Collective Bargaining Case Study

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THE LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY: INTEREST BASED BARGAINING AS AN ALTERNATIVE APPROACH TO

COLLECTIVE BARGAINING

Margie Wheeler, Claremont Graduate University Issam A. Ghazzawi, University of La Verne

Marie Palladini, California State University Dominquez Hills

CASE DESCRIPTION This case serves as an educational tool for discussing and understanding the subject of collective bargaining and conflict resolution in unionized organizations. It is also intended to further engage students in the understanding of the topics of labor unions, the collective bargaining process, labor agreement negotiations, third-party intervention to conflict resolution (i.e. mediation, arbitration), and interest based bargaining.

CASE SYNOPSIS The Metropolitan Transit Authority (MTA) had a history of difficult labor negotiations, often resulting in labor strikes by one or more of its unions. It is estimated that an extended strike in 2003 cost the region nearly $175 million. During the period leading up to the 2003 strike, the union-management relationship was described as poor. Ultimately, the strike in 2003 was settled by an impasse procedure voluntarily adopted by labor and management, referred to as “binding-nonbinding arbitration.” The MTA staff included more than 8,500 full-time employees, over 85 percent of whom were represented by one of five labor unions: 1) United Transportation Union, 2) Amalgamated Transportation Union, 3) Transportation Communications Union, 4) American Federation of State, County and Municipal Employees, and 5) Teamsters. The MTA experienced labor strikes eight times in the last 35 years and the relationship between the labor unions and management was considered to be adversarial. In January 2006, MTA management and labor representatives were once again heading towards the re- negotiation of their employment agreement. MTA’s Chairman of the Board, Los Angeles Mayor Antonio Villariagosa, considered the impacts of the 2003 strike and planned to meet with MTA’s executive team. After the meeting, MTA’s leaders worked together to develop options for the upcoming negotiations in order to change the culture of traditional labor negotiations at the agency. On the agenda of upcoming negotiations, were the following labor interests: Salary and compensation commensurate with cost of living and appropriate to the jobs performed,

 

 

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maintaining and improving levels of benefits, revamping day-to-day labor relations so that issues are resolved faster and more collaboratively, and opportunity to address various practices and work rules in the process. On the other hand, management’s interests were: Create a survivable economic environment and eliminate the structural deficit, improve employee and labor relations, retain and recruit a professional, motivated and committed workforce, and support an “interest based” approach. This time both labor and management agreed to try a new approach to dispute resolution with no certainty associated with such an approach. This innovative approach, known as interest based bargaining, required specialized training for labor and management representatives to prepare for negotiations. This training facilitated each faction to learn how to put forth its own interests.

INSTRUCTOR’S NOTES

CASE ISSUES AND SUBJECTS This case serves as an educational tool for discussing and understanding the subject of collective bargaining and conflict/dispute resolution in unionized organizations. It is also intended to further engage students in understanding the topics of unionization and collective bargaining, the collective bargaining process, labor agreement negotiations, third-party intervention to conflict resolution such as mediation and arbitration, interest based bargaining, and contract administration.

INTENDED COURSES AND LEVELS This case study explores the subject of labor-management conflict and conflict resolution in a unionized organization. It is intended for class study application of concepts learned in the classroom. This case is intended for advanced undergraduate or graduate courses in Human Resources Management, Organizational Behavior, Industrial Organization, and Public Administration. It is designed to complement knowledge derived from concepts in labor- management conflict, collective bargaining, agreement negotiations, third-party intervention, and contract administration, with application to an actual setting. In other words, it seeks to provide an applied, hands-on format for students to increase their understanding of these topics. Answers to the questions in the case will derive from what students learned from theories and concepts.

CASE OBJECTIVES The core pedagogical objective of the case is to help provide an applied, hands-on format for students to increase their understanding of the topics of conflict and its resolution in unionized organizations. More specifically, at the completion of this case the student will be able to:

1. Understand the nature of conflicts in a unionized organization. 2. Understand and explain the collective bargaining process.

 

 

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3. Compare/contrast how labor agreements are negotiated through traditional collective bargaining, interest based bargaining, and arbitration/mediation.

4. Identify the modes of conflict resolution. 5. Actively engage in conflict resolution through traditional methods, arbitration/mediation,

and/or interest based bargaining.

SUGGESTED CLASSROOM APPROACHES TO THE CASE 1. Introduction of the Case in the Class It is recommended that the instructor introduce the script at least a week before the class discussions (duration from 30 minutes-one hour) and assign the questions derived from the case. Doing so ensures that the students have read and understood the issues of the case. While this case could be done on an individual basis, the authors found it most effective to create case study groups and request formal group answers to the case questions. If it is to be done in a group environment, please refer to groups’ formation and report and presentation for more teaching instructions. While there is no one single approach to addressing labor-management conflict and resolution, emphasizing student application of such constructs is extremely important to the learning process. Individually or as a five-member group, students will be asked to discuss and answer the case questions. A PowerPoint presentation and a written report of 2-3 pages should address the case questions. Based on the authors’ experience, requiring a formal response to the questions to help students enhance their written communication skills is a good approach. Please note that this formal write-up of the case requires the instructor to read and grade the students’ work more critically. Because of the nature of this case study, it is suggested that the class be divided evenly into three groups of up to five students per group. The students will respond to the questions as a group. The final question (#5) will be answered by splitting the entire class into three groups representing: 1) Management, 2) Labor, and 3) Facilitators, Consultants, Mediators, or Arbitrators. Students will respond to the final question based on their respective position in the group role playing exercise. Finally, instructors should have enough copies of the script with its instructions to distribute to students at least a week before the class discussions. Answers to the questions in the case will derive from what students learned from the course concepts, text book and outside reading material. The case is expected to be completed and presented for class discussions. 2. Forming Groups At least a week before the class discussions, students will be encouraged to network and get to know fellow students in order for them to decide with whom they want to team. Allow 10- 15 minutes towards the end of the class meeting to submit group members’ names. Initially, students need to form a group of up to five students to conduct this required study. Students will subsequently re-group and form three groups representing: 1) Management, 2) Labor, and 3) Facilitator, Consultant, Mediator, or Arbitrator.

