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Collective Bargaining

Collective bargaining is primarily focused on the sanction function, in that through collective bargaining the conditions and terms of the employment relationship between employee and employer are determined and maintained. Law and state and federal compliance agencies determine the context for bargaining and resolution of disputes. Collective bargaining is a set of techniques under which employees are represented in the negotiation and administration of the terms and conditions of their employment. Because collective bargaining can conflict with other personnel systems, it also focuses conflict over a number of issues: job security with no privatization, employment quotas versus seniority, outsourcing and competitive sourcing, adversarial dispute resolution versus alternative dispute resolution techniques, and win–lose bargaining versus win-win bargaining.

Collective bargaining is a traditional approach to labor relations that has a long and sometimes bitter history in the private sector. In fact, Frederick Taylor’s emphasis and devotion to scientific management at the turn of the nineteenth century was due in large part to his belief that it would lead to harmonious labor relations. Over time, unions and collective bargaining became increasingly accepted in the trades and with industrial labor especially—one thinks of auto workers, steel workers, and teamsters commonly as examples of union workers. But times have changed. The past forty years, and especially the 1960s and 1970s, saw a dramatic shift in union activity from the private to public sector, including school-teachers and employees. In fact, the 4-1 ratio of unionized private-to-public employees has virtually reversed itself. Less than 10 percent of private sector employees are now unionized—an all-time low. In contrast, public employees—teachers, police officers, firefighters, and a variety of other office workers at the state and federal levels—now constitute the bulk of union membership.

The shift away from unions in the private sector can be attributable to several factors, not the least of which is change in the global economy, which places American workers and firms in direct competitive relationships internationally. No directly similar challenge exists for public sector employees. Governments are not going to relocate; and pay and benefits are not going to be determined in the same competitive way as they are in private firms. However, as we have seen throughout the book, at-will employment, competitive sourcing, and the outright sale of public assets like toll roads create challenges for public unions and their members. However, the greatest challenges may be less tangible. According to Riccucci, compared to their predecessors, “The typical American worker is less interested in solidarity and collective action for the good of all workers.” 1 As job security for private sector employees continues to be precarious, taxpayers will not support robust pay and benefit packages for public employees who have relatively more secure jobs.

By the end of this chapter, you will be able to:

1. Discuss the history and legal basis of collective bargaining, focusing on differences between the public and private sectors, and between the United States and other countries.

2. Explain the connection between public agencies’ legal obligation to protect employees’ constitutional rights in the United States, and unions’ in their members’ individual rights as employees.

3. Describe collective bargaining practices: unit determination, recognition and certification, preparation for negotiation, contract negotiation, contract ratification, and contract administration.

4. Discuss the future of public sector labor relations in terms of partnerships, gain-sharing, and alternative dispute resolution.

5. Identify how the value issues underlying contemporary human resources management might affect the future of the field.

6. Identify contemporary and future issues regarding the PADS functions.

Collective Bargaining: History and Legal Basis

It is difficult to clearly frame collective bargaining because it evolved differently in the United States than in other parts of the world. Globally, collective bargaining generally evolved as the labor relations aspect of a broader and more ideological political, social, and economic movement. Thus, it is difficult to discuss the history and legal basis of trade unionism in Europe, Latin America, or the Caribbean without first placing it in the broader context of European socialism and the social welfare movement. In the United States, trade unionism initially followed this European model but fundamentally split from it between the 1880s and the 1920s. During that period, general U.S. popular mistrust with European socialism and anarchism and antipathy toward the southern European immigrants who espoused these philosophies led to the development of U.S. unionism as primarily based in the workplace and focused on narrower economic objectives of better pay and benefits. The most fundamental difference resulting from this separate evolution is that in the United States, workers’ rights are protected primarily by collective bargaining agreements between employers and unionized employees. Government may facilitate or protect collective bargaining rights, but it has little substantive role in protecting worker’s rights through public law. By contrast, under conditions of European socialism, governments took a more active role in protecting employee rights through constitutional safeguards, and unions took a more active role in government. Frequently, these were the basis for political parties or were incorporated into the system by which government institutions represented citizens as both voters and union members.

A related distinction is that in the United States, private sector bargaining is based on a single nationwide body of law and one compliance agency. But in the public sector, bargaining is more complex because there is one law and compliance agency for all national government employees, and separate laws and agencies for state and local government employees in each state—forty-three in all—where collective bargaining is permitted. This section clarifies these complexities.

Private Sector Unions in the United States

In the private sector, collective bargaining began in the late 1800s with the rise of industrial unions (The Industrial Workers of the World and the Congress of Industrial Organization) and craft unions (The American Federation of Labor). In the face of bitter opposition by management, aided in many cases by the federal court system, these unions gained political power and legal protection. The New Deal brought about the passage in 1935 of the Wagner Act (or the National Labor Relations Act), which recognized the right of all private employees to join unions and required management to recognize and bargain collectively with these unions. It prohibited many previously common practices: blacklisting union members, signing “sweetheart contracts” with company unions, and so on. It established a federal agency—the National Labor Relations Board (NLRB)—with the responsibility of certifying unions as appropriate bargaining representatives, supervising negotiations to ensure “good faith” bargaining and adjudicating deadlocks (impasses) that might arise during contract negotiations. This law was counterbalanced (at least from management’s point of view), by the Taft–Hartley Act (1947), which prohibited labor unions from engaging in unfair labor practices and allowed states to pass right to work laws (statutes forbidding unions from requiring applicants to be union members in order to qualify for jobs).

With the change from manufacturing to service that began during the 1960s, the percentage of private sector employees operating under collective bargaining agreements has declined steadily from a high point of about 35 percent in 1957 to a low of about 8 percent today. With current economic trends (including outsourcing, job export, automation, two-tiered wage and benefit systems, and continued growth of service jobs in the secondary labor market), it can be expected that labor unions will not see a resurgence. 2

The Public Sector—Federal

With the exception of a minor provision of the Taft–Hartley Act prohibiting strikes by public employees, and the Postal Service Reorganization Act (1970) that provides for supervision of the U.S. Postal Service collective bargaining by the NLRB, none of these three laws or agencies (the Wagner Act, the Taft–Hartley Act and the NLRB) is involved in public sector collective bargaining. Rather, a complex of laws that apply differentially to federal, state, and local governments regulate collective bargaining in the public sector.

