How can industrial relations assist organisations in maintaining a skilled workforce

In the current rapidly changing economic environment, there has been an increasing tendency since the 1990s for US employers, trade unions and workers to come together to create non-traditional structures aimed at meeting their various interests at work. More progressive companies and unions have used the collective bargaining process as a means to tackle the competitive pressures resulting from globalisation. Some have created partnerships based on new methods of communication and conflict resolution, joint decision-making in many areas, new work processes involving greater creative freedom for workers, and continuous training

In a specially commissioned article for EIRO, David Thaler of the US Federal Mediation and Conciliation Service, presents a personal view of the role of industrial relations in the structural change of organisations in the USA.

Why change is occurring

Given the declining level of unionisation in the USA (with a rate of 13.5% in 2001 - US0211101F), coupled with a decline in legal protections for trade unions, one can conclude that the momentous change in both organisational structure and work processes - involving greatly increased labour-management cooperation - in the last 25 years has been driven not by union pressure tactics or favorable legal forces. It also has not been driven by a sudden spirit of cooperation among labour and management interests. Instead, increased labour-management cooperation in the last 25 years has been driven by economic necessity.

For those familiar with the jargon of the 'interest-based problem-solving' model (summarised in the appendix to this article), structural change in corporate America has been more of an interest-based process than a rights-based process. As in any capitalist system, labour relations have also reflected a power-based dynamic, but power has served only to drive the pace at which change has occurred, and has not been the underlying cause of change. The explanation for this focus on interests lies not in the altruism of employers (which in the USA generally enjoy a power advantage), but rather in the symbiotic, mutually dependent relationship between labour and management that has arisen by necessity in this highly competitive, global, skills-driven, increasingly fragmented, and information- and services-oriented economy.

Changing environment

Before looking at the respective interests of labour and management, we will take a brief look at the economic environment in which they now have to relate. As has been well documented, the developed world has undergone a dramatic shift from manufacturing to services and information as the basis of economic development over the last 35 years. As a result, businesses are under ever-increasing pressure to make goods 'better, faster and cheaper'. With the disappearance of manufacturing jobs and the importance of information processing and customer service, the need for 'brawn' has given way to the need for 'brains'. This phenomenon has been referred to as 'skill-biased technological change', referring to the increasing demand for skilled workers in the post-industrial economy.

The ever-increasing importance of information in today's workplace and the myriad ways of receiving, processing and communicating that information have challenged managers and workers alike to develop new ways of structuring their relationship to maximise their productivity. Traditional 'top-down', 'command and control' labour-management relationships might have been appropriate in an era of routinised, assembly-line work processes focused on repetitive activity. However, this new era of rapid technological change and voluminous, increasingly sophisticated information flow has made it necessary for workers to have the freedom to be creative in developing effective work processes. This is true simply because there is too much information for managers to keep control of, and the simultaneous tasks that arise in today's workplace are multifaceted and increasingly demand new learning and understanding. Today's workers require an environment of both constant, formal upgrading of skills as well as an environment that encourages the manager-to-worker and worker-to-worker interactions that are conducive to informal learning. In addition, the ongoing (if unsteady and uneven) reduction in trade-based protection for industries necessitates that governments, businesses and workers alike constantly adapt to embrace constantly evolving economic opportunities as well as threats.

Changing management and labour interests

In this environment, what are labour and management's interests? From management's point of view, it needs a highly skilled, flexible workforce that fills in the gaps that middle managers used to fill in terms of spotting problems and generating solutions at the working level. Management needs a workforce that is willing and able to learn new tasks and perform new functions. It needs workers who have well developed 'soft' skills such as the ability to communicate clearly and respectfully, to listen actively, to empathise and to react to situations non-defensively. In terms of workflow, management needs workers who are just as comfortable (or almost as comfortable) with exceptions to the norm as they are with the norm itself. Why? There often is no norm anymore! The world and the workplace are simply changing too fast.

What are labour's interests? Workers need a good basic education system to develop the analytical skills required to be productive in an information-driven workplace where there are no 'norms'. While for the most part basic education is beyond the sphere of labour relations (though numerous private sector companies, such as Bell South have found it advantageous directly to support basic education in their communities, thereby creating direct links to the company to ensure a competent pool of labour in the future - see Teaching the new basic skills: Principles for educating children to thrive in a changing economy, Richard Murnane and Frank Levy, Free Press 1996), other aspects of worker training are appropriate for joint labour-management treatment. For example, in light of the continuing failure of many American schools to deliver a good-quality basic education, workers need employers to step up and provide not only initial job training but also continuing opportunities for skills development. Hence the need for the now overused but still very important concept of 'lifelong learning'.

Beyond learning opportunities, workers need opportunities to utilise their skills to 'create' in accordance with their values, talents and abilities and, as a consequence, enjoy the value of their creations. Abraham Maslow recognised this human need to 'create' long ago when he identified 'self-actualisation' at the summit of his famous hierarchy of needs (see Toward a psychology of being, Abraham Maslow Wiley, John & Sons, 3rd ed 1998. [orig 1962]). This ability to create stands in contract to the strict 'Taylorist' production methods so prevalent in the industrialised world in the first three-quarters of the 20th century.

