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Since the early 1990s, the related pressures of global competition, poor industry performance, consolidation, and sagging paper prices have left their combined mark on labor relations in U.S. mills. Overall, union-management relationships appear to have become less adversarial, with each side realizing, as one respondent to Pulp & Paper's 2000 mill manager's survey noted, "we need each other to survive."
However, despite longer contracts and more positive contractual language, "hot button" issues still exist. Depending on the viewer, these issues may be seen either as keys to future profitability or potential threats to job security. It often appears that the needs of union wages, benefits, and secure employment are at permanent odds with the business requirement of improved profitability. On the flip side, though, a cooperative workforce can create efficiencies that positively impact the bottom line.
The challenge, then, is finding a middle ground that is satisfactory for both union and management. To do so, striking a cooperative tone during negotiations should be considered as carefully as the very specifics of the contract. Though union-management relations have come a long way since the late 1980s and early 1990s, the fact remains that it is difficult to overcome ingrained behaviors and suspicions about intent.
NECESSITY OR EVOLVING COOPERATION? Have U.S. labor unions been on the defensive during the 1990s? Some would say this is true. Unions have had to react to contract negotiations that have, in some cases, led to dismantled pooled voting, re-duced benefits and wages, changed work rules that favor company management (such as multitasking), elimination of premium pay, and extended contracts (six year pacts are now common). But what brought about such changes? And, were the moves defensive, or were they cooperative concessions in light of obvious challenges?
According to Steve Cabot, a labor attorney who has exclusively represented management in several industries for 34 years, a change in labor relations within the industry occurred in the late 1980s. At that time, International Paper led "some pretty tough" negotiations and won them, an "unheard of" occurrence for employers at that time, with IP accepting work stoppages to achieve its goals. Although Cabot feels these situations made an impact, he sees the overriding reason for change as the result of external forces.
"In the late 1980s/early 1990s, the price of paper began taking a bath and paper companies saw the need to run their businesses smartly instead of riding purely on the price of paper," notes Cabot. "By 1994, competitive issues became so glaring, those companies started looking at ways to stay alive in the 21st century. Employers now see that effective business planning means the inclusion of labor relations. So labor relations is not the tail of the dog, it's the head of the dog now.
"In contrast to 10 years ago and even more so 20 years ago, it is much easier for me to get CEOs and executives within companies more committed to take a tougher, harder position at the bargaining table, because they all see the trends more clearly than ever."
For Sue Meador Rodier, a consultant with Core-R.O.I. Inc., a company that works in partnerships with both union and management clients, changes in labor relations within the industry have stemmed from a realization on both sides.
"During the 1990s, both sides finally stopped being so myopic and admitted that there is such a thing as competition," she describes. "They stopped being so internally focused on the here and now and began looking at longer term strategies for staying in business."
Keith Kirchner, executive assistant to PACE International president Boyd Young, echoes this realization on the part of the union. With 320,000 members, the Paper, Allied-Industrial, Chemical, and Energy Workers International Union (PACE) represents most organized paper industry workers in the U.S. Kirchner notes that the 1980s "were obviously very adversarial. I think both sides have seen that we need to do something different if we are going to be competitive in the market place."
One possible example of improved union-management relations is the growing number of long term contracts negotiated within the industry. In 1999, the majority of mills (10) negotiated five-year contracts, nine mills secured six-year contracts, four mills had three-year agreements, another four mills had four-year agreements, and only one mill had a one-year contract. This contrasts sharply with a decade ago, when most contracts spanned an average of two years.
For companies, longer contracts help to project labor costs into the future. But do they mean a weaker position for unions? Not necessarily, according to Rodier, who notes that most longer contracts provide for "early re-openers-particularly around salary," equating to economic stability on the union side. Kirchner concurs that longer contracts are sometimes beneficial.
"We don't have a policy that says we are not in favor of longer term agreements," notes Kirchner. "We have ratified a number of such agreements, and, if we have a good relationship with an employer, it can be a good thing."