 

 

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3. Process Each group will start working on this case after the instructor introduces the subjects of unions, the collective bargaining process, labor agreement negotiations, third-party intervention to conflict resolution, mediation, arbitration, interest based bargaining, the “Resolve” method, and contract administration. Students are expected to develop and build their responses (as a group) on their acquired knowledge. It is recommended that the instructor address and clarify case questions ahead of time with the class. 4. Use of Power Point and Audiovisuals It is recommended that students be encouraged to create an effective group presentation. That could be achieved through the use of whatever audio-visual materials, including but not limited to power point. The case itself does not come with a video. 5. Group Report and Presentation Each group is required to write at least a 2-3 page report (12 point font, double-spaced and using the APA writing style). One report is needed for each group. Each group is also required to prepare a 10-15 minute power point presentation explaining its answers. Students are required to use the chapters assigned for the course. To support their responses and enhance their report, students must include outside references such as books, journals, newspapers, internet information, or a direct interview as resources for the case answers (in case of an interview, they need to include the interview questions as an appendix of the report). 6. Recommended Outline The structure of the written report is critical. In the first part of the case write-up, students should provide salient points of the case before proceeding to answering the case questions. In the second part of the case write-up, students present their answers and recommendations. Instructors need to encourage them to be comprehensive in their answers, and make sure that answers are in line with the previous ones so that it fits together and moves logically from one to the next. 7. Starting the Class Discussion Before engaging in a class case discussion and presentations, it is recommended to stress to the students that they might be disagreeing with the points that are being made by other students and that this disagreement is healthy and should not be taken personally. A reminder is helpful. This clarification and reminder ensures that the disagreements/discussions remain open and inviting and do not turn into personal matters. 8. Analysis Since this case is an application of topics covered in the subjects of organizational unions, collective bargaining, contract negotiations, mediation, arbitration, interest based bargaining, the “Resolve” method, and related ethical considerations, students’ understanding of these concepts will be essential.

 

 

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9. Content and Grading Students’ answers and presentations should clearly and concisely demonstrate their knowledge and comprehension of the subject concepts learned in the class, as well as the individual or the group’s ability to apply knowledge learned in class and through research (synthesize, analyze, and evaluate his/her/their work). Students will be graded based on the following criteria: (a) The use of innovative and creative ideas, (b) the application of concepts learned in the class, and (c) the use of outside research to support the case. It is recommended that this case study constitute 5-10% of the student’s participation grade.

RESEARCH METHODOLOGY AND EXPERIENCE TEACHING WITH THE CASE 1. Research Methodology This research is based on published secondary data and some interviews obtained by the authors from available sources related to the case. 2. Experience Teaching with the Case One of the authors has used “The Metropolitan Transportation Authority: Interest Based Bargaining As an Alternative Approach to Collective Bargaining” case in a graduate course “Seminar in Organizations Theory and Behavior” and an undergraduate course “Organizational Behavior.” The instructor applied the case after covering the course related subjects of organizational unions, collective bargaining, third party interventions, good faith bargaining, and ethics. It is important to point out that the case was very motivational and well received by the students.

DISCUSSION QUESTIONS AND POSSIBLE ANSWERS NOTE: The following answers provide only guidelines that are designed to assist in the case analysis process and engage students in critical thinking. These guidelines are not intended to be rigid. Therefore, each question is intended to raise issues that will be helpful in analyzing and resolving the case. Students must be reminded that their answers to the case discussion questions should be well reasoned and supported with evidence/research when applicable. Although there is not one best answer to the discussion questions, some answers might be more appropriate than others. Accordingly, students should be told that simplistic answers to complex questions, situations, or problems such as in our case will never be “good” answers. 1. What are the facts and major issues in the 2006 Los Angeles Metropolitan Transit Authority (MTA) case? The facts of the case are: In January 2006, the Metropolitan Transit Authority’s (MTA’s) Chairman of the Board, Mayor Antonio Villariagosa, was planning for a meeting with MTA’s executive team regarding upcoming negotiations for the labor contract due to expire on June 30, 2006. Chairman Villariagosa was concerned about economic and social impacts to the region if

 

 

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labor and management at Metro could not come to an agreement short of a labor strike. He did not want to see a repeat of the 2003 strike and economic loss to MTA, its employees, Los Angeles County, and various levels of tax revenues. (See Exhibit 1)

EXHIBIT 1 Economic Implications of the MTA Strike

Impact $ Amount Metro operating revenue loss $44 million Employees $38 million Los Angeles County economic output $67 million Lost tax revenues (at all levels of government) $24 million Unexpected additional costs to commuters $46 million TOTAL $175 million Source: Kyser, Jack (2003). Economic Implications of the MTA Strike. A study done by the Los Angeles Economic Development Corporation, commissioned by the MTA.