While one can credibly argue that workers have always had this need for greater control over their work processes, one can argue that it is more pronounced now. An increasingly insecure economic environment (even in the best of times) characterised by a low degree of mutual loyalty between employers and employees, coupled with the declining influence of the family structure and authority in general in the post-modern USA, have given rise to a class of workers that does not see the value of following top-down orders. 'Generation X' workers (the cohort born between, roughly, 1963-79) were often 'latch-key kids' who arrived home to an empty house where both parents were working. Many of them grew up in single-parent homes, in many cases with diminished authority figures (the rate of divorce in the USA skyrocketed starting in the late 1970s with the advent of the 'no-fault' divorce, while over the past 30 years the persistent social and economic marginalisation of vulnerable populations - eg people at or near poverty, racial and ethnic minorities - combined with an ongoing breakdown of traditional family values, has swelled the numbers of women bearing children outside marriage). Unlike 'Baby Boomers' (the cohort born in the massive population bulge from 1946-62), who 'dared' to challenge authority, a scepticism toward authority is ingrained in 'Gen Xers' by virtue of the circumstances in which they were raised.

Above and beyond training and independence, workers still need the same protections they always did, such as safe and desirable working conditions, secure employment, and fair opportunities for employment and promotion. While the underlying needs may not have changed, the nature of those needs in many cases has changed. For example, whereas 'job security' is no longer realistic in an environment where employers' need to fill specific 'jobs' is constantly changing, workers need 'employment security'. That is, they need their employer to provide them with resources and opportunities to keep them useful and productive and, hence, employed - hopefully (for them) with the same company. In addition, whereas safe working conditions used to be more about goggles, air filters and ear muffs, it now involves ergonomics and reducing violence in the workplace.

In the same vein, whereas equal employment opportunity used to be about protecting seniority and/or a formal merit-based system, or prohibiting discrimination on the basis of carefully defined categories such as race, ethnicity, religion, disability and gender, nowadays the challenge is subtler. With respect to the issue of seniority and/or a formal merit-based system, 'fairness' now means candour in terms of possible career growth, since there are no longer guaranteed opportunities in most organisations. Possible career growth often reflects the prospective health of the company, which in turn reflects information that companies have historically withheld from their workers. The process of information-sharing that is such an important part of the interest-based bargaining model (see the appendix to this article) is an attempt to address this need.

Regarding discrimination, whereas workers still need protection from discrimination on the basis of defined categories - race, ethnicity, religion, disability and gender - in an environment of reduced legal protections over the last 15 years, workers also need more fairness of the type that cannot be legislated. Specifically, they need fairness that is rooted in increased integrity, empathy and communication on the part of management. This need for fairness is reflected in the increasingly voluminous backlog of Equal Employment Opportunity (EEO) complaints brought by people who have used the EEO process as their only possible forum to complain of injustices that do not fall into the formal spheres of protection of the Equal Employment Opportunity Commission (EEOC). The EEOC was created under the Civil Rights Act of 1964 to provide a means of redress for workers suffering discrimination under defined categories such as race, gender, religion and ethnicity. Each year, workers file tens of thousands of complaints pursuant to the EEOC's legal framework (US0112156F). Many of these complaints are settled prior to the hearing stage.

The need for fairness is also reflected in the increasing alienation on the part of those who may not file formal EEO complaints but nonetheless feel not only excluded, but also harmed, by 'the system'. While these aggrieved individuals may not have legal recourse (a rights-based remedy), they have a pronounced interest in fairness, integrity, empathy and communication, as indicated by the decreasing levels of job satisfaction among the American labour force (see The effects of workplace practices on job satisfaction in the United States steel industry¸ Peter Berg, Economic Policy Institute, Washington DC, September 1997, rev. November 1997). In a 2002 survey, based on a representative sample of 5,000 US households, the Conference Board of the United States, a not-for-profit business group, found that growing numbers of Americans are less satisfied with their jobs, compared with seven years previously (Special consumer survey report: Job satisfaction on the decline, Conference Board, July 2002). Only about half of those surveyed said that they were happy in their jobs, down from 59% in 1995. The decline in job satisfaction was found among workers of all ages and across all income brackets.

Labour and management working together to meet changing interests

With the ever-changing economic environment, coupled with declining unionisation and longer collective agreement (or 'contract') periods, in this day and age the collective agreement cannot possibly be flexible enough to meet managers' and workers' interests, as described above. Instead, it is 'administration' of the agreement that counts. In the absence of a union, meeting both sides' interests depends on setting up structures and work processes to meet both sides' interests (such efforts, of course, should be constrained by the requirements of the Taft-Hartley Act, which prohibits employers’ attempts to organise workers).