At Core-R.O.I., Rodier explains that a continuum is used to assess strategic options for dealing with the union (see sidebar below). Fifteen to seventeen years ago, she notes that most paper companies used the "play hardball" approach, where arbitration and mediation were common, and "search and destroy" methods for union busting sometimes occurred. However, today, she finds that "cooperate as appropriate" is the norm. Rodier also reports that unions are now more likely to put their issues on the bargaining table first, rather than simply reacting when management presents its slate of issues.
| Strategic Options for Dealing with Unions |
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Organizations have several strategic options for how they deal with the union as a stakeholder. The challenge is determining which strategy can best result in continuous improvement in a unionized organization. Based on years of experience, Core-R.O.I. Consultants, a firm representing both union and management in negotiations, recommends Strategy 5 as superior for companies who desire continuous improvement for competitive purposes.
Strategy 1-Union busting (search and destroy)
Management can take the posture of doing everything possible to encourage its union employees to begin decertification proceedings. Such proceedings are legally risky, and only one out of four efforts is likely to succeed. All of this diverts energy, which should be focused on customers needs.
Strategy 2-Hardball
Positions taken by union representatives are always wrong and require that management contest them. Arbitration and mediation are a way of life. Management assesses a situation, figures out a solution, and forces it upon the union.
While playing hardball is effective, it is costly. It is divisive within plants, and people lose focus on serving customers' needs. They focus on who is right, instead of what is right. Finally, playing hardball often places the decision-making authority into the hands of an arbitrator, a person with no interest in serving customers.
Strategy 3-Make the union benign (work around)
Through concentrated and coordinated efforts, management can develop excellent working relationships with its union members. Members often agree with management's views, and the union functions in name only. However, this strategy requires lots of time in developing employee relationships, along with extraordinary communications skills at the first-line supervisor level."
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This strategy also carries with it the responsibility for management to step covertly between the union and its members. And, there is a slight risk, although a manageable one, of unfair labor practice charges. Management can face accusations of negotiating directly with employees when the union is the legally certified bargaining agent of the employees.
Most companies don't have the skill to apply this strategy. Even when they do, they don't stick with it long enough to achieve payoff. Finally, the "sleeping giant"-the union institution-will invariably wake up with potentially costly "paybacks."
Strategy 4-Cooperate as appropriate (selective cooperation)
This strategy characterizes many organizations during the early stages of developing a cooperative relationship with their unions. Both sides choose a few issues to resolve jointly. A joint leadership group resolves these issues, or they are delegated to an ad hoc task force that recommends solutions in the best interests of both parties.
Typical issues include housekeeping, safety, waste, communication, and improved morale. While a noble beginning, these efforts are often viewed as an end unto themselves, never really resulting in a high degree of trust, easily falling back to traditional styles of dealing with each other, and never changing the culture to continuous improvement. When the next "program of the month" comes along or leadership on either side changes, so goes the cooperative effort.
Strategy 5-True partnership
The fourth strategy is one in which management and its unions forge a true partnership, working together towards mutual interests. When this approach has been accomplished, management and union leadership devote their energy to continuous improvement of the whole organization. Once fully engaged in the effort, the union leadership can offer information and perspectives about the organization¹s systems and employee attitudes, non-productive policies, and support for its members during the transitions necessary to continuous improvement.
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HOT BUTTONS STILL EXIST.
Despite a more positive labor climate as a result of external competitive pressures, hot buttons still exist at the bargaining table. Two of the biggest areas for contention are associated with multitasking and adoption of new technology.
| PACEInternational Union Seeks Strategic ALLIANCEs |
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The following is an example of what language might look like in PACE's strategic ALLIANCE. Union and management would jointly develop each agreement at the involved locations, and no agreement would ever replace or circumvent the collective bargaining agreement. The language would also have to comply with the International Executive Board's policy regarding strategic ALLIANCE.
Sample Strategic ALLIANCE
Company Name and PACEhave committed to jointly develop an interdependent, beneficial relationship to accomplish the goals of our ALLIANCE. We believe this will enhance the philosophies and policies of workplace change essential to our global competitive environment.
Our ALLIANCE is based on a recognition of and commitment to the fact that future success will be made possible only through the efforts of all employees and that those efforts are best achieved through a collaborative labor-management relationship.
We accept our collective responsibility to gain commitment from all employees to contribute to the success of this ALLIANCE and the establishment of a positive work environment beneficial to all.
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Our Key Goals are to continuously improve competitiveness and financial performance while enhancing earning opportunities, long-term employment security, safety, and job satisfaction for all employees.