During the following weeks, MTA’s Chief Negotiator John B. Catoe, Jr., worked with staff towards a goal of developing new and different approaches for the upcoming labor negotiations. Mr. Catoe and staff strived to develop an approach that would respond to the need to change the culture of past traditional labor negotiations at the agency. Based on the book, “Getting To Yes: Negotiating Agreement Without Giving In, by Roger Foster and William L. Ury, interest-based bargaining was recommended for the upcoming contract negotiations. ” 1 Catoe and his team persuaded Villariagosa and MTA’s CEO Roger Snoble to try this unique form of negotiation. MTA board members and union officials were very skeptical about this process, but agreed to give it a try. Gloria Molina, who served as MTA’s first vice chair of the board said, “the goal of this approach is to reduce the level of hostility that typically pervades negotiations of this type”. 2 ATU President Neil Silver stated, “I personally didn’t think this would work”. 3 The negotiations process elicited issues and positions from each side of the bargaining table. The contract issues at stake in 2006 were as varied as the unions and management teams represented at MTA. Bus drivers and rail operators, who are members of the United Transportation Union (UTU), maintenance workers, who are members of the Amalgamated Transit Union, (ATU), and clerical workers, who are members of the Transportation Communications Union (TCU) delineated a number of issues that they wanted in the contract. These issues evolved around wages, break times, cost of living allowances, and health care. They were ultimately delineated in the form of “interests,” rather than demands, which included: cost of living adjustments, maintenance of quality of life, and improved grievance procedures. MTA’s issues pertained to less absenteeism from employees, profitability, and customer satisfaction. These positions were described as the following “interests”: create a survivable economic environment and eliminate the structural deficit, improve employee and labor relations, retain and recruit a professional, motivated and committed workforce, and support an “interest-based” approach. 4

 

 

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2. Using any of the unions involved in the MTA case as examples, discuss what you believe are the appropriate roles of unions in society today and why. The three unions involved in the MTA case were the United Transportation Union (UTU), representing 4,800 bus drivers and rail operators, the Amalgamated Transit Union (ATU), representing 2,000 maintenance workers, and the Transportation Communications Union representing 700 clerical workers. 5 In the instant case, the members of the ATU, Local 1277, Los Angeles, representing mechanics and maintenance clerks, proposed a list of 27 changes to the labor contract, including a significant pay increase for all worker classifications. 6 This demand exemplifies the fact that one of the primary reasons for organized labor is to give employees more influence in workplace decisions. Wage increases are at the heart of every union member’s agenda; and support for unions stems from their ability to promote issues such as pay raises and health and retirement benefits for workers. Employees in today’s workforce feel that management is unwilling to work closely with them, and that unions benefit employees to close the gap between management and labor. In some cases in today’s society, support for unions is usually a direct result of personal or family member experiences from working for unionized or nonunion employers. 7 In considering the history of labor strikes at MTA and the adversarial relationship between the unions and management, the 2003 labor strike is a good example of the role of unions today. Union members believed that management did not want to work with the employees and union members regarding health care benefits and wage increases. This ultimately led to a 35 day strike, which was finally resolved through binding non-binding arbitration. 8 During the 2006 negotiations, MTA management responded to labor’s demands by presenting spreadsheets analyzing industry and MTA financial data. Through interest based negotiating, the union’s bargaining team was able to understand the financial picture of MTA and management was able to consider labor’s interests in view of the budget. 9 This negotiating process put labor and management in a position to negotiate the contract from a perspective of what was best for all entities involved, rather than from a traditional perspective of “us against them.” This case exemplifies the need for unions in today’s society, not only as employee representatives, but to help management understand the day to day needs of its workforce. 3. Using the MTA facts and issues described in our case, give a brief history of the contract negotiation process used at MTA in the past and the contract negotiation status in January, 2006. Discuss the pros and cons of traditional collective bargaining negotiations and arbitration methods used at Metro. MTA had a history of difficult labor negotiations, resulting in labor strikes by one or more of its unions. The extended strike in 2003 cost the region nearly $175 million, not to mention the non-monetary “cost” to over 400,000 commuters dependent on public transportation to get to work, school, medical facilities, and other daily needs. Historically, MTA relied on traditional collective bargaining during its contract negotiations. In 2003, MTA and the unions reached out and tried a novel type of mediation known as binding non-binding arbitration, which ultimately ended the strike. 10

 

 

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Collective bargaining, used for years at MTA, is a mechanism for organized groups of workers and their employers to resolve conflicting interests and to pursue agreement over common interests. 11 It includes negotiation between organized workers and their employers to determine issues such as wages, hours, rules, and working conditions.12 In the MTA case, the contract negotiation process implemented in prior years led to strikes on behalf of the organized workers. One of the issues at stake in 2003 pertained to health benefits for active and retired mechanics. The bargaining units and management could not come to a contractual agreement, resulting in a thirty-five day transit strike. 13 Ultimately the health care issues were determined via arbitration. The type of arbitration used in 2003 is defined as binding-nonbinding arbitration and requires that two parties submit their proposals to an arbitration process. A decision is rendered, but different from traditional binding arbitration, either side can reject it by a supermajority vote. This alternative type of arbitration proved to be a successful means to end the 2003 strike stalemate pertaining to health care benefits. 14 All labor negotiations include what is referred to as bargaining units. A bargaining unit includes the workers or jobs covered by a collective bargaining agreement. 15 For example, in the MTA case, bargaining units included the ATU, representing maintenance workers, the UTU, representing drivers and rail operators, and the TCU, representing clerical workers. In 2003, the ATU’s bargaining unit was concerned with the health benefits for mechanics. 16 The binding- nonbinding arbitration method involved the creation of a panel of arbitrators; one from ATU, one from MTA, and one neutral. The neutral party unsuccessfully attempted to mediate a settlement. Since this didn’t work, formal hearings were held, with each side submitting briefs. The panel then issued a decision, and either party had the option of rejecting the decision by a 2/3 vote of their boards. Since neither party rejected the decision, the decision became part of the contract, extending to 2006. 17 Since this method of arbitration resulted in an end to the labor strike, it would seem to be a positive type of contract negotiation.