Given this need, in recent years, employers, workers and unions have come together to create non-traditional structures to draw upon both sides' resources at the plant level, the company level, and the sectoral level. Their efforts have been augmented, and in many cases jump-started, by the US government through the Federal Mediation and Conciliation Service. In addition, there are a growing number of private sector human resources and labour relations consultants working with organisations to provide flexible, 'just-in time' responses to the latters' labour relations challenges.

More progressive companies and their unions have used the collective bargaining process as a means to tackle the competitive pressures resulting from globalisation, as opposed to using the process to resist such pressures. This broad issue of globalisation has played out in collective bargaining under the cover of various 'partnership challenges', such as:

1. the need for training in new methods of communication and conflict resolution in order not only to reach quicker collective agreements but, more importantly, to administer the whole process of organisational change on an ongoing basis;
2. the need for changes in the structure of the organisation - from top to bottom - to provide for shared decision-making to maximise the quantity and quality of input into the new work processes, and to manage the political aspects of such monumental change;
3. the need to devise new work processes to give workers greater freedom to 'create' and to benefit the company by providing ideas for improvement; and
4. the need to provide continuous training to workers to enable them to learn new technology to keep up with the competition and, relatedly, change jobs within the same employer's operations.

In order to facilitate the discussion of the broad topic of the role of industrial relations in the structural change of organisations, below we divide the discussion according to the four partnership challenges identified above, but combining challenge 2 (structural issues) and challenge 3 (process issues).

Communicating about how to communicate: Training in interest-based problems-solving and conflict resolution and prevention

In every organisation that is attempting a cultural change to enable it to embrace collaborative work processes, labour and management partners must lose old habits and break with the past. Often, labour and management have a contentious history, characterised by hostility and disappointment. Bargaining is usually characterised by each side staking out extreme positions in the hope that such demands will enable it to settle above its 'bottom line'. The problem with such bargaining is that parties are often left disappointed if they are not powerful enough to impose their will on the other side. This dynamic was alluded to above, through the reference to power-based conflict resolution. Even in its most benign form, power-based dispute resolution results in the overbearing of the will of the weaker party, if that party does not have a better alternative to a negotiated agreement. Sometimes, if one or both of the parties perceive that they have a better alternative to a negotiated agreement, the result is a lock-out or a strike. Almost always, in a power-based negotiation the parties' relationship suffers. Given the amount of time that most of us spend at work, the relationship is a significant one in our lives, and damage to it has very serious consequences.

Before an organisation can get out of that pattern, it is almost always necessary to train the labour-management partners in interest-based problem-solving (IBPS) techniques (see the appendix). In a nutshell, the IBPS process involves the parties learning how to communicate by expressing their needs, concerns and feelings - in the form of 'I' statements as opposed to 'you' statements - and engaging in a joint problem-solving to satisfy those needs, concerns and feelings, which in the IBPS process are called interests. In order for this process to take place and be successful, it is necessary to engage in joint training with labour and management partners in skills such as communication, active listening, brainstorming and consensus decision-making.

Contrast the IBPS process and traditional negotiations. In the IBPS process, the parties openly exchange information concerning the interests that they need to satisfy (eg 'we need to keep production costs low enough to compete in the market') and then engage in joint problem-solving to develop several means of satisfying those interests. In contrast, in traditional negotiations parties demand inflexible, absolute positions (eg 'we must keep production costs low by cutting wages 30%') and then use power-based or rights-based arguments to satisfy those demands. (eg 'we will cut 30% of the workforce if you do not agree to take a pay cut, and the law permits us to do that after the collective bargaining agreement expires at midnight Tuesday', or 'if you keep pressing your demand we will go out on strike, and the labour law statute protects our right to do so').

While traditional negotiations may seem to reflect the reality of workplace negotiations and are still in wide use in many workplaces, they often hurt organisations because the parties overlook options that can satisfy both parties' interests and help the organisation move forward and improve. Unless organisations become better at communicating to articulate common goals, and exchanging information on the interests that workers and managers must satisfy in order to accomplish those goals, tremendous inefficiency and loss of productivity will result. This type of communication is simple to explain in theory but hard to achieve in practice. Many organisations struggle with power-based threats and demands to satisfy positions. Often, workers and managers do not stop and think about working together to satisfy everybody's interests to the benefit of the organisation. For these reasons, training in what is, for many, a counter-intuitive way to communicate is essential component in achieving a more productive and efficient workforce.

How have winning organisations incorporated interest-based negotiations and principles into their work processes?