Collective bargaining developed differently in the public sector for two fundamental philosophical reasons. First, in the private sector, the unitary nature of company management makes it possible for a single union to negotiate bilaterally with a single employer. In the public sector, agency managers are accountable to the chief executive, to the legislature, and ultimately to the taxpayers. Thus, it is impossible to negotiate binding contracts at the negotiating table (especially on economic issues) without their being subject to further negotiation and ultimate ratification elsewhere within the political arena. Second, the strike, as an ultimate weapon for exercising collective employee power by withholding services, is more difficult to justify and apply in the public sector because rather than simply affecting corporate directors or stockholders, its direct impact is on the public (possibly involving essential services like police, fire, and sanitation).

Within the federal government, the development of collective bargaining lagged behind the private sector because the types of jobs were different, treatment of employees by employers was better, and federal agencies were relatively small compared to the large industrial firms organized during the 1930s in the private sector. Civil service employees were largely incorporated into the merit system that arose between 1923 and 1945. At the same time, politicians began to lose interest in protecting civil service employees because their jobs were no longer subject to favoritism. Public employees’ unions were recognized as legitimate bargaining agents in 1961. Binding grievance arbitration with management was permitted (though not required) in 1969, and the scope of bargaining was broadened in 1975.

In 1978, Congress passed the Civil Service Reform Act (Title VII), which created a labor relations regulatory agency—the Federal Labor Relations Authority (FLRA) formally authorized to mediate disputes between federal unions and agency managers. Though this law clarified such issues as unit determination, scope of bargaining, and impasse resolution procedures, federal agency employees may still not strike or bargain collectively over wages and benefits, both of which Congress sets. The act was subsequently amended to create the Federal Mediation and Conciliation Service (FMCS), designed to assist voluntary settlement of collective bargaining issues. Though these acts seemed to have stabilized and advanced formal labor relations in the federal sector, subsequent events have created substantial turmoil.

In 1981, in a signal event, President Reagan’s administration fired air traffic controllers—members of PATCO, the union of professional air traffic controllers—who had gone out on strike. The administration hired workers who crossed picket lines and this incident marked a significant blow to unionization in the federal sector. While President Bush attempted to rebuild relationships with federal unions, the number of unfair labor practice charges and grievances nearly doubled for the period 1986–1992. 3

President Clinton’s administration, elected with labor’s support, took substantial steps with E.O. 12871 to rebuild labor relations on a platform of partnership. A National Partnership Council (NPC) was established to oversee development of partnerships and provide advice to the administration. Unions were to be seen as full partners in organizational problem solving and performance improvement. Unfair labor practice charges and grievances fell by 40 percent during this period. 4

In 2001, within the first days of his administration, President G. W. Bush revoked the Clinton administration’s initiatives, but giving agencies the discretion to adopt labor relationship strategies best suited to their individual needs. While the Clinton administration’s partnership approach announced a new age of cooperation, it elevated the status of unions at the expense of managerial flexibility and prerogative. The Bush administration attempted to establish a business model that prizes managerial discretion and responsibility. 5

A consequence of 9/11, on November 12, 2002, President Bush signed legislation creating the Department of Homeland Security (DHS). It combined twenty-two existing agencies and 175,000 federal employees who had been working under eighty separate personnel systems. 6 DHS was given the authority to establish its own personnel system that would be “mission centered, performance focused, contemporary and excellent, generate respect and trust, and be based on merit system principles of fairness.” 7 A design team was formed and developed fifty-two proposals, twenty-five of which outlined labor relations and adverse action options. Ferris and Hyde comment, “When the criticism is levied that current personnel systems are not aligned with current strategic mandates of most federal departments, labor relations systems are seen by many as part of that incongruence.” 8

However, after a series of battles with unions and other DHS employee groups, including litigation, DHS withdrew many of the more controversial segments of its plans regarding labor relations and pay for performance. 9 While DHS was not the first federal agency to be exempted from the large federal personnel system (Title V of the U.S. Code), it was not the last either. Most notably, the Department of Defense followed.

The lesson in this brief recent history is that issues of employee rights and solidarity as reflected in unionization seem contrary to contemporary values of efficiency and a market-based orientation although the strength of public sector unions suggests that changes cannot be mandated. Issues regarding organizational structure and change, performance management, flexibility in pay and compensation, timeliness of hiring and staffing decisions, and handling of adverse employment actions—all at one time or another falling generally within the rubric of collective bargaining—are now being viewed in light of contemporary values which downplay individual employee rights, comparatively speaking.

The Public Sector—State and Local

It is more difficult to comprehend and summarize the status of collective bargaining in state and local governments. This is primarily due to federalism, which means that the authorization and regulation of collective bargaining for state and local governments is a state responsibility. Many federal laws (such as affirmative action requirements and the wage-and-hour provisions of the Fair Labor Standards Act) regulate personnel practices in state and local government. Each state is responsible for developing and administering its own laws to regulate collective bargaining by state agencies, and for local governments within the state.

State governments have often gone beyond the federal government in enacting laws to clarify collective bargaining for their employees and for employees of local governments within their jurisdiction. Presently, nearly all states have enacted laws affording at least some public employees the right to “meet and confer” or negotiate on wages and working conditions. Public employees in a few states are not covered by any labor relations laws, with the possible exception of no-strike provisions applicable to public employees.

