Dealing with Unions


Because of their role, unions can be particularly tricky to work with. Their stated role is to protect the interests of workers. Many unions define these interests by setting them in opposition to management and defending them with an adversarial approach. This approach is exactly like contractual outsourcing, with each side hammering the other to stick to the terms of the contract while flexibility and mutual benefit often suffer. In some cases, the individuals charged with managing the relationship on both sides have additional agendas that make the engagement even more dysfunctional. For example, some managers focus on crushing the union rather than getting good work done; some union officials focus on aggrandizing the union rather than protecting the interests of the workers. These inflexible, adversarial agendas stand in the way of positive incremental change, almost guaranteeing that organizations lurch from transformation to transformation. Again, executives should consider the kind of relation- ship they have with unions, and the kind they want, when addressing union issues in transformational outsourcing.

As we discussed earlier, transformation makes the most sense in the face of big threats and opportunities. In these cases, unlike the situation with smaller, incremental changes, the initiative’s probability of success is lower, but the rationale for proceeding is much clearer. Basically, the organization has little choice. However, union leaders, especially staunch adversaries, may try to ignore these compelling forcing functions. In the U.S. government, union leaders:

. . . aggressively and consistently oppose . . . innovative outsourcing approaches. [Although] where such approaches have been pursued, such as the National Security Agency, the Army, and the Navy, the benefits to the affected federal workforce have far exceeded anything that could have been done under A-76,[4] including if the workforce had been retained in-house. In each of those cases, the workforce was treated as a critical asset and was rewarded accordingly.[5]

A veteran of Indianapolis’s intensive and successful outsourcing during the 1990s continues:

The myth that outsourcing is bad for public employees is one of the greatest fabrications ever. We looked at our wastewater utilities seven years after we signed the outsourcing contract with a private sector company and found that the difference in total compensation for the people who left versus the people who stayed was very dramatic. The average compensation for the people who went to the private sector was 28 percent higher than for people who stayed in public-sector jobs. In addition, on the private side the rate of accidents, the time lost due to injuries, and the grievances were down while the pay raises, the incentive compensation, and the pension contributions were higher.[6]

Just having outsourcing in the mix can improve opportunities for workers. In Indianapolis, the unions vigorously opposed privatization of public functions, but because of the fiscal and political mandates given to the new mayor, they had little chance of success. As a result, they turned their attention to competing against private-sector companies for the work. Ultimately, unionized public-sector workers ‘‘got their costs down and productivity up and outbid private companies for over two dozen contracts’’[7] out of the 65 that were signed over six years. The experience of competing for and winning the work helped change the public-sector culture in Indianapolis. Workers recognized that good ideas paid off, and the entrepreneurship this stimulated was both satisfying for workers and beneficial for the public.

This growing body of evidence that outsourcing can benefit the workforce creates a rift between union leadership and the workers they represent. In cases where the employees see opportunities for growth in their chosen professions and a willingness of their future employer to invest in their training and development, they can begin to sense union opposition to outsourcing as barring their way. In one such situation, an employee confided to the HR director: ‘‘Don’t mind the unions, they’re not representing us.’’

Although managers are frequently reluctant even to consider outsourcing because of the threat of union backlash, outsourcing veterans would agree that these issues are surmountable. Peter Bareau recalls: ‘‘Some initiatives have been deterred for fear of industrial action. We were the guinea pig because it was the largest outsourcing the government had ever done, and we did it without industrial action.’’ Successful executives bring union representatives into the conversation early—generally not into the bunker meetings, but certainly before they make organization-wide announcements. Involving unions at this point conveys an intention to work cooperatively with them. It also gives the union representatives an opportunity to set up their own negotiations with potential outsourcing providers. The union may want the provider to recognize it so unionized employees will be able to retain their membership, for example.

Of course, a comprehensive communications campaign does not stop when a contract is signed. Nor does it end when employees have transitioned to the outsourcing provider. It should be part of day-in-day-out management of important stakeholder relationships.

[4]A-76 is the U.S. government circular that governs most outsourcing. It stipulates that government employees have the opportunity to compete with the private sector for the right to perform functions that are declared noninherently governmental. Private-sector firms must first win this competition before they can be awarded outsourcing contracts.

[5]Stan Soloway, ‘‘Buy Lines: Straight Talk about Fed Employees, Competitive Sourcing,’’ Washington Technology 17, No. 24 (March 24, 2003), www.washingtontechnology.com.

[6]Personal interview, September 18, 2001.

[7]William Eggers, ‘‘Interview,’’ Government Technology, September 1997, www.govtech.net.




Outsourcing for Radical Change(c) A Bold Approach to Enterprise Transformation
Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation
ISBN: 0814472184
EAN: 2147483647
Year: 2006
Pages: 135

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