In the USA, the Miller Dwan Medical Center (MDMC) in Duluth, Minnesota, stands as an example of an organisation that has made significant improvements upon years of contentious labour relations through the use of IBPS. A facilitator from the US Federal Mediation and Conciliation Service (FMCS), Commissioner Darlene Voltin, conducted IBPS training for union and management bargaining committees for four different collective agreements with four different unions. In each case the parties, with much hard work and great effort toward attitudinal change, overcame years of acrimonious relations and set the course for the future using interest-based negotiations (IBN). Commenting on the fourth and final contract, the mediator writes:

Finally, it was time for the real test of interest-based bargaining. Was it possible to use such a process when the chief spokespersons for MDMC and the United Food and Commercial Workers (UFCW) local union had such a contentious history with each other that involved deep-seeded personality conflict? Since the FMCS mediators who did the [IBPS] training were well aware of the history of the relationship between MDMC and UFCW, the training was geared towards listening, understanding and team building. At the outset, ground rules were created based on [IBPS], and they prepared a plan for how the parties would move to traditional bargaining if the [IBPS] approach did not succeed. In addition, the Federal Mediator who facilitated the bargaining obtained an agreement from the parties to follow the process and not take short cuts. Not only did the parties arrive at an agreement based on consensus, but they also dramatically improved their relationship. As they began to resolve issues through the [IBPS] process, their trust increased and their relationship with each other greatly improved ... [The IBPS process allowed] two parties who were blindsided by previous history and personality conflict among party members to refocus their interests back towards their respective goals and the needs of their members, a process that resulted in a successful, voluntary agreement.

(Excerpt from the APEC Best practices toolkit from the 2001 project, Responding to change in the workplace: Innovations in labor-management-government cooperation, funded by the APEC Human Resources Development Working Group, David Thaler, David Glines and Jennifer Ortiz.)

Miller Dwan Medical Center is but one of thousands of organisations that have worked with the FMCS to incorporate IBPS into their labour relations work. Other notable success stories include the Kaiser-Permanente labour management partnership (see below), the Levi-Strauss & Company-UNITE labour-management partnership, and Iron Mountain Records. More information on these and other successes is available from the FMCS website.

Finally, it should be noted that in the last three decades the FMCS and a growing number of private practitioners have applied the interest-based model to not only the resolution of labour conflict but also the prevention of conflict. Whereas 25 years ago an FMCS mediator’s workload consisted 90% of dispute cases and only 10% of preventive cases, nowadays the average mediator’s caseload consists of only 65% dispute cases and 35% preventive cases.

What do preventive programmes look like? They range from simple IBPS training prior to contract negotiations, to the creation of permanent mechanisms to resolve conflict on an ongoing basis (such as a committee consisting of labour and management representatives), to intense programmes designed for organisations with a tumultuous history of labour-management relations, perhaps after a long and bitter strike. An important 'golden rule' of FMCS’s programmes is that preventive programmes - and permanent labour-management committees in particular - are in no way a substitute for collective bargaining and do not supplant the parties’ vigorous representation of their constituents’ interests. Rather they are a mechanism to deal with ongoing workplace challenges that have been intensified by a changing and increasingly competitive marketplace, as well as the gradual lengthening of the terms of collective agreements. The duration of the average collective agreement is now over three years (15 years ago it was two years) and, as such, many more issues need to be dealt with mid-term. The labour-management committee and the accompanying training in IBPS, communication, active listening, brainstorming and consensus decision-making, provide a crucial added edge for companies in this brave, new global world.

FMCS preventive programmes have one or a combination of the following elements:

1. an initial assessment to determine the propriety of the various programmes that FMCS offers;
2. training in relationship-building skills such as IBPS, communication, active listening, brainstorming and consensus decision-making in order to increase the likelihood of success of a particular programme;
3. in many cases, consulting services to establish a permanent institutional mechanism such as a labour-management committee, grievance mediation or a company-wide full-scale partnership; and
4. delivery of the programme itself, which may involve training only, institutional consulting only (see point 3 above), facilitation, or a combination of the all of these services.

An example of a programme in this fourth group is called a 'relationship-by-objectives' programme, whereby the parties receive training, exchange and discuss interests in a facilitated session, jointly develop objectives to improve their relationship, and set up (eventually) self-facilitated committees to help the parties reach their objectives. Commonly, an FMCS mediator will facilitate the first few meetings of a committee, after which the parties are on their own. The mediator will always train the parties in the habits, procedures and attitudes successfully to sustain a labour-management committee. FMCS mediators often build an evaluation and follow-up component into their preventive programmes, and are always available should the parties somehow get off track.

Structural and process change at the plant level: The Harley-Davidson labour-management partnership

In the early 1990s, faced with increasingly stiff competition from Japan and Europe, a demoralised workforce, archaic work practices, and extremely high expectations from its loyal customer base, the motorcycle manufacturer Harley-Davidson Corporation and its trade unions knew that if they were to survive they would have to reinvent the company’s work processes. For this reason, the parties agreed to create a new 'greenfield' factory in Kansas City, Missouri that would be free from the shackles of the past. However, the parties also wanted to be careful to preserve and actually improve upon the 'storied' and unique relationship that Harley-Davidson enjoyed with its customers.

