LIST OF CONTRIBUTORS
Joseph R. Blasi
School of Management and Labor Relations, Rutgers University, USA
Mollie Bowers
Merrick School of Business, University of Baltimore, USA
Robert Bruno
Institute of Labor and Industrial Relations, University of Illinois, USA
Victor G. Devinatz
Department Management and Quantitative Methods, Illinois State University, USA
Anita Jose
Department of Economics and Management, Hood College and also at Centre for Conflict Resolution, Salisbury University, USA
Bruce E. Kaufman
Department of Economics, Georgia State University, USA
Maya K. Kroumova
School of Management, New York Institute of Technology, USA
Douglas L. Kruse
School of Management and Labor Relations, Rutgers University, USA
David Lewin
Anderson Graduate School of Man'agement, University of California at Los Angeles (UCLA), USA
Patrice M. Mareschal
Graduate Department of Public Policy and Administration, Rutgers University at Camden, USA vii
viii E. Patrick McDermott
Center for Conflict Resolution, Salisbury University, USA
Kenneth McLennan
Manufacturers Alliance/MAPI, USA
Daniel J. B. Mitchell
Anderson Graduate School of Management & School of Public Policy and Social Research, University of California at Los Angeles (UCLA), USA
Ruth Obar
Department of Economics and Management, Hood College and also at Centre for Conflict Resolution, Salisbury University, USA
Brian Polkinghorn
Center for Conflict Resolution, Salisbury University, USA
Stephen R. Sleigh
International Association of Machinists and Aerospace Workers, USA
James C. Sesil
School of Management and Labor Relations, Rutgers University, USA
Roland Zullo
Institute of Labor and Industrial Relations, University of Michigan, USA
INTRODUCTION
Volume 11 of Advances in Industrial and Labor Relations (AILR) contains nine papers that deal with a variety of industrial relations topics. The first four papers in this volume were winners of the 2001 AILR/Industrial Relations Research Association (IRRA) "best papers" competition. ~ In the first of these papers, Patrick McDermott, Anita Jose, Ruth Obar, Mollie Bowers and Brian Polkinghorn provide the first evaluation of the U.S. Equal Employment Opportunity Commission's mediation program, basing their analysis and conclusions on field data obtained directly from program participants. In a related paper that relies on participant observation and survey data, Patrice Mareschal distinguishes and analyzes three approaches to mediation - broad, narrow and bifocal - used by U.S. Federal Mediation and Conciliation Service (FMCS) mediators. Then, Maya Kroumova, James Sesil, Douglas Kruse and Joseph Blasi combine several secondary data sets to provide cross-sectional and longitudinal analyses of the effects of employee stock option plans on unionized and non-union companies' financial performance. In the fourth of these best papers, Robert Bruno develops a conceptual model of union governance and draws on detailed survey data to analyze how members of a Chicago-based Teamsters' local union assess their union's internal governance during a period of an imposed trusteeship. The next two papers in this volume also deal with selected aspects of union behavior. Roland Zullo uses a pretest-posttest control group design to assess effects of the Wisconsin AFL-CIO's political education outreach on union members' perceptions of and preferences for political candidates in 1996 congressional races, finding support for a psychological voter model but not for a rationale voter model. Then, using field research as well as archival and event analysis to analyze the unsuccessful attempt of Illinois State University faculty to create a faculty union, Victor Devinatz concludes that the university administration effectively combated the union organizing drive by adopting an adversarial approach that strongly emphasized the potential costs of unionization to several key parties. The final three papers in this volume provide retrospectives on selected dimensions of 20th century industrial relations to forecast 21st century developments. Scholar Daniel J. B. Mitchell analyzes the aging work force to ix
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INTRODUCTION
determine if there will be a 21st century equivalent to the 20th century baby boomer generation. Union staff officer Stephen Sleigh analyzes how worker assets can be leveraged to develop a 21st century focus on corporate governance, in contrast to the 20th century focus on workplace governance. Management representative Kenneth McLennan draws out certain key lessons for 21 st century labor markets based on still further development of the late 20th century trend toward globalization. 2 As a set, these nine papers provide an interesting mix of topics, invoke a variety of theoretical perspectives and research designs, employ a wide range of research methods, produce important findings, and yield well-reasoned and sometimes provocative conclusions. In these respects as well as others, these papers testify to the vibrancy and diversity of contemporary industrial relations research. NOTES 1. Shorter versions of these papers were presented at the national IRRA meeting, New Orleans, LA, January 5, 2001. 2. Shorter versions of these papers will appear in Perspectives on Work, Vol. 5 (Fall) 2001. Champaign, IL: Industrial Relations Research Association and University of Illinois Press.
David Lewin Bruce E. Kaufman Series Editors
HAS THE EEOC HIT A HOME RUN? AN EVALUATION OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION MEDIATION PROGRAM FROM THE PARTICIPANTS' PERSPECTIVE E. Patrick McDermott, Anita Jose, Ruth Obar, Mollie Bowers and Brian Polkinghorn
I. INTRODUCTION Alternative dispute resolution (ADR) programs are gaining increasing acceptance in the workplace as more employers and employees become concerned that settling disputes in a courtroom is a lengthy, time-consuming, costly, and often-frustrating process that results in a win-lose outcome. The report of the Commission on the Future of Worker Management Relations (The Dunlop Commission), which included an investigation of the usefulness of A D R methods in resolving workplace disputes, provided an additional impetus for the examination of the merits of ADR. The unionized sector of the economy has for decades used such techniques to resolve labor-management disputes. Now, diverse organizations across the United States of America (USA) have become receptive to ADR, and to mediation in particular.
Advances in Industrial and Labor Relations, Volume 11, pages 1--40. © 2002 Published by Elsevier Science Ltd. ISBN: 0-7623-0853-2
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Mediation is a dispute resolution process in which a neutral third party, who has no final decision-making authority, assists disputing parties in developing options for an acceptable resolution, t A central feature of a successful mediation is the interaction among the concerned parties and the mediator to arrive at a voluntary, mutually acceptable resolution. This can mean that the parties, with the help of the mediator, engage in "give and take" resulting in a compromise or, with the mediator's assistance, expand the possibilities for resolution. In other words, mediation is a facilitated negotiation. Thus, mediation attempts to focus on the relationship of the parties, rather than on legalism. 2 This becomes important if parties want to preserve their relationship, which may be destroyed or damaged by the adversarial nature of dispute resolution settlement mechanisms, such as litigation. Experts opine that ADR methods, such as mediation, become very important in non-discharge employment cases, where the parties want to preserve their relationship with their employer. 3 Mediation differs from other ADR processes and from litigation in significant ways, including, but not limited to: (1) the parties maintain control over the outcome if a settlement is reached; (2) in compromise situations, there is a diminished sense of win-lose. 4 Furthermore, if the parties do not agree in mediation, then they have the option of submitting their case for administrative and/or legal consideration. 5 Mediation has been found effective in dealing with a number of different types of disputes. It is effective not only in settling small claims, 6 but also in resolving a variety of different disputes including labor grievances, 7 contractual terms, construction damages, personal injuries, damages to property and the environment, 8 and employment discrimination under the Title VII of the Civil Rights Act. 9 There are a number of commonly held beliefs regarding the perceived advantages to using mediation rather than the courts. Many advocates of mediation state that it is often less costly, less time consuming, can be less damaging to the emotional state of disputants, less damaging to the relationship of the concerned parties or can even serve to improve them, and by its very nature promotes a win-win solution. The largest workplace mediation program is the Equal Employment Opportunity Commission's (EEOC) voluntary mediation program, a detailed description of which is presented in the background section of the paper. During the first twelve months of the expanded mediation program (4/1/99 through 3/31/00), the EEOC conducted over 11,700 mediations; more than 7,500 charges were resolved through the program. This early success leads into two next-step questions. The first is does the mediation program help the EEOC system address charges more effectively and secondly, if it does, will it become an
Has the E E O C Hit a Home Run ?
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accepted institutionalized process? The ultimate acceptability of a dispute resolution system has been described as one of the "ultimate tests" of the system's viability. 1° The present research goes toward answering these nextstep questions. The purpose of this research paper is to present the results of a comprehensive survey of the participants (charging parties and respondents) in the EEOC mediation program regarding their experience with and opinions of the program. More specifically, this paper presents the analysis of the participants' opinions regarding the procedural elements of the mediation, the performance of the mediator, and participant satisfaction with the results of the mediation. This paper is organized into several sections. After the introductory section, we present a brief background of the EEOC, its strategies under different administrations, and its mediation program. The third section of the paper introduces our research and its premises. Next, we present a brief review of the literature in the field of ADR program evaluation. The fifth section presents the research methodology of our study. The sixth section details the results of the study. The paper concludes with the discussion section, which focuses on the implications of the results.
II. B A C K G R O U N D The Equal Employment Opportunity Commission (EEOC) was established as the federal agency responsible for the administration and enforcement of Title VII of the Civil Rights Act of 1964 ("Title VII" or "the Act"), which prohibits workplace discrimination based on race, sex, national origin, color, or religion.I l It investigates, conciliates, and litigates complaints of discrimination arising under the laws within its jurisdiction through its 50 field offices located throughout the United States. Central to the agency's mission is the development and implementation of charge resolution programs and processes. Originally, the EEOC had no power to enforce its findings. Title VII indicates that Congress intended the EEOC to quickly investigate allegations of discrimination and to then act as a conciliator between the parties to bring about a voluntary resolution of a dispute. 12 In 1972, the Equal Employment Opportunity Act amended Title VII to allow the EEOC to file suit in federal court to enforce Title VII. This amendment also expanded the EEOC jurisdiction to include public and private educational institutions and state and local government. This law continued to rely primarily on the conciliation process to resolve charges that the agency investigated and found to be meritorious. ~3
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When Title VII was passed in 1964, Congress expected that the EEOC could investigate and then immediately conciliate meritorious cases to a voluntary resolution; this proved to be an unrealistic expectation. From its inception, the EEOC had an inventory of roughly 3,000 cases. By the 1970s, it was clear that the EEOC was overwhelmed with charges. In June 1972, the backlog rose to 53,000 charges. By April 1977, that backlog had risen to 130,000.14 This caused the EEOC to lose credibility with the parties who appeared before the agency. It was clear that something had to be done to more effectively and efficiently process this growing backlog of cases.
A. The EEOC Strategies To Timely Process Charges This section presents the various strategies that the EEOC has taken over the last two decades to process the charges in a timely fashion. From Eleanor Holmes Norton to Ida Castro, the different EEOC chairmen and women have instituted different policies to ensure that the EEOC address the issue of the timely processing of cases. In May 1977, EEOC Chairwoman Eleanor Holmes Norton introduced a "rapid charge processing" program. The program was designed to expedite the processing of charges by seeking quick settlement prior to full investigation. This program relied on no-fault settlement agreements with the agency in return for payment of some money or other benefit to the charging party. This strategy resulted in the expeditious processing of many cases. Also, this strategy enabled the EEOC to expend its limited resources on "pattern and practice" and systemic litigation. These cases are high profile and often result in the recovery of large monetary settlements. From a cost - benefit perspective, such litigation probably results in a larger monetary yield. ~5 To the critics of the program, any charge, other than pattern and practice claims, was seen as being "for sale," i.e. subject to quick resolution, by respondent payment of what the critics considered to be a token sum of money. 16 It also appeared that individual charges were not given the same attention or importance as the pattern and practice lawsuits. In 1979, the EEOC's responsibilities were expanded to include enforcement of discrimination charges made pursuant to the Age Discrimination in Employment Act of 1967,17 the Equal Pay Act of 1963,18 and Section 501 of the Rehabilitation Act of 1973.19 Even with the significant expansion of the EEOC jurisdiction during her tenure, Chairwoman Norton's program reduced the case backlog. In FY 1981, the inventory was 49,500; this was a noteworthy accomplishment given the EEOC's increasing responsibilities, z° She left the agency in February 1981, and was later succeeded by Clarence Thomas. 21
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After Clarence Thomas was appointed as the EEOC Chair in May 1982, he was immediately met with a Government Accounting Office (GAO) report critical of the EEOC rapid charge-processing program. The major criticism was that meritorious cases were being settled too quickly and too cheaply while non-meritorious cases were being settled for too much money. There seemed to be little relationship between the underlying culpability of the respondent and the amount of the settlement. 22 Thomas decided it was inappropriate for the EEOC to do little or no investigation of the "garden variety" discrimination charge, while spending substantial resources on the headline-grabbing, and more financially lucrative, pattern and practice lawsuits. He believed that every person who filed a charge with the EEOC was entitled to a full investigation. Accordingly, Thomas thought the agency should move away from the claims adjuster image it had under Norton and toward that of a law enforcement agency. 23 In December 1983, Thomas implemented a full investigation policy. All charges were to be fully investigated to a determination of "reasonable cause" to believe that there had been a violation of the law or a "no reasonable cause" determination. A full investigatory report was written at the end of each investigation. 24 The use of personnel to fully investigate every charge resulted in litigation of fewer pattern and practice cases. When Thomas left the EEOC in 1990, the case inventory was at 41,987. 25 Commissioner Evan J. Kemp, Jr., replaced Thomas as Chairman in March 1990. Also in 1990, President George Bush signed the Americans with Disabilities Act (ADA) into law. 26 The EEOC responsibilities were further expanded to include the investigation of claims made under Title I of the newly enacted ADA. The Civil Rights Act of 1991 (CRA) further expanded the 1964 Act. 27 The CRA made it more attractive to sue an employer for a violation of Title VII. Under this new law, a victim of employment discrimination was entitled to recover compensatory and punitive damages. 28 Previously these monetary damages were not available and a successful litigant could obtain only injunctive relief backpay (less interim earnings), reinstatement or front-pay in lieu of reinstatement, and respondent payment of the employee's attorney fees and costs. Now, in addition to these remedies, a successful litigant could obtain compensatory and punitive damages. Filing of a charge with the EEOC continued to be a prerequisite to initiating a lawsuit in federal court. Thus, the EEOC again experienced a significant increase in the number of charge filings. In addition to the rise in charges related to the ADA and the CRA of 1991, national attention to sexual harassment, focused by the Clarence Thomas Anita Hill matter, resulted in a rise in charges of workplace sexual
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harassment. In 1992, 72,302 cases were filed, the largest case intake since 1985. 29 The EEOC continued to adhere to the full case investigation approach developed under Chairman Thomas. As a result, the volume of unresolved charges as well as the time that it took to resolve a case continued to increase. In 1994, the time from filing of a charge to resolution averaged 328 days. 3° By October 1994, the EEOC had a new chair, Gilbert Casellas, who joined the EEOC from the Air Force, where he had served as general counsel. Casellas inherited an agency that could not move its cases in a timely fashion. By the end of FY 1994, there was a backlog of 96,945 unresolved cases. 31 Chairman Casellas was faced with the challenge of reducing the backlog. He established internal task forces to address the case-handling dilemma. The resulting taskforce reports provided the information necessary to create a new process for handling incoming charges. They were classified according to "Priority Charge Handling Procedures" (PCHP), which divided charges into three categories: (1) "A" charges are those that, based on the opinion of the EEOC charge intake personnel, 32 were highly likely to result in an EEOC finding of "reasonable cause" to believe that the law had been violated, and involved pattern and practice or systemic issues, or were Equal Pay Act charges; (2) "B" charges were those that have possible merit with the final finding contingent on the results of the investigation; and (3) "C" charges were those without merit on their face that should be dismissed outright. 33 Concurrent with this new classification procedure, in April 1995, the EEOC voted to commit the agency to mediation as a voluntary alternative to normal charge processing. Thus, mediation became the forum for alternative dispute resolution (ADR) that was integrated into the EEOC charge processing procedure. 34 Commissioners Paul Miller and R. Gaull Silberman headed the ADR taskforce that made the recommendations. Mediation was selected largely because of the success of a pilot program that was conducted in four field offices in 1991-1992. 35 In addition to the PCHP, the Casellas administration introduced a National Enforcement Plan (NEP), which was fully implemented by Fiscal Year (FY) 1997. The NEP employed a three-prong approach to address the agency's mission. The prongs were: (1) the prevention of discrimination through enhanced education, technical assistance, and outreach to the employer community, charging party advocacy groups, and other stakeholders; (2) the eradication of discrimination through investigation, conciliation, and litigation of charges with significant impact; and (3) effective caseload and inventory management, including effective use of alternative dispute resolution methods, to allow the Commission to focus substantial resources on those matters having the greatest impact. 36
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The Priority Charge Handling Procedures allowed the EEOC to take great strides in reducing its charge backlog. In FY 1995, immediately prior to introduction of the PCHP, the agency had a backlog of 111,345 charges. At the end of FY 1997, the inventory was reduced to 64,576 charges - a reduction of o v e r 4 0 % . 37 By FY 1998, this backlog had been reduced to 52,011 - a 53% reduction from the pre-PCHP backlog. The PCHP and the NEP of the Casellas administration resulted in the reduction of average charge resolution time, a reduction in the average age of the pending charge backlog, a reduction in the average caseload of the EEOC investigator, and in other qualitative improvements. 38 On October 23, 1998, Ida L. Castro was sworn in as the Chairwoman of the EEOC. During her first year of tenure, the EEOC achieved many accomplishments, including cutting the backlog of private sector charges by 23% to a 15-year low, reducing the average charge processing time, and reforming the federal sector EEO complaint process. ''39 The agency nearly tripled the number of successful charge resolutions handled through voluntary mediations to 4,833 at year-end FY 1999, up from 1,631 in FY 1998. 40 Similarly, the program gained greater acceptance among its target audience; FY 1999 saw an increase in the number of participants in the program. Eighty-one percent of charging parties (up from 68% the year before) and 36% of employers (up from 28%) accepted offers to mediate. The settlement success rate for mediated cases was 65%, significantly higher than the 50% success rate anticipated by the agency. The EEOC also met a key mediation goal by mediating cases in an average of 87 days. a] B. The E E O C Mediation Program
Beginning February 1991, the EEOC introduced an ADR pilot mediation program as a strategy to manage its burgeoning caseload. The one-year pilot tested the use of mediation in the Philadelphia, New Orleans, Houston, and Washington field offices of the EEOC. 42 Statistical information was gathered regarding the successes and deficiencies in the program. Professor Craig A. McEwen of Bowdoin College evaluated the pilot program. He found a high level of participant satisfaction with the pilot program. He concluded that mediation resolved a significant number of charges in a fair manner. 43 The success of the pilot program resulted in the appointment of a mediation task force to explore the possibility of expanding the use of mediation. In 1995, the task force, under the direction of Commissioners Miller and Silberman, concluded that mediation was a viable process. The EEOC adopted a policy statement concerning ADR that included support for mediation. 44 Included in
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the policy statement were certain core principles that governed the ADR program administered by the EEOC. These principles are that the program "must further the agency's mission to eliminate and remedy employment discrimination" and it must be fair to the participants. Voluntariness, neutrality, confidentiality, and enforceability were identified as the requirements to achieve this fairness. 45 The EEOC uses the A-B-C classification system as the basis for selection of cases that were deemed appropriate for mediation. Charges that are identified as "A" charges usually are not selected for mediation. These charges involve cases where a reasonable case finding is highly likely or where important pattern or practice/systemic issues or other public policy concerns militate against the use of pre-investigation mediation. Where a party requests that an "A" charge be mediated, the District Director and Regional Director have the discretion to allow such mediation. However, this is the exception and not the rule for such cases. Charges classified as "B" charges are charges where further investigation is required to make a determination concerning their merit. In general "B" cases are eligible for pre-investigation mediation. However, "B" cases that involve the Equal Pay Act or pattern or practice/systemic allegations are not eligible for pre-investigation mediation. Charges classified as "C" are considered inappropriate for mediation since they are deemed unlikely to result in a probable cause determination. 46 Intake personnel usually make the initial classification decision. Each office has a process that reviews and ensures the accuracy of its classification decisions. Equal Pay Act cases are not eligible for pre-investigation mediation. In general, at the time a charge is filed, the charging party is advised that voluntary mediation is available and is asked whether or not he/she is willing to participate. Once the intake officer classifies the charge as a "B," and it is confirmed that the charging party has agreed that he/she is willing to participate in mediation, the respondent is sent the charge along with a letter that offers the respondent the opportunity to participate in mediation. Since mediation is a pre-investigation dispute resolution procedure, the incentive for the respondent to participate is that, in addition to all of the inherent advantages of mediation, the respondent can postpone preparing a position statement and/or responding to an EEOC information request. 47 Where mediation is not successful, the investigation process is reinstated and the respondent is asked to submit a position statement and otherwise cooperate with the investigation. If the respondent elects to mediate, this process is kept separate from the pending, and now suspended, investigation. Thus, a "firewall" exists that ensures that any confidential information obtained in the mediation process
Has the EEOC Hit a Home Run?
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is not disclosed to EEOC investigators. Investigators are instructed to cease any line of inquiry with a charging party, if the party begins to discuss what occurred in mediation. The EEOC requires that the mediation process be completed within 100 days from the time a charge is received in the office. The EEOC mediation program uses EEOC staff employees as mediators as well as external mediators who are either paid pursuant to an EEOC contract or serve on a p r o bono basis. The EEOC provides extensive training to all mediators. III. THE
RESEARCH
CATALYST
The EEOC decided in 1999 that it needed a comprehensive evaluation of its mediation program based on the end users' perceptions of the process, the mediator and the outcome. On August 18, 1999, Drs. McDermott, Jose, Obar, and Bowers were retained by the EEOC to design, administer and analyze a "customer satisfaction survey" of the EEOC mediation participants (EEOC Order No. 9/0900/7632/2). The purpose of the study was to examine how the participants of the program - charging parties and respondents - evaluated the EEOC mediation program. The Participant Satisfaction Survey, the instrument that was used to collect the data, incorporated several research questions based on a comprehensive review of the literature in the field. The main research questions are the following: (1) What was the participant feedback regarding the mediation? More specifically, how did the participants view the procedural and distributive elements of the mediation program? (2) Does participant feedback vary depending upon variables such as mediator type, representation, mediation status, and mediation result? (3) Would the parties use the program again?
IV. LITERATURE REVIEW A review of the various studies that evaluated the effectiveness of ADR programs indicates that any evaluation of a dispute resolution method should include participant feedback regarding their perceptions of procedural justice (justice with regard to the process) and distributive justice (justice with regard to the outcome). Procedural justice can be defined as "the perceived fairness of the process through which decisions are made. ''4~ The theory of procedural justice posits "disputants prefer procedures that provide them with voice, control over the outcome, and fair treatment by the third party. ''49 Thus, parties to a dispute
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must first be given a fair chance to voice their concerns. Second, parties must have control over the outcome of mediation since mediation is about self-determination. Third, the mediator must be perceived as, and be, fair and neutral. Measurement of participant perception of procedural justice regarding mediation must consider whether the participants felt that they were treated with fairness by the mediator, their voice was heard, and they had control over the outcome. Fairness is an essential element of procedural justice. It is especially crucial to any mediation program because it is a necessary ingredient to induce participation and settlement. 5° Hodges notes that the EEOC has recognized not only the importance of actual and perceived fairness in its mediation program, but also that "fairness requires adequate information, the opportunity for assistance, knowing and voluntary participation, neutrality, confidentiality, and enforceability." The EEOC ADR programs were developed according to these principles of fairness. 51 As indicated above, an element of procedural justice is "knowing participation," i.e. participant understanding of the process. Research in organizational theory has shown that understanding is an important factor in employee attitudes towards organizational activities. 52 Hence, understanding of the process is essential for participant satisfaction with the process and for their perception that the process was fair. Hodges states "in order to make an informed choice about whether to participate in mediation, the potential parties need information about the mediation process, statutory rights and remedies, and the advantages and disadvantages of both mediation and litigation." She also points out that both the EEOC and Administrative Conference of the United States (ACUS) recognize that ADR programs must be fair to the participants, and fairness requires that extensive information be provided to the participants about the process. It should be noted that one of the recommendations of the Task Force on Alternative Dispute Resolution in Employment, which established the "Due Process Protocol for Mediation and Arbitration of Statutory Disputes Arising Out of the Employment Relationship," is that participants be "given access to information about both the process and the substance of the dispute. ''53 The "timing of mediation" and "representation" are two other important variables that affect procedural justice. Prompt scheduling of a program is considered to be an indication of effective program management. The timing of mediation is important since one of the touted advantages of mediation is that it is less time consuming than other methods of dispute resolution. Once the case is referred to mediation and if it takes place promptly (i.e. before positions harden), a settlement may be more likely. ''54
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Fairness/procedural justice requires that there is opportunity for assistance to the participants. Representation in the form of either attorneys or other knowledgeable persons, for one or both parties, may serve to balance powerY It is important not only to let the participants know that they can bring in representatives, but also to notify each party as to who will be representing the other party. 56 There is empirical evidence to support the notion that when one party to a dispute appeared with an unanticipated representative, the other party was concerned about the fairness of the process. 57 The mediator is a crucial assistant to the process of problem solving based decision making. As the third party who assists the parties to a dispute, a mediator facilitates communication, helps them to focus on the real issues of the dispute, and assists them in generating options for settlement. 58 Mediators, unlike arbitrators, do not mandate solutions to a dispute. Instead, they are facilitators who enable parties to reach their own agreement. 59 As facilitators, it is essential that the mediators understand the nature of the dispute in question and the viewpoints of the parties to the dispute. This understanding becomes critical in clarifying the issues to the parties, which is important to promote cooperative problem solving. Mediators also serve as "a reality check, alerting parties to unrealistic expectations. ''6° One of the commonly included criteria in the definitions of mediation is that the mediator be neutral or impartial. 61 Some researchers point out that "neutrality, as traditionally practiced, actually includes two potentially conflicting qualities: (1) impartiality, which refers to the mediator's ability to maintain an unbiased relationship with the disputants; and (2) equidistance, which involves the mediator temporarily becoming aligned with each party to encourage disclosure and assist the party in expressing the case. ''62 Mediators must be impartial, fair, and diligent in order to foster trust between the parties and between the mediator and the parties. They must also maintain the confidentiality of the parties. 63 Participant perception of distributive justice or justice with regard to the outcome is another important element of participant satisfaction with the program. It is not surprising that participants would perceive the outcome to be more just when they received what they wanted than when they did not. However, even when the mediation does not end in a settlement, it has the chance to further the communication between parties since it brings the parties together. Distributive justice measures include participant satisfaction with the outcome of mediation and participant perceptions regarding the fairness of the outcome. 64 Research has shown that participants not only differentiate between procedural justice and distributive justice, but also consider procedural justice to be more important in certain situations. 65
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Gordon, in his study of the issues of justice in a union-management grievance procedure, emphasized the importance of procedural justice in workplace dispute resolution. 66 In his survey of employees' overall satisfaction with the grievance system, he found that the overall evaluation of the grievance system was significantly correlated with the measures of perceived procedural and distributive justice. He also found that the correlation was significantly higher for the procedural justice factors as opposed to the distributive justice factors. Thus, his research seemed to support the findings of Folger and Greenberg 67 that the "procedures followed, rather than the outcomes obtained, have the greater influence on the overall evaluation of dispute-resolution systems. ''68 In conclusion, the literature review shows that the measurement of procedural and distributive justice is essential to the evaluation of any mediation program. Elements of procedural justice include variables such as "knowing participation," representation, performance of the mediator, fairness of the process, and opportunity to present participant views. Elements of distributive justice include participant satisfaction with the outcomes and the fairness of the outcomes.
V. RESEARCH M E T H O D O L O G Y The primary method of data collection is a survey of the participants, who were the charging parties (employees or ex-employees) and the respondents (employers and ex-employers). We also use the internal documents from the EEOC to collect information regarding the characteristics of the charges. The participant feedback survey instrument is composed of a 22-item inventory that includes 14 questions that employ a five-point Likert-type response scale ranging from strongly disagree (1) to strongly agree (5). A Likert scale is used because there is evidence that it is superior to other measurement formats in measuring attitudes, and its underlying factorial structure is more stable across situations and cultures. 69 Of the remaining eight questions, five require a yes or no response, two allow for open-ended responses, and one incorporates a multiple-choice set of responses. Care is taken to ensure that we measured the EEOC's goals (where applicable) with regard to the fairness of its mediation program, i.e. to provide adequate information about the process, the opportunity for assistance, knowing and voluntary participation, neutrality, confidentiality, and enforceability. The survey was pilot-tested and modifications were made in order to improve its construct validity and when compared to these results we are able to ascertain the survey's external validity or reliability. 7°
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The target population includes all the participants in the EEOC mediation process conducted under the supervision of the 50 EEOC field offices from approximately March 1 to July 3 l, 2000. Participants received the surveys at the end o f their mediation sessions and were asked to complete them, place them in an envelope, and seal them. Mediators then forwarded these surveys to the local A D R coordinator along with the other required documentation about the mediation. The local A D R coordinators were asked to mail the surveys once a week directly to the research team. The mediators or field office A D R coordinators were also asked to indicate when participants did not fill out the survey. This was done to allow the researchers to measure the non-response bias. A comprehensive protocol was developed to ensure that data collection was done not only efficiently, but also in a manner to assure client confidentiality. The response rate for these field offices for charging parties was at least 46.25%. The authors received a total of 2,209 surveys completed by the charging parties. Of these, 526 responses were not used in this study (while some were not filled out or only partially completed, most rejected surveys either did not indicate the case charge number or did not have a matching case number in the EEOC database) resulting in a total of 1,683 usable surveys. Thus, the effective participation rate was at least 35%. The response rate for respondents was at least 50%. Of the 2,402 surveys received from the respondents, only 1,572 were in a usable state resulting in an effective participation rate of 33% by the respondents. The combined effective participation rate of the total sample was approximately 34%. The reason that we state our effective participation and response rate as "at least" figures is that the EEOC district offices did not distribute the survey to participants exactly on March 1. While we derived our figures by looking at all the EEOC mediations held in all 50 field offices between March 1 and July 31, it is clear that not all mediations were surveyed due to this staggered rollout. Also, we have not included those surveys (for mediations held by July 31) which we received after our cutoff date. A review of these responses that were not used indicates that they are, in all ways, similar to the results that we report below. Another factor that reduced our response rate was the need for crosstabulations. A number of surveys without charge numbers were excluded from the sample since this preyented us from obtaining the information needed to perform cross-tabulations. Finally, where parties at the site of the mediation declined to fill out surveys, a "non-response log" was kept. Reviews of these non-response logs indicate that there is no probative evidence that the reasons for non-response would affect our reported results.
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The data analyses used here are primarily summary statistics, such as frequencies, percentages, and averages. The primary focus is to set forth the large scale categories of participant responses. The appropriateness of this approach comes from the nature of the study, which measured participant satisfaction with the mediation program.
VI. RESULTS There were 1,683 completed surveys from the charging parties and 1,572 completed surveys from the respondents. These numbers include only properly completed questionnaires. As discussed earlier, in cases where the protocol and the instructions were not strictly followed, the questionnaires were excluded from the final sample.
A. Profile of the Sample What are the characteristics of the sample? How representative is this sample when compared to the cases mediated by the EEOC? To answer these questions, we present a profile of our sample and a comparison of the profile of cases mediated by the EEOC during the March 1-July 31 period. Information was gathered about the company size of the respondents, the applicable statutes (Title VII, ADA, ADEA), bases of the charge (religion, gender, national origin, race, disability, age), issues (discharge, terms/conditions of employment, harassment, promotion, sexual harassment, wages, discipline, and reasonable accommodation), the mediator type (external and internal), the presence or use of a legal or non-legal representative, and the status of the mediation at the time the questionnaire was completed. The majority of the participants were employed in companies with 15 to 100 employees (40.7% of charging parties, 41.7% of respondents) and companies with more than 500 employees (30.2% and 30.3%, respectively). Title VII is the statute that is applicable to the majority of charges (71.2% of charging parties and 71.7% of respondents). The bases of the majority of charges were race and gender, followed by disability, age, national origin, and religion. As indicated in Table 1, the majority of the charges were filed under the issues of discharge and terms and conditions of employment. It should be noted that some parties filed a charge under more than one statute, basis, or issue. For both groups in our sample, the vast majority (78%) of cases were mediated by internal mediators. There is a marked difference in the use of representation by the two parties. Respondents were more likely to have a representative going into the mediation. Only 41% of the charging parties were
Has the EEOC Hit a Home Run ?
Table 1.
Comparison
15
of the Characteristics Between EEOC
Our Sample and the
Database.
EEOC Mediation Cases (March 1-July 31)
Research Sample Charging Parties Respondents
Company Size 15 to 100 employees 101 to 200 employees 201 to 500 employees More than 500 employees
40.2% 13.7% 11.3% 32%
40.7% 14.9% 12% 30.2%
41.7% 14.1% 11.3% 30.3%
71.2% 21.4% 23.5 %
71.7% 21.1% 24.1%
2.5% 30.4% 8.9% 37.9% 23.3% 21.2%
2.5% 30.7% 9.6% 37.7% 23.8% 20.8%
48.6% 19.0% 17.1% 10.4% 10.1% 9.2% 9.2% 8.6%
49.6% 18.4% 16.8 % 10.6% 10.0% 8.7% 9.0% 8.7%
78.4% 20.5%
78.4% 20.6%
41.3% 57.7%
58.5% 39.8%
73.8% 13.8%
81.0% 13.3%
Statute Title VII Age Disability
73.8% 19.2% 22.3 %
Basis Religion Gender National Origin Race Disability Age
2.4% 33.3% 8.5% 35.2% 23.1% 19.3%
Discharge Terms and Conditions Harassment Sexual Harassment Promotion Wages Discipline Reasonable Accommodation
46.0% 20.9% 19.1% 12.1% 10.4% 9.1% 8.9% 8.8%
External Internal
74% 25%
Issue
Mediator Type
Representation Yes No
n/a n/a
Mediation is completed Mediation is on-going
n/a n/a
Mediation Status
The percentages do not add up to 100 because some participants did not furnish the required information.
16
E. PATRICKMcDERMOTTET AL.
represented, whereas 58% of the respondents were represented. For the majority of participants (74% of charging parties and 81% of the respondents), their mediation was completed at the time of the survey. In summary, the discussion above demonstrates the very strong similarity between the sample and population group with regard to the type of mediator used, the company size, the statute the cases were filed under, the basis of the charges, and the specific issue under consideration. These similarities demonstrate that the results of this study are generalizable to the population. B. Procedural Elements and EEOC Mediation
Four statements were used to measure the participants' satisfaction with the mediation process. Of these, the first two were "pre-mediation session" or "mediation preparation" statements regarding whether the participants received an adequate explanation from an EEOC representative and whether the session was scheduled promptly. The next two statements asked whether the participants understood the process and had an opportunity to present their views. a. Explanation, Scheduling, and Voice An analysis of the participant responses regarding their "pre-mediation" or mediation preparation experiences shows that the participants had a positive experience. Eighty-seven percent of the participants agreed with the statement "prior to my attendance at this mediation session today, I received an adequate explanation about mediation from an EEOC representative." The mean score for the statement was 4.23. As indicated in Table 2, data also show that both charging parties and respondents were in agreement regarding the statement. Eighty-eight percent of the charging parties agreed with the statement and 85% of the respondents agreed with the statement. The mean score for the charging parties was 4.24 and the respondents was 4.21, indicating that there is very little difference between the two groups regarding their attitudes on this issue. Eighty-nine percent of the participants agreed with the statement "the mediation was scheduled promptly." The mean score was 4.34, indicating that there was strong agreement about the prompt scheduling of mediation. Ninety-one percent of the respondents and 88% of the charging parties agreed with the statement. The mean score was 4.39 for the respondent group and 4.28 for the charging party group. Analysis reveals that the difference in the mean scores is significant, indicating that the respondents were more satisfied than the charging parties with the prompt scheduling of mediation.
Has the E E O C Hit a Home Run?
17
The authors believe that the reason for the difference in the mean scores is significant is that for the charging parties, many of whom have had an adverse personnel action taken against them, one simply can never get a hearing, mediation, or other administrative action quickly enough. In general, a respondent does not have the same pressing need for immediate action as the s t a t u s q u o is acceptable to the respondent because the respondent determined that s t a t u s q u o and not the charging party. Participants also agreed with the statements regarding the mediation session. Ninety-four percent of the participants agreed with the statement "after the mediator's introduction, I felt that I understood the mediation process." The mean score was 4.44, indicating that participants strongly agreed that they understood the process. A comparison of the two groups shows that 96% of the respondents and 92% of the charging parties agreed with the statement. Analysis reveals that the responses of the participant groups varied significantly and that the respondents (mean score of 4.53) agreed more strongly than the charging parties (mean score of 4.35) that they understood the process. While the overall results indicate that both parties understood the process, the authors posit that the reason for the significant mean scores difference is that in general the respondent may enter the mediation process with an advantage in understanding the mediation process. This may be because the respondent has usually spent some time considering whether, as the charged party, mediation is appropriate. Also the respondent is often, but not always, more experienced in dispute resolution and litigation. Participants also felt that they had a voice during the process. The vast majority of the participants agreed with the statement "I (or my representative) had a full opportunity to present my views during the mediation process." Ninety-five percent of the respondents and 90% of the charging parties agreed with this statement, indicating that the opportunity to present one's views - one of the essential elements of procedural justice - was present in the EEOC mediation process. The average mean scores reveal that the respondents (4.57) felt more strongly than the charging parties (4.39) that they had an opportunity to present their views. The authors are not sure why the difference in mean scores is significant. Since the charging party is the "moving party" in such proceedings it is interesting that significantly more did not feel as though they had a full opportunity to present their views. A review of responses to an open-ended survey question allowing for broad comments on the process did not provide any insight into this result. One possible explanation is that the views that some charging parties sought to present were not conducive to resolution of the dispute and may have been deflected by or otherwise de-emphasized by the mediator.
E. PATRICK McDERMOTT ET AL.
18 Table 2.
Participant Satisfaction with the Explanation, Scheduling, and Voice.
Statements
Prior to my attendance at this mediation session today, I received an adequate explanation from the EEOC representative. The mediation was scheduled promptly After the mediator's introduction, I felt that I understood the mediation process I (or my representative) had a full opportunity to present my views during the mediation process.
Charging Parties Mean (n,%)
Respondents Mean (n,%)
4.24 (1637, 88.3%) 4.28 (1673, 87.7%) 4.35 (1676, 91.6%) 4.39 (1677, 89.8%)
4.21 (1516, 85.4%) 4.39 (1559, 90.5%) 4.53 (1561, 95.8%) 4.57 (1563, 95.0%)
Notes: Satisfaction is measured by the mean responses of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists between the mean responses of the charging parties and respondents. For example, if the view that the charging party sought to present was that his boss was a "lying s.o.b." it makes sense that the mediation process may have discouraged such venting or other adversarial conduct. Another possible explanation is that, as one will see at page 23 infra, 26% fewer charging parties stated that they obtained what they wanted at mediation. Finally, more respondents were represented than charging parties. It may be that represented parties are more likely to report that they had a full opportunity to present their views. b. The Mediator The second set of questions focused on statements regarding the mediator's performance. More specifically, participants were asked whether the mediator understood their needs, helped to clarify their needs, remained neutral in the beginning as well as throughout the process, helped to develop options for the resolution o f their claim, and used procedures that were fair to them. The majority of the participants felt that the mediator understood their needs (87%) and helped to clarify their needs (82%). Eighty-six percent of the 1,669 charging parties and 87% of the 1,552 respondents agreed that the mediator understood their needs. The mean scores of the charging parties (4.30) and the respondents (4.31) indicate that the parties' responses were identical with regard
Has the EEOC Hit a Home Run ?