In collective bargaining, the key participants (or parties) involved are:

1. Management. This term refers to individuals or groups responsible for promoting the goals of their organizations and their employers,

2. Labor. This term refers to both employees and their respective unions that represent them.

3. Government: This is the local, state, and the federal political processes. It also refers to governmental agencies responsible for passing and enforcing public policies relating to negotiations and the government as a representative of the public interests. 18

Past contract negotiations, described above, gave the management team a window into the challenges faced in the traditional approach to labor relations. Management didn’t want to go down this road again and wanted to avoid a costly strike. The management-labor relationship was considered to be adversarial, with only difficult negotiations ahead. That being said, examples of the “cons” of traditional labor negotiations include a “win/lose” approach that is tedious, lengthy and exhibits a lot of posturing. 19 (Refer to Exhibit 2). Since its creation in 1993, MTA weathered labor strikes in 1994, 2000 and 2003, disrupting service to transit riders, after traditional bargaining came to a contract resolution standstill.20

 

 

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Traditional bargaining usually involves labor seeking a bigger slice of the pie and management offering the same or smaller slice of the pie.21 However, in the instant case, both sides were well aware that traditional bargaining could result in the dreaded strike, and decided to try a more open communication method of negotiation. In January, 2006, in view of the historical adversarial management-labor relationship, the MTA management team and the union members did not want a repeat of the 2003 failed collective bargaining process that resulted in a 35 day strike. All parties were very much aware of the fact that the 2003 strike ended only after a mediation plan via arbitration was put into place regarding the key issue of health benefits for active and retired mechanics. 22 With this in mind, MTA began to assemble a team to lead interest-based negotiations and chose Chief Executive Officer for Operations, James B. Catoe, Jr. to lead the MTA negotiating team. 23 4. What is Interest-Based Bargaining? Distinguish between an “interest” and a “position” through analysis of one labor or management “interest” in the MTA case. Explain the RESOLVE method, if needed. Interest-based bargaining is a form of negotiation in which each party attempts to understand the other’s interests, on the expectation that it will achieve a better result by helping the opponent create a solution it sees as responsive to its own concerns. 24 (Exhibit 2 provides a summary of traditional vs. interest-based bargaining). It is based on relationships and requires trust among the parties. Interest based bargaining is an approach to contract bargaining when both sides indicate at the outset what issues are most important to them in the new agreement. 25

EXHIBIT 2 Contrasts Between Traditional Labor Relations AND “RESOLVE” Labor Relations Traditional Approach Tends to Result in: “RESOLVE” Approach Tends to Result in:

Large numbers of issues are raised with little or no prioritization.

Smaller number of issues of highest priority brought for mutual problem solving.

Proposals and counter-proposals are used. Concepts and problems discussed without initial written proposals. Conflicts and disagreements are approached from an adult/child perspective.

Conflicts which arise are seen as opportunities for group problem solving from an adult/adult perspective.

Labor and management approach grievances/differences as a necessary evil.

Differences and even grievances are approached as an ongoing opportunity to improve long-term relationships.

Things approached as win/lose situations. Things approached as win/win situations. Process is tedious, lasting months or years, with lots of posturing.

Process takes effort and commitment to trust-building. It is energizing and rewarding for all involved.

Often involves arbitration, mediation and legal remedies. Works through to consensus-type agreement. Adversarial relations lead to: Loud/visible posturing between groups Name calling Energy spent on justifying positions Upset employees, managers, customers and elected officials.

Collaborative relations lead to: Recognition and focus on common goals Sense of team among all participants Feeling of good will and appreciation among employees and managers that carries over to customers/officials. Mutual sense of accomplishment.

Source: The table was used with permission granted by Rhonda Hilyer of Agreement Dynamics, Inc. In order to form a trustworthy management team, MTA formed a negotiation team comprised of respected operations managers who worked collaboratively throughout the entire process. This team did its homework and analyzed industry and economic data including

 

 

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inflation rates, consumer price index, local costs of living, and the actual cost of a strike. This team worked closely with the board of directors to develop the following agency interests:

• create a survivable economic environment and eliminate the structural deficit • improve employee and labor relations • retain and recruit a professional, motivated and committed workforce • support an “interest-based” approach. 26

The team focused on the fact that interests are needs, concerns, and key priorities, and are not demands, unilateral positions, and forced outcomes. 27 It is noteworthy that the management team pledged to the unions to adhere to a lengthy set of behaviors no matter what happened, and kept this commitment. Some of the behaviors included: show respect at all times, communicate openly and publicly, use accurate information and data, listen, comprehend . . . then speak. 28 In the instant case, management’s interest #2 – improve employee and labor relations – would seem to be readily achievable based on its commitment to engage in respectful behaviors at all times during the negotiation process. If management showed genuine respect for the union representatives at all times, the logical result could only be “improved employee relations!” This act, in and of itself, would improve employee-labor relations, as positive interaction during the negotiations funneled back to the employees. During discussions of diverse interests, maintaining this type of commitment could be very challenging, yet rewarding, if upheld. The fact that management was 100% honest during the negotiation process led to formation of a trusting relationship between the MTA and union negotiators. 29 In contrast, a “position” held by management in the past could have been, “freeze cost of living adjustments.” This unilateral position would definitely put both parties in an adversarial posture before any negotiations even began. While management may have been looking at the bottom line budget concerns, employees would see management as the “enemy,” not concerned with them as individuals. A “position” is also referred to as a “demand” in collective bargaining terminology. In the instant case, the ATU put forth a list of demands including “Increase Bereavement time to 5 days in State and 10 days out of State.” 30 This position was addressed during the interest based negotiations by analyzing it from a cost perspective as well as considering the underlying interests of the employees. In summary, in interest based bargaining, the parties seek ways to improve the pie for all by addressing “interests.” 31 The RESOLVE approach is a highly successful approach to interest-based bargaining, developed by Rhonda Hilyer, founder of Agreement Dynamics. RESOLVE shifts the parties, labor and management, for example, from imposing their respective positions to interest-based or problem solving negotiations. Implementation of the RESOLVE method requires training of all parties involved in the process in order for true joint problem solving to exist. RESOLVE is explained as:

