parties during all phases
    interests as a context for bargaining.                    of the relationship—not just at the bargaining
    While the net result of such transformational la-         table. The Internet is a growing vehicle, for both
    bor-management relations can be a new, strategic          labor and management, to establish such ongo-
    partnership between the parties, he reports that a        ing communication. Essential in this process
    greater percentage of labor-management relation-          will be the same kind of standardization and
    ships are going in the opposite direction. They have      use of process disciplines as are found in quality
    become more adversarial, with more divergence in          improvement efforts and related initiatives. On
    union and management views, less workplace in-            the management side, top management—not
    novation, and a fall-off in a preference for IBB.         HR—needs to set a clear direction and policies
                                                              for the organization’s labor relations so that
    Even in the contested context, many of the
                                                              local-level management can operate on firm
    techniques involved in IBB are, he says, being
                                                              ground. For both labor and management, this
    incorporated into a range of new approaches to
                                                              will involve shifts in the basic institution to
    bargaining—not necessarily using specific labels.
                                                              match today’s global knowledge economy.
    The parties are increasingly engaged in joint
    training; joint data collection prior to bargain-
    ing; pre-agreements on ground rules and a bar-            Roads to Union–Management
    gaining plan; use of facilitators and brainstorm-         Collaboration
    ing during bargaining; use of content experts
                                                              Michael Maccoby
    and subcommittees during bargaining; new
                                                              Anthropologist, Psychoanalyst, and Consultant on
    uses of electronic technology such as projecting
                                                              Leadership, Strategy, and Organizational Behavior
    text on a screen and taking joint minutes; and
    innovative ways to engage and calibrate con-              Dr. Maccoby explained how the current system
    stituents. In a limited, but important number of          of union-management relations is based on an
2
IRConcepts                                            A publication of Industrial Relations Counselors, Inc.




outmoded reality—the industrial model of the          Management (TQM), and quotes Tom Daven-
20th century—as the work, scope, and structure        port, who said, “All knowledge-work organiza-
of today’s workplaces are subject to global eco-      tion is experimental.” Ultimately, companies
nomic, social, and especially technological forc-     and unions both have a profound interest in
es. (He points out that more jobs are lost to the     being competitive and having good jobs in an
U.S. economy today due to automation than are         ever-changing economy. And experiments in co-
due to outsourcing.)                                  operation have led to better business results.
Improving union-management relationships to-          In later discussion, he pointed out that the collec-
day needs to be part of the process of improving      tive bargaining system, starting with the Wagner
work, according to economic and human val-            Act, is built on something that no longer exists.
ues. This involves incorporating concerns about       We have gone from industrial to knowledge work;
quality, productivity, and making work more           automation, continuous process change, global
satisfying. One way to achieve the necessary col-     competition have demanded agility, not inscribed
laboration between unions and management, he          rules; and an every-three-year contract flies in
has found in his extensive work on union-man-         the face of these new realities. Rather, employees
agement projects, is by focusing on the custom-       involved in the work are required to participate
er—i.e., that which creates value.                    responsively, not by the book. Yet, he concluded,
                                                      many companies are not ready to go to the next
The nature of the relationship between the
                                                      level and cooperate with labor—they need to have
union and the company sets the tone for how
                                                      a compelling business reason to do so.
they relate to one another, and he suggests that
unions be considered a supplier—and treated
accordingly. That then puts the union in the
                                                      The Workplace of the Future
position of working to become the “supplier
of choice.” Similarly, some unions (such as the       Hal Burlingame
International Union of Bricklayers and Allied         Director, Industrial Relations Counselors, Inc.; non-
Craftworkers) have focused on continuous de-          Executive Chairman, ORC Worldwide; retired Execu-
velopment of worker competencies while the            tive Vice President, Human Resources, AT&T Inc.
American Federation of Teachers has a policy of
                                                      From the 1980s until 2000, AT&T prospered and
aiding professional development.
                                                      then rode the wave of change in the telecommu-
While “partnering” does not reflect the true          nications industry with an innovative program
power relationship between the parties, he not-       called Workplace of the Future, in which Mr.
ed, “collaboration” does—as it means working          Burlingame played a central part. He described
together for a common purpose. He also noted          the “virtuous circle” on which it was based, in-
that collaboration is in the interest of unions as    tegrating the popular Economic Value Added
well as management—for example, in one case,          (EVA) approach to organizational improvement
as a result of the establishment of a collaborative   with two other elements—Customer Value Added
relationship with management, union member-           (CVA) and People/Employee Value Added (PVA).
ship rose, from 65 percent to 85 percent. And,        From EVA, investment flowed to employees; from
as the wage differential is receding for skilled      employees work and service offerings flowed to
workers (due to demographically based short-          customers; and from customers revenue flowed
ages), unions can “sell” prospective members on       back to the company treasury.
benefits of education and quality work.
                                                      Focusing on the pivotal PVA segment of this
In doing such work, it becomes clear that there       circle, he described a “new conversation” be-
are no final answers. He discussed the initial        tween labor and management about the nature
excitement and ultimate disappointment of ef-         of the employment contract, in which everyone
forts such as reengineering and Total Quality         had to take a fresh look, and information had to
                                                                                                               3
    IRConcepts                                            A publication of Industrial Relations Counselors, Inc.




    be much more widely shared. Management had            said that labor relations is really about human re-
    to open the books and unions had to abandon           lations and that, despite being a classic “old-style”
    notions of seniority and outdated, strict work        manufacturing company, Harley has created and
    rules. All this change required dedicated cham-       maintained a partnership approach to labor rela-
    pions on both sides who faced detractors on all       tions—because they find it to be a value proposi-
    levels of both sides.                                 tion for the company. Today, after a tumultuous
                                                          financial history, Harley is a highly profitable, $6
    Both Mr. Burlingame and Dr. Maccoby (who
                                                          billion organization with $1 billion of profit.
    was the main consultant to the Workplace of the
    Future program) agreed that what was really in-       He described four key facets of the management
    volved was less a traditional labor-management        value proposition. First, a partnership works best
    effort than a leadership development issue on         where there is an equality of power on each side.
    both sides. And Dr. Cutcher-Gershenfeld pointed       Harley, dealing with both the Machinists and the
    out that such an effort cannot work bit by bit—it     Steelworkers unions, recognizes that power—and
    has to be implemented throughout the organi-          the fact that each side, in opposition, could really
    zation, on three levels simultaneously: from the      damage the other side. And so they find they are
    top down, restructuring; from the bottom up,          both better off working together.
    energy; and in the middle, a strategic planning
                                                          Second, they find that a management-union part-
    process for standards, and protocols as guiding
                                                          nership is better than any available alternatives.
    principles. This effort facilitated performance in
                                                          There are an awful lot of working people in the
    turbulent times and helped strengthen AT&T as
                                                          U.S. who need protection, he said—and they can
    its industry structure was changing. Ultimate-
                                                          look to unions, government, or self-help (which
    ly, it was this effort that—when the breakup of
                                                          he defined as “get a lawyer”). “I have not found
    AT&T did occur—made possible a smooth tran-
                                                          unions to be unreasonable,” he said. “And they’re
    sition process for the people at the company.
                                                          better than government or lawyers.” He, too,
    Reinforcing Dr. Maccoby’s point that even the         views unions as “suppliers,” and pointed out that
    most effective organizational change efforts today    companies don’t have adversary relationships
    are temporary, Mr. Burlingame described how,          with their other suppliers, so they shouldn’t with
    when management change occurs, often there            their unions, which is the company’s most long-
    is a reversion to “old style” labor-management        lasting supplier relationship.
    relations, and what had been built over decades
                                                          Third, with Harley’s cooperative history, they
    took just a moment to be shattered. Yet today, as
                                                          are able to get the participation of their work-
    AT&T has now been reunited with SBC, it seems
                                                          force in solving problems—getting people’s
    as though “SBC is attitudinally in this space, ap-
                                                          brainpower as well as brawn. He said that, by
    proaching labor issues in a pretty constructive
                                                          and large, 20 percent of employees will love a
    way.” The biggest challenge they will face with
                                                          company, 20 percent will hate it—and it’s that
    this is the new power of the financial markets that
                                                          middle 60 percent that a strong relationship
    look only at EVA and are not attuned to the day-
                                                          with a union can help engage.
    to-day reality of organizations’ operations.
                                                          Finally, he said, when management offers a
                                                          partnership approach, it benefits from a higher
    The Case of Harley-Davidson                           quality of union leadership. (As the adage goes,
                                                          “A company gets the union it deserves.”) An ad-
    Stephen Weidman                                       versarial environment encourages an adversari-
    Director, Corporate Labor Relations and Human         al union, but when union leadership is involved
    Resources, The Harley-Davidson Motor Company          in both business issues and in operations, the
    While acknowledging the unique, “egalitarian          company benefits from their knowledge, skills,
    biker” culture of Harley-Davidson, Mr. Weidman        and leadership.
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IRConcepts                                           A publication of Industrial Relations Counselors, Inc.