19
to the statement "the mediator understood my needs" the participants also felt that the mediator helped clarify their needs. Eighty-four percent of the charging parties and 79% of the respondents expressed either strong or very strong agreement with the above statement. Although the agreement was strong among participants in general, it was stronger among charging parties (mean of 4.25) than among respondents (mean of 4.17). An overwhelming majority of the participants agreed with the statements regarding the neutrality of the mediator. Of the 1,674 charging parties who responded to the statement "at the beginning of the mediation, I considered the mediator to be neutral," 1,542 (92%) agreed with the statement. Similarly, 1,441 of the 1,566 respondents (92%) who answered indicated strong agreement with the statement. The mean scores of 4.44 for the charging parties and 4.49 for the respondents indicate the similar strength of the attitudes of participants. Ninety-one percent of the charging parties and 89% of the respondents agreed "the mediator remained neutral during the session." An analysis of the mean scores of the participants (4.42 for the charging parties and 4.43 for the respondents) shows that the participant groups felt almost exactly as strongly that the mediator remained neutral during the session. Participants also felt that the mediator played a very useful role in the development of options for the resolution of the charge. 7~ Eighty-five percent of the charging parties and 84% of the respondents agreed with the statement "the mediator helped the parties develop options for resolving the charge." The nearly identical mean scores of the participants (4.27 for the charging parties and 4.23 for the respondents) attest to the fact that the attitudes of both participant groups were almost exactly the same. Participants agreed that the procedures used by the mediator were fair to them. Of the 1,668 charging parties who responded to the statement "the procedures used by the mediator in the mediation were fair to me," 1,476 (89%) expressed agreement with the fairness of the mediation procedures. Similarly, of the 1,564 respondents who answered, 1,436 (92%) expressed agreement. Analysis of the mean scores reveals that the respondents (4.44) agreed more strongly than the charging parties (4.33) regarding the fairness of the procedures used by the mediator. Overall, as shown in Table 3, the participants were very satisfied with the role and conduct of the mediator. There were some differences between the two participant groups regarding their perceptions of mediators. A higher percentage of charging parties (84%) than respondents (79%) agreed that the mediator helped to clarify their needs. This result suggests that the charging parties may have entered the mediation with a greater need for assistance from a third party to help them understand what they wanted. This is also
E. PATRICKMcDERMOTT ET AL.
20 Table 3.
Participants' Satisfaction with the Mediator. Charging Parties Mean (n,%)
Respondents Mean (n,%)
4.30 (1669, 86.4%) 4.25 (1665, 84.4%)
4.31 (1552, 86.9%) 4.17 (1504, 79.3%)
At the beginning of the mediation, I considered the mediator to be neutral. The mediator remained neutral throughout the session. The mediator helped the parties develop options for resolving the charge.
4.44 (1674, 92.1%) 4.42 (1664, 90.7%)
4.49 (1566, 89.1%) 4.43 (1564, 89.1%)
4.27 (1661, 85.1%)
4.23 (1545, 83.9%)
The procedures used by the mediator were fair to me.
4.33 (1668, 88.5%)
4.44 (1564, 91.8%)
Statements
The mediator understood my needs. The mediator helped clarify my needs.
Notes: Satisfactionis measured by the mean responses of the participants on a Likert scale (scale of 1 [stronglydisagree] to 5 [stronglyagree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significantdifference (evaluated at 95% confidence level) exists between the mean responses of the charging parties and respondents.
consistent with the theory that, overall, respondents have a better idea of what they want to get from mediation at the time that they agree to the mediation. Since respondents can decline to go to mediation, and since for all practical purposes the charging parties are strongly encouraged by the EEOC to give mediation a chance, there is a greater self-selection process among respondents who go to mediation. Regarding the participant attitudes concerning fairness of the procedures used by the mediator, 92% of the respondents agreed the procedures were fair, whereas 89% of the charging parties agreed. This is an interesting result that begs for further research. As posited earlier in this paper, it is possible that some charging parties, in pressing their discrimination claims, may have preferred procedures that allowed them to "argue" their claim but were not necessarily conducive to resolution by mediation. For example, the use of an immediate caucus that separates the parties for the majority of the mediation may be an effective dispute resolution tool but may leave parties, particularly charging parties, feeling as though they did not get their full say and therefore the procedure was not perceived as fair.
Has the EEOC Hit a Home Run ?
21
As illustrated in this section on procedural elements, both the charging parties and respondents were very satisfied with the fairness of the process. The mean scores of both participant groups were over 4.00 on a 5-point scale, indicating their strong agreement with the process statements. Thus, participants indicated a high level of satisfaction with the EEOC mediation process.
C. D i s t r i b u t i v e E l e m e n t s a n d M e d i a t i o n
Participant satisfaction with the distributive elements of mediation was measured using four questions concerning the results. More specifically, three questions were asked about participant attitudes regarding the realistic nature of the options developed during the mediation, their satisfaction with the fairness of mediation, and their satisfaction with the results. The fourth distributive question was a "yes/no" question concerning whether the participants obtained what they wanted from the mediation. With the exception of this question, all other distributive and procedural questions discussed above were measured using the above-referenced Likert scale. The first statement concerning the mediation outcome was "most of the options developed during the mediation session were realistic solutions to resolving the charge." The participants responded very similarly to this statement: 76% of the respondents and 75% of the charging parties expressed agreement with the statement. A larger percentage of participants (16% of respondents and 13% of charging parties) remained neutral regarding this statement as opposed to the other mediation process statements. The mean scores of 4.00 for the respondents and 3.95 for the charging parties indicate that they agreed upon the realistic nature of the options developed during the session and that there was very little difference in the views of the participant groups regarding this issue. Eighty-seven percent of the respondents and 79% of the charging parties agreed with the statement "I was satisfied with the fairness of the mediation session. ''72 An analysis of the mean scores of the two groups indicates that respondents agreed more strongly (4.31) with the statement than the charging parties (4.07). While the vast majority of the participants (83%) were satisfied with the fairness of the mediation session, their satisfaction with the results (59%) of the mediation was more tempered. Of the 1,547 charging parties who responded to the statement "I was satisfied with the results of mediation," 55% agreed with the statement, whereas of the 1,477 respondents, 63% agreed. Thus, the respondents were more satisfied with the results of the mediation than the charging
22
E. PATRICK McDERMOTT ET AL.
parties. The mean scores reveal that respondents agreed more strongly (mean of 3.67) than the charging parties (3.38) with the statement. Table 4 presents these findings. This result should be interpreted with some caution since our sample includes participants from on-going mediations. One possible explanation for the significant difference in the parties' response regarding satisfaction with the results o f the mediation and the fairness of the mediation m a y be found in the next set of results. More charging parties than respondents reported that they did not get what they wanted from the mediation. The literature to date has supported the conclusion that where a party does not get what he or she wants the party is more likely to state that the process was not fair or that he or she was not satisfied with the results. The survey also sought to measure whether the participants obtained what they wanted from mediation. This is a strong distributive measure. The participants were asked whether they knew, before going into mediation, what they wanted from mediation. If they stated that they did, then they were also asked whether they obtained what they wanted. 73 O f the 79% o f the charging parties who indicated that they knew what they wanted, 74 only 41% stated that they obtained what they wanted. O f the 83% of the respondents who knew what they wanted going into the mediation, 57% stated that they obtained what they wanted.
Table 4.
Participant Satisfaction with the Distributive Elements o f Mediation. Charging Parties Mean (n,%)
Respondents Mean (n,%)
Most of the options developed during the mediation session were realistic solutions to resolving the charge.
3.92 (1648, 75.2%)
4.00 (1519, 75.6%)
I was satisfied with the fairness of the mediation session.
4.07 (1648, 78.9%)
4.31 (1559, 86.9%)
I was satisfied with the results of the mediation.
3.38
3.67 (1477, 62.6%)
Statements
(1547, 54.8%)
Notes: Satisfaction is measured by the mean responses of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists between the mean responses of the charging parties and respondents.
23
Has the EEOC Hit a Home Run? Mini - Win
Another distributive justice question targeted those participants whose disputes did not get resolved during mediation. As indicated earlier, 26% of the charging parties and 19% of the respondents did not resolve their claims. They were asked whether progress was made in mediation toward the resolution of their claim. Progress, if made, is a mini-win for the parties since it brings them closer together toward the resolution of the charge. As shown in Table 5, of the 488 charging parties who responded, 29% agreed that progress was made. Similarly, 28% of the 486 respondents agreed with the statement. The mean scores of 2.60 for the charging parties and 2.72 for the respondents indicate that the respondents agreed more strongly than the charging parties that progress was made in mediation. In summary, the analysis of participant responses shows that the participants were satisfied with both procedural and distributive elements of mediation. The participants were more satisfied with the procedural elements than with the distributive elements. Regarding the procedural elements, participants expressed the highest degree of satisfaction with the neutrality of the mediator, the opportunity to present their views, and their understanding of the process. Conceming the distributive elements, participants were more satisfied with the fairness of mediation and with the realistic nature of the options developed during the mediation than with the results of mediation. D. The Influence o f Other Variables on Participant Satisfaction
We analyzed participant responses to see whether they varied based on mediator type, representation, mediation status, and mediation result. The analysis is based on within-group comparisons. a. Type o f Mediator
The EEOC mediation used both internal mediators (EEOC staff) and external mediators for mediation. We found only three significant differences (see the bolded numbers in Table 6) in the responses of the charging parties and Responses of Participants Whose Claims Were Not Resolved in Mediation Regarding Whether Progress was Made Toward Resolution.
Table 5.
Participant Group
Total Responses
Charging Parties Respondents
488 486
Mean Rating
Strongly Disagree/
Neither Agree nor Disagree
2.60 2.72
48.6% 41.6%
22.1% 30.9%
Agree/Strongly Agree
29.3% 27.6%
24
E. PATRICK McDERMOTT ET AL.
Table 6. Statements
Participant Satisfaction Based on Mediator Type. Charging Parties Mean (n,%) Internal External
Respondents Mean (n,%) Internal External
Procedural Elements Explanation, Scheduling and Voice Adequate Explanation Prompt Scheduling Understood the process Opportunity to present views
4.26 (1277, 4.32 (1311, 4.37 (1314, 4.39 (1314,
88.4%) 88.6%) 89.6%) 89.6%)
4.20 (343, 88.6%) 4.16 (346, 85.0%) 4.31 (345, 91.3%) 4.37 (346, 90.8%)
4.23 (1189,86.7%) 4.43 (1226, 91.8%) 4.54 (1228,96.0%) 4.57 (1227,94.9%)
4.14 (311, 81.4%) 4.27 (317, 85.5%) 4.50 (317, 95.0%) 4.57 (320, 95.9%)
4.23 (344, 85.5%) 4.18 (339, 82.0%) 4.41 (344, 92.2%) 4.36 (342, 90.6%) 4.21 (341, 86.5%) 4.33 (342, 88.9%)
4.31 (1221,87.1%) 4.17 (1182,79.8%) 4.47 (1229,91.5%) 4.43 (1227,89.0%) 4.24 (1215,83.9%) 4.44 (1229,91.9%)
4.30 (315, 86.3%) 4.16 (307, 77.5%) 4.56 (321, 94.4%) 4.45 (321, 90.3%) 4.19 (314, 83.8%) 4.45 (319, 92.2%)
3.83 (336, 71.1%) 3.99 (337, 75.4%) 3.37 (318, 53.8%)
3.99 (1194,75.5%) 4.30 (1227,87.1%) 3.68 (1156,63.6%)
4.02 (309, 75.5%) 4.34 (316, 85.4%) 3.62 (307, 59.0%)
Mediator Mediator understood needs Mediator helped clarify needs Mediator neutral in the beginning Mediator remained neutral Mediator helped develop options Mediator used fair procedures
4.32 (1309, 4.28 (1309, 4.45 (1313, 4.44 (1305, 4.29 (1303, 4.34 (1309,
86.6%) 85.1%) 92.2%) 90.9%) 85.0%) 88.5%)
Distributive Elements Development of realistic options Satisfaction with the fairness of the session Satisfaction with the results
3.99 (1295, 76.5%) 4.10 (1294,79.9%) 3.39 (1213, 55.2%)
Notes: Satisfaction is measured by the mean responses of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists between the mean responses of the participants in the cases mediated by external mediators and those mediated by internal mediators.
Has the EEOC Hit a Home Run?
25
respondents based on mediator type. Both charging parties and respondents who had an internal mediator expressed greater agreement about the prompt scheduling of the mediation than those who had an external mediator. This data suggests that there may be something in the mediation scheduling process that favors the internal as opposed to the external mediators. According to Steve Ichniowski, EEOC National ADR Coordinator, this is probably due to the fact that the scheduling of external mediations can take more time because documents have to be mailed, forms filled out and mediation space obtained by the mediator. For internal mediations, Ichniowski indicated that the case file can often be walked over to the mediator who can immediately contact the parties and schedule them to meet at an available EEOC office space dedicated to mediation. Charging parties also rated intemal mediators higher than external mediators regarding the realistic development of options. This data suggests that the expertise of internal EEOC mediators, with their specialized dispute resolution knowledge under the law of Title VII, results in the development of more realistic options. It should be noted that the comparison of mean scores from the six statements regarding the performance of the mediators reveals that charging parties were slightly more satisfied with the performance of the internal mediator. Respondents on the other hand, though satisfied with both types of mediators, gave external mediators a slightly higher score on neutrality. This is especially true regarding their attitudes concerning the neutrality of the mediators in the beginning (mean of 4.56 for external mediators and 4.47 for internal mediators). However, as the mediation progressed, their attitudes changed. This can be seen from the fact that on the question concerning whether the mediator remained neutral during the session, the mean score was 4.45 for external mediators and 4.43 for intemal mediators. It appears that respondents were suspicious of the EEOC until exposed to the mediation program, at which point trust appears to have been earned. b. R e p r e s e n t a t i o n
During the mediation some participants were represented, whereas others were not. Representation did not mean just legal counsel; representatives included any individual who was present as an advocate. Our analysis of the mean scores of the participant groups revealed several significant differences based on representation. Among charging parties, those without representation were more in agreement than those with representation regarding the mediator's role in the clarification of needs and in the development of options. Similarly, charging parties who were without representation agreed more strongly than those with
26
E. PATRICKMcDERMOTt ET AL.
representation that most of the options developed during the session were realistic solutions to the resolution of charges. They were also more satisfied with the results of the mediation. Respondents differed significantly on eight statements concerning mediation based on representation. Those who were without representation agreed more strongly than those who were represented that they received an adequate explanation of the process and that their sessions were scheduled promptly. They also rated the mediator higher with regard to the mediator's understanding of their needs, clarification of issues, assistance in the development of options, and neutrality in the beginning. They were also more satisfied with the development of realistic options and with the fairness of the process. In general, it appears that participants who were without representation found mediators to be more helpful than those who were represented. They were also more satisfied with the outcomes. Overall, the results indicate that where respondents are represented, the respondents are more likely to report that the mediator did not perform as well in a broad range of areas. These results allow for some speculation - Do representatives in general, and respondents' counsel in particular, tend to criticize the mediator or the mediation process to their clients, thus causing these results? Do representatives educate clients on process or mediator flaws, thus causing a legitimate decline in clients' overall positive opinions regarding the mediation process? This is an interesting area as some mediation programs are designed with the view that attorney or other representative participation is a negative factor and thus limit or exclude such participation in the mediation. Table 7 shows the results based on representation. c. Charge Status
The attitudes of the participants towards mediation differed, significantly at times, based on their mediation status. As explained before, the participants in the study belong to one of three different groups based on the status of their mediation session: (1) mediation is completed, and the charge has been resolved in mediation; (2) mediation is completed, but the charge has not been resolved and the parties will not continue the mediation; and (3) mediation is ongoing. As one would expect, the perceptions of the participants were affected by the resolution status of their mediation. Table 8 indicates that satisfaction of the charging parties with both the procedural and distributive elements varied significantly based on mediation status. Charging parties who belong to the second group ("mediation finished, charges not resolved") consistently rated all the statements regarding mediation lower than the other two groups. Members
27
Has the EEOC Hit a Home Run? Table 7.
Statements
Participant Satisfaction Based on Representation. Charging Parties Mean (n,%) With Without Representation Representation
Respondents Mean (n,%) With Without Representation Representation
Procedural Elements Explanation, Scheduling, and Voice Adequate explanation
4.20 (669, Prompt scheduling 4.26 (664, Understood the process 4.37 (692, Opportunity to present 4.39 views (693,
85.7%) 87.3%) 91.6%) 88.9%)
4.28 (952, 4.30 (963, 4.34 (968, 4.38 (968,
90.1%) 88.1%) 91.5%) 90.5%)
4.12 (877, 4.34 (909, 4.50 (913, 4.55 (914,
82.8%) 89.2%) 95.0%) 94.3%)
4.33 (612, 4.46 (623, 4.57 (621, 4.60 (623,
88.7%) 92.3%) 96.9%) 96.0%)
Mediator Mediator understood
4.26 (690, Mediator helped clarify 4.18 needs (687, Mediator neutral in 4.44 the beginning (693, Mediator remained 4.41 neutral (690, Mediator helped 4.20 develop options (687, Mediator used fair 4.34 procedures (691,
83.9%) 80.6%) 91.8%) 90.3%) 81.4%) 88.4%)
4.33 (963, 4.30 (962, 4.43 (965, 4.42 (958, 4.31 (958, 4.32 (961,
88.2%) 87.1%) 92.3%) 91.0%) 87.8%) 88.6%)
4.25 (906, 4.11 (873, 4.44 (918, 4.40 (916, 4.14 (900, 4.41 (916,
85.2%) 77.8%) 91%) 88.1%) 81.2%) 91.3%)
4.39 (620, 4.25 (606, 4.55 (621, 4.48 (621, 4.37 (619, 4.48 (621,
89.4%) 81.5%) 93.6%) 90.3%) 87.9%) 92.6%)
Distributive Elements Development of realistic options Satisfaction with the fairness of the session Satisfaction with the results
3.86 (674, 70.9%) 4.12 (685, 79.6%) 3.22 (630, 49.0%)
4.01 (958, 78.2%) 4.03 (951, 78.2%) 3.48 (903, 58.5%)
3.95 (882, 74.8%) 4.27 (917, 85.7%) 3.62 (858, 60.4%)
4.07 (612, 76.8%) 4.37 (619, 88.5%) 3.74 (593, 65.9%)
Notes: Satisfaction is measured by the "mean responses" of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists between the mean responses of the participants with representation and without representation.
28
E. PATRICK McDERMOTT ET AL.
Table 8.
C h a r g i n g P a r t i e s ' S a t i s f a c t i o n B a s e d o n M e d i a t i o n Status.
Statements
Completed and resolved (Group 1) Mean (n,%)
Completed not resolved (Group II) Mean (n,%)
Ongoing (Group III) Mean (n,%)
Procedural Elements Explanation, Scheduling, and Voice Adequate explanation
4.31 (915, Prompt scheduling 4.36 (931, Understood the process 4.43 (935, Opportunity to present views 4.49 (932,
90.3%) 89.4%) 93.5%) 92.6%)
4.12 (301, 4.16 (304, 4.22 (303, 4.21 (304,
85.0%) 85.5%) 88.4%) 84.5%)
4.22 (227, 4.31 (231, 4.35 (231, 4.38 (232,
85.5%) 88.3%) 90.9%) 88.4%)
Mediator Mediator understood needs Mediator helped clarify needs Mediator neutral in the beginning Mediator remained neutral Mediator helped develop options Mediator used fair procedures
4.42 (931, 4.41 (927, 4.50 (932, 4.50 (927, 4.45 (928, 4.41 (927,
90.8%) 89.8%) 93.7%) 92.7%) 91.9%) 90.5%)
4.07 (301, 4.00 (302, 4.32 (304, 4.25 (303, 3.94 (299, 4.20 (304,
78.1%) 75.2%) 89.8%) 85.8%) 70.2%) 85.9%)
4.27 (232, 4.14 (228, 4.50 (232, 4.45 (231, 4.14 (229, 4.37 (232,
84.5%) 78.1%) 93.1%) 91.3%) 81.2%) 87.9%)
Distributive Elements Development of realistic options Satisfaction with the fairness of the session Satisfaction with the results
4.23 (930, 85.9%) 4.20 (925, 83.9%) 3.87 (879, 70.5%)
3.47 (291, 55.3%) 3.88 (300, 69.3%) 2.24 (287, 18.1%)
3.68 (226, 61.5%) 4.03 (231, 76.2%) 2.99 (203, 37.9%)
Notes: Satisfaction is measured by the "mean responses" of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists among the mean responses of the different groups.
Has the EEOC Hit a Home Run? Table 9.
29
R e s p o n d e n t s ' S a t i s f a c t i o n B a s e d o n M e d i a t i o n Status.
Statements
Completed and resolved (Group I) Mean (n,%)
Completed not resolved (Group II) Mean (n,%)
Ongoing (Group III) Mean (n,%)
Procedural Elements Explanation, Scheduling, and Voice Adequate explanation Prompt scheduling Understood the process Opportunity to present views
4.20 (922, 4.41 (952, 4.54 (952, 4.59 (957,
84.3%) 90.8%) 95.9%) 95.3%)
4.28 (308, 87.7%) 4.41 (314, 91.4%) 4.54 (314, 96.2%) 4.55 (312, 95.5%)
4.21 (203, 4.33 (206, 4.48 (207, 4.53 (207,
4.25 (311, 83.3%) 4.06 (300,73.7%) 4.55 (314, 94.6%) 4.42 (13, 89.1%) 3.94 (304, 71.4%) 4.44 (314, 91.1%)
4.25 (204, 4.05 (198, 4.44 (208, 4.41 (207, 4.01 (206, 4.38 (206,
3.43 (292, 50.7%) 4.21 (312, 82.4%) 2.55 (292, 19.9%)
3.73 (199, 63.3%) 4.24 (208, 87.0%) 3.20 (187, 44.4%)
87.7%) 89.3%) 94.2%) 94.7%)
Mediator Mediator understood needs Mediator helped clarify needs Mediator neutral in the beginning Mediator remained neutral Mediator helped develop options Mediator used fair procedures
4.35 (950, 4.24 (920, 4.47 (956, 4.45 (956, 4.37 (947, 4.46 (957,
88.6%) 81.7%) 91.1%) 89.1%) 89.3%) 92.2%)
86.3%) 76.3%) 91.8%) 89.9%) 77.7%) 92.7%)
Distributive Elements Development of realistic options Satisfaction with the fairness of the session Satisfaction with the results
4.26 (947, 87.1%) 4.37 (956, 88.4%) 4.15 (923, 81.0%)
Notes: Satisfaction is measured by the "mean responses" of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 [strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference evaluated at 95% confidence level) exists among the mean responses of the different groups.
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E. PATRICKMcDERMOTTET AL.
of the first group had the most positive feedback. For these questions, a clear continuum was shown for charging parties with the unresolved cases having the lowest positive results, the ongoing cases landing in a middle range, and the resolved cases registering the most positive results. As shown in Table 9, the pattern becomes clear for the respondents only when it comes to the distributive elements of mediation. The data also show that the charging parties, regardless of their mediation status, were able to differentiate between the procedural and distributive elements of mediation. For example, analysis of the mean scores of the second group reveals that the scores for all the procedural statements were either above 4 or close to 4 indicating participant satisfaction with the process. However, their scores for the distributive elements were lower. To summarize this section, participants' satisfaction with the distributive elements varied with their mediation status; so did their perception of the role of mediator in the clarification of needs and development of options. Among the participants, the responses of charging parties varied more dramatically based on the status of mediation. The bottom line is that where the dispute was resolved, the ratings were higher.
d. Mediation Result Participant responses were analyzed based on their satisfaction with mediation results. For charging parties and respondents, the results on every question varied significantly based on their satisfaction with the mediation results. As shown in Table 10, participants who were satisfied with the results of mediation agreed more strongly on the different procedural and distributive questions that were asked than participants who were not satisfied with the results. To summarize this section, participants rated the various elements of the EEOC mediation program highly. In general, they gave higher marks to the procedural aspects of the mediation program than to the distributive aspects. Among the distributive aspects, participant satisfaction was high regarding the fairness of the mediation. While participant responses sometimes varied significantly based on the different variables discussed above, it should be noted that their mean scores were almost always above four points (on a five-point scale), indicating their satisfaction with the various elements of the mediation. E. Would the Parties Use the Program Again ? As the literature review section indicated, a test of acceptability of a program is the willingness of its participants to use the program again. The parties were
Has the E E O C Hit a Home Run ?
Table 10.
31
Participant Satisfaction Based on Their Satisfaction with the Mediation Result.
Statements
Charging Parties Mean (n,%) Satisfied Not Satisfied
Respondents Mean (n,%) Satisfied Not Satisfied
Procedural Elements Explanation, Scheduling, and Voice Adequate explanation Prompt scheduling Understood the process Opportunity to present views
4.43 (826, 4.47 (843, 4.53 (848, 4.60 (845,
3.94 93.5%) (395, 79.2%) 4.01 92.2%) (398, 80.7%) 4.08 96.5%) (397, 83.1%) 4.05 95.7%) (398, 80.7%)
4.31 (886, 4.49 (917, 4.63 (918, 4.70 (923,
3.94 88.6%) (253, 77.9%) 4.08 92.6%) (259, 81.9%) 4.27 98.1%) (260, 89.2%) 4.20 98.2%) (258, 84.9%)
4.50 (915, 4.38 (881, 4.62 (922, 4.61 (922, 4.48 (911, 4.62 (922,
3.84 94.3%) (257, 3.71 87.2%) (252, 4.15 95.3%) (259, 4.01 94.6%) (258, 3.59 92.2%) (254, 4.02 97.4%) (260,
Mediator Mediator understood needs Mediator helped clarify needs Mediator neutral in the beginning Mediator remained neutral Mediator helped develop options Mediator used fair procedures
4.58 (840, 4.57 (838, 4.61 (845, 4.64 (839, 4.58 (841, 4.57 (839,
3.89 95.4%) (397, 73.0%) 3.79 95.0%) (396, 69.2%) 4.16 96.2%) (398, 84.7%) 4.09 97.1%) (396, 81.6%) 3.75 95.6%) (394, 65.2%) 3.99 95.8%) (398, 77.9%)
67.7%) 59.9%) 82.2%) 76.7%) 60.6%) 78.8%)
Distributive Elements Development of realistic options Satisfaction with the fairness of the session
4.44 3.13 (842, 93.5%) (389, 45.5%) 4.48 3.45 (838, 95.1%) (390, 55.6%)
4.38 3.07 (909, 90.8%) (246, 39.0%) 4.59 3.65 (920, 97.2%) (258, 62%)
Notes: Satisfaction is measured by the "mean responses" of the participants on a Likert scale (scale of 1 [strongly disagree] to 5 ]strongly agree]) and by the percentage of participants who agreed or strongly agreed with the statements. The sample size (n) is also given for evaluation purposes. Figures in bold refer to statements where a statistically significant difference (evaluated at 95% confidence level) exists between the mean responses of the participants who were satisfied with the results and those who were not satisfied with the results of the mediation.
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E. PATRICKMcDERMOTT ET AL.
asked whether, if they were party to a charge before the EEOC in the future, they would be willing to participate again in the mediation program (i.e. "willingness to return"). Ninety-one percent of the charging parties and 96% of the respondents indicated that they would be willing to use the program again. This is a highly significant finding that demonstrates from the participants' perspective the utility of mediation to effectively resolve EEOC cases. This finding also lends support to the policy recommendation that the program be supported and perhaps expanded. One could argue that the ultimate test of a system is the willingness of the parties who did not obtain what they wanted to use the system again. As indicated in Table 11, regardless of whether the participants obtained what they wanted from the mediation or not, they overwhelmingly indicated that they were willing to participate in the program again (if the need arises). This can be viewed as a very strong indication of their positive experiences with the EEOC mediation program.
Table 11.
Participants' Willingness to Participate in the EEOC Mediation Program in the Future.
For those who knew what they wanted going into the mediation: Did you obtain what you wanted going into the mediation? Yes No No response given For those who responded YES to the question above: If you were a party to a charge before the EEOC in the future, would you be willing to participate in the EEOC's mediation program? Yes No No response given For those who responded NO to the question above: If you were a party to a charge before the EEOC in the future, would you be willing to participate in the EEOC's mediation program? Yes No No response given
Total Charging Parties
Total Respondents
100.0% 40.8% 55.5% 3.7%
100.0% 56.5% 40.9% 2.5%
100.0% 95.2% 2.2% 2.6%
100.0% 97.5% 0.7%
100.0% 88.9% 9.8% 1.4%
100.0% 93.2% 4.0% 2.8%
1.8%
Has the E E O C Hit a Home Run?
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VII. CONCLUSIONS AND IMPLICATIONS The participant evaluation of the EEOC mediation program shows a high degree of participant satisfaction with the EEOC mediation program and its elements. Both the participant groups - charging parties and respondents - gave high marks to the various elements of the EEOC mediation program. The conclusions of this research and their implications are the following: The participants expressed strong satisfaction with the information they received about mediation from the EEOC prior to their attendance at the mediation session. Pre-mediation preparation and process education help parties gain a sense of what is to come which may reduce the anxiety associated with uncertainty, unpredictability, and sense of control. Participants also feel very strongly that they understood the process after the mediator's introduction. This guidance and education helps parties as they move through the process. One of the EEOC goals of mediation is to provide adequate information about mediation to the parties. The results show that the EEOC was very successful in fulfilling this goal. As the results indicate, "knowing participation," an essential element of procedural justice, is present in the EEOC mediation process. The vast majority of the participants agreed that their mediation was scheduled promptly. Prompt scheduling is important for four reasons: (1) it is an indicator of effective program management; (2) the likelihood of a settlement increases if mediation takes place promptly before the parties hardened their positions; (3) the timely attendance to these matters attests to EEOC's determination to take the resolution of these charges seriously; and (4) the charging parties' have evidenced a strong desire to have an immediate hearing of their claim. The EEOC's prompt scheduling of mediation sessions is indicative of effective program management. It also increases the chances of dispute resolution in reaching an agreement. Finally, it sets the EEOC mediation process apart from the formal litigation process which takes much longer. An overwhelming majority of the participants felt that they had a full opportunity to present their views and be heard during mediation. This "voice factor" is important for five reasons: (1) it provides the parties with the satisfaction that their story is heard. Research on grievance systems indicates that one of the main opportunities that participants seek is a forum to present their views and tell their story; (2) it is crucial to the fairness
34
E. PATRICKMcDERMOTTET AL. of the process, as indicated by the theory of procedural justice; (3) it increases people's acceptance of the outcome, thereby contributing to their overall satisfaction with the outcome. By taking part in the decision making, parties take ownership rather than "buy-in" to the outcome; (4) there is a psychological benefit for the parties to have the opportunity to have a fair chance to express their issues, concerns, and needs in their own language without having to resort to translating them into some legal argument or other procedural language; (5) in some instances the mere process of venting one's emotions can have a cathartic effect on the parties. The participants were very satisfied with the role and conduct of the mediators. They felt strongly that the mediators understood their needs, helped to clarify their needs, and assisted them to develop options for resolving the charge. They felt even more strongly that the procedures used by the mediators were fair. The questions regarding the neutrality of the mediators elicited some of the strongest responses from the participants, who felt that the mediators were neutral not only in the beginning of the process, but also remained neutral throughout the process. This finding is significant for two reasons: (1) the perceived neutrality of the mediator is important to foster trust between the parties and the mediator, which is essential for the resolution of the charge and for the participant satisfaction with the process; (2) one of the EEOC goals of mediation is neutrality. As the participant responses indicate, the EEOC was successful in achieving this goal. Participant satisfaction with the distributive elements of mediation was more tempered than their satisfaction with the procedural elements. This is indicative of the fact that mediation is a facilitated negotiation process, that is couched in a problem solving format, where parties do not usually obtain what they wanted going into the negotiations. This result is also consistent with the dispute resolution literature on distributive justice. Among those elements classified as distributive, the participants were most satisfied with the fairness of the mediation session. They also agreed that most of the options developed during mediation were realistic solutions to resolving the charge. The majority of the participants were also satisfied with the results of mediation. Participant satisfaction with the EEOC mediation program remained high even when the participant responses differed, at times, based on whether a party to mediation was represented, the type of mediator, the status of
Has the EEOC Hit a Home Run ?
35
the mediation, and satisfaction with the result. Our overall results indicated that the EEOC participant feedback reported here was fairly consistent, regardless of the influence of the various factors discussed above. The only obvious exception was based on "participant satisfaction with the mediation result." As one would expect, participants who were satisfied with the result of their mediation gave higher ratings to their mediation experiences than those who were not satisfied. However, it should be noted that even in this case, the results indicate that the participants who were not satisfied with the result of mediation expressed positive opinions regarding the various procedural elements of mediation. An overwhelming majority of the participants indicated that they would be willing to participate in the mediation program again if they were a party to an EEOC charge. Participants, regardless of their satisfaction with the outcome of mediation, overwhelmingly indicated their willingness to return to mediation. This is a strong indication of their satisfaction with the EEOC mediation program. This finding also indicates that participants were able to differentiate between the procedural and distributive elements of mediation. The fact that willingness to return was high, even among participants who did not receive what they wanted, indicates that a fair and neutral process that provides participants with an opportunity to present their views may be even more important than the obtained outcome. This finding is consistent with the results of other empirical studies of procedural justice. The satisfaction of the parties with the process, regardless of the outcome, indicates that mediation is attractive for a number of reasons. Some are presented here but it is certain that there are other reasons not identified in this study; this is an area for further research. Another area of research is based on the notion that "process is related to outcome" and the more opportunities that exist for face-to-face constructive problem solving dialogue the more likely, we theorize, the rate of agreement may rise. This theory needs to be tested by examining the case stream analysis experiences of EEOC personnel. The results of this study so far indicate that mediation is indeed a process that is well fit to manage the issues that typically arise in many EEOC cases. One of the common ADR intake formulas is to determine case "fit" by "matching the issue with the right process" and it appears that EEOC is doing a good job. Seeking ways to improve the case stream analysis and channeling may improve the rate of agreement.
36
E. PATRICK McDERMOTT ET AL. W e have a single policy recommendation. The results of this study, which is the most comprehensive of the EEOC mediation process to date, strongly suggests that the EEOC, based on participant feedback, continue to closely examine ways to make the program more attractive to parties and mediators. W e also suggest that EEOC explore ways to make the program permanent given the strong results provided here that lend credible evidence that the process is well received. Mediation should be made an institutional alternative and not a supplement to the normal processes. This suggestion is not just for cases deemed amenable to mediation but to other more "challenging" cases. If facilitated negotiation is a key to the mediation process acceptance and success then the EEOC should also ascertain parties' disposition to negotiate as one means of channeling cases to mediation. Expanding the program to include more complex cases, and types o f cases, will allow A D R researchers and practitioners the opportunity to determine just how successful mediation can be at the EEOC. The EEOC may discover that the impressive results o f the present program can be achieved for a broader class o f charges filed with the EEOC.
NOTES 1. Center for Dispute Resolution, Mediation (1989); Administrative Conf. U.S., "Implementing the ADR Act: Guidance for Agency Dispute Resolution Specialists" 5 (February 1992). 2. Dannin, E. J. "Contracting Mediation: The Impact of Different Statutory Regimes," Hofstra Labor and Employment Law Journal, (Fall 1999). 3. Hodges, A. C. "Mediation and the Americans With Disabilities Act," Georgia Law Review, (Winter 1996). 4. Ettingoff, C. C. and Powell, G. "Use of Altemative Dispute Resolution in Employment-Related Disputes," University of Memphis Law Review, (Spring 1996). 5. Id. 6. McEwen, C., "Note on Mediation Research." In: S. B. Goldberg, F. E. A. Sander & N. H. Rogers (Eds), Dispute Resolution: Negotiation, Mediation, & Other Processes, (2nd ed.). (1992), Boston: Little Brown. Moore, Christopher W. (1986). The Mediation Process: Practical Strategies for Resolving Conflict. San Francisco: Jossey Bass. 7. Brett, J. M., & Goldberg, S. B. "Grievance Mediation in the Coal Industry: A Field Experiment," Industrial and Labor Relations Review, 37, (1983), 4 9 ~ 9 . 8. Brett, J. M. Barsness, Z. I., & Goldberg, S. B. "The Effectiveness of Mediation: An Independent Analysis of Cases Handled by Four Major Service Providers," Negotiation Journal, (July 1996), 259-269; Thibaut, J., & Walker, L. Procedural Justice: A Psychological Analysis, (1975), Hillsdale, N. J.: Lawrence Earlbaum Associates. Williams, Bruce A., & Albert R. Matheny. (1995). Democracy, Dialogue, and Environmental Disputes: The Contested Language of Social Regulation. New Haven: Yale University Press. Crowfoot, James E. and Julia M. Wondolleck. (1990) Environmental
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Disputes: Community Involvement in Conflict Resolution. Washington, D.C.: Island Press. Maser, Chris. (1996). Resolving Environmental Conflict: Towards Sustainable Community Development. Del Ray Beach FL: St. Lucie Press 9. Dunlop, J. T., & Zack, A. M. Protocols for Employment Dispute Resolution: Mediation and Arbitration of Employment Disputes, (1997), San Francisco: Jossey-Bass. 10. Kochan, T., Lautsch, B., & Bendersky, C. "An Evaluation of the Massachusetts Commission Against Discrimination Alternative Dispute Resolution Program," Harvard Negotiation Law Review, 233 (Spring 2000). 11. Pub. L. 88-352, July 2, 1964; 42 U.S.C. Section 2000(e)-2(a). 12. Pub. L. 88-352, July 2, 1964; 42 U.S.C. Section 2000(e)-4(g) and 5. 13. Where an agency investigation finds a charge to have merit, the agency issues a Notice of Reasonable Cause that Title VII has been violated. Conciliation is offered after this determination has been made. 14. Lundberg, K. "Reducing the Complaints Backlog at the Equal Employment Opportunity Commission", Case C16-00-1562.0, Kennedy School of Government Case Program, Harvard College, (Spring 2000), p. 1, citing Priority Charge Handling Task Force/Litigation Task Force Report, EEOC, March 1998, p. 3. 15. Recent examples of EEOC pattern and practice cases include the Texaco and Mitsubishi cases that were settled for large sums of money. 16. Most respondents are employers but this group also includes trade unions, government entities, and employment agencies. 17. Pub. L. 90-202, Dec. 15 1967; 29 U.S.C. Sections 621-624. 18. Pub. L. 88-38, June 10, 1963; 29 U.S.C. Section 206. 19. Pub. L. 93-112, Sept. 26, 1973; 29 U.S.C. Section 705, 791 et. seq; this law is the precursor to the Americans With Disabilities Act. 20. Lundberg, K. "Reducing the Complaints Backlog at the Equal Employment Opportunity Commission", Case C16-00-1562.0, Kennedy School of Government Case Program, Harvard College, (Spring 2000), p. 3. 21. Due to statutory and political reasons beyond the scope of this paper, when one Chairperson leaves, although an "acting" chair is named, there is usually a significant period of time before a permanent successor assumes office. 22. Priority Charge Handling Task Force/Litigation Task Force Report, EEOC, March 1998, p. 5. 23. Lundberg, K. "Reducing the Complaints Backlog at the Equal Employment Opportunity Commission," Case C16-00-1562.0, Kennedy School of Government Case Program, Harvard College, (Spring 2000), p. 4. This contemplated model was similar to the way that the National Labor Relations Board operated at that time. Some of Thomas' top management had prior NLRB experience. 24. Id. Again, this final investigative report was used by the NLRB for all cases. 25. Id., p. 5. 26. Pub. L. 101-336, July 26, 1990; 42 U.S.C. 12101-12117, 12201-12213. 27. Pub. L. 102-166, Nov. 21, 1991, this law added amendments to various existing civil rights statutes. 28. Compensatory damages are for pain and suffering. Punitive damages are awarded to punish egregious defendant conduct. 29. Lundberg, K. "Reducing the Complaints Backlog at the Equal Employment Opportunity Commission," Case C16~00-1562.0, Kennedy School of Government Case Program, Harvard College, (Spring 2000), 9.
