Author: Peggy Stuart

We read a lot these days about health-care costs. While much of the debate centers on the escalating costs of providing treatment, we hear less about another menacing phenomenon-health-care fraud and abuse.

According to the Washington, D.C.-based National Health Care Anti-Fraud Association (NHCAA), as much as 10% of what the United States spends on health care is lost to outright fraud. Last year’s dollar amount could be as high as $100 billion, according to the U.S. General Accounting Office. “Any health-care fraud means totally wasted dollars,” says Jim Garcia, head of the health-insurance tracking unit for Hartford, Connecticut-based Aetna Life & Casualty Co. “It’s making it difficult for us to compete in the world.”

It may be a while before health-care reform takes effect. Even then, it’s unclear whether any reform will address fraud and abuse. Employers and human resources professionals, therefore, need to take immediate, proactive steps to recognize and prevent such practices. Otherwise, a company could end up spending wasted dollars on health problems that never existed or were unnecessarily treated. Consumers, of course, would bear most of the burden through skyrocketing insurance premiums, higher taxes, increasing medical expenses, shorter hospital visits and inferior health services. So whether your company is self-insured or not, HR professionals must be involved in learning how to detect and prevent fraudulent practices early on.

Health-care fraud and abuse include a variety of practices.
The most common examples of fraudulent abuse include misrepresenting services, overcharging for services delivered or providing more costly services than required. Abuse may involve actions that are inconsistent with acceptable business and medical practices, such as the approach taken by one mother who called her infant’s pediatrician to the house four times in two days-once at 3:30 a.m.-because the child had a cough. (Because the employer’s health insurance covered the charges, the mother was unconcerned about the cost.)

Fraud, on the other hand, involves a willful misrepresentation, concealment or nondisclosure of a material fact or misleading conduct that results in some unauthorized benefit such as receiving money. For example, a provider bills the insurance company for procedures that weren’t actually performed, along with legitimate claims for the same patient. Health-care fraud and abuse can be committed on any level or at any stage of the health-care delivery system. The culprits can be an employee, a service provider, an insurer, a lawyer, a claims processor or a third-party administrator and investigator. But San Francisco-based Blue Shield of California has found that most fraud and abuse practices it discovers occur among service providers, according to Louis L. Lovato, manager of the company’s special-investigations department. Although the majority of health-care providers are honest and ethical, NHCAA estimates that about 2% engage in deliberate or systematic criminal attempts to defraud the private and public-payment systems.

The intent may be as innocent as trying to get the health-insurance company to pay for a needed treatment, or it may simply be an attempt to make extra money. Some examples of provider-generated fraud include:

• Overcharging;
• Billing for services not rendered;
• Rendering unnecessary or inappropriate services;
• Altering diagnoses;
• Waiving copayments;
• Submitting claims for free services.

Some of these practices may involve a conspiracy between the doctor and the patient, usually in an effort to get the insurance company to pay for a procedure that isn’t covered by the insurance, such as a tummy tuck. “We get records and are careful, but plastic surgeons sometimes get these through,” Lovato says.

Providers may be tempted to waive copayments for a patient who seems to be in need of treatment but unwilling or unable to take on the expense involved. In such cases the provider may submit to the insurance company a bill for an amount of which 80% covers the entire cost. Sometimes, to avoid detection, the provider may even bill the patient for the remaining 20%, but tell him or her to disregard the bill. These bills are then written off at the end of the year as bad debt.

Although insidious and costly, these practices usually are a byproduct of legitimate use of the health-care system. Other cases of fraud are more blatant. Some operations have no purpose in mind other than to bilk the system. Common scams include rolling labs, programs for weight-reduction, detoxification programs and basic health screenings.

One of the most costly and effective fraud schemes, however, is the rolling lab. According to Harry S. Miller, vice president of consumer affairs for Blue Shield of California, rolling labs set up operations in a mobile van unit or temporary-office locations-sometimes appearing in shopping malls or other public locations-and offer health screenings to people who have health insurance. They perform routine, noninvasive procedures, such as blood pressure measurements.

After obtaining identifying information such as plan and group numbers on the insured’s health-care plan, Miller says, the scam artists use the information to bill health carriers and insurers directly for amounts as much as $10,000 or more, usually by using false diagnoses. Normally, they have made no effort to contact the patient’s personal physician to verify the need for these procedures. If the insurer’s anti-fraud program results in nonpayment, the rolling-lab personnel may hire collection agents to attempt to collect from the patient.

One of the most famous rolling-lab scams operated in California until May 1991. It was run by two individuals who set up mobile, noninvasive testing labs in Los Angeles, San Diego and Orange counties, according to Lovato. The pair and their accomplices offered people free screenings, and the lab spent at most an hour processing the tests. Then they wrote false diagnoses on the claim forms, Lovato explains. The scam artists made no effort to make the diagnoses fit the patient. “Health problems common to people in their 70s were reported for people in their 20s and 30s,” he says. The bills could be for as much as $150,000 for an hour’s work. Insurance companies received bills for $1 billion; $50 million of that amount was actually paid, he says.

Insurers began working with authorities as early as 1985 to try to stop the rolling-lab scam. In August 1994, two of the principals were sentenced to 21 years in prison, fined and ordered to pay restitution, according to Lovato. This scam may have been the largest in California, but by no means was it the only one. At one time, as many as 348 different operations were under investigation by a joint state and federal crime task force, according to Miller.

Lovato also says that psychiatric fraud started escalating in the ’80s. For example, some psychiatric hospitals promote admitting patients for weight reduction or substance abuse. The admitting psychiatrists then lie to the insurance company about the severity of the problem or the diagnosis. This problem often goes beyond an attempt to get coverage that patients legitimately need. Sometimes the treatment program provides little benefit except to line the pockets of unscrupulous providers.

“People are sent to Florida or California and admitted to the hospital just for a simple weight-reduction program or a substance-abuse program involving little more than Alcoholics Anonymous-type activities. They go on outings to ball games, or to Disneyland, and the insurance company pays for it,” Lovato explains. The insurance companies think that they’re paying for treatment for severe depression or alcoholism. The patients may think that the program is costing as little as $8,000, but the hospital is billing the insurance companies for far more. “This type of scam has cost insurance companies at least $100 million,” Lovato says.

Employees in an employee-assistance program (EAP) may also knowingly or unknowingly fall into the hands of unscrupulous scam artists. Lovato says that he knows of one individual who worked in an EAP and received $2,000 to $3,000 for each referral to a certain treatment program. Another employer was concerned about such abuses, but was afraid to monitor its EAP [it was controlled by the union] too closely. “The company was afraid that the union would think that it was trying to deprive people of benefits if they tried to get the records for people referred through the EAP,” Lovato says.

Some fraud has been generated by unscrupulous or underfunded insurance companies and collective schemes, such as multi-employer benefit trusts. Some set up shop while planning to abscond as soon as enough money has been accumulated from companies that provide health-insurance coverage for their employees without sufficient background checks. “Some aren’t even licensed to write coverage. Some are based in the Bahamas or Cayman Islands,” Lovato explains. Other insurance companies succumb to poor management and become bankrupt. In either case, both the organization and the employees are left holding the bag of unpaid medical bills.

Employees also can be guilty of fraud and abuse.
Among the more common employee-generated fraud schemes are:

• ID-card abuse;
• Non-COBRA former employees still using the plan;
• Listing ineligible dependents;
• Billing for unqualified dependents;
• Billing for unqualified expense;
• Seeking reimbursement for phony medical bills.

Many employers would add employee abuse of the organization’s sick-leave policy. Although this practice doesn’t involve the insurance company, it does cost the organization through a program that provides for the health of its employees.