At Harley, all union presidents and all general      often made through better labor relations—by
managers are policy-setters, sharing all informa-    partnering with the company’s unions to find
tion and operating pragmatically, with mutual        and implement better ways to work, to everyone’s
respect and trust, to engage in mutual problem       eventual benefit. Despite the potential benefits
solving. It is management by influence rather        of labor-friendly private equity only 3 percent
than authority—a consensus culture, in which         of multi-employer pension plan assets are in-
some decisions are made by management, some          vested in private equity compared with 6 percent
with union input, and some are made jointly.         of corporate pension plan assets and 15 percent
Union members work with nonunion workers             of endowment fund assets. Mr. Sleigh cited the
on training and other operational activities,        example of Spirit Aerosystems as a successful
while some plant managers and union presi-           private equity investment that created value for
dents manage plants without supervisors.             investors, managers, and employees.
He said that the partnership culture is so in-       He pointed out that these relationships, like any
grained into the company that even if new lead-      others, are not necessarily forever-after. But each
ership came along and wanted to change it, that      party sees it to be in its interest to cooperate—as
would be very difficult. And yet Harley did re-      long as everyone else does. And one of the knot-
cently have its first strike in 15 years—over the    tiest issues is CEO compensation, particularly
issues of health care and legacy costs, which Mr.    as workers may be agreeing to take wage cuts.
Weidman pointed out are the two intractable is-      But unions are recognizing how such buyouts
sues facing every large employer in the nation,      can be in their interest—and so the private eq-
ones that cannot be solved on an individual          uity fund is now getting leads from unions as
company basis.                                       to underperforming companies that could be
                                                     turned around in a buyout. A buyout by a labor-
                                                     friendly private equity group can spur a radical
A New Private Equity Path                            transformation of labor relations that otherwise
                                                     is unlikely to occur.
Steve Sleigh
Principal, The Yucaipa Companies LLC; former
Director of Strategic Resources, International
                                                     Barriers to Management and Union
Association of Machinists and Aerospace Workers
                                                     Change
While the pure bottom-line-results orientation
of today’s financial markets was mentioned by        William P. Hobgood
many at this conference as in opposition to la-      Arbitrator, Mediator, and former Vice President,
bor-management harmony, Mr. Sleigh demon-            United Airlines
strated that enhanced profitability and cooper-      Taking a balanced look at both sides of the bar-
ative work modes can productively coexist. The       gaining table, Mr. Hobgood notes that the signs
private equity firm of which he is a principal be-   of a bad relationship are obvious: a high griev-
gan with the purchase of a California supermar-      ance level, protracted bargaining, low produc-
ket chain that was carried out with the approval     tivity, public conflict, and strikes. But, drilling
of its unions and which, in private hands, con-      down, he points out that the root causes of such
tinues to work cooperatively with its unions.        results come from deficiencies in both manage-
As with any private equity fund, institutional       ment and labor leadership.
investors put up capital and the fund looks for      Some of the realities that hinder good relations
underperforming public companies to purchase,        include the fact that most change efforts ignore
to improve their operations, and to sell back to     the political character of collective bargaining,
the capital markets at a profit. The unique ap-      and management either doesn’t understand or
proach of this fund is that the improvements are     ignores the union political structure. Both em-          5
    IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




    ployer and union leadership are often reluctant        can sometimes be healthy, he says, in “clearing
    to go past their traditional roles, and show little    the air” and reminding the parties of their mu-
    willingness to assume new and broader respon-          tual needs, tempering employers’ narrow focus
    sibilities. Management leadership tends to have        on stockholder value and unions’ narrow focus
    a quarterly mind-set, while union leaders are          on extracting the “last drop of benefits.”
    largely elected as adversaries to management.
                                                           Sometimes, he said, the real results of a strike
    Management often underestimates the invest-            do not favor the winner. He cited situations in
    ment in time and money necessary to put the            which the company put up a strong fight, and
    relationship on a more cooperative footing—            won on all issues—only, after the strike, to find
    with processes such as team building and inter-        that morale had plummeted and turnover had
    est-based bargaining that need to be leadership        soared. And the company learned to look to inter-
    driven, typically by management, to improve            est-based bargaining as a better alternative than
    the bargaining relationship. Often such efforts        the traditional take-no-prisoners stance, thereby
    are focused on activities rather than outcomes         coming to a good outcome for all concerned.
    and the role of supervisors, who need to be key
                                                           On the other hand, he cited unhappy cases,
    players, is ill defined.
                                                           such as when United entered into its disastrous
    Yet there are positive pointers to better relations.   ESOP plan—and when AT&T sold off a manu-
    While they are neither necessary nor sufficient to     facturing plant to management as the wire and
    improve labor-management relationship, exter-          cable industry was shrinking. He was put on the
    nal threats such as global competitive pressures       board as the union representative, but the com-
    can serve to encourage constructive change. So         pany was again sold, and finally sold again, to
    can recognition of the fact that each of the par-      be liquidated.
    ties needs the other to succeed. And once the de-
                                                           Echoing other speakers, he remembered ex-
    sire to improve the relationship exists, effective
                                                           amples of labor-management cooperation that
    conflict resolution systems can be applied, along
                                                           worked beautifully—for a time, including Chrys-
    with a focus on real performance that includes
                                                           ler and AT&T.
    provision for profitability, institutional security,
    and job security.                                      He was active on the AFL-CIO Committee on
                                                           the Evolution of Work in the 1980s and 1990s,
                                                           a group designed to orient the labor movement
    A Union Leader’s Outlook                               to serving its members. Its Third Report was
                                                           published in 1994 as a call to partnership, a step
    Thomas R. Donahue                                      beyond cooperation. While 35 national union
    Former President and Secretary/Treasurer, AFL-CIO      presidents signed up to the report, they could
    After a lifetime of union involvement, Mr.             not shift the membership and now, 13 years later,
    Donahue has concluded that employers and               they are still talking about the way ahead.
    unions have much more in common than their             Summing up, he said that five basics have to be
    differences, and that partnerships—which he            in place for cooperative arrangements to succeed:
    terms mature bargaining relationships—reflect          finding a willing partner; acquiring the tools to
    those commonalities. They work, he said, when          make it work; developing communications skills
    each party remains true to its base, representing      to sell it up and down both the corporate and the
    the interests of their side, while respecting the      union sides; recognizing limits—that, as in any re-
    other side.                                            lationship, there will always be stresses; and hav-
    While he has seen many successful efforts at           ing dedicated people to make it work. And he said
    learning to live and work together, he says there      that the biggest barrier to the use of interest-based
    are still appropriate moments for a strike. These      bargaining is the issue of cost, on both sides.
6
IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




He left the group with a basic philosophical ques-     ments and expanded membership), with union
tion he said he has spent a long time thinking         members learning to be proactive, demonstrat-
about and to which there is no obvious answer:         ing their vested interest in the success of their
Considering both the traditional legal “master/        company.
servant” relationship of management and labor
                                                       In 2000, the spirit of cooperation extended to
and the practical unity of the work of the job
                                                       the bargaining table, where the two sides deter-
and the person doing it, who “owns” the job—the
                                                       mined to institute a facilitated, single, national
worker or the management?
                                                       “interest-based negotiation” process, in which
                                                       various task groups engaged in joint study,
                                                       problem-solving, and negotiations on subjects
Case of Kaiser Permanente
                                                       ranging from quality and service to work-life
Peter diCicco                                          innovations to wages and benefits—and then
Former Executive Director of the Coalition of Kaiser   submitted recommendations to a centralized
Permanente Unions                                      common issues committee. Ultimately, the na-
                                                       tional agreement and derivative local contracts
In 1996, Kaiser Permanente (KP), America’s lead-
                                                       were ratified by substantial margins—92 per-
ing not-for-profit, fully integrated, and highly
                                                       cent overall.
unionized health maintenance organization,
was facing some difficult challenges. Both its         Working to improve ongoing operations, the
management and staff were suffering from the           partnership follows two strategies: applying the
prevalence of the growing unpopularity of man-         partnership principles and process to address
aged care and from the explosive growth of non-        specific, “naturally occurring” events or crises;
union, for-profit health care companies. And so,       and an incremental, steady, planned diffusion
having suffered a bitter strike in the late 1980s      of those principles and process across the or-
and early 1990s that nobody won, the company           ganization, guided by extensive investment in
began to work toward a genuine partnership             education and training of managers, union rep-
with its unionized employees—not simply coop-          resentatives, and employees.
eration or a new labor strategy, but a joint rec-      He noted that the interest-based bargaining
ognition of the need for fundamental change in         process can seem frustrating because it takes a
order to meet their mutual goals of making life        long time to take hold. It’s slow at first, he said,
better for their customers and communities.            but when it takes off the results start multiply-
The union leaders, representing most staff             ing. So both sides really have to be committed
except doctors, and senior KP executives de-           to slogging on to make it work.
veloped a partnership agreement through an             All of this has worked. In 1998-1999, KP enjoyed
intensive negotiation and problem-solving pro-         a turnaround in its financial performance—and
cess that took most of 1996 and into 1997. The         designed and opened a brand-new hospital in a
toughest issue after job and union security was        new California location incorporating improve-
that of leadership: the scope of shared decision       ments in physical design and in the flow of pa-
making. The unions gained the right to input           tient care that came out of the joint effort. At
(not veto) at the highest level: its representative    that and other facilities, a wide range of mea-
sits in on meetings of the board and all its com-      sures, from financial results to patient care to
mittees except compensation, with both sides           health and safety, rose and continued to rise year
respectful of their determination to achieve to-       after year. And a 2005 union survey of members
tal transparency and confidentiality.                  showed dramatic improvements from 1998 in
Working down from there, management and                their attitudes toward their job, attitudes that
labor worked together to achieve agreed-upon           are critical to the quality of patient care, and the
business goals (such as service quality improve-       competitive success of the organization.
                                                                                                                7
    IRConcepts                                           A publication of Industrial Relations Counselors, Inc.




    Examples of Strategic Labor–Manage-                  gagement, essential to improving performance
    ment Partnerships                                    results. High performance requires discretion-
                                                         ary effort and judgment, which will not appear
    Thomas J. Schneider                                  unless the people who know and have to execute
    President, CEO and Founder, Restructuring            the work feel engaged, a sense of ownership, in
    Associates Inc.                                      it. The most critical concept is that cooperative
    Also involved in the case of Kaiser Permanente       labor-management relations must be a core busi-
    detailed by Peter diCicco, Mr. Schneider related     ness strategy, line-driven rather than driven by
    several examples of burgeoning partnerships.         HR or labor relations staff.