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E. PATRICKMcDERMOTF ET AL.
30. Id., p. 10 31. Id. 32. Every office has some system in place to review charge prioritization systems. 33. Many of these C cases involve situations where the EEOC does not have jurisdiction. The classification of these A-B-C cases was for internal purposes only; the specific designation assigned to a charge was kept confidential by the EEOC. It should be noted that this is a general description of the charge classification process. 34. The EEOC defines mediation as "a fair and efficient process to help you to resolve your employment disputes and reach an agreement. A neutral mediator assists you in reaching a voluntary, negotiated agreement." EEOC Internet Homepage, "Mediation," http://www.eeoc.gov/mediate/index.html (June 18, 2000). 35. McEwen, C. An Evaluation of the Equal Employment Opportunity Commission's Pilot Mediation Program. Bowdoin College (1994). 36. EEOC Office of Field Programs, FY 1997, Year-End Report (Washington, D.C.). 37. EEOC Office of Field Programs, FY 1998, Year-End Report (Washington, D.C.). 38. Id. 39. EEOC Internet Homepage, "Ida Castro: Chairwoman," http://www.eeoc. gov/castro.html 40. EEOC, Comprehensive Enforcement Program Highlights. 41. Id. 42. EEOC Internet Homepage, "History Of EEOC Mediation Program," http://www.eeoc.gov/mediate/history.html (June 18, 2000). 43. EEOC Purchase Order No. 910900176321G, Statement of Work, p. 4 (8/18/99). 44. EEOC Internet Homepage, "History Of EEOC Mediation Program." 45. EEOC. Chapter One: Mediation Policies and Procedures in the Mediation Deskbook. 46. Id. 47. EEOC Internet Homepage, "History Of EEOC Mediation Program," http://www.eeoc.gov/mediate/history.html (June 18, 2000). "Facts About Mediation." According to the EEOC homepage these advantages include saving time and money in an efficient process, the benefit of a neutral third party, confidentiality, settlement agreements obtained in mediation are not an admission of guilt, and mediation avoids lengthy and unnecessary litigation. 48. M. Gordon, "Grievance Systems and Workplace Justice: Tests of Behavioral Propositions About Procedural and Distributive Justice." In: B. D. Dennis (Ed.), Proceedings of the Fortieth Annual Meeting of the Industrial Relations Research Association held in Chicago 28-30, December 1987 (pp. 390-397). Madison, Wisconsin: Industrial Relations Research Association, 1988. 49. Brett, J. M., Barsness, Z. I., & Goldberg, S. B. "The Effectiveness of Mediation: An Independent Analysis of Cases Handled by Four Major Service Providers," Negotiation Journal, (July 1996), 259-269; Thibaut, J., & Walker, L. Procedural Justice: A Psychological Analysis, (1975), Hillsdale, N. J.: Lawrence Earlbaum Associates. 50. Hodges, A. C. "Mediation and the Americans With Disabilities Act," Georgia Law Review, (Winter 1996). 51. Id.
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52. Dulebohn, J., & Martocchio, J. J. "Employee Perceptions of the Fairness of Work Group Incentive Plans," Journal of Management, 24(4), (1998), 469-489. 53. Hodges, A. C. "Mediation and the Americans With Disabilities Act," Georgia Law Review, (Winter 1996). 54. Id. 55. Id. 56. Id. 57. Id. 58. Kovach, K. K. Mediation: Principles and Practice, (1994). 59. Weckstein, D. T. "In Praise of Party Empowerment - And Of Mediator Activism," Willamette Law Review, (Summer 1997). 60. Hodges, A. C. "Mediation and the Americans With Disabilities Act," Georgia Law Review, (Winter 1996). 61. Id. 62. Weckstein (1997). 63. Ettingoff, C. C. and Powell, G. "Use of Alternative Dispute Resolution in Employment-Related Disputes," University of Memphis Law Review, (Spring 1996). 64. Please refer to the next section of this literature review for a comprehensive discussion. 65. Folger, R., & Greenberg, J. "Procedural Justice: An Interpretive Analysis of Personnel Systems." In: K. M. Rowland & G. R. Ferris (Eds), Research in Personnel and Human Resources Management (Vol. 3, pp. 141-183). Greenwich, Connecticut and London, England: JAI Press, Inc., 1985. 66. Gordon, M. "Grievance Systems and Workplace Justice: Tests of Behavioral Propositions About Procedural and Distributive Justice," In: B. D. Dennis (Eds), Proceedings of the Fortieth Annual Meeting of the Industrial Relations Research Association held in Chicago 28-30, December 1987 (pp. 390-397). Madison, Wisconsin: Industrial Relations Research Association, 1988. 67. Folger, R., & Greenberg, J. "Procedural Justice: An Interpretive Analysis of Personnel Systems." In: K. M. Rowland & G. R. Ferris (Eds), Research in Personnel and Human Resources Management (Vol. 3, pp. 141-183). Greenwich, Connecticut and London, England: JAI Press Inc., 1985. 68. Id. at p. 394. 69. Ashkanasy, N. M. "Rotter's Internal-External Scale: Confirmatory Factor Analysis and Correlation with Social Desirability for Altemative Scale Formats," Journal of Psychology and Social Psychology, 48, (1988), 1328-1341. 70. A copy of the survey is available from the authors upon request. 71. We have classified this as a distributive measure but are mindful that one could view this question as a hybrid procedural/distributive measure. 72. This concept of getting what one wanted, did not attempt to ascertain whether the party did not obtain a "target" or "resistance" point and did not attempt to determine whether or not the settlement was within the range between these two points. 73. The results of the first part of this survey response may give solace to the dispute resolution professional who has often wondered, in the heat of mediation, whether the parties even know what they want. 74. Many of the implications are based on the literature review, which was presented in Section II.
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ACKNOWLEDGMENTS The authors would like to thank Steven P. Ichniowski, National ADR Coordinator, Equal Employment Opportunity Commission, for his assistance in explaining the intricacies of the EEOC mediation program and for his feedback on earlier drafts of this paper.
RESOLVING CONFLICT: TACTICS OF FEDERAL MEDIATORS Patrice M. Mareschal
ABSTRACT This research examines the mediation process in the labor relations context to identify the determinants of mediators' tactics. First, data collected from secondary sources, informal networking with dispute resolution professionals, participant observation of new mediator training sessions, and qualitative interviews with Federal Mediation and Conciliation Service (FMCS) mediators were used to develop a written survey. Next, the survey was distributed to practicing mediators with the FMCS. In brief this research compares the assumptions underlying the FMCS' training curriculum with practitioner sentiments concerning good mediator practice. Six hypotheses were developed from the preliminary analysis. These hypotheses were tested using linear regression. Four statistically significant relationships were found. Three hypotheses were confirmed. Survey results indicated that mediator tactics tend to cluster into two groups, "the broad approach" and "the narrow approach." The survey data suggest that the broad and narrow approaches to mediation are complements to each other rather than substitutes for one another. Therefore, I summed the "broad approach" and "narrow approach" scales to create one measure of mediator tactics, which I named "the bifocal approach." The following predictors of the bifocal approach were found
Advances in Industrial and Labor Relations, Volume 11, pages 41-68. Copyright © 2002 by Elsevier Science Ltd. All rights of reproduction in any form reserved, ISBN: 0-7623-0853-2
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PATRICE M. MARESCHAL
to be statistically significant: bargaining context, mediator acceptability, bargaining chips, and unionization rate.
INTRODUCTION Mediators often claim that like snowflakes, no two mediation situations are exactly alike. Moreover, no two mediators would deal with the same dispute in the same way. Practitioners describe mediation as an art with numerous philosophies and approaches (Kolb, 1983; Kochan & Katz, 1988). According to this line of argument, mediation is difficult to learn and not well-suited to scientific study. Mediation is indeed a complex process. Nevertheless, social scientists from a variety of disciplines have studied mediation. Through both theoretical and empirical research social scientists have identified some systematic pattems in the mediation process (Kochan & Jick, 1978; Camevale & Pruitt, 1992; Wall & Lynn, 1993). In recent years, mediation has become increasingly popular as a means to resolve conflict. This phenomenal rise in the popularity of mediation as a form of alternative dispute resolution (ADR) has created a situation in which mediation practice and research has outstripped theory building (Wall & Lynn, 1993). One important question that arises out of the recent growth in the practice of mediation is: Why do mediators do what they do? In the past, a mediator's choice of strategies and techniques was considered so personal and so unique to each situation that many argued that mediator effectiveness was virtually impossible to analyze. Given the explosive increase in the use of conflict resolution services, the premise that a mediator's performance cannot be evaluated has become untenable. Indeed, Bellman (1998) indicates that the tremendous growth in the practice of mediation has created a situation in which "the field could be described as a mile wide and an inch deep" (p. 206). Moreover, Bercovitch and Houston (2000) note that insufficient attention has been devoted to examining how to best mediate or which factors affect the choice of mediator behavior. This research examines the mediation process in the labor relations context to identify the determinants of mediators' tactics. First, data collected from secondary sources, informal networking with dispute resolution professionals, participant observation of new mediator training sessions, and qualitative interviews with Federal Mediation and Conciliation Service (FMCS) mediators were used to develop a written survey. Next, the survey was distributed to practicing mediators with the FMCS. In brief, this research compares the assumptions underlying the FMCS' training curriculum with practitioner
Resolving Conflict: Tactics of Federal Mediators
43
sentiments concerning good mediator practice. The ultimate goal is to develop a theory that makes sense to both researchers and practitioners. Mediation in the Labor Relations Context
Mediation is the most commonly used type of third party intervention in labor disputes and collective bargaining (Noe, Hollenbeck, Gerhart & Wright 2000). In fact, the National Labor Relations Act (NLRA) requires a labor union to notify the FMCS 30 days before calling a strike. The 30-day notice provides federal mediators an opportunity to help the parties resolve their dispute peacefully prior to taking such drastic action as a strike (Kochan & Katz, 1988). In the labor relations context, mediation has traditionally been used to resolve disputes arising out of contract negotiations. In recent years, the practice of using mediation to resolve grievances (i.e. disputes arising out of contract interpretation) has become more widespread (Feuille, 1999). The FMCS is one of the largest providers of mediation services in the areas of contract negotiations and grievance mediation. For example, the FMCS provides preventive mediation assistance programs to help employers and their unionized employees develop problem-solving skills that will enable the parties to resolve disputes on their own. Furthermore, the Administrative Dispute Resolution Act of 1990 and the Negotiated Rulemaking Act of 1990 authorize the FMCS to provide conflict resolution services to public agencies in order to improve operations and reduce the resources expended on litigation (FMCS, n.d.). As a result, mediation is the fastest growing type of ADR being used by the federal government to resolve employment disputes (Bingham, Chesmore, Moon & Napoli, 2000). In addition, a recent survey of Fortune 1000 companies indicates that over 88% of respondents had used mediation at least once in the past three years (Lipsky & Seeber, 1998). The survey respondents were more satisfied with mediation than other types of ADR. Moreover, an overwhelming majority of respondents stated that they will use mediation again in the future (Lipsky & Seeber, 1998). The FMCS
The FMCS was created as an independent agency of the U.S. government by the Labor Management Relations Act of 1947. The agency's mission is to preserve and promote labor-management peace. Toward this end the agency provides mediation, arbitration, and other conflict resolution services and programs to employers and their unionized employees in both the private and public sectors, excluding the railroad and airline industries (FMCS, 1996). In
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PATRICE M. MARESCHAL
addition, Executive Order 11491 authorized the FMCS to assist federal agencies in resolving negotiation impasses (Kearney & Carnevale, 2001). The services the FMCS provides are intended to prevent or minimize conflicts in the collective bargaining process and to improve labor-management relations (FMCS, 1996). In cases where the FMCS' attempts to resolve federal impasses are unsuccessful, the Civil Service Reform Act of 1978 (CSRA), section 7119 authorizes the Federal Services Impasse Panel (FSIP) to intervene in the dispute. The FSIP may use a variety of techniques to resolve federal impasses including mediation, fact-finding, and final-offer arbitration (Keamey & Carnevale, 2001).
M O D E L I N G THE M E D I A T I O N P R O C E S S IN THE LABOR
RELATIONS
CONTEXT
The research on mediation spans several disciplines. Wall and Lynn (1993) have organized the voluminous and diverse research on mediation into a conceptual framework. The key components of Wall and Lynn's (1993) framework include: the parties' interactions, the decision to mediate, the mediator's techniques and strategies, the mediator's and the parties' outcomes, and the determinants of these factors. Wall and Lynn (1993) identify the following factors as directly influencing mediators' choice of tactics: rules and standards, common ground and concern for parties' outcomes, dispute characteristics, mediator's training, mediation context, mediator's ideology, and culture. In addition, in the Wall and Lynn (1993) framework, mediators' choices of tactics are indirectly influenced by the parties' interactions, the parties' outcomes, and the mediators' outcomes. If a relationship exists between techniques and outcomes, the factors that influence the mediation outcomes should also influence the mediator's choice of tactics. Elangovan (1998) provides evidence in support of this conjecture. Previous research on mediation in the labor relations context has identified the following determinants of effective mediation: the characteristics of the mediators, the sources or nature of the conflict, the situational characteristics of the dispute, the mediators' strategies, and the parties to the dispute (Kochan & Katz, 1988). In developing a model of the mediation process in the labor relations context, this research combines aspects of Wall and Lynn's (1993) mediation framework and Kochan and Katz' (1988) model of the determinants of successful mediation. Since FMCS mediators are required to mediate labor disputes upon the request of the parties involved, the "decision to mediate" stage has been eliminated from this model. Also, since the focus here is on the
45
Resolving Conflict: Tactics of Federal Mediators
Other Tactical ~
Mediator Characteristics
/
Determinants
The
Parties' Interactions
Sources/Nature of Conflict
Parties
Tactics
f
Situational Characteristics
Fig. 1. Determinants of Mediator Tactics in the Labor Relations Context.
determinants of mediation techniques, the outcomes of the dispute are not included in this model. The modified framework focuses on the mediator's tactics and the determinants of these factors (e.g. the parties' interactions prior to mediation, mediators' characteristics, sources or nature of the conflict/impasse, situational characteristics of the dispute, and the parties themselves). The model is shown in Fig. 1. The key components of the model are discussed in the sections that follow. Mediator Tactics
Mediators may draw on a variety of techniques to help parties reach agreement. The strategies a mediator may use range from a passive, hands-off approach to an aggressive approach in which the mediator pushes the parties toward agreement. One key mediator technique is framing. For example, Bazerman (1998) suggests that if a mediator wants the parties to compromise, the mediator should strive to have the parties view the negotiations in a positive frame. To accomplish this, the mediator needs to emphasize the realistic risk that both parties face if agreement is not reached. By creating this uncertainty, the mediator encourages the parties to seek a sure settlement (Bazerman, 1998).
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PATRICE M. MARESCHAL
Additional mediator tactics include: demonstrating empathy, structuring discussion, and stimulating thinking (Zubek, Pruitt, Pierce, McGillicuddy & Syna, 1992), using a settlement strategy and using a problem-solving strategy (Kressel, Frontera, Forlenza, Butler & Fish, 1994), using content-control and using motivational-control (Ross, 1990), tracking constitutive and regulative rules (Jorgensen, 2000), reformulating dispute narratives (Phillips, 1999), compensating and pressuring (Harris & Carnevale, 1990), face-saving (Downie, 1991), caucusing (Welton, Pruitt & McGillicuddy, 1988), compromise suggestions (Conlon, Carnevale & Ross, 1994), facilitative tactics (Karambayya, Brett & Lytle, 1992), and active neutrality (Solstad, 1999). Often, mediators use a variety of strategies during the course of a mediation (Kochan & Katz, 1988). Determinants of Mediators' Tactics
The variety of techniques at a mediator's disposal is nearly limitless. In fact, Wall and Lynn (1993) note that approximately 100 techniques for resolving disputes have been identified by researchers. Similarly, the FMCS' new mediator training manual refers to "The 7,000 Habits of Effective Mediators" (FMCS, 1997). Thus, a key question that arises is: Why do mediators do what they do? In other words, what influences their choice of tactics? Parties' Interactions According to Wall and Lynn's (1993) framework, the mediation process begins with the parties' interactions. In the collective bargaining context the parties do not interact in a social vacuum. Rather, they interact in a complex socialinstitutional environment. Tetlock (1991) has emphasized the need to consider the complex socialinstitutional environment in which people make decisions. In particular, Tetlock (1991) argues that in making decisions, social actors are influenced by the fact that they can be held accountable for their actions. Tetlock (1991) also contends that social actors seek the approval and respect of those to whom they are accountable. In determining whether or not to seek the assistance of a third party, management and labor are influenced by the complex social-institutional environment of collective bargaining. For example, the parties to collective bargaining and labor disputes often are required by law to use mediation before taking a job action (e.g. a strike or a lockout) or moving to the next phase of the impasse procedure. Additionally, some collective bargaining contracts call for mediation of grievances.
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47
Existing laws, contracts, and impasse procedures hold both parties accountable for their actions. In addition, both sides must answer to their constituencies and seek their constituents' approval. That is, the union bargaining team must satisfy its members and the management bargaining team must satisfy its employer. Sources~Nature of Conflict Some of the possible sources of conflict include: economic characteristics (e.g. employer's inability to pay, wage erosion), structural characteristics of the relationship (e.g. pattern-breaking relationship), organizational characteristics of the parties (e.g. negotiators' lack of authority to bargain, internal conflicts within one or both of the parties), interpersonal characteristics (e.g. hostility between the parties), personal characteristics (e.g. negotiators' lack of skill or experience), the nature of the issues (e.g. "matters of principle" at stake), and the bargaining behavior of the parties (e.g. unrealistic expectations, over-commitment to a position, unwillingness to settle) (Kochan & Jick, 1978). Recent studies have confirmed the role of these factors in determining the success of mediation. To illustrate, in his study of the labor dispute between Air Canada and the International Association of Machinists (IAM), Downie (1991) found that economic and structural characteristics (e.g. the IAM's agreements with Air Canada's competitors and Air Canada's contracts with other unions), the nature of the issues in dispute (e.g. pension fund "surplus"), as well as internal discord (e.g. union politics) influenced the outcome of mediation. Mediator Characteristics In a humorous mood, William E. Simkin (1971), a well-known mediator, developed a list of 16 qualities sought in a mediator. The first 10 items were somewhat entertaining including: "the guile of Machiavelli" and "the hide of a rhinoceros" (Simkin, 1971, p. 53). The final six items were more serious including such items as: "demonstrated integrity and impartiality" and "basic knowledge of and belief in the collective bargaining process" (Simkin, 1971, p. 53). More recent research efforts have identified trustworthiness, helpfulness, friendliness, humor, intelligence, and knowledge of the substantive issues as desirable mediator traits (Kochan & Katz, 1988). The following mediator characteristics also have been shown to influence the outcome of mediation: self-awareness, presence, and authenticity (Bowling & Hoffman, 2000), power and authority (Conlon et al., 1994; Harris & Carnevale, 1990), authority and experience (Karambayya et al., 1992), experience and tenacity (Briggs & Koys, 1990), status (Keashly & Newberry, 1995), and gender (Carnevale, Conlon, Hanisch & Harris, 1989; Maxwell, 1992; Stamato, 1992).
48
PATRICE M. MARESCHAL
In addition, Wittmer, Carnevale, and Walker (1991), Conlon et al. (1994), and Karambayya et al. (1992) have documented the role that perceived mediator bias/fairness has on the disputants' behaviors and consequently on the outcome of mediation. With respect to gender, Carnevale et al. (1989) found that female mediators tended to perceive more common ground between the disputants and to integrate more and use pressing tactics less than their male counterparts. Likewise, Wall and Dewhurst (1991) found that female mediators used more clarifying formulations (as opposed to controlling formulations) than their male counterparts. Situational Characteristics Situational factors also influence mediator techniques. The most important situational factor is the parties' motivation to settle. In private sector collective bargaining cases the threat of a strike serves as a prime motivator for the parties to settle (Kochan & Katz, 1988). Other key situational factors include: the nature/characteristics of the impasse procedure (Karim & Dilts, 1990; Wissler, 1995), parties' past experience with mediation (Magnusen & Lim, 1994), and parties' trust in the mediation process (Liebman, 2000; Gadlin, 1991; Karim & Dilts, 1990). It is important to note that mediation works better at resolving some types of impasse than others. For instance, Kochan and Jick (1978) found that mediation was most successful in cases where negotiations stalled due to such factors as over-commitment to a position (bargaining behavior) or inexperienced negotiators (personal characteristics). Karim and Dilts (1990) also found that personal characteristics were a shallow cause of conflict and that such conflicts were easily overcome by mediation. In contrast, Kochan and Jick (1978) found that mediation was least successful in resolving impasses caused by economic factors. The Parties Naturally, the parties themselves influence the success of mediation. In particular, information sharing can be a risky proposition for the parties involved in labor negotiations. Thus, negotiators may be wary of cooperating with the mediator and their opponents in the dispute (Kochan & Katz, 1988). Indeed, Gadlin (1991) notes the importance of establishing trust between the parties. Similarly, Ross and Weiland (1996) found that the degree of trust between the parties influences mediator strategies and thereby influences the outcome of mediation. Wissler (1995) found that the parties' goals played a role in determining the outcome of mediation. In particular, if disputants had a competitive, non-integrative orientation mediation tended to be unsuccessful.
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Similarly, Karim and Dilts (1990) found perceptions of bargaining behaviors such as the union's perception that "the other side was not interested in settling" and management's contention that the union was "holding to past positions" to be important predictors of the success of mediation.
Other Tactical Determinants When choosing among these various mediation techniques, mediators are influenced by a variety of factors. In addition to the factors outlined above, previous research has identified the following factors influencing mediators' choice of tactics: rules and standards, dispute characteristics, culture, mediation context, and time pressure (Wall & Lynn, 1993). For instance, dispute characteristics such as the power balance between parties (Laskewitz, Van De Vliert & De Dreu, 1994) and an emotionally charged atmosphere (Lurid, 2000; Adler, Rosen & Silverstein, 1998; Maxwell, 1992) have been shown to influence the mediator's choice of tactics. Similarly, Bercovitch and Houston (2000) found that the mediation environment exerts a strong influence on mediators' choices of techniques and strategies. In addition, Carnevale and Conlon (1988) found that, when working under time pressure, mediators used more pressing and compensating tactics and fewer integrating tactics.
METHODOLOGY Research Design This research examines mediators' opinions of how mediation works. In other words, it explores mediators' interpretations of their experiences with the mediation process. It is based on data collected through unobtrusive measures, as well as participant observation, qualitative interviews, and a written survey. This research follows a grounded theory approach (Strauss & Corbin, 1990). That is, the model presented and tested here is inductively derived from the study of mediation in the labor relations context. This study began with a literature review. The literature review was used to develop a rough model of the mediation process. Using the rough model as a starting point, additional data was collected from secondary sources, informal networking with dispute resolution professionals, participant observation of the FMCS' new mediator training program, and qualitative interviews with FMCS mediators. The collection of qualitative data began with the FMCS' 50th anniversary conference in September 1997 and continued through September 1998.
50
PATRICE M. MARESCHAL
The qualitative data were used to develop a written survey. The written survey was then used to collect quantitative data. Factor analysis was used to reduce the data set to a manageable number of variables. Next, hypotheses were developed to match the variables derived from factor analysis with the constructs from the original model. Finally, the hypotheses were tested using regression analysis. The end result is a triangulated research design that makes use of both qualitative and quantitative data. The procedure of using quantitative data to validate qualitative analysis has been well-documented by Denzin (1978).
Survey Construction and Distribution As mentioned above, qualitative data were collected from a variety of sources and used to develop a written survey. Prior to distributing the survey, it was pilot-tested on six FMCS mediators. Revisions were made based on the feedback received. Then, 185 surveys were distributed at the FMCS National Professional Development meeting in November 1998. A total of 78 usable surveys were received, for a 42% response rate. The mediators were asked to provide information about two dispute mediation (i.e. contract negotiation) cases, one in which the parties reached agreement and one in which the parties failed to reach agreement. Since each respondent provided data on two mediation cases, there were 156 observations on which to base the data analysis. The written survey contained 83 questions which used 4- and 5-point Likert scales. Five of these questions pertained to consequences of mediation, but the remaining questions were aimed at determining how mediators choose to mediate. In addition, the survey included demographic questions, discussed below. Following common practice (Tabachnick & Fidell, 1996), missing values, for questions that were not answered by an individual respondent, were replaced by the mean value of that variable.
Data Reduction Factor Analysis Since the goal of this research was to more formally model the determinants of mediators' tactics and develop empirical testing in this area, factor analysis was used to reduce these 83 Likert-scale questions to underlying factors. In other words, factor analysis was used to confirm and extend the variable identification derived from the literature review. An eleven factor solution was obtained. Ten of the factors were used in this analysis. One factor, "relationship improvement," was not used in this analysis because it captured four of the questions pertaining to consequences of mediation. Factor-based scales were
Resolving Conflict: Tactics of Federal Mediators Table 1.
51
Factors Derived From Mediator Survey.
Factors Derived From Mediator Survey Factor
Percent of Variance
Sample of Questions Loading Highly on Factor
Mediator Acceptability
5.5
Management Outlook
5.2
Relationship Volatility
4.7
Broad Approach
3.7
Bargaining Context
3.5
Bargaining Chips
3.1
Collaborative Orientation
2.8
Narrow Approach
2.6
Structure of Impasse
2.4
Mediator Skill Base
2.3
My trustworthiness was important in bringing the parties closer to agreement. The FMCS' reputation for being credible, acceptable, and professional was important in bringing the parties closer to agreement. The management bargaining team had realistic expectations of the bargaining/mediation process. The chief negotiator(s) for the management team was(were) experienced/skilled in negotiation. Personality conflicts between the chief bargainers played a critical role in the outcome of this case. Hostility between the parties played a critical role in the outcome of this case. I tried to look beyond the contractual issues in defining the problem to be resolved. Reframing was an important technique in bringing the parties closer to agreement. In determining which techniques/strategies to use in this case, I was influenced by an emotionally charged atmosphere. In determining which techniques/strategies to use in this case, I was influenced by time pressures. The threat of a strike played a critical role in the outcome of this case. Pending NLRB charges played a critical role in the outcome of this case. The union team willingly shared information at the bargaining table. The parties' willingness to work together in a collaborative process over the entire range of the relationship played a critical role in the outcome of this case. I encouraged the parties to focus on resolving specific contractual problems. My knowledge of substantive issues was important in bringing the parties closer to agreement. In determining which techniques/strategies to use in the this case, I was influenced by the nature of the impasse procedure. The nature of the impasse procedure played a critical role in the outcome of this case. My labor relations skills/experience were important in bringing the parties closer to agreement. My process skills were important in bringing the parties closer to agreement.
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PATRICE M. MARESCHAL
created by summing those variables which loaded highly on each factor (Kim & Mueller, 1978, p. 70). The ten factors are summarized in Table 1. A noteworthy result of the factor analysis was that the questions pertaining to mediator tactics boiled down to two factors, "the broad approach" and "the narrow approach." The techniques clustering into each factor corresponded closely to Riskin's (1993) typology of broad and narrow mediation strategies. Mediators following the broad approach operate on the assumption that the goal of mediation is to reach an agreement that serves the mutual interests of the parties. The focus is on developing and understanding options. In addition, the broad approach to mediation deals with barriers to negotiation such as emotional/ interpersonal problems and communication problems between the parties and outside actors. Under the broad approach one of the primary objectives of negotiation is improving the relationship between the parties. Furthermore, this approach emphasizes encouraging and empowering the parties to make their own decisions (Riskin, 1993). In contrast the narrow approach, as it name suggests, narrowly defines the conflict to be mediated. This narrow definition of the conflict restricts the issues that can be discussed as part of the mediation process. The narrow approach to mediation places an emphasis on gaining concessions from the parties. Moreover, when this approach is followed the possible outcomes of mediation are severely limited (Riskin, 1993). Control Variables In addition to the questions which were used in the data reduction, six control variables were also used in the quantitative analysis. These are as follows: private sector, gender, previous experience as an advocate for management, previous experience in the private sector, length of tenure with the FMCS, and unionization rate. "Private sector" refers to the sector in which the mediation case took place. "Unionization rate" was a percentage measure of how heavily unionized the geographic area was in which the mediator handled most of his or her cases. The other control variables are self explanatory. Matching Variables and Constructs Mediator Tactics As previously noted, mediators may draw on a variety of techniques to help the parties reach agreement. The tactics box in the model attempts to capture some of these various methods. The variables that matched with the mediator's tactics construct are "the broad approach" and "the narrow approach."
Resolving Conflict: Tactics of Federal Mediators
53
These approaches represent different sets of mediator techniques, but the broad approach is not the exact opposite of the narrow approach. In fact, these two factor-based scales are positively correlated with each other (r = 0.38, p < 0.01). Mediators do not appear to be choosing between these two sets of tactics. It seems instead that they are choosing whether or not to apply both of them simultaneously. Therefore, I summed the two factor-based scales to create one measure of mediator tactics, which I named "the bifocal approach." One of the dictionary definitions of "bifocal" is "embodying two distinct and often conflicting goals, interests, or courses of action" (American Heritage Dictionary, 2000, p. 28). The strategic management literature uses the term "bifocal vision" (Albrecht, 1994; Gogan, 1998; Harari, 1997; Houston, 2000) to describe "the ability to perceive accurately things on the horizon that will inevitably affect the enterprise, as well as the ability to focus on the more immediate, pressing events" (Albrecht, 1994, p. 42). In the bifocal approach, the mediator attempts to remove underlying barriers to negotiation while resolving a manageable set of issues.
Parties' Interactions As mentioned earlier, the mediation process begins with the parties' interactions. The parties' interactions box in the model focuses on how the parties approach the conflict and the mechanisms in place for resolving the conflict. The variable that matches with the parties' interaction construct is "structure of the impasse." Mediator Characteristics Mediator characteristics also influence the mediator's choice of techniques. The mediator characteristics construct encompasses a variety of traits. Some of these include: credibility, experience, trustworthiness, helpfulness, friendliness, humor, intelligence, and knowledge of the substantive issues. The variables which match with this construct include both factor-based scale variables and demographic variables. The following factor-based scales were matched with the mediator characteristics construct: "mediator acceptability" and "mediator skill base." The correlation between these two factor-based scales, while statistically significant, is rather modest (r = 0.18, p < 0.05). Therefore, I chose not to sum these two scales into a single measure of mediator characteristics. The following demographic variables were matched with the mediator characteristics construct: "previous experience in the private sector," "previous experience as a management advocate," "length of tenure with the FMCS," and "gender".
54
PATRICE M. MARESCHAL
Sources~Nature of Conflict Similarly, the sources and nature of conflict influence the mediator's choice of tactics. Two factor-based scale variables matched with the sources/nature of conflict construct. They were "relationship volatility" and "collaborative orientation." These scales were uncorrelated (r = -0.08), so again I chose not to sum them to form a single index of sources/nature of conflict. Situational Characteristics Likewise, situational factors influence the mediator's choice of techniques. Three variables matched with the situational characteristics construct. They were "bargaining chips" (a factor-based scale), "private sector", and "unionization rate". The Parties The parties themselves also influence the mediator's choice of tactics. The variable which matches with the parties' construct is "management outlook". "Management outlook" is a factor-based scale variable which encompasses management's: desire for the mediation to be successful, realistic expectations of the process, and bargaining experience. It was expected that both union and management participants in the mediation process would influence the mediator's choice of techniques. Indeed, the survey asked a parallel set of questions about union participants in mediation. However, these questions failed to load highly in the factor solution. Other Tactical Determinants The variable which matched with the other tactical determinants construct was "bargaining context". This variable encompasses strategic determinants such as an emotionally charged atmosphere, the nature of issues in dispute, and time pressures. The complete correspondence between factor-based scales, control variables, and constructs is displayed graphically in Fig. 2.
HYPOTHESES Figure 2 shows seven constructs, one of which is the dependent variable, mediator tactics. This section briefly summarizes the rationale for expecting a significant relationship between each construct and the dependent variable. If the variables which match each construct are significantly related to the use of the "bifocal" approach to mediation, then the hypotheses are supported.
Resolving Conflict: Tactics of Federal Mediators
55
0
L)
e-
© k~ ;.d e~ o
L) 0
\
e~
.d o)
.=. 8 [-
~C
"= o
~e .=.
~a ~q
~Z
56
PATRICE M. MARESCHAL
Mediator Characteristics The first factor-based scale in this category was mediator acceptability. It was expected that credible, trustworthy mediators would be more successful in using an integrative approach to bargaining, i.e. an approach which focuses on improving the entire relationship between the parties, rather than the traditional approach which narrowly defines the conflict to be mediated. For example, in the new mediator training program the trainees were presented with a code of conduct. The code of conduct emphasized maintaining standards of honesty, integrity, and principle. In addition, throughout the training program the instructors stressed the importance of mediator confidentiality. Similarly, the interview data reveals the importance of professionalism, ethical behavior, operational neutrality, credibility, and sincerity. All of these characteristics help make the mediator acceptable to the parties. Given the voluntary nature of mediation, mediator acceptability is critical to the success of mediation. Furthermore, if the mediator is acceptable to the parties s/he is more likely to be successful in securing the parties' consent to use the broad approach, which is a departure from the more narrowly focused traditional approach to collective bargaining. The second factor-based scale in this category was mediator skill base. The data collected through participant observation and qualitative interviews indicate that mediators need both substantive knowledge (i.e. labor relations skills and experience) and process knowledge (i.e. facilitation and problem solving skills) to be effective. In particular, the need for both types of knowledge is evident in the FMCS' mediator core competencies (Mareschal 1998). This message was reinforced in the qualitative interviews. Although the mediators interviewed disagreed about the relative importance of the two types of knowledge, they tended to agree that both types were necessary. Thus, it was expected that a mediator's labor relations skills/experience should facilitate use of the traditional approach, focused on specific bargaining issues, and a mediator's process skills should facilitate use of the integrative approach, focused on developing and understanding options, removing barriers to negotiation, and improving the relationship between the parties.
Hypothesis One: Mediator characteristics will be related to use of the bifocal approach.
Sources~Nature of Conflict The first factor-based scale in this category was relationship volatility. It was expected that hostile relationships within and between the parties would make it difficult for mediators to use integrative techniques to bring the parties closer
Resolving Conflict: Tactics of Federal Mediators
57
together. For example, the new mediator training program included a section on factors impacting mediation effectiveness. Here the instructors noted that the nature of the relationship between the parties affects the mediator's ability to persuade the parties to resolve their dispute. When the relationship between the parties is hostile, the mediator's ability to persuade the parties by using reward, legitimate, and informational power is severely restricted. This premise was supported by the interview data. In particular, the mediators noted that personality conflicts between the bargaining teams can be some of the most difficult sources of conflict to resolve. The second factor-based scale in this category was collaborative orientation. It was expected that an atmosphere of mutual respect and openness between the parties would make it easier for mediators to use integrative techniques to bring the parties closer together. In particular, the instructors in the new mediator training program noted that when both parties want to work on their ongoing relationship to make it more productive, the mediator's ability to persuade the parties through the use of reward and legitimate power is increased. Likewise, the mediators interviewed indicated that the mediation process flows more smoothly when the parties respect and trust each other. Hypothesis Two: Sources/nature of conflict will be related to use of the bifocal approach. Situational Characteristics The factor-based scale in this category was bargaining chips. It was expected that the ability of one party to pressure the other would make it easier for mediators to use integrative techniques to bring the parties closer together. Specifically, the instructors in the new mediator training program noted that the most essential factor impacting mediation effectiveness is the pressure on the parties to settle. As the pressure to settle becomes greater, the mediator's ability to persuade the parties through the use of reward power and coercion is enhanced. A control variable in this category was unionization rate. It was expected that areas with higher unionization rates would facilitate integrative mediation techniques. In particular, one mediator from a state where the unionization rate is relatively low indicated that he thought mediators in states with higher unionization rates would be freer to experiment with non-traditional techniques. This mediator's perception may be due in part to the fact that where unions are relatively rare, public opinion can be presumed to be less favorable to collective bargaining.