Some employees defend their abuse by claiming they were desperate. Many say their legitimate health-care needs were denied under his or her plan. Patient and doctor may subsequently conspire to use another diagnosis to obtain payment for treatment of the condition. “It’s a sneaky fraud,” says Marilyn Eisele, former personnel administrator for Kent, Ohio-based Schneller Inc. “It’s not as blatant as changing billing amounts from a doctor’s office. It’s often a gray area,” she adds.

In other cases, the intent is clearly to receive money. Lovato cites the case of a man who worked as a clerk for a financial institution. The man took his family to Egypt each year, whereupon he became ill. A private investigator, however, went to Egypt and was able to get the doctor there to admit to the fraud, which amounted to $80,000, according to Lovato.

HR can reduce health-care fraud.
One way HR can protect its health-care benefits from fraud and abuse is by thoroughly investigating all organizations that impact the health-care program it provides, including third-party administrators, insurance providers and multi-employer benefits trusts.

For example, before entering into a contract with a multi-employer benefits trust, investigate that organization’s track record. “Before entering such a union, check with the department of insurance and talk with brokers,” says Lovato, noting that multi-employer benefit associations are unregulated at the current time.

When choosing an insurance company or its counterpart, some advise getting recommendations from other companies, investigating the company’s past performance and other ratings, and checking with other companies with which they have conducted business.

When Robinson Memorial Hospital in Ravenna, Ohio offered a new health-care plan, the staff formed a task force to evaluate the plan, according to Bill Timmins, the hospital’s manager of compensation and benefits. “Members of the task force included a nurse, a doctor, a utilization review specialist and someone from HR,” Timmins explains. They asked the candidate insurance provider for a list of current customers. To check the references, they called hospital providers and doctors, as well as employers using the plan to see how well the insurance company provided service and made payments. In addition, they checked the potential insurance provider’s record with the Ohio State Insurance Commission, as well as the Small Business Bureau, the Better Business Bureau and the local hospital association in the city in which the organization’s headquarters are located.

In making a request for a bid, Robinson Memorial presented the candidate organization with six pages of questions it was asked to address, says Timmins. Then they went through the bidding process. “During that time you should be able to flush out anything that isn’t legitimate,” he says.

If the insurance company you’re considering has a reputation for being ethical and well-financed, the next step is to find out what provisions have been made by the company for identifying fraud. If your organization is self-insured, what kind of help can you expect from your third-party administrator or your in-house people?

One thing to look for during the investigation stage is a method for dealing with illegal or unethical conduct by claims processors or fraud investigators. A person who discovers a case of significant fraud, for example, may be tempted to try to blackmail the provider or individual committing the fraud. An effective fraud-investigation unit in an insurance company should have safeguards in place to prevent such activity. Aetna has a system called C-fraud, which monitors the employees who have responsibility for adjudicating claims, according to Garcia.

If the problem of health-care fraud is to be resolved, HR must be knowledgeable about it and know how to prevent it. “People in HR play a key role,” Garcia says. “They have the responsibility for communication with employees. They receive a lot of complaints, and they may be in a key position to identify different instances of fraud,” he says.

Some attempts are being made to address this problem. For example, New Jersey’s Fraud Bureau is a clearinghouse for information about providers that commit fraud. “The unit can solicit information from insurers on the providers it’s investigating and alert other insurers to providers suspected of fraudulent or abusive activity,” the GAO report says. Without some kind of information sharing, scams can just move on to other locations or to other providers after they’ve been discovered by an organization’s fraud-detection efforts.

Many companies may curb their investigations because of costs. If done correctly, however, the returns can outweigh the costs. Blue Shield’s experience bears this out. “For every dollar invested in ferreting out fraud, the company has averted $12 in charges,” says Miller.

The city of Chicago also gained cost-effective results. The organization had been paying out an estimated 10% of its health-care costs in unnecessary expenses, according to John Holden, a spokes-person for the organization. The city discovered that it had been paying medical expenses for ineligible dependents, in-cluding grandchildren or dependent children above the eligibility age. Now it requires proof of relationship for dependents to receive coverage.

Donald B. Franklin, deputy comp-troller for the city of Chicago, says that it has eliminated more than 11,000 ineligible persons from its benefit eligibility files. “This was done by extensive auditing of every file and (requiring) relationship documentation for all dependents for whom coverage was requested,” he says.

Take steps to combat fraud.
The first step in reducing health-insurance fraud and abuse is to find out what other companies are doing. Some organizations are banding together to help each other fight fraud. One way to do this is through membership in the National Health Care Anti-Fraud Association. The NHCAA is an issue-based organization comprising private- and public-sector individuals and organizations responsible for the detection, investigation and pro secution of health-care fraud.

Linn Downs, vice president of Campton, New Hampshire-based TE Corporation, also recommends contacting the National Association of Claims Assistance Professionals. “Their members are certified to handle claims processing and they’re watchdogs on health-care fraud,” she says. “If a company outsourced its health-care processing to one of their certified members, it might help cut down on health-care fraud,” she recommends.

For anti-fraud programs to be effective, more attention must be paid to educating the consumer, says Miller. Employees need to know about the tactics unscrupulous providers use to perpetrate fraud. This isn’t an expense borne by the insurance company and the employer alone. Some of the expense filters down to the employee as well. But that isn’t the only concern he or she should have. The employee could end up being harassed by a collection agency for bills. He or she might even wind up with a record of a diagnosis that may surface later and make it difficult to get life insurance or result in unwanted exclusions under another health-insurance plan.

Downs says, “Employees must understand that health coverage isn’t a free lunch. The money has to come from somewhere, and eventually the employee is paying, whether it’s directly or indirectly,” she says.

“People should be informed consumers,” Lovato says. “If it seems too good to be true, it probably is. Before they become involved in health screening or any other procedure that seems to be questionable, they should ask the people who monitor the services for their employer or ask the medical society,” he says.

Employees also should learn to ask their doctors or hospitals if they are unsure about a recommended procedure or its costs. They also should know not to sign blank claims forms for any provider. A blank claims form is just like a blank check.

In addition to investigating the recommended procedure, employees and their dependents should investigate any provider they consider using if the provider is not part of a plan’s preferred-provider list or HMO. They should take special care to investigate any provider they learn about through advertising or encounter while shopping or attending a fair or other public event. If contemplating entering any treatment program, they should check into similar programs before making a decision. Most urban areas have consumer watchgroups that can provide information about health-care providers.

Employees also should learn to be informed consumers when using health-care providers for themselves and their families, even if the provider is on a list provided by the company’s health plan. Make sure that employees know that feedback on providers is welcome, and that they know how to register a complaint. It’s only through this kind of vigilance that inadequate providers can be weeded out. A toll-free hot line can make it easier for them to report any questionable charges or activities.

Some companies have even begun to offer incentives to employees who uncover and report instances of provider fraud. The city of Chicago pays 25% of recovered money, subject to a $500 award limit, to employees who report claims paid in error or for services they didn’t receive, according to Franklin. “In 1993, the city recovered nearly $100,000 while paying out about $15,000 in incentives,” he says. “This year, the city already has recovered more than $55,000, while paying out $9,000 in awards.”

Whatever consumer-education plan you choose or develop, make sure that it demonstrates:

• The importance of eliminating health-care fraud and abuse to the organization;
• The cost to employees and their families of health-care fraud and abuse;
• What employees and their dependents can do.

