How Corporate America can deal with EFCA

The EFCA will do away with secret ballot elections, which have historically occurred with less
coercion or intimidation from either management or unions.

Friday, April 10, 2009

Congress is intent on passing the proposed Employee Free Choice Act (EFCA), which the president said he will sign into law. The EFCA will permit union organizers to pressure workers into signing cards or providing other valid authorizations indicating that they want to be represented by a union. If a majority of any company's employees in an appropriate unit sign such cards or authorizations, then workers will, ipso facto, be represented by a union. The EFCA will do away with secret ballot elections, which have historically occurred with less coercion or intimidation from either management or unions. Under the EFCA, however, union organizers will have a greater opportunity to coerce, pressure, and intimidate workers into signing cards, and management will likely have little or no recourse, or opportunity to present its case, as in the past. The result, of course, will be a significant increase in unionized workers, thus raising production costs during a period of recession. Such a result portends even worsening economic problems. In order for Corporate America to avoid such a scenario, it is essential that management and
workers throughout the country obviate their historical adversarial relationship. If a more productive relationship does not come into being, then Corporate America will be burdened by millions of newly unionized workers. To stem the potential tsunami of dramatically increased unionization, it is essential that management understand the feelings, thoughts, and proclivities of its workers, especially in relation to what unionization could mean to them. It is essential that management execute a proactive strategy that will reduce and perhaps eliminate the need for employees to join a union. I have developed the following union free strategic action plan for numerous of my clients, and they have found it to be highly effective.

1. Facility Work Philosophy -- Communicate a statement of the facility work philosophy,
emphasizing organizational goals, objectives, and a commitment to positive employee relations. This sets the tone and direction for positive changes. For example, if a facility's primary commitment is to produce the most cost effective products in an extremely competitive marketplace, the commitment needs to be clearly stated in the employee work philosophy.

2. Employee Opinion Survey -- Conduct a confidential employee opinion survey to ascertain
employee attitudes toward job duties, working conditions, skills of supervisors and managers,
communications, pay, benefits, opportunities for advancement, personnel policies and procedures,
and job security. The survey serves a dual purpose. First, it provides employees with a direct and
anonymous channel of communication to top management. They know that they can communicate frankly with management without fear of reprisal. Second, it furnishes management with an accurate, continuing profile of employee attitudes on which to base policy decisions. For example, items dealing with communications might include "my supervisor asks for my opinion," or "management keeps us well informed about matters that affect us." Employees would then decide the degree to which they agree or disagree with the statement. Items asking for employees' written opinion or comments might include "the thing 1 like most about working here is..." or "some things our management should know are..." Feedback sessions regarding the results are necessary and encourage direct and positive dialogue with employees on critical issues. Once management has gained insight into issues that employees consider important, it can then respond and thus demonstrate that it is truly listening.

3. Employee Profile -- Develop a profile of the type of worker the facility should actively seek for
employment. An employee profile greatly increases the likelihood that a facility will hire applicants
who will be useful, efficient workers and reduces the chances of hiring persons who will be
disaffected and troublesome. The development of an employee profile begins with a thorough
analysis of the employer's current work force. The work force analysis must determine the precise
skills required at the facility and examine the attitudes employees must possess to foster a positive work environment. In addition, it will be necessary to analyze the labor market to measure the availability of desirable employees.

4. Employee Selection System - Once the profile has been developed, management will be in a
position to prepare an employee selection system. The selection system will ensure that the facility hires only applicants who have the right combination of skills and attitudes for the particular work environment. As part of the selection system, management should develop questions and model answers to help employment interviewers determine whether an applicant possesses the desired profile characteristics.

5. Audits must be developed. Audits require supervisors to respond to a series of questions, it
compels them to become more aware of the employees whom they supervise and to take an interest in them. Additionally, audits ask supervisors to provide what they believe is the employees' view of working conditions as well as their needs, desires, concerns and issues. It is important to remember that supervisors themselves are sometimes only recently removed from being hourly employees and are likely to have a good perspective on the hourly work force. Personnel audits serve as a barometer for determining how well the employees are adapting to the pro-employee method of operation. The audit might include the following questions:

  • Does the employee lack motivation?
  • Does the employee frequently complain about the job, salary, or supervisors' treatment?
  • Is the employee openly disrespectful of authority?
  • How often and how recently has disciplinary action been taken against the employee?
  • Does the employee perform work duties inefficiently?

6. Involvement Systems -- Institute systems that encourage employee involvement in the decision making process. Employees will understand and are more likely to support decisions in which they
play a role. Employees who see themselves as a genuine part of the facility, rather than just cogs in a wheel, will be more productive, efficient, caring, and loyal. Informal involvement systems might include meetings with small groups of workers to listen to employees' needs and perceptions, while encouraging them to suggest positive workplace solutions. Formal involvement systems include the use of such techniques as quality circles, focus groups, and/or employee membership on committees dealing with work rules, safety, discipline, and so forth. The important point is that management must listen to what is on the minds of employees and encourage them to provide solutions that will have a positive impact; it will further serve to demonstrate that management cares about employees and their jobs.

Summary

Management will be facing a crucial employee challenge when the Employee Free Choice Act is
passed. That challenge is to create a work environment in which employees and employers
recognize that their interests are the same and that their goals can best be achieved through mutual cooperation. By implementing an integrated union-free strategy, the prudent employer can meet that challenge and diminish the likelihood that workers will be swayed by organizers into signing cards or other authorizations for union representation.

Stephen J. Cabot, Chairman of the Cabot Institute for Labor Relations (www.cabotinstitute.com), is a nationally renowned labor relations expert and strategist. He is also the author of the best-selling books, Everybody Wins! Up From Confrontation, and Stephen Cabot's Complete Guide to Labor Relations in the 21st Century.

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It's Your Call: Labor Days

Manufacturers and their workers throughout the country must develop a new détente which will obviate their historical adversarial relationship. If such a détente does not come into being, then the United States will fall behind not just the rapidly developing economies in China and India, but also the more mature economies in Japan, Germany, and France. In order to succeed, management and labor must agree to implement the following eight points:

1. Workers and management must create a new criteria for dealing with one another

The old, historical adversarial relationship provides a formula for disaster. No longer can labor bargain for itself to the detriment of the overall economy. There can no longer be a bargaining based upon one-upmanship that results in an inflationary spiral. Instead, management and labor must agree on their common goals and work to achieve those goals.

2. Manufacturers must make new judgments

Management has generally refused to allow or limited its workers any voice in making decisions of policy or strategy. It is no wonder that in such situations, there exist perpetual erosions of worker motivation, which have negative effects on productivity and quality. Indeed, the more indifferent that management is to the ideas of workers, the more intransigent and resentful will be workers.

Management only seems to recognize its obligations to workers when a crisis develops, when a company’s fortunes lag, or when workers are about to strike. To improve its relationship with labor and to reap the benefits of that improved relationship, management must adopt an enlightened attitude toward workers and pro-actively implement it. There should be increased candor, greater consideration of the needs of workers, and sensitivity to individual concerns.

3. Labor must defuse internal politics.

If organized labor is to have a realistic and productive relationship with management, it must stop promoting and breeding adversarial relationships within their own ranks, between local unions, and between industry-wide unions seeking to encroach upon each other. Internal strife prompts a militant stance toward management and results in unrealistic demands on business.

Four other changes should be considered by organized labor: A). A new era of democracy must begin with a move toward more useful dealings with management. B). Rank-and-file should be told of the true situation about the ability of employers to meet new wage demands and whether union concessions will be necessary. C). Politics within the local union should not determine demands, but should ensure that leadership, policy, enforcement, bargaining, solicitation, and general procedures represent the viewpoint of the workforce majority. D). The voices of younger workers and/or minority workers should be considered.

4. The challenge of job security must be met head on.

During economic downturns, jobs are often eliminated, and many workers understandably panic. They direct their anger at both management and their union. They often believe that the two are double dealing, double talking, and all at the expense of workers. The concessions that workers had granted in order to ensure job security have failed to reach that goal. Their resentment and fear now serve to add fuel to the adversarial relationship.

It must be understood that in today’s global economy, no employer can guarantee job security. The solution lies in training, preparation, reorientation, and communications. Management and labor should be obligated to develop training programs that deal with automation, robotics, and retraining.

5. The re-education of employees should be a top priority.

In order to mitigate the negative effects of the adversarial relationship, employees must learn that one side is not all bad and the other all good. There are shades of gray, and employees should learn the needs and expectations of management, while also evaluating the needs of workers. This can be achieved through an effective educational process.

6. Changing the climate with new semantics

When it comes to collective bargaining, words and terms used by management and labor are often harsh and accusatory, thus raising red flags on both sides. Soft words and phrases, however, lead to better relationships, but only if both sides agree to utilize those words and phrases. Such usage will lead to a more harmonious interchange and further diminish adversarial relations.

7. Stop using the media to affect outcomes.

Unions accuse management; management accuses the union. Words fly like unguided missiles and anger explodes like land mines. The media sees a story, and both sides fight in the glare of media coverage, there resorting to hyperbole and vituperation. If adversarial relations are to end, then both sides must cease using words as if they are weapons. The result of both sides fighting it out in the media is negative: goals and benefits are shot down, and no one wants to give an inch. It is essential that bargaining be conducted in a private, civilized way.

8. Honest and realistic bargaining.

When I speak with union leaders and negotiators, I am often told that labor may be amenable to various kinds of cooperation as long as the solutions make labor look good to its constituency. The heart of the collective bargaining process often becomes an extension of this charade, spawning months of talks which inevitably look more like predictable set pieces than actual negotiations. It’s nothing more than a series of face-saving gestures.

Joint management-labor committees charged with defining how business and unions can constructively co-exist may help to remove many time-wasting steps by thrashing out issues in closed advisory meetings and then influencing the leadership on both sides to come up with resolutions that are neither acrimonious nor the product of a charade.

For manufacturers and labor to succeed at achieving mutually beneficial goals, they must change the processes and attitudes that have governed their adversarial relationships and be committed to resolving problems together. The result will be that both sides win.

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Changing Corporate Culture, Increasing Productivity

MANY CORPORATE CLIENTS HAVE told us that too many of their employees are not sufficiently well motivated. Though such employees are often fired, their replacements frequently descend to the same level as those whom they replaced. "What's happening?" they ask. "Are we always destined to have employees who are under-motivated, who are clock watchers, and complainers?"

To increase employee morale and corporate productivity, you must dramatically alter corporate culture. Corporate culture comprises the values, ethos, and behaviors of a company. It affects how business is conducted, one's level of profitability, the time it takes to reach goals, and the responses of customers among various other important elements. To have a wellrun company that hums along smoothly and productively and employs dedicated and hard-working employees, you must design a corporate culture that nourishes such behaviors through a strategically implemented action plan.

Here's an example of a problem brought to us by one of our clients. The CEO had complained that a number of his employees were not highly motivated and were not reaching established benchmarks of productivity. In addition, they were a drag on their colleagues; by their complaints and overall negativity, they tended to sap the drive and ambition out of those with whom they worked. They never volunteered solutions, but always found fault with the way the company operated. Our client, of course, could and did fire such employees based upon their performance, but he was never really successful in replacing them with the kind of employees that would be ideal workers.

To determine what the CEO should do, we first conducted a survey of his workforce. Not surprisingly, it revealed a high level of discontent in about 32 percent of his workers. Many of them were perpetual fault finders, always looking for what was negative about the company and then complaining to their colleagues about what they discerned.

By contrast, within that same company, as in many other companies that we had also surveyed, were groups of individuals who were highly motivated, who enjoyed their work and took pride in their accomplishments.

Our client wanted us to help him clear out dead wood and put together a hiring and selection program that would result in his having highly motivated, positive minded employees who would significantly raise his level of productivity and so add to the company's bottom line. In other words, he wanted us to help him change his corporate culture.