We recognize that our ALLIANCE requires involvement of employees at all levels of the organization in information exchange, problem solving, and decision making processes. We will develop, through shared decision making, approaches to work focused on creating and maintaining a competitive advantage to meet the current and future needs of our business.
These approaches to work will maximize the contribution of our ALLIANCE through the efforts and commitment of all employees. This ALLIANCE that we establish together enhances the probability for arriving at the realization of our vision of an improved workplace environment and security for all employees.
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Multitasking. To Cabot, the real battles at the bargaining table are fought over multitask issues rather than wages and benefits. Multitasking, which impacts work rules determined by the union, essentially means the ability of one worker to perform several functions. To unions, this often threatens job security, since one person might be able to perform several jobs, reducing headcount and union membership.
"In terms of wages, contracts are coming in between 2.5% and 3.5%, or 2.5% to 4% with benefits, which is true all over," explains Cabot. "The real issue is multitasking, and management has made inroads with various labor unions in the paper industry to operate this way, despite their reluctance. It has nothing to do with being anti-union or pro-union; it's about world class manufacturing and running the business like a smart employer who effectively manages assets."
However, Rodier points to the negative aspects of forcing multitask language into a contract, noting that it can damage an otherwise good relationship where trust has been established.
"I call it an oversimplification of thinking and focus," explains Rodier. "Companies tend to jump on such contractual language as a panacea, and the result may be uncooperative employees with a ïwork-to-rule' attitude that do absolutely the minimum required. And, such language may not actually reduce jobs in the end.
"From the union side, Kirchner looks for involvement with employers when discussing multitask issues, exhibiting the hope of functioning more as a "true partnership" in Rodier's continuum. Concerns about multitasking, says Kirchner, can revolve around compensation for extra skills or around which jobs should actually be combined and what training is necessary to do so. However, the approach to the situation seems equally crucial.
"Often, companies just come in and say we need to combine jobs to solve a certain problem and here is how we are going to do it, which can result in an argument," explains Kirchner. "We would like involvement in identifying the problem and to then jointly come up with the solution. If combining jobs is part of that solution, then the union understands, because it has been involved, so it's not one-sided. If you do it together in a problem-solving mode, you can generally resolve most issues."
New technology. Many times, concerns over multitasking are driven by new technology, such as automation equipment and systems. To deal with global price pressures, companies want the flexibility to implement this new technology as they see fit. As a result, issues at the bargaining table revolve around retraining of employees so they are prepared to work with the new technology, as well as elimination of jobs.
According to Kirchner, PACE realizes that technological advances are "inevitable." However, he once again notes the importance of engaging the union at the outset as a way of avoiding conflict and building a more positive relationship. For example, he foresees a scenario in which union leadership is included from the outset in capital projects, just as engineers, financial strategists, and plant managers are, previewing the equipment at off-site locations to better assess how it has impacted training and employment levels. He says that such involvement is not so much out of the fear of losing jobs, but a desire for more involvement in the business.
"We want to show employers that we add value and that when we empower our members to be involved in daily decision making, it creates a more constructive work environment," describes Keith Kirchner, PACEpresident Young's executive assistant. "We want to work with engineers, marketing people, and supervisors on innovative ways to produce a product."
"We want to understand what to expect, as well as the business case for the project," explains Kirchner. "This kind of due diligence makes the project much more acceptable in the end. Although I can't say that such involvement does not occur, I don't believe it is common."
Understandably, the union would hope that employees displaced by the new technology could be retrained for other jobs within the mill. However, as Cabot notes, companies need the flexibility to pursue world class manufacturing, even if that means eliminating jobs. Although exit training for employees displaced by technology, or even consolidation, is a common topic at the bargaining table, Cabot says that it "is kind of an oxymoron right now, because the folks who have exited have landed on their feet due to the tight labor climate we are in."
PARTNERSHIPS OR POWER PLAYS?
So, how can unions and companies work together to confront contentious issues and to remain competitive in the new global economy? For Rodier, the answer lies in forming a true partnership as described in her continuum. Most paper companies, however, fall in the "cooperate as appropriate" category, something she sees as an important measure of progress for the industry. Such cooperation begins with important "enabling" language in the actual contract, which provides a shell within which union and management can work on designated thorny issues.
