The Role of Cooperative Structures in Workplace Transformation
Nicole Blumner, May 1998
Cooperative structures have been used in the public and private sector with varying degrees of success for the past 70 years, with a revival of their use in the last two decades. The overall goals of cooperative structures fall into two major categories: improving productivity and increasing employee satisfaction. Cooperative programs may take form in several venues: those within an organization, those within an industry, and finally those covering a variety of establishments in an area or region. These programs most typically include labor-management committees, productivity sharing plans, and quality of worklife programs. Although cooperative structures offer many benefits to organizations, there often exist various internal and external barriers that limit their implementation and effectiveness. Examples from New York State illustrate the role that these structures can play in improving service delivery in the public sector.
Structural Changes
Labor-Management Committees
The focus of labor-management committees is often on problem-solving activities and building trust. Committees typically deal with issues including workplace safety, work hours, training, personnel issues, and daily workplace concerns. Although committees may initially focus on less controversial issues, such as safety, over time they may build a level of trust between labor and management that allows them to deal with more complex problems. Management and labor may use these committees to avoid bringing unnecessary issues to the bargaining table, ultimately simplifying the bargaining process. Furthermore, the trust established in committee meetings can have a positive impact on the relationship between management and labor at the traditionally contentious bargaining table.
When establishing a committee, labor and management often write a letter of understanding to establish the committee's jurisdiction as separate from the basic labor agreement. Unfortunately, the letter of agreement may prevent committees from discussing urgent issues covered in the bargaining agreement that arise between negotiations. For instance, committees at Xerox are not allowed to discuss vital issues such as: salaries, union grievances, the union contract, benefits, company policy, working hours, rates, breaks, classifications, overtime, personalities, the payroll, discipline, problems on which shop chairs were working, and production standards. Although this measure protects workers in one sense from losing ground on vital issues during the course of a contract, it limits the ability of committees to solve workplace problems outside of the bargaining table when they may be capable of doing so.
Quality of Worklife Programs
Quality of Worklife Programs provide opportunities for workers to participate in organizational decisions that directly affect their jobs. These structures may be known as quality circles, employee-involvement teams, or by other terms. These programs function not only to improve quality of the product, but also to enhance the productivity and work life of employees and to further labor-management relations. Quality circles may consider implementing initiatives to improve job tasks, job stress, scheduling of work hours, social relations, career development, and control over the work environment.
Productivity Gainsharing Plans
Gainsharing combines worker participation an incentive plan for productivity gains. Incentives are provided in the form of cash, a deferred bonus paid into a trust fund for later use, or a combination of the two. However, this form of cooperative structure has had limited use in the public sector, where "profit" is traditionally not the paramount motivation of the organization. Gainsharing was implemented in New York City after the fiscal crisis of 1976, although in a more punitive and unpopular form: workers received pay raises only if they increased productivity levels.
Barriers to Cooperative Structures
Despite its numerous benefits, worker participation often faces limits and barriers. First, participation is often limited by the fact that some decisions, such as corporate financial planning, must be made by management alone. In fact, most of the participation that takes place involves the employee's immediate workplace environment. Management may resist cooperative structures for several reasons. Citing loss of authority and the fact that workers don't have much to offer to improve productivity, managers often believe that workers will bypass and inhibit middle management and slow the decision-making process. Fundamentally, it is questionable whether labor-management committees actually increase productivity. However, this is partly because it is difficult to isolate and measure committees' role in improving productivity. The clearest indicators that have been documented are reduced absenteeism, accidents, grievances, improved collective bargaining relationships, and increased overall job satisfaction.
Union opposition to cooperative structures may also limit worker participation. Unions may construe cooperative structures as a management ploy to weaken labor and divert attention from basic issues such as wages, job security, and workplace health and safety. Other union objections include the argument that the economic benefits go only to management. Furthermore, unions may fear that increasing workplace efficiency can lead to employees putting themselves out of a job. Unions may argue that participation does not give workers any real power and will undermine the union's strength at the bargaining table. Finally, unions have even argued that the responsibility for increasing productivity lies with only with management, and not with labor.