    Catholic Healthcare West has 44 hospitals in
    California, Nevada, and Arizona, with 40,000
                                                         Best Practices in Interest-based
    employees whose staff and nurses had been
                                                         Bargaining
    organized since 2002 by the SEIU. Facing stiff
    competition, particularly from Kaiser Perman-        Michael Gaffney
    ente, in 2006 they agreed to form a labor-man-       Mediator, Facilitator, Educator; Consultant,
    agement strategic alliance to simultaneously         Restructuring Associations; formerly Cornell
    redesign three hospitals and the delivery of         University School of Industrial and Labor Relations
    care—all systems, processes, and jobs—in Las
                                                         Dr. Gaffney pointed out that prior to the intro-
    Vegas, starting with a clean slate rather than in-
                                                         duction of interest-based bargaining (IBB) to in-
    stituting incremental change. The initial meet-
                                                         dustrial relations in the mid-1980s; there was no
    ing with representatives of labor and manage-
                                                         way to connect then emergent structures of la-
    ment took place in July 2006 and in just seven
                                                         bor-management cooperation with mainstream
    months committees were formed, had identi-
                                                         industrial relations activity (contract bargaining
    fied initial functions, processes, and problems
                                                         and contract administration). Collaboration be-
    for redesign to improve performance, and had
                                                         tween management and union prior to the 1980s
    gained the approval of the steering committee.
                                                         was relegated to parallel structures specifically
    Now they are beginning to carry out their coop-
                                                         enjoined not to address issues having to do with
    erative endeavors. One of the goals is to become
                                                         terms and conditions of employment, i.e., the
    a “Magnet” hospital, one deemed so by nurses
                                                         important stuff. IBB provided a means by which
    as a best place to work; this status both attracts
                                                         the parties could move the ethos of collaboration
    the best nurses and, therefore, attracts doctors
                                                         from the wings into the mainstream.
    and patients as well.
                                                         FMCS data earlier cited by Dr. Cutcher-Gershen-
    The management and SEIU at Allina Health-
                                                         feld demonstrates how significant that penetra-
    care, the largest health care delivery system in
                                                         tion has been, awareness and use of IBB tending
    Minnesota, have now worked jointly for a year
                                                         upward. That same data, however, also indicates
    on specific important performance-related
                                                         recurrent problems with IBB application and some
    challenges by means of a process that not only
                                                         recent slippage in terms of bargainer preference
    focused strongly on communicating their mes-
                                                         for this approach. While it is likely that this loss
    sage throughout the organization, but also
                                                         of ground may have been due in part to difficult
    trained all middle and lower-level managers and
                                                         economic conditions during the survey period, it
    stewards in alternative dispute resolutions pro-
                                                         is Gaffney’s opinion that the problem lies as well
    cesses and effective conflict resolutions skills,
                                                         within the IBB method itself—or at least within
    and jointly trained management and stewards
                                                         a version of IBB which borrows heavily from the
    regarding contract interpretation.
                                                         organizational development values and practices
    In these and other workplaces, he said, the core     of the mid-1980s—from which environment the
    business strategy is strategic and operational en-   early champions/trainers/consultants emerged.
8
IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




This version of IBB asks for behaviors, which          There was no attempt to generate a consensus
in Gaffney’s opinion, are unrealistic in many          view from summit participants, but ORC staff
bargaining settings (particularly those en-            came away with the following thoughts about
tailing low to only moderate levels of trust, a        union and management efforts to improve their
modicum of training, and no external facilita-         relationships.
tion), resulting in frequent disappointment.
                                                         1. The process should commence with an
Gaffney mentioned a number of unrealistic
                                                            in-depth joint review of what each party
components of this version of IBB which he
                                                            hopes to get out of the changed relation-
dubbed “fragile” (prohibition of positions,
                                                            ship and whether the hoped-for benefit
prohibition or discouragement of caucuses,
                                                            is worth the cost. In this respect, manage-
no or low tolerance of display of emotion, im-
                                                            ment and unions may need help in devel-
plicit assumption that a win/win solution can
                                                            oping a joint vision of the future. Are the
be achieved in every instance and consequent
                                                            visions of a desired future consistent? If the
lack of instruction on how to deal with distrib-
                                                            price of union participation is management
utive/monetary issues).
                                                            neutrality in organization drives and recog-
Gaffney recommended an alternative “robust”                 nition on the basis of an authorization card
version of IBB that was much more sober in these            check, rather than an election, is manage-
regards. The subsequent discussion among the                ment willing to agree to that?
summit participants focused primarily on one             2. The arrangement needs to function at
issue—whether or not the absence of positions               corporate, strategic business unit, and
was the sine qua non of IBB.                                workplace levels, to address strategic,
                                                            collective bargaining, and workplace is-
                                                            sues. Piecemeal approaches are not likely to
Going Forward and Some Concluding                           be successful; relations at one level are syn-
Thoughts                                                    ergistically influenced, for good or for bad,
                                                            by relations at other levels.
Conference speakers and attendees alike agreed
on a number of issues:                                   3. Issues need to be sorted out in terms of the
                                                            manner in which they are to be addressed:
  •	 Management	 and	 organized	 labor	 need	               management decides and informs the
     each other to keep their organizations com-            union, management seeks input from the
     petitive in today’s harsh business climate.            union and decides, decisions are shared
  •	 Mutual	 respect	 and	 a	 willingness	 to	 work	        in some manner, etc. Potential bumps in
     hard in understanding each party’s objec-              the road need to be anticipated and provided
     tives are essential.                                   for: management believes a decision must be
  •	 Transparency	and	information-sharing	are	              made too rapidly to allow for consultation
     the necessary foundations of mutual trust.             or bargaining, major outsourcing, facility
  •	 A	huge	hurdle	is	the	fear	of	change	in	tradi-          closure, shifts from interest-based to tradi-
     tional roles.                                          tional bargaining, etc.
  •	 Continuing,	 intensive	 communication	 is	          4. Planning for education, training, and
     essential in three domains:                            communication activity is needed. Train-
                                                            ing in interest-based bargaining may be re-
    – Within management, starting with the
                                                            quired. Union members and representatives
      full education of the CEO
                                                            often need better understanding of P&L
    – Within union membership                               statements, etc. Managers in functions oth-
    – Between management             and    union           er than HR often need to be sensitized as
      membership                                            to behavior that will lead to a union’s aban-
                                                            donment of a cooperative arrangement.               9
     IRConcepts                                                    A publication of Industrial Relations Counselors, Inc.




          Minimum standards of dialog frequency                         account in the management reward system.
          for each level should be set.                              6. The effort to improve relationships can-
       5. Each party needs to examine its own in-                       not be based on wishful thinking (in-
          ternal arrangements as they relate to the                     stantaneous transformation; the ups and
          relationship. The union will have to find                     downs of relationships can be ironed out;
          ways to prevent an opposing faction from us-                  fostering relationships can eliminate win-
          ing successful labor-management collabora-                    lose issues). Nevertheless, the search for
          tion as coziness warranting regime change.                    common ground and improved relation-
          Management should consider whether and                        ships can be fruitful.
          how to take relationship performance into




     About IRC and ORC Worldwide:
     In the wake of the Ludlow Massacre in the Colorado            and European experience with unemployment insur-
     minefields of 1917, John D. Rockefeller, Jr., created an      ance in the establishment of the federal social securi-
     organization to foster improved employer/employee             ty system and the design of unemployment insurance
     relations—Industrial Relations Counselors, Inc. (IRC).        in the United States. IRC was also deeply involved in
     Incorporated in 1926, it was the first research organi-       advancing the interests of progressive employers in
     zation in its field.                                          the formation of national labor policy.

     IRC advocated the establishment of employee repre-            Between 1927 and 1932 IRC was the official represen-
     sentation plans, which involved employee-elected rep-         tative of American business to the International La-
     resentatives and regular meetings with management to          bour Office in Geneva, and conducted research there
     discuss matters of mutual interest. The idea was greeted      on employment issues in several European countries.
     with less than enthusiasm by many of Rockefeller’s fel-       IRC research has also dealt with all aspects of collec-
     low industrialists, but it led to his conviction that there   tive bargaining policy, remedies in emergency dis-
     could be a “unity of interest” between labor and man-         putes, executive retirement, and job evaluation. For
     agement—it was not always necessary for one party to          many years IRC’s own management development and
     lose in order for the other to win; win-win arrangements      education courses broadened the expertise of human
     and agreements were possible.                                 resources professionals and increased line managers’
                                                                   understanding of employee relations issues. Periodic
     IRC continues to be dedicated to its original objective:
                                                                   IRC symposia bring together business leaders and
     “To advance the knowledge and practice of human
                                                                   academic researchers to review HR topics of mutual
     relationships in industry, commerce, education, and
                                                                   importance.
     government.” IRC’s work has been guided over these
     80-plus years by a board of trustees comprising distin-       After several decades, IRC spun off its for-profit com-
     guished leaders of American industry.                         pany that is today known as ORC Worldwide. Since
                                                                   1953, ORC has served to assist clients, primarily For-
     IRC became an exemplar of the progressive manage-
                                                                   tune 500 firms, with specialized knowledge and advice
     ment view that labor and management, while adver-
                                                                   about human resources management.
     saries, had common interests and that it was the task
     of the industrial relations function to seek ways to          For further information about IRC and ORC’s activi-
     establish this unity of interests. From its inception,        ties in the labor and employee relations field, please
     IRC has conducted innovative research and pro-                contact Thomas Connors, Senior Vice President, ORC
     duced publications that have broken new ground in             Worldwide at 212-719-3400.
     the employee relations field. In the 1930s, legislators
     drew on IRC expertise concerning pension systems              www.ircounselors.org
10
IRConcepts                                              A publication of Industrial Relations Counselors, Inc.