As described in the sidebar on pg. 32, there are drawbacks to keeping cooperation selective to a few issues as opposed to forming a true partnership. These problems occur when the union realizes the bounds of its actual influence.
"The company says that it wants a cooperative effort, but what plays out in reality sometimes is that they pick and choose what they want to do," describes Rodier. "When some of the tough things are approached, they tell the union it's none of their business. At that point, the notion of being in this whole struggle to stay competitive together is obliterated, and the level of cooperation begins to reflect that."
From PACE's standpoint, Kirchner describes a desire for a true partnership, one that does not limit the cooperative relationship to certain issues and one that involves more input into business strategy. Despite the desire, he says that the union has been "disappointed, to date, in the response we have gotten from the industry."
"We want to show employers that we add value and that when we empower our members to be involved in daily decision making, it creates a more constructive work environment," describes Kirchner. "We want to work with engineers, marketing people, and supervisors on innovative ways to produce a product. Our members who have experienced this have gone into it wholeheartedly; it offers them a way to raise their standard of living and provides them more dignity on the job."
In fact, PACE has formally revealed its wish to move true partnerships from the mill up to the corporate level something the union refers to as a strategic ALLIANCE. The call for such an ALLIANCE was put forth at AF&PA's President's Forum this past October by PACE president Boyd Young. The sidebar on pg. 35 shows an example of the language between a paper company and the union for such an ALLIANCE.
So, why the need for such an ALLIANCE? According to Rodier, individual units/plants within companies had previously initiated "partnership" efforts, despite not having total corporate backing. In some of these cases, things would be going great for the partnership at a district/local level but falling apart when it came to company strategies in another geographical location. The strategic ALLIANCE is what she describes as "PACE's attempt to put teeth in a true partnership."
"Theoretically, it gives both the union and the company equal footing and equal power," she notes. "This is important because when trust and relationships aren't built at all union/management levels, that is, international union president and corporate CEO, and so on down the line, the balance of power can be tipped. PACEis pushing this concept to the max in its new policy statement."
Since the announcement, Kirchner says, "we had discussions with paper companies, but I wouldn't categorize the interest as strong at this point." For Cabot, this is not surprising. Although he sees "a great deal of middle ground" in the industry as far as obtaining statements of mutual respect and intent to cooperate, he finds the language in the ALLIANCE unacceptably strong.
"My sense is that many of the rights that are seemingly desired in this language already exist within Federal labor law and usually within contracts," Cabot describes. "This appears that the union is trying to cleverly find a way to restrict management's authority in order to get more power and give itself equal authority in matters that affect its membership."
Cabot is especially troubled by the language associated with "shared decision making," calling this "reallocation of power a reach, especially within an area that is the right of management, like decision making. There will only be so many jobs, and they want a right to veto that."
As another example of the problematic inclusion of the union in business decisions, Cabot cites confidentiality, something he sees as "transcending the employer-employee/union-management relationship." Discussions surrounding technological changes that might bring a company competitive advantage should remain private, he says, so that competitors do not have advance knowledge and try to react.
Kirchner's comments relating to decision making do not necessarily sound open-ended, since, in relation to the ALLIANCE, he says the union "will try to develop and talk about the areas in which they would share decisions." However, he does indicate the contractual language will encourage "organizing efforts" in new facilities.
"We won't have those traditional fights over organizing, and we won't need a third party to arbitrate," Kirchner describes. "We want to show with these agreements that, with an enlightened work force, we can work better and that we can improve the bottom line for the company, which relates back to growing the union, as well as growing the business."
Cabot says that resistance to such promulgating language would be strong, since most paper companies are now so diversified that they have non-union plants. "Companies are not trying to bypass the union by resisting this; we are trying to involve the employees," he says. "The policy is that the employees should have the choice."
Rodier, however, sees benefits in the language of the strategic ALLIANCE.
"Both union and management can focus on the business of the business and not fighting each other, wasting valuable time, money, etc.," observes Rodier. "A committed work force, continuous improvement, assistance in making sound business decisions, waste reduction, shared rewards and shared risks, mutual accountability, new business, better profits-the list is endless, if management will entertain the possibilities."
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