NO MORE DEAD WOOD

Once the dead wood was cleared, we initiated a program for hiring productive workers. We hired employees based upon certain key attitudes as well as aptitudes and skills that conform to the sought-after work environment. In other words, prospective employees must have the type of positive attitude that will not only be reflected in their job performance, but will also be contagious to others within the workforce itself. Their aptitudes must also be appropriate for the jobs they will have to do. Aptitude and attitude must be complementary, for one without the other will only accomplish half the goal. And in many cases, if an employee has an appropriate aptitude for a specific job, but has a negative attitude, the company will not be well served. When the right combination of aptitude and attitude has been found, then one should also make sure that such a worker has the necessary skills to perform at a high level of efficiency and productivity. In addition to those qualities, we wanted employees who would feel as if they were part of a corporate family, who would take pride in being stakeholders in helping a company to reach its goals.

To further maintain a productive and satisfied workforce, we put in place a program of mentoring workers. Mentors coach workers to excel. They are thoughtful, helpful individuals who help workers to reach benchmarks of productivity. The coach-mentor is also there to make sure that there are no obstacles to a worker achieving success.

After our client implemented all of the above, levels of productivity dramatically increased and that went directly to the company's bottom line. The corporate culture had been refashioned and the workers thought the company a great place to work.

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Making a Great Place to Work

 Many casinos have found that a particularly effective means for reducing labor relations problems before they arise is to hire committed workers with positive attitudes. By developing a reputation as a great place to work, casinos will attract many potentially productive workers who take pride in their work, intheir casinos and in what they produce.

How does a casino develop such a reputation? By implementing a strategic human resources action plan. The first step is to set forth a hiring and selection strategy to attract people who fit into the corporate culture. The plan mustalso assign responsibilities, such as naming those who will be accountable for its implementation and those who will be its coordinators. It must list the necessary resources required to make the plan successful, and it must also establish deadlines for reaching specific goals.

Overall, the plan must be able to address workers’ issues, which means implementing a strategy for not only listening to what workers have to say, but also demonstrating that the company hears them and responds in ways that demonstrate concern. When their issues are addressed, workers not only feel appreciated, but they become integral members of winning teams. They know that they are team players. They also understand that they are stake-holders in their company; they have a vested interest not only in the outcome of their ownefforts, but also in the overall results that will be achieved by the company.

Maintain a healthy dialogue

We have put in place a variety of programs that have resulted in employees knowing that they work for great companies, and all of the programs have acritical component based on two-way communications between management andworkers. It begins with management asking questions, listening to the words and deeds that satisfy the needs of workers.

In a variety of venues, workers should get to express themselves to management. If management does not listen and respond positively, then problems will fester and all sorts of labor relations problems may arise.

To avoid such problems, we have designed programs at many companies so that regular meetings are held where workers first state their concerns to management, and then management asks for proposed solutions. If a solution issuitable for solving a problem, then it is implemented. If workers feel inhibited about speaking in front of large groups, they are invited to write out questions and deposit them in an “answer box.” Employees then receive private responses to their questions. Another kind of program that we have created is a“let’s hear it now” monthly meeting. These are informal sessions where information is shared, questions are asked and answers given.

Communication does not just mean talking and listening. Properties must communicate their concern and interest in the welfare of employees by creating situations that permit workers to control more of their lives. For example, incertain situations, workers may be provided with flexible work schedules; orthey may be permitted to telecommute; and in some cases, workers may be permitted to compress their work schedules, so they work longer days, but shorter weeks.

Making the workplace more healthful and reducing stress are also goals that areappreciated by workers and result in greater levels of productivity. For example, numerous companies now have onsite fitness programs, subsidize on-site fitness centers and provide yoga as well as aerobic exercise classes.

When possible, companies may also provide unpaid sabbaticals for those employees who have been with the company for a specified number of years. The amount oftime for an unpaid sabbatical can vary according to seniority.

Program possibilities  

Here is a menu of programs that can be combined and refined to satisfy the needs of particular workers and help create a reputation for a company as a great place to work.

-Recreation programs: Sponsor video game tournaments, movie nights, tripsto the theater, wine tasting trips, weekend skiing trips and attendance atsporting events.

-Financial incentives: Put a percentage of employees’ salaries into401(k) plans, offer free investment advice from professionals and provide interest-free loans for college.

-Equal opportunity: In a company with a large portion of female employees, there should be a proportionately large number of women who are promoted to managerial positions.

-Recipient gifts:  When a mother gives birth, she and/or her spouse may be the grateful recipients of a cash bonus, a savings bondin the name of the new born child and free at-home cleaning services for aspecified period of time.

-Mentor programs: Every new employee can have a mentor, and a variety ofnon-work activities should then be planned for mentors and mentees, such as baseball games, golf outings, lunches and dinners, etc. New employees who are mentored tend to have high rates of productivity, quickly learn new tasks and develop an appreciation of corporate goals.

-A warm welcome: New employees may get signing bonuses based upon their levels of competence and experience. Their spouses might receive bouquets of flowers,and, if they have children, each children receive an age-appropriate gift.

-Sales goals: If employees reach or exceed sales goals, each may receive a cashbonus, free membership in a health club, a night out with a spouse at a favorite restaurant, play or sporting event.

-Relax and enjoy life: Employees may receive monthly messages, regular yogaclasses, free manicures and makeovers. They may also be invited to participate in golf outings and company sponsored picnics, among various other recreational activities.

-Training: If companies provide workers with extra training the permits them toundertake increased responsibilities and ascend the corporate ladder, theworkers will feel increased loyalty and understand that they ate stake-holdersin their company. As management promotes from within, workers feel they have anincentive to strive and achieve success.

Enhancing reputations

An ongoing strategic human resources plan will ensure that a casino develops areputation as a great place to work. If such a reputation is not to crack andcrumble, it must be built upon a solid foundation of asking, listening, talkingand acting in response to employee needs and issues. Management cannot since rely ask, listen and respond if it is ignorant about those with whom it converses.Therefore, management should know each worker’s name, job description and familybackground, and be familiar with each worker’s performance record. Such basic knowledge implies a level of care and concern.

An employer’s genuine concern for employee welfare will go a long way toward establishing trust. Having successfully communicated concern for employees,manage-ment can open more direct channels of communication, knowing that itscredibility is secure.

Another part of the plan is the exit interview. When someone leaves a casino,management does not want its carefully crafted reputation impugned by an unhappyemployee. During an exit interview, management can learn a great deal about problems that an employee may have been hesitant to express while employed. One can garner valuable information about where a company must improve working conditions, where it needs to make changes in its corporate culture, and how toincrease its own levels of trust and credibility. Such insights will ultimatelyserve to enhance levels of productivity and efficiencies. It is also importantfor management to reiterate its commitment to employee welfare by explaining any misinterpretations that the departing employee may have.

The most self-destructive thing that a company can do to its repute-tion as agreat place to work is to develop an adversarial relationship with its workers.Such relationships are an implicit invitation to militant unions to organize workers and inspire them to commit slowdowns, walkouts and strikes.

The strategic human resources action plan is designed to break down adversarial relations and establish perceptions of management’s goodwill. If followed, it will ensure years of increased productivity and profitability-results that go directly to a casino’s bottom line.

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Cabot Employment Alert

I. Featured Employment Case

Supreme Court Will Not Disturb Finding of Transsexual Discrimination

The United States Supreme Court on November 7, 2005, declined to review a decision of the federal court of appeals in Ohio, which found that the City of Cincinnati discriminated against a transsexual police officer, and awarded the officer $874,236.00. This case was originally brought under Title VII of the Civil Rights Act of 1964 which prohibits sex discrimination, and protects individuals from “sex stereotyping” because they do not conform to his or her gender in the way he or she looks and behaves.

Phillip (now Philecia) Barnes was a 17-year veteran of the Cincinnati police force, who was taking female hormones in preparation for surgery to change him from a male to a female when he took and passed a sergeants exam, but then failed the probationary period required to become a police sergeant, and was demoted from the position. Based on the results of a rigorous training and evaluation program during the probationary period, and a special form created to evaluate Barnes, the City felt that Barnes lacked “command presence,” did not appear to be masculine, and had “grooming deficiencies.” In fact at the time of his promotion to sergeant, Barnes usually reported for duty as a male, though sometimes wearing make-up, but was generally living as a female in his off-duty time: wearing women’s clothing, a French manicure, and arched eyebrows. Barnes sued the City of Cincinnati claiming that he failed the probationary period because of the City’s unlawful sex discrimination under federal law, based on his failure to conform to sex stereotypes.

II. Featured Labor Decision

Give Me Your Strike-Tired, Your Pictures of Closed Plants, and Your Personal, Factual Union Experiences…

The National Labor Relations Board recently determined that the Stanadyne Automotive Corporation did not violate the Labor Management Relations Act when it held meetings with employees during a United Auto Workers organizing campaign, when it discussed with employees: potential strike consequences including plant closures, violence, loss of pay and health insurance contributions; the contrast of experiences at union and non-union facilities; incidents of intimidation and sabotage with this union just before a collective-bargaining agreement was due to expire; and even the violent death of a guard during a strike at another Stanadyne plant. At the conclusion of the question and answer portion of the meetings, Stanadyne displayed seven photographs of closed Stanadyne plants with the word “CLOSED” across each photograph in red block letters, and a heading indicating that these plants are where the UAW “used to” represent employees. When the election was held 8 days after the series of meetings, the unit of about 650 production and maintenance employees voted against union representation with 219 for the Union, 412 against and 7 challenged ballots.

According to the Board, the above employer activities did not violate the LMRA because the Stanadyne meetings speakers conveyed events that had already occurred, supplied the perspective of employees who experienced some of the events, and informed the employees of the potential impact of their impending votes while making expressly clear that these were not threats or predictions about the future. The statements made and topics covered in these meetings fell into the permissible “general views about unionism” or “specific views about a particular union” categories of protected, free employer speech as defined by statute and Supreme Court ruling.

III. Featured Employer Tips

Employers at Risk: Hand-Held Devices

Technology keeps producing smaller and smaller hand-held devices, with memory capacities that get increasingly bigger. As convenient, and often indispensable as these devices have become to our workforces, the risk increases for employers every time technology chisels out a smaller, more useful hand-held device. Whether the risk is borne of a camera phone’s capability to photograph drawings at relatively high resolution for to-be-patented products, or a pocket PCs ability to download sensitive, legally privileged or protected files from an office computer, employers face a great risk of exposure to legal trouble and financial loss from workforce abuse of these devices. There are a number of things employers can do to prevent or lessen the security leak that could result from evolving hand-held technology:

  • Ensure that a technologically informed “information systems” person or staff is in place to implement available security feature modifications (both for theft and loss) on all office-based computer equipment as well as all company-issued hand-held devices;
  • Restrict physical and/or computer based access to sensitive company information, files and plans;
  • Include in employee handbooks, and prominently post up-to-date company policies on security issues and prohibitions, information confidentiality and the technological solutions the company has implemented to reduce or prevent information theft;
  • Hold mandatory training for all employees in the above-policies, and require employees to sign an acknowledgment of the training; and,
  • Determine whether the workplace lends itself to an absolute prohibition on employees bringing personal hand-held devices, including camera phones, to work, and if so, issue a policy to that effect.

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How to Avoid (or Decertify) a Union

As you may have noticed, organized labor has taken a new interest in attempting to unionize nursing homes. What's more, the National Labor Relations Board has been certifying union elections in nursing homes at a rate unprecedented in recent years. This unwelcome news comes at a time when nursing homes face increasing regulation, decreasing public resources and growing competition for staff and residents. In short, it's another headache that nursing homes don't need at this point. What can be done to relieve it?

First of all, let's address why this is happening. Nursing home staffs have, of course, always been a fertile field for union organizing due to their typically low pay and demanding workloads. The advent' of John Sweeney as President of the AFL-CIO stimulated new interest by the Service Employees International Union and the National Union of Hospital and Health Care Employees (1199) in organizing these and other health care workers. Sweeney, a former president of the SEIU, has had long experience in this arena. He put that experience to use this past summer by fielding hundreds of college-based volunteers to spread the union word among nursing homes and other employers throughout the coun-try. He has also supported training of organizers to "infiltrate" facilities by having them seek employment as staffers and working from within.