Agenda
Welcome                                                 A New Private Equity Path
Hal Burlingame, Director, Industrial Relations          Steve Sleigh, Principal, The Yucaipa Companies LLC,
Counselors, Inc.                                        former Director of Strategies Resources, Internation-
Fiona Webster, Director, International and Social       al Association of Machinists and Aerospace Workers
Labor Affairs, ORC Worldwide

                                                        Intra-Organizational Bargaining:
The Challenge for the Institution of                    Insider and Outsider Perspectives
Collective Bargaining
                                                        William P. Hobgood, Arbitrator, Mediator and
Joel Cutcher-Gershenfeld, Dean and Professor,           former Vice President, United Airlines
University of Illinois Industrial and Labor Relations
Center
                                                        A Union Perspective
                                                        Thomas R. Donahue, former President and Secre-
Successful Intervention in the
                                                        tary/Treasurer, AFL-CIO
Workplace
Michael Maccoby, Anthropologist, Psychoanalyst
                                                        The Kaiser Permanente Experience
and Consultant on Leadership, Strategy and Organi-
zational Behavior                                       Thomas J. Schneider, President, CEO and Founder,
                                                        Restructuring Associates Inc. and
                                                        Peter diCicco, former Executive Director of the
The Workplace of the Future                             Coalition of Kaiser Permanente Unions
Hal Burlingame, non-Executive Chairman, ORC
Worldwide and retired Executive Vice President,
                                                        Group Discussion of Thoughts and
Human Resources, AT&T Inc.
                                                        Experiences Addressed So Far
                                                        Rory Mullett, ORC Worldwide
The Harley-Davidson Motor
Company Experience and Relationship
Transformation Situations                               Getting to Real: Second-Generation
                                                        Interest-Based Bargaining
Stephen Weidman, Director, Corporate Labor Rela-
tions and Human Resources, The Harley-Davidson          Michael E. Gaffney, Mediator, Facilitator, Educa-
Motor Company                                           tor and Consultant, Restructuring Associates,
                                                        formerly Cornell University School of Industrial
                                                        and Labor Relations




                                                                                                                 11
     IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




     Descriptive Bibliography
     Appelbaum, Eileen (Rutgers) & Hunter, Larry            some form of “partnership,” but fewer than 3
     W. (Wisconsin-Madison), Union Participation in         percent of them were strategic.
     Strategic Decisions of Corporations, NBER Working      Arrangements negotiated by the IBEW, CWA
     Paper 9000 (March 2003),                               & IBW, USWA, and IAMAM are discussed. The
     http://www.nber.org/papers/w9590                       CWA/IBEW/AT&T Workforce of the Future is
                                                            discussed in greater detail in Agents of Change by
     This paper looks at the subject primarily from         Heckscher et al., digested below. The USWA and
     a union point of view. Its table, “Choices Facing      IAMAM arrangements follow here.
     Union Leaders in the Design of Institutions for        In 1992 the USWA adopted a “New Directions”
     Strategic Partnership” (on the following page) is      bargaining program, seeking “an ongoing voice”
     particularly valuable.                                 in decisions affecting the shop-floor, plant, and
     Strategic partnerships are unlikely to evolve from     corporate performance. Its main provisions in-
     other partnerships or employee involvement pro-        cluded no layoffs, involvement in workplace and
     grams, and they raise dilemmas for unions. At the      corporate decisions, restructuring to increase
     local level, unionists have to reinterpret and rede-   flexibility, improving productivity and reducing
     fine their roles and convince the membership of        costs, neutrality, and card check. These provi-
     the values associated with cooperation. Involve-       sions were negotiated with the major integrated
     ment at more strategic levels is more problematic.     companies in the 1993-94 round and renegotiat-
     Responsibility without corresponding authority         ed in 1999. Contracts with other steel companies
     is unattractive. Will management share enough to       “contained many of the substantive features.”
     make the arrangement influential? Will manage-         The authors report variations in implementation
     ment take action inconsistent with the arrange-        from company to company but an overall posi-
     ment under pressure?                                   tive effect despite union and management skep-
                                                            ticism as to whether the arrangement can live up
     The primary incentive for union involvement
                                                            to expectations with respect to union participa-
     is the viability of the firm, but the arrangement
                                                            tion in top-level strategic decisions.
     is unlikely to be able to address the turbulence
     outside the firm that seems to be endemic to the       The IAMAM has High Performance Work Or-
     current economy. To gain worker support, the           ganization (HPWO) Partnerships at about 50
     arrangement must provide not only employment           facilities (out of several thousand), including
     security but union institutional security. Man-        Harley Davidson. The IAMAM is looking for:
     agement neutrality with respect to organizing          [1] a business plan incorporating long-term re-
     and outsourcing prohibition may be required.           turns, market expansion, and workforce growth,
     History does not appear to support the notion          [2] accurate accounting of all activities support-
     that innovative union-management arrange-              ing the firms products/services, and [3] changes
     ments have provided greater security.                  in process to improve quality and productivity.
                                                            Extensive education, training, and planning are
     Organizing the arrangement in terms of link-
                                                            involved; several years of relationship explora-
     ages with union structure and including all rel-
                                                            tion may precede an agreement. Beyond growth
     evant parties can be difficult. An international’s
                                                            and joint decision-making, the IAMAM seeks
     responsibilities with respect to a particular firm
                                                            employment security and an education and com-
     and the industry may be conflictual.
                                                            munication plan for all employees.
     A study of CBAs expiring between 9/1/97 and
                                                            The paper also includes a fairly extensive section
     9/30/07 found that about 47 percent contained
                                                            on union membership on boards of directors.
12
IRConcepts                                               A publication of Industrial Relations Counselors, Inc.




Choices Facing Union Leaders in the Design of Institutions for Strategic Partnership
Type of Choice             International               International or             Local Union
                           Union                       Local Union
Establishment of partner- Does the international       Does the union bargain       Should workers buy stock
ship                      union advocate part-         for partnership struc-       in their own company?
                          nerships as a matter of      tures?                       Should partnerships
                          policy?                      If management is reluc-      accompany concession
                          Does the union support       tant to agree, how much      bargaining?
                          board seats?                 is partnership worth?        What role should employ-
                          Does the union support       How should future or-        ment security guarantees
                          negotiated strategic part-   ganizing campaigns and       play in the partnership
                          nerships?                    acquisition of nonunion      agreement?
                          What policy should the       operations be handled?
                          union demand of the
                          company with respect to
                          subsequent organizing
                          campaigns?




Identity of union repre-   Should active interna-      What criteria will be used   Who will the representa-
sentatives in strategic    tional union leaders be     to select representatives?   tives be?
level decisions            permitted to involve
                           themselves in governance
                           decisions of individual
                           companies?

Continuing support for     Will the international      Will the union attempt       Will structures be estab-
representatives            union provide training      to coordinate with or        lished for communication
                           and technical support for   instruct the representa-     between representatives,
                           the representatives?        tives?                       local union leaders, and
                                                                                    local members?



Beaumont, Phillip B. & Hunter, Laurence C, both          nition of legitimate interests, [3] commitment to
with the University of Glasgow, “Collective Bar-         employment security, [4] focus on the quality of
gaining and Human Resource Management in                 working life, and [5] adding value.
Britain: Can Partnership Square the Circle?” in
                                                         The authors say that the profile of the sort of or-
Kochan & Lipsky, Negotiations and Change: From the
                                                         ganization to successfully adopt the partnership
Workplace to Society (Cornell 2003), p. 161
                                                         approach is one that:

Much of this article seems to have little relevance         1. Is under competitive/performance pres-
to the U.S. labor-management situation, but a                  sure
couple of aspects are worth noting.                         2. Sees HRM practices as a major way to re-
                                                               spond to pressure
The Trades Union Congress has created a TUC
Partnership Institute, which has defined partner-           3. Is relatively highly unionized
ship in terms of six principles: [1] shared commit-         4. Has unions not historically hostile to the
ment to the success of the enterprise, [2] recog-              HRM
                                                                                                                  13
     IRConcepts                                                A publication of Industrial Relations Counselors, Inc.




        5. Has an existing relationship that needs             reversion to traditional bargaining okay. There
           fixing but isn’t hopeless                           are three phases: [1] option generation á la IBB
        6. Has a management that sees the distinc-             but without the necessity of agreeing to stan-
           tion between negotiating and employee-              dards or criteria for evaluation; [2] sharing inter-
           management relationships and is willing             ests and proposal exchange on non-economic is-
           to invest in both                                   sues, followed by traditional bargaining thereon;
        7. Has a management that understands                   [3] an interest approach to economic matters,
           that unions can’t sell change if they               followed by traditional bargaining on all remain-
           haven’t been involved in the design of the          ing issues. Unlike IBB, there is no requirement to
           change                                              completely share information or for consensus,
                                                               but it does encourage information sharing.
        8. Has an international, as well as a local,
           that is welcome in the design process               The article provides greater detail on IBB and
        9. Addresses issues of concern to the repre-           its predecessor “PAST” approach. The essential
           sented early                                        message with respect to IBB is akin to “no pain,
        10. Needs early success                                no gain,” it offers substantial benefits provided
                                                               the parties are willing to live with its disciplined
     See Appendix A for a 6/22/04 speech by Ron Bloom,
                                                               approach and invest the time it requires.
     Special Assistant to President, USWA, to a manage-
     ment group setting forth what the Steelworkers look for   The basic idea is that there is no one approach
     in a relationship with management.                        that is better for all parties and situations (one
                                                               size doesn’t fit all). Hence FMCS offers four mod-
                                                               els ranging from traditional bargaining to IBB
     Brommer, Buckingham, Loeffler (FMCS Com-                  with a couple of choices in between.
     missioners and Deputy Director), Coopera-
     tive Bargaining Styles at FMCS: A movement
                                                               Cooke, William N., Labor-Management Coopera-
     toward     choices”,    http://www.fmcs.gov/
                                                               tion: New Partnerships or Going in Circles? (Upjohn
     internet/assets/f iles/Articles/Pepperdine/
                                                               Institute for Employment Research 1990)
     CBStylesatFMCS.pdf