In our federal system of government, both national and state governments have sovereign powers. Local governments are created and regulated by state governments, so they have no sovereignty. With respect to collective bargaining, this has meant that they cannot enter into collective bargaining agreements with employee organizations unless the state has passed legislation authorizing them to do so. Home rule powers make it possible in some cases for a local government to opt out of the state law or to create its own “meet and confer” ordinances if state law makes it optional. Typically, this has meant that pressure for public-sector bargaining first arose among teachers, police, or firefighters in big cities and spread to other areas of a state once the state statutes or constitutional revisions authorized it. In the states allowing some form of collective bargaining in 2007, over 2 million state employees were represented by unions—some 34 percent of state employees. At the local level, over 5 million were represented by unions—over 45 percent of local government employees including the education sector. These numbers compare to 1 million federal employees—32 percent. 10 The conditions imposed on public sector collective bargaining make the extent of unionization and the growth of collective bargaining understandable. First, the inability of employees to negotiate bilaterally with management has meant that public sector unions have developed primarily as interest groups whose objective is to influence the decisions of the legislatures (Congress, state legislatures, city councils, and school boards) that will have the ultimate authority to ratify or reject negotiated agreements, or to set pay and benefits if these are outside the scope of bargaining. 11 Because the Taft–Hartley Act forbids states from enacting closed shop provisions applicable to public agencies, public employees are not required to join a union as a condition of employment in a public agency, even though these employees will be covered by the provisions of the collective bargaining agreement negotiated between the union and agency management. These free riders benefit from the gains won by the union for its members, but are able to avoid paying dues if they so choose by declining to join the union.

The differences between public- and private-sector collective bargaining laws and regulatory agencies are shown in Table 14-1.

Table 14-1 Public and Private Sector Collective Bargaining in the United States

Labor Codes in Europe, Latin America, and the Caribbean

Politically, European democracies tend toward a parliamentary rather than Presidential model, with multiple political parties rather than a two-party system as in the United States. At least historically, European political parties tend to represent smaller and more ideologically unified constituencies than in the United States—including organized labor. So European public- and private-sector unions tend to be more ideological and to have a higher political profile than in the United States. They participate in elections, nominate candidates, and sponsor partisan legislation. Frequently, basic employee rights are included in the national constitution (usually as an appended Labor Code), including rights to health care, pensions, annual vacations, and severance bonuses based on years of service. Frequently, these basic rights apply to all employees (whether unionized or not). Because the labor code is highly visible and uniform nationally, employees find it easier to approach government in situations where they feel their rights as employees are being violated. These European traditions carried over to Europe’s Latin American and Caribbean colonies during the colonial period, and have largely been retained in the English-, French-, and Spanish-speaking countries of the area.

Imagine, then, the plight of an immigrant worker newly arrived in the United States from one of these countries who has trouble with an employer because, for example, he has not been paid in a month even though he is supposed to be paid weekly, is paid at a lower pay rate than other employees doing comparable work, or is fired for complaining about unsafe working conditions. Rather than a single labor code and a single agency enforcing employee rights, we offer him a variety of federal, state, and private remedies, depending on the situation:

• If you were discriminated against based on a federal EEO/AA law, contact the local office of the appropriate federal compliance agency (see Chapter 8).

• If you were not paid, or not paid for all the hours you worked, and are not a member of a “protected class” (see Chapter 8), contact the state Department of Labor.

• If you have been discriminated against as a “whistleblower” and your employer is a federal contractor (see Chapter 13) contact the U.S. Department of Labor or the Office of Federal Compliance Programs.

• If none of these remedies apply, you may sue your employer in civil court.

Since a large number of workers who experience these employment problems may also face language barriers and immigration issues and since the historical and legal traditions of U.S. collective bargaining differ so fundamentally from those prevalent in their countries of origin, it is not surprising that immigrant workers hold an ambivalent view of economic opportunities in the United States. On the one hand, our higher standard of living and economic development means that it is possible to earn much higher wages here than in most other countries. Our emphasis on market values and our fragmented system for protecting employee rights presents risks that always counterbalance and sometimes outweigh our economic advantages.

Collective Bargaining, Individual Rights, and the Constitution

Collective bargaining is one method by which terms and conditions of employment are determined. Understanding the unique role of collective bargaining in public agencies means understanding the relationship among union power and individual rights, constitutional protection, and political action.

While collective bargaining contracts demonstrate employee influence on some personnel functions (primarily pay, benefits, promotion, and disciplinary action), collective bargaining has no impact on selection (applicants are not eligible for union membership until they are hired and pass their probationary period). Because both managers and unions are required to comply with affirmative action laws, affirmative action has influenced both unions and management much more than collective bargaining has influenced the selection and promotion process.

Public employees’ pay and benefits have been particularly affected by collective bargaining. Control over these activities has passed from management to the legislature, which now has three roles in the process: to pass enabling legislation governing contract negotiations, to pass appropriations bills funding negotiated collective bargaining agreements, and to pass substantive legislation incorporating noneconomic issues into the jurisdiction’s personnel laws and regulations.

Collective bargaining plays a unique role in the public sector because of its close and interactive relationship with the constitutional rights afforded public employees within civil service systems and because of the union’s role in protecting the individual rights of public employees as a dominant value.

In the private sector, only two dominant values are competing in the context of collective bargaining—administrative efficiency and employee rights. Management’s legitimate interest is the “bottom line”—protecting profits by keeping production costs (including wages and benefits) low. In the absence of collective bargaining or employment contracts, most employees are hired and fired “at will” (in contrast to the public sector where at-will employment is a relatively new concept). Similarly, pay and benefits are often negotiated on an individual basis, without general awareness by other employees in the company.

In the public sector, government agencies are required to protect the individual rights of employees. This goal originated with the desire of civil service reformers a century ago to protect public employees from partisan political pressure and to promote efficiency. In the last few decades, federal courts have recognized that agencies that are constitutionally required to protect the rights of citizens in general cannot violate the constitutional rights of citizens as public employees. The cumbersome nature of civil service laws regulating disciplinary action, and the need of public managers to maintain efficiency, has meant that elected officials and public managers continue to exert pressures challenging the individual rights of employees. These include contracting, privatization, political appointments, and affirmative action (where the rigidities of civil service or collective bargaining systems based on seniority have had an adverse impact on minorities).

In responding to these pressures, public sector unions have three advantages over their private sector counterparts. First, public agencies are required to provide services to residents of a particular geographic area. This means that with some exceptions (primarily contracting out or outsourcing), the employer is required to remain in a fixed geographic area. Second, union members are not just employees—they are voters as well. Given the key role of legislative action in ratifying negotiated collective bargaining agreements in the public sector, the strength of union members as political action arms and voting blocks is important in understanding their political strength. Third, unions in the public sector have been able to obtain court opinions enforcing the value of individual rights as it is defined and protected by seniority systems.

