Organizational Processes for TPP: Session 10

1. Organizational Processes for TPP: Session 10 Labor-Management Partnership Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

2. Session Design (3 hours ) • Introduction (5 min.) • Dialogue on Industry Analysis Papers (10min.) • Labor-Management Partnership Principles (15 min.) • K-P Case (45 min.) • Break (10 min.) • Skill module (45 min.) • Skill module (45 min.) • Concluding comments (5 min.) Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

3. Labor-Management Partnership • Key Assumptions – Multiple stakeholders – Common and competing interests • Need for mechanisms to identify and pursue common interests • Need for mechanisms to surface and address conflicting interests – Interests/Contextual Conditions evolve • Need for periodic recalibration Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

4. Selected Principles of Partnership • Trust and Respect • Shared Vision • Negotiated Change • Joint Implementation and Governance • Learning and Adjustment Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

5. Selected Tensions Underlying the Principles Individual Institutiona Trust and Respect Big Picture Details Matter Shared Vision Forcing Fosterin Negotiated Change Dialogue Action Joint Implementation/Governance Short Term Long Term Learning and Adjustment Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

6. US Context for Labor- Management Partnerships • Historically adversarial relationships • The era of stable labor-management relations and economic growth – 1950s, ‘60s • Concession bargaining and anti-union era – late ‘70s, especially the 1980s and into the 1990s • Re-considering labor-management relationships – new ventures, Saturn, Kaiser Permanente • Distinguishing partnership from cooperation Adapted from presentation by Susan C. Eaton & Robert McKersie at Conference on “Transforming Labor Relations” MIT – March 6, 2003 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

7. Conceptual framework for Labor-Management Partnerships • Basic Model of Change – Factors that unfreeze or motivate change – Implementing the change process – Diffusing and institutionalizing change • Changes must be consistent across three levels of activity—workplace, negotiations, strategic • Process will encounter periodic pivotal events • Substantive results must address bottom line interests & objectives of workforce and the employer Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

8. Strategic partnership case study: Kaiser Permanente and the Coalition of Kaiser Permanente Unions (CKPU) – Kaiser Foundation Health Plan and Hospitals in a business partnership with Permanente Medical Groups (PMGs) • K-P serves 8.6 million members in 18 states with 80% in California • Employment: 110,000 • Eligible for union membership: 92,032 • Covered by the labor-management partnership: 76,000 – Partnership coverage: • 8 international unions (largest is SEIU) • 26 local agreements • The California Nurses Association with 10,000 members in northern California is not a member, other unions are Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

9. Pivotal Events • Confrontation Meeting in Dallas 1996 • Partnership Agreement 1997 – Key agreements: employment and income security, interest- based problem-solving, marketing union healthcare • Clarification of Employment Security 1999 • SEIU Strike in Oregon 1999 • Agreement to Negotiate a National Agreement 1999 • Interest Based Process 2000 • Additional key “unfreezing” factors: – Strong union presence—avoidance not an option – Both parties dissatisfied with past – Credible union threat of escalation (corporate campaign) – Strong leadership with alternative vision • David Lawrence & Peter diCicco – All the unions involved Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

10. 2000 Negotiations • Prerequisites: – Extensive training in concept and tools of IBN – Agreement that local market rates have weight – Local agreements would be extended without a common expiration date – Either side could opt out • The Process: – Feb to Sept 2000 with almost 400 participants – Seven Bargaining Task Groups – Common Interest Committee (coordination role) • The Agreement – Five year agreement – Ratified by 92% Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

11. Further pivotal events • Outcomes of the 2000 Negotiations – Substantive terms • A Joint Staffing Process • Reducing Errors and Improving Patient/Member Safety • Workforce Flexibility Principles • Work-Life Balance • Compensation • Medical Benefits • Issue Resolution and Corrective Action – Confidence, converts to power of IBN and Partnership Principles • Partnership Infrastructure—governance structures, training, joint funding, etc. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

12. Joint LMP Contractual Committees Kaiser Permanente Partnership Group (KPPG)* Coalition of Kaiser Permanente Unions (CKPU)* National Labor Management Partnership Strategy Group** Regional Partnership Teams** National Partnership Council (NPC)** Service Area/ Facility Teams** Service Area/ Facility Teams** Service Area/ Facility Teams** Joint Staffing Issue Resolution Work-Life Balance Transitional Work*** Structure Performance Sharing Education Benefits Subcontracting Workplace Safety *Independent Governance Bodies ** JointLMP Contractual Committee/Team *** Functional Responsibility Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

13. Key events diffusion examples • Baldwin Park: Opening a new facility in record time and with work innovations • Optical Laboratory—Jointly saving and turning around a facility likely to close, involvement of key managers and union people • Main effect: Highly visible success stories with clear results on key interests of employer and workforce Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

14. Achievements to date include : • Largest partnership in the country • Most extensive partnership agreement • Most successful example of IBN in labor negotiations • Some key visible, tangible achievements • Infrastructure and resources in place to support diffusion • Developing penetration of on-going operations- working with middle managers • Developing capacity and skills among union leaders, sense of improvement for workers Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

15. Future challenges • Strategic Level: – Clarifying Union Participation at Strategic Level – Gaining Buy in from Doctors & Line Mgrs. – Building Union Capacity to Add Value • Negotiations Level: – Preparing for Follow up Agreement in 2005 • Workplace Level: – Delivering Tangible Benefits to Rank & File – Grievance handling and problem resolution – Day to day work environment improvements – Achieving Tangible Cost Savings and Performance Improvements System-wide Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”