At plant level, the partnership between the Harley-Davidson Corporation and its unions, the International Association of Machinists and Aerospace Workers (IAMAW) and thePaper, Allied Industrial, Chemical and Energy Workers Union (PACE) is an excellent example of an organisation utilising the labour relations process to embrace the structural change necessary for survival in a rapidly changing world. The partnership is embodied as the very core of the collective agreement, from which virtually all other provisions of the agreement flow. The Harley-Davidson case stands as an example of a carefully planned and purposeful extension of both partnership and devolution of decision-making, from the top layers of the organisation right down to the rank and file.

As early as three years prior to the signing of the collective agreement, Harley’s chief executive officer and chief financial officer met with the top officers from IAMAW and PACE to discuss a course of action in choosing a new greenfield plant site that would embody Harley’s reinvention of itself as a company that is administered in partnership. From these initial top-level meetings, the parties formed a joint partnership implementation committee (JPIC), consisting of high-level officials from all three organisations, to begin broad-based discussions around workplace change. The JPIC soon developed a procedure for devolving decision-making within the organisation, called 'elements of shared decision-making'. Beginning by tackling the least contentious issues, the parties identified 23 vital 'elements' such as training and education and outsourcing. The Harley-Davidson labour-management partners then assigned a 'level' that they hoped to attain with each element of shared decision-making. There were three levels:

1. D1: unilateral – management or labour retain sole discretion to make decisions;
2. D2: unilateral, but with prior input from the other party(ies); and
3. D3: joint consensus – each side has veto power over the decision.

The JPIC developed a table that assessed where the parties stood at the time with respect to each type of decision, as well as their eventual goal. In all cases, the desire was to go from more unilateral to more consensus-based decision-making. The following is an excerpt from their table (provided courtesy of IAMAW's Office of High Performance Work Organizations)

Note: 1 = unilateral decision-making; 2 = unilateral decision-making, but with prior input from the other party(ies); 3 = joint consensus, with each side having veto power over the decision.

As one can see, the devolution of decision-making does not occur for its own sake. Rather it is part and parcel of a comprehensive programme to draw upon the knowledge and talent of all workers and managers to reach clearly defined objectives.

Having developed a mutual understanding of just what 'shared decision-making' meant in the Harley-Davidson context, the JPIC then went on to create the permanent governing structure of the partnership. For this task, the JPIC recruited 20 hourly representatives, called production technicians (PTs), who were to work toward 're-engineering current processes' to reflect the values of the partnership and better serve the new factory. The JPIC also recruited a seasoned new plant manager, who had an understanding of and sensitivity to the evolving collaborative process. He was to work with a handful of his own support personnel as well as the PTs to design the new processes. The system that the developed became known as the 'Kansas City Operating System'.

The following excerpt from a case study of the Partnership prepared by IAMAW describes the Kansas City Operating System. It should be noted how the various jointly managed layers progressively integrate the work done at the floor level, which reflects such a high degree of employee empowerment that the work is described as 'self-directed'.

The first layer of decision-making falls within four Process Work Groups (PWGs) [which are organised according to skill and function: Fabrication; Paint; Assembly; and Future]. Groups of workers, called Natural Work Groups (NWGs), are responsible for decisions at the floor leveland are essentially self-directed. Within the NWGs the work of building motorcycles gets done. Specific tasks are planned and organised, the parts and supplies provided, and the shared decision-making on quality, output, safety checks, and communication is done. A collection of NWGs and support employees (roughly 15 in each NWG) make up the PWG.

The second level of decision-making is the Process Operating Group (POG), which is a smaller leadership group among the PWG made up of the Process Leader, steward, and a member of each NWG along with a support employee. The POG accepts the decision-making role in the PWG. It is responsible for assuring delivery of the parts/products and services for that particular manufacturing process, on schedule and within budget. In the POG, the work of the NWGs is coordinated with other NWGs within that particular Process Operation. POG representatives share production information with the NWGs, other POGs, PWGs, and NWGs throughout the factory. POG stewards, with a working knowledge of the agreement, shepherd the partnership and resolve issues with their Process Leaders.

By empowering workers and instituting structures and processes to benefit from the expertise of both labour and management, Harley-Davidson set itself on a course to unprecedented success. At the time of writing, many thousands of would-be Harley Davidson owners are on waiting lists to buy the company's motorcycles. If a company now has a challenge, it is to 'scale up' to meet its increased demand.

Structural and process change at the company-wide level: the Kaiser-Permanente labour-management partnership

In contrast to Harley-Davidson, where the structural and process change was initially focused on one plant, Kaiser-Permanente and its unions have established a national partnership encompassing facilities located throughout the USA. Since they comprised a highly complex entity consisting of the Kaiser Foundation Health Plan and Hospitals, 14 separate physician groups, and nine different trade unions, the labour and management partners felt that they needed a more broad-based programme from the outset if it was to have a chance to succeed.