Educating employees can be ineffective if the policies you have are unfair, or even if employees only perceive that they are being treated unfairly. “Coordination of benefits between the corporation and its health-care policy administrator (payer) are often miscommunicated,” Downs says. According to Downs, HR personnel often are caught in the middle, trying to maintain the precarious balance between the interests of the health-care administrator, the corporation and the employee. “In general, employees respond to corporations in the way they perceive they’re treated,” she says. “If employees feel that the corporation is good and treats them respectfully, they don’t abuse the company’s health-care policy or sick day limits.”

As for the service providers who commit fraud, Garcia says: “We just can’t tolerate it. They’re like weeds in a garden. If you let them go, they’ll suffocate the garden.”

The increased use of computers for processing claims may be making health-care fraud more inviting to unscrupulous providers. There also are some basic characteristics inherent in the health-insurance system in the United States that enables fraud and abuse to flourish unchecked. Some examples:

• More than 1,000 payers process 4 billion claims each year to pay hundreds of thousand of providers, using different payment methods and subject to different billing regulations.

• Providers’ claims are paid by many different insurers, making billing patterns hard to identify. Thus, a provider who bills for more than 24 hours of visits on a single day might not be discovered when the claims filed by that provider are split among many insurers.

• Collaboration among insurers to detect improper billing can be hindered by privacy concerns and incompatible claims data.

• Insurers must weigh the financial benefits and deterrent value of their detection efforts against the legal and administrative burden they may cause providers.

• Successful prosecutions may not result in insurers recovering their money.

• Federal prosecutors may not accept criminal health care cases involving less than $100,000 because of limited resources.

• An insurer’s efforts against unscrupulous providers can result in scams being shifted to other insurers. For example, when Medicare excluded providers who were cheating the program, the providers moved their unlawful operations to private insurers.

• Increasingly, health providers are investing in medical facilities, allowing them to control the demand for and supply of services; this creates a potential conflict of interest.

• Insurers are limited in their ability to trace and hold accountable the source of fraudulent billing in new, unregulated medical facilities.

• Physicians frequently invest in medical facilities but aren’t always required to disclose their investment in facilities to which they refer patients.

• Anti-kickback statutes aren’t always applicable to providers who, through private insurance, profit from their patient referrals.

SOURCE: Health Insurance: Vulnerable Payers Lose Billions to Fraud and Abuse, U.S. General Accounting Office, Washington, D.C. May 1992.

Even the best tutoring programs and literacy efforts may result in time and money wasted if hidden vision problems remain undetected. These problems are present in many participants in literacy programs, according to two studies reported by the St. Louis-based American Optometric Association.

In one study, three-fourths of the students in a Virginia literacy program failed a vision screening. The most common difficulty identified during the screening was an eye-tracking problem, which made it difficult for subjects to move their eyes smoothly along a line of print.

In the other study, two-thirds of the students in a literacy program in New York failed the vision screening. In this study, the most common difficulty was the inability to see clearly at a normal reading distance.

Just because your literacy-program students already wear glasses doesn’t mean that they don’t have undetected vision problems. Although most schools screen for these problems today, many older people in the work force may have received screening tests for distance vision only, according to Joel Zaba, OD, who headed the Virginia study. “Many in the adult illiterate population may not have had their learning-related visual problems detected earlier,” he says.

1. Visual Acuity:
   Visual acuity is the ability to see objects clearly. Reading letters on an eye chart only measures how well or poorly the person can see at that distance.
2. Visual Fixation:
   Direct fixation is the ability to aim the eyes accurately when looking at a stationary object, such as reading a line of print in a book.
   Pursuit fixation is the ability to follow a moving object with the eyes, such as reading a sign on a moving bus.
3. Accommodation:
   Accommodation is the ability to adjust the focus of the eyes as the distance between the individual and the viewed object changes. For example, this enables the person to read an instruction manual while working on a machine.
4. Binocular Fusion:
   Binocular fusion is the brain’s ability to gather information received from each eye separately to form a single, unified image. Without this ability, double vision may result. The brain often subconsciously suppresses or inhibits the vision in one eye to avoid confusion. That eye may then develop poor visual acuity. This is known as amblyopia, or lazy eye.
5. Convergence:
   Convergence is the ability to turn the two eyes toward each other to look at close objects. This skill is critical to binocular fusion.
6. Stereopsis:
   Stereopsis is the result of binocular fusion that enables judgment of the relative distance between two objects. Poor stereopsis is an indication of incomplete binocular fusion.
7. Field of Vision:
   Field of vision is the area covered by one’s vision. It’s important that a person be aware of objects on the periphery as well as in the center of the field of vision.
8. Visual Perception:
   Visual perception is the total process responsible for the reception and understanding of visual information.
   Form perception is the ability to organize and recognize visual images as specific shapes. The shapes encountered are remembered, defined and recalled.

Individuals who present some of these visual problems may require nothing more than a pair of glasses before they can get the most out of a literacy program. Other problems require vision therapy to help the student learn to use both eyes together, develop eye-tracking skills or improve other skills needed for reading, says Andrea P. Thau, OD, who headed the New York study. Detection of these problems improves the chances of success of literacy efforts, but uncovering a cause for reading difficulties also has a positive effect on literacy students’ motivation.

Further information on learning-related vision problems is available from:

American Optometric Association
243 N. Lindbergh Blvd.
St. Louis, MO 63141
314/991-4100

A checklist of vision-related symptoms and single copies of a pamphlet, Do Vision Problems Cause Adult Reading Problems? are available. Send a self-addressed, stamped, business-size envelope with your request to the Communications Center at the above address.

Most U.S. citizens take English for granted. But in states like California, where the immigrant population continues to increase, English is a second language for many. Recognizing that phenomenon and wanting to help, employees at Irvine, California-based Avco Financial Services came up with an idea that didn’t start in HR. The resulting program, called Each One, Teach One, provides English as a second language (ESL) tutoring for employees who want to participate. The program is run by Capistrano Beach, California-based South Coast Literacy Council (SCLC), a not-for-profit organization that provides training for tutors and facilitates literacy and ESL training in Southern California.

Since the program’s inception in April 1993, 20 Avco employees have been trained to provide ESL tutoring, and 28 employees have received language instruction. Tutors can work with students individually or in small groups according to a mutually determined schedule. Avco’s voluntary program offers help with:

• Pronunciation and conversation
• Reading and comprehension
• Writing skills and grammar
• Proficiency with tenses
• Intonation.

HR plays a vital role in literacy efforts.
Although the program didn’t originate with HR, human resources staff found out about the effort and recognized its potential value to the organization. Avco management already had some concerns about employees’ literacy problems because many of the employees were immigrants from Mexico, Vietnam, Cambodia, Russia and Romania. Therefore, the need had been apparent during recruitment efforts. Also, some current employees—although well-educated individuals—still had difficulty filling out applications or communicating adequately during interviews for promotions. Sometimes, they didn’t know the proper tenses and were unable to convey the right messages. In fact, HR’s concern peaked after one woman was passed over for a promotion because of her poor writing and communication skills.

So, if there were such problems, why didn’t Avco only hire applicants who already had adequate English-language skills? The reason for the company’s openness is that today’s population in Orange County—where the headquarters is based—is diverse. It’s necessary for the company to have employees who have come from many different cultures because that diversity will be the makeup of Avco’s growing customer population. Also, the company is expanding internationally, so having employees who can speak other languages can be a real benefit—if they communicate well in English.

An HR staffperson discussed the organization’s literacy problems with an employee who had gone through a literacy program and who’s now an English tutor in her spare time. Through this employee, HR learned about Avco employees’ efforts to develop a literacy program. Interested individuals already had formed a literacy committee in 1991. A company literacy program seemed the best solution.

