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Seminar Research Paper Series Schmidt Labor Research Center

2005 Union-Management Cooperation: Can a Company Move from an Adversarial Relationship to a Relationship and is Interest-Based Bargaining a Necessary Condition to do so? Jane Ostrowsky University of Rhode Island

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Recommended Citation Ostrowsky, Jane, "Union-Management Cooperation: Can a Company Move from an Adversarial Relationship to a Cooperative Relationship and is Interest-Based Bargaining a Necessary Condition to do so?" (2005). Seminar Research Paper Series. Paper 12. http://digitalcommons.uri.edu/lrc_paper_series/12http://digitalcommons.uri.edu/lrc_paper_series/12

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UNION-MANAGEMENT COOPERATION: CAN A COMPANY MOVE FROM AN ADVERSARIAL RELATIONSHIP TO A COOPERATIVE RELATIONSHIP AND IS INTEREST-BASED BARGAINING A NECESSARY CONDITION TO DO SO? JANE OSTROWSKY University of Rhode Island

Strikes “More often than not, unions are viewed as the villainous Indians and management is viewed as the white-hatted cowboys in a simplistic cowboy and Indians movie” Stuart R. Korshak

Union-Management cooperation is not just a more committed to their , and more passing fad nor is it new or recent. However, productive because their ideas have made a interest in this particular way of doing difference while the employer enjoys the rewards has been growing. Union-management of additional business from the customer, less cooperation is a term that has been used to turnover from its employees and profitability is characterize cooperative activities between unions good. The behavioral changes improve the and employers aimed at improving organizational outlook and the impact on the company business performance and reduce costs. The expectation of as well. cooperation is that both labor and management One way to improve products and services and gain more from their relationship through to have more satisfaction between employer and cooperation than they could achieve without it. employees is with union-management cooperation. With union-management cooperation both unions METHODOLOGY, ANALYSIS and managers form a relationship or Customer focus or CFM seems to that will be able to ward off threat or gain a be the new “buzz” word coming from large competitive advantage or offer job security or companies today. Companies exist in an perhaps even more jobs. environment where they need to adapt rapidly to The unionized companies that are most their customer’s changing needs. Employees are successful in harnessing their employees' ideas usually closer to the customers than is have found that the only effective way of making management, therefore management needs to employee participation is through a listen to their employees and gain their perceptions cooperative relationship with their unions. of what their customers are looking for and use Union-management cooperation may seem a their ideas to improve and incorporate those ideas little far-fetched since it is difficult to believe that into continuously improving products and these two adversaries would stop the bickering and services. To do that requires effective employee start working together for the same common good. participation and programs. It is All workplaces as well as the ones with unions both legally and practically difficult to obtain such require higher morale, productivity, participation, participation and empowerment in a unionized and flexibility to be successful. Human company without the active involvement of the ’s must educate their managers to follow a union (Korshak, 2002) cooperative approach with unions if they want to By focusing on customer needs companies be successful. will see improved customer relations as well as The AFL-CIO has for several years endorsed more customer satisfaction. Customers, be it labor-management between unions internal or external are a huge part of company and management as the best way to satisfy both success and their satisfaction means continued sides’ needs and to build strong unionized business to the company. Satisfaction to companies. The AFL-CIO and many of its sister employees will be greater because they believe unions take the position that organized labor that the organization will be satisfying in the long should present management with two, and only run, they care about the quality of their work, are

