Adversaries Find Common Ground

Several years ago, Salt River Project (SRP), a public electric and water utility based in Phoenix, faced a growing stalemate with the union. Tensions between SRP management and the leadership of International Brotherhood of Electrical Workers (IBEW) Local 266 had been intensifying.

Employees increasingly were filing grievances, and those left on the books weren’t being resolved. Needless to say, labor-management relations were close to an impasse because of the adversarial nature of communications. Both sides festered with distrust. (Local 266 represents approximately 2,200 hourly employees of SRP’s 4,300-person workforce.)

However, in the fall of 1993, SRP management and IBEW Local 266 agreed to try a new approach. The approach, interest-based bargaining, is designed to find the common ground between negotiating parties, to build relationships and to eliminate the adversarial elements of traditional collective bargaining.

Both sides agreed the process was a wise decision. The new bargaining approach led to productive contract negotiations in the fall of 1994 and a dramatic decrease in the number of grievances. HR managers elsewhere also are beginning to appreciate the merit of different forms of preventive mediation services. Why? Because it’s less adversarial and more geared toward mutually beneficial solutions.

Today, there’s a new era of labor-management relations at SRP—one characterized by continuous consensus and relationship-building. Operational as well as labor-management issues are being addressed and solved early on. Some also believe the new approach contributes to SRP’s safety performance. For example, employees have set low accident-frequency rate standards in major safety categories the past two fiscal years.

Labor-management relations undergo change. Two major reorganizations at SRP during the late 1980s and early 1990s eroded labor-management relations and led to the need for new processes. SRP, the nation’s third largest public power utility and Arizona’s largest water supplier, underwent a restructuring to better meet the needs of its customers and to position itself for electric utility industry competition.

Relationships suffered along the way, however. Both sides replaced dialogue and teamwork with cynicism. Labor-relations and employee-relations professionals also kept busy with challenges arising from employee morale problems.

However, the Federal Mediation & Conciliation Service (FMCS) commissioners in the Phoenix area were familiar with the situation. The FMCS helped facilitate contract settlements several times during that period. During the summer of 1993, the FMCS commissioners suggested SRP management and Local 266 leadership undergo relationship-building training. About a half-dozen representatives from each side participated in a seminar titled Partners in Change.

“SRP and union participants were encouraged to frankly assess the present state of labor-management relations,” says Lavonne Ritter, an FMCS commissioner who worked with SRP and Local 266. “Participants also were asked what those relations should be like in the future, and what was needed in order to improve.”

Ritter says the seminar focused on brainstorming and consensus-building skills. Her organization, established as an independent agency by the Labor-Management Relations Acts of 1947, resolves collective bargaining disputes and promotes the development of stable labor-management relations, she explains. With SRP, “We emphasized a nonadversarial approach to resolving issues,” she says. In late 1993, many of the first participants attended a workshop facilitated by the FMCS. It was designed to sharpen their effectiveness in working in committees and small groups. The goal was to overcome individual differences and to work toward a mutually beneficial settlement. “After the second workshop, the participants had learned a better way to do things, that they could work together more effectively, and that there was some hope for [improved] labor-management relations,” Ritter says.

In February 1994, an additional 20 SRP and Local 266 representatives (10 on each side) attended a two-day seminar about interest-based bargaining (IBB), again facilitated by the FMCS. IBB is a process that requires training of the bargaining teams as well as those who won’t be a part of the team, but whose support is necessary for the teams to succeed. It’s not a panacea for unhealthy labor-management relationships, and it shouldn’t be viewed as a replacement to adversarial bargaining, which all parties must embrace, says Ritter. Just as “one size doesn’t fit all,” the IBB process isn’t appropriate for all labor-management relationships. Even after a training, the parties may decide the process isn’t appropriate for them, may decide to use the process on language items only or may decide to pilot the process in the arena of labor-management problem solving on the shop floor, prior to attempting an application in their contract negotiations. When FMCS conducted the training for SRP, the participants were encouraged to focus on the mutual interests of each side, rather than on their differences of opinion. To be productive, the FMCS focused the discussions on issues, rather than personalities, positions and posturing.