This is one reason (though not the only one) that the NLRB has received and approved the largest number of organizing petitions from nursing home staffs since 1991. Further, under new NLRB guidelines, the time between the filing of an election petition and the actual elec-tion has been reduced radically, from months to weeks -- an average of about 42 days, in fact. This is barely enough time for nursing home management to react and go through the early stages of panic before the election date hits. It's not a pretty picture for the unwary.

This is especially unfortunate, since there are several ways nursing homes can avoid this scenario before it ever becomes a threat. In fact, these methods can be applied by nursing homes that have already been organized, and help lead them toward the "promised land" of union decertification. It boils down to today's labor-management version of the three R's: Recognition. Repetition, Reinforcement.

Before explaining this, I'd like to lay out the context in which this is occurring. In the labor environment of the 1990s, the issues are not as focused as they once were on such tangibles as wages and benefits. Today it's more a matter of "Does the employer care?" Is the em-ployer treating its employees with re-spect and dignity? Can you trust the employer? These concepts are very dif-ficult to pin down but, believe me, today's trained organizer understands them thoroughly and knows how to put them to very effective use.

In short, trust -- or lake of same -- has become the major issue. Very simply, if management can retain employees' trust, it has reasonably little to fear from today's organizing activity. Once it begins to lose that trust, however, that is another story-and owe trust is lost, it is very, very difficult to get it back. Rebuilding employee trust takes about a year in a non-unionized facility, and two-to-three years in a unionized facility, according to rules of thumb I have developed over the years. Patience is very much in order -- but that patience will be rewarded.

The three R's, as I mentioned, are recognition, repetition and reinforcement. Let's start with recognition, which is the first step in any program designed to inspire employee trust. It is the corner-stone of what I call your labor relations action plan -- a formalized plan similar to any financial or marketing plan you might routinely devise. Like these other plans, it covers a fixed period -- say, one year. Recognition can begin with an employee survey every nine months or so on such issues as pay (in non-unionized facilities only; unionized ones have a problem which I'll explain later), staff-ing, performance improvement and other is sues. These surveys genuinely seek employees' opinions and give them feed-back within about one month.

Another component of recognition would be an awards program -- "Em-ployee of the Month" or "Best Sugges-tion," for example. The program would be overseen by a five-to-seven-member committee with employees forming the majority. Winners are publicized, re-ceive thanks and get a cash award large enough to be meaningful (but not so large as to be interpreted as a bride).

This process should be conducted on a regular, routine basis-repetition. Employees will, over time, begin to at least understand why lee-than-satisfactory situations-concerning pay or staffing, for example-exist. They may not look or even agree with the reasons, but they'll understand. Beyond this some genuine improvements may occur, with employees' responsibility for this being directly acknowledged-and that?s reinforcement.

Consistent adherence to this approach will build and strengthen the employee trust that is the crucial issue in today?s labor relations. It can, and often does, lead to their questioning the necessity for a union (and for paying union dues).

What about the facility that has a union in place, where trust as presumably been eradicated? What works then? I submit that the exact same approach works; it just takes longer.

There is also, for these facilities, a legal consideration that must be taken into account. On the basis of a relatively recent decision, E. I. DuPont DeNemours and Co., 311 NLRB 983(1993) ("DuPont") [also see a related case, Electromation, Inc., 309 NLRB 990(1992) ("Electromation")], the NLRB has ruled that it is illegal for a unionized employer to establish an employee committee to deal with issues pertaining to wages, hours or working conditions; these issues are considered by the NLRB to be mandatory subjects of collective bargaining.

This does not necessarily rule out the use of surveys or the committees that I have described, however. Issues that still be addressed include such matters as employer/management communications, quality of care and productivity. Even on this more-restricted basis, the three R's can, and will, work.

There is also the psychological con-cern that unionized employers will be reluctant to reach out to employees in any way, whether for fear of upsetting the union or simply because they've given up and automatically refer employee concerns to the union. It only strengthens the union, of course, when employees see it as their only recourse. It is crucial that front-line supervisors be trained to be responsive to employee concerns. They must show that they are open to hearing employee concerns on all matters other than those defined as subjects of bargaining.

Recognition, repetition and reinforcement come into play again. Recognizing the need for concern, repeatedly address-ing those concerns and reinforcing the positive results will re-establish trust and again, increase questioning of the need for a union. And in the "real world," I can attest, nursing home union decertifications do occur.

The bottom line is that today's em-ployer must be proactive with respect to employees' concerns. Ideally, that should always be the case. In today's labor-management environment, employers really have no choice.

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New Unionizing Troubles

The first half of 1994 saw more than 3,000 strikes and 2,405 union representation petitions -- dramatic evidence of the new union activism that we first warned of in the July 15. 1993 issue of Boardroom, and then expanded on in the March 1, 1994 issue.

The unions are now using an increasing number of young, well-educated minority organizers who are prepared to assist workers in all aspects of life, nor just workplace issues.

Whether your company is union-free...facing an organizing attempt...or trying to deal with a union that is already in place, it's important to recognize that the increasing level of employee frustration and insecurity today is creating a very real threat to efficiency and workplace morale. Latest challenges for business:

  • The National Labor Relations

    Board under the Clinton administration, is now more supportive of union/employee rights than has been the case for the past 12 years under Reagan and Bush.

  • There have even been recent cases of unions pushing for recognition without an election. Thiswas a popular tactic before Reagan replaced the air traffic controllers...and it is now reemerging.

    WHAT TO DO

  • Prepare now to head off union activity. If there is a sudden push for elections you won't have much time to correct the company's image in the eyes of employees. Start by trying to understand the real frustration felt by workers. There are problems, of course, with workers who have seen many of their peers laid off in down-sizing and restructuring efforts. Those efforts are still in progress in many US companies.

  • Take the initiative. Don't wait for an outbreak of trouble. Take an aggressive stance now toward more effective and timely communications with employees.

  • Bring in outside lawyers or consultants to train the company's employees in better communications and to help them solve real-life problems.

  • Example: We are now working with companies to educate employees on how to deal with issues of violence.

  • Use new tools, such as Alternate Dispute Resolution (ADR), to remove the contention that can arise between bosses and subordinates.

  • Set up a complaint resolution system with an appeals process. This can be done either inside the company, where there might be a provision for peer review and/or a hearing by the CEO, or outside the company, using impartial arbitration and mediation services such as the American Arbitration Association or the Federal Mediation and Conciliation Service. There also are a number of private mediation services.

    Important: Make it clear whether these services have only mediation powers -- or final decision powers. A landmark Supreme Court case (Gilmer vs. Interstate/Johnson Corp., 111SC 1647, 1991) has established that an ADR providing for binding arbitration of an employer/employee dispute was final and could even preclude the employee from bringing other court actions if the employee had previously agreed, in writing, to be bound by the decision.

    TEAMS CAN BE TRICKY

    Many companies are having success using work teams of various kinds to improve quality and productivity.

    These can be particularly effective in nonunion companies to reduce the incentive to organize. Even in unionized companies they are fine, as long as they avoid getting into questions of hours, wages or working conditions -- legally the province of unions. In some companies, there is a union representa-tive on every team who can convey such problems back to the union for resolution.

    Recognize that there is a lot more ag-gravation in the workplace than ever be-fore, and be sure that teams are per-ceived as parts of the same wheel. You want the employees to feel that a team is their team, not just the company's team. This may require special education to bridge various aspects of the company's labor program, such as team-building, training or suggestion awards, and ex-plain how they relate to each other.

    In all cases be sure to assign accountability and responsibility, along with time frames for completion. Ask for feedback from employees to get reinforcement and commitment to team goals. Make use of employee surveys to find out how sentiment is running.

    UNDERSTAND THE UNION

    It is official policy at the AFL-CIO today to give at least lip service to a more cooperative stance, to help US companies become more globally competitive.

    In reality, much depends on the local union leaders, many of whom still espouse the adversarial thinking of the 1930s and the 1960s. Some-times these local officials -- who want to be reelected (just like members of Congress) -- must adopt a more mili-tant stance in response to their frus-trated constituency.

    Defensive strategy: As with any re-lationship, it is useful to develop an ongoing dialogue with the union. Both parties need to be openly involved in the process for mutual advantage. This doesn't mean management must invite the union into the boardroom, but the company should make a com-mitment to provide enough information to the union so that it can educate and control its members.

    Aim: To build respect and credibility between the two sides. Be prepared to be challenged on what you do, if it turns out to be different from what you say.

    Important: The two sides don't always have to agree. You can agree to disagree, preferably without being disagreeable, handling disputes in as po-litely a way as possible.

    Example: Making off-the-record con-versations public after a negotiation is a good way to kill off any trust that has been built in the relationship.

    Bottom line: Be reasonable and willing to listen, but never turn over the reins to the union. Do what you have to do to run the business.

    Important: Come up with a plan as to how you could continue to operate the business during a strike.

    Don't turn down union demands without due consideration. Wherever possible, try to seek acceptable middle ground. But when you have to say no-out of conviction that you are doing what is right for the long-term interests of the company and its em-ployees-stand tall and do it.

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  • Racial Code Words

    It is no secret that many of today's bank tellers are women and people of color. Unfortunately, many of them are being terminated because of downsizing that has resulted from mergers, while still others are being replaced by the marvels of technology.

    Terminated employees, unable to find new jobs, may seek judicial means of remuneration. Many are tempted to bring law suits charging age discrimination, sexual harassment and racial discrimination. In the past, the rules governing such suits have been quite clear. But now the rules are rapidly changing, and unwary employers may soon be the targets of highly expensive litigation. The reason is that a recent U.S. Court of Appeals ruling has dramatically changed the legal landscape, lowering the barriers for contemporary litigants so they can more easily sue their employers for racial discrimination than in earlier times.

    For many years, it had been the law that the workplace be free of explicit racial epithets; however, that is no longer sufficient compliance. Employers, managers and supervisors must now make sure that they refrain from any words that can be cons1d as racial code words, even if one considers such words, on their face, to be benign.

    Now, employers no longer have to express explicit racial comments to be the targets of actions brought under Title VII of the Civil Rights Act. Instead of voicing ugly racial epithets, one need only use such expressions as you people, poor people like you or one of them. All those expressions can now be considered racially charged code words that can land any bank, its managers and executives in legal hot water.

    According to a federal case known as Aman v. Cort Furniture Rental, which has strong implications for the banking industry and was recently decided by the Court of Appeals for the Third Circuit, racially implicit code words can create a workplace environment that violates the civil rights of employees. The court found that racial code words can be used to establish an environment of racial discrimination.

    Guarding the Workplace

    The Court of Appeals stated that "while Title Ⅶ does not prohibit racist thought, the law does require that employers prevent such views from affecting the work environment....Title VII tolerates no racial discrimination, subtle or otherwise."

    "While legislators have not written new laws about expressions that can be cons1d as racial code words, the Court of Appeals has made it clear that such expressions as you people, poor people like you, and one of them are indeed evidence of racial code words. It is, unfortunately, yet another example of the judiciary usurping the role of the legislative branch of government. In making that decision, it has put banks and others on notice that they must institute programs to prevent the expression of such words. Neither ignorance nor a lack of malice will be mitigating circumstances. If the words cited above (as well as others) can be interpreted as racial code words, then employers can be the targets of highly expensive litigation.

    The rules of the workplace have not only changed, they have become slippery and open to individual judiciary interpretations. In order to avoid being targets of law suits under Title VII of the Civil Rights Act, all employers will have to formulate an employee handbook policy on the use of code words, give examples of code words that must be avoided, make supervisory personnel sensitive to possible interpretations of subtle code words, train them to correct such situations promptly, set up seminars or other means of communication for teaching employees about how to avoid the use of code words, and further, let employees know that any violations of such rules may result in termination or other sanctions.

    As our civil rights laws evolve through judicial interpretation, it is essential that all preventive measures be taken not just to demonstrate one's good faith efforts, but also to maintain a strong defensive position. If one does not, then surely this will expose the industry to a stream of plaintiffs whose legal bounty will have negative effects on profitability.

    A racially charged and hostile work environment can not only significantly reduce productivity by .diminishing worker morale, but it can also cost a bank large sums of money in litigation and subsequent settlements.

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    When Words Mask Discrimination

    A supervisor criticizes an employee, referring to the female clerical worker as "another foolish person whom we shouldn't have hired." The employee, in turn, feels that the supervisor's criticism is, in effect, a form of racial harassment.