Collective Bargaining Practices

Collective bargaining has evolved into a formal and technical process, an administrative ritual that involves a number of prescribed concepts: unit determination, recognition and certification, scope of bargaining, contract negotiation, impasse resolution, ratification, contract administration, and unfair labor practices. We will briefly describe each below.

Unit Determination

Before collective bargaining can occur, a primary responsibility of the federal or state collective bargaining agency is to determine appropriate criteria for the formation of unions. 12 The two most commonly used criteria are to divide employees either by agency or by occupation. Agency bargaining establishes each state or local government agency as a separate bargaining unit. While this offers the advantages of working within an existing management structure, it can cause a proliferation of bargaining units and inequities among agency contracts.

An alternative is to group employees into general occupational classes, usually based on the state or local government’s job classification system. This will result in the establishment of bargaining units such as health, public safety, teachers, general civil service employees, state university system employees, and so on. This method has the advantage of limiting the number of bargaining units and automatically including employees of new agencies in preestablished units. It also clarifies, on a systemwide basis, which employees are excluded from participation in bargaining units because their jobs are managerial or of a policy-making nature. Its disadvantage is that it lumps workers with different interests and needs into one large bargaining unit, such as all health care workers.

Both agency-based and occupation-based unit determination require coordinating mechanisms to ensure that negotiated contracts treat employees equitably.

Recognition and Certification

Once appropriate bargaining units have been established, unions are free to organize employees for bargaining collectively. While no uniformity among state laws exists, recognition and certification procedures are generally similar in all states; New York State’s Taylor Law was used as a model by many of them. An employer may voluntarily recognize a union as the exclusive bargaining agent for employees in that bargaining unit without a recognition election if the union can demonstrate that a majority of the employees in the bargaining unit want to be represented by that union. If voluntary recognition does not occur, the union can win recognition through a representation election. Here, employees are offered the option of approving any union that has been able to show support (through signed authorization cards) from 10 percent of the eligible employees, or declining union representation. Depending upon state law, winning the representation election requires that the union win a majority of the votes cast or a majority of votes from eligible members of the bargaining unit, regardless of the actual number of votes cast.

Once a union has been voluntarily recognized or has won a representation election, it is formally certified by the labor relations agency as the exclusive agent for that bargaining unit. Certification requires that management recognize this union as the legitimate representative of employees and that it engage in collective bargaining over all items required or permitted by applicable law.

Scope of Bargaining

The scope of bargaining is simply the range of issues that applicable law requires or permits to be negotiated during collective bargaining. If the laws specify which issues are included or excluded, the scope of bargaining is considered closed. If no restrictions are placed upon bargainable issues, the scope of bargaining is termed open. Nonetheless, certain issues like agency structure, agency mission, and work methods or processes are usually, but not always, excluded from bargaining because they are management prerogatives. While federal employees do not bargain over wages and other economic issues that Congress deals with, that is not the case in most state and local governments. Yet the distinction between issues included in bargaining—or excluded from it—is not always clear. Issues that management considers excluded, such as adding drug testing to selection or promotion criteria, are frequently considered bargainable by unions because they affect member rights or important public policy issues. In such cases, their bargainability must be clarified by the state labor relations agency.

Contract Negotiation and Preparations for Negotiation

Contract negotiation usually begins immediately following recognition and certification or (if the union has previously been certified) in anticipation of the expiration of an existing contract. Local union officials may represent their own membership, or a professional negotiator who has negotiated similar contracts with other state or local governments may be employed. Management is represented by an experienced negotiator supported by a team of experts that will include the personnel manager, the budget officer, a lawyer, and some line managers who understand the impact of contract provisions on agency operations.

In most cases, negotiation occurs in the sunshine. That is, negotiations are conducted in public because states have an open-meetings law that prohibits government officials from determining public policy through back-room deals. Prior to the negotiations, it is important that management’s negotiator reach a clear understanding with elected officials concerning their preferred contract provisions and their minimally acceptable contract provisions (particularly with respect to economic issues). It is important to prepare adequately for negotiations by collecting comparative data on other agencies and contract agreements, preparing spreadsheet analyses of the cost of alternative settlements on economic issues, and estimating projected revenues available to pay the price tag on economic items. Good negotiation is impossible without good research.

Negotiation involves both task- and process-oriented issues. Both sides see it as the opportunity to shape HR policy and practice. As in any strategic contest, each side attempts to discover the other’s strengths and priorities, while keeping its own hidden until the opposition appears most willing to concede on an issue. Good negotiations depend on the negotiators’ ability to marshal facts, sense the opposition’s strengths and weaknesses, and judge the influence of outside events (such as job actions or media coverage) on the negotiations. Good faith bargaining requires negotiators to work for the best deal their side can get, while still remaining receptive to the needs of the other party. Experts agree that interest-based bargaining, also called collaborative or win-win bargaining, is the most satisfactory. 13

Impasse Resolution during Contract Negotiations

There are two types of collective bargaining impasses: disagreements that occur during the negotiations over the substance of negotiations (such factors as pay or benefits) and disagreements over the interpretation of contract provisions that have previously been negotiated and approved. If management and union are unable to resolve differences through two-party contract negotiations, there remain three procedures involving intervention by a third party: mediation, fact-finding, and arbitration. The order in which these are employed, and whether they are used at all, will depend on the provisions of the applicable collective bargaining law.

Mediation is the intervention of a neutral third party in an attempt to persuade the bargaining parties to reach an agreement. This may be an independent individual or one from a group designated by an agency such as the American Arbitration Association or the Federal Mediation and Conciliation Service (FMCS). It is in the interest of both parties to make a good-faith effort to reach a voluntary mediated settlement, as this is the last stage at which they will have full control over contract provisions.

If mediation is not successful, negotiations may progress to the second step—fact-finding. A fact-finder appointed by the federal or state collective bargaining agency will conduct a hearing at which both sides present data in support of their positions. After these hearings, the fact-finder releases a report to both parties and to the public that outlines what he or she considers a reasonable settlement. Although this advisory opinion is not binding, the threat of unfavorable publicity may make either side more willing to reach a negotiated settlement.