Cooperative structures also raise legal questions. For instance, do the presence of labor-management committees violate the union's exclusivity to collective bargaining? The National Labor Relations Bureau has on several occasions invalidated labor-management committees as violating U.S. labor law as interfering with the union's exclusive bargaining power. However, most of these cases also involved charges of unfair labor practices against the corporation. It therefore appears that the committees have rarely invalidated on a purely categorical basis.
Fortunately, productivity gain sharing plans are cooperative structures that may spark less controversy than labor-management committees or quality programs. Furthermore, gainsharing is cost-free, since salary increases are paid from productivity increases. Gainsharing has not been widely used in the public sector, but it should be considered for its potentially positive impact on labor-management relations.
Overcoming the Barriers
Despite the obstacles, there are certainly proven tactics that can be used to overcome some of the barriers to cooperative structures.
- Invite union participation early in the process to adopt committees. This can prove essential to later successes.
- Serious management problems that exist prior to the establishment of a cooperative structure may severely limit its effectiveness and need to be resolved beforehand.
- Real commitment to the structure must be communicated to all the stakeholders and then proven by the later actions of both labor and management.
- Training must ensure all stakeholders have a clear understanding of the process. In particular, managers and supervisors must understand and be ready to accept their new roles. Middle managers may block implementation if they feel threatened by the loss of their traditional role in areas such as quality control and workplace improvement.
- Workers may justifiably believe that gains in productivity may lead to lay-offs. Management needs to ensure that there are safeguards for current employees to avoid this barrier to change.
Successful Examples of Workplace Transformation
National Survey of Workplace Transformation
In 1992, Paul Osterman published a survey of the incidence of innovative work practices in 694 U.S. manufacturing establishments. Innovative practices observed in the study included the use of self-directed work teams, job rotation, quality circles, and Total Quality Management (TQM) practices. This study has several implications for the practice of workplace transformation in local government. First, firms undertake transformation not only to save costs, but also to improve service level and quality. Second, competition is a significant factor in firms' decision to adopt innovative practices. In the public sector, the threat of privatization may be a strong motivator in improving service provision. Finally, organization size plays a role in firms' ability to implement new structures. For smaller governments, this implies that they may have limited resources and need assistance to undertake restructuring efforts.
The study found that only 35% of private sector establishments with 50 or more employees made substantial use of innovative work practices in the study year. The remaining organizations made limited or no use of such practices. Of the firms making substantial use of programs, worker teams appear to be most common (54%), followed by job rotation (43%), TQM (33%) and quality circles (40%). 21% of responding firms used none of these measures.
Factors associated with adoption of new practices included the presence of competitive global markets, the use of technology in the workplace that requires high levels of skill. Other factors include a competitive strategy emphasizing product over cost, human resource practices which emphasize training and innovative pay systems. The size of the organization was also key as large organizations were more likely to have the financial and human resources to initiate change that might not pay off immediately.
Workplace Transformation in New York State
Several studies have cited examples of cooperative structures in local government in New York State. A 1983 U.S. Department of Labor survey found 37 examples nationally of labor-management committees on a local government or authority level, two of which were from New York States. Jamestown, NY, a labor-management committee for the public school system involved both AFSCME and other union representatives. Two management representatives meet with 25 labor representatives each month, with an executive group of 3 people developing each meeting's agenda. The committee, founded in 1977, worked on issues such as education, work improvement, communication, service quality, training. Among other accomplishments, this committee won awards for its cost-saving recommendations.
Onondaga County also implemented a labor-management committee with CSEA, the New York State Nurses Association, and other unions in the area of health care services. This committee of 5 managers and 5 union representatives meets monthly to discuss issues of scheduling, automation, training, productivity, waste, safety and health, overtime, absenteeism, quality of work life, etc. Its accomplishments include reduced grievances, increased productivity, and reduced waste and costs.