Even the seating arrangement of the two sides was designed to alleviate tension. Negotiators sat intermingled, rather than in segregated groups on opposite sides of a table or room. Everyone became involved because the process would fail if only a few strong personalities dominated.

The most important aspect of interest-based bargaining is that both sides share information about their interests and concerns. They create a menu of possible solutions to their concerns and work to achieve a solution that best meets everybody’s needs. Brainstorming is an important tool in creating an environment of free-flowing exchange. Participants were encouraged to consider each other’s ideas and to build on each other’s thoughts. “The initial reaction to the training was very positive,” Ritter says. “The first real test was later in 1994, when SRP and Local 266 began contract negotiations.”

Win-win bargaining helps reach settlement. Contract talks began in August. Eight representatives from each side participated in the opening sessions. As the talks continued, more people were called in as committees were formed to address the various issues. The FMCS commissioners monitored the progress of the talks, but insisted on remaining in the background. The other FMCS commissioner, Ron Collatta, also was available, but Ritter really wanted SRP and Local 266 to take ownership of the process and work through the negotiations without the FMCS’s help, Ritter says.

Both sides used the new IBB approach during negotiations to identify interests and potential resolutions for the initial 16 issues that had been identified. The issues included management accountability, compensation, contracting, flexible work schedules, preference hiring and performance reviews.

Employees received updates through communiqués jointly released by a communication representative from each side. During previous negotiations, each side had maintained a telephone hot line, but these hot lines weren’t activated during the 1994 contract talks.

Initially, the progress seemed slow and laborious. As issues were identified and discussed, and committees formed to examine possible solutions, the contract talks gathered momentum. At the beginning of the contract talks, there were 175 outstanding grievances on the books. During negotiations, approximately 90 were resolved. Some were resolved because the negotiating parties made changes to various sections of the agreement. Others were resolved because both sides committed to addressing various situations during the life of the contract.

Eventually, the negotiating parties agreed to a tentative settlement nine days before the old contract’s expiration date. Quite a feat considering how past negotiations continued beyond the expiration dates.

One anecdote is telling: “In the past, once we reached a settlement, both sides were eager to get away from each other,” one participant observed. “This time, after we reached a settlement, a majority of the participants went out for a happy hour.”

IBEW Local 266 membership subsequently approved the new agreement by more than a 95 percent margin. SRP’s governing boards approved the new agreement unanimously. Typically, labor negotiations result in an agreement among the bargaining parties that’s reduced to writing and fixed for the duration of the contract term. Although the SRP-IBEW accord is similar to this type of an agreement, there are two key differences.

“First, management and the union committed to handling issues when they arise, and [vowed] not to wait until the next contract negotiations,” says J.R. Iannacone, business manager for IBEW Local 266. “If something isn’t working for both parties, we’ll fix it sooner rather than later.”

The contract states: “To continue the win-win [interest-based] process during the life of the Collective Bargaining Agreement… Nothing contained in this labor agreement shall prohibit the Salt River Project and IBEW Local 266 from addressing and resolving issues of common interest … Said discussions and/or resolutions shall not operate to open the Collective Bargaining Agreement for negotiations.”

The second difference between the SRP-IBEW accord and a typical labor agreement is that both parties formed a number of committees to examine a wide range of labor-management issues, including those unsolved during contract talks. Union leadership selected hourly members, and SRP management selected nonrepresented (generally salaried) members to each committee. “The committees were responsible for obtaining consensus-based recommendations on outstanding labor-management issues,” said Joe Gelinas, manager of employee and labor relations services, adds Iannacone. “Both sides are committed to using the committee process to solve outstanding issues and to implement recommended solutions during the life of the current contract,” Iannacone says.