                                                               This book addresses the literature; presents
     This article compares and contrasts:
                                                               original survey findings that reflect different
       •	 traditional	bargaining                               perceptions of local union leaders, national/in-
       •	 enhanced	cooperative	negotiation	(ECN)               ternational union officers, plant management,
       •	 modified	traditional	bargaining	(MTB)                and corporate management; provides a statisti-
                                                               cal assessment of the survey results; and presents
       •	 interest-based	bargaining	(IBB)
                                                               the observations of an individual who knows
     As indicated by the ordering above, ECN is clos-
                                                               his subject matter. The findings seem somewhat
     er to traditional bargaining than MTB, which is
                                                               overwhelmed by the methodology. In addition,
     closer to IBB than ECN.
                                                               Cooke sees management as having to choose
     ECN entails [1] mediator-facilitated issue prepa-         among union-avoidance, cooperation, or a mix
     ration and exchange, [2] proposal preparation             of the two strategies and doesn’t focus enough
     and exchange, and [3] traditional bargaining.             on the balance between traditional/distributive
     It requires less training of the participants than        bargaining and cooperation. Management could
     MTB or IBB.                                               choose to deemphasize cooperation and empha-
                                                               size hard-nosed traditional bargaining in the be-
     MTB requires more training than ECN but less
                                                               lief that this is the way to a better deal rather than
     than IBB. It entails more focus on interests than
                                                               because cooperation is inconsistent with union
     traditional bargaining. In effect the process
                                                               avoidance. In summary, following is a distillation
     starts the parties on an interests path but makes
14
IRConcepts                                            A publication of Industrial Relations Counselors, Inc.




of some key points. (For all of the listed benefits   Potential costs to employees include:
and costs, Cooke cites relevant literature.)
                                                         1. working harder, not necessarily smarter
Potential benefits of cooperation to manage-             2. displacement or loss of employment from
ment include:                                               increased productivity
   1. increased productivity and efficiency              3. unwanted peer pressure to be involved or
   2. improved quality                                      not involved
   3. improved customer relations and service         Potential benefits to union leaders include:
   4. reduced waste and rework                           1. credit from members for improvements
   5. reduced overhead, materials, and mate-             2. more influence in management decisions
      rial handling costs                                3. improved communication with manage-
   6. enhanced supplier service                             ment
   7. improved communications                            4. reduced day-to-day contract administra-
   8. improved relations between supervisors                tion problems
      & employees                                        5. greater member involvement in union af-
   9. reduced grievances and disciplinary action            fairs
   10. stronger identity and commitment to            Potential costs to union leaders include:
       company goals                                     1. perceived cooptation by management
   11. reduced absenteeism, tardiness, and               2. undermining of traditional roles of
       turnover                                             unions and collective bargaining
   12. increased organizational flexibility and          3. heightened political conflict over leader-
       adaptability                                         ship role
Potential costs to management include:                   4. increased uncertainty of reelection
   1. added costs to reorient and train manag-           5. loss of member commitment and union
      ers, employees, and union representatives             influence
   2. perceived loss of authority and status          Trust and commitment to cooperation are criti-
   3. displacement or loss of employment for          cal and interrelated. Neither is easy to develop.
      middle managers and supervisors                 Disenchantment and demoralization readily fol-
   4. wasted time spent in meetings                   low when hoped-for gains are not achieved. Bal-
                                                      ancing cooperation and traditional bargaining
   (5. Cooke does not list slower response time
                                                      is difficult. Many of the benefits of cooperation
       resulting from need to consult)
                                                      are hard to measure, as are some of the costs of
Potential benefits to employees include:
                                                      traditional bargaining (e.g., morale, distrust, in-
   1. intrinsic rewards from participation/in-        security).
      volvement
                                                      Factors consistent with perceived successful
   2. more say in how work gets done                  cooperation (These statements may be seen to
   3. improved working conditions                     oversimplify Cooke’s heavy data.):
   4. more money from gainsharing and other             •	 high	union	leader	participation
      incentives
                                                        •	 frequent	team	meetings
   5. improved supervisor-employee relations
                                                        •	 committee-based	programs
   6. quicker resolution of problems; reduced
      need to grieve                                  Factors consistent with perceived lack of success:
   7. hightened dignity, self-esteem, and pride
                                                        •	 continued	employment	loss
      in work
                                                        •	 subcontracting                                      15
     IRConcepts                                               A publication of Industrial Relations Counselors, Inc.




       •	 low	union	leader	participation                         3. Fewer than 10 percent of relationships
       •	 infrequent	team	meetings                                  report that transformative efforts have
     To make cooperation work:                                      resulted in cooperative and improving re-
                                                                    lations.
       •	 build	in	a	problem-solving	mechanism	such	
                                                              Two possible implications are derived. One is
          as fact finding, mediation, or arbitration
                                                              that there is no need to transform traditional
       •	 attempt	to	reach,	up	front,	a	consensus	of	         bargaining and adversarial relationships. The
          standards of behavior in relation to trust          other, favored by the authors, is that the context
          and commitment                                      in which the relationships exist and the bargain-
       •	 agree	 that	 when	 either	 party	 perceives	 the	   ing takes place is changing and there is a corre-
          other isn’t meeting trust/commitment                sponding need for the institution of collective
          standards, it will be immediately brought           bargaining to change or innovation will be mini-
          to the other party’s attention                      mal and decline will be steady and long-term.
       •	 identify	where	and	how	much	union	input	
                                                              A selection of the salient observations follows:
          to company decisions is expected
       •	 agree	as	to	how	union	input	contributes	to	           •	 Many	 of	 the	 more	 highly	 visible	 experi-
          cooperative gains                                        ments have not been sustained.

       •	 agree	as	to	the	union’s	share	in	terms	of	in-         •	 Pressure	 from	 domestic	 and	 international	
          come and security from the gains of coop-                competition increases the likelihood of
          eration                                                  new, transformative contract language.
                                                                •	 Forcing	 does	 not	 necessarily	 reduce	 the	
                                                                   likelihood of new, transformative contract
     Cutcher-Gershenfeld, Joel (with MIT at time
                                                                   language, but fostering is needed.
     of article, now with University of Illinois,
     Urbana-Champaign, Institute of Labor & Indus-              •	 Positive	 action	 at	 one	 level	 increases	 the	
     trial Relations) and Kochan, Thomas (MIT),                    likelihood of positive action at other lev-
     “Taking Stock: Collective Bargaining at the                   els, but positive action at all three levels is
     Turn of the Century,” 58 Industrial and Labor                 needed.
     Relations Review No. 1, 3 (October 2004)                   •	 Management	and	union	representatives	re-
                                                                   port the same phenomena differently.
     This article examines two sets of FMCS data and            •	 Management	 representatives	 were	 higher	
     draws three broad conclusions:                                on IBB than union representatives in 1996
                                                                   and 1999, but both were a little less positive
       1. The transformation of labor-management
                                                                   on IBB in 1999 than 1996.
          relations depends on aligning efforts at
          three levels (workplace, collective bargain-
          ing, and strategic)
                                                              Cutcher-Gershenfeld, Joel (with MIT at time
       2. The aligning factors are readily identifi-
                                                              of article, now with University of Illinois,
          able:
                                                              Urbana-Champaign, Institute of Labor & In-
         a. workplace practices supporting worker
                                                              dustrial Relations), “A Five-Phase Model for
            use of skills and knowledge
                                                              Examining Interest-Based Bargaining” in Kochan
         b. negotiation processes encouraging prob-           & Lipsky, Negotiations and Change: From the Work-
            lem-solving and producing contract                place to Society (Cornell 2003), p. 141
            terms that support ongoing innovation
            during the contract term                          Simultaneous interest-based bargaining (IBB)
                                                              and demonstrating vigorous representation to
         c. joint strategic level interactions support-
                                                              constituents is complicated. Traditional bargain-
            ing ongoing innovation
16                                                            ing is more consistent with the latter and can
IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




prevent the other party from trumping your inter-      initial positions, and exploring in IBB may well
est-based approach with a power move. But tradi-       have increased the number of issues contemplat-
tional bargaining doesn’t easily address a number      ed at the time of opening. There needs to be joint
of issues (e.g., quality, work and family, strategic   recognition that it’s time to narrow. The process
investment). FMCS data indicates the use of IBB        entails identifying connections between issues,
is growing, as is the preference for IBB over tradi-   “what if” exchanges, agreeing to criteria to evalu-
tional bargaining, but the latter is not growing as    ate options, etc. It’s tough—the forcing/fostering
fast as the former, and management is more favor-      balance is very much in play, at least some trust
ably inclined to IBB than unions are.                  is needed, maybe the other party was only talking
                                                       IBB as a façade.
The five phases follow. Success in one phase de-
pends on the results in the prior phase and sub-       Agreeing isn’t just the falling of the final dom-
stantive results are dependent on success with         ino. The effort to come up with the words may
the process.                                           reveal there wasn’t a meeting of minds. Even if
                                                       there was, finding the right words isn’t always
  1. prepare
                                                       easy. Moreover, the constituents have to buy in,
  2. open
                                                       and they may have reservations to the effect that
  3. explore                                           the IBB process is too cozy.
  4. focus (package development)
                                                       The parties’ relationship and bargaining process
  5. agree
                                                       is not immune to external economic, political,
Preparation entails morphing positions into            and social winds.
interests, which entails intra-organizational bar-
gaining. First, constituents have to accept the use
of a nontraditional approach; second, they have        Heckscher (Rutgers), Maccoby (independent
to be willing to evaluate the outcome in win-win,      consultant & author), Ramirez (HEC [a French
rather than win-lose, terms, giving some weight        business school]), & Tixier (Institut d’Etudes
to the relationship.                                   Politiques de Paris), Agents of Change: Crossing the
Opening in IBB avoids the traditional overstated       Post-Industrial Divide (Oxford 2003)
positions. It can strongly influence the balance
between the issues to be forced (traditional,          This is a book about reconstructing systems of
distributive bargaining) and those for which           relationships, focusing on labor-management
fostering the relationship is a significant consid-    relations. The authors’ experiences with four in-
eration, as well as overall forcing/fostering atti-    terventions provide points of departure:
tudes with respect to the negotiations.                  •	 Maccoby’s	work	at	AT&T,	including	work-
Exploring is the effort to visualize a potential            place restructuring and worker participa-
deal and where the land mines are. In traditional           tion and involving unions in operational
bargaining, it is usually done off stage by the             planning
chief negotiators; in IBB, it’s open brainstorm-         •	 Ramirez’	 involvement	 with	 redefining	 the	
ing with whole bargaining committees. The                   strategic direction of the Italian State Rail-
openness helps produce win-win solutions but                road
can be problematic in terms of constituent ex-           •	 Heckscher’s	 efforts	 to	 facilitate	 strategic	
pectations. The tension between forcing and fos-            dialog between unions and management at
tering can hamper exploration.                              Lucent Technologies
Focusing is trying to gel the vision of a potential      •	 Tixier’s	 efforts	 to	 help	 the	 French	 electric	
deal. It’s less significant in traditional bargain-         monopoly and its unions deal with the
ing because the perimeters there are defined by             pressures of opening markets
                                                                                                                  17
     IRConcepts                                              A publication of Industrial Relations Counselors, Inc.