Today, the literacy committee is one of Avco’s community-involvement committees, and HR is fully behind the effort, according to Teri Howes, senior programmer analyst for Avco. Howes, who had been an ESL tutor for three years, spearheaded the committee and was instrumental in getting the Each One, Teach One program off the ground in April 1993. “The response was overwhelming,” she recalls.

Whether a program such as this originates with HR or is a grassroots movement, HR should play an active role. Its role as organizer of training programs and facilitator of communication can be useful to the employees’ literacy efforts. HR professionals can act as liaisons between the people, the community and all the other departments.

Tutors can be more effective than classes because they can provide a type of instruction that isn’t possible to attain in large classes. Speakers of many other languages may have difficulty with English pronunciation because they don’t use their tongues in the same way that English speakers do. The tutors help their students feel comfortable about looking them directly in the face. This way, they can see how the tutor’s mouth forms the words.

Non-English speaking individuals require specialized instruction, according to Mary FitzGerald, vice president of ESL tutor programs for the SCLC, the local branch of Syracuse, New York-based Laubach Literacy Action (see “Where To Get Help”). “In some cases, this kind of instruction isn’t available to the student. In other cases, there’s no time or money to take advantage of the educational opportunities that are available,” FitzGerald says.

Help is available from local literacy groups.
Because Howes had been an SCLC volunteer tutor, it was natural to turn to the SCLC for help and support, she says. FitzGerald offered to add another ESL tutor-training class to her schedule of seven classes per year so that she could accommodate the employees at Avco who wanted to receive training.

FitzGerald says that other corporations can also receive help with corporate literacy programs from local Laubach Literacy organizations. “Companies can expect help with training for their tutors,” she says. Volunteer tutors can attend a training course put on by a local branch of Laubach Literacy Action, such as the SCLC, or, if there are enough employees interested in the program, the company can bring in the trainers and provide onsite instruction.

After training is completed, the local Laubach organization can provide continuing support. “The Council would then be a resource for providing books for the students and ongoing support for the tutors,” FitzGerald explains.

The committee customized the tutor-training program.
The SCLC’s involvement in the Avco training program enabled Avco’s literacy committee to tailor the existing program to meet the needs of the company. Because Avco really didn’t have employees who were just learning to speak English, its tutors didn’t need to spend as much time learning to work with beginners. For example, Carolyn Baker, community affairs administrator for Avco, tutors two employees, both of whom are advanced ESL students. One of these employees is interested primarily in business writing. The other wants to improve his vocabulary and pronunciation.

“We customized the tutor-training to concentrate more on advanced students,” Howes says. In addition, some material about lesson planning and assessing the level of the student was added to the curriculum. The customized training provided at Avco enables Baker and the other tutors to meet the needs of these advanced students.

The classes met once a week for five weeks and covered the following topics:

• How adults learn
• Pronunciation problems
• Cultural sensitivity
• Teaching tips
• Lesson-plan design
• Games
• Survival conversations
• Methods for motivating students
• Assessment of level of proficiency.

During the sessions, students also observed demonstrations and were given the opportunity to practice what they’d learned. The committee also brought in guest speakers to three of the classes. Betty Kent, director of the SCLC center in Irvine, spoke about games that tutors could play with their students and shared information about the center. Larry Brose, a tutor for seven years, spoke about teaching advanced students. During the final class, three ESL students talked to the class about how they’d acquired their English skills and how English proficiency has changed their lives.

At the end of the five weeks in May 1993, 18 participants had completed the program satisfactorily and received certificates. Tutor trainees who missed a session received an opportunity to make up the missing material and still receive certificates. The certificates made them eligible to provide tutoring either at Avco or at one of the local literacy centers.

Following the training program, the committee sent out a flier to inform employees that the ESL tutoring was available and invite them to participate. The response was impressive. The 20 employees who signed up were requested to specify when they were available to be tutored—before work, after work, during lunch or on weekends. Howes attempted to match the students with tutors who were available at the same time of day. This often wasn’t easy, because many of the students were hourly employees who only had 30 minutes for lunch. It also created logistical problems for tutors who worked in one building but had students in another. The tutors have handled this problem by driving to their students’ buildings to save the entire lunchtime for the lesson. “So far, everyone has been able to make arrangements to meet,” Howes says.

The committee worked hard, but the effort wasn’t without problems. “This program started without a how-to handbook, so we’re still learning. Our employees are literally designing the program as they go,” Avco President Warren Lyons says. “Having the benefit of 20/20 hindsight, perhaps publicizing successes earlier would have helped accelerate the program,” he adds. The organization has corrected this oversight and now highlights the program’s successes regularly in its bimonthly, all-company publication, Trends, and its Community Involvement Newsletter.

How can HR start a literacy program?
A program like Avco’s Each One, Teach One can’t be as effective without support from the company, even if it originates with the employees. This support was evident at Avco even before the literacy committee was formed. First, the company has to provide the kind of workplace environment that encourages each employee to contribute to the well-being of others, says Lyons. This means that management must set the tone for personal participation and self-improvement. The organization must demonstrate its support of the program as well. This support doesn’t have to be expensive, as the Avco experience bears out.

“For a workplace literacy program to be successful, the company must feel that the long-term benefits of increased productivity and improved employee morale are worth the expenditure of time and money,” FitzGerald says.

The commitment of management isn’t enough, however. “Employees participating in the program must be aware of the wholehearted support of the company and be willing to demonstrate their own commitment by regularly attending classes and freely giving the time necessary for preparation,” FitzGerald says.

Tutors and students participate on their own time.
Although Avco provided support for the program, it didn’t cost the company much in terms of dollars. The tutors used their own time to complete the training program and didn’t receive any time off for working with fellow employees. Neither did the students receive time off from work to attend their meetings with tutors. In fact, no incentives were offered to employees to be trained as tutors or to volunteer as tutors in the program, says Howes.

“One of the more amazing parts of this growing literacy program is the fact that everything has taken place [and continues to do so] on personal time,” says Jim Straw, vice president of community affairs for Avco. “All program participants work hard every day at their assigned Avco tasks. In addition, they work together to become even better employees who, in turn, help others as they have been helped themselves. This is the epitome of a win-win situation.”

The employees who have participated so far in the ESL training program are proud of what they’ve accomplished. “I like that our program is employee-driven,” Howes says. Al-though the program has the support of the executive committee, it wasn’t mandated by that committee or human resources. “It’s something that the employees wanted to do. The students wanted to learn, the tutors wanted to help their fellow employees, and the executives of the company are supportive of the program. These factors provide great potential for a successful program,” she says.

The volunteers are people who want to do something to help other people and the company, although their reasons for becoming involved in a literacy program may vary. For example, Baker’s interest in tutoring comes from her own love of reading. “When I saw the need, I thought that it was something I’d like to do,” she says.

Of the 18 individuals who completed the tutor training and received certificates in May 1993, several had learned English as a second language themselves. Most have volunteered to tutor other employees at Avco, while some have gone on to tutor at centers in the community. Some tutors are working both with Avco employees and people at the centers.

“All ESL tutors are Avco employees who understand the value of literacy to Avco and to society in general. These individuals are willing contributors to a program that benefits everyone—student, tutor, Avco and the community,” Lyons says.

The cost of the program is small.
Because participants have been contributing their own time to the effort, Avco hasn’t had to pay for staff time for the program. “On a very basic level, Avco’s human resources training department has been increased by a staff of caring and compassionate instructors at no additional staff cost to the company,” Lyons says.

The committee has found other ways to save money as well. The SCLC usually charges $25 per person for the tutor-training program to cover the cost of materials. The company could have paid to have its tutors participate, but it found a less-expensive alternative: The literacy committee made the tutors’ notebooks, and the company print shop copied the materials, with permission from the SCLC, so that neither the company nor the tutor-trainees had to pay for the class.