1. Restate the issue in neutral terms. 2. Establish ground rules and criteria 3. State the interests: reasons why the issue is important to you and what your needs and

concerns are. 4. Objectively restate what you heard the other participant’s interests to be.

 

 

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5. Let them clarify any misunderstandings about their interests and you do the same about yours.

6. Vacuum for satisfiers and analyze them using your criteria. 7. Elicit and express agreement. Agree on specific satisfiers, defer to another time or entity,

or agree to disagree. 32 Early in 2006, MTA’s newly formed management negotiation team enlisted labor, management, and board members to participate in RESOLVE training prior to initiation of contract negotiations. This training paved the way for the parties to incorporate their stated interests into the bargaining process, rather than initiate the process through the traditional position based bargaining negotiations. 5. It is now April 2006, and labor and management are preparing to negotiate a new MTA contract. It is your responsibility to negotiate a new contract. The interests/positions of both labor and management are included in the case study materials. Be sure to explain the method or methods your group used. (traditional collective bargaining, arbitration/mediation, interest based negotiations/“Resolve”approach.) Answer the following question, based on your group assignment.

a) If you are a member of the labor group, what are your interests/positions? Discuss and analyze the negotiation process. Provide an example of terms of the proposed or final contract.

Two of the labor unions at MTA involved in contract negotiations were the ATU and the UTU. These unions include bus drivers, service attendants, maintenance workers, and mechanics, who enjoy their work providing a necessary service to the citizens of Los Angeles and the surrounding areas. In early 2006, one of the concerns of the service attendants, represented by ATU, was the system of pay/promotion. There were two wage tiers of service attendants with no movement between the two tiers in place.33 They wanted management to provide a means for service attendants to move to a higher tier. A large percentage of the members of the unions were employees in 2003 during the MTA strike and were hoping for a contract resolution without having to go on strike. Based on the advice of ATU President Neil Silver, an agreement was reached to engage in interest based negotiations, with the hope of coming to a contract agreement all parties could live with. In January 2006, prior to any formal contract negotiations, the ATU union members discussed a number of issues that should be included in the contract renewal terms. These issues/positions were discussed from the perspective that if labor didn’t get what it was asking for; the only option would be to strike. This posturing was the only way labor knew how to “negotiate” via the collective bargaining process. 34 As in traditional collective bargaining, the proposals to the new contract were provided to MTA, and several are listed below:

• wage tiers of service attendants • significant pay increase for all classifications • increase the number of days for casual vacation days • increase retirees’ pension • cost of living adjustments 35

 

 

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Based on the battled history between labor and management at MTA, the union leaders bravely imposed interest based bargaining as a workable alternative. The thinking seemed to be that the labor groups were ready for something new and different. Before any negotiations began, labor and management members of the bargaining teams received interest based bargaining training. This training helped the labor leaders to identify “interests” rather than “positions”. 36 This training included learning and applying the RESOLVE method. 37 At first, this training was very uncomfortable since it requires an open and trusting environment between all parties. However, after several months of negotiation and placing 100% trust in management, the labor representatives put forward three interests that were included in the final contract. These interests were a result of discussing and negotiating each of 27 proposals submitted to management with a complete understanding of the cost analysis presented by MTA. The three interests were: Cost of living adjustments, maintenance of quality of life, and improved grievance procedures. 38 As mentioned above, an example of one of the terms of the final contract pertains to the ATU service attendants’ issue with two-wage tiers and no possible movement from the lower tier to the higher tier. This issue was converted to the following interest based solution, included in the 2006 contract: “Each time a vacancy occurs in the top tier, two top tier vacancies are created. The vacancies will be filled with the 2 most senior lower tier service attendants who had no attendance violations in the past year. They will go through a 4-year progression to get to the top tier. Their progression is halted if they violate the attendance policy. They continue the progression after one year of no attendance policy violations.” 39 The interest based solution was achieved during the negotiations when management’s interest in reducing the rate of absenteeism among service attendants was weighed against labor’s desire to be able to promote to a higher wage tier. The interests of each side were considered and a workable resolution was reached.

b) If you are a member of the management group, what are your interests/positions? Discuss and analyze the negotiation process. Provide an example of terms of the proposed or final contract.

The members of the management team, an operations-focused management bargaining group, put together by John B. Catoe, Jr., Chief Negotiator, brought in a management consultant, Gayland Moffat, almost a year before the labor contracts expired. These dynamic leaders formed a team of key operations managers from MTA, with little or no prior labor negotiations experience. The team met almost daily and worked collaboratively throughout the process. One of the hired consultants was very helpful in identifying stakeholders, interests, and positions. In preparation for the contract negotiations, the team collected and analyzed industry data which helped develop a comprehensive economic picture including inflation rates, consumer price index, local cost of living as well as actual cost of a strike. 40 Prior to entering the negotiation process, the team received training in the RESOLVE method of interest based bargaining. This training helped all of the team members understand and develop interests rather than unilateral positions. 41 The management team went the extra step in the negotiations process to give the union officials advance notice on issues that were likely to be raised with the board or potential operations changes that might be considered.