While joint labor-management committees aren’t revolutionary in labor-management practices, what sets SRP’s committees apart from most is that they’re self-directed, Gelinas explains. Each committee designates its own leaders—usually salaried and hourly co-captains. Committee members may explore and gather almost any form of data they may need to complete their tasks.

“So far, this method of addressing issues of mutual interest is working,” Iannacone says. “What you have is both union and nonunion salaried employees advocating to their respective hierarchy or management the course of action that’s in the best interest of all.”

To sustain the momentum, Local 266 and SRP agreed during the contract talks to form training teams to communicate the principles of the new interest-based approach to all employees and their supervisors. Seven training teams were composed of representatives from SRP and Local 266. Each team worked with groups of 20 to 25 employees at a time. The teams encouraged employees to help identify ways the interest-based bargaining principles could be used to improve working relationships and the decision-making process.

SRP labor relations and employee relations professionals were instrumental in working with Local 266 leadership in scheduling and facilitating the training, which concluded in early spring of 1996. Each session lasted approximately three hours and included subject material used successfully by the New York City-based American Arbitration Association.

Standing the test of time. Clearly, the real tests of interest-based bargaining are contract implementation and the subsequent use of win-win to work through labor-management issues.

So far, most agree the new approach is working. “The real evidence of ongoing change comes from looking at the current grievance log,” Iannacone says. As of December 31, 1996, all Salt River Project grievances filed prior to 1995 had been settled without going to arbitration. Seventy-five grievances were filed during the past two years. Only four grievances, all filed during calendar year 1995, went to arbitration; two were settled before the arbitrator’s ruling. There were no arbitrations in calendar year 1996. Just 12 of the 75 grievances from 1995 and 1996 remain active. Some of the grievances filed late in 1996 were being settled by the involved parties as this article went to press. “Win-win, interest-based principles are extremely effective in the areas of dispute resolution and building consensus,” Gelinas says. “We’re counting on this approach to help improve relationships and increase productivity throughout SRP.

“Of particular significance is that supervisors, employees and stewards have settled numerous workplace issues before a formal grievance has been filed,” Gelinas says. “There have been settlements of formally filed grievances in the new first step of the official grievance procedure in the labor agreement. It calls for a prompt meeting [held within 10 days] between the supervisor, steward and employee to solve the problem on a nonprecedent-setting basis. This is dramatic evidence of effective problem solving using the new bargaining principles.”

Success gains national recognition. SRP and Local 266’s success with IBB has been the topic of numerous public presentations and has brought a measure of national recognition to both parties. The public recognition has had a positive influence on the parties’ continuing efforts at win-win.

For example, SRP and/or Local 266 have participated in nearly a dozen presentations nationwide and have published articles about the process in several major industry publications. “What they’ve accomplished is remarkable. They’ve really turned things around,” Ritter says. “SRP and Local 266 show other electric utilities that you can address competitive industry issues and maintain and improve labor-management relations at the same time.”

Improved labor-management relations also have contributed to a number of other successes. During the past year, SRP earned top awards and/or honors from the Washington, D.C.-based American Public Power Association and the Itasca, Illinois-based National Safety Council for employees’ safety performance. SRP’s work/family initiatives have received accolades from several corners, including Working Woman magazine, U.S. Department of Labor’s Working Women Count Honor Roll and the International Women’s Forum.

While the leadership of SRP and that of Local 266 continue their strong support for the process, both sides acknowledge some challenges along the way. “If we had to do it all over again, more attention would have been given to the intermediate and lower levels of leadership in the philosophy and practice of the interest-based methods,” Gelinas says.

Nevertheless, both sides express confidence that these and other challenges will be resolved because the new approach is an active process that feeds on problem-solving situations. Addressing issues of mutual interest when they need to be addressed is at the heart of the win-win philosophy. “Using the interest-based bargaining approach helps us find new ways of doing business, and, in turn, creates value for the organization and our customers,” says Iannacone.

Workforce, March 1997, Vol. 76, No. 3, pp. 97-102.