58
PATRICE M. MARESCHAL
Hypothesis Three: Situational characteristics will be related to use of the bifocal approach. The Parties The only independent variable in this category was management outlook. Management outlook is a factor-based scale variable which encompasses management's: desire for the mediation to be successful, realistic expectations of the process, and bargaining experience. It was expected that management intransigence would inhibit the use of integrative techniques, while a favorable management outlook would facilitate the use of integrative techniques. For example, the interview data demonstrate that the parties must believe in the mediation process and must want to resolve their dispute for mediation to be successful. If management does not want to deal with the union or if management wants the union to be decertified, the case can be very difficult to mediate. Hypothesis Four: Characteristics of the parties will be related to use of the bifocal approach. Parties' Interactions The only independent variable in this category was structure of the impasse. It was expected that a highly structured impasse procedure would inhibit the use of integrative techniques. In some cases mediation is one of many steps in the impasse procedure. That is, additional dispute resolution processes are available to the parties after they participate in the mediation process. Under these circumstances, it was expected that the mediator would have greater difficulty in using the broad approach, which is aimed at improving the parties' entire relationship, because the parties tend to view mediation simply as a stepping stone to other dispute resolution processes. Hypothesis Five: Parties' interactions will be related to use of the bifocal approach. Other Tactical Determinants The only independent variable in this category was bargaining context. It was expected that a pressurized, emotionally charged atmosphere would inhibit the use of integrative techniques. This outcome was expected because the broad approach requires the parties to consider mutual interests and focuses on developing and understanding various options. When faced with extreme time
Resolving Conflict: Tactics of Federal Mediators
59
pressures and an emotionally charged atmosphere the mediator may find it difficult to get the parties to step away from their entrenched positions and try to see the "big picture".
Hypothesis Six: Other tactical determinants will be related to use of the bifocal approach.
RESULTS Tables 2 and 3 display descriptive statistics and correlations for all variables used in this analysis. In the following section the statistically significant results of a multiple regression are reviewed. The dependent variable is use of the bifocal approach. The results of the regression predicting the bifocal approach are shown in Table 4. The following predictors of the bifocal approach were found to be statistically significant: bargaining context (p<0.01), unionization rate (p < 0.01), mediator acceptability (p < 0.01), and bargaining chips (p < 0.05). As depicted in Fig. 2, two of these predictors matched the situational characteristics construct, one predictor matched the mediator characteristics construct, and one matched the other tactical determinants construct. The
Table 2.
Descriptive Statistics for All Variables Used in Regressions. (n = 156)
Variable
Mean
S.D
Factor-based scales: 1. Structure of impasse 2. Mediator skill base 3. Acceptability 4. Management outlook 5. Relationship volatility 6. Bifocal approach 7. Bargaining context 8. Bargaining chips 9. Collaborative orientation
7.90 6.36 11.14 12.35 13.64 17.79 7.82 17.78 13.67
2.61 2.03 3.12 3.69 4.10 4.04 2.62 4.35 4.01
Other variables: 10. Private sector 11. Gender (Male = 1) 12. Management advocate 13. Tenure w/FMCS 14. Private sector work exp. 15. Unionization rate
0.81 0.82 0.36 9.13 0.90 33.04
0.40 0.37 0.48 9.42 0.30 19.17
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PATRICE M. MARESCHAL
t~ I I I
~A i::::
I
II
I I I
I
II
II
t-q I I I
I
I
I
II
II
I
I
I
II
I
I
I
> H
[..,
~4 v
Resolving Conflict: Tactics of Federal Mediators
61
significant results supported Hypotheses One, Three, and Six. Given the very high number of significant bivariate correlations in Table 3, collinearity diagnostics are also shown in Table 4. Tolerance values range from 0.57 to 0.90, averaging about 0.75, which indicates that multicollinearity was not a serious problem in this regression.
So What?: Interpreting Statistically Significant Results Three coefficients were positively related to the use of the bifocal approach. These were mediator acceptability, bargaining chips, and bargaining context. Again, given the voluntary nature of mediation, it is not surprising that mediator acceptability is related to a mediator's choice of tactics. In essence, a mediator must gain the parties' consent to assist in resolving the dispute. Bargaining chips measured the ability of one party to pressure the other, and bargaining context indicated an emotionally charged atmosphere. When at least one party has such tools at hand, it appears that the mediator is in a better position to persuade the parties to focus on developing and understanding options for a mutually acceptable agreement rather than following the traditional approach of trying to extract concessions and inflict losses on one's opponent. Table 4.
Regression Results: Dependent Variable = Bifocal Approach. (n = 156)
Independent Variable Mediator acceptability Mediator skill base Gender (Male = 1) Tenure w/FMCS Private sector exp. Management advocate Relationship volatility Collaborative orientation Bargaining chips Unionization rate Private sector case Management outlook Structure of impasse Bargaining context Constant F-statistic Adjusted r-squared
b 0.41 0.13 -1.44 0.05 0.16 0.08 0.07 0.11 -0.15 -0.05 - 1.02 -0.01 0.21 0.33 11.52 5.91 * * 0.31
* significant, p < 0.05; ** significant, p < 0.01.
s.e.(b) 0.11 0.17 0.81 0.03 1.00 0.61 0.07 0.08 0.07 0.02 0.84 0.09 0.12 0.12 2.22
t
tolerance
3.56** 0.75 -1.78 1.48 0.16 0.13 0.89 1.44 2.06* -3.08** - 1.22 -0.07 1.65 2.74** 5.19"*
0.57 0.61 0.80 0.82 0.78 0.86 0.79 0.74 0.70 0.90 0.67 0.70 0.69 0.76
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PATRICE M. MARESCHAL
One coefficient, unionization rate, was negative. The dependent variable is based on Likert scales for which a lower number indicates greater agreement. Thus, in the case of control variables, a negative coefficient indicates a positive relationship with use of the bifocal approach. Where unions are relatively rare the collective bargaining process has not been institutionalized. Under these circumstances, it may be more difficult for the mediator to employ a coherent set of tactics.
Theoretically Interesting, Statistically Insignificant Results In particular, two sets of statistically insignificant results are theoretically interesting. First, there is the failure to confirm a relationship between the management outlook and the dependent variable. Based on the interview data, it was expected that management outlook would be significantly related to the bifocal approach. However, the management outlook variable did not come close to statistical significance. Another look at Table 3 explains this result. Here management outlook is correlated with the dependent variable at p < 0.05 and more highly correlated with the following statistically significant independent variables: mediator acceptability, bargaining chips, and bargaining context (p < 0.01). Moreover, in a bivariate regression the coefficient of management outlook is significant at p < 0.05, whereas in the multivariate regression as reported in Table 4 the t-statistic for management outlook was the smallest of all the independent variables. Thus, management outlook appears to exert an indirect effect on the bifocal approach through the direct effects of mediator acceptability, bargaining chips, and bargaining context. The second set of theoretically interesting, statistically insignificant results concerns the mediator skill base. One key question surrounding the growing popularity of mediation as a dispute resolution tool is: what do mediators need to know to help the parties resolve their disputes? Recent attempts to develop objective standards for gauging the knowledge, skills, and abilities required of mediators have met with great resistance (Bush, 1993; Kolb & Kolb, 1993; Salem, 1993). Part of the debate over mediators' qualifications focuses on the relative importance of substantive knowledge (e.g. labor relations skills and experience) and process knowledge (e.g. facilitation and problem solving skills). The mediators interviewed disagreed over the relative importance of these two types of skills. Indeed, the FMCS is currently experimenting with the mix of skills required of new mediators. The factor analysis performed here suggests that both types of knowledge are necessary. Unfortunately, in the regression
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analysis, mediator skill base was not significantly related to the bifocal approach. However, mediator skill base is correlated with the dependent variable, as well as mediator acceptability, relationship volatility, and bargaining context at p < 0.01. Again, this suggests that mediator skill base may have an indirect effect on the dependent variable through the direct effects of these other variables. The failure to establish a statistically significant relationship between mediator skill base and the bifocal approach may have to do with the homogeneity of the survey respondents. Until very recently, the FMCS recruited mediators based on their substantive knowledge and skills. That is, applicants were required to have a minimum of seven years of "front-line" labor negotiations experience. Within the past five years, the FMCS has begun hiring applicants with strong process skills who may not have had the minimum seven years front-line experience. The new mediators hired on the basis of their process skills are taught substantive skills on the job (FMCS, 1996). Once hired, the new mediators attend a comprehensive training program over the course of a year. The topics covered include dispute mediation, preventive mediation, and alternative dispute resolution (Mareschal, 1998). The training sessions serve to initiate the new mediators to the agency and provide the basic tools they need to do their jobs. While the training sessions alone will not make the mediators successful, they give a flavor of what mediators can expect on the job. In addition, all new mediators begin their work with the FMCS by "shadowing" other more seasoned mediators on cases. Only after the shadowing period has been successfully completed do the new mediators begin to handle cases on their own. Since the FMCS only recently relaxed the requirement concerning labor negotiations experience and since all new mediators with the FMCS complete this program, FMCS mediators tend to develop a uniform/similar skill base. As a result, in self-reports they may underestimate the role that their skill base plays in determining the tactics that they use.
CONCLUSION As noted in the introduction, this research strives to understand how mediation works and why mediators do what they do. In brief, an inductive study was conducted to further develop a theoretical model of the determinants of mediators' tactics derived from a review of the mediation literature. With the theoretical model in mind, qualitative and quantitative data were collected to refine and test the model. Six hypotheses were developed from the preliminary analysis. These hypotheses were tested using regression analysis. Four
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statistically significant relationships were found. Three hypotheses were confirmed. To summarize, in mediation a neutral third party assists the parties in conflict in reaching a voluntary agreement. The mediator does not have the power or authority to impose a settlement. Instead, s/he simply facilitates the negotiation process. The primary goal of the mediator is to help the parties come to an agreement. Mediation is important for a number of reasons. In particular, mediation is quickly becoming the policy instrument of choice to resolve disputes at various levels of government. Furthermore, mediation promotes labor-management cooperation; such cooperation is essential to organizational effectiveness. Moreover, since managers are involved in team building, resolving interpersonal disputes, and handling grievances they are in essence bargaining all the time. Indeed, courses in conflict resolution/mediation are being offered in the curricula of many business and public administration programs in an effort to help managers understand the nature of conflict in their work and their role as conflict resolvers. The growing interest in teaching negotiation and dispute settlement is also reflected in the editorial policies of multidisciplinary journals such as Negotiation Journal which features a section on Educational Innovations. Thus, mediation is a topic WOl:thy of study for both practitioners and scholars in a variety of disciplines such as business and public administration, public policy analysis, organizational studies, labor relations, and conflict resolution. Although mediation has become increasingly popular as a means to resolve conflict the practice of mediation has outstripped theory-building. As mentioned earlier, mediators often claim that mediation is an art, not a science. However, given the explosive growth in the use of conflict resolution services, the premise that mediation cannot be evaluated has become untenable.
Limitations and Suggestions for Future Research The most important limitation of the research is the researcher's inability to observe any mediations directly. Obviously, first-hand observation would have enhanced the understanding of the mediation process. However, since it is often argued that no two mediations are alike, direct observation of a few mediation cases might provide a less complete picture of the mediation process than the triangulated research design used here. This research could be extended in several directions. First, the labor relations context is highly structured. For example, the parties have rights
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established by law and labor boards exist to enforce these laws and to deal with parties who bargain in bad faith. It would be interesting to see how the mediation process works in less structured environments. The survey could be replicated in different contexts such as family mediation as a step toward devising a general theory of mediation. Second, within the labor relations context the survey could also be administered to other mediation participants such as management and union negotiators in order to gain alternative perspectives on the mediation process. As Schtn (1983) notes, the reflective practitioner learns from the client's interpretation of the problem. If research on mediation is to have practical value, then researchers would do well to learn from both the mediators (i.e, the practitioners) and the parties (i.e. the clients). Third, the FMCS itself is an interesting research site for conflict resolution scholars as it attempts to modernize its image, broaden the range of services it provides, and diversify its workforce. Indeed, in a recent Industrial Relations Research Association newsletter practitioners and researchers alike were called upon to participate in a national policy forum. One of the key topics discussed in the forum was the massive organizational changes that the FMCS has undertaken in recent years (Kochan, 1999). Although no significant impacts of mediator demographic characteristics were found it is possible that, as the FMCS strives to recruit a new type of mediator for the new millennium, new clusters of mediator techniques, as well as new determinants of these tactics, may be discovered. Finally, Federal agencies involved in labor relations (i.e. the National Labor Relations Board and the FMCS) have a somewhat weak history of conducting or sponsoring research on the phenomena they regulate or otherwise influence. This research is a first step at reversing that "tradition." This new trend toward more openness could be extended with a concentrated effort to further test the model of mediators' tactical choices presented here.
REFERENCES Adler, R. S., Rosen, B., & Silverstein, E. M. (1998). Emotions in negotiation: How to manage fear and anger. Negotiation Journal, 14, 161-179. Albrecht, K. (1994). The power of bifocal vision. Management Review, 83(4), 42-46. American Heritage Dictionary of the English Language (4th ed.) (2000). Boston: Houghton-Mifflin. Bazerman, M. (1998). Judgment in Managerial Decision Making (4th ed.). New York: Wiley. Bellman, H. S. (1998). Some reflections on the practice of mediation. Negotiation Journal, 14, 205-210. Bercovitch, J., & Houston, A. (2000). Why do they do it like this? An analysis of the factors influencing mediation behavior in international conflicts. Journal of Conflict Resolution, 4, 170-202.
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Bingham, L. B., Chesmore, G., Moon, Y., & Napoli, L. M. (2000). Mediating employment disputes at the United States Postal Service: A comparison of in-house and outside neutral mediator models. Review of Public Personnel Administration, 20(1), 5-19. Briggs, S., & Koys, D. J. (1990). An empirical investigation of public-sector mediator effectiveness. Journal of Collective Negotiations, 19, 121-128. Bowling, D., & Hoffman, D. (2000). Bringing peace into the room: The personal qualities of the mediator and their impact on mediation. Negotiation Journal, 16, 5-28. Bush, R. A. B. (1993). Mixed messages in the Interim Guidelines. Negotiation Journal, 9, 341-347. Camevale, P. J., & Conlon, D. E. (1988). Time pressure and strategic choice in mediation. Organizational Behavior and Human Decision Processes, 42, 111-133. Carnevale, P. J., Conlon, D. E., Hanisch, K. A., & Harris, K. L. (1989). Experimental research on the strategic-choice model of mediation. In: K. Kressel & D. G. Pruitt (F_xls),Mediation Research. San Francisco: Jossey-Bass. Camevale, P. J., & Pruitt, D. G. (1992). Negotiation and mediation. Annual Review of Psychology, 43, 531-582. Conlon, D. E., Camevale, P., & Ross, W. H. (1994). The influence of third party power and suggestion on negotiation: The surface value of a compromise. Journal of Applied Social Psychology, 24, 1084-1113. Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16, 297-334. Denzin, N. K. (1978). The Research Act (2rid ed.). New York: McGraw-Hill. Downie, B. M. (1991). When negotiations fail: Causes of breakdown and tactics for breaking the stalemate. Negotiation Journal, 7, 175-186. Elangovan, A. R. (1998). Managerial intervention in organizational disputes: Testing a prescriptive model of strategy selection. International Journal of Conflict Management, 9, 301-335. Federal Mediation and Conciliation Service (n.d). Labor-Management Relations for the 21st Century. Washington, D.C.: Federal Mediation and Conciliation Sei'vice. Federal Mediation and Conciliation Service (1996). Transformation: Federal Mediation and Conciliation Service 48th Annual Report. Washington, D.C.: U.S. Government Printing Office. Federal Mediation and Conciliation Service (1997). Federal Mediation and Conciliation Service Strategic Plan 1997-2002. Washington, D.C.: Federal Mediation and Conciliation Service. Feuille, P. (1999). Grievance mediation. In: A. E. Eaton & J. H. Keefe (Eds), Employment Dispute Resolution and Worker Rights in the Changing Workplace. Champaign, IL: Industrial Relations Research Association. Gadlin, H. (1991). Careful maneuvers: Mediating sexual harassment. Negotiation Journal, 7, 139-153. Gogan, J. L. (1998). Bifocal IS Management. Informationweek, 13(July), 146. Harari, O. (1997). Looking beyond the 'vision thing.' Management Review, 86(6), 26-29. Harris, K. L., & Carnevale, P. (1990). Chilling and hastening: The influence of third-party power and interests on negotiation. Organizational Behavior and Human Decision Processes, 47, 138-160. Houston, P. D. (2000). Balancing Paradox. Association Management, (June), 62-66. Jorgensen, E. O. (2000). Relational transformation in mediation: Following constitutive and regulative rules. Mediation Quarterly, 17, 295-312. Karambayya, R., Brett, J. M., & Lytle, A. (1992). Effects of formal authority and experience on third-party roles, outcomes, and perceptions of fairness. Academy of Management Journal, 35, 426--438.
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Karim, A., & Dilts, D. A. (1990). Determinants of mediation success in the Iowa public sector. Journal of Collective Negotiations, 19, 129-140. Kearney, R. C., & Carnevale, D. G. (2001). Labor Relations in the Public Sector (3rd ed.). New York: Marcel Dekker. Keashly, L., & Newberry, J. (1995). Preference for and fairness of intervention: Influence of thirdparty control, third-party status and conflict setting. Journal of Social and Personal Relationships, 12, 277-293. Kim, J., & Mueller, C. W. (1978). Factor Analysis: Statistical Methods and Practical Issues. Newbury Park, CA: Sage. Kochan, T. A. (1999). President's column. IRRA Newsletter, 41(2), 5. Kochan, T. A., & Jick, T. (1978). The public sector mediation process: A theory and empirical examination. Journal of Conflict Resolution, 22, 209-240. Kochan, T. A., & Katz, H. C. (1988). Collective Bargaining and Industrial Relations (2nd ed.). Homewood, IL: Irwin. Kolb, D. M. (1983). The Mediators. Cambridge, MA: MIT. Kolb, D. M., & Kolb, J. E. (1993). All the mediators in the garden. Negotiation Journal, 9, 335-339. Kressel, K., Frontera, E. A., Fodenza, S., Butler, F., & Fish, L. (1994). The settlement orientation vs. the problem-solving style in custody mediation. Journal of Social Issues, 50, 67-84. Laskewitz, P., van de Vliert, E., & De Dreu, C. K. W. (1994). Organizational mediators siding with or against the powerful party? Journal of Applied Social Psychology, 24, 176--188. Liebman, C. B. (2000). Mediation as parallel seminars: Lessons from the student takeover of Columbia University's Hamilton Hall. Negotiation Journal, 16, 157-182. Lipsky, D. B., & Seeber, R. L. (1999). In search of control: The corporate embrace of ADR. University of Pennsylvania Journal of Labor and Employment Law, 1, 133-157. Lund, M. E. (2000). A focus on emotion in mediation training. Family and Conciliation Courts Review, 38, 62-68. Magnusen, K. O., & Lim, R. G. (1994). Special master mediation in impasse resolution: The Florida experience. Journal of Collective Negotiations, 23, 347-358. Mareschal, P. M. (1998). Providing high quality mediation: Insights from the Federal Mediation and Conciliation Service. Review of Public Personnel Administration, 18(4), 55-67. Maxwell, D. (1992). Gender differences in mediation style and their impact on mediator effectiveness. Mediation Quarterly, 9, 353-363. Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2000). Human Resource Management: Gaining a Competitive Advantage (3rd ed.). Boston: Irwin. Phillips, B. (1999). Reformulating dispute narratives through active listening. Mediation Quarterly, 17, 161-180. Riskin, L. L. (1993). Two concepts of mediation in the FMHA's Farmer-Lender Mediation Program. Administrative Law Review, 45, 21-64. Ross, W. H. (1990). An experimental test of motivational and content control on dispute mediation. Journal of Applied Behavioral Science, 26, 111-118. Ross, W. H., & Wieland, C. (1996). Effects of interpersonal trust and time pressure on managerial mediation strategy in a simulated organizational dispute. Journal of Applied Psychology, 81, 228-248. Salem, R. A. (1993). The Interim Guidelines need a broader perspective. Negotiation Journal, 9, 309-312. Sch/Sn, D. A. (1983). The Reflective Practitioner: How Professionals Think in Action. New York: Basic.
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Simkin, W. E. (1971). Mediation and the Dynamics of Collective Bargaining. Washington, D.C.: Bureau of National Affairs. Solstad, K. E. (1999). The role of the neutral in intra-organizational mediation: In support of active neutrality. Mediation Quarterly, 17, 67-81. Stamato, L. (1992). Voice, place, and progress: Research on gender, negotiation, and conflict resolution. Mediation Quarterly, 9, 375-386. Strauss, A., & Corbin, J. (1990). Basics of Qualitative Research: Grounded Theory Procedures and Techniques. Newbury Park, CA: Sage. Tabachnick, B. G., & Fidell, L. S. (1996). Using Multivariate Statistics. New York: Harper Collins. Tetlock, P. E. (1991). An alternative metaphor in the study of judgment and choice: People as politicians. Theory and Psychology, 1,451-475. Wall, J. A., Jr., & Lynn, A. (1993). Mediation: A current review. Journal of Conflict Resolution, 37, 160-194. Wall, V. D., Jr., & Dewhurst, M. L. (1991). Mediator gender: Communication differences in resolved and unresolved mediations. Mediation Quarterly, 9, 63-85. Welton, G. L., Pruitt, D. G., & McGillicuddy, N. B. (1988). The role of caucusing in community mediation. Journal of Conflict Resolution, 32, 181-202. Wissler, R. L. (1995). Mediation and adjudication in the small claims court: The effects of process and case characteristics. Law and Society Review, 29, 323-358. Wittmer, J. M., Carnevale, P., & Walker, M. E. (1991). General alignment and overt support in biased mediation. Journal of Conflict Resolution, 35, 594-610. Zubek, J. M., Prnitt, D. G., Pierce, R. S., McGillicuddy, N. B., & Syna, H. (1992). Disputant and mediator behaviors affecting short-term success in mediation. Journal of Conflict Resolution, 36, 546-572.
BROAD-BASED
EMPLOYEE STOCK
OPTIONS - A UNION-NONUNION COMPARISON Maya K. Kroumova, James C. Sesil, Douglas L. Kruse and Joseph R. Blasi
INTRODUCTION Until recently, stock options were primarily reserved for senior executives and selected managers in most American corporations. In the last decade or so, however, stock options have become part of the compensation package for an increasing number of rank-and-file employees. As of February 2000, the National Center for Employee Ownership (NCEO) estimated that there are more than 3000 active broad-based stock option (SO) plans in the United States based on an extensive review of press announcements by companies. The expected benefits of broad-based 2 SO plans resemble those of other incentive compensation: reduced turnover and increased effort, creativity, and cooperation, which in turn, presumably result in higher productivity and ultimately better overall firm performance (Kroll, 1997). In addition, stock options do not entail a direct charge against earnings) and they have the potential to foster an "ownership" culture by focusing employee attention on the firm's financial performance. 4 Finally, they allow a lot of flexibility in tailoring rewards: SOs can be granted as a reward for joining the company; they can be based on individual performance and/or meeting group/business unit goals; or the grant can be tied to the profitability of the company, etc. Advances in Industrial and Labor Relations, Volume 11, pages 69-94. Copyright © 2002 by Elsevier Science Ltd. All rights of reproduction in any form reserved. ISBN: 0-7623-0853-2
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Empirical evidence for the positive effects of stock options on productivity and market valuation is beginning to accumulate (Weeden, Carberry & Rodrick, 1998; Sesil, Kroumova, Kruse & Blasi, 2000; Blasi, Kruse, Sesil & Kroumova, 2000). The expected benefits of SO plans make them attractive to both unionized and non-unionized employers who are trying to design an efficient compensation package. As unions tried to reinvent themselves as a valuable partner for both employers and employees in the 1990s, they have become more open to incentive pay, including stock options. 5 However, as of yet, there is little conceptual and empirical work on how broad-based stock option plans work, and what, if any, effect they have on company performance in union firms. An empirical comparison of the relationship between SO plans and firm performance in union and non-union firms may therefore be informative for future theory building. The goal of this paper is to assess the differences in economic and financial performance between stock option and non-stock option companies in unionized and non-unionized settings.
INCENTIVES AND GROUP INCENTIVES: THEORY AND EVIDENCE In a publicly owned company, property rights, broadly defined as the rights to the benefits, use, and disposal of assets and goods (Kang & SCrensen, 1999), have become fragmented. Use and disposal (control) rights are separated from benefit (ownership) rights (Berle & Means, 1932). Four broad classes of stakeholders share these rights: security holders, directors, managers, and employees. The diverging self-interests of these various stakeholders, along with the fragmentation of property rights, create opportunities for capturing rights that the original right holder cannot protect. 6 In the context of the employment relationship, managers can capture benefit rights from shareholders and employees, for example, by diverting cash towards perquisites; employees can capture additional benefit rights from managers and shareholders by withholding their effort (moral hazard) and/or providing inaccurate information about their ability (adverse selection). Such self-interested behaviors could be contained if the parties to the employment relationship had perfect information about each other and obtaining such information was not costly (Alchian & Demsetz, 1972). However, in the presence of imperfect knowledge and costly monitoring, the employer (or principal, in an agency theory framework) has to address problems resulting from self-interested worker (agent) behaviors such as moral hazard and adverse selection. In particular, the firm has to design an efficient compensation contract that provides employees with incentives to act in ways that are consistent with the interests of the other stakeholders (Asch &
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71
Warner, 1997), and that takes into account that employees (agents) are more risk averse than shareholders (Weitzman & Kruse, 1990). Thus, an efficient compensation package would motivate employees to supply effort and to self-select into firms/jobs based on their unobservable characteristics (Asch & Warner, 1997). A large variety of individual and group incentives are being used to address problems brought about by self-interested employee behaviors. Individual financial incentives include piece-rates, merit pay, commission systems, individual performance-based bonuses, efficiency wages and upward-sloping wage-tenure profiles.7 Group incentives include bonuses based on group/ business unit/firm performance, profit-sharing, gainsharing and employee ownership plans. These financial incentives vary in their ability to influence behavior, and their effectiveness is contingent on firm characteristics (Jones, Kato & Pliskin, 1997). Stock option plans are a type of group incentive plan, and as such their impact on worker effort can be analyzed drawing on existing theoretical and empirical knowledge about other group incentive plans. Group incentive plans are expected to serve the same purpose as individual incentives, that is, to motivate employees to provide effort in the amount and direction desired by the firm. Specifically, theoretical arguments that predict a positive effect of group incentives on firm performance are based on extending agency theory (Eisenhardt, 1989) to conceptualize employees as agents of management. Granting stock options to employees may reduce the incentive conflicts that arise when the interests of workers are not aligned with the interests of owners and managers. 8 An added benefit of group incentives is that they are expected to result in improved cooperation among employees (FitzRoy & Kraft, 1987; Weitzman & Kruse, 1990; Strauss, Gallagher & Fiorito, 1991; Kruse & Blasi, 1997). Peer pressure and horizontal monitoring have been advanced as explanatory mechanisms for this effect (Weitzman & Kruse, 1990; Kruse, 1993). Consequently, group incentives may also reduce monitoring costs (Kruse, 1993). Further, Mitchell, Lewin and Lawler (1990) hypothesized that group incentives increase employee effort and commitment indirectly via improved communication about company performance and better employee understanding of the importance of profitability and organizational effectiveness. However, there are also theoretical reasons to expect negative or mixed effects of group incentives on employee effort. First, depending on the design and implementation of the plan, the connection between individual effort and obtaining the group reward may be t e n u o u s 9 (Gomez-Mejia & Balkin, 1992; Blasi, Conte & Kruse, 1996), which would result in a weak or non-existent
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incentive to supply effort. Stock-based rewards may be especially susceptible to this problem because, with these types of incentives, the reward is experienced only if and when the stock price increases, yet many of the factors that influence stock price movements over the short run are outside of employee control. 10 Second, whenever it is hard to monitor individual employee effort and when any one employee's reward depends on everyone else's effort, a dilution or free-rider problem may occur. Employees may cut back on their effort because individual accountability is low (Weitzman & Kruse, 1990; Cooke, 1994; Jones et al., 1997). Thus, in a static, one-period framework, the larger the group among which the reward is to be shared, the smaller the incentive value of the reward and the higher the likelihood of free-riding behavior.~l Broad based stock option plans are vulnerable to this criticism in that the reward (stock price appreciation) is ultimately contingent on overall firm performance, and the reward is shared with all other stakeholders. Therefore, one might expect group incentives such as SO plans to have an insignificant or even negative effect on performance. Nonetheless, theoretical arguments based on game theory suggest that in a multi-period setting, where the "game" of group reward earning and sharing is repeated, cooperation is a possible equilibrium solution (but not the only solution) (Weitzman & Kruse, 1990; Levine & Tyson, 1990; Cooke, 1994). Ultimately, whether cooperation will emerge as the actual solution will depend on the organization's performance management system, culture, and other factors (Weiss, 1987; Weitzman & Kruse, 1990; Hansen, 1997). Third, whether a stock option plan will elicit additional effort from employees will also depend on how employees "frame" the plan - as an extra reward or as a trade-off for foregone increases in base-level compensation. Framing a stock option plan as a trade-off may result in unchanged levels of work effort. To complicate matters further, such framing may change over time and be susceptible to fluctuations in stock price. For example, a stock option plan may initially be perceived as a trade-off for pay: if the stock price increases sharply it will likely be perceived as a reward, but if the stock price declines sharply ensuing disappointment will likely lead to a decrease in work effort. Finally, contextual factors are also likely to moderate the effects of group incentives on employee behavior. Ben-Ner and Jones (1995) argue that ownership based only on return fights (broadly defined as financial and physical payoffs generated from the operation of the organization) is likely to have small and conflicting effects on individual motivation and performance and, as well, on cooperation across organizational units. They hypothesized that granting employees both return and control fights would improve effort and performance, albeit in a non-monotonic fashion.
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Thus, theoretical arguments exist for both positive and negative effects of group incentive plans on motivation, effort, and performance. In this regard, several empirical studies have attempted to measure the net effect of group incentives on various employee and organization-level outcomes. Kruse & Blasi (1997) reviewed 26 empirical studies of the effects of employee stock ownership ~2 on employee attitudes, motivation, and firm productivity and profitability. Although the studies exhibit a wide variety of measures, ownership forms, and contextual factors that make generalizations difficult, Kruse & Blasi (1997) report that most studies find a positive relationship between employee ownership and organizational commitment, and either positive or neutral effects of employee ownership on employee satisfaction. Perceived participation in decision-making appears to be an important predictor of employee satisfaction and commitment, either by itself or interacted with employee ownership. As far as firm productivity and profitability are concerned, the evidence indicates either better or unchanged performance under employee ownership. A weakness of this empirical research is that it sheds little light on the specific mechanisms through which employee ownership might improve performance, satisfaction, and other outcomes (see Pierce, Rubenfeld & Morgan, 1991, for a proposed model of how employee ownership affects productivity, satisfaction and commitment). Jones et al. (1997) provide a critical review of the available econometric evidence on the effects of profit-sharing and gainsharing on performance. The evidence clearly supports the hypothesis that profit-sharing improves productivity, although its effect on profitability is less clear. As for the effects of such variables as firm size and capital intensity on the effectiveness of profit-sharing, the evidence is mixed, with studies variously finding positive, neutral, and negative effects. The empirical evidence about the relationship between worker participation and profit-sharing is also inconclusive. As with research on employee ownership, there is little research exploring the specific mechanisms through which profit-sharing increases productivity, though some studies suggest that profit-sharing increases effort and lowers voluntary quits, absenteeism and dismissals (see Jones et al., 1997, for a review of these studies). In summary, empirical work on group incentive plans such as profit-sharing and employee ownership indicates that their net effect on productivity is either positive (as with profit-sharing) or neutral (as with employee ownership). No evidence exists that such group incentives decrease average productivity. As far as stock option plans are concerned, an organizational characteristic that has received little attention is the presence of a union. Therefore, we may ask, "do stock option plans operate in the same way in unionized as in non-union work-
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M.K. KROUMOVA ET AL.
places?" And, "are the effects of group incentive plans on productivity and financial performance smaller or larger in unionized than in non-union firms?" The next section summarizes some theoretical arguments and empirical evidence on these questions. UNION
EFFECTS
ON GROUP
INCENTIVES
AND
PERFORMANCE: THEORY A N D E V I D E N C E Whether a stock option plan improves performance depends on individual employee perceptions of the instrumentality of the plan, individual employee decisions to put forth extra effort, and individual employee access to organizational resources required to get the job done. In addition, in a unionized setting, the SO plan would also have to be backed by (or at least not opposed by) the union for potential positive effects of the plan to materialize. Do unions reduce or increase the potential effects of stock option plans on employee motivation and performance? Unions may perceive any effort to align the interests of employees with those of managers/owners via stock ownership as a threat to their raison d'etre. Therefore, even if unions agree to the inclusion of a stock option plan in the compensation package, they might not support its implementation, thereby reducing its motivational impact. Lack of trust between union and management may increase the transaction costs of implementing the plan. Also, unions may tend to frame stock option plans as added benefits, substitutes for wage concessions, or mechanisms to maintain fixed industry wage patterns (Zalusky, 1990), rather than as incentives to improve performance. For example, an empirical study of group incentives in manufacturing firms in the Midwest (Cooke, 1994) found that group incentives such as profit-sharing and gain-sharing plans had modest positive cross-sectional effects on productivity in unionized finns, but more substantial positive effects in nonunion firms. On the other hand, there are arguments suggesting a favorable union posture towards adopting and implementing stock option plans. Unions' struggles during the last several decades have been well documented as they have lost membership, bargaining power and political clout (Strauss et al., 1991). But during the 1990s, unions attempted to fight back and reestablish themselves as a valuable partner in the employee-employer relationship. As part of an effort to "add value to business" (Masters & Atkin, 1999), unions have been experimenting with designing and implementing high-performance workplace practices as well as workplace democracy initiatives that enhance employee involvement and commitment. Stock option plans are well suited to reward
Broad-Based Employee Stock Options - A Union-Non-Union Comparison
75
union members engaging in such practices and initiatives. Union involvement in the design and implementation of a stock option plan may result in better communication and understanding of the benefits of the plan compared to non-union contexts. Such improved understanding may then, in turn, have positive effects on employee motivation and performance. Another important priority for unions in recent years has been recruiting new members (Masters & Atkin, 1999). To attract workers from the hi-tech sector, in particular, unions have had to go beyond traditional notions of pay, including by supporting stock option plans as a new form of employee compensation. 13 Empirical evidence on union acceptance of "alternative" rewards such as skill based pay, profit-sharing, gainsharing, and stock ownership also suggests that unions have recently come to view stock option plans favorably. Heneman, von Hippel, Eskew and Greenberg (1997) found that unions favor incentive plans with objective, group-based performance measures as well as plans in which employees receive equal payouts. Broad-based employee stock option plans can easily accommodate these preferences: unionized employees can be awarded an equal number of options contingent on a group financial or operational target. Furthermore, over time, unions have been able to overcome their historic opposition to employee ownership 14 (McElrath & Rowen, 1992); in fact, today, stock sharing plans are especially prevalent in unionized firms. ]5 In sum, there are arguments favoring both positive and negative effects of stock option plans on employee motivation, effort and firm performance in unionized firms. But, whether any dominant effect will prevail is a matter for empirical investigation.
P U R P O S E OF THE STUDY The goal of this study is to measure the net effect of SO plans on employee productivity and financial performance in union and non-union firms. We build in two ways on prior empirical work that has evaluated the effect of group incentives on performance: ~6 first, we examine the effects of a highly popular, yet little studied type of group incentive plan, namely, broad based employee stock options; t7 second, we analyze such plans in both union and non-union companies. Following Cooke (1994), we compare the effect of group based incentives on productivity in samples of union and non-union companies. In addition, financial performance measures are included in the empirical analysis, and our data set contains firms from a broad range of industries (not just manufacturing). Further, we go beyond cross-sectional research to conduct a longitudinal analysis of the effects of SO plans on productivity and performance.
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M.K. KROUMOVA ET AL.
The limitations of our data (for example, we use sales per employee as a proxy for productivity) do not allow us to test hypotheses about the direct effects of stock option plans on motivation. It may be the case that employees do indeed perceive stock options as a valuable reward, and therefore increase their effort to obtain this reward; nonetheless, circumstances beyond employee control (as examples, poor management and lack of resources to get the job done) may counteract such an increase in effort. Because of this problem, a cross-sectional analysis using sales/employee as a proxy for employee effort is likely to underestimate the effect of SO plans. Another limitation on our analysis is that we do not know whether employees frame the SO plan as a reward or a trade-off. As mentioned above, incentives are motivating when the reward is perceived as valuable; hence, if in some of the companies in our sample employees perceive the SO plan as a concession, this would also result in an underestimation of the effects of SO on employee effort. Furthermore, when assessing the differential effects of SO plans on finn performance in union and non-union companies, unmeasured variables, such as the quality of the union-management relationship or the union's support of alternative compensation practices, may result in under- or over-estimating such differences. Table 1.
Distribution of Broad-Based Stock Option Plans by Industry, 1997. Percent of all Firms Unionized Within Each Industry
Percent of Unionized Firms with SO Within Each Industry
Percent of Non-union Finns with SO Within Each Industry
Industry Agriculture & Mining Construction Manufacturing Trans. & Comm. Utilities Wholesale Retail Fin., Ins. & Real Estate Services
52% 17% 37% 43% 55% 23% 15% 15% 16%
0% 0% 5% 4% 8% 0% 2% 6% 4%
3% 2% 14% 1% 10% 10% 5% 5% 15%
All Industries Combined
31%
5%
11%
N
3691
1246
2715
Source: Compustat data merged with data from IRS's Form 5500 to determine union status and NCEO's broad-based stock option data base to determine presence of SO plan. Only compustat companies that provided employment data for either 1996 or 1997 are included.
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77
DATA SETS AND VARIABLES The primary data set used in this study is Standard & Poor's Compustat. Finns that reported employment levels in either 1996 or 1997 were included in the data set. 18 This yielded an initial list of 8,152 publicly held companies. Compustat files provide extensive standardized financial information on public companies, but do not provide information on unionization. Therefore, we used Internal Revenue Service (1RS) Form 5500 to determine the union status of all firms in the study. 19 A company was considered unionized if one or more of the pension plans it sponsors was collectively bargained. Form 5500 data allowed us unambiguously to establish union status for 4,173 of the initial 8,152 Compustat companies. 2° To determine whether a company sponsors a broad-based stock option plan, we used a list of 1,360 companies provided by the National Center for Employee Ownership (NCEO); 2~ we were able to match 493 of these 1,360 companies to Compustat data. Merging information from all data sets (Compustat, Form 5500, and the NCEO list) resulted in a total sample size of 3,961 publicly owned firms (with a total of about 36 million employees) from nine industry sectors. Of these, 1,246 are union firms and 2,715 are non-union firms. Of the 1,246 union firms, 60 had a SO plan; of the 2,715 non-union finns, 309 had a SO plan (see Table 1 and the Results section below). We divided the 3,961 companies in our sample into four categories based on union status and presence of a SO plan: unionized finns with SO plans; unionized firms without SO plans; non-union firms with SO plans; and, non-union firms without SO plans. We then compared the economic and financial performance of the four union/SO groups using a set of four performance indicators. Productivity was used as a proxy for employee effort, with the specific measure being the natural logarithm of sales per employee, adjusted for inventory change. Financial performance was assessed via two market-based measures, namely total annual shareholder return (TSR) and Tobin's q ((market value + preferred stock + long term debt)/(capital stock + current assets current liabilities)), and by one accounting measure, namely, return on assets (ROA). Because we used an augmented production function for our analysis, our independent variables included dummies for union/SO status, labor, capital intensity and industry (see the Appendix for variable definitions and Table 2 for descriptive statistics on all variables). MODEL
SPECIFICATIONS
We perform two sets of empirical analyses using four different measures of firm performance for each set. The first set uses a cross-sectional specification that
78
M . K . K R O U M O V A ET AL.