    I don't know what the supervisor meant by his unfortunate choice of words; however, his criticisms should have referred only to the employee's.

    Obviously upset by those words, the employee consulted a lawyer who subsequently informed her that she had been victimized by racially charged code words. The lawyer said he would be happy to sue the woman's supervisor and his employer under Title VII of the Civil Rights Act.

    A crazy scenario? Not really. For many years the law has required that the workplace be free of explicit racial epithets; however, meeting those minimum requirements is no longer sufficient. Employers, human resources executives and supervisors must now make sure that the workplace is free of any words that can be cons1d as racial code words.

    The Court of Appeals for the 3rd Circuit clearly spells this out in Aman v. Court Furniture Rental. The court stated that racially implicit code words can indeed create a workplace environment that violates the civil rights of employees.

    The court further stated that "while Title VII does not prohibit racist thought, the law does require that employers prevent such views from affecting the work environment....Title VII tolerates no racial discrimination, subtle or otherwise."

    DONT BE A TARGET

    What can employers and human resources executives do to avoid being the targets of such suits?

    To begin, racial epithets, implied or explicit, have no place in the workplace and should be extirpated by all responsible employers. While no employers had been informed, by either legislatures or judiciaries, that such expressions as "you people," "poor people like you" and "one of them" are racial code words, the Court of Appeals stated that those specific words can be evidence of a pattern of conduct that indicates a hostile work environment. Therefore, it is up to individual organizations to be proactive in preventing such expressions.

    The rules of the workplace have certainly changed, and human resources executives have a new responsibility to make sure that all new hires, especially supervisory personnel, understand what constitutes racial code words.

    In order to avoid being targets of lawsuits under Title VII of the Civil Rights Act, every company should formulate an employee policy on the use of code words. The policy should give examples of code words to be avoided, such as those noted in the box to the left, and establish a complaint procedure in the event that such words are uttered. In addition, each company should make all supervisory personnel sensitive to possible interpretations of subtle code words and train them to "nip such problems in the bud" so they can correct potentially inflammatory situations before they give rise to legal issues. Furthermore, each company should be prepared to conduct seminars or initiate other means of communication (written or verbal) for teaching employees about how to avoid the use of offensive words. Finally, each company must regularly communicate to all of its employees that any violations of code-word rules will result in termination or other sanctions.

    Altogether, employees and employers should avoid racial code words in the workplace, not only because such expressions will result in a racially charged and hostile work environment that will significantly reduce productivity by diminishing worker morale, but because the utterance of such words will probably result in expensive and time-consuming litigation as well as enormous judgments.

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    Supplanting the Role of Unions

    In order to maintain a productive non-union workforce, manufacturers need to supplant the role of unions. Unfortunately, there are not many managers trained to do so. That lack of training can be a detriment to a company's success.

    In the past, the foremost role for unions was dealing with employee grievances/complaints. Where there is no union, management must create an "asking strategy" that comprises listening to needs, concerns, fears, and grievances/complaints of employees and be prepared to resolve them without discord. An "asking strategy" is an effective means for creating a policy that promotes employee inclusion.

    ALTERNATIVE DISPUTE RESOLUTION PROGRAMS

    It is essential that HR executives be expert in administering alternative dispute resolution (ADR) programs ADR programs are generally welcomed by management and employees they are cost-effective and swiftly arrive at fair resolutions.

    While there are many ADR programs, the three most common varieties are the following:

    • Arbitration, an adjudication process during which a third party hears both sides of a dispute; and weighing the evidence, renders a decision;
    • Mediation, involving a third party who facilitates open and ongoing communication that is designed to lead to a settlement that both sides will accept;
    • Peer review, an adjudication process that relies upon a selected panel of managers and employees, a majority of whom render a binding decision.

    So that employees are aware of ADR process, management should structure the use of various types of communications, such as newsletters, brochures, e-mails, company announcements on bulletin boards, direct mail pieces in pay envelopes or mailed to homes.

    ADR programs are important for defusing and resolving employee grievances/complaints before they can grow and have negative effects on morale and productivity.

    FOCUS GROUPS

    When management successfully supplants the role of unions, it also undertakes to perform a traditional role of unions: asking and then listening to what employees say about their jobs, futures, companies and policies.

    One of the best means of doing that is focus groups, which afford management important opportunities to obtain reliable information about workforce and attitudes.

    A focus group, for example, might be formed so that management can impart new policy information about health care benefits, while learning about employee attitudes to the new policy. A focus group should be run by a person who has the interpersonal skills to ask the right questions and get specific information.

    Focus groups examine issues in a flexible manner that is part of an overall strategic plan; they are an effective means for collecting valuable data.

    TEAM BUILDING

    Focus groups lead to team building. While the former are exploratory, teams are instruments for implementing strategic plans.

    Teams serve to enhance communications and resolve conflicts, but are most effective for increasing productivity and enhancing employee morale. When it comes to meeting certain productivity criteria, for example, the entire team is mutually responsible for reaching those goals (TEAM is an acronym for "Together, everybody accomplishes more," which helps to dissolve adversarial relationships.)

    When teams of workers are formed, they can be banded together to accomplish specific tasks, then reformed to accomplish other tasks. Management can reconstitute teams to solve different problems and to achieve higher goals of productivity.

    To create effective teams, management should clearly determine what problems a team should solve. It is important that teams have a selection of the right kind of people to get a job done. The most effective teams are composed of idea people, detail people, and facilitators.

    Once teams are established, it is important that they meet regularly, review their progress, keep records, and provide management with tracking tools. One individual should report to management.

    EMPLOEE ADVOCATE REPRESENTATIVE (EAR)

    As unions have shop stewards, non-unionized companies can have what is known as an Employee Advocate Representative (EAR). The EAR position is usually a trial assignment aimed at improving morale. The EAR is proactive, asking and listening, then imparting employee concerns to management. The EAR deals with workplace issues and the personal concerns of employees. The EAR position may or may not be salaried and is for a limited period of time.

    The responsibilities of the EAR include providing input about employee issues and suggesting solutions at regular department meetings. In addition, the EAR may assist in promoting company communications. 

    If management implements these activities, it will successfully supplant the role that unions had played in the past, and it will do so without the negative aspects of unionization.

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    The UPS Strike

    The two-week strike in August by the Teamsters union against UPS caused nervousness throughout much of the business community -- about the possibility of a new era of labor militancy.

    While unionized workers represent only 15% of the US workforce -- down from 35% as recently as 1987 -- some analysts suggest that the UPS strike represented a turning point from which organized labor will begin a major resurgence.

    For a clear and authoritative perspective on the new labor situation, Bottom Line/Business interviewed two of our experts -- management-employment lawyer Stephen J. Cabot and labor economist Audrey Freed man.

    The UPS settlement is certainly the biggest that organized labor has had in many years. But the benefits will be short-lived.

    Thanks to organized labor's very effective public relations effort, the strikers were able to obtain favorable attention from the media and general support from the public.

    But the public's perception will change over time as controversy about Teamsters' president Ron. Carey heats up.

    Questions about the legitimacy of Carey's election and campaign financing were obviously known to the union but were kept quiet until after the strike. In six months or so, people will again be talking about mob connections, etc.

    As to the strike itself, the great union victory that was pronounced in the press was not great at all. Carey had promised he would never commit his union for more than a three-year contract, yet he gave UPS a five-year deal.

    only an average of 3% a year -- a minimum figure in the current negotiating climate in which many companies arc willing to go to 3.5% or even 4% to get long-term contracts.

    Key: UPS was never going to give in on the central issue of hiring increasing numbers of part-time workers -- and it didn't. Its industry is growing so fast that it can easily turn some workers into full-timers. It will still hire more part-timers and may even have a larger percentage of them in five years.

    Even if there were no union, the company was destined to pay part -- market is very tight in today's strong economy, and UPS needs the kind of quality people who generally work longer hours than the typical part-timer.

    Bottom line: Most companies use part-timers. Most labor con-tracts allow for the hiring of part-timers. And many people today are looking for decent part-time jobs. Nobody's putting a gun to anybody's head to work pan-time for UPS or any other firm.

    My guess: If those part-timers were offered the chance to become full-time workers, as many as half-men and women -- would turn it down for a wide variety of reasons. It is a personal issue, not a legal issue or a humanitarian.

    So-the union took a red herring and created a populist appeal.

    Short term: I think that unions will get a short-term benefit out of the strike. I've seen it already in more active union organizing during August and early September, which is normally die slow season for labor activity.

    So-I'm urging clients to be prepared. Expect unions to be more assertive and aggressive in both organizing and negotiations. Make sure you dot the is and cross the t's in union contracts...communicate effectively with employees...and treat employees as they deserve 10 be treated -- as valuable assets -- so they don't feel the need to join a union to get a better deal.

    AUDREY FREEDMAN

    The biggest impact really has nothing to do with the union. Shippers will now be wary of dealing exclusively with UPS. That wariness creates opportunities for other delivery companies to begin to nibble at the edges of UPS's very large apple.

    On the labor issues, this is always the time of year when a great bragging noise comes from the AFL-CIO.

    Of course, the AFL-CIO's John Sweeney has a more aggressive mind-set than his predecessor, Lane Kirkland, and he's putting more money into revitalizing labor. But we've been hearing for years about organizing the farm industry, etc.

    As for labor's recent success in organizing Las Vegas hotel workers, the union's trust funds -- along with the Mafia-have owned many of the major casinos in Las Vegas for a long time. That's like claiming great success for organizing AFL-CIO headquarters.

    As for the issue of part-timers, UPS has about 100,000 of them, and when management agreed to convert 10,000 to full-time positions over five years, it was really not making much of a concession-assuming that UPS continues to grow at a healthy pace. What we're talking about really is UPS's ability to use and schedule its workers with total flexibility.

    Part-time is almost a misnomer here. Essential to UPS's success is having the flexibility to have workers do different tasks at different times. UPS has preserved that flexibility.

    The union was very effective at putting its own spin on the strike story. We all fell for the term '"pan-time employees," although quite a few of them work more than just part-time.

    Important: In a tight labor market, such as the one we have currently, any company that is smart enough to devise a schedule that will attract students, retired people and those who have other jobs has an advantage.

    Question: How much flexibility did UPS lose in the settlement? Answer: Not very much.

    Concerning the long-term impact on the future of labor, most businesses can relax.

    The AFL-CIO, under its forceful leader, John Sweeney, succeeded in signing up some government workers and small numbers in related areas where organizing has recently been somewhat successful, such as at public hospitals and HMOs.

    But -- the loss of union members is extremely heavy in the private sector and has been for some time. So I think organized labor probably either will continue to stagnate or begin to decline.

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    Employment Practices Liability

    Considering the Insurance Option

    Over the past decade employment related litigation has burgeoned. New federal statutes such as the Americans with Disabilities Act and the Family and Medical Leave Act, the enlargement of remedies like compen-satory and punitive damages, and new and ever expanding ton theories advanced by the plaintiffs bar, have led many corporate executives to feel under a stare of siege.

    Damage awards, particularly when punitives are involved, can run into the multimillions. Even a successful defendant may end up spending over $50,000 to defend a protracted litigation. In some cases employment suits have forced employers into bankruptcy or even dissolution.

    It is therefore of the utmost importance for employers to be well versed on all potential measures they can take to reduce employment-related risk. One such measure is insurance.

    Traditional Policies

    Under certain circumstances companies and managers have been successful in obtaining coverage for employment claims under traditional insurance policies. These include Comprehensive General Liability Insurance (CGL); Director's and Officer's (D&O); Errors and Omissions (E&O); Fiduciary Responsibility Insurance (FRI); Workers' Compensation; Homeowners (for individuals); and excess insurance policies.