Continuing support is needed, however. Howes says that Avco has provided the office space to set up a Literacy Resource Center. “This is an area where students and tutors can meet, where supplies are kept and where students can go during their breaks to study,” she explains. Tutors often meet there to share ideas with one another. “The tutors are coming up with great ideas,” she says.

Although the cost has been small, management expects to provide additional assistance as the needs of the program become evident, but employees responsible for program leadership don’t expect these needs to be costly. “These are extremely responsible people who have a frugal mentality toward corporate assets,” Lyons says.

The committee continues to look for ways to improve Each One, Teach One. “Right now we’re looking into everything that might improve our program because it’s still so new,” Baker says.

Probably the most expensive need of the program is for computers and software. The organization now has four computers and is researching various software packages to enhance and maximize the entire literacy effort, says Straw.

The cost may have been small so far, but what about the results? What has Avco accomplished by supporting the ESL program? Lyons says: “Those individuals who have a need or desire to become more literate do so, but this process offers much more. Respect for each other, improved self-esteem and greater workplace efficiency translate into a better total workplace environment.”

The needs of Avco that the program meets are no different from the needs of other successful companies. Lyons says that Avco needs an educated and literate work force to understand job requirements and respond appropriately to customers’ needs. This program takes a unique step in helping the company create a work force that’s better able to meet these organizational needs.

The company’s goal is to reduce turnover among valuable employees. “These are some valued workers, so why not train them to be able to stay here and move up in the company?” Baker asks. One of Baker’s students needs to write correspondence to outside vendors and agents, but doesn’t feel comfortable with that part of her job. Baker is working with her to help her become more competent in letter-writing skills.

Language skills aren’t the only skills that tutors must work on with their students, however. For instance, during tutoring sessions, Baker became aware that one of her students lacked some basic organizational skills. She’s working on those skills now, in addition to reading, writing and speaking skills.

Baker also has become more aware of what the other people in the company do and what the needs of the company are. “When you get in your own position, you aren’t aware of what the other people are doing,” she says. “I like having interaction with people in an area other than the one I’m in, to see what they’re doing. It’s a real morale booster. It’s stimulating. It’s exciting.”

Lyons says that all employees are members of a team. “The extent to which we can help strengthen every employee makes Avco a stronger company,” he says.

During the recent recession, it has become even more apparent that the welfare of the community has an impact on each of its businesses. Any program that benefits the community is likely to return some benefits—however small—to the organization. In this case, the program provides substantial benefits to the organization, but at the same time helps the community by improving the ability of some of its citizens to communicate with others using a common language.

Grievances can be a serious deterrent to labor-management cooperation. Unions play an important role in grievance management. Mediation is becoming more common in U.S. companies. North of the border, however, some companies are trying out a special type of mediation approach. Some companies tackle this problem by providing an ombudsperson to workers to help settle all types of disputes, especially in nonunion settings.

“We were concerned that our salaried, nonunion employees might not feel comfortable with the company’s complaint process,” says Gary Johncox, VP of HR at MacMillan Bloedel Limited in Vancouver. “We thought that an independent, outside, professional and neutral person might provide a safer, more confidential complaint avenue,” he says. MacMillan Bloedel chose a lawyer for the ability to investigate and question, the discipline of thought process, and the knowledge of law and arbitral jurisprudence. The company specifically chose a woman, hoping to reduce any reluctance on the part of women employees to use the program.

Johncox says that the program has been more successful than expected. Complaints get handled quickly. The company’s treatment of people has been exonerated often, and some real problems have been identified and are in the process of being resolved. The company has added another ombuds-person, also a female lawyer.

Some members of management didn’t see the need until the pilot program proved a success. They thought that if managers were fair, then employees would discuss their problems openly. They also were reluctant to advertise the program. Johncox said that he had to explain to managers that the ombudsperson is neutral, not an employee advocate on the lookout for management wrongdoing.

Whenever an ombudsperson has received complaints from union members, she has let union leaders know. “The union leaders were quite willing to include her or hand a problem over to her, if it was a member-versus-member issue,” Johncox says.

The union is also happy to have expert help in cases of sexual harassment-an area in which union leaders aren’t fully competent-or in other cases that the union can’t resolve. The ground rules for involvement were worked out in advance.

The program was set up in 1991. Since then, it has been expanded to include all 3,300 of the company’s employees.

Protestants have made friends with the Catholics in Northern Ireland. Palestinians and Israelis are rebuilding the Middle East. Bosnians, Croats and Serbs are reuniting Yugoslavia in peace. Unions and management are working together—as business partners—for the benefit of both groups.

These scenarios might seem pretty far-fetched. It’s difficult to imagine any of these traditional adversaries burying the hatchet—other than in each other—and working together for the common good.

Unions and management haven’t often tried to kill each other, as is the case with the other adversaries, but they often have been pulling in opposite directions, and there have been some hard feelings. Now some unions and the employers that they represent are learning to work together. In a highly competitive business environment, in which most firms are struggling to stay alive, the adversarial approach is counterproductive. “It isn’t what employees want, and it isn’t what drives success,” explains William K. Ketchum, AT&T’s vice president for labor relations.

On June 21, the cooperative joint efforts of General Motors and the United Auto Workers union paid off for both parties. The company announced that it will shift production of some of its automobiles from a plant in Mexico to one in Lansing, Michigan, creating at least 800 new jobs at the U.S. plant. This action resulted from a complete turnaround in union-management relations within the past year, according to UAW Vice President Stephen Yokich.

This isn’t an isolated incident, however. For many years, unions have supported—in one way or another—the industries whose employees they serve by providing day care, training and other services. Today, that service is taking on a new dimension. Today, the union is becoming a business partner.

One of the earliest cooperative efforts grew out of the Laborers’ International Union of North America (LIUNA) and the Associated General Contractors in 1969. This effort, called the Laborers-AGC Education and Training Fund, oversees the training that members of the union receive. The fund has provided safety training, workplace literacy and ESL training. It also recently worked with the EPA to combine training in the cleanup of hazardous-waste sites with the actual cleanup of public waste sites, including removing lead-based paint from publicly owned housing units and bridges, according to Arthur A. Coia, general president of LIUNA.

In 1987, the Oil, Chemical and Atomic Workers Union (OCAW) and the International Brotherhood of Firemen and Oilers worked with Rohm & Haas Kentucky Inc. in Louisville, Kentucky, to assist with the design of a new plant, by preventing design flaws and expensive retrofitting. The Design Committee grew out of a long-standing attitude of cooperation between the unions and management.

Stamford, Connecticut-based Xerox Corp. was struggling during the early ’80s, but has made a significant comeback, thanks in large part to union-management cooperation initiatives. Xerox became the first major U.S. firm to win back market share from the Japanese without government intervention, at the same time as its return on assets increased from 8% to 14.7%, according to Joe Laymon, director of corporate industrial relations in Rochester, New York. Cooperative efforts at Xerox have included an agreement with the Amalgamated Clothing and Textile Workers’ Union (ACTWU) that allows the union to bid on any work that Xerox wants to contract out, a leaner-but-friendlier contract-negotiation process and a new, jointly developed factory design, called a focus factory, which allows quick accommodation to changes in product demand.

Not to be outdone, AT&T and its unions—The Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW)—are refocusing the entire organization, using a framework called the Workplace of the Future, to make the unions and the company true partners in every aspect of the business. Company and union officials say that they expect to be able to work together to redesign the work environment and help AT&T meet the demands of the global marketplace, while giving employees a greater voice in decisions affecting their jobs and working conditions.