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Broad-Based Employee Stock Options - A Union-Non-Union Comparison Table 3.
79
U n i o n Status, Stock Options Plans and 1997 P e r f o r m a n c e Levels.
Dependent variables: Ln (output/employee) Independent variables Union Stock Option Union No Stock Option No Union Stock Options Ln (total employment) Ln (net assets) Intercept F 2-digit industry dummies n
Total Shareholder Return (1) (2)
0.287 *** (0.076) 0.038 (0.023) 0.355 *** (0.035 -0.369*** (0.010) 0.318 (0.008) 3.642 *** (0.070) 242.23 Yes 3456
Tobin's Q
-0.280 (6.298) -2.657 (2.066) -8.519 *** (2.879) 5.960 *** (0.883) -0.474 (0.727) 11.015 * (6.010) 17.66 Yes 3160
(3) 0.630"** (0.217) -0.142"* (0.069) 0.613 *** (0.100) 0.431"** (0.030) -0.324 (0.024) 3.835*** (0.202) 754.44 Yes 3295
Return on Assets (4) 1.540 (2.136) -1.732"** (0.651 ) 0.375 (0.986) 5.640*** (0.287) -2.823 (0.234) 23.655*** (1.952) 914.95 Yes 3464
Based on robust regressions that minimize influence of outliers. Standard errors in parentheses. * p < 0.10 ** p < 0.05 *** p < 0.01. The excluded group is No Union*No Stock Option.
Table 3A.
Estimated Proportional Differences in Productivity by Firms Categories.
Union*Stock Option Union*No Stock Option No Union*Stock Option
33.3% 3.9% 42.6%
*Exponential functions of coefficients reported in Table 3: [(exp(Bi)-l)*100] (The refernce group is No Union*No Stock Option).
captures the net differences in firm p e r f o r m a n c e a m o n g the four u n i o n / S O categories. Results f r o m these analyses are presented in Table 3. Cross-sectional estimates are vulnerable to a n u m b e r o f estimation problems, such as selfselection and omitted variable bias. G i v e n the limitations o f our data set, w e attempt partially to correct for s o m e o f the biases associated with cross-sectional estimation by also conducting a longitudinal analysis. Thus, our second set o f empirical analyses c o m p a r e s the average performance and the average differences in p e r f o r m a n c e a m o n g the four u n i o n / S O categories in the periods b e f o r e and after adoption o f an S O plan. 22 Results f r o m these analyses are reported in T a b l e 4.
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M . K . K R O U M O V A E T AL.
Table 4.
U n i o n S t a t u s , S O P l a n s , a n d C h a n g e s in P e r f o r m a n c e L e v e l s , 1985-1987
Dependent Variables Independent variables
to 1 9 9 5 - 1 9 9 7 .
Ln(Output/ Total ShareEmployee) holder Return (1) (2)
All companies w/data in both periods^ 1985-1987
Tobin's Q (3)
Return On Assets (4)
0.094 ** (0.045) 0.213 *** (0.046)
4.690 (3.287) 4.840 (3.641)
0.329*** 1.329 (0.085) (1.154) 0.553*** 3.355*** (0.089) (1.198)
0.081 *** (0.017) 0.088 (0.021)
6.743*** (1.278) 1.202 (1.637)
-0.125"** -0.519 (0.033) (0.438) -0.181 -0.041 (0.041) (0.525)
0.157"** (0.030) 0.387*** (0.033)
2.154 (2.189) 6.535*** (2.449)
0.432*** 0.939 (0.057) (0.760) 0.644*** 5.313 (0.062) (0.814)
0.044*** (0.017) Change from 1985-1987 to 1995-1997 ^^ Union Stock Option 0.119 * (3.42) Union-No Stock Option 0.007 (0.06) No Union Stock Option 0.230*** (27.12) No Union No Stock Option 0.044***
4.397*** (1.313)
0.089*** 1.140"** (0.033) (0.409)
0.150 (0.00) -5.542*** (7.33) 4.381 (1.80) 4.397***
0.224 * 2.026 (3.37) (1.49) -0.056 0.478 (1.15) (0.50) 0.212"** 4.374*** (6.40) (15.57) -0.089*** 1.140"**
1995-1997 Union-No Stock Option 1985-1987 1995-1997 No Union-Stock Option 1985-1987 1995-1997 No Union-No Stock Option 1985-1987 1995-1997
Difference Union SO-Union NSO Difference Union SO-No Union SO
0.112 * (3.19) -0.111 (2.32)
5.692 (1.53) -4.231 (0.63)
.280** (5.57) 0.013 (0.01)
1.548 (0.91) -2.348 (1.59)
F
543.8
63.7
136.75
118.59
Total Observations
13210
11565
1619
14206
Notes: Standard Errors in Parentheses. * p < 0.10 ** p < 0.05 *** p < 0.01. The excluded group is No Union No Stock Option in 85-87. ^ Based on robust regressions run on all companies with complete data for the 1985-1987 and 1995-1997 periods and In(assets) plus year dummies and 2-digit industry dummies. ^^ T-statistics (not standard errors) reported in parentheses in these companies.
Broad-Based Employee Stock Options - A Union-Non- Union Comparison
81
Following prior empirical work assessing the net effect of group incentives on performance, we use an augmented production function for our crosssectional productivity analysis (Kruse, 1992, 1993; Blasi et al., 1996; Jones et al., 1997). We use the same model when financial performance rather than productivity is the dependent variable. Our first model is cross-sectional. Firm performance in 1997 is modeled as follows: Model (1) P e r f i = b o + b 1U S O i + b 2 U N S O i + b 3 N U S O i + b 4 1 n ( L ) i + b s l n ( K ) i + b 6 _ 1 3 ( i n d u s t r y d u m m i e s ) i +e i
where
Perf = In(output/employee), total shareholder return, return on assets, and Tobin's q in 1997 USO = dummy for union, stock option plan in 1997 UNSO = dummy for union, no stock option plan in 1997 NUSO = dummy for non-union, stock option plan in 1997 in(L) = In(number of employees) in 1997 In(K) = In(capital intensity) in 1997 e i = error term assumed normally distributed i.i.d. b i = coefficients.
As noted above, cross-sectional regression results are susceptible to omitted variable bias. It may be the case that factors (for example, quality of the unionmanagement relationship and quality of the workforce) other than the ones we measured affect performance and are non-randomly distributed across union/SO status. Also as noted, cross-sectional coefficients may be biased due to self-selection problems: firms in our sample have selected themselves into union/SO categories, and the selection rule may be related to the outcome being measured. In other words, firms with preexisting high productivity may be particularly likely to adopt SO plans. If so, then even if a cross-sectional analysis finds that SO firms are more productive, such higher productivity may not be due to the adoption and presence of SO plans (Kruse, 1993). One simple method to correct for this type of self-selection bias is to compare pre-adoption and post-adoption firm performance levels. Unfortunately, we did not have plan adoption dates for the majority of SO companies in our data set, and so could not use panel data to estimate the difference between pre- and postadoption performance. 23 We did, however, have information on plan start dates for a limited number of SO companies. We obtained this information from a survey of broad-based U.S. SO companies conducted by the NCEO in 1998. The survey had a response rate of approximately ten percent and contained a
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M.K. KROUMOVA ET AL.
total of 133 SO companies. Of these, 93 provided plan start dates, only 10 of which were identified as union companies. Eighty-five percent of these 93 companies had adopted their broad-based SO plans during or after 1989. Consequently, in the absence of information on plan start dates for the majority of companies in our sample, we compare mid-1980s company performance with mid-1990s company performance as a proxy for a comparison of pre- and postadoption performance. This approach involves some measurement error, as a small number of SO plans may have been adopted during the early 1980s or before. Also, such a comparison does not establish causality since it may be the case that other important changes (as examples, restructuring, downsizing and changes in management) occurred simultaneously with SO plan adoption. Nonetheless, comparing average performance in the 1985-1987 to average performance in the 1995-1997 period within and across union/SO groups (Model 2) allows for some useful insights about the relative changes in performance experienced by our 4 categories of firms. The longitudinal specification used is as follows: Model (2)
Perfit = b0+b 1[USO *(85-87)] +bz[USO*(95-97)] +b3[ UNSO *(85-87)] + b 4 [ UNSO * ( 9 5 - 9 7 ) ] ÷bs[NUSO * ( 8 5 - 8 7 ) + b 6 [ N U S O * ( 9 5 - 9 7 ) ] + bT[ N U N S O *( 9 5 - 9 7 ) + b 81n( L )+bg[ln( L ) *( 9 5 - 9 7 ) ]+b loln( K) + btl[ln(K)*(95-97)] +industry+year+ eit where
Perf = In(output/employee), total shareholder return, return on assets, and Tobin's q in 1985, 86, 87, 95, 96, and 97 USO = dummy for union, stock option plan UNSO = dummy for union, no stock option plan NUSO = dummy for non-union, stock option plan 85-87 = period dummy for 1985-1987 95-97 = period dummy for 1995-1997 In(L) = In(number of employees) in 1997 In(K) = In(capital intensity) in 1997 eit -- error term assumed normally distributed i.i.d. b i = coefficients.
In Model (2), the excluded group is No Union-No Stock Option Plan in 1985-1987. The coefficient b 1 indicates the average adjusted difference in performance between Union-Stock Option companies in 1985-1987 and No Union-No Stock Option Plan companies (i.e. the excluded group) in 1985-1987. Comparisons of differences in performance among union/SO status groups over time (e.g. comparing average performance in 1985-1987 to average
Broad-Based Employee Stock Options - A Union-Non-Union Comparison
83
performance in 1995-1997) are obtained by subtracting the respective coefficients. To illustrate, the average change in performance for Union-Stock Option companies between 1985-1987 and 1995-1997 is obtained by subtracting b I from b 2 (see Table 4). To obtain an estimate of the difference between average changes in performance across time periods for Union-Stock Option companies and Union-No Stock Option companies, we use [(b 2 - b j) - (b a - b3)] (see Table 4). RESULTS Table 1 provides information on the industry distribution of the companies in the combined data set and the prevalence of stock option plans within each industry for both union and non-union companies. About 30% of the 3,961 finns in our sample had union workers; 24 about 11% of the 2,715 non-union companies had a broad-based SO plan compared to 5% of the 1,246 companies that had union employees, suggesting that SO plans are more prevalent in non-union firms. That trend held across all major industry groups with the exception of Finance, Insurance and Real Estate. Descriptive statistics and simple mean comparisons for all variables are provided in Table 2. In 1997, there were 60 unionized SO firms and 309 nonunion SO finns. Unionized firms with SO plans were larger than other finns in terms of both sales and employees, and also had higher capital intensity compared to all the other categories of firms. Hence, the results from the empirical analysis below should be interpreted as applying primarily to large publicly owned finns with union employees. 25 These firms also had higher productivity, ROA, Tobin's q and TSR levels in 1997 than the three other categories of finns. Note that non-union firms without stock option plans were considerably smaller than the three other categories of firms. Table 3 reports cross-sectional results comparing performance across union-SO status controlling for capital intensity, firm size and industry characteristics in 1997. The reference category for the estimates reported in this table is nonunion firms without stock option plans (NU-NSO). To minimize the influence of outliers, robust regression was used in estimating all of the equations. Productivity, an outcome that is theoretically more directly affected by employee effort than market and accounting based measures of firm performance, was significantly higher for firms with SO plans irrespective of union status (these results are consistent with Sesil et al., 2000). Table 3A indicates that productivity was about 33% higher in union firms with SO plans compared to the reference group (namely, NU-NSO firms); the productivity difference
84
M.K. KROUMOVA ET AL.
was even larger - 43% - between non-union firms with SO plans and non-union firms without SO plans. 26 By contrast, the difference in productivity between union firms without SO plans and non-union firms without SO plans was small-about 4%-and statistically insignificant. Tobin's q, a measure reflecting the present value of a firm's future profit stream (and a proxy for the nontangible value of the firm), was also significantly higher for stock option firms than for non-stock option firms irrespective of union status. 27 These results imply that financial markets evaluate the future prospects of SO firms more positively than the prospects of non-SO firms; the fact that a firm has unionized workers does not alter that evaluation. Conversely, union non-stock option firms had a Tobin's q that was significantly lower than all other groups, including the baseline group, implying that financial markets have low expectations about the future profit streams of union, non-stock option firms. A plausible explanation of these results is that the existence of a SO plan is interpreted by financial markets as a proxy for "progressive" management and good employee relations in both union and non-union firms. For union firms, the absence of SO plans may be interpreted by investors as a proxy for traditional management with poor employee relations. The cross-sectional results for our second measure of market-based firm performance, TSR, differ across union and non-union SO firms. TSR at union SO firms was slightly but not significantly different from TSR in the reference group (NU-NSO) of firms. However, TSR was 8.5% lower in non-union SO firms than in the reference group, and the difference is significant at p(L)0.01. Why do stock option plans appear to have a net negative or no effect on TSR, as opposed to their positive effects on productivity and Tobin's q? One possible explanation is that stock options entail an economic cost - the firm either issues new shares and effectively sells these at a discount to employees or has to buy back its own stock. This cost could result in diluted shareholder earnings if productivity does not improve or if the employees rather than the shareholders capture the benefits from improved productivity. However, before interpreting the above results as evidence that employee stock options reduce shareholder returns, it should be noted that TSR in any single year is a very "noisy" measure of firm performance-more so than the three other performance measures used here. 28 Consequently it is more informative to look at the pre-post comparison results presented in Table 4, since they average TSR over two 3-year periods. 29 The accounting measure of performance used in this study, ROA, suggests that both union and non-union stock option companies do not perform worse than the baseline group (also see endnote 28 for 1995 and 1996 cross-sectional ROA results). On balance, the empirical evidence suggests that there is no
Broad-Based Employee Stock Options - A Union-Non-Union Comparison
85
significant relationship between the presence of a SO plan and ROA (in 1997). Consistent with prior research, union firms without stock option plans have a lower ROA compared to non-union firms, suggesting that unions may be shifting returns from capital to labor (see Bell & Neumark, 1993). Were performance levels higher or lower for SO firms before plan adoption? Did performance improve after SO plan adoption? Table 4 reports pre- and post-adoption comparisons evaluating differences within and across union/SO groups between two time periods - 1985-1987 and 1995-1997. The excluded group is non-union, non-stock option firms in the 1985-1987 period. The results indicate that productivity in the pre-adoption period was higher in SO firms than in the reference group, both in union and non-union firms. Productivity in these firms continued to be higher in the 1995-1997 period compared to the reference group. More important, between 1985-1987 and 1995-1997 productivity increased for both union stock option firms and non-union stock option firms, and the increases were relatively large (0.119 and 0.23, respectively) and significant (see Table 4, "Change from 1985-1987 to 1995-1997"). The productivity increase was smaller in union SO firms than in non-union SO firms (-0.111), but the difference was not significant. Thus, these results not only support the cross-sectional evidence in Table 3, they also suggest that companies that adopted SO plans had higher productivity levels before plan adoption compared to NSO firms and experienced a significant increase in productivity after SO plan adoption. In contrast, union NSO firms were more productive than non-union NSO firms during the mid-1980s, but their productivity did not increase over time. The same pattern of results was found for Tobin's q, namely, levels were higher for both union and non-union SO companies before adoption, they remained higher after adoption, and there was a significant increase in Tobin's q from pre- to post-adoption. By contrast, for union NSO companies, Tobin's q was significantly lower than in the reference group of firms during the mid-1980s, and there was no increase over time. Thus, financial markets had lower expectations about the future revenue streams that union NSO companies might expect in the mid-1980s, and these lower expectations persisted over time. As for TSR, all three groups of firms had somewhat higher returns compared to the non-union NSO firms, but only the difference between union non-stock option and non-union non-stock option firms was statistically significant. TSR did not change significantly from pre-adoption to post-adoption for either union or non-union stock option companies; it decreased for union non-stock option firms and increased for non-union, non-stock option firms. Union NSO companies exhibited a significant decline in TSR over the period
86
M.K. KROUMOVA ET AL.
from the mid-1980s to the mid-1990s. However, these results should be interpreted as suggestive since additional analysis using risk-adjusted monthly (rather than yearly) TSR data is needed (see note 29). Pre-post comparisons for ROA indicate that ROA increased significantly from the mid-1980s to the mid-1990s for non-union firms (the increase was larger for stock option finns, as shown in Table 4). Over the same period, ROA did not change significantly for union firms irrespective of their SO status. These results again support the cross-sectional evidence presented in Table 3, and also suggest that, for union SO companies, better productivity did not result in higher ROA (or TSR). Thus, it may be the case that returns are indeed shifted from capital to labor in these firms. In union NSO finns, ROA is consistently lower throughout the studied period than in non-union firms. To summarize, the cross-sectional analysis suggests that productivity and Tobin's q are significantly higher in stock option finns compared to non-stock option firms; this holds true for both union and non-union stock option firms. Moreover, the size of the effect appears to be similar for stock option firms across union status. The longitudinal analysis indicates that for stock option finns, both union and non-union, levels of productivity and Tobin's q were higher before adoption, increased between the pre-adoption and post-adoption periods, and remained higher in the post-adoption period. Consequently, union and non-union SO finns outperformed the two other groups of finns based on these measures. However, TSR did not improve over time in SO union and non-union firms, while it increased significantly in non-union NSO finns. And, the adoption and presence of a SO plan had different effects on ROA in union and non-union firms. For union firms, ROA did not increase after SO plan adoption, whereas ROA increased significantly for non-union SO finns. In addition, over time union non-stock option finns fared worse than both non-union finns and union stock option firms on all four performance measures that is, their productivity, Tobin's q, and ROA did not increase over time, and their TSR declined significantly. Our results have some important limitations. All the union stock option finns in our sample were large (90% of them had more than 3,000 employees and over half had more than 24,000 employees). Hence, our results apply primarily to large, publicly held union companies. Also, the lack of panel data including exact stock option plan adoption dates for union and non-union finns prevents us from using a true panel data set to implement two-stage modeling. Thus, it may be the case that characteristics (such as superior management and higher quality human capital) that prompt companies to adopt SO plans are also the characteristics that make companies more productive. Though we attempted to address this issue with our pre-post analysis, new data and further research are -
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required better to address both of these problems. Also, our measures of union status and TSR were rather unsophisticated; it would be especially informative to repeat this analysis using a within-firm measure of union density rather than a simple dummy variable, and using monthly, risk-adjusted data for the TSR comparisons.
CONCLUSION This empirical study evaluated the net effects of employee stock option plans across union status on economic and financial measures of firm performance. The data set contained 3,961 public companies and was obtained by merging company information from several sources: Standard & Poor's Compustat, IRS's Form 5500, and an NCEO database. The analysis produced fairly strong evidence that broad-based employee stock option plans yield substantial gains in firm-level productivity and Tobin's q. Furthermore, the net effect of stock option plans on productivity and Tobin's q was found to be similar in union and non-union finns. In addition, union stock option firms consistently outperformed union non-stock option firms with respect to these two measures of performance. Our results for productivity are consistent with Cooke (1994), who found that both union and non-union manufacturing firms with group incentive plans outperform non-union firms with no group incentives, the magnitude of the effect being 18-21%. Results for total shareholder return were less clear-cut, suggesting that SO plans might have an economic cost associated with them. As for return on assets, non-union SO companies improved their ROA after adoption, whereas union SO companies did not. Thus, even though productivity increased over time for both union and non-union SO companies, this increase resulted in higher operating income per unit of assets only for non-union firms, raising the possibility that the gains from improved productivity in union firms were captured by the workers rather than the firm. In summary, on the positive side, the empirical evidence implies that stock option plans are associated with a net positive effect on productivity, and union and non-union firms capture the potential incentive effects of these plans on productivity equally well. Thus, the results alleviate fears that contemporary group incentives, such as stock options, do not function well in unionized settings. Also, financial markets appear to value the future prospects of SO firms highly, perhaps because SO plans are used as a proxy to indicate better, performance-aligned management practices. On the other hand, increased productivity did not result in higher annual shareholder returns for SO firms (irrespective of union status), and ROA increased after SO adoption only in
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non-union companies. These findings raise the question of how the economic gains from incentive plans are captured within union and non-union firms, and which stakeholders benefit from such economic gains. Further research and better data are needed to explore this question. We believe the analysis presented here provides useful information on a topic that has been little explored - stock option plans and their impact on finn performance in union and non-union settings. As with any other research endeavor, many interesting questions remain unanswered. Specifically, why do companies adopt employee stock option plans, and do union firms adopt such plans for different reasons than non-union finns? How are stock option plans structured (that is, are options awarded based on merit, tenure, percent of pay, and/or other factors?), and do union finns structure their plans differently (e.g. more equitably or bureaucratically) than non-union firms? How well do employees understand the functioning of their stock option plan?, how do they frame it (as a valuable reward, an unimportant add-on, or as a way to reduce their base pay rate)?, and are there "understanding" and "framing" differences between union and non-union employees/finns? To address these questions, panel data for large representative samples of all four types of firms studied here are needed-data that contain information on plan adoption dates, plan design, and other human resource management practices. We hope this paper will stimulate further interest in this area and will encourage researchers to develop greater understanding of how stock options interact with other key factors (including other human resource management practices) to effect employee effort and finn performance.
NOTES 1. Available at: www.nceo.org 2. We define broad-based plans as plans that offer stock options to 50% or more of all employees. For simplicity, broad-based SO plans are referred to as SO plans in the remainder of this paper. 3. See Huddart & Lang (1996) for an overview of the accounting and tax treatment of employee stock options. 4. A study by Coopers & Lybrand (1993) estimated that if companies reported the value of options granted the average reduction in net company income after the phasein period would have been 3.4% for mature companies and 26.5% for emerging companies. 5. Recent examples of union employees receiving stock options include Harley Davidson and Verizon. 6. Assuming rational, self-interested economic actors.
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7. For an in-depth review of the existing theory and empirical findings on piece rates, executive compensation, merit pay, and commission systems, see Asch & Warner, 1997. 8. Stock options provide a gain to employees only if the stock price increases between the grant and exercise dates; thus, both employees and shareholders benefit from the price increase. If the stock price falls below the grant price, shareholders experience a loss (the value of their investment has decreased over the period in question) whereas employees receive no gain. Some argue that this reduces the incentive power of options (compared to, say, stock ownership). Nonetheless, it may be the case that employees expect to receive a financial gain from their SO plan (a quite reasonable assumption during the rising market of the 1990s). Hence, if their initial frame of reference is an expected gain, receiving nothing would be experienced psychologically as a loss. 9. Expectancy theory (Vroom, 1964) predicts that a reward will elicit effort from employees if the reward is valued, the probability of obtaining the reward given performance targets are met is high, and the probability that effort will result in meeting performance targets is high. It is reasonable to assume that stock options provide a valued reward. But the relationship between meeting performance targets and stock price is fraught with uncertainty, and depends on much more than employee effort. Also, whether increased individual effort will result in improved group/unit/company performance is likely to depend on a company's financial and human resource management systems, its culture, and other factors. 10. Gomez-Mejia and Balkin (1992) report that about 18% of the variance in firm performance can be attributed to managerial decisions in response to the incentive structure; the remainder can be attributed to unsystematic factors. 11. This logic implies that the larger the firm/workplace size, the more difficult it is for management to monitor employees and for employees to monitor the output of their co-workers. Hence the need for incentive compensation, either individual or group, is greater in large firms (e.g. see Brown, 1990, or Drago & Heywood, 1995). But, by the same token, such plans may be less effective at eliciting effort in large firms/work units. These conflicting dynamics may explain the mixed empirical evidence on the relationship between size and profit-sharing effectiveness (see Jones, Kato & Pliskin, 1997). 12. A potentially important difference between these types of plans and broadbased SO plans is that, under the latter, employees have somewhat greater control over when to realize the reward (i.e. when to exercise their options once they become vested). As a result, the timing and size of the reward will vary across individuals. In as much as reward timing and size affect future behavior, however, the behavioral effect of such plans is less consistent than the effect of either profit or gain sharing. Also, SO plans encourage employees to monitor the market performance of the firm more closely than any other group incentive plans, at least during the period before exercise/selling. 13. The recent strike against Verizon Communications illustrates this point. In August 2000, the Communications Workers of America and the International Brotherhood of Electrical Workers fought for, and won, concessions making it easier for them to organize the wireless part of the business. The agreement with the company also included the establishment of a profit-sharing plan and the allocation of stock options to union members. (Romero, S., "Labor Accord Hits New-Economy Notes", New York Times, August 22, 2000, Section C; Page 1; Column 4).
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14. For an overview of unions' changing attitudes toward employee ownership, see McElrath and Rowan (1992). They argue that economic necessity, lack of evidence of a negative impact of ESOPs on earnings and employment, and realization that ESOPs can be used to achieve strategic union objectives have prompted unions to overcome their opposition to employee ownership. 15. In a survey of 150 union and 350 non-union firms, Heneman et al. (1997) found that union firms are more likely than non-union firms to use stock sharing plans. 16. For a review of prior empirical work on group incentives, see section two of this paper "Incentives and Group Incentives: Theory and Evidence". 17. For an exception, see Core and Guay (2000). Their paper addresses the question of why companies adopt non-executive employee stock option plans (although their data do not distinguish between broad-based and other types of employee stock option plans). They find that firms use greater stock option compensation when facing high capital requirements and financial constraints. The results from their empirical analysis also suggest that firms may be using options to attract certain types of employees, provide retention incentives, and create incentives to increase firm value (though the authors do not directly test any of these three propositions). 18. At the time this project was started, 1997 Compustat data was the most recent available to the authors. We used all annual Industrial and Full Coverage Files. These files contain all companies listed on the New York Exchange, American Exchange and NASDAQ, companies listed on regional exchanges, publicly held companies trading common stock, and wholly owned subsidiaries trading preferred stock or debt. We also included companies from the annual Industrial Research File This file contains companies that have been deleted from the Industrial Files due to bankruptcy, acquisition or merger, leveraged buyout, or because they became private companies. 19. IRS's Form 5500 is a tax form that all U.S. pension plans in establishments with 100 employees or more must file every year. We used data on 66,091 establishments from 1995 (the latest available in electronic format) to determine union status in 1997. This data base is made available by the U.S. Department of Labor. 20. We used employer identification numbers (EIN) to merge records from the two data sets. 21. In 1998, the NCEO compiled a comprehensive list of 1,360 companies (both public and private) sponsoring broad-based SO plans based on a national clipping service on stock compensation, regular reviews of company announcements, and information provided by various consulting firms and practitioners. Out of these 1,360, we were able to match 493 to Compustat data. 22. Unfortunately, we did not have plan adoption dates for most of the SO companies in our data set. Based on the limited information on plan adoption dates, we developed Model (2). See the Methods section above for a detailed explanation of the assumptions we made in developing Model (2). 23. The lack of plan start dates also limits our ability to use a two-stage model that would estimate the probability of adopting an SO plan as a first stage, and then use these estimates to explain firm performance in the second stage. 24. Since our measure of unionization was derived from Form 5500 data, we do not know the actual percent of workers within each company that belongs to a union. Also, because we combined data from several data sets, yet our primary source is Compustat, our final sample is composed only of public companies. Further, because of the merging procedure, only public companies that provided their correct employer
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identification number and information on collective bargaining in Form 5500 are included. 25. To explore the possibility that the effect of SO plans varies with company size, we fitted model (1) using various employment size breakdowns. For union SO companies, the results for productivity were stable and similar to the ones reported in Table 3; the only difference occurred for companies with more than 50,000 employees. Specifically, the productivity effect was still positive but had shrunk to 7% (compared to the 33% reported in Table 3). The difference between non-union SO and non-union NSO companies also diminished for the biggest companies, but nevertheless remained large (30% compared to the 43% reported in Table 3). 26. The difference between the dummy coefficient for union/SO status and nonunion/SO status was not statistically significant; in other words, there is no evidence that the net effect of stock option plans on productivity is different between union and non-union firms. 27. As with productivity, the effect sizes for union stock option and non-union stock option finns with respect to Tobin's q were similar in size, and the difference between these effect sizes was not statistically significant across union status. Hence, there is no evidence that the net effect of stock option plans on Tobin's q is different between union and non-union firms. 28. We estimated the four cross-sectional equations for 1995 and 1996 and compared the results to those for 1997 (reported in this paper). The direction, size, and significance of the union/SO effects were remarkably similar in all three years for productivity and Tobin's q; if anything, the effects were slightly larger in 1995 and 1996, compared to 1997. For ROA, in both 1995 and 1996, SO companies had significantly higher ROA compared to the excluded group irrespective of union status, and the effect for the nonunion, non-stock option firms is similar to the one estimated for 1997. The effects for TSR, however, vary widely. In 1996, all union/SO groups had lower TSR compared to the reference group, but the coefficients were small ( - 1 % to - 4 % ) and statistically insignificant. In 1995, non-union stock option firms showed an average return 15% higher than the reference group of firms (as opposed to 8% lower in 1997), and the difference was highly significant. The average estimated return for union stock option firms in 1995 was 4% higher than the return for the reference group, but the difference was not statistically significant. Hence, cross-sectional differences in TSR show an unstable behavior over time, as compared to cross-sectional differences in productivity, Tobin's q and ROA. 29. It may be difficult to interpret TSR coefficients unambiguously, even for our prepost comparisons, because returns are not adjusted for market risk in this analysis (because Compustat provides only quarterly and yearly stock returns). If market risk is non-randomly distributed across union/SO status, it will be difficult to interpret the union/SO coefficients on a non-risk-adjusted basis.
ACKNOWLEDGMENTS The authors w o u l d like to thank the National Center for E m p l o y e e Ownership ( N C E O ) and their partners for providing the data for this analysis. W e w o u l d also like to thank the a n o n y m o u s referees.
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REFERENCES Alchian, A., & Demsetz, H. (1972). Production, Information Costs, and Economic Organization. American Economic Review, 62, 777-795. Asch, B., & Warner, J. (1997). Incentive Systems: Theory and Evidence. In: D. Lewin, D. Mitchell & M. Zaidi (Eds), The Human Resource Management Handbook, Part 1 (pp. 175-215). Greenwich, CT: JAI Press. Bell, L., & Neumark, D. (1993). Lump Sum Payments and Profit-Sharing Plans in the Union Sector of the United States Economy. Economic Journal, 103, 602-619. Ben-Ner, A., & Jones, D. (1995). Employee Participation, Ownership, and Productivity: A Theoretical Framework. Industrial Relations, 34(4), 532-554. Berle, A., & Means, G. (1932). The Modern Corporation and Private Property. New York: Harcourt, Brace & World. Blasi, J., Conte, M., & Kruse, D. (1996). Employee Stock Ownership and Corporate Performance Among Public Companies. Industrial and Labor Relations Review, 50(1), 60-79. Blasi, J., Kruse, D., Sesil, J., & Kroumova, M. (2000). Stock Options, Corporate Performance and Organizational Change. Oakland, CA: National Center for Employee Ownership, September. (Available online in an expanded version at: http://www.nceo.org/library/ optionreport.html). Brown, C. (1990). Firm's Choice of Method of Pay. Industrial and Labor Relations Review, 43(Special Issue), 165-S-182-S. Cooke, W. (1994). Employee Participation Programs, Group-Based Incentives, and Company Performance: A Union-Nonunion Comparison. Industrial and Labor Relations Review, 47(4), 594--609. Coopers & Lybrand (1993). Stock Options: Accounting, Valuation, and Management Issues. Coopers & Lybrand, New York, NY. Core, J., & Guay, W. (2000). Stock Option Plans for Non-Executive Employees. Manuscript, Wharton School of Business, University of Pennsylvania. Drago, R., & Heywood, J. (1994). The Choice of Payment Schemes: Australian Establishment Data. Industrial Relations, 34(4), 507-531. Eisenhardt, K. (1989). Agency Theory: An Assessment and Review. Academy of Management Review, 14(1), 57-74. FitzRoy, F., & Kraft, K. (1987). Cooperation, Productivity and Profit-Sharing. The Quarterly Journal of Economics, 102(1), 23-36. Gomez-Mejia, L., & Balkin, D. (1992). Compensation, Organizational Strategy, and Firm Performance. South-Western Human Resource Management Series. Hansen, D. (1997). Worker Performance and Group Incentives: A Case Study. Industrial and Labor Relations Review, 51(1), 37-49. Heneman, R., von Hippel, C., Eskew, D., & Greenberger, D. (1997). Alternative Rewards in Unionized Environments. ACA Journal, 6(2), 42-55. Huddart, S., & Lang, M. (1996). Employee Stock Option Exercises - An Empirical Analysis. Journal of Accounting and Economics, 21(1), 5-43. Jones, D., Kato, T., & Pliskin, J. (1997). Profit-Sharing and Gainsharing: A review of Theory, Incidence, and Effects. In: The Human Resource Management Handbook (pp. 153-173). JAI Press Kang, D., & SOrensen, A. (1999). Ownership Organization and Firm Performance. Annual Review of Sociology, 25, 121-144.
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Kroll, A. (1997). Exploring Options. HRMagazine, 42(10), 96-100. Kruse, D. (1992). Profit-Sharing and Productivity: Microeconomic Evidence from the United States. The Economic Journal, 102(January), 24-36. Kruse, D. (1993). Profit-Sharing: Does It Make a Difference? Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Kruse, D., & Blasi, J. (1997). Employee Ownership, Employee Attitudes, and Finn Performance : A Review of the Evidence. In: D. Lewin, D. Mitchell & M. Zaidi (Eds), The Human Resource Management Handbook, Part 1 (pp. 113-151). Greenwich, CT: JAI Press. Levine, D., & Tyson, L. (1990). Participation, Productivity, and the Finn's Environment. In: A. S. Blinder (Ed.), Paying for Productivity (pp. 183-243). Washington, D.C.: Brookings Institution. Masters, M., & Atkin, R. (1999). Union Strategies for Revival: A Conceptual Framework and Literature Review. In: Research in Personnel and Human Resource Management (Vol. 17, pp. 283-314). McElrath, R., & Rowan, R. (1992). The American Labor Movement and Employee Ownership: Objections to and Uses of Employee Stock Ownership Plans. Journal of Labor Research, 13(1), 99-119. Mitchell, D., Lewin, D., & Lawler, E. (1990). Pay Systems, Firm Performance and Productivity. In: A. Blinder (Ed.), Paying for Productivity. Washington, D.C.: Brookings Institute. Pierce, J., Rubenfeld, S., & Morgan, S. (1991). Employee Ownership: A Conceptual Model of Process and Effects. Academy of Management Review, 16(1), 121-144. Sesil, J., Kroumova, M., Kruse, D., & Blasi, J. (2000). Broad-Based Employee Stock Options in The U.S.: Company Performance and Characteristics. Academy of Management Conference Best Papers Proceedings. Toronto, ON. Strauss, G., Gallagher, D. G., & Fiorito, J. (Eds) (1991). The State of the Unions. Madison, WI: Industrial Relations Research Association. Vroom, V. H. (1964). Work and Motivation. New York, NY: Wiley. Weeden, R., Carberry, E., & Rodrick, S. (1998). Current Practices in Stock Option Plan Design. Oakland, CA: National Center for Employee Ownership. Weiss, A. (1987). Incentives and Worker Behavior: Some Evidence. In: H. R. Nalbantian (Ed.), Incentives, Cooperation, and Risk Sharing (pp. 137-50). Totowa, NJ: Rowman & Littlefield Weitzman, M., & Kruse, D. (1990). Profit-Sharing and Productivity. In: A. Blinder (Ed.), Paying for Productivity. Washington, D.C.: Brookings Institute. Zalusky, J. L. (1990). Labor-Management Relations: Unions View Profit-Sharing. In: M. J. Roomkin (Ed.), Profit-Sharing and Gain Sharing (pp. 65-78). Metuchen, NJ: Scarecrow Press.
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APPENDIX Variable
Definition
Union/SO status
Four dummy variables for: unionized firms with SO plans; unionized firms without SO plans; non-union firms with SO plans; and, non-union firms without SO plans Natural logarithm of total company employment (continuous) Natural logarithm of total company sales (continuous) Total assets divided by total employment (continuous) Natural logarithm of output per worker (total sales adjusted for inventory and inflation divided by the number of employees) (continuous) (Market value + preferred stock + long term debt)/(capital stock + current assets - current liabilities) (continuous) (Adjusted stock price (for stock splits) + adjusted dividend)/ (adjusted price It-1]) (continuous) [(Operating income-adjusted depreciation)*100]/(net adjusted value of capital stock + current assets current liabilities) 2-digit industry codes (dummy variable)
Ln (Employment) Ln (Sales) Ln (Capital Intensity) Ln (Productivity)
Tobin's q
Total shareholder return
Return on assets
Industry controls
CONSENTING TO BE GOVERNED: UNION TRANSFORMATION A N D TEAMSTER DEMOCRACY Robert Bruno
INTRODUCTION In their efforts to define and assess union democracy, researchers have principally relied on a "legalistic" perspective (Taft, 1948; Edelstein & Warner, 1976; Stephan-Norris, 1998), which focuses on formal constitutional measures and a "behavioral" perspective (Lipset, Trow & Coleman, 1956; McConnell, 1958; Martin, 1968; Nyden, 1985; Stephan-Norris & Zeitlin, 1992; Needlemen, 1998), which addresses the effects of internal parties competing for the support of the rank-and-file by projecting differing political-economic ideologies. While these two frameworks contribute substantially to conceptualizing union democracy, neither of them measures the quality of intemal governance by assessing what rank-and-file members actually think about how they are governed. The empirical literature on union democracy typically addresses constitutional structures and leadership behavior, but rarely addresses or valorizes the views of the membership. In other words, the variables typically used to measure the level of union democracy do not include directly asking the member for his or her opinion on how the union is performing. It is the intent of this article then to bring workers' opinions into the study of union democracy.