    These forms of insurance are not typically offered by the insurance industry with employment practices litigation coverage in mind. Nonetheless, some courts have interpreted coverage terms very broadly. For example in Solo Cup Co. v. Federal Insurance Co., the Seventh Circuit held that a carrier had the obligation to defend allegations of discrimination under an excess Liability umbrella policy. While purely intentional acts were not encompassed within the policy definition of "occurrence," the court reasoned that claims of disparate impact discrimination were covered because that theory does not demand proof of discriminatory intent. Similarly, in Interco Inc. v. Mission Ins. Co., the Eighth Circuit determined that an insurer had a duty to defend alleged "intentional and/or reckless" act because recklessness could fall within the policy definition of occurrence. In other cases courts have allowed coverage of employee claims for emotional distress and mental anguish under "bodily injury" or "personal injury" endorsement language. Indeed, some plaintiffs' attorneys have had the acumen to recite the physical manifestations of alleged injuries in their complaints in the hope of accessing the deep pocket of an insurance company.

    To counteract what the insurance industry views as overly broad judicial construal of standard insurance policies, many such policies now contain employment practices exclusion provisions that expressly disclaim coverage of employment related claims. Even policies which allow some employment claim coverage now virtually always restrict it to exclude many of the most frequently asserted causes of action.

    Employment Practices Liability Insurance

    However, in recognition of the need for protection in these employment litigation fraught times, in the early 1990s, insurance companies began to devise a new insurance product specifically designed to provide coverage for employment discrimination, sex harassment, wrongful discharge, negligent supervision, and work related defamation claims. Pioneers of this new product, known as Employment Practices Liability Insurance (EPLI) included Reliance Insurance Company of Illinois, Lloyd's of London. Chubb & Sons Inc. and Lexington Insurance Co. Today over 50 carriers offer some sort of EPLI product.

    Since EPLI is relatively new, the policy is far from uniform. Insurers offer widely ranging kinds of coverage at vastly different rates, making comparison and selection difficult for the consumer.

    The starting point for a cost-benefit analysis is usually cost. In the current mar-ketplace, premiums for EPLI start in the neighborhood of $4, 000 but are more typ-ically in the range of $10, 000 for a medium size concern. Available deductibles can be as low as $I, 000 to $2, 000 or as high as $20, 000 to $25, 000 per claim. (Price and deductible levels are in a stale of some flux as carriers are just beginning to garner adequate actuarial data to appropriately cost this new product.)

    Benefit analysis is a highly individu-alistic and involved affair. It is a vast oversimplification to say that the most expensive policies are the best, since the degree and nature of protection needed by every organization differ markedly.

    Notably, while your insurance bro-ker may with the best of intentions endeavor to find an EPLI policy that fills the gaps in your firm's insurance portfolio, agents rarely have the legal know-how to guide you towards policies that will provide effective projection in the rapidly transmuting terrain of employment law.

    For one thing, the precise language used to define terms such as "the insured," "an insured event," "claimant," "claims," "loss," and "damages" on the policy will be of critical consequence in the context of employment litigation. To illustrate, should comprehensive protection of indi-viduals be desired, the definition of "the insured" should include not only the corporate entity, but current, former and prospective officers, directors, managers, nonmanagerial personnel and perhaps independent contractors.

    If the company wishes to pass along the risk of costs for all kinds of claims, the definition of claim must cover not only lawsuits instituted in courts of laws, but charges filed with the Equal Employment Opportunity Commission and counterpart state and local agencies.

    To ensure extensive loss indemnification, the "loss" and "damage" definitions should encompass sums paid in settlement, attorneys' fees awarded to plaintiffs, pre-judgment and post judgment interest, defense costs including expert and witness fees, front pay, pack pay, compensatory damages, and (if possible) liquidated and punitive damages. The extent of policy limits is also of key importance. The broadest possible definition of employment prac-tices violations may additionally be advisable. Employment counsel should be consulted to ensure that the kinds of claims to which your company is vulnerable are comprehensively covered.

    Indeed at such point as your firm is seriously looking into the EPLI, it is imperative that it seek the advice of counsel with employment law expertise. Your attorney will be able to scrutinize the policy with an eye towards issues which, as noted earlier, agents are likely to be unaware of and even the most knowledge human resource and risk managers may not consider.

    Customize Your Policy

    The EPLI policies on the market are rarely offered on a take-it-or-leave-it basis. Terms can -- and should -- be negotiated.

    One provision that is frequently a subject of negotiation relates to defense counsel. A major benefit of insurance is the duty of the provider to defend, which is broader than the duty to indemnify. In exchange for this benefit, policies virtually always provide that the insurer will select counsel and maintain control of the litigation.

    Many employees are just as happy to let their carrier choose counsel. (Presumably, the insurance company will retain reputable and skilled attorneys.) Other employees may not have a preference for a specific law firm, but do want to at least participate in selection of counsel. Still others feel very strongly about using attorneys whom they know and trust. Whatever the case, negotiation of the selection of counsel provision to make it more flexible may be worthwhile. For instance, the policyholder might be able to get approval of its own lawyer if it agrees to pay any portion of the fees which may be higher than the rate charged by the insurer's attorney.

    Evaluating the Employment Practices Liability Insurance Option

    Ultimately, whether employment practices liability coverage is worth the cost is a highly individualized analysis which each enterprise must make for itself. However, any decision should include consideration of the following four factors.

    Risk Vulnerability: Can your company afford to gamble? To what extent does it have the financial resources to weather several protracted litigations or a sizable loss? If a company can afford the expense of EPLI coverage but could not sustain a large damage award, insurance may be the product alternative.

    Past Claim History: Have employment claims previously been filed against the company? How often? What monetary awards or settlement sums have been paid? Importantly, what is the trend of claims? A company which had numerous claims filed against it in the 1980s, but which received only a few in the early 1990s, and none for several years, probably has less of a liability concern than a firm that has received far fewer total complaints but which has witnessed a claim increase over the past five years.

    Workforce Composition: What is the constitution of the workplace? Anyone can assert a contract or tort claim but discrimination laws largely protect specified classifications of employee. How have individuals in those protected classes fared at the company? Have a disproportionate number of older workers been paid off in recent years? What is the company's promotional record? Do women and minorities compose a large percentage of the rank and file, but only a small percentage of management? Such circumstances may not in fact result from discrimination but they present a picture that they will help plaintiffs establish a prima facie case.

    Personnel Policy and Procedure: Does the firm undergo regu-lar personnel policy and procedure audits? Does it have a strong human resource department, an up-to-date employee handbook, well publicized antidiscrimina-tion and antiharassment policies and a fair and effective internal grievance system? To the degree good human resource practices exist, litigation risk is lessened. But the reverse is also 1.

    After careful evaluation of the above four factors, a company may determine that the cost of EPLI is a worthwhile investment. Alternatively, the employer may choose to channel its resources towards risk preventive measures such as the reassessment of dismissal and promotional criteria, careful monitoring of internal employee complaints, and the overall strengthening of personnel policies. Most important, the employer must ensure that its human resource department has the sufficient expertise, authority, and funding to be a truly effective agent of risk reduction.

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    Avoiding Age-Related Lawsuits

    Driven by mergers or the simple imperative to increase profitability by streamlining their operations, banks are laying off employees by the thousands. As this happens, middle managers ranging in age from 40 to 65 are suddenly finding them-selves unemployed. Angry and frustrated, they are turning to the courts for redress -- oftentimes asking for large settlements based upon being the victims of age discrimination.

    The Age Discrimination in Employment Act (ADEA), which dates back to 1967, made clear that employers cannot discriminate against any individual over the age of 40 in terms of pay, benefits or continued employment. If banks down-size without giving sufficient thought to possible legal ramifications, they could not only be the target of individual age discrimination suits, but class action suits as well.

    In the current environment of extensive merger activity, managers are focused solely on the bottom line. Few are looking at the possible costs of employment litigation, as the ever-increasing numbers of age discrimina-tion suits attest. Indeed, the numbers are nearing epidemic proportions. This trend can and should be reversed -- but only if bank managers follow a specific course of action. I have outlined exactly what every prudent banker should do to avoid being the target of age-discrimination suits.

    Prior to any downsizing that will involve layoffs, senior management should determine how many employees will be affected. The number should be based on purely economic or other legitimate busi-ness considerations. You must be very clear about your motives and goals. Next, calculate a timetable for the phased -- in implementation of a downsizing program.

    As I noted earlier, there must be exact reasons for terminating employment, so establish perfor-mance criteria and standards for choosing which personnel will be laid off. Since personnel records can become evidence in any future litiga-tion, it is imperative that work perfor-mance records have non-discriminatory language that justifies the evaluation. There also should be an obvious level of consistency in all perfor-mance evaluations. In other words, do not judge one person by one set of criteria and another person by a more stringent set of criteria.

    Workers with the weakest per-formance records should be dismissed first. Obviously, if someone is not performing up to corporate standards of productivity, that is an issue to be considered as long as other employees are evaluated by the same standards. And if two employees have virtually equal skills and performance records, seniority should be the deciding factor in any layoffs.

    To further implement a successful downsizing, you may want to encourage early retirements. If an early-retirement strategy is going to be successful, it must offer an attractive set of incentives. Possible features include early and complete vesting in pension benefits, the maintenance of health care benefits after retirement, generous severance plans, counseling and training programs, and out-placement services. You might also want to retain "special" employees as consultants, although it's important not to run afoul of Internal Revenue Service scrutiny over misclassified employees.

    In addition to those incentives, some of my clients have offered their employees ages 55 or older, and with at least 10 years of seniority at the time of retirement, severance packages that include 50% salary for two years. Such packages permit senior workers to plan for the future, while permitting employers to bring in the next generation of quality workers.

    To further minimize any chance of age discrimination suits, employers should carefully explain the retirement option and then obtain a signed statement of the employee's understanding. Thereafter, the employer should obtain a signed release from any employee who willingly chooses early retirement. True voluntariness, combined with a valid release, will prevent the retiree from bringing suit under ADEA.

    While many age discrimination suits are frivolous, many others are the result of short-sighted behavior on the part of employers. Successful downsizing strategies require intelligently designed tactics to insure success. prepared strategy will go a long way toward avoiding costly and time-consuming litigation.

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    How to Screen Out Troublemaking Employees...Legally

    Far too many companies shoot from the hip when hiring people, figuring they can always get rid of them in a month or two if they don't work out. That's a recipe for trouble, thanks to the vast number of legal weapons that employees can now wield.

    It always makes more sense to screen job candidates carefully... and hire only those who will fit in well. With the right screening techniques, this can be done.

    Start by establishing a company philosophy. That might sound corny, but it helps. Whatever the company's goals may be, refine them, describe them and put them into a document that can be given to prospective employees. That document tells job applicants about the company's attitudes.

    DISCOVERING ATTITUDES

    Find out about candidates' attitudes. The applicable questions are perfectly legal as long as they dovetail with the company's business-related philosophy statement and as long as all interviewers ask all applicants the same questions. All applicants should also be evaluated according to the same standards.

    Effective questions for rooting out potential troublemakers:

    • If we were to call your former employers, what would they tell us about you?
    • Do you think you should be able to criticize management?
    • How do you react to rumors on the job?

    QUALITIES TO LOOK FOR

    What you're looking for in the answers to all of these questions are honesty, openness and respect for the chain of command. Employees who have nothing to hide, for example, will urge the interviewer to call their former employers. They're confident that the report will be good.

    If there's an awkward pause, or if the candidate hems and haws, I often a sign that there's something he or she doesn't want your company to find out. In that case the answer usually goes something like this: Oh, I think they 'II give me a pretty good report...well, I really didn't get along too well with my immediate boss.

    An applicant who gives an unequivocal no to the question about criticizing management usually isn't being honest. The kind of answer to look for: Not in every instance; But when management is doing something that I believe is dangerous or unfair, I feel that I should be allowed the opportunity of talking with management about the situation.

    For better or worse, the grapevine is one of the most effective communications channels in any company. Here again, the applicant who claims not to pay any attention to rumors isn't being honest. Because many rumors involve guesswork about what management is up to, this question is a cross-check on the previous one about criticizing management, Best answer: Rumors can be upsetting, and if a rumor would impact my job, I'd like to feel that I could pursue it with management.

    To probe further, ask: How would you discuss such a rumor with management? The best answer would be something indicating respect for authority and a desire to work through channels. If satisfaction isn't obtained at the first level in the chain of command, the employee would go to the next level. Time and time again, employees who give these answers are the least likely to cause trouble later.