     There are lessons here for unions and manage-           CWA withdrew from the Workplace of the Fu-
     ment and for neutrals trying to assist the par-         ture program.
     ties. Although the authors would likely contend
                                                             There were benefits from participatory efforts in
     (and may well be right) that the parties cannot
                                                             the workplace, and managers and union repre-
     be successful without non-party intervention, I
                                                             sentatives gained insights as to their behaviors
     have tried to collapse the lessons into what the
                                                             and relationships from the operational-level dia-
     parties need to do. And, although the book de-
                                                             logs, but there were gaps and challenges:
     rives lessons from all four interventions, only the
     AT&T and Lucent cases will be discussed in any            •	 Less	than	a	third	of	the	workforce	was	in-
     detail here. Finally, the authors are pessimistic as         volved.
     to whether the parties and/or interveners have            •	 Athough	some	management	bonuses	were	
     the knowledge and/or ability to do what needs                related to WPoF participation, measures
     to be done.                                                  and rewards for managers weren’t fully
                                                                  aligned with the program.
     Organizations have stakeholders, and there is
     a need for some form of organized stakeholder             •	 The	strategic-level	board	did	not	meet	reg-
     relations to maximize mutual gains. It’s not                 ularly, and the union did not participate
     just about labor-management relations. It also               in decision making at that level.
     involves relations between top and middle man-               CWA attempts to organize newly acquired
     agement, national and local unions, companies                units were resisted, causing distrust.
     and customers, environmentalists, etc. But in la-         •	 The	 relationship	 between	 corporate	 labor	
     bor-management relations there are fundamen-                 relations and line management in the new
     tal obstacles:                                               union-free units became strained.
                                                               •	 Other	 key	 management	 supporters	 of	 col-
       •	 management	 visualizing	 leadership	 in	 a	
                                                                  laboration left.
          non-bureaucratic way
       •	 union	visualizing	member	job	involvement	          Had AT&T’s new management bought into the
          without weakening the ability to fight when        WPoF vision, the results it was producing and
          necessary                                          the momentum it was gaining would likely have
       •	 union	 acceptance	 of	 responsibility	 for	 the	   changed the story.
          effectiveness of the company
                                                             Zooming in on Lucent
       •	 management	taking	responsibility	for	max-
          imizing employment security                        Lucent carried WPoF from AT&T, but the cli-
       •	 an	 environment	 requiring	 radically	 more	       mate for collaboration was more difficult—ex-
          speed and flexibility than in the past             treme industry turbulence, fundamental man-
                                                             agement strategy shifts, and major divestitures
     Successful collaboration requires cooperation at        and layoffs.
     three levels: strategic (institutional/corporate),
                                                             In this context, management did not regard
     operational (divisional/SBU), and doing (work-
                                                             WPoF as very important. Assurances that union
     place).
                                                             membership would remain relatively constant
     Zooming in on AT&T: “Cooperation is                     did not prove to be true. Management’s view was
     not enough.”                                            that while business growth was a shared respon-
                                                             sibility, membership was a union concern.
     The unions were never significantly involved at
     the strategic level. After intensified competitive      There was a process for involving unions in dives-
     pressure, the acquisition of non-union compa-           titures. The company paid for two financial advi-
     nies, and management turnover leading to less           sors picked by and responsible to the union. The
     neutrality and support for collaboration, the           unions input to bid specifications. The advisors
18
IRConcepts                                            A publication of Industrial Relations Counselors, Inc.




looked at the bids and reported to the union.         security could be worth consideration. The em-
The union could meet with potential buyers and        ployer would invest in employees’ marketability,
could tell the company their preferences. Finally,    either internally or elsewhere.
the union negotiated a CBA with the buyers and
                                                      For the most part, the parties were not able to re-
severance with Lucent while the buyer and Lu-
                                                      construct their relationships, but they did learn
cent negotiated on sales terms.
                                                      to cooperate and solve problems more effectively
Management fragmentation, lack of HR/LR               within the framework of the processes they were
clout, and lack of middle management experi-          trying to change. Management did not buy into
ence with a dialogic role hampered dialog, as did     the notion that the union could actually add val-
union identity as combating management, lack          ue and certainly did not want to see the union as
of resources and skills to engage in business dia-    a more powerful force within the firm.
log, internal politics, fragmentation between the
                                                      Interparty similarity is discoverable. Setting
national and locals, and a history of being reac-
                                                      aside management wishful thinking that the
tive rather than proactive. In addition to the dif-
                                                      union will go away, interdependency is also dis-
ficulty of changing interparty relations, each par-
                                                      coverable.
ty had difficulty changing intraparty relations.
                                                      CBAs work by stabilizing relations for a period
Zooming out                                           of time, but this is inconsistent with the need for
Three basics:                                         flexibility and rapid adjustment required by the
                                                      business environment.
  1. There are no off-the-shelf solutions; the
     parties have to tailor the approach to fit       The old industrial relations system is no longer
     their situation.                                 viable. Obstacles to stable and trusting labor-
                                                      management relationships include:
  2. Rational self-interest is not the whole nine
     yards; the history of the relationship may,        •	 opening	of	markets
     and often does, lead to “irrational” behavior.     •	 weakening/delegitimation	 of	 unions	 and	
  3. The approach has to be systemic—looking               government regulations
     at inter-, intra-, and extra- party relation-      •	 corporate	 focus	 on	 knowledge	 and	 service	
     ships, including environmental influences.            value-added

The parties also need to have dialog on how             •	 a	big	increase	in	reorganizations	and	strate-
they want to have dialog. But, dialog alone                gic re-focusings
isn’t enough. Patterns of behavior that were            •	 more	empowerment	of	frontline	knowledge	
appropriate at one time can persist after the              workers
situation has changed. Each party needs to re-          •	 co-productive	 arrangement	 blurring	 for-
flect on its self-image in relation to the other           merly clear organizational boundaries
party as well as on its image of the other. Then,
it may be possible to change the situation            Corporate strategy needs implementation, and
through trial and error, not in one fell swoop        implementation requires the involvement of
but one bite at a time.                               stakeholders, and stakeholders contribute value.
                                                      The need for effective collaboration within a firm
A common understanding of the past and not            is as great as that between firms. The old loyalty
incongruent visions of the future are necessary       for security tradeoff is no longer an adequate lu-
to be able to work together in the present.           bricant for collaboration. The shift in emphasis
A vision of joining forces to overcome a threat to    from traditional to interest-based bargaining
the survival of both parties hasn’t proved to be      helps but is alone not sufficient. Although there
enough. A future involving, among other aspects       is no clear light at the end of the tunnel, the need
of the picture, a shift from job to employment        to keep striving for it is clear.
                                                                                                               19
     IRConcepts                                              A publication of Industrial Relations Counselors, Inc.




     McKersie (MIT), Eaton (Harvard, Kennedy                     are even marginally affected, consultation
     School), & Kochan (MIT), Interest-based Nego-               should precede a decision.
     tiations at Kaiser Permanente, MIT Sloan School           •	 If	one	party	has	little,	if	any,	interest	in	the	
     Working Paper 05-4312-03 and IWER Working                    outcome and no particular expertise on an
     Paper 05-2003, downloadable without charge                   issue to be decided, informing is adequate.
     from http://ssrm.com/abstract=413101                      •	 In	 the	 absence	 of	 consensus,	 mandatory	
                                                                  bargaining subjects will be resolved in ac-
     This paper deals with the negotiations involving             cordance with contractual and legal rights.
     the establishment of the “partnership” between               On non-mandatory and non-contractual
     Kaiser and the coalition of unions with which it             subjects, management has the sole respon-
     bargains. The analysis concludes with the 2001               sibility and right.
     contract. Twenty-six locals representing 70,000
     employees and a variety of bargaining unit types        The objectives of the Partnership are: [1] improv-
     were involved. There is considerable focus on do-       ing the quality of health care, [2] expanding KP
     ing national and local bargaining “at once.” Al-        membership and market share, [3] improving
     though not explicitly stated, the article’s bottom      performance, [4] securing employment security,
     line seems to be that interest-based negotiation        [5] making KP a better place to work, and [6] in-
     (IBN) defines the relationship and roles.               volving employees and union leaders in decision
                                                             making.
     The parties bargained again in 2005 (after the ar-
     ticle was written). Information on 2005 from the        There seem to be three levels of union-manage-
     union coalition may be found at www.bargain-            ment organization:
     ing2005.org and www.impartnership.org.
                                                               1. A national “strategy group” co-chaired by
     The toughest issues were union security, em-                 KP’s VP for Workforce Development (prob-
     ployment security, and the scope of shared de-               ably the most senior HR official) and the Di-
     cision making. Union security was resolved by                rector of the union coalition, supported by
     agreement on management neutrality and card                  a staff unit, and including about 50 union
     check. Employment security was resolved by                   and management leaders who meet several
     agreement on a goal of providing “maximum                    times a year, plus a third-party consultant
     possible employment and income security                      jointly selected by the parties.
     within Kaiser Permanente and/or the health                2. Regional union-management teams
     care field.” The meaning of this language was             3. Service area (business unit?)/facility union-
     subsequently clarified.                                      management teams
     The agreement on the scope of shared decision
                                                             The national level unit reports to a senior man-
     making included strategic initiatives, quality,
                                                             agement group and the coalition’s governing
     member and employee satisfaction, business
                                                             unit. Interestingly, the management group con-
     planning, and business unit employment issues.
                                                             sists of two groups representing different com-
     Specifically:
                                                             ponents of KP’s business. The authors look at
       •	 Decision	making	is	to	be	governed	by	two	          this and the union coalition as partnerships, in
          criteria: [1] the degree to which the parties’     addition to that between the company and the
          constituents or institutional interests are        coalition.
          likely to be affected, and [2] the level of ex-
                                                             After the Partnership Agreement was signed, the
          pertise or added value the parties can bring
                                                             parties decided to separate Partnership activities
          to bear.
                                                             from collective bargaining, but subsequently ad-
       •	 If	either	party’s	vital	interests	are	likely	to	
                                                             opted an approach involving a single integrated
          be affected, consensus should be used.
                                                             national negotiation, allowing retention of local
20     •	 If	 constituent	 or	 institutional	 interests	
IRConcepts                                                A publication of Industrial Relations Counselors, Inc.