Advances in Industrial and Labor Relations, Volume 11, pages 95-122. Copyright © 2002 by Elsevier Science Ltd. All fights of reproduction in any form reserved. ISBN: 0-7623-0853-2
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In order to assess rank-and-file support for democratic practices, the following work presents as a case study, an opinion survey of Chicago International Brotherhood of Teamsters' (IBT) Local 705. The local consists principally of package delivery workers, freight, cartage and tanker drivers and commercial movers. For most of the post-war years the local's dominant employers were large freight and cartage haulers, but since the early 1980s United Parcel Service (UPS) has employed a wide majority of 705 members. 1 Once recognized as a poster child for corruption and elite rule Chicago area Local 705 has been lauded as a model of democratic reform (Wall Street Journal, April 6, 1998). Since an Intemationally imposed trusteeship in 1993 the union has painstakingly worked to wipe off years of scandal, sweetheart-contracts and abuse of the rights of the rank-and-file, z The following analysis will be presented in three sections. After a brief explanation of the conceptual rationale for utilizing a survey approach to measuring union democracy, findings from the rank-and-file survey including a description of the participants will be discussed and reported in frequency tables. In addition, the responses will be subjected to bivariate analysis to determine the impact of various independent democratization variables on union performance. Finally, the conclusion offers a note of caution in interpreting the survey results.
CONCEPTUAL FRAMEWORK A membership survey approach to measuring the character of union governance accepts the widely held contention that democracy is by definition a collective expression of the will of the people (Pateman, 1970). Simply put, the most authoritative way to know whether a union democracy is in classical terms "by the people" is to ask the people (i.e. union members). To be sure, ignoring rank-and-file opinion could produce something called a constitutional or pluralistic democratic union. However, it would be intellectually dishonest to define a union as democratic in any sense when a majority of its members believed that it was not. Failing to acknowledge what members think can also create an overly formalistic, and truncated assessment of union governance. As argued persuasively by Parker and Gruelle (2000), without direct input and feedback from the membership on the union's governing behavior, the leadership can become disconnected from the ranks. The result is that union leaders begin to equate their judgments with what is best for the membership. Elections may still be held, meetings conducted and laws abided by, but instead of democratic ideas emerging out of an on-going member-leader relationship, they tend, as Robert
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Michaels (1949) has argued, to be unilaterally imposed from above. In this scenario, what passes for democratic behavior at the procedural level of analysis is actually an imposed leadership agenda. While open, honest leadership is vital to union representation, without membership feedback, it produces what George Strauss has called a "democracy for the people" and not "by the people. ''3 In the end, union members must be able to pass judgment on more than contract issues or strategic planning goals. They must be able to grant their "consent" to be governed in programmatic and ideological ways. Importantly, consent is provided both before the leadership acts and post hoc as a form of feedback and approval. Consent is best measured by providing members with the opportunity to express an opinion on how they are being governed. In this sense, the work presented here offers a direct member-level diagnostic tool for measuring union democracy. To address whether union members have consented to the form of governance that has characterized Local 705 since the 1993 trusteeship, the survey attempted to answer some fundamental questions about three critical and related areas of union behavior: membership communication, membership input, and membership representation. These areas were selected in order to determine the level of membership consent to the most important changes implemented by the local in response to the International's administrative intervention. 4
Membership Communication Workers were first asked whether they were aware of the many structural and behavioral changes made at the local since the trusteeship was imposed and additionally, whether the leadership communicated openly with the rankand-file. Prior to 1993 the local was infamous for treating the union's business like confidential state secrets. Members had little access to their stewards or business agents, and they were unwelcome at the local's offices (Bruno, 2000). But because consent can only be offered when workers have sufficient knowledge of what the leadership is doing or planning to do, it is critically important to find out how information has been distributed since the trusteeship.
Membership Input Second, members were also asked about opportunities to contribute to local decision-making and whether they were supportive of the decisions reached since the trusteeship was imposed. The International's findings revealed scant evidence that the previous leadership had ever bothered to take serious the views of the rank-and-file either before or after acting (Bruno, 2000). The pre-trustee leadership had in effect insulated itself from the membership and
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consequently the approval or disapproval of the ranks was irrelevant to the local's behavior. But because membership consent must not be falsely manufactured but earned, it is vital to first know if the members now have input into their own governance, and secondly, do they approve or disapprove of how the local leadership has governed since the trusteeship.
Membership Representation Finally, members were queried about the impact of the trustee and posttrustee changes on union representational behavior and on the relationship between the members and leaders. In the two decades leading up to 1993, elections at Local 705 were a fraudulent exercise, most worker grievances were lost or dropped, arbitrations were rarely filed, sweetheart contracts regularly negotiated, and external organizing all but ignored (Bruno, 2000). In most situations, members were denied an opportunity to provide their leaders with informative signals about how the governing regime was representing worker interests. In order then to determine the effects of post-trustee political change on the level of rank-and-file support for democratic reform, it is essential that membership feedback be provided to the leadership. In order to answer each of the fundamental questions workers were presented with a number of additional questions addressing various related elements of democratic unionism (Fletcher, 1998). Lending greater weight to the IBT 705 survey is the realization that it represents the first and only independent analysis of Teamster rank-and-file opinions concerning union democracy. Given the difficulty in gaining access to union members, it is nearly unprecedented to construct an independent, direct rank-and-file assessment of any union's democratic temper. Additionally, in light of Local 705's undemocratic past, attaining such a measurement here is particularly fortunate because it provides observers with the opportunity to assess the impact of Local 705's transformation. SURVEY
RESPONDENTS
In the fall of 1999 a 57-question survey was mailed to 3,000 rank-and-file members of IBT Local 705. Respondents were chosen from a stratified random sample of non-officers, stewards and staff designed to reach members employed in UPS and non-UPS divisions represented by the local. The number of surveys sent to workers in each division was proportional to their overall representation within the union. 5 After excluding incorrectly or incompletely filled out surveys, and those returned in an untimely fashion a
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total of 241 cases (8.4%) were assessed. While the small number of cases is disappointing it was not unexpected and a brief discussion about the possible reasons for the response rate will be addressed below. Respondents averaged approximately 44 years of age and the median term of membership was an even dozen years. It is important to note that with three-quarters of the survey participants paying union dues for at least five years or more the survey captured members that had experienced to some degree the union's dramatic transition. This composition permits a more informative assessment of how the local has changed its charter and mode of representation. Nearly three quarters of the respondents (72.6%) were working full time and 41.5% had earned at least a high school or general equivalency diploma. Survey participants were overwhelmingly male (88.5%) and white (76.7%). Median income for 1999 was between $40,000 and $49,000, with 18.5% earning less than $20,000 and 2.6% grossing between $70,000 and $79,000. Now before going further there are two representational problems with the sample that need to be addressed. First, the returned surveys included a predominance (64.3%) of non-UPS members and consequently under represented the local's largest unit, the UPS division. In doing so the survey responses are likely biased towards drivers of local cartage and freight companies. The effect of this pool is to slightly increase the average age of respondents, but not the average years of union membership. The education level of the overall sample was also reduced by a minor degree with a higher percentage of UPS members than non-UPS workers holding some college credit. In addition, the median income was nudged downward with a higher percentage of non-UPS drivers earning within and below the survey median range. The second problem with the sample is that by under representing UPS workers, responses also failed to reflect the very large pool of part-time workers in the local (only 5.1% of useable part-time surveys were returned compared to a much higher if still a very modest 14% of full-timers). While UPS consists of nearly 60% part-time workers, full-time package car drivers made up the majority (52%) of the UPS respondents. As a result of this breakdown the demographics of the participants were overly influenced by full-timers. For instance, part-time respondents were on average considerably younger, less experienced with unions, considerably less well compensated, and much more likely to be female and minority. Unfortunately, due to a series of internal union debates and governance matters that transpired after the initial survey was processed, it was impossible to send a second targeted mailing to part-time members. Under an ideal situation, a follow up mailing
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to part-time workers with at least seven years of experience would have improved the representativeness of the sample. But occupational status alone likely explains only a part of the low response rate. In addition to the standard problems of a one-time mail survey, a less verifiable but probable cause for the modest cartage/freight response is the union itself. Rightly or wrongly the IBT has for most of its history been synonymous in the public's mind with corruption. While the International union was once a powerful source for dramatically improving the working lives of truck drivers from coast to coast it is also true that it was once intricately connected to organized crime. From the sensational McClellan Congressional Committee Hearings in 1959 to the 1989 Racketeer Influenced Corrupt Organization (RICO) civil lawsuit and consent order the IBT has been portrayed as organized labor's "number one enemy. ''6 After the 1991 historic referendum election for International officers the union membership has withstood 40 local and one joint council trusteeships, 217 permanent member expulsions, charges against nine International officers or appointees, the criminal conviction of an International Director of Governmental Affairs, the expenditure of $20 million dollars in taxpayer funds trying to get the union to act democratically, had an international election overturned and saw its reform president banned from the union for misusing the membership's dues money (Daily Labor Report, 1997 and 1999; Conboy, 1997; Union Labor Report, 2000). Under these wrenching and highly uncertain conditions it would be unreasonable to expect any rank-and-file Teamsters to easily offer their opinions about a union that "inspired the institutional equivalent of a foreign invasion" to begin respecting worker rights (Kannar, 1993). Of course Local 705 is not just any group of Teamsters working in anyplace USA. This is after all the Chicago Teamsters. At the beginning of the 20th Century, Chicago was the operative birthplace of the union and it has always been a "big, brawling play-for-keeps world" for Teamsters (Dine, 2000, A12). Local 705-business agent Sam Canino found out just how brawling it was when in the late 1960s he nonchalantly lifted his garage door and was greeted with a gun shot blast that blew away part of his face. Where in 1983 crime syndicate connected and union bagman Allen Dorffman was gunned downed in a suburban parking lot. It was also where in the early morning hours of August 21, 1991 ex-Local 705 secretary-treasurer Danny Liquroutis shot his adopted son with a .38 caliber pistol in the basement of Teamster City. And that bizarre act of self-defense or murder was preceded five months earlier by the beating of 705 Teamster for a Democratic Union (TDU) member Leroy Ellis at a local delegate-nominating meeting (Modea, 1978; Crowe, 1993). These violent incidents and other unflattering affairs of course happened prior to the trusteeship,
Consenting to be Governed
101
which was later imposed for a plethora of different improper and nefarious acts. It should come then as no surprise to any observer, that rank-and-file members of a Chicago Teamster local still in its democratic infancy would be reluctant to express even an anonymous opinion about the union's behavior.
SURVEY FINDINGS The following section includes a presentation of survey findings, grouped according to the three areas of study mentioned above. In nearly all cases where statistical data is reported a corresponding table is also provided. However, in those few cases where tables are not shown it is because the information was collected in a dichotomous (i.e. yes or no) fashion, or all the findings related to the survey items were fully described in the narrative. Membership Communication In order to determine how well informed workers were about Local 705"s political transformation, they were first asked directly whether significant changes have occurred in the union since the 1993 trusteeship. A robust 63.9% "agreed" that significant changes had in fact been made (see Table 1). Additionally, nearly 70% of the respondents agreed that they were aware of the reasons given for imposing the trusteeship and for making changes in how the union functions (see Table 2). Importantly, by a smaller proportion, about one-half of the respondents agreed that the reform leadership made them "aware" of their rights as union members (see Table 3). While this figure appears less than optimal, it is nearly twice as large as those respondents who disagreed and certainly a significant improvement over the pre-trustee days. 7 Workers were also asked about two principal union vehicles for communicating information to members and for members to provide feedback on the leadership's performance. Prior to the trusteeship the local did not have a newspaper or newsletter. But shortly after the trusteeship was imposed the Local 705 Update was published. The local paper is mailed monthly to every active member and covers topics ranging from grievance panel decisions and arbitrations to political issues. Like other in-house communication devices it serves primarily to inform the membership about the accomplishments of the local leadership. While it is not (nor should it be) the equivalent of a community paper it does offer its readers an opportunity to become aware of what the local is doing as a bargaining agent. The 705 Update has also been central to the local's reform efforts. For the first the time in the local's history, the names and phone numbers of all business agents were made publicly available to the membership through
102
Table 1.
ROBERT BRUNO There have been significant changes made over the past five years.
Item
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 2.
72 82 38 17 17 15 241
Percent 29.9 34.0 15.8 7.1 7.1 6.2 100.0
The trusteeship was imposed to restore integrity to the local and to protect members' interests.
Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Frequency 84 83 38 16 12 7 241
Percent 35.0 34.6 15.8 6.7 5.0 2.9 100.0
the pages of the paper. An important question then for continued democratic advancement is whether or not members are bothering to read the local paper. When asked how often they read the 705 Update, a sizeable 60.6% of the respondents said "always," and another 20% looked at it "most of the time" (see Table 4). In addition, nearly 70% agreed that since 1993, "union materials have kept me informed about union matters" (see Table 5). This degree of rank-and-file faith in the top-down transmission of information would be impressive for any local union. It is even more so when you keep in mind that before 1995 union material directed at the membership was hard to find. Reading of course does not necessarily mean understanding or even becoming better educated, but it does strongly establish a showing of interest in the institution's behavior. As any classic democrat would note, paying attention to what the government (i.e. union leadership) does is more than an important check against an abuse of power; it is a sign of political engagement. A second source of reciprocal information and communication are the local's stewards and union representatives. In a democratic union the nexus points that connect workers with their leadership are numerous. Along with reading the local paper members attend meetings, vote and campaign for officers, and run
Consenting to be Governed Table 3.
103
The post-trustee leadership keeps me aware of my rights as union members.
Item
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 4. Item
Percent
39 80 49 38 31 4
16.1 33.1 20.3 15.7 12.8 2.1
241
100.0
How often do you read the Local 705 Update? Frequency
Percent
Never Rarely Sometimes Most of the time Always NA
5 6 28 49 143 4
2.1 2.5 11.9 20.8 60.6 2.1
Total
241
100.0
Table 5.
Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Since 1995 union materials have kept me informed about union matters. Frequency 46 114 44 23 9 5 241
Percent 19.1 47.3 18.3 9.5 3.7 2.1 100.0
for office. In order for members to participate in the union and subsequently to consent to the u n i o n ' s politics, they need to be well informed by their stewards and representatives. And in fact, most !705 respondents feel that they are. Slightly less than half of the respondentsl agreed that they were "kept informed" by their stewards and representatives compared to nearly 35% of those who disagreed. In addition, a majority al~o believed that their stewards
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ROBERT BRUNO
and representatives are accessible "most o f the time" or "always" (see Table 6 & 7). While a larger number felt informed than did not the difference was not exceptionally wide. There apparently remains some dissatisfaction with the union's outreach to its members. The survey of course does not provide a mechanism to explain the difference in respondent's answers but one interpretation can be proffered. W o r k e r attention to and subsequent evaluation of their u n i o n ' s communication efforts is typically "event" driven. W h e n members have a problem or deep concern they establish a closer relationship with the union leadership. Consequently, they then have a baseline to evaluate how well the union has kept them informed. It is possible that all o f the respondents had equal access to information but that more of the "agrees" had more cause to call on the union then their counterparts. The question does not o f course assess whether the m e m b e r s were pleased with the information; only whether or not they were kept in the dark about the u n i o n ' s behavior. In this sense the r e s p o n d e n t s ' answers m a y have tapped into a union i n v o l v e m e n t matter.
Table 6.
Since 1995 business agents and stewards have kept me informed about union matters.
hem
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 7.
31 76 47 53 29 0 236 (5 missing)
Percent 13.1 32.2 19.9 22.5 12.3 0 100.0
How often do you have access to your business agent and steward (percent only)?
Item Never Rarely Sometimes Most of the time Always NA Total
Frequency 7.7 16.6 l 9.1 25.5 20.9 10.6 100.0
Percent 8.8 11.3 13.8 27.9 36.7 1.7 100.0
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Consenting to be Governed
MEMBERSHIP INPUT One indication of the local's interest in membership input is the degree in which the ranks feel that they are encouraged to participate in union affairs. In stark difference to the pre-trustee days, a very robust 64% of members agree that they are "encouraged to participate" (see Table 8). Of similar contrast to the previous governing regimes, over half of the respondents concurred that they now have "opportunities to attend union meetings and programs" (see Table 9). Members were also asked to indicate their overall approval or disapproval of the changes that have occurred since the trusteeship was imposed. While one-quarter of the respondents remain uncertain about the changes, 45.2% either "strongly agree" or "agree." Most importantly, less than a quarter of participants either "strongly disagree" or "disagree" with the changes that have occurred (see Table 10). This level of support was however, considerably less than the near 70% of respondents who agreed that the trusteeship was "needed to protect the members." Apparently the members' approval of particular retail changes has been less than their support for a wholesale change in union leadership and internal governance. Table 8.
Item
Members are encouraged to participate. Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total Table 9.
Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
45 106 38 27 20 5 241
Percent 18.7 44.0 15.8 11.2 8.3 2.1 100.0
Members have oppurtunities to attend union meetings and programs. Frequency 45 81 73 21 16 5 241
Percent 18.7 30.7 30.3 8.7 6.6 2.1 100.0
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ROBERT BRUNO
A final measure of approval was taken by asking workers whether the post-trustee elected local leadership conducted affairs consistent with the "best interest of the members?" While a not immaterial 30% "disagreed," a much heftier 47% agreed that their interests were being protected (see Table 11). The nearly identical percent of respondents who both approved of the changes and believed that they were made in the members best interest, suggests that consent may be related to a rank-and-flier's belief in whether workers as a group, and not the leadership or management are the intended beneficiaries of the changes. The disapproval, however, of approximately one-fifth of the respondents to how the local has transformed, suggests to the reader the complexities involved in popular reaction to organizational change under any circumstances. But in Local 705's case change was mandated, dramatic and highly adversarial. Rankand-file members did not get a democratic vote on whether they wanted to transform their union. If they had, it is likely that a significant number of them would not have voted for change. For a number of decades the local was ruled with an iron fist and members were treated like "dependents" of the leadership. In the "old days" a member had literally nothing to do but go to work. But Table 10. Item
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 11.
Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
I approve of a majority of the changes. Percent
35 74 59 32 25 16
14.5 30.7 24.5 13.3 10.4 6.6
241
100.0
Changes have been made in the best interest of the membership. Frequency
Percent
47 65 46 44 27 12
19.5 27.0 19.1 18.3 11.2 5.0
241
100.0
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Consenting to be Governed
since the trusteeship, opportunities for involvement have expanded and the union's business is no longer a secret. Despite the observable governing differences, there may be a "developmental lag" between institutional change and membership attitudes. In other words, while there is undisputable evidence that the union is procedurally more democratic today than it was pre-trusteeship, members' perceptions of the union's character may not have caught up with reality. If this is the case, then the phenomena playing out here may not be unlike what occurs in emerging democratic states. Autocratic governing bodies undergo democratic reform while popular consciousness remains captured by disbelief and suspicion of all things new. In Local 705 the old ways of acting have been dying, but perhaps the new ways of thinking have yet to be completely born.
MEMBERSHIP REPRESENTATION As a post hoc assessment of the local's performance, membership feedback provides a valuable way for the membership and the leadership to build a democratic relationship. In two of the most significant and mixed findings of the survey, a plurality (44%) of respondents both agreed that since the trusteeship, "workers have more influence over how the union acts" and consequently, that the "union acts for the membership" (see Tables 12 and 13). In both cases, however, between one-quarter and one-third of the members answered negatively. The mixed nature of the responses here, is relevant to understanding how Local 705 members evaluated the consequences of the last seven years of union representation. On one hand, considering Local 705's not to distant checkered past, it is a positive sign that better than two out of five members feels that they now have more influence over what the union does and that what gets done is on behalf Table 12.
An important change is that workers have more influence over how the union acts.
I~m Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Frequency 44 62 50 38 37 10 241
Percent 18.3 25.7 20.7 15.8 15.4 4.1 100.0
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ROBERT BRUNO
Table 13. Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Since the trusteeship, the union acts for the membership. Frequency 31 76 56 34 29 13 239 (2 missing)
Percent 13.0 31.8 23.4 14.2 12.1 5.4 100.0
of the dues-payers. On the other hand, it is troubling that a third of the surveyed workers did not believe that their local had become more responsive to the views of the membership. Two related and plausible explanations may provide some insight into the nature of these responses. First, perhaps the negative respondents are individuals who because of mistreatment or misunderstanding continue to feel disenfranchised despite the formal introduction of democratic procedures. Conversely, the positive respondents may have had good experiences with the union leadership. In the end, individual workers may well have evaluated the union's responsiveness to the membership based on their own self-interest, instead of on what was best for the collective body. It is also possible that since the trusteeship a more open space for political disagreement has created a partisan mentality among competing groups of workers. In a classic study, Leonard Sayles and George Strauss (1953) pointed out that conflicts among interest groups within local unions are not uncommon and that efforts to deliberately increase democratic participation tend to create divisive internal battles that may leave some factions feeling marginalized (Terry, 1996). But despite the messy political disagreements made possible because of a democratic openness, the leadership is still charged with the responsibility of acting for the union and therefore, individual member interests and institutional fortunes are not likely to perfectly align. Feeling like you have no greater input into how things get done is not necessarily a condemnation of the system of union governance. An additional measure of democratic reform, which helps to parse out the meaning of rank-and-file attitudes, is whether or not the trusteeship helped to rid the local of corrupt leaders. When asked if "corrupt officers had been removed from the local" about one-quarter of survey participants disagreed (see Table 14); that is slightly fewer than responded negatively to the question of workers' influence over the union. One interpretation of this variance is that while some workers
Consenting to be Governed
109
feel that since the trusteeship their leaders are not more responsive to them, these same leaders are j u d g e d for the most part to be honest. In other words, they may not be democrats in a New England-town hall sense, but neither are they "mob-upped," "thugs," or "criminals." While the pre-trustee membership was rarely given an opportunity to express their opinion about anything, what is known from a sample of written union documents is that local leaders were often charged by the membership with at best indifferent behavior and at worst with out-and-out evilness (Bruno, 2000). In the pre-trustee days workers were treated like children; seen but not heard. A fear of reprisal for speaking out against the leadership was well founded. So what happened when the local submitted to independently monitored elections and other trappings of democratic practice? Do members now have the freedom to speak out? Does the fear of j o b loss or the cold sting from the back of a metal chair still represses a worker' s voice? Apparently for a small minority of workers the rights of free expression are no greater today than they were five years ago. But for nearly 60% of workers, there is greater freedom to speak out now than before the International filed abuse of power charges against the Local 705 "Old Guard" (see Table 15). Table 14. Item
The trusteeship helped to remove corrupt union leaders. Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 15. Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
52 74 47 26 20 19 238 (3 missing)
Percent 21.8 31.1 19.7 10.9 8.4 8.0 100.0
Members have the freedom to speak out without fear. Frequency 38 97 43 29 29 0 236 (5 missing)
Percent 16.1 41.1 18.2 12.3 12.3 0 100.0
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Being encouraged to get involved in your union does not mean however, that members are taking up the charge. Union democracy should not only make possible membership participation; it needs to inspire use of the franchise. During the pre-trustee period IBT 705 rank-and-file members paid dues, went to work and rarely voted in union elections or on labor agreements, and fewer still spoke out at or attended membership meetings. Thus, an important question about the behavioral consequences of 705's democratic transformation is whether, since the trusteeship was lifted, rank-and-file participation in union activities has picked up. Voting in union elections is an obvious measure of democratic health and a good place to begin an analysis of political participation. There have been two local officers elections since the trusteeship was imposed (the first one in 1995) and in the 1997 race 88% of the survey respondents cast a ballot. While this indicates that the survey may be over-represented by politically involved union members, it is very illuminating that nearly a third of this group "never" voted in local elections before 1993 and approximately 42% either never cast a ballot or voted only "sometimes" (table not shown). 8 Democratic leaders should be freely chosen in meaningful and honest elections, and represent their constituencies in both form and substance. Consequently, voting has become a more valued institutional good because 43.7% of workers believe that "elections are honestly run." While there is a troubling 33.2% that remains uncertain about the validity of elections, there is a decidedly smaller number (23.1%), which views the contests as illegitimate (table not shown). Recall that prior to 1993 there were very few contested races for union office and where they occurred workers were rarely offered a full airing of issue positions. But here again change seems substantial. When asked if "elections provide members opportunities to address important issues," 54.2% of participants agreed (see Table 16a) and nearly 60% concurred, "elections offer real choices among candidates" (see Table 16b). More importantly, those union choices appear to be better than twiddlelee-dee and twiddle-lee-dom. Nearly 40% of survey participants agreed that, "elections provide the membership with qualified officers," while less the one-quarter disagreed (see Table 16c). Respondents also agreed that, "elections are important to how the members are represented" (see Table 16d), and that in fact, third party monitored and contested elections have improved the quality of "membership representation" (see Table 16e). Voting is vital to democratic choice, but it's not a very timely or particularly precise instrument to effect policy. To act immediately and with individual precision the monthly membership meetings better serve the members. One of the initial decisions made by the first post-trustee elected executive board was to move the date of the membership meetings from a mid-week evening to a
111
Consenting to be Governed Table 16a.
E l e c t i o n s p r o v i d e m e m b e r s o p p o r t u n i t i e s to a d d r e s s i m p o r t a n t issues.
Item
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA
Percent
30 93 54 41 9 0
Total
227 (14 missing)
Table 16b.
Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA
32 102 53 37 5 0
Total
229 (12 missing)
Table 16c.
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Table 16d. Item
100.0
E l e c t i o n s o f f e r m e m b e r s real c h o i c e s a m o n g c a n d i d a t e s .
Item
Item
13.2 41.0 23.8 18.1 4.0 0
Percent 14.0 44.5 23.1 16.2 2.2 0 100.0
E l e c t i o n s h a v e p r o d u c e d qualified officers. Frequency 18 73 85 35 20 0 231 (10 missing)
Percent 7.8 31.6 36.8 15.2 8.7 0 100.0
E l e c t i o n s are i m p o r t a n t to h o w the m e m b e r s are r e p r e s e n t e d . Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA
61 115 31 15 8 0
Total
230 (11 missing)
Percent 26.5 50.0 13.5 6.5 3.5 0 100.0
ROBERT BRUNO
112
Table 16e..
Item
Elections have improved the way that are members are represented. Frequency
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
30 86 68 34 11 0 229 (12 missing)
Percent 13.1 37.6 29.7 14.8 4.8 0 100.0
Sunday morning. The new date was chosen in order to maximize meeting turnout. It may have worked. The rank-and-file survey revealed that 63.6% of respondents agreed that "union meetings since 1995 have been open to all the members" (see Table 17). Good as that figure is, it tells us little of the individual member's actual use of the meetings as a way of being involved in the union. A better measure would be a comparison of how many annual meetings a worker attended pre and post-trusteeship. On this score the differences could not be starker. While an equal number of members annually attended nine or more meetings both prior to and after 1995, nearly 10% more of them had attended one or more meetings since that year. In addition, 41% of the respondents had never attended a single meeting before the trusteeship. That number had dropped to 32% following the return to a locally elected executive board (see Table 18). Going to membership meetings is an act of participation; so is walking up to the floor microphone and speaking your peace. Under the previous regimes it was a brave dissenting soul, true believer or sycophant who addressed the multitude of assembled union members. Accordingly, only 15.6% of respondents said they ever "spoke at any membership meeting" prior to 1995. But
Table 17. Item
Union meetings are now open to all the members. Frequency
Percent
Strongly Agree Agree Neutral Disagree Strongly Disagree NA
50 100 49 24 13 5
20.7 41.5 20.3 10.0 5.4 2.1
Total
229 (12 missing)
100.0
Consenting to be Governed Table 18. Item Nine or more Eight or seven Six Five or four Three Two One Zero Total
113
Times you attended Union meetings (percent only). Before 1995
Since 1995
10.3 6.4 5.9 6.4 6.9 9.3 14.2 40.7
9.2 6.3 7.5 9.6 12.9 14.2 8.8 31.7
100.0
100.0
since the trusteeship members no longer need to supplicate themselves before the leadership in order to be recognized at a meeting and consequently, the number of workers speaking at meetings has dramatically increased (Bruno, 2000). However, while speaking out is no longer a hazardous act only 18.6% of the survey participants have chosen to take advantage of this more protective environment (table not shown). Nor are contemporary rank-and-fliers better utilizing union educational opportunities. Roughly 9% of pre and post trustee respondents admitted that they "attended union educational program" (table not shown). Now this equivalency of use hides the fact that before the election in 1995 there was little evidence that rank-and-file members had many educational opportunities available to them. On the other hand, since a reform movement slate was first elected, educational opportunities have expanded (Bruno, 2000). While low membership utilization rates typically reflect individual workers' work schedules, family commitments and career choices there is a qualitative difference in leadership between one that makes resources available for education purposes and one that does not. The former would certainly better serve union democracy. But the low number of workers choosing to speak at membership meetings or attending educational sessions does reflect a puzzling condition about union and civic democracy. Commentators from different disciplines have noted that democratic structures and opportunities do not in themselves generate widespread democratic behavior. Having the right and the means to vote does not bring someone to the polls. Likewise, access to union meetings and the space to be recognized does not draw someone to the floor microphone. While different theories abound as to why even under ostensibly democratic conditions citizens (Dahl, 1961; Parenti, 1980; Barber, 1984) and union members (Cochran, 1977; Parker, 1998; Sciacchitano, 2000; Parker & Gruelle, 2000) remain silent, most
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ROBERT BRUNO
theorists (Kuklinski et al., 2001) have argued that either a salient issue or a pressing need, along with a belief in the efficacy of acting is required to stimulate democratic participation. Importantly however, scholars (Dahl, 1961; Luskin, 1987) also warn that the lack of democratic activity does not necessarily signal dissatisfaction with the governing structure. If, for example, 18% of the members speaking out is a sign that all is well with the union then the lack of participation here may not be troubling. But if 18% means that most members do not believe it matters whether they speak out or not then Local 705 may still have a credibility problem within its ranks. Along with rank-and-file opportunities to attend union meetings and educational programs, the effectiveness of the local's transformation can be measured by how well the leadership has responded to workers' grievances about management. Unlike the pre-trustee years when members' grievances were largely disappeared, exactly half the respondents revealed that problems with management are "always" or "most of the time" investigated (see Table 19). Additionally, with union representatives on duty it comes as no surprise to find that 45% of respondents think that their "steward and business agent are qualified," and the same proportion believe that they have done a "good job" (see Table 20). Significantly on both measures less than one-third of workers disagreed. It is also expected that in a democratic union the leadership will not only act on behalf of the people, but also do so with respect. For Local 705's reform agenda it was critical that respect of the membership be shown at all times. If members did not feel that self-proclaimed reformers treated them respectfully there would be little likelihood of changing the local's dismal trajectory. On this score considerable improvement has been made. Slightly more than half of the respondents (51.3%) believe that they are "treated with respect," roughly doubling the number (26.8%) that still feels disrespected (see Table 21). Table 19.
Item Never Rarely Sometimes Most of the time Always No opinion Total
How often are members' grievances investigated? Frequency 9 24 46 66 52 37 234 (7 missing)
Percent 3.8 10.3 19.7 28.2 22.2 15.8 100.0
115
Consenting to be Governed Table 20.
Qualifications and performance of business agents and stewards since 1995 (percent only).
Item
Agents and Stewads are qualified
Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
9.6 35.6 27.2 20.1 7.5 0 100.0 Table 21.
Item Strongly Agree Agree Neutral Disagree Strongly Disagree NA Total
Agents and Stewards have done a goodjob 14.2 30.5 29.7 15.5 10.0 0 100.0
Members are treated with respect. Frequency 39 82 54 38 23 5 241
Percent 16.2 34.0 22.4 15.8 9.5 2.1 100.0
Respecting the membership at IBT Local 705 has likely contributed to more successful grievance panel decisions, arbitrations and better contracts. But has it narrowed the status gap between officers and the membership? Sociologist Robert Michels (1949) predicted that the "iron law" of organizations would slowly but assuredly separate the leadership from the membership and place additional restraints on union democracy. To measure whether workers have begun to bridge the "vertical social distance" (Mannheim, 1956, p. 180) that would certainly separate them from their leadership in a undemocratic union, respondents were asked to identify how well they understood the actions and decisions of their officers. A remarkable 72% of respondents said that they have an excellent to good "level of understanding" of what Local 705 is doing (see Table 22). While such a response does not indicate approval or disapproval, it does signify that the institution is not an alien concept to the membership. Democracies, unlike dictatorships, are not a mystery. Democratic processes may be messy, combative, time consuming and demanding of compromise, coalition building and public relation skills, but they are understandable by
116 Table 22.
Item Excellent Very Good Good Fair Poor Very Poor Total
ROBERT BRUNO What level of understanding do you have for the policies and actions of Local 705? Frequency
Percent
19
7.9
55 95 20 38 15 241
22.8 39.4 8.9 15.8 6.2 100.0
anyone concerned enough to pay attention. However, one party states, elite rule or family control are built on the whims, prejudices, and self-interest of power holders. Governance of the local during much of the pre-trustee period was personal, private, irrational and thus, not subject to rank-and-file understanding. 9 But since 1995, inclusive of all blemishes, the membership has indicated a high level of understanding for the behavior of the local. Scholars of union democracy have noted that unions often begin to fray at the edges of a worker's sense of institutional ownership. A union "by the people" should generate a reasonably high level of confidence that the workers have ownership over their local. What sense of ownership should union members have about their organization? In the case of Local 705 the results appear ambiguous. On one hand, despite large pluralities of workers supporting numerous improvements in the local, approximately only 37% of respondents agreed that they now had a sense of "union ownership." Adding the one-third of respondents who remain uncertain to the nearly 34% who disagreed, means that two-thirds of the members are not feeling a sense of ownership (table not shown). Admittedly the finding here is negative. But seen from another perspective the results may be more encouraging. In just five years two-thirds of the membership have either developed a sense of ownership or remain open about the matter. While no pre-trusteeship rank-and-file survey exists it is not unreasonable in light of Local 705"s past to interpret a slightly higher number of workers who claim a sense of union ownership than those who do not as an achievement. One final question bearing on the union's representational function was posed to Local 705 members. Members were asked to provide an umbrella definition of Local 705. The answer in broad terms for all but a small minority is that IBT 705 is a union that "effectively represents the membership." But differences emerge when the nature of that representation is
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qualified. For instance, one-fifth of respondents describe the local as being effective and involving "the membership in all union matters." Another 31% acknowledges the local's effectiveness but holds that it "most often acts without membership involvement," and more often than not just "informs the membership about decisions made" by the leadership. That leaves only 17.5% of respondents who describe Local 705 as a "union that fails to represent the membership and denies the membership an opportunity to participate in union matters" (see Table 23). Results here would seem to support George Strauss's important distinction between a union leadership that is democratically governing "for the people" but that has not yet found a way to allow rank-and-file workers to govern themselves. A final assessment of how workers judged the dramatic post-trustee developments at Local 705 is a measurement of what particular changes workers have most closely associated with the democratization movement. To accomplish this Pearson correlations were drawn between levels of agreement that significant changes have been made and the nature of those changes. The independent variable is the imposition of the trusteeship and the reforms implemented since 1995, and the dependent variables were the following changes: (1) members have the freedom to speak out; (2), members are encouraged to participate in union activities; (3), members have the opportunity to attend union programs; (4), the leadership values input from the members; (5), workers are protected against abuse by union officials; (6), corrupt leaders were removed from the union; (7), members are more aware of their union rights; and (8) members have a sense of union ownership. On each of the items the correlation was positive and in all but two cases significantly strong (see Table 24). Two findings are of particular Table 23.
Which of the following statements best describes the present Local 705?
Item
Frequency
Percent
A union that effectively represents the membership and involves the membership in all union matters
47
20.5
A union that effectively represents the membership but most often acts without membership involvement
71
31.0
A union that effectively represents the membership but basically just informs the membership about decisions made
71
31.0
A union that fails to effectively represent the membership and denies the membership an opportunity to participate in union matters Total
40
17.5
229
100.0
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Table 24.
Relationship between agreement that significant changes have been made since the trusteeship and particular changes.
Item Members have the freedom to speak out Members are encouragedto participate in union activities Members have the opportunity to attend union programs The leadership values input from the members Corrupt leaders were removed from the union Members are more aware of their union rights Members have a sense of union ownership
Pearson Correlation 0.503** 0.464** 0.440** 0.653** 0.134"* 0.567** 0.630**
**
[email protected] (2 tailed) interest. The first is the very substantial positive relationship between democratization and the value the leadership now places on rank-and-file input. Secondly, surveyed members have strongly signaled the importance of having a sense of ownership over their union. As positive as the overall survey findings are, what is perhaps more encouraging is that the respondents drawn from over-the-road truckers covered under the local's Master Freight Agreement, traditionally supportive in Chicago of the conventional elite leadership, were equally or more supportive of the way that the local had transformed itself over the past seven years. When UPS workers were compared to non-UPS members there were no meaningful statistical differences in the positive direction of the responses. By modest to large margins UPS and non-UPS workers showed majority support for the changes that have occurred since the trusteeship. With few exceptions the percentage of agreed and disagreed responses of both groups was within a few points. Overall, however, non-UPS members displayed a slightly higher-level support for democratic reforms on more of the items than did UPS workers. The support given for democratization by members within the local's primary divisions is bolstered by the knowledge that the units displayed contrasting political loyalties. During the 1998 rerun election of the Teamsters' International contest for general president, it was commonly interpreted (perhaps mistakenly) that a vote for either James Hoffa Jr. or Tom Leedham signified a worker or local's support for continuing the reforms of the Carey administration. Voting for general president then became a proxy for furthering or restricting the government enforced changes in the behavior of the Teamsters. In the city of Chicago vote support for James Hoffa Jr. was nearly unanimous. In fact, every local in the state of Illinois gave a majority of its
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votes to Hoffa and the son of the legendary Teamster leader won dominant control over the Midwest region and Chicago Joint Council. The only Chicago and Illinois exception to Hoffa's sweeping success was Local 705. Led by 705 Secretary-Treasurer Gerald Zero and President, John McCormick who was also running for the secretary-treasurer post on the Leedham slate, the local cast 58% of its votes for the decided underdogJ ° While no figures were available to verify the vote breakdown it was a common assumption within the local that Leedham's strongest support came from UPS workers. Survey findings confirm that assumption. Leedham won nearly three-quarters of the votes cast by UPS members, but just 32% of nonUPS workers. The sizeable and contrasting margins should have revealed a serious fault line in the local. The campaign for the International presidency was framed over the controversial and emotional ideas of either returning to an ugly past of mob connected union bosses or continued subservience at the feet of an oppressive federal government. In Chicago little middle ground was carved out. To be sure, individual Teamster voting reflected more complex ideas about the union's identity then popular belief permitted. Nonetheless, it is undeniable that the election was waged in near apocalyptic terms. But despite the often acrimonious and ideological nature of the race, Hoffa and Leedham supporters endorsed in near equal proportions the democratic transformation of Local 705. CONCLUSION The internal governance of Local 705 has apparently passed a membership consent test. After experiencing seven years of dramatic personnel, structural and procedural changes, Local 705 members gave an encouraging if cautious endorsement to the post-trustee period. On every measured item more workers than not approved of what their local leadership was doing. Support however was not overwhelming. The roughly one-quarter to one-third of respondents who responded negatively to many questions, along with the 20% who were commonly uncertain of their feelings suggests a possible tipping stage in membership opinions. The local cannot ignore the one out of five "swing voters" who have yet to make up their minds about the post-trustee changes. There is potentially a near majority of rank-and-file opponents who are not supportive of the local's behavior. Some of these members may feel disaffected by the actions already taken, while others are holding back their approval until the local goes even further with its reform agenda. Thus it would be in the local's best democratic interest to interpret the survey findings cautiously. Such an interpretation however, should not distract from
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the positive assessment members have rendered. In the final analysis, when asked for the first time in the local's history to evaluate the character o f the union's internal governance, the membership has given an endorsement to the democratic changes it has experienced. The membership will of course have other opportunities to express its approval and to grant its consent through officer elections and contract votes. As workers and their leaders go about the business of building a real democratic union it is important for interested observers to recognize how terribly difficult it is to go from a condition of tyranny to one of selfsovereignty. Union democracy, like political democracy is not any easier to first realize and then sustain just because it is the morally right way for people to govern their public affairs. As researchers continue to identify and test a range o f democratic measures, a future challenge is to explore the relationship between union transformation and members' opinions. Union members are rarely directly asked to evaluate how they are being governed; yet locals like IBT 705 have undergone major overhauls. While membership surveys can never definitively assess a u n i o n ' s governing character, they can make a significant contribution to revealing whether workers have consented to being governed in particular ideological and pragmatic ways.