    AVOIDING LAWSUITS

    The two things that most often trigger equal employment lawsuits are questions that aren't work related or that differ from candidate to candidate. Attitudinal questions that dovetail with the company's philosophy statement, however, are (or should be) clearly work related. And when every applicant is interviewed and evaluated according to the same standards, no one can claim discrimination. The key here is that the system establishes an even-handed measuring rod -- it doesn't mix apples and oranges.

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    Labor-Management Cooperation Essential for American Business

    American workers have always sought better wages and job security. Years ago they were just "employees at-will," subject to the whims of their employers. They toiled in difficult working conditions and feared the day when their employers might fire them.

    Workers eventually turned to unions for job security and improved conditions. Bolstered by the National Labor Relations Act, which prevented discrimination against employees because of union activity, unions became the bargaining agents for millions of workers. By the end of World War II, it looked as if we would become a nation of unionized employees.

    But the promises of unionism were never fulfilled. In the name of job security, unions compelled employers to accept inflexible, unproductive work rules. Unions spoke angrily and carried a big "strike" stick.

    They drove employers to pay ever-higher wages and contributed to an adversarial management-labor relationship, but they did not assist in improving productivity.

    Unions gradually became anachronistic institutions, preaching the same 1930s message while the nature of work and the work force changed. Unions came to be perceived as self-serving institutions tainted by criminal indictments and prosecutions.

    Unions also became less relevant as an increasing number of state and federal laws were enacted to protect workers. Various laws now regulate minimum wages, overtime, pension plans, work-place safety, Social Security and the like. Many of those regulations contain provisions making it unlawful for employers to terminate employees who report violations.

    While those laws made work safer and more secure, state court decisions have built a new bulwark around individual employees over the last 15 years. Those courts have further limited the "at-will" concept of employment by allowing terminated employees to file suits against their former employers for "wrongful discharge."

    Some employees have succeeded in these lawsuits by alleging that employers violated public policy because they fired them for serving on a jury, taking time off to vote, or -- blowing the whistle on a health violation.

    Many courts also have recognized implied contractual theories of wrongful discharge. In such cases employers were found to have made and subsequently broken binding, written or oral "promises" of employment.

    Still, wrongful discharge actions, because they are undertaken by individuals, can give only the most limited job security to the masses of working people.

    Indeed, neither union bullying, statutes nor state court actions will provide American workers the job security for which we all struggle. Such security will be achieved only after both employers and employees deal successfully with two of the most vital economic issues of our times: international competition and productivity.

    We all know that international competition has put American industry on the spot. Our nation is swamped with imports in almost every field of production.

    Japan is one of our fiercest competitors, producing top quality products, while paying its employees lower wages than comparable American workers receive. Yet labor relations in Japan are excellent compared with those in America. Japanese workers have a high degree of company loyalty, and Japanese management regards its obligations to them as a top priority.

    It is the very need to compete with Japan and other productive, energetic nations that ultimately will force American industry to protect its employees and provide better job security.

    American industry will become a competitive leader in the international marketplace only when it builds cooperative partnerships of labor, supervisors and management. Employers who see the "writing on the wall" will realize that they have to treat their employees fairly and work with them to harness their energies to meet the competition.

    American managers must re-examine their methods. Management must communicate effectively with employees, encourage suggestions and participation, adequately train supervisors in interpersonal relations and introduce problem-solving mechanisms in which employees have confidence. Under such circumstances, employers would find that their employees are eager to solve problems in the workplace.

    The American-managed Nissan plant in Smyrna, Tenn., is an example of a company that has built a working partnership of labor and management. The company trains its workers to do a number of jobs, involves them in decisions and gives them responsibility for the quality of the product at every level. The Nissan employees have shown no interest in unionizing, and labor relations are harmonious.

    This cooperative approach may have been born out of necessity, but it will be cooperation, rather than wrongful discharge actions, government regulations or union muscle, that will be the source of employee protections in the future.

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    Labor Relations without Interference

    Union membership has steadily declined since the mid-1950s. Since 1975 alone, membership has dropped by over four million to its current level of approximately 18 percent of the workforce. In response, union leaders have vowed to reverse the trend of the last three decades through aggressive recruitment and by investing huge sums in organizing efforts. Leaders are also using new methods to attract members, including "associate" memberships, low-interest credit cards and discounted legal service plans. In short, unions are utilizing the latest administrative, technological and psychological approaches to regain their stature in today's workforce.

    Employers, particularly those in the growing service sector of our economy, must be prepared to meet the challenge of the aggressive and increasingly sophisticated organizing drives by unions. Management may most effectively meet this challenge by asking themselves why unions have been necessary and then structuring a work environment in which they are unnecessary.

    A work environment in which unions are unnecessary is one which stresses employer-employee cooperation, open and effective communication, understanding of shared goals, joint problem solving based on mutual respect, positive leadership and direction. Such an environment will produce a cohesive, productive workforce which has no need for or interest in a union.

    The cornerstone of this type of proactive work environment is a workforce which recognizes that the employee's individual interests are the same as those of the employer and that these interests are best achieved through mutual cooperation. An employer can build and maintain a cooperative workforce by using a system designed to hire those employees who will work most productively within that company.

    The Work Philosophy: Commitment to Cooperation

    The current workforce and work environment must be evaluated before it is possible to design an effective hiring system. This evaluation is best accomplished by interviews with selected members of management. These interviews accomplish two goals: they define the company's "work philosophy" and allow the company to formulate a description (or "wanted poster") of the employee who will work most productively within that company's work environment.

    A company's "work philosophy" is a policy statement regarding its commitment to cooperative employee relations and the advantages of operating without interference from organized or outside representatives. All levels of management, particularly top management, must be fully committed to the principles outlined in the work philosophy if it is to provide a strong base for an effective hiring system. For that reason, the philosophy must be an amalgamation of top management's views, ascertained through their initial input, of the type of employee relations environment which is appropriate for that company.

    Profiling the Ideal Employee

    The initial information gathered from management can also be used to develop a profile or "wanted poster'' of the ideal employee. This profile defines specific behavioral attributes and values, but should not be an outline of personality characteristics. Instead, it must emphasize prospective employees' propensities for cooperation on the job and their past work experience.

    One starting place for a profile is an evaluation of the company's existing workforce. Supervisors and managers should be asked to describe those employees who are "successful"' from both the company's and their own points of view and those who are "unsuccessful." Those interviewed should be cautioned to avoid describing employees' personality traits. What is more important is how employees view:

    • The work they do,
    • The people to whom they report,
    • The company's policies and procedures, and
    • The employees with whom they work

    For example, the initial evaluation could determine the amount or independence which is suitable for an employee of the company. It could also determine whether the work requires employees to think for themselves and adapt their work habits to specific situations, or if it requires employees to conform to a standardized pattern of repetitive work.

    As an alternative to interviewing supervisors and members of management, the preliminary information may be gathered through an opinion survey. An opinion survey allows supervisors to express their unbiased views regarding the existing workforce and has the added benefit of eliciting the supervisors' opinions and attitudes about their work environment in general.

    Once a sampling of "wanted posters" has been gathered from management and supervisory personnel, their descriptions can be distilled into a list of desirable and undesirable characteristics. These characteristics form the backbone of an effective hiring system and should define both positive and negative attributes. In other words, it is important to know the characteristics an interviewer should look for in a prospective employee and those an interviewer should seek to avoid. A profile of this nature provides a company with an objective method of determining whether an applicant will strive to achieve the company's goals and objectives.

    Pinpointing Cooperative Employees

    Once positive and negative characteristics are defined, a set of interview questions must be designed to measure candidates against the profile attributes. These questions should be phrased to encourage the applicant to respond with more than a "'yes" or "no" answer. In addition, a manual is needed for interviewers which shows how the positive or negative attributes appear in typical and exemplary answers.

    Carefully designed questions and suggested answers provide an interviewer with a consistent, objective system for evaluating prospective employees. The hiring system is even more objective when it is based on a tally sheet which summarizes and evaluates an applicant's responses to the interview questions. An effective tally sheet would indicate how many points were assigned to each attribute on each question. The total number of points the applicant receives will determine whether to consider the person for employment.

    Aside from assessing an applicant's suitability for a company's work environment, a hiring system of (his nature can also protect an employer from charges of discriminatory refusal to hire. A systematic interview and scoring process can assure that no unlawful questions are asked. In addition, if challenged, the company can produce a standard set of interview questions and the applicant's tally sheet to rebut any allegation that the company's employment decisions are based on discriminatory motives.

    Auditing the Work Environment

    A company cannot develop and maintain an ideal work force by using the hiring system alone. A system of labor relations audits is also necessary to assess the effectiveness of the hiring process and to monitor the company's employee relations climate. Labor relation audits can fulfill a number of functions, including:

    • Minimizing labor relation "risks" by minimizing exposure to discrimination charges and wrongful discharge lawsuits;
    • Aligning employees' expectations with the company's organizational philosophy and competitive reality;
    • Promoting and maintaining employee morals, effectiveness, satisfaction and loyalty to the company; and
    • Monitoring personnel procedures and policies including the competitiveness of the compensation package.

    A System of Labor Relation Audits

    Regular audits completed by management, supervisors and employees help to monitor a company's environment and labor relations. Various types of audits which can be utilized to accomplish these goals include:

    • Employee Audit, which monitors each employee's satisfaction and loyalty to the company;
    • Vulnerability Audit, which assesses a particular group's receptivity to a union organizing attempt;
    • Daily Human Resource Audit, which is completed by human resource managers and reviews absenteeism and disciplinary actions which might indicate dissatisfaction and vulnerability to union organization;
    • Weekly Human Resource Audit, which reviews turnover rates, tardiness, layoffs, disciplinary action, voluntary terminations, injury rates, employee communications and other factors which may highlight potential personnel problems; and
    • Monthly or Quarterly Human Resources Audit, which includes an analysis of wage and benefit comparisons, union organizing activity in the company's geographic area, a review of hiring procedures, methods of announcing and filing job openings, training, awards, communication programs and other indicators of employee satisfaction.

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    Labor Unions and Their Supporters Are Trying to Turn Back the Clock

    From the end of World War II until the Reagan administration, powerful American labor unions regularly demanded wage and fringe-benefit increases that were regularly granted.

    Increased labor costs were simply passed on to consumers. However, the spiral eventually spun out of control, and consumers turned to cheaper foreign products such as cars, electronics, and cameras.

    Some companies closed their domestic factories and moved to countries that had no unions and low labor costs. Banks, as might be expected, suffered from a loss of business.

    Unrealistic Demands

    Ultimately, unions proved to be their own worst enemies, pricing themselves out of the marketplace. Their demands had grown increasingly unrealistic, their strikes and slowdowns the last gasps of self-destructiveness.

    During the 1980s, union membership decreased, more and more companies opened factories either in other countries or nonunion ones in the United States, and consumers benefited from high-quality, low-priced products. The unionized worker had been made superfluous by selfish and overzealous unions.

    Now there is an effort to turn the clock back and repeat the mistakes of the past, to tilt the playing field to the benefit of organized labor as Secretary of Labor Robert Reich has stated he would like to do.

    To affect that tilt, President Clinton, Secretary Reich, and the AFL-CIO are all pushing Congress to pass a ban on permanent replacement workers.

    Harmful to Recovery

    As one who regularly negotiates the settlement of management-labor disputes and contracts on behalf of banks and others. I believe that the legislation would significantly undermine the nation's economic recovery and ability to compete in a global economy.

    The new legislation, in fact, will give labor a powerful new weapon to be used against employers in collective bargaining.

    Workers will rightly feel that they can strike at will and bring banks to their knees, because they can go on strike and feel that their jobs will not be replaced by permanent new workers.

    In addition, banks will find it more difficult to operate during a strike, because temporary workers will be unwilling to cross picket lines for jobs that will end when the strike ends.

    Finding it difficult to operate during strikes, banks will have to capitulate to union demands. Knowing that, striking workers will have an even greater incentive to strike again and again for more and more money.

    Spur to Strikes

    Richard Lesher, president of the U.S. Chamber of Commerce, warned that the adoption of the permanent striker replacement ban "would guarantee this country would experience many more strikes in the future." The bill will "tilt the current level playing field in favor of organized labor."

