Managing Strikes, Minimizing Loss
But like millions of other frustrated baseball fans, Kochiyama, an administrative assistant for the New York-based National Postal Mailhandlers Union, Local 300, understands strikes. He also realizes that baseball is much more than just a field of dreams. Even though it's a national pastime and sport, the relationship between baseball owners and players is no different from that of any other business and its unionized work force. Indeed, when the baseball Players Association went out on strike last August, the action underscored the nature of classic labor-management disputes. When it comes to wages, benefits and job security, anybody can play hard ball. It doesn't matter whether the playing field is a baseball stadium, a factory, a post office or a highway.
Prepare in advance for a possible strike.
Today, according to the Bureau of Labor Statistics (BLS), unions represent about 16% of America's work-force. Even though the number of strikes is declining, as long as companies operate in a union environment, human resources managers would be foolish not to assume and plan for the possibility of a strike. "A fair portion wait until the eleventh hour," says Jim Levine, senior vice president of Vance International, a protection services company. "Part of it is that they think if they talk about security, it's an admission of defeat. But anywhere within a year's time is not too far ahead of [anticipating] a problem." HR leaders usually represent their companies at the bargaining table, but their first responsibility must be to ensure that their company will continue to operate under extraordinary, and sometimes volatile, circumstances. A strike will inevitably pose challenges in many areas: managing contingent workers; setting up communication between management and all employees; maintaining customer service; establishing interim policies regarding benefits, overtime, vacations and sick leave; and bolstering non-striking employees' morale. Clearly, those that prepare well in advance will suffer the least trauma during and after a labor dispute.
"The vast majority of strikes occur when a contract expires," says Irving Bluestone, professor of labor studies at Detroit-based Wayne State University, and a retired vice president of the United Auto Workers (UAW). "They can (be prompted) by any number of issues. In each instance, the duration, intensity and settlement will vary," he says. But with increased downsizings, global competition, deregulation, technological changes and subcontracting of work, unionized employees are understandably concerned about their futures. Moreover, managers' growing acceptance of permanently replacing striking workers poses a grave threat. "Under law, a striker may not be discharged, but (he or she) can be replaced. But I've never understood the difference," says Bluestone, noting that supporters of S55 (the bill that would have banned the practice) failed to invoke cloture and halt a Republican filibuster last July.
Nevertheless, at least 471 strikes occurred between January and October 1994, according to Floyd Wood, deputy director of the Federal Mediation and Conciliation Service. Nearly 40 of them involved companies with more than 1,000 striking employees. Although unions upset the labor-management status quo, they don't have to be viewed negatively, he says. "Unions can be invaluable in harnessing consensus among employee groups. And HR managers should continue to integrate a spirit of teamwork in their organization," says Wood. Last year, the 48-year-old agency negotiated thousands of expired labor contracts, including the National Master Freight Agreement involving the Teamsters. Its 199 mediators provide free services for the private, public and federal sector, he adds. Under the Taft-Hartley Act, if a union anticipates a strike, it must provide FMCS with a 30-day notice. Likewise, if a company plans a lockout (when employers close the plant gates until a contract is settled), the agency must be notified before any economic action. Once notified, FMCS mediators contact the company's human resources department because HR usually represents the company at the bargaining table. FMCS advises HR about the agency's mediation services. "We don't like to be called in at the last minute, when the parties are so hardened. If there's a potential strike, we want to help the union and management find solutions," says Wood.
In fact, about one-third of the agency's work is devoted to preventive-mediation training. Wood says the proactive approach is offered to both sides of a labor dispute before a contract expires to enable more interest-based bargaining. The training includes relationship building, organizational process and problem-solving. Last year, FMCS facilitated 200 such negotiations—most of which involved human resources professionals, management executives and union representatives. HR professionals, he adds, increasingly are acquiring the necessary negotiation and communication skills required to settle labor disputes. The way Wood sees it, both employers and unions have to "step up to the plate, take the pitch" and find ways of solving problems at the workplace through means other than strikes.
But since labor disputes are still a reality—even when companies have instituted total quality movements and joint labor-management programs—those who have survived strikes can offer valuable insights. To better understand how HR has weathered such conditions, Personnel Journal interviewed three human resources executives to see how they managed during last year's strikes in the transportation, trucking freight and baseball industries. In all three cases, these HR leaders demonstrated commendable resilience and fortitude. They are: Leila Procopio, assistant director of human resources in administration for the Los Angeles County Metropolitan Transportation Authority (MTA); Brian Tierney, director of human resources for CF MotorFreight; and John C. Lawn, vice president of operations for the New York Yankees.