 

 

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Unheard of in traditional negotiation proceedings, the management team pointed out information that was advantageous to the union’s arguments. Such openness built trust and both ATU and UTU accepted management’s analysis of financial data. 42 The positive results of the RESOLVE training are exemplified in a negotiation procedure involving rest/breaks for UTU operators. Wage Order #9, a legal requirement under California law mandated that operators receive 2 ten-minute rest periods and a 30-minute meal break. The UTU wanted to make sure that their members got these breaks and wanted to ensure that the Union was protected in any legal proceedings regarding the wage order. Management also wanted compliance with the wage order, but at the lowest possible cost. This issue was converted to the following interest based solution, included in the final contract: “The EOL [end of line] and other schedule recovery times will now be used as the rest and meal time for the Operators. These times can be provided in any time increments as long as the total time in a day meets the 50 minute minimum. This will require adjusting running and recovery times in the runs.” 43 Obviously, interest based bargaining and the RESOLVE method allowed management to move forward and finalize a contract without encountering a labor strike. Management was able to develop and finalize the following interests through the negotiation process:

• Create a survivable economic environment and eliminate the structural deficit • Improve employee and labor relations • Retain and recruit a professional, motivated and committed workforce • Support an “interest-based” approach 44

c If you are a member of the consultant/arbitrator/facilitator group, explain

your role in the 2006 contract negotiations. Discuss what transacted prior to and during the negotiations process. Describe what techniques contributed to the success, or in the alternative, the inability to finalize a contract. Provide examples of the terms of the final or proposed contract.

The facilitator group looked at MTA’s strike history and engaged in interest based bargaining to negotiate the 2006 contract between labor and management. Because interest based bargaining was a new concept to both labor and management at MTA, Rhonda Hilyer of Agreement Dynamics, Inc., was hired to provide training and act as facilitator at the ATU and UTU negotiation sessions. This training included the newest theories in collaboration, conflict resolution, and team building. One of the methods used to build trust between the unions and management was something as simple as eating lunch together, which helped formed a bond between the two groups. 45 The facilitator worked separately with the parties and helped them to utilize interests as opposed to positions or demands. For example, the ATU Service Attendants wanted to be able to move from a lower wage tier to a higher wage tier, and were frustrated with the inability to do so. Management did not have a system in place for this to occur. However, management had an interest in lowering the incidence of absenteeism of service attendants. The Union had an interest in providing a way for the service attendants to move to the higher wage tier. To facilitate a resolution of this issue, for example, the parties engaged in the “RESOLVE” method (explained in answer #4 above). The goal of RESOLVE is to obtain voluntary agreement between groups by dealing directly with their differences, which include values,

 

 

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interests, styles, and perceptions. Individuals know that differences lead to disagreement, which can be interpreted as threats, leading to conflict. RESOLVE goes beyond this conflict with the goal of attaining mutual trust, respect, and understanding. Once implemented, RESOLVE training allowed the parties to set a very positive tone at the negotiation table. 46 There were times, however, during the three month negotiation process, when discussions became very heated and argumentative. Ms. Hilyer was able to calm things down and keep negotiators on task by holding up cards with expressions such as, “Don’t personalize this,” and “No shouting.”47 The RESOLVE method was successful in leading to the interest based solution in relation to the ATU Service Attendants wage tier issue. The solution: “Each time a vacancy occurs in the top tier, two top tier vacancies are created. The vacancies will be filled with the 2 most senior lower tier service attendants who have had no attendance violations in the past year. They will go through a 4-year progression to get to the top tier. Their progression is halted if they violate the attendance policy. They continue the progression after one year of no attendance policy violation.”48 The facilitator was able to show management and labor how to put the “interests” of each side on the table and engage in joint problem solving, rather than focusing on demands that lead to conflict. As evidenced in the ATU example, the service attendants were given an opportunity to advance to a higher wage tier, so long as they complied with attendance criteria. Management’s interest in lowering absentee rates of service attendants became a viable possibility now that movement between the wage tiers was based on attendance records. This also helped morale of the service attendants, and saved the MTA money in the long run by preventing high turn-over and the associated training costs. 49 This is a win-win situation! Through implementation of interest based negotiation, a labor agreement was successfully facilitated between MTA and the unions. This is a welcome change from the past history of strikes at the MTA. The terms of the contract include the “interests” articulated by labor and management in sections a and b, answered above.

EPILOGUE On June 26, 2006, The Mayor of the City of Los Angeles, Antonio Villaraigosa, announced that the Metropolitan Transportation Authority entered into a three-year tentative agreement with its bus drivers and mechanics, ensuring that mass transit in Los Angeles County would continue uninterrupted by labor strife. That was the first time in nearly a decade that MTA labor negotiations ended without a bus strike. 50 Flanked by union officials at a news conference outside MTA headquarters in downtown Los Angeles, Villaraigosa said “the buses will continue to roll and the trains will keep on running without interruptions”. 51 James A. Williams, general chairman of the United Transportation Union commented by saying “we reached a good agreement…my members are going to like it”. 52 According to Neil Silver, Amalgamated Transit Union President, “I figured it wouldn’t work and I didn’t really want to partake in a time-wasting event.” Later, it did work and this is the result. I’m very happy.” 53