If fact-finding is unsuccessful, the final stage may be arbitration. Essentially the same procedures are followed as in fact-finding. However, the arbitrator’s formal report contains contract provisions that both parties have agreed in advance will be binding. In an effort to avoid having to “split the difference” between extreme positions, the arbitrator may decide in advance to take the “last, best final offer” presented by either side, based on either the entire contract or issue-by-issue. Arbitration of substantive items at impasse during contract negotiation is termed interest arbitration, to distinguish it from subsequent arbitration over the meaning of previously ratified contract provisions (grievance arbitration) during the contract administration process. The cost of third-party interest dispute resolution during negotiations is usually equally borne by both parties.

Contract Ratification

Once representatives of labor and management have negotiated a contract, both the appropriate legislative body and the union’s membership must ratify it before becoming law. For the union, ratification requires support of the negotiated contract by a majority of those voting. For management, it requires that the legislature (state, county, school district) appropriate the funds required to finance the economic provisions of the contract. Because all states have laws or constitutional provisions prohibiting deficit financing of operating expenses, revenue estimates impose an absolute ceiling on the pay and benefits that may be negotiated through collective bargaining. Nor is it considered bad faith bargaining for a legislature to refuse to ratify a negotiated contract if projected revenues will not meet projected expenses.

The requirement that a negotiated contract be ratified by the legislature is a sore point for union advocates because it limits the application of binding interest arbitration. Courts have uniformly held that the legislature cannot delegate its responsibility for keeping expenditures within revenues. Although union advocates frequently (and justifiably) protest that the legislature is biased toward management, state laws require that the state or local legislature take all interests into account—including those of the union and its members—in deciding whether to ratify a negotiated contract.

Contract Administration

Once a contract has been negotiated and ratified, both union and management are responsible for administering its provisions. Key actors in implementation include the union steward, a union member who will interpret the contract for the employees and serve as their advocate and representative to management; supervisors, who will be implementing contract provisions relating to everyday employee–employer relations; and the personnel manager, who is management’s expert on how the contract affects human resource policy and practice.

Conflicts are bound to arise during contract administration because reaching compromises during negotiations often requires agreement on what will later turn out to be ambiguous contract language. For example, labor and management may agree during contract negotiations that the shop steward “may spend a reasonable amount of time not to exceed two hours per week on union activities.” Subsequently, differences may arise over such issues as whether the steward is in fact spending a “reasonable” amount of time on union business or whether management has the right to approve when this time can be taken. Negotiations will then be needed to determine whether the shop steward’s or the supervisor’s actions constitute a violation of the contract’s provisions.

Part of the contract will therefore outline the process for resolving grievances that occur during contract implementation. The process may begin very informally with discussion between union and management representatives. If the issue is not satisfactorily resolved informally, it is written up as a formal grievance and appealed through channels up to a neutral third party outside the agency. Binding grievance arbitration is the norm (in contrast to the lack of binding interest arbitration over contract negotiation impasses).

Management should view the grievance process as one more potentially beneficial effort by employees to make the organization more effective by calling attention to inefficient or inequitable supervisory practices. It can serve as an internal evaluation device, a means of instituting planned change and a method of redressing inequitable organizational practices. It is recommended that supervisors and public personnel managers know the contract, maintain open lines of communication with employees, meet and deal informally with union representatives over potential grievances, exhibit uniform and adequate documentation for all personnel actions, and keep the record open to unions and employees. One way to keep both parties honest in handling grievances is to require the losing party to pay for the services of a third-party arbitrator. This discourages unions from pursuing frivolous grievances just to satisfy a disgruntled member, and it encourages management to handle grievances fairly rather than simply opposing the union on every issue.

The Future of Public Sector Labor Relations

While growth in public sector collective bargaining has grown substantially over the past forty years, the future is hardly predictable. Nevertheless, one thing does seem sure. The traditional notion of hard-core adversarial labor management relationships seems very discordant with contemporary public sentiment. One cannot expect private sector employees who see their health and pension benefits pale in comparison to public sector employees stand by as voters and support public sector unions pushing for what may seem arrogant. Thus, we can expect to see the profile of labor relations in terms of partnerships with alternative dispute resolution becoming even more popular and the threat of strike which for teachers, public safety officers, and firefighters less popular among the public.

In fact, binding arbitration and impasse resolution mechanisms have become the norm when compared to strikes and lockouts. This move reflects the growing realization that in today’s political environment, labor and management have more to gain from cooperation than from adversarial relationships. While unions traditionally have viewed relationships with management in adversarial terms, the absence of a profit motive and competition in the public sector permit government workers to be treated well and compensated fairly. 14 Much evidence shows that in a union-management setting, collaborative management can exist and can create a positive organizational atmosphere. 15 Calo cites research that concludes union settings can be very conducive to participative decision making and the reduction in traditional autocratic managerial structures. 16 Calo contends that the keys are gaining senior management and union leadership commitment, building mutual trust and respect by choosing to cooperate and working to assess the success of the collaboration, and the third tier of the stool is employing best HR policies and practices.

Diverse organizations oriented toward team-based productivity improvement require methods of resolving disputes that are more appropriate to their culture and structure than traditional grievance resolution. This is part of the movement toward collaborative labor relations. Fortunately, contemporary organizations have been successfully utilizing alternative dispute resolution (ADR) techniques that meet these criteria. Generally, these include any procedure, agreed to by the parties to a dispute, in which they call upon the services of a neutral party to assist them in reaching agreements and thus avoid litigation. The most popular variants are mediation and arbitration, but they include a range of procedures:

• Open door policy: Encourages employees to bring grievances of any kind to their managers with the assurance that no retaliation will result. 17

• Negotiation: A process of explicit bargaining between parties to a dispute in an effort to reach a settlement without outside intervention.

• Ombudsman: Use of a manager with strong communication skills, respected by labor and management, with broad authority to hear disputes and facilitate resolution. 18

• Peer review panel: Use of an informal panel representing labor and management, to determine if existing policy was accurately and equitably applied. 19

• Mediation: Active assistance by a neutral third party in reaching a settlement. Emphasizes informality, confidentiality, and flexibility to resolve a particular dispute or to preserve and improve long-term relationships. 20

• Arbitration: A process by which both sides usually commit themselves in advance to the binding decision of a neutral arbitrator, referee, or private judge, typically through procedures specified by the American Arbitration Association. 21

This development was spurred by the Alternative Dispute Resolution Act of 1998, which encouraged use of alternative methods of workplace dispute resolution throughout the Executive Branch. Every federal agency has an alternative Dispute Resolution policy and the federal Office of Personnel Management provides resources. 22 In addition, the FMCS reports increasing efforts assisting nonfederal governmental units in dispute resolution. ADR results in significant savings in legal fees, quicker dispute resolution, and a decrease in litigation.