© Jane Ostrowsky, 2005 Ostrowsky-Labor –Management Cooperation 2

two alternatives. These are (1) an “open hand of side is doing their best to make this effort work is cooperation” for real partnerships or (2) a “closed also a factor. fist” for a fight in a confrontational relationship. Management and union must also show they Given these two alternatives, which is more likely are committed to making this relationship work in a unionized company to result in high morale and that they are there for the mutual interests of and productivity, the ability to solve complex all employees. Having face-to-face weekly or bi- problems, and adaptability to changes in the weekly meetings with all participants and not just ? (Korshak, 2002). a few shows a commitment to the process as well. Asking the question “how are we doing” and then GUIDELINES TO A COOPERATIVE actually listening to the answer and discussing the RELATIONSHIP issue if there is one, shows commitment to the Changing behaviors and shifting customs of process. management and union leaders are the major The knowledge and skill levels of the priorities to building a trusting union-management employees must also be increased. A given level relationship. , of cooperation between management and union as well as trust and commitment requires certain degrees of skill levels. You would are key to making this change successful. need to train or retrain managers as well as union Each party brings a difference in culture such employees in problem solving skills; how to as their values, way of thinking and ways of doing identify and resolve the problem. How to handle business to the table. These cultures or conflict is another skill that would be needed. differences must be handled properly or they will Agreed upon ways to handle conflicts should also interfere with the new partnership. be put into place. There must also be good communication building is an important skill since the practices between the parties with information union and management have to work together on a being flowed down to all levels of workers. In a day-to-day basis. traditional union management relationship, Interpersonal skills such as verbal communication is flowed down from management communication as well as written skills, public and flowed up through the union. Because of this speaking, presentation skills all become a part of communication process, there has to be a change the collaborative effort. Coaching and counseling in the way information is communicated is also an important skill that both middle throughout the ranks. It must be free flowing. managers as well as the shop stewards will need. Each contributor must be kept aware of the The parties should also think strategically process. This is not only for management, but also about cooperation. A should be in place to for all employees who are stakeholders in the help guide the leaders with the factors and forces cooperative process or partnership. Without that may affect the effort of union-management communication to all parties involved the process cooperation. One factor may be that there are may come to a standstill or fail completely. Face- powerful individuals on both sides that are to-face communication, verbal communication is a indifferent to the relationship. very important factor. Email is ok, but not all the Lastly, the company should also develop time. It may be misunderstood. mechanisms to track the process of the Trust and commitment from both sides has to relationship such as team health surveys. With be extended. This is not an easy task. It takes this information the company would then make time to develop trust especially if there has been any necessary adjustments that may be needed the traditional adversarial relationship between (Shappe, 1997). union and management and the trust between the By making organizational changes, having two parties was more mistrust. Factors that trust and commitment and a better communication contribute to developing trust and creditability are flow within the company there will be more having a positive attitude toward each other, employee satisfaction as well as customer initiating a cooperative behavior. Building a good satisfaction. Employees will feel more engaged in rapport with each other and believing that each the business and productivity and Schmidt Labor Research Center Seminar Research Series 3 levels will rise along with morale. The parties EVIDENCE OF UNION-MANAGEMENT will feel an increase in power as the from COOPERATION SUCCESSES their begins to flow. One of the earliest cooperative efforts grew The best Human Resource Director’s strive to out of the Laborers’ International Union of North have their companies work cooperatively with American (LIUNA) and the Associated General their unions because it increases productivity, Contractors in 1969. This effort, called the quality and morale, not because they fear unions. Laborers-AGC and Training Fund, If HRDs want to be effective and make a oversees the training that members of the union difference, they should educate senior receive. The fund has provided safety training, management that this is the best way to work with workplace literacy and ESL training. It also unions and they should train junior management recently worked with the EPA to combine training how to do so (Korshak, 2002). in the cleanup of hazardous-waste sites with the In the United States, many studies have shown actual cleanup of public waste sites, including that labor-management cooperation efforts in a removing lead based paint from publicly owned nonunion setting are short-lived. It is the Union housing units and bridges according to Arthur A. that brings stability and longevity to the process. Coia, general president of LIUNA. The Union gives the process credibility. Workers The Oil, Chemical and Atomic Workers Union feel more comfortable and less threatened when (OCAW) and the International Brotherhood of they see their union representatives actively Firemen and Oilers worked with Rohm & Haas involved. There is less fear and fewer feelings of Kentucky Inc in Louisville in 1987 to assist with insecurity. This ultimately leads to worker the design of a new plant. The Design Committee acceptance and participation. grew out of a long-standing attitude of cooperation There is enough evidence to prove that where between the unions and management. there is an honest union-management partnership, The Cooperative joint efforts of General productivity and product quality are increased. Motors and the United Auto Workers union paid Employee satisfaction is also increased and off for both parties. The company shifted employee turnover decreases. This better enables of some of its automobiles from a plant the company to be able to deal with rapid and in Mexico to one in Lansing, Michigan, creating at constant change in a highly competitive global least 800 new jobs at the U. S. plant. This action marketplace. resulted from a complete turnaround in union- Labor-management cooperation is the key to a management relations within one year, according continuing effective relationship between union to UAW Stephen Yokich. and management. Labor-management cooperation Xerox based in Stamford, CT results from two strong respecting who struggled at one time has made a comeback each other and working along side one another to with the help of union-management cooperation achieve mutual interests. It does not indicate that initiatives. Xerox became the first major U. S. the parties cannot disagree over certain issues, but firm to win back market share from the Japanese the disagreements would not affect the overall without government intervention, at the same time relationship, or the ability to resolve other issues. as its return on assets increased from 8% to 14.8%. The parties can agree to disagree with issues being The cooperative efforts included an agreement resolved through the use of mediation or with the Amalgamated Clothing and Textile arbitration when necessary. Workers’ Union (ACTWU) that allows the union This type of organizational change will not to bid on any work that Xerox wants to occur overnight. As the organization prepares to out, a leaner-but-friendlier contract –negotiation move toward union-management collaboration, process and a new, jointly developed both management and union officials need to be design, called a focus factory, which allows quick trained. Both union and management must accommodation to changes in product demand. continue to work together to foster and maintain So that they wouldn’t be outdone, AT&T and union-management cooperation for the long term. its unions—The Workers of America (CWA) and the International Ostrowsky-Labor –Management Cooperation 4