In the 1980s and early 1990s, with the advent of for-profit healthcare providers in the USA, not-for-profit providers such as Kaiser Permanente were routinely being underbid by their for-profit counterparts, which enjoyed the benefit of marketing themselves only to better-risk populations and companies that provided incentives to their employees to restrain their use of healthcare. In response, the company and its unions engaged in a series of rounds of 'concession' bargaining in which one union would set a pattern of concessions that the other unions were compelled to follow.

Realising that Kaiser-Permanente was the most unionised healthcare organisation in the USA, the unions decided that they if they harmed Kaiser-Permanente they would just be harming themselves. However, the unions did not want just to acquiesce to the company's agenda. They made it clear that they had their own agenda that they wanted to pursue, and decided that a partnership would be the best vehicle to do so. For its part, the company knew that to remain competitive it would not only have to avoid the organisational distraction of labour conflict, it would also need the input of its employees who do the daily work of the organisation in order to achieve maximum quality and efficiency.

With these goals in mind, in 1997 the parties approached the FMCS, whose director not only facilitated the initial high-level meetings of the partnership, but also made the significant donation of 20 mediators to assist with training in skill-building as well as institutional development. The parties also retained a private consultant, Restructuring Associates, Inc, to assist the partnership formation and implementation process.

In terms of the structure of the partnership, unlike Harley-Davidson, the Kaiser-Permanente partnership deals with many different facilities and not just one. Similar to Harley-Davidson, though, the Kaiser Permanente partners established a senior partnership committee (SPC) consisting of Kaiser Permanente executive-level staff (from both the hospital and physicians' groups) and senior and local leadership from the participating unions.

Again similar to Harley-Davidson, the Kaiser Permanente partnership concept has spread throughout the company down to the working level. As sufficient progress is made by the SPC in terms of managing the implementation of the partnership, each business unit (defined as a division, region or market) becomes responsible for developing local joint partnerships to implement the goals of the partnership, which include, inter alia, strategic initiatives, quality of care, member and employee satisfaction, business planning, marketing and employment issues.

Another analogue to the Harley-Davidson partnership is the decision-making process, which is always guided by the following considerations:

1. if either party's vital interests are likely to be affected by a decision, the decision must be ratified by consensus;
2. if either of their interests will be even marginally affected, consultation should precede a final decision; and
3. if one party has little, if any, interest in the outcome, and no particular expertise on an issue to be decided, merely informing the other party is adequate.

There are other aspects of the partnership worthy of note. Kaiser Permanente has agreed to bear the costs of the partnership, including expenses for Kaiser Permanente employees. The unions and management have also agreed freely to share information with each other, and that each will have 'timely access to all relevant and pertinent information necessary to address the purposes of the partnership'. The parties have also acknowledged a mutual obligation to maximise employment security and, to that end, avoid the displacement of any employee. Management has agreed to take a neutral stance in any organising campaign the unions might engage in, but it reserves the right 'to speak out in any appropriate manner when undue provocation is evident in an organising campaign'. For their part, the unions agreed to make their best efforts to market Kaiser Permanente to new groups and individuals and to increase the company’s penetration in existing groups. Finally, the partnership agreement explicitly states that the agreement in no way affects any rights that the union may have pursuant to its collective agreement, that it is voluntary, and that its benefits are beyond those contained in the collective agreement.

Five years into the partnership, the partners are pleased that it has come a long way toward meeting its goal of infusing collaborative practices at all levels of the organisation: from joint staffing - where employees have meaningful input on how work is done - to performance sharing, to workplace safety initiatives. In addition, partnership teams are in place in every service area in Southern California (by far Kaiser Permanente's largest market), each with their own local initiatives and implementation plans. For example, at Baldwin Park Hospital in California seven committees consisting of hospital staff - admissions/business, critical care and medical surgery, emergency room, observation, perinatal, preoperative and continuing care - designed the entire work process of the hospital. Even the biggest decisions at the hospital include workers, as the hospital is managed through a series of joint governance bodies. Managers have union partners working side by side with them in day-to-day operations as well as in the hospital's long-term planning. As a result of their involvement in design and administration, the nurses now enjoy more time with patients and spend less time preparing cooking trays and performing other non-nursing duties.

Broader partnership initiatives include a comprehensive effort to reduce the number of workplace-related illnesses and injuries by 50% over the next four years. The workplace safety initiative is based on the premise that the safety and well-being of all of Kaiser employees is key to fulfilment of the 'KP promise'. Another partnership project that has been launched involves developing a long-range inpatient care documentation system to modify and enhance the unified medical record (UMR). The project's goals are to streamline documentation, promote quality patient care and staff/physician satisfaction, and meet regulatory and accreditation requirements. Finally, Kaiser Permanente submitted a letter of support to the California Department of Health Services (DHS) urging adoption of the nurse staffing ratio standards proposed by two of its union partners, the United Nurses Associations of California/Union of Health Care Professionals (UNAC/UHCP) and the Service Employees International Union (SEIU) Nurses Alliance.

