Union-Management Alignment
SPL 5.3
Joel Cutcher-Gershenfeld
Senior Research Scientist, MIT Sloan School of Management and
Executive Director, MIT Engineering Systems Learning Center
Presentation for:
ESD.60 – Lean/Six Sigma Systems
MIT Leaders for Manufacturing Program (LFM)
Summer 2004
Overview
¾ Session Design (20-30 min.)
¾ Learning Objectives
¾ Appreciation of the mixed-motive
nature of union-management
relations
¾ Understanding of the potential
and limits on innovation in
unionized settings
¾ Part I: Introduction and Learning
Objectives (1-2 min.)
¾ Part II: Key Concept or Principle
Defined and Explained (3-5 min.)
¾ Part III: Exercise or Activity
Based on Field Data that
Illustrates the Concept or
Principle (7-10 min.)
¾ Part IV: Common “Disconnects,”
Relevant Measures of Success,
and Potential Action
Assignment(s) to Apply Lessons
Learned (7-10 min.)
¾ Part V: Evaluation and
Concluding Comments (2-3 min.)
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 2
Part IV: Disconnects
Part V: Conclusion
Labor-Management Relations and
Lean/Six Sigma Systems
The unions hitherto have been chiefly combative organizations
designed to protect and enhance the workmen’s share in
distribution.
This is still a necessary function, and one that must be performed by
the strong organization of unions. . .
The cooperative features of the relationship between employer and
employee, however, need to be developed equally, in order that
the size of the pie may be increased as much as possible.
Paul Douglas (Journal of Political Economy, 1921)
“Mutual Growth Forums promote cooperation between the union
and the company through better communication, systematic fact
finding, and addressing as early as possible issues affecting the
interests of employees, the union and management”
Source: “Sharing Our Pride” UAW-Ford National Programs Center, Winter
2000
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
6/9/04 -- 3
Focus on Labor-Management Relations
¾ Key Assumptions
¾Multiple stakeholders
¾Common and competing interests
¾Need for mechanisms to identify and pursue
common interests
¾Need for mechanisms to surface and address
conflicting interests
¾Interests/Contextual Conditions evolve
¾Need for periodic recalibration
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 4
Part IV: Disconnects
Part V: Conclusion
A Core Assumption:
Joint Interests and Independent Interests
Management –
Predominantly
Independent
Interests:
Internal
Corporate
Operations,
Corporate
Profits,
Management
Rights…
Primarily
Independent Action
Predominantly
Joint Interests:
Safety, Quality,
Employee
Involvement,
Training,
Maintenance,
New Technology,
Work/Life Balance,
Business Success,
Sustainability…
High Potential for
Joint Action
Labor –
Predominantly
Independent
Interests:
Internal Union
Operations,
“Check and
Balance” on
Management,
Expanding
Membership,
Political Action…
Primarily
Independent Action
Note: The areas labeled as “Independent Interests” are primarily separate domains where labor and
management resist input by the other – but there are some legitimate joint aspects in even these domains.
Similarly, even in the area labeled as “Joint Interests” there are aspects of these issues that involve what the
parties see as separate or independent interests. One key consideration has to do with the concentration of
effort and attention – is it in the domain of joint action or the domain of independent action.
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 5
Part IV: Disconnects
Part V: Conclusion
A Framework for Labor-Management
Transformation
Strategic Level
Collective Bargaining Level
Workplace Level
Source: Adapted from Thomas Kochan, Harry Katz, and Robert McKersie, The
Transformation of American Industrial Relations. New York: Basic Books (1984)
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 6
Part IV: Disconnects
Part V: Conclusion
Selected Principles of Partnership
¾ Trust and Respect
¾ Shared Vision
¾ Negotiated Change
¾ Joint Implementation and Governance
¾ Learning and Adjustment
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 7
Part IV: Disconnects
Part V: Conclusion
Selected Tensions Underlying the
Principles
Individual
Institutional
Trust and Respect
Big Picture
Details Matter
Shared Vision
Forcing
Fostering
Negotiated Change
Dialogue
Action
Joint Implementation/Governance
Short Term
Long Term
Learning and Adjustment
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 8
Part IV: Disconnects
Part V: Conclusion
Observations on Labor-Management
Partnerships
¾ Basic Model of Change
¾ Factors that unfreeze or
motivate change
¾ Implementing the change
process
¾ Diffusing and institutionalizing
change
¾ Changes must be consistent
across three levels of activity—
workplace, negotiations,
strategic
¾ Process will encounter periodic
pivotal events
¾ Substantive results must
address bottom line interests &
objectives of workforce and the
employer
¾ It takes three agreements to
have one agreement
¾ Agreement within the union
¾ Agreement within