Brotherhood of Electrical Workers (IBEW)—are committees were formed at each site where they refocusing the entire organization, using a developed agreed upon ground rules for working framework called the Workplace of the Future, to together. They negotiated what were called make the unions and the company true partners in Enabling Agreements. These agreements were every aspect of the business (Stuart, 1993). outlined a clear, specific path forward and Canadian firm Molson Breweries has committed the parties to making the effort work recognized that improved labor-management (Nee, 1999). These committees were the models relations were critical to its success in achieving for behavioral changes within their companies. growth in productivity, quality, innovation, Other work organizations are called High customer satisfaction and time to market. Performance Work Organizations (HPWO). At Management had realized it had to establish better the International Specialty Products Corporation relationships with the nine institutional labor poor quality, costs and low were unions. The company has acknowledged that both some of the problems that existed. By making union and management would not be able to create process changes and formalizing improved a new work that can help it enhance its methodologies definitely improved performances, competitiveness if the adversarial relationship but these changes could not have been made between labor and management persisted. To without first changing the adversarial relationship address the issue, management has negotiated that the union and management had for many partnership agreements with the labor unions. Its years. The success of these efforts was success in concluding these agreements can be recognized in 2002 when the Specialist Products credited to its efforts to harmonize the of the Corporation received from the University of company, the unions and the employees Louisville an award honoring cooperative labor- (McKenna, 1995). management relationships. Putting together Joint Advisory Committees ISP credits its improved labor-management (JAC) is another way to foster cooperation. Scott relationship and performance in part to its paper and the United Paperworkers International implementation of a high performance work Union (UPIU) formed a JAC and the Executive organization (HPWO) partnership. The Committee of Scott Paper and UPIU both International Association of Machinists and approved a statement committing to this. The Aerospace Workers (AMSAW) promoted shared statement was the first product of joint decision- decision-making as the means to help the business making by the members of the JAC. Driving this grow. statement was that Scott had not demanded Interestingly, it was the union that introduced concessions during negotiations, but rather the HPWO partnership concept to Calvert ’s management felt strongly that achieving cost ISP plant. (Jusko, 2003) reductions through increased and improved An HPWO partnering agreement formalizes effectiveness could be achieved methods of working together by management and through working with its employees. Change was the union. Each partnering agreement is tailored also occurring in the workplace. The UPIU felt to the unique circumstances of an individual they had a right and a responsibility to participate company, but they all share decision-making in work redesign and other change impacting their around jointly determined functions critical to members. This required a change in the traditional business success, new workplace roles and role of and union and gave them a new responsibilities for management and production opportunity to be more effective in representing workers, and strategies to implement change. their membership. Both parties believed that the In October of 2004, a was done in union could, and under appropriate circumstances Australia called the Australian Worker and would, enable change to occur as long as they Representation and Participation Project that clearly participated in the decision-making involved a national survey of one thousand processes and as long as better business results employees and a six–nation study of worker were reasonably shared with the representation in the Anglo-American world of the employee/member. Joint Labor-Management United States, Canada, United Kingdom, New Schmidt Labor Research Center Seminar Research Series 5