    I BELIVER
    That we will see a return 
    to the blood-in-the-streets
    activities that perverted
    the labor movement
    during the 1920s and 
    1930s.
    A BAN on replacing
    strikers with permanent
    replacement workers 
    would undermine the 
    nation's recovery and 
    ability to compete in a global economy.

    Not only will labor strife increase, but the intensity and destructiveness of that strife will wreak havoc on the financial well-being of management and labor alike: indeed, I believe that we will see a new era of labor-related violence, a return to the blood-in-the-streets activities that perverted the labor movement during the 1920s and 1930s.

    In addition, the passage of the ban will be a body blow to America's ability to respond competitively to German, Japanese, and other country's companies. And that will have a negative effect on the entire banking industry.

    Exodus to the Third World

    Rather than benefiting from an economic resurgence of American business, we will be helpless spectators to the exodus of American corporations into Third World countries. Those countries will welcome investments that will drain out of American banks, while they provide an affordable labor pool.

    The products those workers will manufacture will be affordable to American consumers, but of no help to their economic well-being.

    The alternative, of course, would be for American companies to go along with union demands, pay ever-increasing wages and benefits, pass the costs on to consumers who will refuse to buy those high-priced goods, and then go out of business.

    One need only look at the vast number of American companies that were thriving in the 1950s and then went out of business during the 1970s.

    A Delicate Balance

    Edwin L.Harper, president and chief executive officer of the Association of American Railroads, said that a ban on the use of permanent striker replacements "would upset the carefully crafted and long-standing balance" that exists in collective bargaining.

    "Just as the law permits workers to withhold their labor in an effort to secure favorable results," added Mr. Harper, "employers are permitted to keep their business going during such work stoppages by offering permanent positions to workers hired to replace strikers."

    Mr. Harper further pointed out that the scales are already tipped disproportionately in labor's favor, since the Supreme Court's 1987 decision(Burlington Northern Railroad Co. v. Brotherhood of Maintenance of Way Employees) to uphold the legality of secondary boycotts against railroads and airlines.

    Incentive to Relocate

    In effect, this bill is not only a company buster, but it provides a unique incentive to American companies to locate within the borders of countries that are known for being favorable to the interests of business. If American manufactures choose to operate on foreign soil, the banking industry will shrink as a natural consequence.

    American companies need all of the help they can get to compete successfully. The ban on permanent worker replacements is an economic kick in the teeth.

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    How to Increase Productivity and Reduce Labor Unrest

    Abstract By altering an organization's hierarchical structure and making its employees feel as if they are participating in management, a company can decrease labor strife, increase productivity, and reduce personnel turnover. The Author presents the employee involvement matrix which can aid a management team in implementing employee involvement programs that will be successful at different levels of sophistication. The matrix utilizes two continuums: the employee involvement continuum, which contains the various types of participation; and the learning continuum, which specifies the skills that are required in order to implement a given level of involvement.

    Keywords Employee involvement, Staff turnover, Productivity, Participation

    Many old-line companies have a hierarchical structure in which directives are issued from top to bottom. It is not unusual for such companies to experience periodic labor strife, which brings with it a concomitant reduction in productivity and revenue. Labor is what companies want to prevent, but it is an integral part of a hierarchical corporate culture.

    My experience with numerous clients over the last two decades has shown me that by altering its hierarchical structure and making its employees feel as if they participating in management, a company can decrease labor strife, increase productivity, and reduce personnel turnover.

    Prior to changing a corporate culture, supervisors -- who reflect the views of senior management -- must learn new modes of behavior. Invariably in an authoritarian hierarchy, supervisors are expected to achieve certain rigidly sanctioned goals. Their roles may consist of checking off the names of morning latecomers, keeping close tabs on daily production quotas, and inspiring workers by instilling fear and insecurity.

    After participating in training program aimed at team building and increased employee involvement, however, supervisors can be transformed into team leaders who coach and mentor workers, giving them a sense of pride in their accomplishments, Where supervisors and workers once followed rigid formulae, now they can be encouraged to be flexible and creative, to use their own best judgment, and to pitch in and help colleagues. Management and employees work together which a common mission: to make the company a better place to work. The end result goes beyond increased productivity and profitability to produce enhancements of company products.

    Such successes, however, cannot occur without first changing the corporate culture. Experience has taught us that a number of initiatives are essential for improving workforce morale:

    • Developing a written, one-year plan for improving workforce morale.
    • Creating flexible task forces to handle every workplace issue.
    • Evaluating employee opinions on new ideas, tactics, and strategies.
    • Defining the existing corporate culture, through the use of contemporary surveys, so that the views of employees mesh with the company's financial goals.
    • Deciding how much to budget for training so this initiative can be an integral part of all future budgets.
    • Establishing a system for evaluating the success of both existing and future proactive endeavors.

    Instilling enterprise-wide change

    Three factors must be in place if the enterprise-wide change initiative is to succeed: a methodology for successful communications, an understanding of the various employee involvement activities, and senior management's commitment to cultural change.

    A methodology for successful communication is essential if a corporate culture is to become flexible and open to change. A sophisticated method of workforce communication can help change the corporate culture and maintain those changes over time. Without back-and-forth flow of communications, a clearly defined corporate identity and purpose will become blurred, resulting in ambiguous expectations. It is essential that all workers feel they understand where their company I headed and how it plans to get there. There is a direct an axiomatic link between good communication and significant increases in productivity.

    All businesses, regardless of size, have two distinct cultures: a management culture and an employee culture. For the most part, companies tend to operate under management's agenda, unaware of the employees' agenda.

    Communications should serve to unite these cultures. The unification of divergent agendas is the key to any successful, long-term human resources strategy. Thus, communication is critical in any effort to achieve productivity gains while enhancing morale, which usually run on parallel tracks.

    To create a truly effective change initiative, communication strategies must be blended with employee involvement initiatives. The employee involvement matrix can aid a management team in understanding employee needs and goals. (See Exhibit 1.) The matrix helps company leaders focus on what they must do to implement employee involvement programs that will be successful at different levels of sophistication. The matrix takes in to account organizational conditions, management commitments, and workforce skills; and it provides a guideline for the realistic and appropriate degree of employee involvement.

    The basic concept underlying the matrix is that increased levels of employee involvement cannot be accomplished unless adequate employee and management sills exist. Increasing employee involvement can be attained as company-wide training levels and organizational conditions improve and become more sophisticated.

    The matrix (See Exhibit 1.) utilizes two continuums to project an appropriate level of employee involvement for a particular company. The horizontal continuum, labeled "Employee involvement," contains the various types of programs. The first program, cooperative goal setting, is the least complicated and requires the least "cultural commitment" on the part of the company. The continuum progresses to program No. 10, which is employee ownership and control.

    "[If real cultural change is to occur] there must be a genuine commitment by management to a meaningful level of employee involvement as part of its ongoing business strategy."

    The vertical continuum on the matrix is the learning continuum. It specifies the type of knowledge and skills that will be required throughout the company in order to implement a desired level of employee involvement. The learning continuum has five general areas, ranging from interpersonal relations to business process.

    To determine the reasonable level of employee involvement in a given company setting, management should begin at program No.1 on the employee involvement continuum and work upward.

    If employees are already involved at given level -- cooperative goal setting or an employee idea system -- and wish to do more such as convene focused task forces, the group process and problem-solving skills shown in the next section of the learning continuum would have to be in place before that new activity could be attempted.

    The basic premise of the matrix is that successful implementation of employee involvement at any level must be preceded by requisite workforce skills and managerial commitment.

    The final factor in the success of the cultural change process is commitment by management. Simply instituting training on the skills in the learning continuum will not be sufficient. There must be a genuine commitment by management to a meaningful level of employee involvement as part of its ongoing business strategy. A constant re-evaluation of the level of cultural commitment by management is essential to moving further along the employee involvement continuum.

    Employee involvement continuum

    • The employee involvement continuum progresses through ten steps of increased involvement.
    • Cooperative goal setting -- the joint establishment of goals b each individual and his or her supervisor after mutual discussion. Goals are set and reviewed on a work-cycle basic.
    • Employee idea system -- a managed and funded program, which provides formalized feedback and includes a reward system. The program results must be highly visible for maximum success.
    • Focused task forces -- the convening of a group to work on a specific issue of set of issues and to recommend alternative solutions within a given time period.
    • Problem-solving teams -- work-unit teams that spend a specified amount of time each week trying to solve identified work-related problems.
    • Cross-functional groups -- problem-solving at interdepartment level with representation from various group functions within the work environment.
    • Union management committees -- can be considered if the employees are represented by a labor union. Joint union-management involvement will help to maximize union participation in all phases of employee involvement.
    • Process improvement groups -- selected groups to solve macro-level problems and improve key enterprise processes, such as product development, quality control, marketing, and distribution.
    • Self-managed work teams -- unsupervised teams of individuals working together for the purpose of improving skills, rotating jobs, and making work-related decisions that affect the total team.
    • Entrepreneurship -- creating opportunities for employee to implement innovative ideas, including designating a special team to pursue an idea, accepting the risks, and appointing a champion to execute the idea within the organization.
    • Employee ownership and control -- employee ownership of all or part of an organization or subsidiary within that organization. Increasing degrees of ownership can improve a business's profitability.

    The Learning Continuum

    The Learning Continuum denotes the skills and processes necessary for each level of employee involvement.

    A. Interpersonal relations involves five skills:

    • Team building -- creating and sustaining high-performance oriented teams.
    • Effective meetings -- conducting purposeful and productive meeting and methods of meeting planning, leadership, participation, and follow-up.
    • Leadership styles -- understanding and practicing leadership styles and straits and the factors that make certain styles more effective.
    • Motivation theory -- knowledge of what motivates individual human behavior, e.g. personality, needs, expectations, dependency/maturity theories.
    • Communications skills -- understanding and practicing effective, two-way communication, e.g. listening, writing, speaking, and giving and receiving feedback.

    B. Group process involves four skills

    • Presentation skills -- techniques for preparing and giving a persuasive and effective presentation.
    • Data gathering/organization -- methods of collecting data such as surveying and interviewing, and methods of organizing and presenting information.
    • Group problem solving -- utilizing group problem-solving techniques as compared to the individual-solving process.
    • Group leadership -- analyzing how people behave in groups, what constitutes a group, and the roles of a group's leaders and participants.

    C. Employee relations consists of four types of learning:

    • Stakeholder analysis -- analyzing the goals, motives, and behaviors of all internal and external stakeholders of a given enterprise and determining how to maximize mutual benefits.
    • Conflict resolution -- understanding, mediating, and resolving conflicts between groups.
    • Negotiation -- methods and strategies for achieving win-win results in negotiations and avoiding the zero-sum game.
    • Collaboration -- comparison of cooperative versus competitive strategies and their relative impact on goal achievement.

    D. Organization analysis includes three processes:

    • Work and job design -- coordination of the interrelationship of jobs, workflow, and other factors in orders to improve quality, productivity, and employee commitment.
    • Organization structure -- design of organization structures to meet current and future economic and technological demands.
    • Systems/process analysis -- identifying and solving problems utilizing macro-level processes, which promotes the attainment of key business objectives.

    E. Business process contains four skills:

    • Risk analysis -- pinpointing and quantifying risks in given enterprise and determining acceptable risk levels and trade-offs.
    • Life-cycle analysis -- identifying the critical steps in the development of strategies, plans, markets, products, and technologies to ensure their ultimate success.
    • Cost/benefit analysis -- methods and techniques for determining cost factors and projecting real and probable benefits in implementing new business ventures and technologies.
    • Business systems -- analyzing the goals, inputs, processing requirements, outputs, constraints, and feedback mechanisms in a business operation in order to maximize. Efficiency and effectiveness.

    We have seen the implementation of this broad initiative effectively change the corporate culture of many companies, unifying the agendas of management and employees, Sustained through the proactive implementation of flexible communications programs, the resulting corporate cultures have achieved a significant increase in productivity, very low levels of personnel turnover, and an absence of labor unrest.