Coia says that the old us-versus-them dynamics have broken down. For years, the fortunes of union contractors and union workers have receded because of a focused challenge from the nonunion sectors. American companies and American workers have been battered economically by global competitors. The fortunes of both unions and management have taken a nosedive in direct relation to the growing challenge from these competitors. “The most-progressive leaders from labor and management have joined forces to compete against common enemies,” Coia explains. “In the minds of these new leaders, the old us meant unions and workers; today it means union labor and management working together. The old them meant management; today it’s our non-union competitors and international challengers who would take our jobs and underbid our corporate employers,” he says.

Martin R. Smith, president and CEO of Management Sciences International Inc. in Lawrenceville, Georgia, and author of Contrarian Management (Amacom, 1992), agrees. “The way it used to be done, the company would call the labor lawyer in, and the union president would get together with union people and plot and scheme,” Smith says. “Then they’d sit across the table from each other and try to get as much as they could. Those days are gone—or the company’s gone, and all the jobs with it,” he says.

The shift away from top-down management has helped move cooperative efforts forward because the unions often have more credibility with their members than management has. “If you fully integrate the union into these efforts, then you’re going to get a lot more cooperation,” Smith says.

Coia predicts that we’ll see an increased use of joint committees to solve problems on the job. These committees will help break down the old distinctions between union and management thinking. “The use of joint committees will have the effect of breaking down the old ways of viewing each other’s spheres of responsibility,” he says. For example, he points out that not long ago, the issue of competitiveness was viewed by management as within its exclusive decision-making sphere. “Today, however, our nation’s most innovative companies recognize that employees—and unions as their representatives—possess a lot of insight into how a company can compete better,” he says.

The tougher economic climate today is influencing similar changes in the ways in which unions and management in Canada operate as well. Gary Johncox, VP of HR for MacMillan Bloedel Limited in Vancouver, says, “Economic crisis seems required, and the more doctrine-rigid the union is, the greater the crisis must be to encourage change.”

To make this new partnership work will require all parties to change, according to Robert Reich, U.S. Secretary of Labor. “We must make change our ally and use it to create a just economy and a just society,” he says.

Change is difficult to accept.
Getting people to accept change is one of the greatest difficulties that unions and managers face when they begin cooperative efforts. “It’s very difficult to go from a pyramid, from a high-volume, static organization, to a dynamic, high-value organization,” Reich says. “It’s hard because it’s so threatening to everybody. It threatened the people on the top, because, remember, they got there because they were the font of all wisdom, daring and insight, and now, suddenly, they have to give up control. They have to acknowledge that they are no longer necessarily the fonts of all wisdom and daring and insight. It’s threatening to middle managers because they have to give up being in the control business. They have to be in the business of facilitating groups of people, making sure that they learn together and that they’re productive. They’re in the control-implementation business. It’s threatening for the people on the front line, because it means more responsibility,” he adds.

Coia agrees. “Anytime you try something new, there’s going to be some resistance to it,” he says. “In the labor movement as a whole, real schisms have developed between so-called hard-line unionists-who believe that the movement towards greater cooperation between labor and management isn’t good—and others who believe that the challenges of the 1990s are different from those faced in the 1930s and ’40s, and require a different approach,” he says, adding that most members of the Laborers’ include themselves in the latter camp.

Smith also points to change as a major obstacle to union-management cooperation. “Age isn’t a factor,” he says. “Young people can have closed minds, and 50- to 60-year-olds can be receptive.”

Another hurdle for union-management cooperation is the history of mistrust that grows out of the old adversarial relationship. “Trust is a fragile thing,” says Walter Trosin, managing consultant specializing in HR at Johnson Smith & Knisely Accord in New York City. “It can be destroyed more easily than it can be built.”

Before the new alliance could be formed between the Laborers’ International Union and the contractors, both sides had to summon the courage to think differently about each other, according to Coia. “To some extent, both sides had to take a leap of faith of sorts, to get the process rolling,” he says, although even he admits to “cautious optimism” during the early stages of any labor-management effort.

Coia says that the leaders of his union and the leaders representing the union contractors always had seen each other only from the opposite side of the table. Coia reports that they’re finding ways to work together. “Now we’re seated on the same side of the table, working to develop mutual solutions to our mutual problems,” he says. “The key to finding solutions to these problems is flexibility and innovation-from both sides, but you’ll never reach this point unless the trust element is firmly cemented into the process.”

The union can become a part-time business partner.
Every union-management cooperative effort is unique. Some programs address one-time concerns, but grow out of and leave behind a spirit of cooperation that affects other areas. The design committee at Rohm & Haas Kentucky Inc. is one example. Management at the 800-employee firm decided in 1987 to invest in a complex, computer-driven system in its polymer manufacturing unit. The company planned to recruit operators for the new facility largely from its plant already in operation at the same site. Rohm & Haas assembled the design committee, comprising one first-line supervisor, four operators representing one union, a mechanic who represented another union, a night supervisor, a facilitator, an internal consultant and an external consultant. The design committee went to Rohm & Haas headquarters and looked at the blueprints and the model of the new plant, and made changes before the firm broke ground for the new building. “We made tons of changes,” says Tom Connelly, training coordinator for Rohm & Haas Kentucky. All the changes involved design flaws or equipment that the committee knew wouldn’t work in the field, including everything from moving the stairs or putting in a door where there wasn’t one to replacing one pump with another that would work better in Kentucky’s climate. Connelly doesn’t know how much money the committee saved the company, but he’s convinced that the figure is high, when you consider the expense of tearing out walls or the reduced productivity that would have resulted from the flaws.

There were recruitment benefits for the new operation as well. Because committee members worked among the potential recruits for the new plant, it wasn’t difficult to get people to volunteer. They knew that the design of the new plant would address their needs because their co-workers had helped design it. They also were able to talk with committee members about the operation of the new plant, which they did in a series of meetings.

The design committee’s 80-page document covering the committee’s mission, functions, restructuring methods and cost savings is used as a model for other units at Rohm & Haas. The same committee approach helped during two plant-redesign efforts, although the results weren’t as dramatic as in the new-plant design.

Cooperative efforts can turn a business around.
Xerox Corp. turned to its unions for help when the company ran into difficulty in the early ’80s. “The competition was selling the product at the same price that it was costing us to make it. That was one reason that we lost market share,” Laymon says.

One area of cooperation at Xerox developed as a response to management’s realization that it could save money by moving production of the wire harness—the configuration of strands of wires that delivers the current throughout the copier—to the company’s plant near Mexico City. This would mean eliminating 182 jobs at its Webster, New York, plant. The company had just signed an agreement with the ACTWU that attempted to prevent layoffs by allowing a buffer of temporary workers of as much as 10% of the permanent work force. The union urged management to give workers a chance to bring costs down at the Webster plant to make it competitive with the Mexico operation. A study team found $2.9 million in potential savings, which management accepted as close enough to the $3 million that it said that it needed to stay in the U.S.

The same situation arose a few years later. This time, the study team was unable to get as close to the figure needed. The team pointed out, however, that it could reduce the quality and attain sufficient cost reductions. Management recognized that the quality of the harnesses produced in Mexico was not as high. In fact, it had moved some operations back to the U.S. because of quality problems in Mexico. In the end, managers decided that the higher quality, along with reduced shipping costs, was enough to make the difference. The jobs stayed in the U.S.—for now.

In 1989, Xerox and the union formed A-Delta-T teams to study the actual performance of each work process, in an attempt to identify the most cost-effective way to perform each job. The study teams are trying to reduce inventories and streamline production for a Japanese-style just-in-time manufacturing process. Managers at Xerox hope to improve the way in which the firm produces the more than 3,000 components that go into 200 types of wire harnesses for Xerox copy machines.