Joint labour-management efforts in support of lifelong learning

In view of the rapidly changing workplace, both workers and management share a mutual interest in continuously training the work force in the skills required to remain productive enough to meet increasingly stiff competition. For this reason many companies have established extensive programmes to train their employees not only in specific skills required for concrete workplace tasks, but also in broad academic subjects that can employee’s quality of life and at the same time give him or her develop critical thinking skills that can be utilised for a variety of workplace tasks. This is the essence of 'employment security' as opposed to 'job security'.

One notable example is the Alliance for Employee Growth and Development, created by AT&T and the Communications Workers of America (CWA). The Alliance is the first jointly owned, non-profit educational corporation in the telecommunications industry. It is incorporated in the State of New Jersey, with equal numbers of management and union members on the board of directors. It has two managing directors, one appointed by the company and the other by the union. The Alliance is funded from the AT&T collective agreement.

Since 1986, approximately 160,000 employees have utilised the Alliance, according to Morton Bahr, the CWA president (speaking at the symposium of the Asia Pacific Economic Cooperation forum, 'Responding to change in the workplace: Innovations in labor-management-government cooperation,'). There are few restrictions - an employee may utilise it in the pursuit of a college degree up to and including a PhD, or to prepare for a higher job within AT&T, or to prepare for a new career outside AT&T, and also just to just go to college for self-improvement and lifelong learning. All costs are borne by the Alliance.

According to Mr Bahr: 'We have literally changed the lives of countless members while substantially improving the educational level of the general workforce. The new process dramatically changed the labour-management relationship by enabling the parties to establish a great degree of trust. The new partnership led to an enormous breakthrough — AT&T agreed to neutrality and card check recognition throughout the company.'

The Garment Industry Development Corporation (GIDC) is an organisation that is jointly funded by apparel manufacturers and the Union of Needletrades, Industrial and Textile Employees (UNITE) to protect and promote New York’s fashion industry. More than almost any other sector, the US apparel industry has been devastated by the outsourcing of manufacturing overseas. GIDC was created in recognition of the need for labour and management to work closely together in the common interest of maintaining New York City’s pre-eminence in the world of fashion. In contrast to the AT&T Alliance for Employee Growth and Development, which involves only one company, GIDC is a non-profit consortium of labour, industry and government dedicated to strengthening New York's apparel industry and keeping jobs in fashion.

GIDC'S programmes include on-site training programmes to provide individualised training assistance to New York apparel manufacturers and contractors. Bilingual vocational trainers work with operators and their supervisors to upgrade and diversify the skills used on the sewing floor. GIDC considers its 'train-the-trainer' programme to be the key to the success of its employer-specific training. Since 1988, GIDC's 'Super Sewers' programme has helped nearly 1,000 displaced workers to enhance their sewing machine skills and master workplace English. The 13-week programme addresses speed and accuracy. A special emphasis is placed on learning whole-garment construction.

To promote lifelong learning, GIDC's evening courses provide a path for career advancement to apparel workers. Courses include pattern making, marker making, sample cutting, manual pattern grading, computerised pattern making and computerised marking and grading. GIDC also offers shop owners and supervisors the opportunity for continuing learning, which can lead to cost savings and increased efficiency. Topics include computer skills, machine maintenance and repair, garment costing/cost control, and occupational health and safety.

According to the Task Force on Retraining the American Workforce that was commissioned by the Century Fund, a public policy think-tank, there are indications that training practices may be spreading as more manufacturing firms adopt principles of 'high performance workplaces', endorsed by management and labour, that emphasise the importance of training and giving responsibility to front-line workers. Joint union-management training agreements involving the United Auto Workers, the United Steel Workers, the Service Employees Union, the Building and Construction Trade Unions and UNITE all include formal labour-management commitments to upgrade the skills of workers at most job levels in order to enhance both worker productivity and job security. The challenge, in the view of the Task Force, is to find ways to encourage more firms to emulate such efforts at integrating training strategies for employees throughout the country.

Conclusion

The American workplace has undergone a dramatic shift in recent decades, driven by an increasingly competitive environment that penalises organisations that maintain workers who are not adding maximum productivity to the enterprise. The new economy has compelled companies to insist on 'better, faster and cheaper' production methods. Given this need and given the changing nature of work away from rote, top-down manufacturing to service- and information-oriented work requiring 'soft' skills (eg the ability to communicate clearly and respectfully, to listen actively, to empathise and to react to situations non-defensively), managers have had to accommodate workers for two reasons. First, managers must provide adequate and continuous training, both to increase the employee’s employability and, more importantly to the manager, to enable crucial flexibility in work assignments. Second, managers must give employees freedom to discover and create, free from the shackles of micro-management, in order to unleash workers’ know-how to enable better, faster and cheaper production to take place. In this new service- and information-oriented economy, managers cannot possible have all the knowledge to ensure quality and efficiency. Training both parties in improved communication and conflict management can give them the tools to reach agreement toward the above accommodations. That is the best way to ensure the survival of both of their jobs in this unstable and often nerve-wracking labour market of the 2000s.