 

 

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While the MTA relied on a team of inexperienced negotiators in 2006 negotiations, John B. Catoe Jr., put aside his regular duties as Metro’s deputy chief executive officer to negotiate the contracts full time. 54 In his own words, “We listened. We didn’t challenge them on issues that we didn’t understand…It didn’t mean we agreed, but we respected each other.” 55

ENDNOTES 1. This information was provided based on an interview on July 30, 2010 with John Catoe, Jr., MTA’s Chief

Negotiator, 2006, currently President and CEO, The Catoe Group. 2. For more information, refer to “Statement by Los Angeles County Supervisor Gloria Molina on the

Tentative Labor Negotiation Agreement Reached Between the MTA and the UTU/ATU/TCC” by Roxane Marquez, June 27, 2006. This article and its related information were retrieved on January 17, 2010 from: http://molina.lacounty.gov/pages/Press/2006%20Press/06%2026%202006%20Molina%20Approves%20L A%20County%20Budget.htm. Para. 5. Also refer to: Transit deal reached for L.A. Marathon by Susannah Rosenblatt, Los Angeles Times (February 16, 2007). This article and its related information were retrieved on January 17, 2010 from: http://articles.latimes.com/2007/feb/16/local/me-marathon16.

3. For more information, refer to “Mayor Villaraigosa and Union Leaders Announce Tentative Agreement on Transit Labor Contracts” by Marc Littman, Metro Media Relations, June 27, 2006. This article and its related information were retrieved on January 15, 2010 from: http://www.metro.net/news_info/2006/metro 112.htm. Para. 10.

4. See “Transforming Labor Relations” by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information were retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

5. See Jean Ouccione and Jeffrey L. Rabin (2006). 3 Unions MTA Reach rare Accord. Los Angeles Times (Wednesday, June 26, 2006).

6. Document (no date available) containing ATU proposals to the contract between MTA and ATU Local 1277, provided by Richard Hunt, Service Sector General Manager, MTA, to one of the authors.

7. Refer to John A. Fossum (2009). Labor Relations: Development, Structure, Process. 10th Edition, New York, NY: McGraw-Hill/Irwin, pp. 13-14.

8. For more information, refer to, “Mediation Plan Ends MTA Strike” by Kurt Streeter, Sharon Bernstein and Caitlin Liu, Times Staff Writers, Los Angeles Times, November 18, 2003. This article and its related information were retrieved on January 15, 2010 from: http://articles.latimes.com/2003/nov18/local/me- mta18

9. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and CEO, The Catoe Group.

10. For more information, refer to, “Mediation Plan Ends MTA Strike” by Kurt Streeter, Sharon Bernstein and Caitlin Liu, Times Staff Writers, Los Angeles Times, November 18, 2003. This article and its related information were retrieved on January 15, 2010 from: http://articles.latimes.com/2003/nov18/local/me- mta18

11. For more information, refer to Harry C. Katz, Thomas A. Kochan, & Alexander J. S. Colvin (2008). An Introduction to Collective Bargaining and Industrial Relations”. Fourth Edition. New York: NY, McGraw- Hill.

12. Ibid. 13. For more information, refer to, “Mediation Plan Ends MTA Strike” by Kurt Streeter, Sharon Bernstein and

Caitlin Liu, Times Staff Writers, Los Angeles Times, November 18, 2003. This article and its related information were retrieved on January 15, 2010 from: http://articles.latimes.com/2003/nov18/local/me- mta18

14. For more information, refer to Edmund D. Edelman and Daniel J.B. Mitchell’s article “Dealing with Public-Sector Labor Disputes: An Alternative Approach”, page 166; California Policy Options, UCLA

 

 

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School of Public Affairs, UC Los Angeles, 01-01-2005. Retrieved on April 3, 2010 from: http://escholarship.org/uc/item/9z82f2x4.

15. See also Harry C. Katz, Thomas A. Kochan, & Alexander J. S. Colvin (2008). Listed above. 16. For more information, refer to, “Mediation Plan Ends MTA Strike” by Kurt Streeter, Sharon Bernstein and

Caitlin Liu, Times Staff Writers, Los Angeles Times, November 18, 2003. This article and its related information were retrieved on January 15, 2010 from: http://articles.latimes.com/2003/nov18/local/me- mta18.

17. For more information, refer to Edmund D. Edelman and Daniel J.B. Mitchell’s article “Dealing with Public-Sector Labor Disputes: An Alternative Approach”, page 166; California Policy Options, UCLA School of Public Affairs, UC Los Angeles, 01-01-2005. Retrieved on April 3, 2010 from: http://escholarship.org/uc/item/9z82f2x4.

18. For more information, refer to Harry C. Katz, Thomas A. Kochan, & Alexander J. S. Colvin (2008). An Introduction to Collective Bargaining and Industrial Relations”. Fourth Edition. New York: NY, McGraw- Hill.

19. For more information, refer to Hilyer, Rhonda (1990). RESOLVE: To create successful results and relationships. Seattle, WA: Agreement Dynamics, Inc. 20. For more information, refer to “Mayor Villaraigosa and Union Leaders Announce Tentative Agreement on Transit Labor Contracts” by Marc Littman, Metro Media Relations, June 27, 2006. This article and its related information were retrieved on January 15, 2010 from: http://www.metro.net/news_info/2006/metro 112.htm.

21. For more information, refer to Hilyer, Rhonda (1990). RESOLVE: To create successful results and relationships. Seattle, WA: Agreement Dynamics, Inc.