Perhaps the most unusual union-management cooperative effort is the sub-contracting provision that provides that if the work isn’t performed competitively in terms of cost, then the organization reserves the right to subcontract or outsource that work, according to Laymon, but only after a joint company-union team has had an opportunity to bring the cost of that business to within acceptable norms. “We provide for experts, finance information, handling and engineering to do the analysis for the team,” Laymon explains. If their recommendation doesn’t bring the cost down, Xerox reserves the right to ship the work out.

All these efforts are paying off. “We’ve had quality improvement, market-share gains and cost reductions,” Laymon says. “The numbers have been dramatic. We’ve had a tenfold improvement, measured by defects per 100 machines—from 60/100 to 6/100,” he says. “We’ve turned the corner on the loss of market share. Now we’re gaining in market share. The cost of building product X is competitive with what others can build it for, and we think we’ve built a better one.”

AT&T seeks the workplace of the future. Perhaps the most ambitious attempt at bringing unions in as business partners is the Workplace of the Future effort by AT&T, the CWA and the IBEW. The Workplace of the Future (WPOF) was rolled out at two conferences, one on March 8 with the CWA in Randolph, New Jersey, and the other on June 16 in Chicago with the IBEW. Keynote speakers for the two conferences were Secretary of Labor Robert Reich and Bernard E. DeLury, director of the Federal Mediation and Conciliation Service, respectively. Both men are long-time proponents of union-management cooperation.

The WPOF grew out of the problems resulting from divestiture in 1984, after which AT&T had to transform itself from a domestic monopoly into a global company of communications products and services in highly competitive markets. The resulting climate created a strain on union-management relations. The WPOF resulted from last year’s bargaining agreement between AT&T and the two unions, during which all parties realized that the fast-paced and dramatic change in the marketplace, technology and competition required cooperation and collaboration, instead of adversarial labor-management relationships, for AT&T to survive and for workers to have job satisfaction. Window-dressing wouldn’t do; the changes had to be sweeping and permeate the entire organization.

Ketchum says that WPOF isn’t a program; it’s a framework for change. “I’ve been a line manager for the bulk of my career. We tried to implement self-management teams and found that a management style that supports the concepts has to have enough of a support system to allow it to be systemic, rather than just to rely on leaders,” he explains. Management and the unions wanted a framework that wouldn’t become too bureaucratic or burdensome, but would be supportive and help drive some of these systems, and, at the same time, turn the relationship into one that was more cooperative, more information-sharing and less adversarial and restrictive in nature, according to Ketchum.

The new framework has four levels, which differ by focus and time frame:

1. The Workplace Models develop new ways to manage change. They encourage union officers and AT&T managers to identify and develop new approaches to managing change in the local workplace. Their focus will be on quality, customer satisfaction, quality of work life and competitiveness. They may involve self-managed or self-directed teams, continuous quality-improvement efforts, flexible work environments, union involvement in the development of new systems of work organizations and other initiatives.
2. The Business-unit/Division Planning Councils involve unions in key business-unit decisions, such as the assessment of market conditions, the deployment of new technology and future work-force requirements. They influence decisions that determine production technology, work organization, job content and employment, worker education and so on.
3. The Constructive Relationship Council (CRC) reviews existing and pilot programs that relate to national contract agreements. The existing Council comprises two management and two union representatives from each of the national bargaining committees. It also oversees the Workplace Models and the Business Councils.
4. The Human Resources Board reviews AT&T’s worldwide HR issues and provides input to the firm’s senior management. On the board are three AT&T executives, two union officials and two outside HR experts, agreed to by both the company and the union. The Board’s mission is to address a broad range of strategic issues that affect employees. It makes recommendations directly to the executive committee of AT&T in areas that include all aspects of working conditions that impact employees, including education and training, future work force needs and benefits problems, like health care.

“It will be interesting to see how much progress has been made a year from now,” Ketchum says. “It’s a long-term effort, not something that’s the project of 1993. We see it as having a lasting effect on how we operate. I’m sure that how it’s going two years from now will impact our bargaining in 1995. It’s a crucial component in our ongoing relationship,” he says.

Union-management cooperation isn’t easy.
There are a lot of problems to overcome during implementation of any union-management cooperative effort. “When you look at improving productivity, there’s a sense of insecurity due to the potential loss of jobs or assignments,” Laymon points out. “If we improved in the way we needed to improve, there was going to be a need for fewer people, and people would need to be retrained,” he says. Laymon remembers that the cooperative approach at first had an unanticipated impact on first- and second-level managers. “We hadn’t put together an appropriate response to their needs and concerns,” he says.

Something interesting happened at Xerox that gave a new twist to the issue of job security. The efficiency that developed from the cooperative efforts did require fewer people to perform a given job than were needed before, but the expanding markets brought about by the increased market share have created more jobs than would have been given up, according to Laymon.

Choosing the people to become directly involved in the cooperative effort should be undertaken with great care, according to Trosin. “It’s important to have the right players—new players who can be positive, who can walk the fine line between representing people in the union and management,” he says. Just because there’s friction doesn’t mean that your cooperative effort isn’t working. Trosin explains that you have to recognize that there’s going to be friction, but that this friction can be a benefit to both parties if dealt with responsibly. Trosin also recommends bringing in people who aren’t encumbered by the history of union-management relationships.

When choosing people to participate, don’t overlook someone who has been branded as a troublemaker, Smith recommends. Sometimes people earn this kind of reputation because they have ideas and press for change. “As long as the person is bright and focused, the old ground rule of ‘This person’s a troublemaker’ doesn’t fit today. You may be missing a valuable resource,” he says. It’s important to work on the relationship with the union. This means looking at the old emotional baggage that collected because of the long-standing adversarial roles. “You have to take on the union as an equal, but in the framework of a cooperative relationship,” Smith says. “To get the most out of them that we can doesn’t work anymore.”

“Unions need to feel that the employer respects them,” says Edward Wytkind, executive director of the transportation trades department for the AFL-CIO in Washington, D.C. “Build up the union instead of tearing it down,” he says. Recognize that the union is an asset. If the union members flourish, so will the company. This approach will build trust and foster cooperation.

Coia recommends focusing on the areas of common ground that will help the company compete, rather than dwelling on the legitimate, but different, interests. Show the union how the company’s interests are also union interests. “Working together to benefit both groups, first and foremost, means recognizing how the old dynamics have changed,” Coia says.

You can’t develop a good relationship with the unions without keeping them informed. That means that information sharing must be timely. “Don’t come to the union at the eleventh hour, just as you’re about to go into bankruptcy court,” Wytkind says. By then it may be too late for the union to help.

The information sharing that’s part of cooperative efforts may require some education of union leaders, especially at first. “If the management group lets the union group become more aware of what the business is, what it’s all about and who the customers are, then the union is in a better position to work together with the company,” Connelly points out. Connelly’s local plant has been exceptional for having this kind of two-way communication.

Don’t assume that union leaders don’t know much about your business. Find out from them what they don’t know; show respect for their abilities. “The union individual is becoming more articulate, better-educated, more reasoning in terms of global competition, and has a better perception of the company as a team,” Smith says.

To have a true partnership, according to Laymon, the information sharing with the union leaders must occur on a regular basis, the way you would share information with the board of directors. “Treat them as a business partner. Assist them in the representation of their membership,” he says. He recommends giving unions free access to:

• Research-and-development data
• Profit data
• Sales-revenue data
• Employee-satisfaction data
• Customer-satisfaction data
• Sites on which you plan to build products and why.

Don’t overlook the informal or unintended messages that the union may be receiving from management. “Remember that actions are communications,” Trosin says.