David Thaler, Federal Mediation and Conciliation Service

Appendix - the elements of interest-based negotiations (IBN)

The following is an excerpt from the APEC Best practices toolkit from the 2001 project, Responding to change in the workplace: Innovations in labor-management-government cooperation, APEC Human Resources Development Working Group, David Thaler, David Glines and Jennifer Ortiz.

Element No. 1: Identify issues

It may seem an obvious point, but the first task in a negotiation is for the parties to get a handle on just what is at issue. This is a step that should not be ignored or even taken for granted. If the parties do not take this step, the negotiations can become unwieldy as the parties change or add to the issues according to the ebb and flow of negotiations. In addition, negotiations that do not have clear issues risk degenerating into acrimonious affairs that focus too much on the difficulties on the past, or on personality differences between the parties. This is the basis for the old IBN adage: 'focus on the problem, not the people' and the oft heard exhortations of the IBN facilitator for the parties to be forward-looking as the negotiations proceed.

Element No. 2: Exchange interests

Following the delineation of the issues, in IBN the parties then exchange their interests. In contrast to an issue, which is what you care about, an interest is why you care about an issue. An interest should be contrasted with a position, which is an inflexible demand that represents only one way to satisfy an interest. As we will see, IBN is about the parties working together to develop many ways of satisfying an interest. The following are some examples of interests as opposed to positions:

The benefit of focusing on interests instead of positions is that there are often ways to satisfy both parties’ interests with one solution. For example, in the first two examples above, the company can develop a results (not time) based accountability system by which it determines a bonus on a sliding scale. In the second two examples, perhaps the business can use the savings from the reduced need for office space in order to invest in technology to enable workers to telecommute.

The process is not always so cut and dry, and there are not always sufficient resources to implement every option to satisfy both parties’ interests. However, the process of engaging in this type of dialogue builds the parties’ relationship and gets their creative juices flowing in a positive direction. Those factors make it more likely that the organization will have good enough relations to design a program to adapt and thrive in the global economy.

Element No. 3: Brainstorm options

Brainstorming is the process of a group focusing on an interest and generating options to satisfy that interest, with at least three important ground rules: (1) there is no criticism of the ideas as they are generated; this creates an environment in which people are uninhibited and therefore free to be their most creative; (2) the focus is on broadening the options on the table rather than looking for a single answer; and (3) the parties try to search for options that satisfy both parties’ interests. Brainstorming works best when all participants sit next to each other, with the participants on the different 'sides' randomly distributed, facing a flipchart, a screen or a blackboard.

The process of brainstorming options is truly one of the most liberating for an organization, but it is also difficult to achieve. It requires professionalism and a maturity that is difficult to achieve in many organizations. The element of non-criticism of ideas implies a breaking-down of hierarchical barriers that many organizations find difficult to realize. The suspension of the tendency to find 'the' answer to a problem runs counter to the culture of many organizations that are focused on quick and immediate results. The race to 'the' correct result that many organizations are used to often precludes creative out-of-the-box solutions that might seem strange at first, but which may actually be modified into something workable with the benefit of the input of others in the group. Finally, the idea of searching for mutual gains is counterintuitive to many people, unless the organization has done a lot of work to align workers and managers with a common vision and objectives.

If an organization can incorporate brainstorming into its usual work processes, the benefits can be enormous in terms of obtaining the benefit of the input of each and every worker. In this way ideas can be adopted that otherwise would never be possible in the context of hierarchical, top-down decision-making.

Element No. 4: Evaluate options according to objective criteria

Once the options have been 'brainstormed', the group is now ready to evaluate them and adopt them according to objective criteria. This is critically important to the IBN process and to collaborative and efficient workplace processes in general. In the absence of objective criteria, options may be adopted based on power or simple persuasion, both of which are likely not conducive to satisfying the parties’ interests. At a minimum, the group risks adopting an inefficient or unfeasible solution that can do more harm than good.

A group develops objective criteria through the use of the brainstorming technique described above. Common examples of objective criteria are:

Taking into account objective criteria keeps the IBN process on track when, at the point of actually deciding on a concrete course of action, all of the benefits of the parties’ prior good work are at risk of being subverted by power imbalances or other forces that are not geared toward satisfying their interests.

Element No. 5: Decide on plan of implementation

Finally, in order to move forward in adopting the options, a group should think about how they will be implemented. This is not to say that the group has to engage in a detailed discussion of every step required in implementation. Rather it is to ensure the integrity of the IBN process by making sure that there are individuals or groups empowered to implement the options adopted by a certain milestone dates. If the parties do not take this step, they risk compromising the IBN process and the numerous benefits that they stand to enjoy from it.

Why is IR important in an organization?

How the employees relations can contribute to increase the performance of the organization?

What are the factors that help to maintain good industrial relations?

Why is employee relations important to workforce productivity and industrial peace in any business setting?