Beyond the concrete assertion that cooperative labor relations will be the norm rather than the exception, Adler notes several other trends in public sector unionism. 23 First, he notes the loss of power at the federal level. One of the impacts of the DHS and the Department of Defense creating their own personnel systems is the modification of rights and employee protections provided by the Civil Service Act of 1978. Collective bargaining agreements were also modified. Second, outsourcing and at-will employment have made inroads into employee rights at the state level. Adler reports on research showing that in thirty-one of fifty states, there was a decline in job security. Third, while substantial gains were made in public sector unionism in the past forty years, most of that gain occurred in the 1960s and 1970s. Actually, coverage for teachers, firefighters, and police declined slightly since 1980, while a high level of penetration still exists. Finally, Adler speculates about the impact that the 2005 split among unions in the AFL-CIO will have on the union movement in general. Will the split and the resultant competition among unions for public sector members advantage the labor movement or drain it of resources—both financial and political.

Managing the Workforce of the Future

We draw this discussion of labor relations to a close and now speculate on HR issues involved in managing the workforce of the future. We will try to pull together many of the observations made throughout the book, and we invite our readers to compare their observations and experiences with those we offer.

We start with our observations about the values and then aided by Table 14.2, we will discuss the functions.

Table 14.2 Managing the Workforce of the Future

Values and Functions

Table 14.2 provides a comprehensive look at various categories of employment and then analyzes each according to the four functions we have been working with throughout the book. While we have talked about these employment categories, we have not systematically placed them beside each other for comparative purposes. The table does this, and the one word that captures an impression of the table is “complexity.”

Traditionally, we have looked at permanent civil service employees, including those unionized, as the bedrock of government service. As such, temporary workers, part-time workers, contract employees, and outsourced work were seen as peripheral to the centrality of public administration. While we should not lose sight of the millions of permanent public employees in federal, state, and especially local governments, at the same time, we must acknowledge that administering the work of government no longer falls solely upon permanent public employees.

The implications of this observation are enormous if one considers that public employees, more than any other group of people, probably carry the four democratic values into their work. They have to—because “public administration” requires balancing the values in legislative work, implementation, and even in the judicial arena. Without even becoming aware of it, pubic employees inculcate the values into their work. When one of the authors gives policy-making/managerial case studies to groups of public employees who have never actually confronted the case situation, he asks: “Is the case unfamiliar to you?” The answer is always “no; it is familiar”—not the specifics, but the broad contours of issues that will likely be faced, processes that likely will be employed, and the dynamics that will be encountered. The values provide a public service analytical framework for public service professionals, and one wonders what will happen to an appreciation of the values as the permanent public workforce diminishes.

Clearly, what we have seen in recent years is a shift in values toward efficiency and market-based values. The value of responsiveness holds its own but it takes a different shape than in earlier years. While there continues to be issues connected to partisanship and increasing desire to have one’s “own” in government jobs, responsiveness today is aligned with efficiency and market-based values. To be responsive today is to be efficient, which in ideological terms means: endorse market-based values.

The value of equity as it was known in the days of affirmative action has yielded to the force of diversity. Increasing diversification of the workforce, in large measure due to immigration, has deflected attention from the initial impetus for racial equality in employment practices. The force of immigration is so powerful that given the generational profile of the future workforce and birthrates among immigrant populations, one wonders when Hispanic workers will take advantage of their political muscle and truly see public employment as a source of mobility.

Diversity itself has become a term that encompasses so many different elements of HR. The different possible combinations of employment status reflected in Table 14.2 provide a glimpse that takes us beyond traditional categories of race and gender. We discussed generational diversity earlier, and one implication of the aging workforce with inevitable retirements is a decline in the value of individual rights in employment. Today’s generations are growing up in an environment of globalism where entrepreneurial careers are not only prized but are expected. Those with public service motives who wish to work for the government will find opportunities, but they will come to their work the product of their own generation when it comes to expectations about job security, pay for performance, benefits, and retirement.

Regarding the functions, each contains a challenge for the future. Planning and sanction may see the most dramatic changes brought about on the one hand by a shortage of skilled workers and on the other hand by the mixed employment relationships that affect the psychological and actual contracts between employer and employee.

In the earlier editions of this text, workforce planning was approached technically—as an incremental or comprehensive method. Workforce planning as an imperative has grown with each edition. We used to refer to the military’s understanding that tomorrow’s generals/admirals are entering the service today. The composition of today’s recruits will signal the demographic composition of tomorrow’s core of general rank officers. HR planning for the military is an imperative, and now other occupations and employers are coming to the same realization. Every state department of transportation is asking: “Where are tomorrow’s engineers going to come from?” At the same time that the demographics of the population and workforce are encouraging workforce planning, people are coming to the realization that “human capital” makes a difference. In Chapter 3, we referred to David Walker’s (Comptroller General of the United States) influential observation that organizational transformation depends upon investments in human capital.

As we talk about investments in human capital and as every federal agency now has a Chief Human Capitol Officer, Table 14.2shows how complex today’s employment relationships have become. This complexity is not yet well understood in the HR management area. We have approached the complexity with terms like governance and networks that have been studied with attendant concern for effectiveness and accountability. Nevertheless, we have not fully studied the dynamics of juxtaposing multiple HR management systems from several organizations. We have seen it work within an agency, and in fact, we argue that organizations must manage internally with civil service, patronage, collective bargaining, and affirmative action systems. Nevertheless, it still is possible, at least theoretically to talk about organizational values and norms within this kind of organization. The “hollow” organization—one that primarily manages contracts—challenges the notion not only that human capital is a crucial resource, it also invites uncertainty and conflict when host organizations have invited a multiplicity of other employers along with their HR systems into the arena for the purposes of service delivery. How does one build a base of values in this kind of context? We must wait and see, and we suspect that the private “hollow corporation” may have some lessons for the public sector here.