Zealand, Australia and Ireland. The survey was workforces within a huge cooperative industrial made up of five different categories, one of which relations climate. Since the implementation of was union-management cooperation. , both the management and union have found This survey is based on the 1994-1995 Worker the environment to be good or excellent because of Representation and the change. There are a few different identified. Participation Survey in the USA, the 2001 There are directed and self-managed work teams. British Worker Representation and Participation With directed work teams external management is survey, conducted by the Center for Economic maintained, but there is consultation and Performance at the London School of , participation being introduced. In self-managed and, the 2003 New Zealand Worker teams there is more delegation of authority, Representation and Participation Survey. Thus, and decision- making. In most of the results of this survey can be compared with Australia’s automotive industries, self-directed international benchmarks. teams have been put into place (Park, 1997). The results were Union members’ attitudes to In the British clothing there were union-management cooperation were strongly serious attempts to establish the framework for positive, with a majority agreeing that unions try union-management cooperation when the Labor to cooperate with management and vice versa. Government came into office in 1945. The Labor Nevertheless, employees also agreed that unions Party wanted to reshape Britain into a cooperative and management should both cooperate more commonwealth. Labor’s program called for the closely with each other, although this was higher nationalization of about 20% of the British with regard to management. Consistent with the industry, and proposed national economic employees’ view that there should be greater to coordinate the efforts of both the cooperation between management and unions, nationalized industries and those under private 62.3% of employees agreed in some form that . unions should focus greater attention to helping OPPOSITION the organization succeed. An overwhelming 93.1% of employees agreed that unions should The National Union of Tailors and Garment fight hard when employee interests are threatened Workers wanted to play a part in the planning. (Pyman, 2004). They received encouragement for the idea of joint Australia’s had faced an labor-management cooperation. Out of this came uncertain future in the global market place in the the development council. late twentieth century. New industrialized The development councils were similar in countries were taking the market share of the organization to the recovery boards set up under Australian vehicle manufacturers. Once heavily the National Industrial Recover Act in the United protected, the automotive industry now had to States. compete in an open market. The free The attitude of the NUTGW was very of the Australian government steadily favorable to the idea of the development council. reduced the tariff on imported vehicles. Because The council gave the union the opportunity to of this, Australia’s automotive industry has participate in the planning and the program as it embarked on a program to improve quality, grew. Other employee groups did not feel the productivity and quality of work life by same as the NUTGW and those groups were developing a more flexible and team-based bitterly opposed to the council. workforce. A study of sixty-two international Even though the clothing industry associations automotive plants found that plants utilizing team- voiced their opposition and announced they were based workforces and high commitment human not ready to discuss the structure and activities of resource practices had higher levels of the council, a development Council was productivity and quality than traditional established by an order of the board of trade in production plants. 1950. The automotive industry in Australia has The governing body of the clothing industry pursued the implementation of team-based development council was made up of 17 members, Ostrowsky-Labor –Management Cooperation 6

