ASQ - Team and Workplace Excellence Forum

April 1998


Forging New Ways To Work

Celebrating Success

JCPenney Spells Out A METHOD For Success

Roberts Express Delivers CATs

Stories Of The Future

Taxes, Oscars And Performance Appraisals


Quality, Wherefore Art Thou?
by Peter Block

The Bottom Line Benefits Of Participation
by Cathy Kramer


Brief Cases
Business News Briefs

Views for a Change

Book Review


Forging New Ways To Work

NFC: What have been the challenges for you as you've moved from a confrontational mode of labor and management negotiation?
Rosel: Well, we don't usually say collaboration. That word has some connotation in the union that we don't like. We like the word participation. We actively participate with the managers to make sure that the division is going to be successful. Part of that is really trying
to overthrow scientific management and Taylorism. Taylor started his studies at Bethlehem Steel in 1906. So we are more deeply entrenched in scientific management than almost any other company.

NFC: Some of the ramifications of that being…?
That the workers would check their brains in at the time clock. We didn't have to think. Management was going to think for us. That's not a really good way to work. You have to have all kinds of people looking over your shoulder to see if you're doing what they want you to do rather than have people be self-directed. Which is what the partnership agreement was saying. We should do workplace redesigns that would allow the workplace to be safer, fairer, less authoritarian with more control and influence from the workers, substantially reducing the levels of management. It was trying to get away from an authoritarian, scientific management style of managing, to one where the workers have to take on more accountability and responsibility.

NFC: The plate mill was shut down two months ago?
Well the plate mill hasn't been shut down. It's still running, but the company's announced that the plate mill is going to be shut down by the end of the year. In this partnership agreement we have an employment security agreement. We can put people from the plate mill into the employment security pool.

NFC: And what's the employee security pool?
If people are displaced by technology or by shutdowns like the one in the plate mill, then we can have them do other work in other parts of the plant, rather than have them laid off.

NFC: What have been some of the challenges for you over the past few years with this partnership?
There's been the challenge of trying to communicate to people exactly what this partnership agreement is and why it's in their best interest. And also educating them about the business, about the union and about new roles and ways of working that would help us be successful in the future.
Being an agent of change is not that easy. You have to let people come to conclusions themselves in some cases. Give them the information, try to be factual and truthful, and have them come to the same conclusion that you're coming to.

NFC: How difficult is change from labor's perspective?
The biggest change that's happened here in the last 12 months is the union negotiated an agreement to get a new cold mill in this plant that's worth $300 million by agreeing to $30 million in cost savings around changing work practices in the plant.
NFC: What are some of those work practices that have changed to create those savings?
Operator assists maintenance, craft-to-craft lead-follow maintenance, combination overlaps of control tech, instrument tech and electronics, and a new position in the plant that's a union position called working coordinator that takes the place of first-line supervisors - where the union supervises itself.

NFC: And that person's job would be...
Basically they are allowed to work with their tools and work with the crew, but they are the first-line supervisor. They take the place of the foreman. This is the union taking over the first-line supervisory function in the plant and making that a union position instead of a management position.

NFC: How did management react to that?
At first they didn't react too favorably. We had NCBA (not covered by the bargaining agreement) positions that were hourly people the company would pull out of the hourly ranks. The company selected them without any input from the union and they became the first-line foremen. They paid union dues, but couldn't do any work with their tools even though they knew how to do the work. If you have a management foreman, they're not allowed to work. If they get caught working with their tools, the union files a grievance for four hours pay. This way (the new agreement) you have a foreman who directs the crew, but if the crew needs help, they can be utilized as part of the crew.

NFC: How do you respond to those critics that feel these kinds of partnerships have basically co-opted the union's authority?
This program is put forth by the union, not by the company. We developed the training. We developed the education. We have driven this process. We caucus as a union, so that we don't lose our identity as a union. To understand, if this isn't in our self-interest, then we're not going to do it.

NFC: What has been the biggest change in your way of thinking over the past 10 years in terms of how you approach your work?
The biggest change is that the union has to be part of figuring out how to best manage the plant. In other words, the management of the plant is too important to leave to the management. The union has to actually get involved in trying to manage these divisions for success. And try to do that in a win-win situation where the workers get paid more money and have a better future, but the performance of the company is also enhanced.

NFC: What do you see as the challenges ahead for you?
I think that the work that we did already is going to make our negotiation in '99 a lot easier. We've enhanced performance and sustained profitability for all the years under the partnership. And it wasn't because the price of steel went up. It wasn't because the company put new equipment in the plant. It's because the people in the plant are working better and smarter than ever before. So, the main thing for us is to make sure we get our fair share of this new wealth we've created and that we continue the partnership agreement, hopefully with the no-layoff clause which has been very successful and was a big change.

NFC: Have you seen management's perspective of these negotiations changing as you have brought something different to the table?
I think before the partnership, management probably thought the union really didn't care whether the company was profitable or not. Now they see that there are many people in union leadership positions who have done things to try to enhance the profitability of the division, while not really undermining the workforce.