22. For more information, refer to, “Mediation Plan Ends MTA Strike” by Kurt Streeter, Sharon Bernstein and Caitlin Liu, Times Staff Writers, Los Angeles Times, November 18, 2003. This article and its related information were retrieved on January 15, 2010 from: http://articles.latimes.com/2003/nov18/local/me- mta18. ok

23. For more information, refer to “Mayor Villaraigosa and Union Leaders Announce Tentative Agreement on Transit Labor Contracts” by Marc Littman, Metro Media Relations, June 27, 2006. This article and its related information were retrieved on January 15, 2010 from: http://www.metro.net/news_info/2006/metro 112.htm.

24. For more information, refer to 25. For more information, refer to Hilyer, Rhonda (1990). RESOLVE: To create successful results and relationships. Seattle,WA: Agreement Dynamics, Inc.

25. Refer to John A. Fossum (2009). Labor Relations: Development, Structure, Process. 10th Edition, New York, NY: McGraw-Hill/Irwin, p. 586.

26. See “Transforming Labor Relations” by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

27. Ibid. 28. Ibid. 29. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and

CEO, The Catoe Group. 30. Document (no date available) containing ATU proposals to the contract between MTA and ATU Local

1277, provided by Richard Hunt, Service Sector General Manager, MTA, to one of the authors on August 3, 2010.

31. See “Transforming Labor Relations” by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information were retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

32. For more information, refer to Hilyer, Rhonda (1990). RESOLVE: To create successful results and relationships. Seattle, WA: Agreement Dynamics, Inc.

33. See “Transforming Labor Relations” (ATU Example – Service Attendants) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its

 

 

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related information was retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

34. For more information, refer to Harry C. Katz, Thomas A. Kochan, & Alexander J. S. Colvin (2008). An Introduction to Collective Bargaining and Industrial Relations”. Fourth Edition. New York: NY, McGraw- Hill.

35. Document (no date available) containing ATU proposals to the contract between MTA and ATU Local 1277, provided by Richard Hunt, Service Sector General Manager, MTA, to one of the authors on August 3, 2010

36. See “Transforming Labor Relations” (Training and Facilitation) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information were retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

37. See Hilyer, Rhonda (1990). RESOLVE: To create successful results and relationships. Seattle, WA: Agreement Dynamics, Inc.

38. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and CEO, The Catoe Group. Also, a phone interview with Rhonda Hilyer of Agreement Dynamics, Inc. January 22, 2010.

39. See “Transforming Labor Relations” (ATU Example – Service Attendants) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information were retrieved on January 17, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx

40. See “Transforming Labor Relations” (Early, Thorough Homework) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx

41. See “Transforming Labor Relations” (Training and Facilitation) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx

42. See “Transforming Labor Relations” (Early, Thorough Homework) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

43. See “Transforming Labor Relations” (UTU Example – Wage Order#9) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

44. See “Transforming Labor Relations” (Early, Thorough Homework) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx

45. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and CEO, The Catoe Group.

46. See Hilyer, Rhonda (1990) RESOLVE: To create successful results and relationships. Seattle, WA: Agreement Dynamics, Inc.

47. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and CEO, The Catoe Group.

48. See “Transforming Labor Relations” (ATU Example – Service Attendants) by Rhonda Hilyer” in HR Advisor: Municipal Research and Services Center of Washington, December 2006. This article and its related information was retrieved on January 15, 2010 from: http://www.mrsc.org/focus/hradvisor/hra0612.aspx.

49. Interview with John B.Catoe, Jr., July 30, 2010, MTA’s Chief Negotiator, 2006, currently President and CEO, The Catoe Group.

50. For more information, refer to Jean Guccione and Jeffrey l. Rabin of the Los Angeles Times “3 Unions, MTA Reach Rare Accord” (June 28, 2006, para. 3). This article and its related information were retrieved on January 17, 2010 from: http://articles.latimes.com/2006/jun/28/local/me-mta28.

51. Ibid. Para. 10

 

 

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52. Ibid. Para. 7 53. Ibid. 54. Ibid. Para. 22.

AUTHOR’S NOTE The authors developed the case for class discussion rather than to illustrate either effective or ineffective handling of the situation. The case is based on published secondary data and some interviews. The case, instructor’s manual, and synopsis were anonymously peer reviewed and accepted by the Western Case Writers Association Conference, March 25, 2010. The authors extend their appreciation to Rhonda Hilyer of “Agreement Dynamics, Inc.,” (the facilitator during the 2006 negotiations), for her advice and support. This case benefited tremendously via the input and feedback provided by John B. Catoe, Jr. (MTA’s Chief Negotiator in 2006, who is currently the President and CEO of The Catoe Group). The authors also extend their appreciation to Barbara Fox Stoner, Attorney at Law, for her legal and editing assistance. Margie Wheeler is an executive student at the Peter F. Drucker and Masatoshi Ito Graduate School of Management, Claremont Graduate University. She has more than 20 years of experience in the public sector, served as an adjunct faculty member for more than 10 years and owned a natural resources consulting company. She currently serves on the Board of Directors for the Southern California Leadership Network. Her current research focuses on strategy, leadership and management. Issam A. Ghazzawi is the associate professor of management at the University of La Verne. He received his PhD from the University of Pittsburgh. His current research and cases’ interests focus on job satisfaction, organizational development, employee motivation, and organizational design. He is the president elect (2010/2011) of the Western CaseWriters Association. Marie Palladini is an assistant professor at California State University Dominguez Hills, College of Business and Public Policy, Department of Public Administration. She received her J.D. from Southwestern University, Los Angeles. Her current research focuses on the value of student internships, women in leadership, and interactive learning pedagogy.

 

 

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