NOTES 1. The membership breaks down in the following approximate way: UPS - 11,500, Cartage - 1,200, Air Freight - 1,000, Freight - 1,000, Tankers - 600, Liquor Division - 300, Movers - 200, Municipalities - 150 and Grocery Houses - 100. 2. The trusteeship was based on the findings of an Independent Review Board (IRB) set up by a 1989 consent decree negotiated between the IBT and the federal government to monitor the union's internal governance. In addition to the IRB the union's Ethical Practices Committee also charged the local leadership with various violations (see, Letter and report from the Independent Review Board to Ron Carey dated May 25, 1993). 3. George Strauss' comment was made during a panel presentation titled "Union Governance in a Changing Labor Movement," at the 53rd Industrial Relations Research Association Annual Meeting, January 6, 2001, New Orleans, Louisiana. 4. The Independent Review Board had investigated the local and filed a seventeen page report with the International union which "evidences financial wrongdoing, constitutional violations and a deteriorating condition that warrants the imposition of Trusteeship and the filing of charges against officers of Local 705." The IRB findings determined that the local leadership had "brought reproach upon the IBT" for both financial and non-financial violations of the IBT Constitution" (see IRB Report to Ron Carey, May 25, 1993). 5. The breakdown was as follows: 1885 surveys were mailed to UPS members (63%) and 1,115 sent to non-UPS members (37%).
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6. The quote was from George Meany, ex-president of the AFL-CIO about Teamster president Jimmy Hoffa in Robert F. Kennedy's, The Enemy Within: The McClellan Committee's Crusade Against Jimmy Hoffa and Corrupt Labor Unions (New York: Da Capo Press, 1990 [1960]), p. 161. 7. One of the first actions taken by the post-trustee leadership was to distribute thousands of copies of the union's constitution and bylaws. The local also printed a summary of the Landrum-Griffin Act in their local newspaper. 8. In the 1997 election a little less than 40% of the membership voted. 9. Louis Pike ran the local from 1964 to 1987 and Danny Ligurotis from 1987-1992. 10. Vote totals taken from "1998 IBT Election Vote" at http://members.aol.corn/ ibtvote/index.htm
REFERENCES Barber, B. (1984). Strong Democracy: Participatory Politics for a New Age. Berkeley: University of California Press. Bruno, R. (2000). Democratic Goods: Teamster Reform and Collective Bargaining Outcomes. Journal of Labor Research, 21 (1), 83-102. Conboy, K. (1997). Decision of Election Officer for the International Brotherhood of Teamsters (November 17). Crowe, K. (1993). Collision: How the Rank and File Took Back the Teamsters. New York: Charles Scibners Sons. Daily Labor Report (1997). Teamsters Independent Review Board: Five Year Report 1992-1997, United States v. IBT, 88 Civil 4486 (DNE), 218 (November 12-25): E3-E17. Daily Labor Report (1999). Republican and Democratic Executive Summaries Of House Subcommittee Report on Teamster, 37(February 25): E39-E48. Dahl, R. (1961). Who Governs? Democracy and Power in an American City. New Haven: Yale University Press. Dine, P. (2000). James Hoffa is rekindling the unity in the Teamsters that his father bred. St. Louis Post-Dispatch, (June 4), A12. Edelstein, D., & Warner, M. (1976). Comparative Union Democracy. George Allen & Unwin. Eisenscher, M. Leadership Development and Organizing: For What Kind of Union? Labor Studies Journal, 24(2)(Summer), 3-21. Fletcher, B. (1998). Whose Democracy? Organized Labor and Member Control. In: G. Mantsios (Ed.), A New Labor Movement for the New Century. New York: Monthly Review Press. Gruelle, M., & Parker, M. (1999). Democracy Is Power: Rebuilding Unions from the Bottom Up. A Labor Notes Book. Detroit. Lipset, S. M., Trow, M., & Coleman, J. (1956). Union Democracy. New York: Doubleday Anchor. Luskin, R. (1987). Measuring Political Sophistication. American Journal of Political Science, 31, 856-899. Kuklinski, J., Quirk, P., Jerit, J., & Rich, R. (2001). The Political Environment and Citizen Decision Making: Information, Motivation, and Policy Tradeoffs. American Journal of Political Science, 45(2)(April), 410-424. Mannheim, K. (1956). Man and Society in an Age of Reconstruction. New York: Harcourt Brace. Martin, R. (1968). Union Democracy: An Explanatory Framework. Sociology, 2(May), 205-220. McConnell, G. (1958). Factionalism and Union Democracy. Labor Law Journal, 9, 635-f:~40. Michels, R. (1949). Political Parties. Glencoe, Illinois: Free Press
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Modea, D. (1978). The Hoffa Wars: Teamster, Revels, Politicians and the Mob. New York: Paddington Press. Needlemen, R. (1998). Black Caucuses in Steel. New Labor Forum: A Journal of Ideas, Analysis and Debate, (Fall/Winter), 41-56. Nyden, P. (1985). Democratizing Organizations: A Case Study of a Union Reform Movement. American Journal of Sociology, 90, 1179-1203. Parenti, M. (1980). Democracy for the Few. New York; St. Martin's Press. Parker, M. (1998). Appealing for Democracy. New Labor Forum: A Journal of ldeas, Analysis and Debate, (Fall/Winter), 57-73. Pateman, C. (1970). Participation and Democratic Theory. Cambridge, England: Cambridge University Press. Sayles, L., & Straus, G. (1953). The Local Union: Its place in the Industrial Plant. New York: Harper and Brothers. Sciacchitano, K. (2000). Unions, Organizing, and Democracy. Dissent, (Spring), 75-81. Stephan-Norris, J., & Zeitlin, M. (1992). The Insurgent Origins of Union Democracy In: G. Marks & L. Diamond (Eds), Reexamining Democracy in Honor of Seymour Martin Lipset. New York: Sage. Stephan-Norris, J. (1998). Strangers to Their Own Class? Sociological Inquiry, 68(3), 329-353. Taft, P. (1948). The Constitutional Power of the Chief Officer in American Labor Unions. Quarterly Journal of Economics, 6, 459-471. Terry, M. (1996). Negotiating the government of Unions: Union democracy in theory and practice. British Journal of Industrial Relations, 34,1 (March), pp. 87-110. Union Labor Report (2000). Special Report: Teamsters Draft Plan for Reform Is Criticized and Defended. 54(16)(April 20), 128.
REVITALIZING AFL-CIO POLITICAL OUTREACH: CAN A DIRECT INFORMATIONAL CAMPAIGN DO THE TRICK? Roland Zullo
ABSTRACT Using an experimental design, the author examines the impact of AFLCIO political education outreach on union members' perception of and preferences for, political candidates in three 1996 Wisconsin congressional races. Contrary to the rational voter model results show that a direct informational campaign has little effect on union member vote behavior. Rather, members' preferences for candidates demonstrate stability during the two months prior to the election, and change in members' perception of candidates is associated with pre-outreach preferences. These results support the psychological voter model, and suggest that organized labor must build a culture of political mobilization to have a substantial impact on electoral outcomes.
Advances in Industrial and Labor Relations, Volume 11, pages 123-144. Copyright © 2002 by Elsevier Science Ltd. All rights of reproduction in any form reserved. ISBN: 0-7623-0853-2 123
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Labor leaders are keenly aware that more effective political action is crucial to reversing the decline in power of their organizations. In 1995, the AFL-CIO commissioned a survey to better understand how to persuade and motivate union members during political campaigns. Survey responses indicated that union members disliked unsubstantiated appeals for candidates, but they did believe their unions play a positive role in supplying information on political issues and candidate positions (Hart, 1995). Union members want to know why they should vote for a candidate, not simply who to vote for. In response to these findings, the Sweeny administration launched "Labor '96," a campaign designed to increase labor's capacity to educate its membership. Since then, re-establishing political power through member education has been a core objective of the AFL-CIO, marking a contemporary strategic shift in resource use for organized labor (Master, 1997). Unfortunately, little empirical work is available that evaluates labor's political education methods, despite a mention of the importance of this topic in a review article by Masters and Delaney (1987). Research since then has confirmed that union members prefer labor endorsed candidates over candidates opposed by their organizations (Delaney et al., 1990; Form, 1995; Hojnacki & Baum, 1992; Juravich & Shergold, 1988; Sousa, 1993). However, the mechanisms underlying this relationship have not been adequately identified. Indeed, the very question of whether union political activities cause members to choose endorsed candidates remains unanswered. A critical limitation of prior research is the inability to measure and isolate the political outreach itself. Most empirical work to date has examined voting behavior with respect to union status, not the receipt of political outreach. Sousa (1983) analyzes nationwide data for the 1960 through 1988 presidential elections and, controlling for race, party identification and income, finds that union status is positively associated with voting Democrat in most of the elections. On the basis of these findings, he concludes " . . . there is a clear group mobilization effect on the partisan direction [italics in original] of unionists' voting behavior" (Sousa, 1993, p. 756). Like Sousa, Hojnacki and Baum (1992) structure their dependent variable as a dichotomous preference for Democratic candidates. They find differences between union and non-union voters for local and national 1986 and 1988 elections in Ohio, and generally attribute these results to the information, or "cues," directed to members (Hojnacki & Baum, 1992). Delaney et al. (1990) examine the relationship between union status and COPE endorsed candidates, a more precise dependent measure than Democratic candidates, for House, Senate and Gubernatorial
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races in selected congressional districts from a 1978 nationwide survey. Controlling for income, political ideology, region and various demographic factors, they report a strong positive relationship between union status and preferences for COPE endorsed candidates. They then proceed to outline several competing explanations for this finding. While the totality of this research implies that union leaders are effective at persuading union members, Delaney et al. (1990) were correct in cautioning against this interpretation. By varying degrees, the candidate endorsement process is a democratic one: in some locals union officers dominate candidate endorsement decisions, while in others union leaders invite candidates to speak at membership meetings and the endorsement is based on a general poll. Thus, one limitation with the above research is the possibility for simultaneity bias: the effect of communicating political endorsements to union members is confounded with the effect that union members have on the organizational endorsement process. It is necessary to untangle these effects to estimate the impact that the organization has on its members. Prior research that measured union political outreach has relied on one survey instrument to collect data for the dependent and independent variables. Juravich and Shergold (1988) do find a relationship between union literature and preference for a presidential candidate in the 1984 election. However, this effect was significant only for those respondents who recalled receiving literature and who claimed the literature was useful. It is quite possible that an expressed preference for a pro-labor candidate and a positive rating of literature usefulness are factors for the same latent construct, such as the strength of member identification with their union. Common method variation problems such as this are exacerbated when the survey involves normative behavior and the chance of social desirability bias is high. We see evidence of social desirability bias in the work of Delaney et al. (1988), who found that vote turnout tends to be overstated by survey respondents when checked against municipal records. Likewise, it can be anticipated that union members will provide biased responses to political surveys to match the communicated positions of their organizations, particularly when the survey is sponsored by labor and this sponsorship is revealed. This study begins to address these limitations by employing experimental design methods to test the effect of Wisconsin AFL-CIO political education efforts during the 1996 national election. Experimental designs have been used to measure the impact of political outreach in non-union field contexts (Bochel & Denver, 1971; Eldersveld, 1956; Eldersveld & Dodge, 1954), and are considered superior to cross-sectional survey methods (Ansolabehere et al., 1991; Ansolabehere & Iyengar, 1995; Bowler et al., 1992). Using experimental
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techniques, I isolate the effect of the union political outreach, and test whether the AFL-CIO information campaign influenced union members' perceptions of, and preferences for, political candidates in three Wisconsin congressional races.
THEORIES ON INFORMATION AND VOTING
BEHAVIOR
There are two competing theoretical perspectives on voter response to political information. The first begins with the premise that voters are rational actors who weigh the cost of obtaining and analyzing information against the benefits of doing so. Rational voters want to make political choices consistent with their interests, and therefore information about issues and candidates is desired, but gathering and digesting information carries a cost that these same rational individuals will seek to minimize (Cohen & Rogers, 1983; Downs, 1957). Consequently, voters rely heavily on political information that they can obtain for zero cost, be it from advertising, the mass media, or outreach conducted by politically active organizations. Rational voters do desire a plurality of sources to provide checks against biased reporting. Yet information processing is costly, and these constraints cause voters to delegate the analysis and evaluation of political issues to a limited number of sources. The tendency is to favor sources that focus on the facts germane to the individual voter's decision-making, have similar goals, possess more data, and are believed to have equal or better powers of judgment (Downs, 1957). It follows that specific forms of information distributed by trusted advocacy organizations are given more weight than general media sources. Such a model recognizes that single-issue organizations, corporations, religious institutions, ethnic clubs and other groups compete with organized labor to provide information to union members. Extending this theoretical framework, Alvarez (1998) posits that candidate evaluations are related to the precision of the information available to voters. Ambiguity over a candidate's position on issues will tend to reduce the utility of that candidate, thereby reducing the probability that the individual will support that candidate at the ballot box. Further, the impact of information is larger when uncertainty over a candidate is greatest, such as at the beginning of an election cycle. Analyzing data from National Election Studies over multiple election cycles, Alvarez (1998) finds a negative relationship between voter uncertainty for a candidate's position on policy matters and voter preference for that candidate. The inference drawn is that ambiguity tends to penalize politicians: increasing the flow of information to voters on issues of importance should shift preferences toward a candidate, particularly for those voters who are less familiar with that candidate.
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If the rational voter model is applied to the distribution of union-sponsored political outreach, it is expected that as union member-voters cull information they engage in an objective evaluation of the data with the aim of selecting the candidate that most closely represents their interests. Since a significant proportion of union members perceive the AFL-CIO as a valuable advocacy organization and information source (Hart, 1995), then this model predicts that union members would respond to AFL-CIO sponsored information that distinguishes the candidates along issues of importance. Information recipients should display significant levels of crossover patterns (i.e. candidate preference switching) during the election cycle compared to those who do not receive union political outreach. Likewise, members' perceptions of candidates should be positively related to the intent of the mailings: perceptions of COPE endorsed candidates should improve; while perceptions of COPE opposed candidates should be downgraded. This leads to the following hypotheses: HI: COPE outreach will be associated with a positive change in
union members' perception of the COPE-endorsed candidate. H2: COPE outreach will be associated with a negative change in union
members' perception of the COPE-opposed candidate. H3: COPE outreach will be associated with a shift in member prefer-
ences toward the COPE-endorsed candidate. The field of political psychology offers an alternative model of voter response to political information. This view begins with the premise that an individual's political behavior is a function of a life-long socialization process. Deep-seated political attitudes begin to form during childhood, establishing the foundation for a partisan ideology that is quite resistant to change as a person matures (Campbell et al., 1960; Greenstein, 1969; Hess & Torney, 1967; Himmelweit, et al., 1981; Jennings & Niemi, 1968). Voters' decision-making processes are directly influenced by their political predisposition. Where the rational voter enters the political cycle with the aim of selecting candidates based on utilitarian criteria, and valueless political symbols are ignored, the psychological voter is socially conditioned toward political symbols, such as political party affiliation. Voting Democrat is meaningful, in part, because a person grew up in a household or community that favored Democrats, and such behavior is consistent with kinship and societal norms. As the psychological voter receives campaign information, there is a tendency to cognize data that reinforce those long-standing political beliefs. Political information is not digested objectively, but rather, information that supports prior positions on campaign issues or political parties is retained while contradictory information is discounted. In this way, information activates latent
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political predispositions and polarizes the electorate. Ansolabehere and Iyengar (1995) advance this thesis through a series o f experimental tests of the impact of political advertisements on vote preference. They report that advertising has the intended effect on voters when the ad sponsor is the same political party as the voter, particularly for voters with a low interest in politics (Ansolabehere & Iyengar, 1995, Ch. 4 and Tables B2.4 and B2.5). Thus, exposure to information is not enough. The recipient must accept the information, and acceptance is conditional on the partisan political attitudes and beliefs cultivated over ones' lifetime. The p s y c h o l o g i c a l perspective w o u l d therefore model voters as stubborn in their preferences, changeable perhaps when the individual is i m m e r s e d in a new cultural environment. Organized labor will impact union m e m b e r voting b e h a v i o r when m e m b e r s b e c o m e successfully integrated with the political socialization process. A n outreach c a m p a i g n that relies on issue information only will have little effect. Operationally, we should observe no evidence o f candidate preference switching linked to union political outreach. Instead, change in m e m b e r s ' perception of candidates should be related to their p r e - c a m p a i g n political positions. An additional hypothesis is therefore needed: H4: Change in members' preferences toward the candidates should be positively related to their pre-campaign preferences. WISCONSIN
AFL-CIO POLITICAL STRATEGY
EDUCATION
In 1996, following the lead of the national A F L - C I O , the Wisconsin A F L - C I O launched its own project called the "Campaign for Working Families: Moving Wisconsin Forward Again." The initial document outlining the Campaign stated, recent poll commissioned by the National AFL-CIO shows that union members yearn for a new voice. Union members want to be educated on the issues and the candidates in order to make informed decisions. We need to find new ways to engage more union members in the electoral and legislative process. Working people need to vote for their economic interests and their jobs more than ever. Those members who have special concerns about guns or abortion still need to vote their interests as working families first - then lobby their special interests later (WI-AFL-CIO, 1996). A
To implement this agenda a statewide electoral coalition was created, modeling itself after similar efforts led by central labor councils in Milwaukee and South Central Wisconsin (Eimer, 1999). These coalitions brought together the A F L CIO, the Allied Senior Citizens, Citizen Action, n o n - A F L CIO unions such as the Wisconsin Education Association, and unions with above-average interest
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in politics, like AFSCME. For the 1996 elections, the statewide and local coalitions established a division of labor: the state coalition was responsible for developing and distributing political education material, while the local unions and central labor councils engaged in grass-roots activities designed to increase voter turnout. Direct mail pieces sent to members' homes was the core education tactic. The timing, sequence, and content of the mailings were intended to gradually build support for the COPE endorsed candidate. An initial brochure introduced the program and educated members on economic issues, such as the erosion of family income. No mention of the candidates appeared in the piece. The second mailer continued the working families theme, comparing the presidential candidates on seven key issues and providing voting records for all Wisconsin congressional incumbents on economic issues. Though Clinton and the Democratic Congressional incumbents were favorably reviewed, the brochure never urged support for any particular candidate. In contrast, the third mailing directly compared the Republican and Democratic congressional candidates on six key issues: strengthening pension security law, raising the minimum wage, protecting Medicare funding, expanding health care, raising OSHA standards, and funding public education. Voting records on specific bills or position papers by each candidate supported the ratings. Each candidate's position was summarized as either being "right" or "wrong" for working families. In one section, the literature suggested, "the record is clear" and prominently displayed a picture of the candidate that "supports working families." The fourth piece of literature was a simple postcard designed to remind members whom the AFL-CIO had endorsed, and to get out the vote. This study tests the effect of the first three pieces of educational literature.
DESIGN, DATA AND MEASURES Experimental Field Test A Pretest-Posttest Control Group design is used (Campbell & Stanley, 1963), where a random sample of union members in the outreach population were surveyed prior to the distribution of the union literature (survey one). Using a random number generator, respondents were assigned to one of three groups: (1) a control group that received no outreach; (2) a group that received only the first two union literature pieces; and (3) a group that received all three union literature pieces. The control group was purged from the state AFL-CIO mailing list before any literature was sent. The second group was purged from the list
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after the second mailing. Respondents from all groups were removed from local AFL-CIO lists to minimize the noise created by the outreach efforts of central labor councils. 2 The subjects remained in their assigned group for the duration of the study, and were surveyed again with identical measures after the union sponsored literature was distributed, but just before the election (survey two). There are three major advantages to this design. First, the independent factor of interest (i.e. the union political outreach) is administered separately from the dependent measures collected through the survey process. Second, the panel data permit a test for outreach effects on the change in dependent measures during the observation period. Third, this design capitalizes on random assignment to distribute unmeasured factors randomly across groups, and thereby reducing the potential for omitted variable bias.
Sampling and Survey Administration Union members who were scheduled to receive educational literature were sampled from Wisconsin congressional districts 1, 2 and 4 (n = 1,990). These three districts in southern Wisconsin were chosen because the State AFL-CIO considered them close political contests. At least five attempts to contact each prospective respondent were made per survey. There were 1,044 completed wave one surveys, and 865 wave two surveys, representing a panel response rate of about 43%. 3 The distribution of respondents across the three groups was as follows: control, 317; 2 mail pieces, 216; and 3 mail pieces, 332. 4 Survey two respondents were asked whether they recalled receiving AFL-CIO literature. Affirmative responses to this question were compared against the treatment groups (r 2 = 0.09) for a manipulation check. As a precaution against administrator related bias, both surveys were conducted over the telephone by the same survey agency, and the agency was never informed of the treatment status of respondents. Further, to minimize social desirability bias, union sponsorship was concealed in the survey, and an attempt was made to complete the second survey prior to the announcement of the November 5 election results. 5 Finally, to reduce the risk of pretest respondent sensitization to the union literature, the survey language was designed to resemble a neutral poll, differing substantially in both tone and content from the union outreach.
Dependent Measures Two dependent measures are analyzed: the perception of the COPE-endorsed and COPE-opposed candidates, and the stated preference for a candidate. While
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the two measures, perception and preference, are related, it is advantageous to include both. Perceptions are considered more malleable than preferences (Alvarez, 1998, p. 21), and therefore more sensitive to the effects of political outreach. Changing a member's preference is believed to be more difficult, and from the perspective of labor leaders is the true test of outreach effectiveness. Perception of Candidate Union members' perception of political candidates was measured by a feeling thermometer, which has a long history of usage in the National Election Surveys (ICPSR, 1993) and has been applied to union surveys (Form, 1995). The feeling thermometer asks respondents to rate how "warm" or "cold" they feel about a congressional candidate based upon a 100 point scale (Sudman & Bradburn, 1983, Ch. 6). The primary advantage of the feeling thermometer is that it is a reliable indicator of voter intentions that can be efficiently applied to a long list of candidates. In addition, because the thermometer readings are graduated by 100 degrees, it is sensitive enough to detect relatively small changes in the perceptions of candidates, while serving to guard against memory related bias. A thermometer rating was collected for the COPE endorsed and COPE opposed congressional candidates in both survey waves. This dependent variable was analyzed using ordinary least square techniques. Candidate Preference Candidate preference was assessed with the question, "Who do you think you will vote for in the congressional race between _ _ and ? " If members expressed a preference for a congressional candidate, they were then asked, "Would you say that your preference for this candidate is strong or not strong?" The question wording was borrowed from the most recent National Election Survey (ICPSR, 1993), and applied only to respondents who were familiar with both congressional candidates. The wording and sequence of these questions were identical in both surveys. Responses to the preference questions were used to categorize union members according to their level of commitment for the candidate endorsed by the Wisconsin AFL-CIO. A four point ordinal scale was created with these data, with higher values corresponding to stronger support for the COPE-endorsed candidate: (1) members that were strong for the COPE-opposed candidate, (2) members that were leaning for the COPE-opposed candidate, (3) members that were leaning for the COPE-endorsed candidate, and (4) members that were strong for the COPE- endorsed candidate. This dependent variable was analyzed using ordered probit models.
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Independent Measures Political Outreach The chief independent variable of interest is the union political outreach. As mentioned above, some respondents received no outreach, a second group received the first two mailings, and the third received the complete outreach package. This separation was made to understand whether there were any empirical differences based on the content and tone of the outreach. The first two pieces provided more general information about the issues and the incumbents, while the third piece was comparative and overtly directional, distinguishing the candidates along several contemporary political issues. Indicator variables were created for union members who received the first two informational pieces and those who received the third comparative piece. Pre-Outreach Perception of Candidate The thermometer score from survey one is a measure for member's perception of the candidates prior to any union outreach. It is used to control for the stability in perceptions during the election cycle. Pre-Outreach Candidate Preference Responses to the preference question in survey one were used to indicate candidate preferences prior to the distribution of outreach. A categorical variable composed of five mutually exclusive indicators was created: (1) strong for COPEendorsed candidate (Strong For COPE), (2) leaning for the COPE-endorsed candidate (Leaning For COPE), leaning for the COPE-opposed candidate (Lean Against COPE), strong for the COPE-opposed candidate (Strong Against COPE) and those respondents with an unknown preference (Unknown). Respondents categorized as unknown include a mix of those who could not identify one or both of the candidates, those who knew the candidates but expressed no preference, and those who refused to answer the question. A second pre-candidate preference variable was constructed that collapses the information in the five indicator categories into one continuous measure. This was achieved by assigning a value of zero to those respondents who expressed strong support for the COPE-opposed candidate, a one for those leaning toward the COPE-opposed candidate, a two for those who were unknown, a three for those leaning for the COPE-endorsed candidate, and a four for those who expressed strong support for the COPE-endorsed candidate. This construction imposes both order and interval constraints on the preference variable, and is used to test for a linear relationship between pre-candidate preference and change in member perception of candidates.
Revitalizing AFL-CIO Political Outreach Table 1. Variable Perception of COPE Endorsed (Survey One) Perception of COPE Endorsed (Survey Two) Perception of COPE Opposed (Survey One) Perception of COPE Opposed (Survey Two) Candidate Preference (Survey Two) No Outreach (Control Group) First 2 Mail Pieces 3rd Mail Piece Strong For COPE Lean For COPE Unknown Lean Against COPE
Strong Against COPE
Linear Preference AFSCME
UAW IBEW
UFCW
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Variable Definitions and Descriptive Statistics. Definition
Mean (s.d.)
Thermometer rating for COPE endorsed congressional 54.091 candidate in survey 1 (range: 0 to 100) (24.525) Thermometer rating for COPE endorsed congressional 56.857 candidate in survey 2 (range: 0 to 100) (26.079) Thermometer rating for COPE opposed congressional 45.872 candidate in survey 1 (range: 0 to 100) (25.634) Thermometer rating for COPE opposed congressional 45.198 candidate in survey 2 (range: 0 to 100) (26.209) Ordered scale indicating the preference level for the 0.622 COPE endorsed candidate in survey 2 (range: - 2 to 2) (1.665) Indicator for respondents that received no political 0.366 information mailings (1 = Yes; 0 = Other) (0.482) Indicator for respondents that received 2 political 0.634 information mailings (1 = Yes; 0 = Other) (0.482) Indicator for respondents that received 3 political 0.384 information mailings (1 = Yes; 0 = Other) (0.487) Indicator if respondent expressed strong preference for 0.200 COPE endorsed candidate in survey 1 (1 = Yes; 0 = Other) (0.400) Indicator if respondent expressed not strong preference for 0.089 COPE endorsed candidate in survey 1 (1 = Yes; 0 = Other) (0.285) Indicator if respondent did not register a candidate 0.517 preference in survey 1 (1 = Yes; 0 = Other) (0.500) Indicator if respondent expressed not strong preference 0.066 for COPE opposed candidate in survey 1 (0.248) (1 = Yes, 0 = Other) Indicator if respondent expressed strong preference 0.128 for COPE opposed candidate in survey 1 (0.335) (1 = Yes, 0 = Other) Ordered scale indicating the preference level for the 2.166 COPE endorsed candidate in survey 1 (range: 0 to 4) (1.201) Indicator for respondents who are members of the 0.252 American Federation of State County Municipal Employees (0.434) (1 = Yes; 0 = Other) Indicator for respondents who are members of the 0.212 United Auto Workers (1 = Yes; 0 = Other) (0.409) Indicator for respondents who are members of the 0.046 International Brotherhood of Electrical Workers (0.210) (1 = Yes; 0 = Other) Indicator for respondents who are members of the United 0.081 Food and Commercial Workers (1 = Yes; 0 = Other) (0.273)
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Union Affiliation Indicator variables were created for the four largest unions represented in the sample: the American Federation of State, County and Municipal Employees (AFSCME), the United Auto Workers (UAW), the International Brotherhood of Electrical Workers (IBEW) and the United Food and Commercial Workers (UFCW). The purpose of union affiliation was to explore the possibility of an effect on member voting behavior caused by the outreach performed by the regional offices of international unions. Definitions and descriptive statistics for the measures 6 are provided in Table 1.
EMPIRICAL SPECIFICATIONS Perception of Candidate As described above, one goal of this study was to provide a direct test of the causal relationship between union outreach and union member perceptions of political candidates. Accordingly, these panel data are analyzed using two-wave linear models, where the dependent measures are a function of the union political outreach, the stated strength of member preferences in wave one, and union affiliation. Equation (1) is the empirical specification for member perception: Pt = [30 + [31Pt-J + [321+ [33Mt-i + [34U + •
(1)
Pt is member perception of candidates just prior to the election (survey tWO), Pt-I is member perception of candidates before the outreach (survey one), Where
I is the union political information, Mt_ l is strength of member preference at survey one, and U is union member affiliation. Unbiased regression coefficients are given by 13, and e is a normally distributed error term.
Candidate Preference A similar specification is used to test the effect of union political outreach on candidate preference just prior to the election, denoted as C. Equation (2) provides the specification for member preference: C = [30 + [311+ [32Mt_l + [33U
(2)
Probabilistic values for candidate preference are expressed as a linear function of the receipt of outreach (I), the strength of member preference at survey one (Mt_l), and union member affiliation (U).
Revitalizing AFL-CIO Political Outreach Table 2.
135
OLS of Union Member Perception of COPE Endorsed
Congressional Candidate (Standard Errors in Parentheses). Independent Variable
Model 2.1
Model 2.2
Survey One Percept!on
0.715"** (0.031) Omitted 4.527 ** (2.011) 3.051 (1.982)
0.572*** (0.035) Omitted 3.688 (1.924) 2.973 (1.894) 6.362** (1.941) 4.541 (2.532) Omitted 10.251"** (2.990) 13.074"** (2.287)
No Outreach First 2 Mail Pieces 3rd Mail Piece Strong For COPE Lean For COPE Unknown Lean Against COPE Strong Against COPE Linear Preference
Model 2.3 0.578*** (0.350) Omitted 3.912" (1.927) 3.161 (1.898)
UAW IBEW UFCW
Observations Model R 2 Adjusted R 2
0.570*** (0.035) Omitted 3.434 (1.907) 2.682 (1.875) 5.614"* (1.940) 4.481 (2.510) Omitted 10.155"** (2.961) - 12.471"** (2.268)
4.865*** (0.636)
AFSCME
Constant
Model 2.4
16.988"** (2.135) 637 0.452 0.450
25.979*** (2.500) 637 0.503 0.498
13.953"** (2.083) 637 0.498 0.495
0.687 (1.787) 7.400*** (2.102) -2.218 (3.531) -4.919 (2.807) 25.310"** (2.586) 637 0.519 0.510
* p < 0.05; ** p < 0.01 ; *** p < 0.001 (all two-tailed tests).
RESULTS Perception of Candidate To understand the effect of political information on union member perceptions of candidates, parallel OLS regressions were performed for the COPE-endorsed congressional candidate and COPE-opposed
congressional candidate responses.
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The results for member perceptions of the COPE-endorsed candidate are in Table 2. For all models, the thermometer score for COPE-endorsed candidate in survey one was a strong predictor of scores in survey two. This suggests that there is considerable stability in the relative perceptions of candidates among union members during the two months preceding the election. Model 2.1 indicates that the overall perception scores for the COPE-endorsed congressional candidates increased during the two-month time period before the election. For those respondents in the control group, perceptions of the COPEendorsed candidates increased an average of 17 thermometer points. Political information appears to have had some effect on improving the perception of the COPE-endorsed candidate, indicated by positive and statistically significant coefficient for the first two pieces of literature. However, the magnitude of the impact is not substantial: receiving two pieces of political literature was associated with an average thermometer score increase of 21.5: only a 4.5 point gain over the control group. The marginal effect of the third piece was negative, but statistically insignificant. To explore whether changes in perception are related to pre-outreach political preference, Model 2.2 decomposes perception responses by strength of candidate preference in survey one. Strong early supporters of the COPEendorsed candidate demonstrated the greatest change in their perception of the COPE-endorsed candidate during the two months prior to the election. They had an average thermometer increase of 32 points, followed by respondents leaning toward the COPE-endorsed candidate, unknown respondents, respondents leaning against the COPE-endorsed candidates, and finally those respondents who were strong against the COPE-endorsed candidates. A test between Model 2.2 and nested Model 2.1 is statistically significant (F = 16.3; p < 0.001), indicating that the pre-outreach candidate preference variable adds explanatory power. The introduction of the candidate preference variable also reduces the estimated effect of the union outreach. Model 2.3 replaces the categorical pre-outreach preference variable with one that is continuous. The aim was to impose linearity on this variable to perform a more stringent test of the psychological perspective. Consistent with Model 2.2, the coefficient for Linear Preference is positive and statistically significant (p < 0.001). A one unit movement along the linear preference scale (i.e. stronger stated preference toward the COPE-endorsed candidate) produces an increase of approximately 5 thermometer points. Moreover, a comparison between Model 2.2 and 2.3 indicates no significant decline in predictive power by using the constrained variable (F = 2.16; p = n.s.). Model 2.4 introduces indicator variables for respondents affiliated with AFSCME, UAW, IBEW and UFCW. The omitted group includes respondents
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with other union affiliations. U n i o n m e m b e r s affiliated with the U A W increased their perceptions of the C O P E - e n d o r s e d candidate significantly m o r e than other union m e m b e r s in the sample. A test that this set of variables is zero is rejected (F = 4 . 9 9 ; p < 0.001), i m p l y i n g a relationship b e t w e e n union affiliation and change in candidate perception. Table 3 offers a parallel set o f m o d e l s for m e m b e r perceptions o f the C O P E o p p o s e d candidate. Consistent with the results f r o m Table 2, the survey one
Table 3.
O L S o f U n i o n M e m b e r Perception o f C O P E O p p o s e d C o n g r e s s i o n a l Candidate (Standard Errors in Parentheses).
Independent Variable
Model 3.1
Model 3.2
Model 3.3
Survey One Perception
0.712"** (0.036) Omitted 0.094 (2.408) 1.264 (2.370
0.602*** (0.042) Omitted -0.088 (2.364) 1.590 (2.332) -6.058* (2.377) -0.134 (3.014) Omitted 2.515 (3.362) 9.732** (2.730)
0.608*** (0.041) Omitted 0.274 (2.358) 1.678 (2.323)
No Outreach First 2 Mail Pieces 3rd Mail Piece Strong For COPE Lean For COPE Unknown Lean Against COPE Strong Against COPE Linear Preference
UAW IBEW UFCW
Observations Model R2 Adjusted R2
0.575 *** (0.042) Omitted 0.394 (2.346) 1.222 (2.306) 7.134** (2.366) 1.878 (3.001) Omitted 0.554 (3.358) 8.065** (2.867)
3.568*** (0.730)
AFSCME
Constant
Model 3.4
12.399"** (2.281 ) 537 0.430 0.426
16.811"** (2.730) 537 0.457 0.449
* p < 0.05; ** p < 0.01; *** p < 0.001 (all two-tailed tests).
24.914"** ( 3.399) 537 0.454 0.450
2.363 (2.339) 9.433*** (2.394) 0.846 (4.310) 0.351 \ (3.137) 21.882"** ( 3.141 ) 537 0.474 0.463
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perceptions of candidates are strong predictors of survey two perceptions, offering evidence of stability during the campaign cycle. More germane to our theoretical question, however, is the absence of an effect from the union political outreach. According to model 3.1, respondents increased their thermometer ratings of the COPE-opposed candidate by an average of 12 points, but the political outreach variables add little explanatory power. However, it does appear that the introduction of the pre-outreach candidate preference variables improves the fit of the model. A test comparing Models 3.1 and 3.2 is statistically significant (F = 6.56; p < 0.001). Most notable in Model 3.2 is the pattern of change exhibited by the pre-outreach candidate preference variables. The greatest movement toward the COPE-opposed candidate, an average of 27 thermometer points, is from those who expressed strong early support for the COPE-opposed candidate. The ranking of the magnitude of change in the thermometer scores then follows a pattern that is exactly inverse to the expressed support for the COPE-endorsed candidate: those leaning toward the COPE-opposed candidate, those respondents whose preference was unknown, those leaning for the COPE-endorsed candidate, and strong COPE-endorsed supporters. Once again, the linear preference variable is in the expected direction and statistically significant (p < 0.001). A one unit increase in the linear preference scale is associated with about a 3.5 point decline in perception of the COPE opposed candidate. A test comparing Models 3.2 and 3.3 indicate no significant loss of predictive power with the linear preference variable ( F = 0.80; p = n.s.). Thus, pre-outreach candidate preference is linearly associated with the change in perception for both the COPE-endorsed and COPE-opposed candidates. The finding of a relationship between the expressed strength of support for a candidate and changes in the perception of that candidate during the election cycle support the psychological perspective. Model 3.4 includes the four union affiliation variables. As a group, these indicators provide only marginal improvement in the model (F = 2.07; p < 0.085). Members of the UAW, however, do demonstrate suppression in their change in candidate perception. Estimates from Model 3.4 are that the increase in perception of the COPE-opposed candidate was approximately seven points less for UAW members compared to other union affiliations.
Candidate Preference The effect of political information on candidate preference switching was tested using ordered probit models, where the dependent variable indicates the strength of preference for the COPE endorsed candidate just prior to the election. Table
Revitalizing AFL-CIO Political Outreach Table 4.
139
O r d e r e d Probit of U n i o n M e m b e r C o n g r e s s i o n a l C a n d i d a t e Preference (Standard Errors in Parentheses).