NFC: One of those recent examples is with the plate mill and the anticipated closing. Some workers had participated in a plant wide agreement to produce $130 million in savings in exchange for the $300 million investment in the steel rolling mill, which was going to cost about 900 jobs.
I think of the partnership process when we're negotiating around the cold mill agreement. The company says to the union that we don't have any money. We have to go borrow the money from the bank and the bankers want us to insure that we make this agreement in a way that we can get an acceptable return.
Through the partnership process and being able to have access to information and consultants, we can investigate these things. The union never made the cold mill agreement believing the company didn't have any money. We knew they had money. That's not why we made the agreement. We made the agreement because it was in our interest to make the agreement. Because the company had the option of moving this cold mill to Virginia or some other state and if they did that was going to be the end of Sparrows Point. So we made the agreement because it was in our self-interest to do it.
The partnership is not necessarily about trust. It's like what Deming said about quality, "In God we trust, all others must bring data." Hopefully the company tells us the truth most of the time, but even when they don't, we're able to discern for ourselves whether that's factual or not.
And yes, there are problems in the sense that the Lukens Steel decision wasn't made by the management at the division level, it was made by the corporate management. And because that deal involved the purchase of stock in Lukens, there are confidentiality questions. Having said that, there's still information that we need. What is the business case behind the company buying Lukens and how does that affect the long-term profitability and ability of Sparrows Point to be successful? If our plate mill gets shut down, and it looks like it will be, there's the possibility of layoffs, but there's also the possibility that we may not have to lay anybody off. The agreement represented 900 jobs. One hundred of those jobs are management jobs. 400 of those jobs are ones that are displaced by the technology of the new cold mill. So, that reduction of 400 was predicated by the equipment. The other 400 jobs were work practice changes that the union agreed to in order to save $30 million that was part of a whole program to save $130 million.
What happened under the partnership is that we know the nature of the steel business now. We know that the mini-plants are out there running under a different paradigm than the integrated steel companies and that we have to compete with them. The union is still making proposals to create new union jobs by profitable growth of downstream operations. So all those things are going on in a partnership that never would have happened before because we would have never had enough information to try to make these proposals to correct these decisions.

NFC: You pointed out that the partnership is not about trust. I'd like you to envision a world where it was about trust. How would things be different or what would have to change?
It would be better if it was about trust. Maybe over time we will get more trust because trust has to be earned through experience. When people tell you the truth and when people do what they say they're going to do, you start to develop trust.

NFC: But why would management not have trust in you if you're coming up with ideas to help them be more successful? $130 million in savings is rather significant.
Organizations are too big and there are too many people. Even if I trust the division president, who's to say that the corporate officers aren't going to decide that the company must move in another direction. So how do I trust hundreds of people, many of whom I don't even know? The thing is that people really need to operate in their own self-interest. You can look for win-win situations, but you shouldn't do things that are against your interest, hoping down the road, somebody's going to do something for you. You have to make the company successful and do it in the interest of the company, but you have to do things that are in the interest of the union at the same time. It's like a marriage, both people have to get something out of it.

NFC: How are those two in conflict? What's in the best interest of the union and what's in the best interest of the company?
If you give the union and the management the same information, we're probably, in most cases, going to make the same decision. But if we don't have that information then we're liable to make an uniformed decision that maybe wrong. So the partnership process gives us this information and we are able to evaluate this information and try to make the best decision possible. And sometimes, like the disagreement around the cold mill, it's not good for the union that we have to reduce 400 jobs by work practice changes in order to get this mill. But if we didn't, we would've lost all 4,300 jobs in the long run. We had to face reality. The business is about making money and getting acceptable returns. We're hoping that through this agreement we can actually grow the business and get some of those jobs back through profitable growth and downstream operations. But obviously, if the plant wasn't here, we'd have no chance.

NFC: If you were on the other side of the table, what kinds of changes would you make?
Well, one of the goals would be… in order to become a first class company you have to treat all employees as first class. But too many times in corporations, especially old-line corporations, there's a cultural division between people based upon their position in the company. I'd like to break it down so every person is as valuable as the next person and everybody's input is valued and every person is treated as first class, not as corporate people being first class, the people in the division second class, and the union another class. Everybody's in it together.

NFC: Creating a larger sense of community in other words. How would you do that? What would be a first step?
One of the first steps is for people to sit down and talk. For the highest ranking people in the company to be willing to come down and have frank discussions with rank and file workers. Let them know that they actually care about what they're doing. At the same time making sure that people are engaged in the processes of making the union successful, making the company successful and also giving them a clear set of expectations of how these things are going to be accomplished. I mean, that's simple.

NFC: Why do you think that it is so hard?
I think that a culture developed over a long period of time through Taylorism and other kinds of management styles that separated people more than brought people together. Instead of engaging people, it was a command and control situation where the general doesn't have to take the time and talk to the troops because he could delegate it down to somebody else.

NFC: What's one of the key things you learned at the European Institute of Business Administration conference last month?
That people are the answer, not the problem. It has to come from the heart.
You work to have people giving their hearts and minds to doing things as well as they can because they realize it's in their interest to do that. That people are the answer to businesses doing better. And the way you do that is to treat people very well.

April '98 News for a Change | Email Editor


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