agreement expirations, and a series of decentral-           •	 up-front	understanding	of	the	subject	mat-
ized task forces focusing on particular issues.                ter being addressed by each decentralized
                                                               task force, and sharing their results with
Eight internationals with 25 locals were involved.
                                                               each other
Almost 400 union and management people and
20+ neutral facilitators were involved. There were          •	 keeping	late	night	sessions	to	a	minimum
bargaining task groups on [1] wages, [2] benefits,
[3] work/life balance, [4] performance and work-
force development, [5] quality and service, [6]           Rubinstein, Saul & Heckscher, Charles, both with
employee health and safety, and [7] work organi-          Rutgers University, “Partnerships and Flexible Net-
zation and innovation. These groups reported to           works: Alternatives or Complementary Modes of
a centralized Common Issues Committee.                    Labor-Management Relations?” in Kochan & Lip-
                                                          sky, Negotiations and Change: From the Workplace to
In the end, there was a reversion to quasi-tra-
                                                          Society (Cornell 2003), p. 189
ditional bargaining in a nine-hour marathon
session.
                                                          The partnership model is defined to mean one in
Features of the contract included:
                                                          which workplace relations are modified to sup-
  •	 card	check	at	new	locations                          port employee value-added participation in prob-
  •	 a	 trust	 fund	 to	 diffuse	 the	 Partnership	       lem solving and decision making and to involve
     (including training), funded in part by 6-           union leaders in high-level business strategy.
     cents/hour employee contributions
  •	 joint	determination	of	staffing                      Partnerships have experienced problems where
                                                          technologies and markets are changing so fast
  •	 flexibility	subject	to	seniority	and	union	ju-
                                                          that flexibility becomes management’s dominant
     risdiction
                                                          goal. Unions’ need for voice and employment se-
  •	 open	communication
                                                          curity do not resonate in harmony with keeping
  •	 non-punitive	corrective	action	procedures            the firm’s boundaries flexible.
The parties believe the contract facilitated im-
                                                          Lessons from the Saturn experience (before it
proved patient care, delived in a more participa-
                                                          came unglued) included:
tory, cost-effective manner. The first-year cost of
growing the Partnership (training and Partner-              1. The perception that union involvement in
ship staff) was estimated to be $12 million, about             running a business is a legitimate role, con-
half coming from employee contributions.                       sistent with trying to ensure the long-term
                                                               job security of its members
Success factors include:
                                                            2. Joint development of risk and reward for-
  •	 educating	bargainers	and	ratifiers	in	IBN                 mulas
  •	 enabling	 each	 side	 to	 withdraw	 and	 bar-          3. Co-management requiring a new set of
     gain toward the expiration dates of existing              skills for union leaders (all members re-
     agreements                                                quired a minimum of 92 hours of training)
  •	 when	 parties	 find	 it	 difficult	 to	 agree	 on	     4. Strong support for the model required
     general standards or criteria for settlement,             from corporate and the international
     focusing on agenda items that must be re-
                                                            5. The local needing to be able to both do the
     solved in order to reach agreement
                                                               partnership stuff and vigorously represent
  •	 accessing	reliable	data                                   individuals
  •	 consistently	communicating	the	final	deal	           Employment security implies training of exist-
     to avoid multiple interpretations                    ing employees when new skills are needed and
  •	 tracking	what’s	going	on	at	all	levels               can also be inconsistent with efforts to focus on        21
     IRConcepts                                           A publication of Industrial Relations Counselors, Inc.




     core competencies and get other companies to         go away and never come back. And so we are
     do complementary non-core work.                      skeptical, to put it mildly, when people tell us
                                                          how much they like us.
     There may be more opportunity for partner-
     ship with respect to higher value-added work         And while Steelworker representation is in fact
     than lower. As to low value-added work, man-         good for a company and most assuredly critical
     agement’s interest in stringent cost control is at   for the survival of the industry, for now, I will not
     variance with the union’s basic interests. As to     bother trying to convince you of that.
     high value-added work, employees need more
                                                          I will save my thoughts on the virtues of Steel-
     business understanding, and their security can
                                                          worker representation for the after-dinner speech,
     be enhanced by enhanced mobility. Hence, em-
                                                          when you have had something to drink—actually
     ployers, unions, and government have an inter-
                                                          a lot to drink—and after I have offered definitive
     est in investments/alliances that will enable em-
                                                          proof of the existence of the tooth fairy and per-
     ployees to add to their value and organizations
                                                          suaded you to register democratic and vote for
     to have better access to necessary talent.
                                                          John Kerry.
                                                          Instead, at least for now, let’s agree to have an
     Appendix A                                           honest and open relationship, based on clear
                                                          thinking and mutual respect. Let’s not pretend
     Ron Bloom, Special Assistant to the President,       that our interests are identical, but let’s agree
     United Steelworkers of America, remarks to Steel     that we have enough in common to work togeth-
     Success Strategies, the Plaza Hotel, New York, NY,   er on projects of mutual concern.
     June 22, 2004.
                                                          Rule Number Two: We can accept your mis-
     This morning I would like to share with you,         sion—but only if you accept ours.
     Eight Simple Rules for dealing with the United       We can accept the mission of the industry’s own-
     Steelworkers of America, A Word from my Spon-        ers—making a return on their investment; the
     sor and A Cautionary Tale.                           mission of management—running successful
     First, let me of course thank Peter and the folks    companies, lowering their handicap and mak-
     at American Metal Market for inviting me to          ing a buck or two along the way; and the mission
     speak to you here today. I have looked over the      of the various lawyers, accountants, investment
     program and it seems quite interesting. There        bankers and others—feeding off the industry
     seems to be a good balance—forty-seven speak-        while contributing nothing—except of course for
     ers from the companies and one from the union.       Peter Marcus—but we will not do so, unless, in
     Seems about fair.                                    exchange, you accept our mission—representing
                                                          workers.
     Anyway, here we go.
                                                          Our mission is to represent every non-manage-
     Rule Number One: We are not looking for              ment employee in the steel industry, and we can
     love, or even particularly to be liked, but we       never have a stable relationship with an industry
     do demand respect and not just in the morn-          stakeholder who does not accept this basic rai-
     ing, or when you need us, but all day long.          son d’etre of our union. How could we?
     Now we understand that the people who own            As I said earlier, we do not expect that if all other
     steel companies, the boards of directors who         things were equal, you would want us to grow
     operate the companies on their behalf and the        and prosper. But, all other things are not and
     management that the boards employ all agree          never will be equal.
     that they would strongly prefer that their em-
     ployees not be represented by the Steelworkers       You need us to accept your mission in order for
     Union and that life would be better if we would      you to succeed and while it would be nice for you
22
IRConcepts                                            A publication of Industrial Relations Counselors, Inc.




if we would accept your mission without you ac-       be assumed to have made an affirmative choice
cepting ours, unfortunately for you, that deal is     to buy them that day—either because they actu-
not available. And the deal that is available—we      ally did or because they chose not to sell.
accept you, you accept us, is better than the real
                                                      But those shareholders feel absolutely no obliga-
world alternative.
                                                      tion to make the same decision tomorrow. There
So, take the deal and let’s move on.                  is and under our current rules, can never be, real
                                                      commitment or loyalty from a shareholder to a
Rule Number Three: We seek a level playing
                                                      given company or the industry.
field, which to us means that we oppose com-
petition based on hourly labor costs. We be-          Management, while somewhat more long-term
lieve that this is in every company’s general         oriented—still has genuine mobility and can usu-
interest but we understand that it is in no           ally be expected to depart for greener pastures if
company’s specific interest.                          the price is right.
It doesn’t take an MBA from Harvard or a PhD          Customers and suppliers—while some have long
in metallurgy to figure out that if everyone pays     histories with a particular company must also
their workers $25 per hour and you can get away       have limited loyalty. After all they have their own
with paying them $20, you will make a little          shareholders to please.
more money. The problem is, number one its
                                                      Workers, however, are truly the one constant in
unfair, which I know you do not find terribly rel-
                                                      the life of an enterprise. The average turnover
evant, but I figured that I needed to at least say
                                                      at most steel companies are about 3% per year.
it, and number two that advantage only works
                                                      Many public companies have shareholder turn-
until everyone else ratchets their wages down to
                                                      over of that amount in a morning.
the same level and the cycle starts all over again.
                                                      So when we say that these are our mills we say it
Companies that win in this industry should be
                                                      the truest sense of the word—no one cares more
those that build a sustainable advantage based
                                                      about them or is more dedicated to their success
on better technology, better quality, better man-
                                                      than we.
agement, or better strategy, not those who figure
out a way to short-change their workforce.            After all, possession is nine-tenths and in the
                                                      union we always round up.
The reality is, left to your own devices, you will
eat each other up in a race to the bottom and in      Rule Number Five: We may forgive, but we
the process do nothing but make your custom-          never forget and it’s always personal.
ers rich.                                             We do, as I have indicated, have a lot at stake
We are the glue that holds this industry togeth-      here. We genuinely suffer when steel companies
er, that forces you to reach for those elusive bet-   fail and the mills close and we are therefore pre-
ter angels of your nature. And you should thank       pared to go more than the extra mile if we believe
us for it.                                            that you are genuinely interested in the company
                                                      and its future.
Rule Number Four: These mills are ours.
                                                      But conversely, if we conclude that your con-
The steel industry has many stakeholders but
                                                      cerns are purely about personal aggrandizement,
none of them are as completely committed to its
                                                      about making a quick hit and leaving us hold-
success as the Steelworkers Union.
                                                      ing the bag, or if we conclude that you do not
For holders of financial assets—particularly          respect our members or their institution, we will
shareholders—everything is based on the mo-           fight to protect ourselves with every weapon at
ment, there is no memory and no future. Every-        our disposal.
one who owns shares in a publicly traded com-
                                                      And we think we are pretty good at it. Ask the
pany when the market closes on a given day can
                                                                                                               23
     IRConcepts                                           A publication of Industrial Relations Counselors, Inc.