management
¾ Agreement between union
and management
¾ The essence of a union and
management organization
¾ Management is a formal
hierarchy with politics in the
background
¾ A union is a political
organization with hierarchy in
the background
Adapted from presentation by Susan C. Eaton & Robert McKersie at Conference on
“Transforming Labor Relations” MIT – March 6, 2003
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 9
Part IV: Disconnects
Part V: Conclusion
Incredibly difficult challenge of
following path 3
Path 1:
Unrestrained
Opposition to
Management
Path 2: Total
Cooperation
with
Management
Path 3: Work closely with management to
advance the interests of our members, but retain
our independence as a local union
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
6/9/04 -- 10
Sample Local union structure and
operation
• Local Officers
¾
¾
¾
¾
¾
¾
¾
President
Vice-President
Financial Secretary
Recording Secretary
Sergeant at Arms
Executive Board
Trustees
• Bargaining Committee
¾
¾
¾
Chair
Members
Skilled Trades
• Committeepersons
¾
¾
¾
¾
¾
¾
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
District Committeepersons
Committeepersons on Days
Committeepersons on
Afternoon/Midnights
Alternate Committeepersons
Skilled Trades
Committeepersons
Alternate Skilled Trades
Committeepersons
6/9/04 -- 11
Sample Local union appointee
structure
• National
Appointees
¾
¾
¾
¾
¾
¾
• Sample Local
Appointees
Employee Resource
Coordinators
Benefits
Representatives
EAP
Health and Safety
Job Security
Quality
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
¾
¾
¾
¾
¾
Ergonomics
Joint
Apprenticeships
Quality
TPM
Visual Management,
and other “nontraditional”
positions
6/9/04 -- 12
Plant Joint Governance Structure
Department/Workgroup Meeting
Area Steering Committee
Weekly
Lean/Six Sigma Champions w/
Vertical Cross-Functional Teams
Plant Joint Steering Committee
Leadership Forum
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Weekly
Ad-Hoc
Structure
6/9/04 -- 13
US Labor-Management Relations
100%
90%
Union -- 1996
Union -- 1999
Union -- 2003
80%
70%
Management -- 1996
Management -- 1999
Management -- 2003
60%
50%
40%
30%
20%
10%
0%
Very Cooperative
Somewhat Cooperative
Somewhat Adversarial
Very Adversarial
Source: FMCS National random sample survey of matched pairs of union and management lead
negotiators – Presentation by Joel Cutcher-Gershenfeld, Thomas Kochan and John-Paul Ferguson
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 14
Part IV: Disconnects
Part V: Conclusion
Direction and Rate of Change in Relations
100%
Union -- 1996
Union -- 1999
Union -- 2003
90%
80%
70%
Management -- 1996
Management -- 1999
Management -- 2003
60%
50%
40%
30%
20%
10%
0%
Relationship
Improving
Relationship Not
Changing
Relationship
Getting Worse
Quick or Very Slow or Very Slow
Quick Change *
Change *
Source: FMCS National random sample survey of matched pairs of union and management lead
negotiators – Presentation by Joel Cutcher-Gershenfeld, Thomas Kochan and John-Paul Ferguson
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 15
Part IV: Disconnects
Part V: Conclusion
Management-Driven Outcomes
100%
Union -- 1996
Union -- 1999
Union -- 2003
90%
80%
70%
Management -- 1996
Management -- 1999
Management -- 2003
60%
50%
40%
30%
20%
10%
0%
Wage Concessions
Benefit Reductions
Work Rule Flexibility
Source: FMCS National random sample survey of matched pairs of union and management lead
negotiators – Presentation by Joel Cutcher-Gershenfeld, Thomas Kochan and John-Paul Ferguson
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 16
Part IV: Disconnects
Part V: Conclusion
Union-Driven Outcomes
100%
Union -- 1996
Union -- 1999
Union -- 2003
90%
80%
70%
Management -- 1996
Management -- 1999
Management -- 2003
60%
50%
40%
30%
20%
10%
0%
Wage Increases
Benefits Increase
Job Security
Source: FMCS National random sample survey of matched pairs of union and management lead
negotiators – Presentation by Joel Cutcher-Gershenfeld, Thomas Kochan and John-Paul Ferguson
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 17
Part IV: Disconnects
Part V: Conclusion
Additional Outcomes
100%
Union -- 1996
Union -- 1999
Union -- 2003
90%
80%
70%
Management -- 1996
Management -- 1999
Management -- 2003
60%
50%
40%
30%
20%
10%
0%
Increased Worker Input Profit/Gain Sharing, Pay
for Knowledge
Team-based Work
System
Joint Committees
Source: FMCS National random sample survey of matched pairs of union and management lead
negotiators – Presentation by Joel Cutcher-Gershenfeld, Thomas Kochan and John-Paul Ferguson
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 18
Part IV: Disconnects
Part V: Conclusion
Concluding Comments
¾ Large potential impact with alignment of collective
interests
¾ Complicated process of transformation and change
in institutions and relations
¾ A global challenge
© [LFM Students] – ESD.60 Lean/Six Sigma Systems, LFM, MIT
Part I: Introduction
Part II: Concepts
Part III: Application
6/9/04 -- 19
Part IV: Disconnects
Part V: Conclusion