A 1997 survey provides many examples of current restructuring efforts in New York State. All town and county governments in New York State outside of New York City were surveyed. Twenty-one of twenty-six counties responding cited at least one case of restructuring in their jurisdiction. Factors such as fiscal pressures for greater cost efficiency, increasing responsiveness of government and increasing the quality of service were all cited as motivations for restructuring local government. Several counties used cooperative structures in implementing change, including Genesee, Ontario, and Tompkins Counties, all of which are profiled in a Special Report on labor-management cooperation found at this web site.
The Ulster County Example
Ulster County is an excellent example of the effective use of labor-management committees. The U.S. Department of Labor profiled Ulster County, New York, in its Task Force Report on Workplace Innovation. In 1977, a joint labor-management committee was established in the collective bargaining agreement between Ulster County, New York (with a work force of about 1,600) and CSEA Local 856. The relationship became a truly productive problem-solving team effort in 1985-86, when the county, the union and the New York State Public Employees Relations Bureau jointly received a grant to improve the effectiveness of the existing committee. The grant provided for training, the hiring of a full-time facilitator, and the adoption of consensus decision-making as standard county practice. The county-wide committee has joint co-chairs and 10 members each from labor and management. There are also four departmental committees at the county's largest agencies: mental health services, social services, the residential health care facility, and the Community College.
Since 1986, these committees have addressed many issues of mutual concern. Cost containment, training needs, scheduling of work (including implementation of flexitime), fair administration of a furlough program, as well as safety and security concerns of employees are all issues that have been successfully addressed by these committees. Currently, the county is establishing a network of safety committees to address unique safety issues at each county work site. Also recently, a quality management initiative has been undertaken and implemented in Ulster County.
A significant benefit of establishing a more cooperative relationship between labor and management has been the improvement of the collective bargaining process. While the 1992 agreement took 24 months to reach, the 1995 contract took only "a few days." Both labor and management attributed this improvement to increased trust, better communications, and improved problem-solving skills that had developed in the cooperative process.
Other Examples of Cooperation
Other counties in New York State have implemented workplace improvement using cooperative structures. In particular, Tioga County has successfully used mutual gains bargaining to smooth the process of contract negotiation. However, Tioga has not used other forms of cooperation, hence the effectiveness of the cooperative relations established by mutual gains bargaining has been limited to the contract negotiation process only. Genesee, Ontario and Tompkins Counties have all implemented several forms of cooperative structures, which are all profiled in detail in the case study section of this web page (HOTLINK to case studies). In addition, many counties have entered into cooperative agreements on an intermunicipal level, including Dutchess, Ulster, Suffolk, Putnam and Tompkins.
I believe that both labor and management must take a fresh approach to worker-management relations. The old, adversarial approach squanders resources and increases worker and management frustration with the system. ...More and more these days, we are seeing that cooperation is taking the place of confrontation. Both workers and supervisors are beginning to realize that they are on the same team."
U.S. Senator Nancy Kasserbaum, Committee on Labor and Human Resources Hearing, February 9, 1995.
Lessons
The above discussion should make clear that cooperative structures are not without their flaws and difficulties. Their recent resurgence and growing incidence in the public sector may indicate their usefulness as a tool for both labor and management to accomplish their objectives. In an age of fiscal uncertainty and increasing demand for limited government budgets, the public sector is using the innovative tool of cooperative relations to improve the quality and efficiency of government service. By working together, labor and management can achieve mutual goals, forging a cooperative relationship where benefits easily outweigh costs. The models presented here are examples of current and past successful cooperative structures. As the public sector continues to innovate in service delivery, new examples will emerge, and should be documented for labor and management alike to examine and adopt in future initiatives.
The Minnesota Example
The Minnesota "Strive Toward Excellence in Performance" (STEP) Program is a well-documented example of innovative practices on a state-wide level in the 1980's. In 1989, over 50 workplace innovation programs had been initiated in individual Minnesota state agencies through the STEP program. STEP's basic concept is as a process for planning and managing "long-term fundamental changes in...government's management values and practices." To develop the STEP initiative, a top-down approach was initially used-an appointed steering committee established goals and objectives. The committee then solicited pilot projects from individual agencies. Then, STEP staff provided support to agencies through training, advice, and cutting through red tape to implement these project ideas.