Implementing any kind of change in the way you interact with the union requires education—both of employees on the line and managers. Show how the change benefits them. Managers may need the training more than the line employees, according to Smith.

“Management understands the team concept, but on up the line, it gets away. Problems don’t come as much from resistance as from oversight,” Connelly says. Managers are accustomed to having the control and the responsibility. “We have to let some of the marbles slip out of our hands,” he adds.

Some people will adapt to drastic changes better than others. Connelly says that it’s the most difficult for people who have spent the past 20 years working under traditional management styles. “A cooperative effort isn’t something you put in on June 1, and by June 2, people are happy with it,” he says. He says that most people want to see the results too quickly. “When you’re changing the whole philosophy of how you’re going to do business, it isn’t going to change overnight,” he says.

The National Labor Relations Board (NLRB) is looking carefully at employee committees. In a ruling in the recent DuPont case, the Chemical Workers Association complained that DuPont’s employee teams circumvented the legal bargaining process. AT&T’s contract with the union contains safeguards that should help it avoid similar problems (see “AT&T’s Agreement with the Unions Sets the Criteria for Cooperation”).

The reason that the cooperative efforts at AT&T, Xerox and Rohm & Haas aren’t likely to run into trouble with the NLRB is that these companies are involving employees by going through the unions, not around them. The government isn’t inherently opposed to union-management cooperation. In fact, Reich indicates that the Clinton administration plans to do what it can to encourage such efforts. “We’re entering an era in which economic progress depends to an unprecedented degree on collaboration in our workplaces and consensus in our politics,” he says.

Cooperative efforts simplify contract negotiations.
Coia says that the trust built up during union-management cooperation can be a benefit to both groups during contract negotiations. “On the most basic level, the success of both processes (cooperative efforts and contract negotiations) hinges on establishing a relationship based on trust. Once that bedrock has been established, each process can feed off the other,” he says.

This cooperative relationship at Rohm & Haas Kentucky has smoothed the way for collective bargaining, according to Connelly. “Because the cooperation has been what it has been in the past, contracts are smoother. The company knows what’s important to the union, and the union knows what’s important to management,” he says, adding that this understanding makes the negative aspects of negotiations much more palatable. “Both sides are honest about saying what their needs are. This approach has evolved over the years, so that the union doesn’t think that the company has a hidden agenda, and vice versa.”

Many problems that develop during collective bargaining are the result of misinformation. “If you deny me access to the books, and I see you paying shareholders thousands of dollars a year, but then you come to me and say, ‘I can’t pay you’—uh-uh,” Wytkind says. “It’s tough for me as a negotiator if you’ve been giving the shareholders a rosy picture,” he says. Once unions become business partners, the understanding of the business needs of the organization can influence collective bargaining and make union members more receptive to the firm’s needs.

Ketchum agrees that contract negotiations with a business partner will be easier. “It consumes a lot of energy to work in an adversarial role. The framework for collaboration has to make it easier to deal with times in which we have honest disagreements and conflicts,” he says.

A history of positive contract negotiations can have a positive impact on union-management cooperation as well. Coia says that this is the situation that exists between the Laborers’ and the contractors’ associations. “I believe that the collective-bargaining process has set into place the basic building blocks of trust. With trust comes the ability to work together as a team, and to plan the new strategies and programs necessary to compete and move forward,” he says.

Laymon was selected by CEO Paul Allaire and the former CEO, David Kearns, to make changes in labor relations at the organization. His efforts have led to a cooperative approach to negotiations. He trains collective-bargaining participants in negotiating techniques and limits bargaining to needs, not wants. Using this approach, the negotiations were completed in record time, and both sides were pleased with the contract.

Unions can provide a competitive advantage. A union that has a good working relationship with the organization can be an asset. A union can provide the bridge to employees that companies need to remain competitive. “In this day and age, with everybody seeing fewer high-paying jobs, less security and the company failing in the marketplace, I think that the union is better able than management to relate to its members just how important productivity and quality are,” Connelly says. Union leaders also are in a better position than rank-and-file members to see what the organization has to deal with in the marketplace. “The union can relate the information on a gut level, that this is what we have to do, and we’re all in this together. If union members see how much union management cares about these issues, then they’re more likely to care about them, too,” Connelly says.

“This plant has always had exceptional cooperation between unions and management, and I’m spoiled,” Connelly says. “We don’t have a problem talking to the union steward and asking for help. They always bend over backwards to help,” Connelly says. He adds that his plant has had fewer than three grievances within the last year. “We talk about our problems. Our productivity has gone up by leaps and bounds; it’s higher than ever,” he says.

Coia maintains that union facilities are more productive than nonunion facilities. If the union and management become business partners, then that benefit is enhanced. “I believe that the numbers speak for themselves,” Coia says. “In the late 1980s, for example, a study of 1,000 manufacturing plants was conducted by the Massachusetts Institute of Technology and Carnegie-Mellon University. The study found that union facilities that utilized labor-management problem-solving committees in the 1980s were much more efficient than their nonunion counterparts,” he says.

Unions and management that already have been working as business partners can see the benefits. “This relationship of trust has created long-term stability for both organizations,” Coia says of the LIUNA and the contractors’ association. “It has allowed us to grow and expand in ways that, working alone, we might never have achieved. That’s something the nonunion side should consider as the union sector continues to make inroads into new markets,” he says. The example that Coia gives is the early recognition of the need for ridding the environment of lead-based paint products. The union is ready for the jobs. “In fact, at this time, we have more workers trained in lead abatement than there are jobs. Our relationship with our employers has enabled us to plan far ahead so that our members and our industry can be ready to capture the work when the work begins,” Coia says. This provides an obvious benefit to the contractors who expect to see the need increase dramatically, but the surplus of workers who have received this training doesn’t create a problem, because these laborers do other jobs for contractors as well.

“We continue to have jobs,” Connelly says. “We’re the leader in the marketplace and won’t maintain that position unless we work together. No amount of the best technical expertise will help if your productivity isn’t worth a crap. People down on the floor have to care as much about the product as the people sitting up in the big offices,” he says.

Participation in a union-management cooperative effort is a learning experience for the people involved. “It was a tough nine months, but I wouldn’t trade it for anything,” Connelly says.

Another reason for encouraging cooperative efforts is to ensure that the unions are positive players. Ketchum says, “The alternative is that they’ll be negative—not value-added. To get them to be value-added, you have to respect their rights as the representatives of the employees, and give them involvement that isn’t hollow.”

Effective cooperation shows up in the change in the interaction between unions and management. “I think what labor and management at Xerox have done—and what similarly positioned companies have done—is to divert resources from fighting each other to jointly fighting the competition,” Laymon says. “We’re nowhere near where we should be, but we’re going to struggle to get there,” he adds.

What’s the future for unions?
Some pundits have forecast the death of labor unions. Most predictions are, however, that the unions will remain on the scene for some time, but that their roles will evolve. Unions that are able to evolve will find survival easier. “The unions’ role of influence will change,” Laymon says.

The influence of some unions will diminish. “They’ll diminish in the private sector as large firms outsource to small firms that are difficult to organize,” Johncox says. “The growing service sector is also tough to organize because unions are amazingly clueless about how to appeal to such people. The current role model is public-sector unions, and they’re mostly far too noisy, social-issue-centered and in love with the traditional tools of trade unionism to attract service-sector people,” he adds.

When unions actively seek a partnership role, it’s easier for human resources to foster the cooperative effort. Encouraging such involvement in the absence of any interest may be more challenging and require HR to use all its educational, diplomatic and sales skills. “Unions need to find cooperative roles, and we in management need to help them do so,” Johncox says.