As a corollary to this discussion, as the hollow state becomes more prevalent, there are dramatic impacts on the sanction function. The expectations of employees will change, especially when it comes to permanence and job security, and employee rights may very well come to be seen as a luxury. The real drama here, however, will be played out in the rights of employees in firms who are contracted with to handle the government’s work. The key justification for job security for civil servants is that it gives them the confidence to “speak truth to their politically powerful bosses.” The question is whether contract employees will be protected if they attempt to speak “truth to power”—especially in areas that traditionally have been serviced by public employees—like prisons.

Next, demographics are going to force more agility and creativity in attracting and retaining employees. The promise of challenging work cannot be underestimated as a recruitment tool—one of which we expect to employ very creatively both electronically and maybe even by extending recruitment pools beyond our borders. It is difficult to see this happening now with concerns over illegal immigration and terrorism, but private firms utilizing call centers that operate in other countries have tested the waters. Private corporations have only virtual homes with financial capital floating all over the world and work being performed electronically. It may be that some of this will be transferred to the public sector, and we will find increasingly that our engineers will be coming from India. After all, what employer doing technical work would not want a pipeline to graduates from the Indian Institutes of Technology?

Finally, retention of employees is going to depend heavily on investments in the development function. We expect increasing appreciation for the importance of retention as the consequences of retirement make themselves felt. Investing in employees also means investing in their families and in their lives outside of work. Flexible work arrangements, bus passes, on-site day care, days that can be used for elder care, and innovations we do not yet see prevalent in the public sector may become commonplace if retention of employees is valued.

No time in our memory have we seen public administration in more flux. Perhaps for the younger generation of worker, today’s employment relationships simply are what they are. What we are concerned about is the institution of public administration as a values-carrying foundation of democracy. As we hollow out the state in favor of more governance, one wonders how the institution of public administration will face the challenges of legitimization. Historically, HR management has been at the core of government reform because it is the core of administrative processes and values. We expect that focus will continue.

Summary

Collective bargaining is law, process, and ritual. As law, it provides the constitutional and statutory foundation that enables employees collectively to negotiate the terms and conditions of employment with managers (and indirectly, with legislators and the public). Second, this collective negotiation takes place by the standardized procedures. Third, employees demonstrate their relative power (through the sanctions process) over employment policy and practice through a ritual.

In the final analysis, the strength of collective bargaining as a public personnel system will be affected by unions’ ability to persuade the public and its leaders that strong unions are tied to vital public policy concerns that go beyond the more narrow economic concerns of their current members. The number of union members in the public sector has leveled off, and traditional adversarial relationships are giving way to partnerships and alternative methods of dispute resolution.

In terms of the future of HR management, the emphasis on the values of efficiency and market-based approaches to governing is having a significant effect on the way the functions are being fulfilled. More emphasis on efficiency has meant less emphasis on employee rights, which has an impact on sympathy for unions. In this environment, the functions of planning and sanction become critical, especially the sanction function where expectations and obligations of employer and employee are established and maintained.

Key Terms

• alternative dispute resolution (ADR) 345

• Alternative Dispute Resolution Act of 1998 346

• American Arbitration Association 343

• arbitration 343

• Civil Service Reform Act (Title VII) 337

• closed shop 339

• collective bargaining 334

• contract administration 344

• contract negotiation 342

• Department of Homeland Security 337

• fact-finding 343

• Federal Labor Relations Authority (FLRA) 337

• Federal Mediation and Conciliation Service (FMCS) 337

• free riders 339

• grievance 345

• grievance arbitration 344

• “hollow” organization 354

• “in the sunshine” (negotiations) 343

• interest arbitration 344

• labor code 339

• mediation 343

• National Labor Relations Act (Wagner Act) 336

• National Labor Relations Board (NLRB) 336

• National Partnership Council 337

• outsourcing 336

• Permanent civil service employees 353

• Postal Service Reorganization Act (1970) 336

• ratification 344

• recognition and certification 342

• right to work laws 336

• scope of bargaining 342

• Taft–Hartley Act (1947) 336

• two-tiered wage and benefit systems 336

• unfair labor practices 336

• unit determination 342

• win-win bargaining 343

Discussion Questions

Case Study: Good Management or Bargaining in Bad Faith?

Background Information

You are the new city manager for Sunbelt City. It is small (50,000 population) but growing at about 10 percent annually, as retirees and business owners move south seeking warmer winters and lower taxes. The City currently employs about 100 sworn police officers. The city charter classifies police officers as within the civil service system. Because public sector collective bargaining is authorized for local governments in this state, those officers in nonsupervisory positions are also represented by the PBA (Police Benevolent Association).

Sunbelt is governed by a five-member elected city council. Last November, three incumbent council members were defeated by newcomers who ran on a platform of keeping taxes down by making government more effective and efficient. The two remaining council members also favor this objective.

The council has enthusiastically supported your strategy of reducing the city budget by bargaining hard with unions over salary and fringe benefits. By using the veiled threat of privatization or outsourcing as a “hammer,” you have successfully renegotiated contracts for the City’s solid waste and public works employees. Under the new contracts, trash collectors now work a full eight-hour day instead of being allowed to go home when their routes are finished. The public works department is now operating under a two-tiered contract that protects salaries and benefits for current employees but requires new employees to enter at lower salaries and to pay a higher proportion of their health benefit costs.

Now you face a challenge. A new council member suggests that you use the same strategy in renegotiating the contract with the PBA, up for renewal this year. You immediately sense trouble ahead as other council members have indicated a similar interest. Threatening solid waste and public works employees with privatization is one thing—it has been done all over the country, and many private trash haulers and maintenance companies do a thriving business. What are the alternatives to police officers hired through a civil service system? Will any alternative satisfy voters and the rest of the council, given that Sunbelt residents want both lower taxes and high-quality police protection? You hire a collective bargaining consultant and labor negotiator to provide you with expert advice in the matter. The consultant recommends that you consider three options: (1) hard bargaining with the PBA, (2) contracting for police services with the county sheriff’s office, or (3) contracting with a private security firm.