STEP provides several lessons to local governments considering re-structuring services. First, STEP is a state-wide program; thus it has more financial and human resources available to it than a local government program might typically have. This is not a fundamental obstacle, as many local governments have found special funding and additional resources to undertake workplace transformation. Second, STEP is fundamentally a project-oriented program that does not necessarily involve making structural changes to each agency participating. If government is truly interested in instituting structural change, STEP may not be the best model to follow.
A Historical Note
The history of labor-management committees in the United States began in 1918, when the National War Labor Board (NWLB) first developed shop committees and work councils in the defense industry. These structures provided a democratic alternative to a unionized workplace, but they were also used in combination with unions. Examples of successful cooperative structures were first found in the public sector in 1940, when the Tennessee Valley Authority initiated cooperative committees in its workplaces.
Remaining strong during the two world wars, committees dealt with such issues as safety, absenteeism, training and personnel. However, few committees continued after the war, with the dismantling of the NWLB. More recently, there has been a resurgence of public sector labor-management committees across the country. Training to establish and support these structures has also been institutionalized. Since 1982, the Program for Employment and Workplace Systems at Cornell has helped both the private and public sectors develop such committees.
Resources
Gold, Charlotte. Labor-Management Committees: Confrontation, Co-optation, or Cooperation? Ithaca: ILR Press, Cornell University, 1986.
This book examines the history and current role of labor management committees as well as other cooperative structures in improving service delivery and generating organizational transformation in both the private and public sectors.
Hearing of the Committee on Labor and Human Resources U.S. Government Printing Office, Washington, 1995.
This hearing, first in a series focused on the role of labor management cooperation in improving American industrial competitiveness, focuses on the benefits of cooperative structures. The goal of the hearing was to provide a rationale for relaxing the current legal restrictions that protect the bargaining power of organized labor but inhibit the creation of cooperative structures.
Resource Guide to Labor-Management Cooperation. Washington: U.S. Government Printing Office, 1983.
This resource guide provides several hundred examples of cooperative structures of all kinds on a national level in both the private and public sectors.
Osterman, Paul. "How Common is Workplace Transformation and Who Adopts It?" Industrial and Labor Relations Review (Vol. 47, No. 2) Ithaca, New York: Cornell University.
This article provides a survey of private sector use of innovative workplace practices and attempts to correlate a number of variables such as global competition with the adoption of more flexible workplace practices and structures.
Hale, Sandra and Mary M. Williams, eds. Managing Change: A Guide to Producing Innovation from Within.Washington: Urban Institute Press, 1989.
This book describes the improvements and service innovations that have taken place since the 1980's under the auspices of the Minnesota "Strive Toward Excellence in Performance" program.
U.S. Department of Labor. Website:http://www.dol.gov/dol/_sec/public/media/reports/worktogether/append_e.htm, 1998.
This website provides an inventory of local governments implementing workplace transformation through cooperative structures. This site also includes a task force report on the role of flexible and cooperative practices in the improvement of government service delivery. Suggestions are made for further research on determining barriers to restructuring in order to develop better methods for overcoming these barriers.
Warner, Mildred and Robert Hebdon. "Restructuring Local Government Service Delivery Among Towns and Counties in New York State." Unpublished survey, 1997.
This study examines local government restructuring in New York State (outside of New York City) and the relative importance of variables such as workforce unionization, cost concerns, political and legal concerns and other issues in restructuring efforts. Several examples of cooperative structures are featured in the survey responses, but there are also many examples of more adversarial labor-management relations in government restructuring.
Other Useful Sources on Cooperation
American Federation of State, County and Municipal Employees. Website: http://www.afscme.org, 1998.
This site includes information on this large public sector employee union's research on improving labor management cooperation on a variety of workplace issues.