Preparation can minimize a labor crisis.
Last year, on July 25th, 1,900 mechanics and service attendants belonging to the Los Angeles-based Amalgamated Transit Union (ATU) walked off their jobs. Two other unions, representing 5,000 bus drivers, rail operators and transit clerks, honored the picket lines. The walkout left more than 1.2 million daily commuters in the country's second-largest city without access to the MTA's full fleet of 2,508 buses and 54 rail cars. "I don't know how to describe it. It was hell. Most employees, like myself, had never experienced a strike," says Procopio, who served on the MTA negotiation team for transit police a couple of years ago. But preparation—two months before the union contract expired—minimized the chaos. For example, on May 9, the MTA certified 107 of its own transportation supervisors to operate the buses. In addition, 87 other secretaries and managers learned how to drive a bus during a five-week training session. "Some of our employees didn't want to drive buses," she says. "They were scared, but if there hadn't been any planning, it would've been impossible to run the service." By the second week of the strike, the MTA ran 380 buses that serviced 38 of the system's 200 routes. Two-thirds of them, however, were leased school buses that reportedly cost the MTA $160,000 per day to rent. And since they weren't equipped to collect fares, lucky commuters rode free instead of paying the usual $1.10. As the strike unfolded, the MTA also reassigned other employees to fuel, maintain and clean the buses, provide perimeter patrol or staff the temporary telephone centers, says Procopio.
The labor dispute, she explains, was over the use of non-union subcontractors such as community groups and juvenile offenders to clean buses of debris and graffiti. Union members also worried because the MTA wanted the ability to buy parts that cost less than making them in-house with union labor. For example, it cost $25 for a union-made mop pan, which sells for $9 at a hardware store. The union believed that the agency's fiscal constraints were signs that the previous year's layoffs might not be the last. The ATU's members worried that they'd be sacrificed in the agency's efforts to balance its reported $3 billion annual budget.
One of the reasons why the MTA was able to maintain minimal customer service during the nine-day strike was that HR had kept a file of recent employee applicants. By taking proactive measures, the agency processed 79 contingents off the list to help drive or maintain the buses, or staff the telephone center. They also received training about customer relations, safety and current legislation affecting the disabled. "Most were never used because the strike ended before the training was completed. But we're extremely proud of the way training was done," she says. "Those who were hired were let go after the strike." Other contingents, Procopio adds, were recruited through newspaper advertisements that normally take longer periods to process. Since the Department of Motor Vehicles requires physical examinations, clinics were notified to keep their doors open to accommodate the agency's emergency-staffing needs. "We had to send many applicants for physical examinations, and drug and alcohol testing. Of course, it added a lot more work for the clinics and ourselves because we had to review the results," she says.
Even though HR had prepared for contingent staffing, Procopio and others also had to establish special interim policies that would affect striking and non-striking employees. Unpredictable issues required a quick response, she says. For example, "We didn't foresee that striking employees would line up to request their paychecks or want to be put on our sick-leave program after the strike had begun," she says. HR, therefore, had to assign personnel to explain the agency's policy and screen employees' requests for sick leave. The agency also suspended its flexible-work schedule during the strike, and non-striking employees were asked to sacrifice their vacations. The MTA exempted a few from the policy, including one employee who had already paid for a vacation cruise. "It depended on the situation," she says. But for the most part, "Everybody just rolled up their sleeves and did whatever they had to do. We can laugh about it now, but we even had to empty our own trash at the end of the day because the custodians were supporting the strike."
To maintain communication between Franklin White, the CEO, and the employees, HR provided access to the personnel database so employees on both sides of the picket line could receive important news from management. At the end of the strike, White even had thank-you letters sent to all of the staff that had worked during the dispute and threw a party for them.
When all the dust had settled, the agency and the union had made some gains. The MTA guaranteed that no union workers would face layoffs as a result of subcontracting. But the MTA would maintain the right to subcontract for some maintenance and transportation operations. Newer employees hired for those positions, however, would receive lower wages than unionized employees. And union employees' wages would be frozen during the first year of the contract. As she reflects on the strike four months later, Procopio says that even though the action was disruptive to normal operations, it didn't permanently impair labor-management relations. The strike was something the agency and its employees had to weather. "That's what negotiations are all about. But we hope it doesn't happen again."