     shareholders of US Steel, ISG, Allegheny-Tech-       For the overwhelming majority of the twentieth
     nologies and Oregon Steel about the value of         century the industry first tried in every way pos-
     peace with the union. And ask the shareholders       sible to prevent our existence and then, when our
     of AK about the price of war.                        coming became inevitable, tried to focus on min-
                                                          imizing the liability which they believed us to be
     People often tell us that their antagonism toward
                                                          by disagreeing with everything we said, rejecting
     our members and us is just business and that we
                                                          our ideas because they came from us and trying
     should not take it personally. I worked on Wall
                                                          to put us into the narrowest box possible.
     Street for ten years so I understand that way
     of thinking. You screw me on Monday, I screw         For a while we played along. We checked our
     you on Tuesday, we both screw everyone else on       brains at the door and did what we were told and
     Wednesday through Friday and we all meet for a       no more. While this approach brought decent
     round of golf on the weekend.                        wages and benefits, it also produced a failed in-
                                                          dustry, with catastrophic consequences for liter-
     For us it does not work that way.
                                                          ally hundreds of thousands of innocent people.
     Although when you tell us to not take it person-
                                                          Recently, an enlightened few have come to un-
     ally we will often nod and smile, don’t be mis-
                                                          derstand that the union as a contingent asset can
     led. For us, it is always personal because—news-
                                                          be made both real and in fact quite large; that
     flash—we represent persons, and the decisions
                                                          steelworkers, with the confidence and security
     you make impact real people with real husbands
                                                          that can only come from the protections pro-
     and wives and children, trying to pay real mort-
                                                          vided by a collective voice, are in fact capable of
     gages and lead real lives. So when we are passion-
                                                          contributing an enormous amount to every facet
     ate and emotional, do take it personally—because
                                                          of the business.
     we mean it that way.
                                                          It is axiomatic to note that no one knows how
     We do not seek confrontation and we never start
                                                          to run a steel mill better than those who do it,
     a fight. But we cannot do our job if we retreat
                                                          but the adoption of this simple insight is the
     when challenged.
                                                          only reason there is still integrated steelmaking
     The choice is yours.                                 in America today. And those who have truly em-
     Rule Number Six: With us—you get what you            braced this philosophy are those whose future is
     deserve.                                             brightest.

     Our members run our union and we have great          Put it another way, you get the union you de-
     faith in their ultimate wisdom. This does not        serve.
     mean that our leaders are afraid to lead. We are     Rule Number Seven: We often have signifi-
     often far out in front of our members at a given     cant negative power; we seldom have as much
     point in time.                                       positive power.
     But do not expect that we will act in a manner       This negative power evidences itself most clearly
     that is divorced from the fact that ultimately,      in restructurings but extends generally to situ-
     the Steelworkers Union is about giving working       ations where any significant change is required.
     people control of their own lives.                   And we are not afraid to use that power.
     But how that democratic impulse is expressed is      But we have also learned that negative power only
     largely up to you.                                   takes you so far, that to truly build something,
     Think of us as a liability and a contingent asset.   to create an economically viable enterprise to op-
     The size of the liability and whether or not, and    erate our mills, we need positive power as well.
     to what degree, the asset becomes real is in your    And in order to exercise positive power, we have
     hands.                                               discovered, requires partners. And so, we have
24                                                        formed partnerships with management and with
IRConcepts                                             A publication of Industrial Relations Counselors, Inc.




capital providers to create these enterprises.         And of course we have the wonderful spectacle of
                                                       the fact that in 1946 six of the ten highest paid
We think the record is pretty clear—a combina-
                                                       executives in the entire country were employed
tion of the union’s negative power with the posi-
                                                       by the Bethlehem Steel Corporation. Gee, I won-
tive power of management and capital providers
                                                       der if that attitude had anything to do with how
is the best route for first creating and then sus-
                                                       things eventually turned out for the sharehold-
taining both economically viable companies as
                                                       ers, bondholders, workers and retirees at that
well as a viable industry.
                                                       company.
And so we are looking, as I said earlier, not for
                                                       More recently, some folks made a few shekels
love, but for long-term strategic alliances with
                                                       betting on those ratty old LTV assets and its no
providers of capital and those skilled in the art
                                                       good workforce and finally we can brag that our
of management who want to join us in building
                                                       industry has produced the owners of both the
an empire in steel.
                                                       largest and the most expensive private residences
Andrew Carnegie—where are you when we need             in the world.
you?
                                                       But in the end, despite, or maybe because of
Which brings me to                                     some of that, this industry has not created a vi-
Rule Number Eight: We represent workers                able model for long-term success for its stake-
not consumers and we understand that over              holders.
the long run it is a lot easier to extract mo-         Now I at least, want to keep doing this for a
nopoly rents—which we most assuredly wish              while—I don’t think my old partner really wants
to do—out of an industry that is making at             me back anymore—and while one could make
least some profit.                                     an argument that the best thing to do is find
We do not accept the market as the proper ar-          enough dumb money for one more round, the
biter for wages, hours and working conditions.         Union’s horizon is a little longer.
The proper arbiter in a civilized society, one that    We understand that the steel industry needs long-
believes in a middle-class, is collective bargain-     term financial success if we and our members are to
ing.                                                   prosper. We think this requires three things.
But we recognize that in a capitalist society, over    First, individual steel companies must have com-
time, if capital does not earn a return it will stop   petitive cost structures. In this area, we have and
showing up. And so our members, in their own           will continue to do more than our fair share.
self-interest, want to work for companies that
                                                       Second, we need a stable industry structure and
make money. The more the better.
                                                       that means consolidation. While America con-
An honest reading of the history of the steel in-      tinues to have too few steel mills, it has far too
dustry would tell you that capital has not in fact     many steel companies.
done very well. On a cumulative basis the world’s
                                                       Now we understand the implications of that
steel industry probably did not make a profit in
                                                       statement for the long-term job security and
the twentieth century.
                                                       prospects of steel industry CEOs. And unlike the
Now I certainly am not saying that nobody has          fate of many of our members, we are prepared to
ever made a buck investing or working in steel.        have much of this done through attrition. But in
There was this fellow named Carnegie who did           the end, if we want to have a stable industry, we
OK, and Rockefeller did pretty well on his in-         need to have just a few companies, each of whom
vestment in Colorado Fuel and Iron (although           has enough presence in the market that they can
he did have to endure some libelous accusations        have a bargaining as opposed to a begging rela-
about a small misunderstanding in Ludlow).             tionship with their customers.
                                                                                                                25
     IRConcepts                                              A publication of Industrial Relations Counselors, Inc.




     So guys, take one for the team. We have.                It is obviously true that if there were no steel in-
                                                             dustry, there would be no Steelworkers Union.
     And finally, we need a political environment that
                                                             What may be less obvious but is in fact just as
     supports both the making of steel and the mak-
                                                             true, is that in America today, sisters and broth-
     ing of products that consume it here in Amer-
                                                             ers, if there were no Steelworkers Union, there
     ica.
                                                             would be no steel industry.
     Which brings me to the word from my sponsor.
                                                             And on that note, let me end with a cautionary
     Whether we like it or not, the steel industry’s         tale.
     fate here in America depends on the willingness
                                                             There are three men walking through the forest—
     of the federal government to insist that global
                                                             an Englishman, a Frenchman and a Steelworker.
     trade in steel is conducted on a level playing field,
                                                             They are set upon by savages who capture them
     something which today we should all be able to
                                                             and take them to their leader. The leader an-
     agree, does not exist.
                                                             nounces that the men are to be killed and their
     And we all should be adult enough to admit              skin used to make canoes but because these sav-
     that the fact that the active and retired mem-          ages are decent, they will allow their captives to
     bers of the Steelworkers Union reside at ground         both choose the method of their death and to
     zero of the so-called battleground states and           have the honor of taking their own lives.
     that our union has an incredibly sophisticated
                                                             The Englishman goes first. He requests a pistol,
     political organization, is the only reason that
                                                             puts it to his head, shouts “God save the Queen”
     our pipsqueak little industry, an old-economy
                                                             and shoots himself.
     dinosaur, many of whose participants can best
     be described as HMO’s with steel company sub-           The Frenchman steps up next. He asks for a knife.
     sidiaries, representing less than one-half of one       “Viva La France” he cries and slits his throat.
     percent of the American economy, has received
                                                             Finally, the Steelworker steps forward. “I want
     the attention it has.
                                                             a fork,” he says. The chief is a bit perplexed but
     It sure isn’t our charm and good looks, ample           agrees to honor the request. The steelworker then
     though they are.                                        takes the fork and madly starts stabbing himself
                                                             all over his body.
     Yet there are companies in the industry, I dare
     say some of whose representatives are sitting in        “Screw your canoe.”
     this very room that, while they oppose in every
                                                             Thank you.
     way the union’s mission of representing their
     workers, are more than willing to reap the ben-
     efits of our hard work.
     Shame on you! But more importantly—shame
     on your owners for letting you be so shortsight-
     ed.
     We should all be deeply resentful of these free
     riders. In the Union everyone pays dues because
     we know that if one is allowed to ride for free,
     all will want to, quickly leading to the weakening
     of the institution and everyone’s eventual disad-
     vantage. This is, of course, a principle everyone
     in this room understands and accepts as being
     at the core of civilized society. Taxes are not and
     cannot be voluntary.
26

				
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