Your Choices

Hard bargaining means taking bargaining positions that reduce pay and benefit costs, such as: (a) proposing a tiered contract offering lower pay and benefits to new officers than current ones; (b) routinely challenging police officer requests for disability retirement and workers’ compensation for injuries suspected of being caused by outside employment; (c) hiring civilian employees to do office work and putting all sworn police officers on the street; and (d) proposing early retirement provisions to reduce lower personnel costs by reducing the number of senior officers. This is politically the least risky option, but it will work well only if citizens are convinced the quality of law enforcement will not suffer and if PBA negotiators fear that one of the other two options will be imposed if they do not agree to “giveback” contract provisions that reduce pay and benefit costs.

Contracting with the county sheriff’s office means changing the city charter by abolishing the police department and contracting with the county sheriff’s office for police services. The contract would need to be carefully negotiated to include (a) reimbursement to Sunbelt for any capital equipment (such as police buildings or vehicles) sold to the county; (b) qualitative and quantitative measures of service (such as number of officers, response time, and responsiveness to the council); and (c) provisions for city police officers to join the county sheriff’s department (this would involve complex negotiations over seniority, pay, and benefit packages for both organizations). This option offers probable dramatic short-term cost savings. The downside is less control over quality of service, no assurance that costs for contracting will remain lower than the cost of the Sunbelt police department, and a large one-time lump-sum payment of accrued annual leave to those Sunbelt police officers who elect to retire rather than join the county sheriff’s department.

Contracting with a private security firm offers the greatest potential benefits and risks. Private security corporations already provide security at many condominiums and public facilities, operate county and state correctional facilities, and are starting to move into municipal law enforcement. Informal negotiations with officials in private security firms lead you to believe that they will offer to provide sworn law enforcement officers at less than half the cost of the current police department’s budget, largely because of lower pay and benefit costs. Not only will payroll costs be lower, but also administrative expenses are capped by the contract, and legal liability risks are covered by the contractor’s bond. The risks are also great. Public opinion will probably be against hiring “rent-a-cops” to replace sworn police officers, and the PBA will use this opposition to build a firestorm of political opposition to the proposal. Certainly, the quality of service will be in doubt and the training and fitness for duty of sworn officers may be questionable if, as rumored, the security company hires retired police or corrections officers because they are already certified.

The Outcome

You decide on the first option (hard bargaining), backed by credible statements that if hard bargaining is unsuccessful you intend to pursue council approval for either of the other two options. The PBA fights back hard, stirring up public opinion against you, directly lobbying the council against your proposal, and filing an unfair labor practice charge with the state collective bargaining regulatory agency, alleging that your purported threat to contract out for law enforcement services is in fact a refusal to bargain in good faith. Several weeks later, the hearing officer decides that you have not violated the requirement for good faith bargaining. In the meantime, PBA and public pressure have forced two council members to publicly come out against the contracting option. The county sheriff’s department becomes the subject of investigation by the State Attorney General’s office and the State Department of Law Enforcement, when it is alleged that sheriff’s deputies are guilty of widespread bribery and extortion efforts to protect drug dealers and gambling interests in the county. The PBA agrees to a contract that is essentially the same as the previous one, with a cost-of-living increase in pay and no changes in benefits. As a condition of ratification, the PBA insists privately to council members that you be fired. The council fires you at the same time it approves the collective bargaining agreement with the PBA.

Questions

Notes

1Riccucci, N. (2007). The changing faced of public employee unionism. Review of Public Personnel Administration, 27 (1): 72.

2United States Department of Labor, Bureau of Labor Statistics (2008). Available at: http://data.bls.gov/cgi-bin/surveymost?lu (accessed on September 25, 2008).

3Ferris, F., and A. C. Hyde (2004). Federal labor-management relations for the next century—or the last? The case of the department of homeland security. Review of Public Personnel Administration, 24 (3): 216–234.

4Ibid.

5Cited in Ferris and Hyde, Federal labor-management relations for the next century—or the last? The case of the department of homeland security, p. 225.

6Ibid., p. 217.

7Ibid.

8Ibid., p. 220.

9Barr, S. (February 20, 2008). DHS Withdraws Bid to Curb Union Rights. Available at: www.washingtonpost.com (accessed on September 25, 2008).

10Department of Labor, Bureau of Labor Statistics (2008). Union affiliation of employed wage and salary workers by occupation and industry. Available at: www.bls.gov (accessed on September 25, 2008).

11Chandler, T., and R. Gely (December 1996). Toward identifying the determinants of public-employee unions’ involvement in political activities. American Review of Public Administration, 26 (4): 417–438.

12A good general reference for public-sector unit determination is Gershenfeld, W. (1985). Public employee unionization: An overview. In Association of Labor Relations Agencies (1985). The evolving process: Collective negotiations in public employment. Ft. Washington, PA: Labor Relations Press.

13Fisher, R., and W. Ury (1991). Getting to yes. New York: Penguin Books.

14Calo, T. J. (April 2008). Collaborative management: A positive approach to public sector employee relations. HR News Magazine, pp. 11–14.

15Martin, E. J. (2003). Labor-management relations, collective bargaining, and public sector: Collaborative solutions in Alameda, California. LaboPublic Administration and Management: An Interactive Journal, 8 (2): 54–68.

16Calo, Collaborative management, pp. 12–13.

17Barrier, M. (July 1998). A working alternative for settling disputes. Nation’s Business, 86 (7): 43–46.

18Hayford, S. L. (January 2000). Alternative dispute resolution. Business Horizons, 4: 111–118.

19Verespej, M. A. (February 2, 1998). Sidestepping court costs. Industry Week, pp. 68–72.

20Mareschal, P. (Fall 1998). Providing high quality mediation: Insights from the Federal Mediation and Conciliation Service. Review of Public Personnel Administration, 18: 55–67.

21Carver, T., and A. Vondra (May–June 1994). Alternative dispute resolution: Why it doesn’t work and why it does. Harvard Business Review, 70: 120–130.

22The federal Office of Personnel Management provides a ADR resource guide at http://www.opm.gov/er/adrguide/ (accessed on September 25, 2008).

23Adler, J. (Winter 2006). The past as prologue? A brief history of the labor movement in the United States. Public Personnel Management, 35 (4): 311–329.