a few of them from the NUTGW and the management cooperation. They introduced a joint Waterproof Garment Workers Union. But despite industrial council, but this council too was met the representation of the union the development with opposition and no interest from the councils were doomed when the Wholesale employers association and therefore was never Clothing Manufacturer’s Federation and other established. clothing trade associations served a writ The conclusion is that union-management challenging its legality indicating that the cooperation cannot be legislated as in the British Development Council was being pushed on an clothing industry. The parties must have unwilling industry. persuasive reasoning for working together on The intense opposition to the council by issues that are outside the normal collective employers hampered its successful operation even bargaining. In this case, the union was the party though the high court had dismissed the that was looking to have cooperative relationship employers’ writ challenging the establishment of while the management side was not interested the development councils. Even with all the (Helfott, 1959). opposition while the council was in effect, they had confronted four issues facing the clothing CONCLUSION industry: seasonal unemployment, export trade, In looking to the future, will union- sizing of garments, and the purchase on management cooperation continue to spread? clothing. Those interested point to the changing workforce Despite its research work in trade matters, the as an inducement to the worker involvement in employer groups never relented in their opposition decision-making. They also count on the to the development council. Negotiations challenge to the competitive position of American concerning the council’s establishment were industry as a continuing incentive to union- discussed between the president of the board of management cooperation. trade and the Conservative Party in 1951. Finally, Union-management cooperation is not a in 1952 three years after the establishment of the passing fad. It has been and is a permanent feature council it was abolished. of the American system of . So the government did not look completely Changes as reflected in the recent spread of foolish, the employers agreed to a voluntary cooperative efforts, will come gradually, rather council called the Joint Clothing Council. This than as an alteration in our of industrial council’s functions were similar to the relations. development councils, but also included research in the files of design, quality, production, REFERENCES marketing, distribution and the training of labor as Helfott, R. B. 1959. Union-Management well as promotion of exporting. Cooperation in the British Clothing The difference between the two councils was Industry. Labor Journal. that the development council had a specified Jusko, J. 2003. Nature vs Nuture: Unique budget and the voluntary council did not have Arrangements Help manufacturers Break guaranteed budget. fromt he Traditional Adversarial Union- The voluntary council also met with Management Relationships to Improve opposition from the major employer associations Both Business Performance and Company and soon the Wholesale Clothing Manufacturers’ Morale. Industry Week, 252(7): 5. Federation, the largest association, became uninterested in it. It became clear that the major Korshak, S. R. 2002. Good Union employer associations wanted neither a voluntary Relationships Are Best. Workforce or statutory council and the voluntary council was Management. also dissolved. McKenna, L. M. 1995. Moving Beyond While neither of these two councils worked, Adversarial Relationships. Canadian the National Union of Tailors and Garment Business Review, 22(2): 3. Workers continued its pursuit of union- Schmidt Labor Research Center Seminar Research Series 7

Nee, J., Pamela A Kennedy, Donald L Langham. 1999. Increasing Manufacturing Effectiveness Through Joint Union/Management Cooperation. Human , 38(1): 77-85. Park, R., Peter J. Erwin and Karl Knapp. 1997. Teams in Australia's automotive industry: Characteristics and future challenges. The International Journal of Human Resource Management, 8(6). Pyman, A., Julian Teicher, Peter Holland and Brian Cooper. 2004. The Australian Worker Representation and Participation Project: Department of Management, Monash University. Shappe, R. H. 1997. The Marriage of Union and Management: Understanding and Preventing Failure. Business Horizons(March/April): 25-32. Stuart, P. 1993. Labor Unions Become Business Partners. Personnel Journal, 72(8): 54-63.