Daily communication alleviates uncertainty during labor strife.
If there's any lesson that Brian Tierney learned during the 24-day Teamster strike last year, it was this: Never underestimate your employees' emotions. As director of human resources for Menlo Park, California-based CF MotorFreight, Tierney had never managed a strike before. He'd read Thriving on Chaos by management consultant Tom Peters, but even that didn't help. "The book talks about being as creative as possible. But during a strike, there's no opportunity for creativity," says Tierney. "It's disheartening when management has worked to build bridges and [a strike] arises. Trust is eliminated, and you can't manage in a systematic manner." Even though CF MotorFreight had prepared for some local strikes, Tierney says HR didn't expect it to be nationwide.
On April 6, 70,000 trucking-industry workers went out on strike when the three-year National Master Freight Agreement expired. The Teamsters' contract covers about 120,000 workers for 20 major long-haul trucking firms such as CF MotorFreight, Yellow Freight and Roadway Express. Most of the firms are represented by Trucking Management Inc., a multiemployer collective-bargaining arm of the unionized freight-trucking industry. Among the main issues were management's desire to: divert more traffic to rail; establish labor stability by changing the contract to a four-year agreement; reduce wages; and hire part-time employees. "Our employees were very emotional about the part-time issue," says Tierney. "They didn't want a lower standard of living and thought part-timers would contribute to that. In retrospect, it was understandable."
But CF MotorFreight and other trucking firms, he explains, have been trying to survive since deregulation in 1980. Today, trucking firms face stiffer competition since the government lifted the trucking industry's anti-trust immunity to pricing. Now, non-union carriers offer more flexibility and have lower cost structures than unionized carriers. "That puts more economic and service pressure on the long-haul segment of the less than truckload market." Over the years, the pressure also aggravated management and employee relations. Realizing that adversarial relations would only weaken the company's competitive edge, CF MotorFreight initiated a total quality management program in 1989. The company established quality teams at hundreds of its nationwide terminals. CF MotorFreight managers, Tierney says, spend at least 80% of their time visiting more than 500 terminals and conducting town-hall meetings with videos to keep employees abreast of the industry, the company and other personnel matters. These activities were well in place before the strike and viewed by executives as efforts to "open up the management style."
So when the strike began, Tierney knew that his first priority would be to maintain quality communication between management and employees. Otherwise, previous TQM efforts would be undermined. "We set up a 24-hour hotline so our employees could contact us. We wanted them to be aware of how negotiations were going and what we were doing." The 800-number, he says, provided some degree of comfort because the employees were "starving for information." Tierney says that management must communicate as honestly and frankly as possible. "Make sure you always talk about inclusion. It's important to [realize] that the strike will end and we'll need to work together."
Communication also served CF MotorFreight's customers such as Hewlett Packard, Sears and US West. All were contacted on a daily basis. Even before the strike, HR ensured that customers were alerted to the possibility of a strike. If they needed to make alternative shipping plans for computers, clothing or communication products, CF MotorFreight encouraged their contingency plans. During the strike, the company also worked with some customers to deliver freight when it was critical. "We had some managers delivering, and in some cases, we arranged for customers to pick up their [own] freight. But that was difficult because emotions were running very high. Any trailer that appeared at the terminal was perceived as taking work away during the strike. So we tried to get it done as quickly and as easily as possible," he says. The bolder customers, however, didn't escape the strikers' wrath. Those who had chosen to pick up their shipments experienced some damage to their equipment. But the strikers that were caught provoking incidents were charged with disorderly conduct.
During the strike, HR also must prepare its managers for adjustments in their salary. CF MotorFreight, for example, told its managers that they would have to expect reduced wages during a period of the strike. Senior managers took a 50% cut in pay; middle managers, 35%; and front-line supervisors and sales representatives, 25%. "We weren't taking in revenue, so we had to look at ways to preserve cash during that time," he says. Since the company was basically shut down, some managers also were given a week off without pay, he says.
By June 5th, however, the Teamsters union had formally voted to accept a new four-year contract. In addition to wage and pension increases totaling $3.20 an hour over four years, the companies agreed to drop a proposal to use large numbers of part-time dock workers, but kept the right to use casual four-hour employees. The trucking companies also won the right to move more freight by rail.