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    Auditing Your Company's 'Human' Resource

    As an auditor, it is your responsibility to analyze the effectiveness of your resources. But most auditors overlook a company's most important, and often most costly resource, its employees. An auditor is particularly qualified to monitor the existing workforce and to develop a system through which an employer can hire those employees who will work most productively within the company's work environment.

    ASSESING THE CURRENT WORKFORCE

    Before designing an effective hiring system, you must evaluate the current workforce and work environment. You can complete this evaluation by conducting a series of audit-interviews with selected members of management. The preliminary audit-interview accomplishes two goals: it defines the company's "work philosophy" and allows you to formulate a description or "wanted poster" of the type of employee who will work most productively within that company.

    Work Philosophy Defined

    The "work philosophy" is a policy statement regarding the company's commitment to maintaining a cooperative employee relations atmosphere and, where appropriate, the advantages of operating without interference from organized or outside representatives. All levels of management, particularly top management, must be fully committed to the principles outlined the "work philosophy" if it is to provide a strong base upon which to build an effective hiring system. For that reason, the philosophy must be an amalgamation of top management's views, as ascertained through the initial audit process, of the type of employee relations environment which is appropriate for that company.

    THE EMPLOYEE PROFILE

    The initial audit process can also be used to develop a profile or "wanted poster" of the ideal employee. The employee profile defines specific behavioral attributes and values. An employee profile should not be an outline of personality characteristics, but rather an assessment of a prospective employee's propensities and past work experience.

    You can design a profile for your company or client by evaluating the existing workforce. Supervisors and members of management should be asked to describe those employees who are "successful" company employees and those who are unsatisfactory. You should caution those individuals interviewed to avoid describing employees' personality traits. What is more important is how the successful employee and the unsatisfactory employee view the work they do, the people they report to, the company's policies and procedures and the employees with whom they work. For instance, the initial audit could determine the amount of independence which is suitable for an employee of that company. It could also determine whether the work requires employees who think for themselves and can adapt their work habits to specific situations, or employees who are satisfied performing tedious and repetitive work.

    As an alternative to audit-interviews, you can gather this preliminary information by conducting an opinion survey. An opinion survey will allow supervisors to express their unbiased views regarding the existing workforce and has the added benefit of eliciting the supervisors' opinions and attitudes about their work environment in general.

    Wanted Posters

    Once you have gathered a sampling of "wanted posters" from management and supervisory personnel, you can begin to distill their descriptions into a list of desirable and undesirable characteristics. These profile characteristics form the backbone of an effective hiring system.

    The profile should list and define both positive attributes and negative attributes; in other words, those characteristics an interviewer should look for in a prospective employee and those characteristics an interviewer should seek to avoid. By developing a profile of this nature, you can provide your company or client with an objective method of determining whether an applicant will work well within the company's work environment to achieve the company's goals and objectives.

    THE INTERVIEW PROCESS

    Once positive and negative characteristics are defined, you should help your company or client develop a set of interview questions designed to elicit the various profile attributes. You should phrase interview questions in a way which encourages the applicant to respond with more than a "yes" or "no" answer. Each question should be accompanied by suggested answers and an explanation of the positive or negative attributes which the suggested answer indicates.

    Questions and sample answers of this nature provide an interviewer with a consistent, objective system for evaluating prospective employees. The hiring system can be made even more objective if you develop a tally sheet which summarizes and evaluates an applicant's responses to the interview questions. A tally sheet assigns a point value to each attribute indicated by the applicant's answer to each interview question. The total number of points the applicant receives determines whether the applicant should be considered for employment.

    A Second Benefit

    Aside from the benefits of assessing an applicant's suitability for the company's work environment, a hiring system of this nature can help protect an employer from charges of discriminatory refusal to hire. An interview system developed through this process can assure that no unlawful questions are asked. In addition, if challenged, the company can produce a standard set of interview questions and the applicant's tally sheet to rebut any allegation that a decision not to hire a particular individual was based on a discriminatory motive.

    AFTER YOU HIRE

    The auditor's job does not end when the hiring system is completed. You should also develop a system of general labor relations audits which help the company assess the effectiveness of the hiring system and which allows the company to monitor its employee relations climate. Labor relations audits can fulfill a number of employee relations functions, including

    • Minimizing overall labor relations "risks" by minimizing exposure to liability under state and federal anti-discrimination laws and under theories of wrongful discharge
    • Align employees' expectations with the company's organizational philosophy and economic reality
    • Promote and maintain employee morale, effectiveness, satisfaction and loyalty to the company
    • Monitor personnel procedures and policies
    • Maintain a competitive compensation package

    LABOR RELATIONS AUDITS

    You can develop a series of audit forms to be completed by supervisors or other management personnel on a regular basis to monitor various elements of the company's working environment which effect its labor relations climate. Various types of labor relations audits you can develop to accomplish these goals include:

    • Employee Audit -- monitors each employee's loyalty to and attitude toward the company.
    • Vulnerability Audit -- assesses a particular employee group's receptivity to a union organizing attempt.
    • Daily Human Resource Audit -- completed by the individual responsible for handling human resource matters. This audit reviews on a daily basis absenteeism, discipline and other factors which would indicate the company is vulnerable to a union organizing attempt.
    • Weekly Human Resource Audit -- reviews turnover rates, absenteeism, tardiness, lay-offs, disciplinary action, voluntary terminations, forms of communications used, injury rates and any other factor which could affect the overall human resource climate of the company.
    • Monthly/Quarterly Human Resources Audit -- includes an analysis of wage and benefit comparisons, union organizing activity in the company's geographic area, a review of hiring procedures, orientation procedures, methods of communicating the availability of and tilting job openings, training, discipline, resignations, awards, communication programs, points of employee dissatisfaction, and other factors affecting the company's work environment.

    A combination of labor relations audits used in conjunction with a hiring system can help a company to pinpoint trouble areas while developing and maintaining a workforce which will maximize the company's productivity and minimize its vulnerability to outside interference.

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    A Pro-active Employee Relations Program

    Long-term care is a labor-intensive industry. The National Nursing Home Survey (DHHS 1977) noted that 59.7% of a facility's operating costs are labor costs. Of that total, 32.6% represents nursing payroll. Labor is by far the largest cost in operating long-term care facilities.

    Long-term health care administrators face a crucial challenge in creating a work environment where employees recognize that their individual interests and those of their employer are the same and can best be achieved through mutual cooperation. No combination of management styles, philosophies, or progressive labor relations programs will be effective if employees lack this perception. If employees believe their interests differ from those of their employer, they may turn to a third party to fulfill their needs.

    Employers have sound business reasons for embarking upon a planned union-free strategy. A union-free strategy means a well-planned, positive approach to the employer-employee relationship. Union-free should not be considered a negative term or an antiunion approach. It is far more than simply not having a union. It means taking the initiative in implementing an active pro-employee program. It means acting, rather than reacting to employee dissatisfaction. It means establishing a positive approach toward labor relations. This approach fosters employee support through fair policies that encourage mutual employer-employee cooperation and establishes management's credibility through effective communication. It stresses shared goals, joint problem solving, positive leadership and direction, participative management, and a perception of mutual respect. These positive values advance the interests of both the health care employer and the employee. Employees who do not want union representation are the by-product of this approach.

    Health care administrators have often not adopted a pro-active strategy, but merely waited until they faced full-blown union organizing efforts and then mounted an acrimonious, defensive campaign in response. Such an approach is purely negative and focuses solely on the "dangers" of unionism. In some cases, this type of campaign may be sufficient to keep a facility nonunion, but in others it will be too little, too late. If the facility merely reacts to union organizing efforts and does not implement a pro-active strategy, the core problems and perceptions that allowed the union inroads in the first place will remain, even if the facility wins the first round. Engaging in union prevention through a defensive posture constitutes too narrow a perspective. This lactic just delays but does not solve the problem. Union organizing efforts will surely be repealed, and the facility will again experience the turmoil of an organizing campaign. An integrated union-free strategy is a far more preferable and lasting approach. Positive, pro-employee measures result in a cohesive work force that has no need for or interest in a union.

    Pro-employee labor relations programs also reduce the likelihood that employees will initiate employment-related litigation because they understand the work philosophy of the facility and know where they stand in relation to the work rules, supervision, and disciplinary system. Additionally, should an employee initiate litigation, a facility that has a pro-employee program greatly enhances its chances of successfully defending against a lawsuit or administrative action because it has implemented mechanisms for identifying troubled employees and has instituted fair disciplinary systems that thoroughly document all actions taken against employees.

    Health care administrators can lay the cornerstone of this pro-active approach to the employee relations environment by the following strategy.

    Facility Work Philosophy -- Communicate a statement of the health care facility work philosophy, emphasizing organizational goals, objectives, and a commitment to positive employee relations. This sets the tone and direction for positive changes. For example, if a facility's primary commitment is to create a family environment while providing high-quality patient care in an extremely competitive industry, this commitment needs to be clearly stated in the facility's employee work philosophy.

    Employee Opinion Survey -- Conduct a confidential employee opinion survey to ascertain employee attitudes toward job duties working conditions, the skills of supervisors and managers, communications, pay, benefits, opportunities for advancement, personnel policies and procedures, and job security. The survey serves a dual purpose. First, it provides employees with a direct and anonymous channel of communication to top management. They know that they can communicate frankly with management without fear of reprisal. Second, it furnishes management with an accurate, continuing profile of employee attitudes on which to base policy decisions. For example, items dealing with communications might include "my supervisor asks for my opinion," or "management keeps us well informed about matters that affect us." Employees would then decide the degree to which they agree or disagree with the statement. Items asking for employees' written opinion or comments might include "the thing 1 like most about working here is ... " or "some things our management should know are..." Feedback sessions regarding the results are necessary and encourage direct and positive dialogue with employees on critical issues. Once management has gained insight into issues that employees consider important, it can then respond and thus demonstrate that it is truly listening.

    Employee Profile -- Develop a profile of the type of worker the facility should actively seek for employment. An employee profile greatly increases the likelihood that a facility will hire applicants who will be useful, efficient workers and reduces the chances of hiring persons who will be disaffected and troublesome. The development of an employee profile begins with a thorough analysis of the employer's current work force. The work force analysis must determine the precise skills required at the facility and examine the attitudes employees must possess to foster a positive work environment. In addition, it will be necessary to analyze the labor market to measure the availability of desirable employees.

    Once the profile has been developed, management will be in a position to prepare an employee selection system. The selection system will ensure that the facility hires only applicants who have the right combination skills and attitudes for the particular work, environment. As part of the selection system, management should develop questions and model answers to help employment interviewers determine whether an applicant possesses the desired profile characteristics.

    Because they require supervisors to respond to a series of questions about employees, audits compel supervisors lo become more aware of the employees who they supervise and to take an interest in them. Additionally, audits ask supervisors to give what they believe is the employees' view of working conditions in the facility. It is important to remember that supervisors themselves are sometimes only recently removed from being hourly employees and are likely to have a good perspective on the hourly work force. Personnel audits serve as a barometer for determining how well the employees are adapting to the pro-employee method of operation. The audit might include the following questions:

  • Does the employee lack motivation?
  • Does the employee frequently complain about the job, salary, or supervisors' treatment?
  • Is the employee openly disrespectful of authority?
  • How often and how recently has disciplinary action been taken against the employee?
  • Does the employee perform work duties inefficiently?

    Involvement Systems -- Institute systems that encourage employee involvement in the decision-making process. Employees will understand and are more likely to support decisions in which they play a role. Employees who see themselves as a genuine part of the health care facility, rather than just cogs in a wheel, will be more productive, efficient, caring, and loyal. Informal involvement systems might include meetings with small groups of workers to listen to employees' needs and perceptions. Formal involvement systems include the use of such techniques as quality circles or employee membership on committees dealing with work rules, safety, discipline, and so forth. The important point is that management must listen to what is on the minds of employees and let employees know that management cares about them and their jobs.

    Summary

    Long-term health care administrators face a crucial employee challenge. That challenge is to create a work environment in which employees and employers recognize that their interests are the same and that their goals can best be achieved through mutual cooperation. By implementing an integrated union-free strategy, the prudent health care employer can meet that challenge.

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