As with many labor disputes, the strike ultimately took a heavy toll on both sides. The work stoppage reportedly drained the Teamsters' strike fund and left it with a $28 million debt. And TMI, the employer bargaining group, had estimated its members had lost more than $1 billion in revenues, according to news reports. "The strike did weaken TQM, so we're working to re-establish that by refocusing on our strategic element, the customer," says Tierney.
HR managers have to be resilient during a strike.
Last fall, John C. Lawn didn't know whether the gates of Yankee Stadium would open for the new season. For the first time in baseball history, the World Series had been cancelled. Yet, as vice president of operations for the New York Yankees, he had to assume that the strike would end before Opening Day—maybe even before spring training. "We must go forward," says Law, former administrator of the Drug Enforcement Administration under the Bush Administration. "We can't wait to sell seats after the strike. The volume of work would be so substantial, we wouldn't get it done." Add to that the additional responsibility of reimbursing baseball fans and advertisers for 1994. "All of those fans who had purchased tickets for games after the strike date had to be contacted," says Lawn. "Then a determination had to be made whether they wanted reimbursement or wanted to use the money to purchase tickets for the [next season]. We had to prepare thousands of checks."
In spite of one of the game's most exciting seasons, major league baseball players drew their line on August 12. The sticking point was a proposed salary cap. The 28 baseball club owners say they want a cap that splits industry revenues 50-50 and guarantees a set, minimum payroll level for individual players. They complain that escalating salaries have put baseball in dire financial straits. The players, on the other hand, say a cap would destroy their free agency. Complicating matters is a conflict between small- and large-market clubs. Franchises such as Milwaukee and Pittsburgh say they haven't been able to compete with larger teams and need those clubs to share their revenues.
With no settlement in sight as of last November, Lawn proceeded to plan for the new season. But instead of managing his usual 75 full-time staff at the stadium, he was forced to put an undisclosed number of them on temporary leave. "As the strike continues to hang over us, we furlough more and more people each week." As head of operations since 1990, Lawn is responsible for all activities within Yankee Stadium, except for those of the players. He oversees security, the restaurant, maintenance of the stadium and field, all of the electricians and plumbers and all personnel-related matters. In addition to his full-time, unionized crew, he also manages 1,500 part-time stadium employees during the baseball season. "But if there aren't any games, there's no requirements for these people," he says.
When the strike began, Lawn found himself in the position of juggling his permanent staff. First, he reviewed the 19 union contracts he helped negotiate for his full-time employees. Some contracts allowed workers affected by strikes to be eligible for furlough and collect unemployment. Others didn't. So Lawn had to find other ways to temporarily trim the staff. He encouraged his permanent employees to take their vacations. When that was used up, he sent furlough letters to the employees indicating that their medical coverage would still be covered. "But they were told not to come to work—that when the strike was resolved, they'd be called back," he says.
Some, like Harvey Winston, director of administration and services, have since assumed some of those employees' tasks. Without his assistant, he's had to file purchase orders, respond to applicant resumes and help answer the phones.
"We're down to the bone right now," says Winston. "I'm in the position of taking care of employees and purchases. But if there are no employees, there's nothing to purchase. So what's my status?"
Clearly, Winston's uncertainty about the future has been shared by his HR counterparts in other industries. Nobody enjoys a strike. But if a company operates in a union environment, HR professionals will have to expect that one day they'll be in a similar situation as Procopio of the MTA, Tierney of CF MotorFreight and Lawn of the New York Yankees. All three survived their first strike as HR managers more easily because their companies had prepared in advance. Moreover, two of them continued to nurture better labor-management relations after the strike and negotiations were concluded. As Bluestone, of Wayne State University, observes: "Human resources management is moving in the direction of bringing decision making down to the workers," he says. No longer are workers being viewed simply as adjuncts to their tools. Such attitudes have not only helped create a better working environment overall, but served as a reminder of how mutual respect must be maintained, even under adversarial situations such as a strike. Adds Wood of the Federal Mediation and Conciliation Service: "HR professionals and unions are becoming more sophisticated in how [they] treat people. They're not just looking at their skills, but the whole person coming through the door."
Personnel Journal, January 1995, Vol. 74, No. 1, pp. 50-60.