Independent Variable
Model 4.1
Model 4.2
No Outreach First 2 Mail Pieces
Omitted 0.009 (0.132) 0.180 (0.129) 1.145"**
Omitted -0.033 (0.134) -0.193 (0.130) 1.187"**
(0.150)
(0.153)
0.124 (0.165) Omitted 0.753***
0.143 (0.166) Omitted 0.717"**
3rd Mail Piece Strong For COPE Lean For COPE Unknown Lean Against COPE
(0.188) Strong Against COPE
1.602"**
(0.162)
(0.163)
1.049 (0.105) 0.618 (0.100) 0.012 (0.098)
0.045 (0.129) 0.269 (0.139) -0.333 (0.232) -0.488* (0.194) --1.090 (0.123) -0.652 (0.118) 0.034 (0.116)
582 595.905 233.45 6
582 588.213 248.84 10
AFSCME UAW IBEW UFCW ixl t~2 ix3
Observations - Log L Model ×2 d.f.
(0.190) -1.544"**
* p < 0.05; ** p < 0.01; *** p < 0.001 (all two-tailed tests).
4 estimates the i m p a c t o f the union outreach on pre-election candidate preference (survey two), controlling for pre-outreach candidate preference. T h e e v i d e n c e suggests that the political outreach had no effect on m e m b e r preferences. Coefficients for 2 mail pieces and 3 m a i l pieces are statistically insignificant for all models. Rather, the findings show that candidate preferences
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are relatively robust during the political campaign cycle. Predicted probabilities from Model 4.1 are that 86% of those who strongly favored the COPE-endorsed candidate in August held the same view just before the election. Similarly, 74% of those who strongly favored the COPE-opposed candidate maintained their preference status. Model 4.2 includes the union affiliation variables. A likelihood ratio test indicates that the four union variables contribute significantly to the model fit (X2 = 15.38; p < 0.01). Further evaluation of the coefficients demonstrates remarkable variation across affiliated groups. The predicted probability that a UAW member was either strong or leaning toward the COPE-endorsed candidate just before the election was 81%, followed by AFSCME at 65%, the IBEW at 61%, and the UFCW at 49%. Understanding this variation will undoubtedly require the inclusion of demographic, organizational and economic factors that vary across union groups. However, the fact that these results were obtained after controlling for the pre-outreach candidate preferences implies that the outreach tactics by regional and local affiliates of these internationals explain some of the variation. Discussion and Limitations
The aim of this study was to test for an effect of COPE political education tactics on union member perceptions of, and preferences for, political candidates. In 1996, the Wisconsin AFL-CIO mailed a series of informational brochures on congressional candidates and campaign issues to the homes of union members. The outreach went beyond an endorsement: the brochures presented candidate positions on issues that were identified as important to union members, and the information contained in the brochures was referenced to candidate position papers and voting records. The WI AFL-CIO used this direct informational tactic to educate union members on the issues and ultimately persuade them to vote for COPE-endorsed candidates. This study tested the effectiveness of that approach using experimental methods. Contrary to rational voter theory of information and political behavior, the results provide little evidence that the outreach changed union members' voting pattems. A modest impact on union members' perception of the COPE-endorsed candidate was detected in the positive association between the first two mailings and union member perceptions of the COPE endorsed candidate. However, the coefficient for this measure becomes statistically marginal with the introduction of pre-campaign preference measures. Moreover, the third brochure, which contained the clearest comparative data, produced a coefficient that was negative and statistically insignificant. If union members were objectively
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141
digesting AFL-CIO information for electoral guidance, then one would expect a positive and sizeable effect from this final mailing. Further, the outreach had no impact on members' perception of the COPE-opposed candidate. Even more critical for labor, there was no association between the union sponsored outreach and shifts in union member preference toward the COPE-endorsed candidates. Returning to the formal tests, the weak support for hypothesis one and the rejection of hypotheses two and three stand in contradiction to the predictions based on the rational voter model. Why was the effect of the WI AFL-CIO outreach so miniscule? It may be that the AFL-CIO's effects are cumulative; shifting member preferences toward labor candidates gradually over multiple election cycles, and this study was unable to capture an effect due to a limited observation period. It may also be that local union bodies engaging in member communications at the workplace and in communities generate the most powerful forms of union persuasion. While this study did not directly measure local union activities, the union affiliation variables did demonstrate predictive power. Affiliation with the UAW, in particular, was associated with significant movement toward the COPEendorsed candidate and away from the COPE-opposed candidate. In post-election interviews, UAW officials described their political outreach as an ongoing, member-to-member process, which relies heavily on a strong steward system for the transmission of political information. No other union in the sample had such a comprehensive workplace-level strategy for political mobilization. The implication from these preliminary clues is that the most effective political outreach takes place at the union local or regional level, where grassroots political activities are an institutionalized dimension of union culture. Additional results from this study support the psychological voter model. One finding is that union members have opinions on candidates prior to exposure to any union political outreach, and for the majority these opinions are robust up to Election Day. This implies that the AFL-CIO may have to offer political education well before election time, perhaps on a continual basis, and in a form that distinguishes union sponsored information from competing political messages. A second, more compelling result was that the change in candidate perception leading up to the election tends to reinforce pre-campaign candidate preferences, supporting hypothesis four along with the theory that voters selectively evaluate information from general media sources to match political predispositions. If true, then organized labor may have to merge political mobilization activities with programs that build stronger member identification with the labor movement to overcome the tendency for voter polarization. In the very least, changing union member voting behavior seems difficult, and to meet the challenge organized labor will probably have to direct resources toward
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member-to-member outreach techniques. Experimental tests such as this would help labor evaluate local-level outreach techniques, hone their strategy, and effectively allocate resources. In drawing these conclusions, it is important to emphasize that this research was limited to three congressional districts in Wisconsin, and that only the informational activities of the W I A F L - C I O were tested. Future research on the relationship between A F L - C I O outreach and u n i o n voter behavior should be extended to other political districts, and to the activities of local and regional organizations. Testing a broader variety of A F L - C I O outreach tactics, such as candidate persuasion calls and get-out-the-vote drives, might prove valuable.
NOTES 1. The fourth piece was scheduled to arrive at union households at about the time the survey for this study was to be administered. Because I could not be reassured that the fourth mailing would arrive before the survey, it was omitted from the analysis. 2. Internationals and locals often conduct political outreach that is independent from the efforts by the state and regional AFL-CIO bodies. I was unable to censor survey respondents from these other forms of union outreach, and therefore must rely on the random assignment process to control for these effects. 3. The non-response breakdown is as follows: refusals, 374 (19% of sample); cannot locate (usually due to the lack of a telephone number) 285 (14% of sample); other non-response, 441 (22% of sample). In addition, 17 were unusable because they were located outside of the three congressional districts, and 8 were omitted because of returned mail. 4. Since respondents in the group that received three mall pieces also received the first two, the actual number of respondents that are exposed to the first two pieces of literature is 548. 5. Over 95% of the second surveys were completed before election results were announced on November 5. 6. Numerous other measures were collected in the survey, including the demographic variables age and sex. While age and sex are often systematically associated with political perceptions and preferences, tests indicated that these variables were distributed randomly across the three groups and that they did not interact with the union outreach. Age and sex were therefore omitted from the analysis to present a parsimonious report.
ACKNOWLEDGMENTS The author gratefully acknowledges Heejoon Park, Lydia Li, Craig Olson and Stuart Eimer for their comments on earlier drafts. This research was funded by a grant from the Wisconsin AFL-CIO.
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REFERENCES Alvarez, R. M. (1998). Information & Elections. Ann Arbor: University of Michigan Press. Ansolabehere, S., Behr, R., & Iyengar, S. (1991). Mass Media and Elections: An Overview. American Politics Quarterly, 19(1), 109-139. Ansolabehere, S., & lyengar, S. (1995). Going Negative: How Attack Ads Shrink and Polarize the Electorate. New York: The Free Press. Bochel, J. M., & Denver, D. T. (1971). Canvassing, Turnout and Party Support: An Experiment. British Journal of Political Science, 2, 257-269. Bowler, S., Broughton, D., Donovan, T., & Snipp, J. (1992). The Informed Electorate? Voter Responsiveness to Campaigns in Britain and Germany. In: S. Bowler & D. M. Farrell (Eds), Electoral Strategies and Political Marketing (pp. 204-222). NY: St. Martins Press. Campbell, A., Converse, P. E., Miller, W. E., & Stokes, D. E. (1960). The American Voter. New York: John Wiley & Sons, Inc. Campbell, D. T., & Stanley, J. C. (1963). Experimental and Quasi-Experimental Designs for Research. Boston: Houghton Mifflin. Cohen, J., & Rogers, J, (1983). On Democracy. New York: Penguin. Delaney, J. T., Masters, M. F., & Schowchau, S. (1988). Unionism and Voter Turnout. Journal of Labor Research, IX, 221-236. Delaney, J. T., Masters, M. F., & Schowchau, S. (1990). Union Membership Voting for COPEEndorsed Candidates. Industrial and Labor Relations Review, 43(5), 621-635. Downs, A. (1957). An Economic Theory of Democracy. New York: Harper & Row. Eimer, S. (1999). From 'Business Unionism' to 'Social Movement' Unionism: the Case of the AFL-CIO Milwaukee Labor Council. Labor Studies Journal, 24(2), 63-81. Eldersveld, S. J. (1956). Experimental Propaganda Techniques and Voting Behavior. The American Political Science Review, L, 154-165. Eldersveld, S. J., & Dodge, R. W. (1954). Personal Contact or Mail Propaganda? An Experiment in Voting Turnout and Attitude Change. In: D. Katz, D. Cartwright, S. Eldersveld & A. McClung Lee (Eds), Public Opinion and Propaganda. NY: Holt, Rinehart and Winston. Form, W. (1995). Segmented Labor, Fractured Politics. New York: Plenum Press. Greenstein, F. I. (1969). Children and Politics. New Haven CT: Yale University Press. Hart and Associates, Inc. (1995). A Nationwide Survey Among Union Members and the General Public on Politics and Legislation. Report to the AFL-CIO, May. Hess, R., & Tomey, J. (1967). The Development of Political Attitudes in Children. Chicago: Aldine. Himmelweit, H. T., Humphreys, P., Jaeger, M., & Katz, M. (1981). How Voters Decide: A Longitudinal Study of Political Attitudes and Voting Extending Over Fifteen Years. London: Academic Press. Hojnacki, M., & Baum, L. (1992). New Style Judicial Campaigns and the Voters: Economic Issues and Union Members in Ohio. The Western Political Quarterly, 45, 921-948. ICPSR, (1993). American National Election Study, 1992: Pre- and Post-Election Survey. InterUniversity Consortium for Political and Social Research. Ann Arbor. Jennings, M. K., & Neimi, R. G. (1968). The Transmission of Political Values from Parent to Child. The American Political Science Review, LX/l(1)(March), 169-184. Juravich, T., & Shergold, P. (1988). The Impact of Unions on the Voting Behavior of Their Members. Industrial and Labor Relations Review, 4•(3), 374-385. Master, B. (1997). A New Political Strategy For American Unions. Working USA, M.E. Sharpe, Inc. September-October, 16-29.
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Masters, M. F., & Delaney, J. T. (1987). Union Political Activities: A Review of the Empirical Literature. Industrial and Labor Relations Review, 40(3), 336-353. Patton, D. B., & Marrone, J. J. (1984). The Impact of Labor Endorsements: Union Members and the 1980 Presidential Vote. Labor Studies Journal, (Spring), 3-18. Sousa, D. J. (1993). Organized Labor in the Electorate. Political Research Quarterly, 46, 741-758. Sudman, S., & Bradburn, N. (1983). Asking Questions: A Practical Guide to Questionnaire Design. DC: Jossey-Bass. Wisconsin State AFL-CIO, (1996). Campaign for Working Families: Moving Forward Again. Issue Statement.
THE FEARS OF RESOURCE STANDARDIZATION AND THE CREATION OF AN ADVERSARIAL WORKPLACE CLIMATE: THE STRUGGLE TO ORGANIZE A FACULTY UNION AT ILLINOIS STATE UNIVERSITY Victor G. Devinatz
ABSTRACT In this article, I investigate the effect that the communication of an antiunion message delivered by faculty union opponents and the university administration had on a recent faculty union organizing drive at Illinois State University. Specifically, I argue that the Illinois State University Faculty Association's (ISUFA) certification election loss was due to the union opponents' effective communication of a message that having a faculty union and collective bargaining representation would impose more costs than benefits through the standardization of college and departmental resources across the university and by creating an adversarial climate between the administration and faculty members. Conversely, the union
Advances in Industrial and Labor Relations, Volume 11, pages 145-179. Copyright © 2002 by Elsevier Science Ltd. All rights of reproduction in any form reserved. ISBN: 0-7623-0853-2 145
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was ineffective in combating these two arguments by convincing faculty of the overriding benefits of unionization. The ISUFA failed to build a sufficient "community of interest" (or solidarity) among the faculty by focusing on a single issue or a set of related issues that extended to university-wide issues as a whole or to external issues that confronted the faculty as a profession. The article concludes with lessons learned from the campaign.
INTRODUCTION For many people, academic labor is not really considered to be labor. Even the lowest rung of academic labor, graduate research and teaching assistants, are often considered by many people to be a privileged class of individuals. For example, witness the attitude of the Omaha World-HeraM in its analysis of the Yale teaching assistants' (TA) grade strike at the end of the 1995 fall semester in the Graduate Employees Student Organization's drive to achieve collective bargaining with the Yale University administration. In spite of facing long and arduous graduate programs, an academic job market that would provide few of these TAs with tenure-track positions upon the completion of their doctorates, and average compensation a bit less than $10,000 per year in 1995, Omaha's newspaper opined: Yale's 721 teaching assistants are already part of the Information Age's new aristocracy ... At Yale, they will begin building lifelong networks of other influential people, meet brilliant scholars of the opposite sex, marry, have brilliant children and generally live the life of Riley. Talk about the haves and the have-nots: Yale's teaching assistants are among the most pampered people in America (cited in Watt, 1997, p. 229). And if graduate TAs and research assistants as the lowest stratum of academic labor are considered to be privileged, how are college and university tenured and tenure-track professors, as the highest stratum of academic labor, viewed by the populace as a whole? Nevertheless, at the end of the twentieth century and the beginning of the twenty-first century, college and university faculty are confronted with a variety of problems including attacks on the tenure system (Aronowitz, 1997), the dramatic increase in the hiring of part-time faculty in the academy since 1970 (Pratt, 1997; Thompson, 1997), the growth and implementation of distance learning (Rhoades, 1998), low salary increases and the corporatization of the university with its consequent threat for the traditional shared governance system between faculty, administrators and university governing boards (Aronowitz, 2000). Because of these conditions, faculty have conducted unionization campaigns in recent years at a number of colleges and
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universities, including research institutions such as Southern Illinois University (SIU) and the University of Minnesota. Thus, at the start of the twenty-first century, collective bargaining appears to be a practical solution for dealing with major threats to academic labor, to further encourage a democratic culture of higher learning in colleges and universities, to expand workplace justice for the professoriate and to preserve the pursuit of truth in the academy which is under attack from a variety of external sources who believe that institutions of higher learning should be operated according to the business model. The purpose of this paper is to discuss the attempt to create a faculty union at Illinois State University (ISU) by examining the dynamics of the Illinois State University Faculty Association's (ISUFA) organizing campaign from the first exploratory meeting held at the end of July 1998 until the representation election in March 2000. In analyzing a faculty union organizing drive at Queen's University (Kingston, Ontario), Rastin (2000) demonstrates the importance of the communication of the union's message to the faculty (in this case, an emphasis on collegiality in generating support for the union) in establishing an organizing climate that led to a successful certification vote. I use the same concept of examining the role of communication in ISUFA's organizing drive from a slightly different point of view; I investigate the effect that the communication of an anti-union message delivered by the administration and an anti-union faculty group had on creating the organizing climate which led to an unsuccessful certification election vote. Specifically, I argue that a major factor in the ISUFA's loss in the certification election was due to the union opponents' effective communication of a two-pronged message that unionization would impose significantly more costs than benefits for the university's faculty. First, according to the union opponents, having a faculty union would lead to the standardization of college and departmental resources across the university. Second, the union opponents argued that collective bargaining representation would disrupt the harmonious and collegial environment between the faculty and administration at the university, thus creating an adversarial workplace climate in which decision making would occur. Conversely, the union was ineffective in combating these two arguments by convincing faculty members of the overriding benefits of unionization. It failed to build a sufficient "community of interest" (or solidarity) among the faculty by focusing on a single issue or a set of related issues that extended to university-wide issues as a whole (salaries, faculty governance, etc.), or to external issues that confronted the faculty as a profession (increase in non-tenure track positions, attacks on the tenure system, etc.).
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The primary anti-union message communicated by administrators and a faculty anti-union group, the Faculty for Shared Governance (FSG), played upon the fears of faculty members that unionization would potentially lead to the equalization of resources across the university which would have negative consequences for a number of individual departments. Therefore, the message that the administration and the FSG sent to the faculty was the following: you will be better off as individuals and departments in continuing to compete for university and college resources than to take a chance on collective bargaining which will lead to a uniformity of outcomes and conditions for all faculty members. Thus, for many faculty members at ISU, unionization may have been perceived as a mechanism which could hurt them on an individual (or departmental) level rather than as a vehicle for improving the situation for faculty as members of the university community or as members of the professoriate as a whole. The success of the "standardization of resources" argument in leading to the defeat of the ISUFA in the certification election can best be explained by the median voter model of union behavior (White, 1982; Demsetz, 1993; Babcock & Engberg, 1999). If the outcome of a union certification election is determined by a simple majority vote of the bargaining unit and the voters' preferences are well ordered (that is, single-peaked) and a function of one variable, the median voter's preference is the result that will defeat all other outcomes in a series of pairwise elections (Kaufman & Martinez-Vazquez, 1988). Based on the array of faculty salaries and departmental allocation of resources, the median member most likely falls within the College of Arts & Science (CAS).With respect to applying the major principle of the median voter model, the fear of the union opponents was that faculty members in CAS would align with the low salary/low resource departments of the College of Fine Arts (CFA), forming a majority coalition in favor of union representation and thus redistributing salaries and resources from the high salary/high resource College of Business (COB) and College of Education (COE) departments to the CAS. This concern over salary and resource leveling was probably a major reason for the ISUFA's loss in the certification election and will be analyzed in greater detail in the conclusion of this article.
THE W H E E L E R AND M c C L E N D O N T H E O R Y OF EMPLOYEE SUPPORT FOR UNIONIZATION A useful guide for understanding the unfolding and the outcome of ISUFA's organizing campaign is the integrative model of union joining developed by
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Wheeler and McClendon (1991). According to this model, three "paths" exist to union organization. One path, the rational calculation path, involves each employee deciding on whether to vote in favor of union representation based on the individual's subjective judgment of the benefits and costs that will occur if the union wins the representation election. If the employee believes that the anticipated benefits will exceed the anticipated costs of having a union, then a vote will be cast for the union. However, if the employee believes that the costs will exceed the benefits, then the employee will vote against union representation (Holley, Jennings & Wolters, 2001). A second path, the emotional path, in Wheeler and McClendon's (1991) model posits that an individual will take action against an employer and move towards supporting unionization if an employee experiences either a specific threat or a particular frustration imposed by the employer with respect to the individual' s current conditions of employment (such as the employer decreasing pay or refusing to give employees pay raises). However, this support for unionization may be modified by either facilitating conditions or inhibiting conditions. Facilitating conditions include solidarity, instrumentality, and saliency, that is, the occurrence of certain events or leaders making unionization appear attractive. Inhibiting conditions include fear of employer sanctions against the employee for supporting unions and norms opposed to supporting unionization. For example, in a study of employer campaign tactics, Lawler (1990) reports that 25.9% of employers commit unfair labor practices by discriminating against union supporters during the unionization drive. The third (and final) path, the political/ideological beliefs path, posits that an employee will support unionization based on the individual's ideological commitment to unionism. The role of the rational calculation path in the union organizing drive will be discussed in the section below. The roles of the emotional path and the political/ideological beliefs path will be discussed at relevant points later in the paper.
PERCEIVED BENEFITS AND PERCEIVED COSTS OF FACULTY
UNIONIZATION
AT ISU
With respect to utilizing the rational calculation path throughout the union organizing drive, the ISUFA presented the following benefits that could be potentially obtained if faculty members chose unionization although, as mentioned earlier, it did not focus the campaign around a single issue (or a set of related issues) in order to attract support: faculty salaries will increase; the faculty would gain more representation in the decision-making process; the faculty would have an independent organization providing
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representation; the faculty would have an independent forum for discussing professional issues; more tenured/tenure-track faculty would be hired and the faculty would obtain more support for research. The FSG, on the other hand, outlined the following potential costs that would be imposed on the faculty if unionization was achieved, while basing its campaign on the two specific issues mentioned above: another level of bureaucracy would be added to the decision-making process; all faculty members would be required to pay union dues; there would be increased polarization between faculty and administrators; both faculty members and individual departments would lose autonomy in negotiation over university resources; faculty members will go on strike; there will be fewer resources for the library, computers and research; union decisions will be made in an undemocratic manner and there will be more outside intervention from union staff, mediators and lawyers. In utilizing the rational calculation path, the union's strategy was to attempt to cobble together a coalition of faculty members by appealing to each faculty member on one (or more) of a number of benefits outlined during the organizing campaign. The union felt that this strategy would lead to a successful certification election outcome because it believed that a majority of faculty members would identify strongly with at least one of the union's positions on the issues that the union presented in its platform and during the organizing drive. On the other hand, the FSG's strategy was to try to get faculty members to vote against unionization by focusing its anti-union message on two potential costs of faculty collective bargaining, as mentioned above, the standardization of departmental/college resources across the university and the creation of an adversarial workplace climate. As will be elaborated on throughout this article, a majority of faculty members did not believe that having the ISUFA represent them for collective bargaining purposes would be in their self-interest. Rather, they felt that the FSG's vision of what would happen with respect to resource allocation at the university would be more likely to occur. Specifically, these faculty members feared that an intemal redistribution of resources from high salary/high resource colleges and departments to low salary/low resource colleges and departments within the university was most likely to occur.
BRIEF HISTORY OF F A C U L T Y COLLECTIVE B A R G A I N I N G IN THE UNITED STATES Faculty collective bargaining in the United States has been in existence for a little over three decades, dating back to the late 1960s (Cameron, 1982). In the first decade of faculty unionization in institutions of higher education, from
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1969-1979, the number of unionized faculties increased approximately tenfold from 24 to 227 (Garabino, 1980). However, by 1980, faculty unionism in the private sector experienced a major setback with the Supreme Court's Yeshiva decision. In this decision, the Court restricted the right of faculty members at private colleges and universities to unionize when it ruled that Yeshiva University faculty were "managerial employees" and thus did not have statutory rights to negotiate under the National Labor Relations Act (Douglas, 1990). While the common perception of academic collective bargaining is that the process is still mostly limited to public sector primary and secondary school teachers, unionization among college and university faculty has reached major proportions. In 1994, there were 242,221 faculty located on 1,057 campuses that were covered by collective bargaining agreements (Rhoades, 1998) with 98% of the faculty covered by labor contracts being represented by three labor organizations, the American Association of University Professors (AAUP), the National Education Association (NEA) and the American Federation of Teachers (AFT) (Annunziato, 1994). Furthermore, faculty unionization is fairly concentrated with respect to geography. Even though collective bargaining units for faculty are present in 31 states, 50% of all faculty union members are found in California and New York and 83% of faculty covered by collective bargaining agreements are found in 10 states which include California, New York, Pennsylvania, Connecticut, New Jersey, Michigan, Florida, Massachusetts, Washington and Illinois (Annunziato, 1994). Although faculty at research universities are largely non-union, with major exceptions being the State University of New York system and Rutgers University, approximately 44% of full-time faculty (if part-time faculty are included with full-time faculty, the figure falls to 26%) possess union representation on 29% of all campuses throughout the United States. If one only considers the unionization of full-time faculty in public universities, union density increases to 63% of full-time faculty members and 60% of institutions. Eliminating the public research universities from this tally, unions represent 89% of all faculty members. Compared with the 1994 union densities for the workforce as a whole (16%) and the private sector workforce (12%), unionization rates among college and university faculty were considerably higher (Rhoades, 1998). In the early 1970s, the primary issues of concern leading to faculty unionization centered on economic issues, specifically dissatisfaction with current salary levels and fringe benefits (Williams & Zirkel, 1989). However, within a few years, faculty discontent spread to include concern over nonmonetary issues such as" (1) fewer new positions restricting jobs for new entrants and mobility for senior faculty members; (2) more difficulty in obtaining tenure;
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(3) worsening working conditions because of increased teaching loads, outside income limitations, a decrease in the availability of sabbaticals, and the encouragement of early retirement; and (4) threatened layoffs for research staff, administrative professionals and contingent (part-time and temporary) faculty (Garbarino, 1973). Because of these concerns, contractual clauses dealing with personnel issues (specifically, appointment, dismissal, tenure, seniority, staff reduction, and promotion) and governance issues, (that is, the faculty member's perceived role in institutional decision making) were included in faculty collective bargaining agreements throughout the mid-1970s and 1980s (Williams & Zirkel, 1989). With the onset of the 1990s, college and university faculty have been confronted with budget crises in higher education that have resulted in downsizing of institutions of higher education, reduction and/or elimination of academic programs leading to, in certain situations, faculty layoffs (Graf et al., 1994) as well as renewed attacks on faculty governance, tenure and academic freedom (Rosenthal et al., 1994; Pratt, 1994). In addition, in the 1990s, faculty are working longer hours - an average of 54 hours per week - compared with an average workload of 45 hours per week in 1977 (Rosenthal et al., 1994).
DETERMINANTS OF SUPPORT FOR UNIONIZATION AMONG C O L L E G E / U N I V E R S I T Y FACULTY A multitude of studies exist outlining the determinants of faculty support for unionization at colleges and universities. Economic factors are clearly the primary reasons for the unionization of college and university faculty in the United States (Graf et al., 1994; Hemmasi & Graf, 1993; Williams & Zirkel, 1989; Ponak et al., 1987; Jones, 1986). Studies have consistently found the existence of an inverse relationship between salary levels and faculty support for unionization (Ali & Karim, 1992; Karim & Ali, 1993; Ausieker, 1976; Begin & Browne, 1973; Graf et al., 1994; Hemmasi & Graf, 1993; Ladd & Lipset, 1973). College and university faculty members who feel that their salaries are inadequate are more likely to possess positive attitudes toward unionization (Barbezt, 1989; Gress, 1976; Williams & Zirkel, 1989). A related finding is that faculty members who find their salaries to be deficient, even if their salary levels were equivalent to academicians at similar schools, were more likely to become members of the union (Alien & Keaveny, 1981; Bigoness, 1978; Hemmasi & Graf, 1993; Ponak et al., 1992). In summary, the major determinant of unionization in institutions of higher education is faculty dissatisfaction with their compensation packages (Kochan, 1980).
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With respect to university governance issues, several studies have found that degree of participation in self-governance is a major factor contributing to faculty members feeling positively about unionization (Ali & Karim, 1992; Karim & Ali, 1993). Faculty members who felt that they had little input in decision making and wanted to have a higher level of participation were more likely to support unionization (Graf et al., 1994; Hemmasi & Graf, 1993). Based on demographic characteristics, there is differential support for unionization among sub-groups of faculty members. Bigoness (1978) found the existence of an inverse relationship between positive attitudes towards unionization and age, academic rank, and salary. With respect to field of study, social scientists demonstrated the most support for unionization, followed by professors working in the humanities and the natural sciences. Faculty members teaching in business, engineering and related applied fields were least likely to be in favor of unionization (Feuille & Blandin, 1974; Ladd & Lipset, 1973). Because of tenure and job security concerns, younger, untenured professors were found to be more favorably predisposed towards unionization (Ali & Karim, 1992; Karim & Ali, 1993). With respect to working conditions at colleges and universities, job satisfaction has been found to be consistently related to support for faculty unionization (Zalesny, 1985). Bigoness (1978) discovered that job dissatisfaction (concerning work, pay, supervision, and promotional opportunities) was significantly related to support for faculty unionization. Other studies have found an inverse relationship between specific and overall job satisfaction at work and attitudes toward faculty unionization and pro-union voting behavior (Hemmasi & Graf, 1993; Heneman & Sandver, 1983). Although compensation issues are the major determinant of faculty unionization attempts, other single issues can ignite such organizing drives. For example, the organizing campaigns at the University of Minnesota and SIU were "hot shop" campaigns because of perceived crises by faculty members a proposed draconian revision of the tenure code in the case of Minnesota (McClure, 1999) and extreme faculty dissatisfaction with university governance at SIU (Magney, 1999). However, in contrast at ISU, a "cold shop" campaign ensued because the union did not develop and utilize the emotional path as outlined in Wheeler and McClendon's (1991) model during this drive. In other words, there were no specific single issues that led to a majority of faculty members feeling threatened and/or frustrated on an individual basis and that subsequently galvanized the majority of faculty members to support unionization. While there was considerable support for the ISUFA, affiliated with the National Education Association (NEA)/Illinois Education Association (lEA), to represent faculty at ISU for collective bargaining purposes, the ISUFA lost the
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representation election on March 8, 2000 by a margin of 335 votes (54%) to 283 votes (46%). NOTE
ON THIS
STUDY'S
METHODOLOGY
Before I begin my analysis let me briefly comment on the methodology used in this article. As a member of the ISUFA Steering Committee, and the lead organizer in the College of Business (COB), this paper is based on participant observation and is an ethnographic study of the organizing drive from its inception until the holding of the certification election. I engaged in discussion concerning the unionization drive with the vast majority of faculty in the COB, as well as individual faculty members in other departments, and I kept notes throughout most of the organizing drive. In addition, I was involved in all major aspects of the organizing drive and have a (virtually) complete collection of the written material distributed by the ISUFA, the administration, and the FSG, the faculty anti-union group that emerged in February 2000. BRIEF
HISTORICAL BACKGROUND TO THE ISUFA'S ORGANIZING DRIVE
The ISUFA organizing drive came within a few years after votes of "no confidence" of ISU president Tom Wallace in the summer of 1995 and ISU provost John Urice in the fall of 1997. The vote against Wallace was prompted by his uncompromising attitude that it was acceptable that he received large (and secret) salary supplements from the ISU foundation; another factor which hurt Wallace among faculty members was his perceived arrogant attitude that he should be allowed to run the university as he saw fit. As in the case with Wallace, Urice's vote of "no confidence" was precipitated by a belief among the faculty that the provost operated in an arrogant and authoritarian manner in carrying out his official duties. After the brief presidency of David Strand (1995-1999), Victor Boschini assumed the post of president of ISU in July 1999; former College of Fine Arts (CFA) Dean Alvin Goldfarb was appointed provost in July 1998. As dean of CFA, Goldfarb had developed a well-deserved reputation of being a strong faculty advocate. Boschini, having served as vice president of student affairs at ISU for a little over a year, did not have much of a track record but was similarly viewed as being "faculty-friendly." Thus, the Boschini-Goldfarb team was perceived quite favorably by a large segment of the faculty (including many union supporters) in contrast to the Wallace-Urice administration of the early to mid-1990s.
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In addition to having problems with the university administration, the faculty experienced problems with the newly reconstituted Board of Trustees. After the dissolution of the Board of Regents, which governed Illinois State University, Northern Illinois University and the University of Illinois-Springfield (formerly Sangemon State University), each of these universities received its own Board of Trustees that was responsible for governing the university. With the need to rewrite the ISU constitution because of the implementation of the new governing board, a conflict with the Board of Trustees developed in 1997. Faculty concern over the future of shared governance peaked in 1998 "when the Board adopted a new constitution in 1998, without the consent of the Academic Senate." The standoff with the Academic Senate ended in January 1999, when the Board of Trustees issued a Memorandum of Understanding that outlined the faculty's "primary responsibility for academic issues, faculty affairs issues and educational issues related to student life." The return of faculty prerogatives contained in the Memorandum led to a vote in which the Academic Senate overwhelmingly approved the new constitution ("Has Shared Governance Broken Down at ISU?" 8 February 2000).
THE FIRST STAGE OF THE CAMPAIGN, JULY 1998-JANUARY 1999 The first meeting to explore the possibility of unionization at ISU occurred at the end of July 1998 at the university's student center. Hazel Loucks, IEA's Higher Education Director at the time, led the informational meeting that was attended by six faculty members. A second exploratory (and informational) meeting was held early in September 1998 that was attended by 25 faculty members; several other informational meetings, led by the lEA, were held throughout September that were sparsely attended. However, what emerged from these meetings was the realization that there was a small (but committed) core of faculty members willing to undertake the rigors of a faculty organizing drive. Towards the end of September, a number of the core activists decided that it would be a good idea, out of respect, to approach Hank Campbell, the president of the AFT local on campus, to determine if the AFT had any interest in conducting a unionization drive among ISU faculty. The APT and the AAUP had unsuccessfully competed against each other in an attempt to unionize the ISU faculty in the late 1980s although a small inactive group of AFT members remained on campus. A meeting was held with Campbell at the end of September 1998, attended by a dozen union activists, to discuss the AFT local's position on staging a union organizing drive. Campbell's position was that he did not think
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that unionization could succeed at ISU at this time and was even skeptical that authorization cards could be collected from a sufficient number of faculty members in order to qualify for the holding of a certification election. With this information, the small group of approximately 15 union activists decided to form a Steering/Organizing Committee and to affiliate with the NEA/IEA. Although a major issue that provided the impetus for beginning the organizing drive at this time was the conflict occurring with the Board of Trustees, this core group of activists was composed of a majority of faculty members who were ideologically committed to unionism although a few of these activists supported unionism because of many years of dissatisfaction with a succession of university administration regimes. Therefore, this core group differed from the vast majority of ISU faculty members in taking the political/ideological path (Wheeler & McClendon, 1991) in its support for collective bargaining. These activists did not support unionization simply on the basis of developing a balance sheet on the perceived benefits and costs of faculty unionization. Unfortunately, as will be discussed in more detail in the article's conclusion, this political/ideological path was, on balance, a negative influence in the unionization campaign because relatively few ISU faculty members, mostly concentrated in the history, sociology and political science departments, were ideologically committed to unionism. From October 1998 through the beginning of December 1998, the committee met once or twice a week in the evenings to hammer out a platform for the ISUFA. Each meeting lasted for approximately two hours and potential planks were discussed among the participants in a vigorous yet non-confrontational manner. In the final platform, there were 10 planks that the Steering Committee felt were issues of concern to the ISU faculty as a whole and around which to unite the faculty in constructing a democratic academic unionism, hopefully culminating in a successful certification election vote. Included in the platform were the following planks: a commitment to "meaningful shared governance" at ISU in which the faculty would "exercise primary responsibility for the academic program and faculty status decisions" as well as "an appropriate role in all university decisions"; support for the Academic Senate's "continuing adherence to the principles of shared governance," as contained in AAUP principles; "full participation" in all university decisions concerning the budget and resource allocation; the preservation of disciplinary diversity; the promotion of cooperation among faculty throughout the university; the implementation of policies providing child care, maternity leave and "flexible tenure clocks" in certain situations; "the introduction of new technologies such as distance learning" when such techniques do not result in faculty exploitation and lead
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to enhancement of the educational experience for students; a non-negotiable maintenance of tenure; the guarantee of academic freedom as outlined by AAUP principles, and the democratic participation of all union members in all collective bargaining decisions. The platform was distributed to the faculty members through their university mailboxes during finals week in December 1998 and, again, when classes resumed in January 1999 ("Illinois State University Faculty Association Platform" 21 January 1999).
THE ASSESSMENT & THE AUTHORIZATION CARD DRIVE, JANUARY 1999-DECEMBER 1999 At the end of January 1999, a public meeting was held to officially launch the ISUFA. Besides the attendance of approximately 70 faculty members, the meeting was well attended by the media, which included the local television stations, radio stations and newspapers. Ron Strickland, the ISUFA president and a professor in the English department, made some brief remarks inaugurating the organization before inviting the attendees to stay for the buffet lunch. Beginning in the 1999 Spring Semester and continuing into the summer of 1999, the ISUFA engaged in an assessment of all tenured and tenure-track faculty members employed by ISU. Departmental representatives conducted this procedure and the purpose of this assessment was to determine the faculty's initial reaction towards faculty unionization and collective bargaining. For departments that had no representatives, union activists telephoned faculty members from the IEA office in both April 1999 and June 1999. Approximately 580 faculty (of 680 faculty) were assessed through this procedure and the results indicated that a little more than one-third were in favor of faculty unionization, one-third were undecided and a little less than one-third were opposed to faculty unionization. Many members of the Steering Committee were encouraged by these results, especially a number of the veterans from the earlier unionization attempt in the late 1980s, because of the support present in the COB. Although in the previous campaign, there was virtually no support in this college, the assessment indicated that approximately one-third of COB faculty supported faculty collective bargaining. After the tabulation of these results, it was decided that the authorization card drive would be launched at the start of the 1999 Fall Semester. A decision was made at this time to only solicit cards from faculty members who supported the union. The reasoning behind this decision was that the union wanted to have a good idea with respect to the union's base of support before filing for a certification election. Because of rules established by the Illinois Education Labor Relations Board (IELRB), the union had a six-month period
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to collect authorization cards. Since the first cards were collected at the end of August 1999, the ISUFA had until the end of February 2000 to file for a certification election with the labor board. During the first few weeks of the authorization card drive, cards were collected rather quickly and easily. In the four-week period from September 14, 1999 to October 12, 1999, over 150 authorization cards were signed and by the end of this period, the ISUFA had exceeded the 30% minimum required to file for an election. However, while it had taken only six weeks to collect cards from 30% of the bargaining unit, it took another six weeks to collect an additional 10% of cards from bargaining unit members. Thus, by Thanksgiving, the ISUFA had collected cards from a little more than 40% of the eligible bargaining unit. The breakdown by college is presented in Table 1. It is not surprising that there were differential success rates between the various colleges during the authorization card drive. The strongest support came from the Colleges of Arts & Sciences (CAS), Fine Arts (CFA) and the Library. The weakest support came from the Colleges of Applied Science & Technology (CAST) and Nursing. It should be noted, however, that the total lack of support in the College of Nursing may have been due to the fact that it became part of ISU in July 1999 and had only seven tenured/tenure-track faculty members at the time of the card drive. Nevertheless within the CAS and CAST, there were major differences with respect to support during the card drive. For example, in six departments within CAS, which included History, Sociology & Anthropology, Foreign Languages, Political Science, Philosophy and Psychology, 75% of the faculty members had signed cards. However, within the physical sciences departments, which included Biology, Chemistry and Physics, only 14.8% of these faculty members signed cards. In the CAST, 66.7% of the faculty members in the Criminal Justices Department signed cards while only 7.4% of the faculty members in the departments of Agriculture and Health Sciences signed cards. These results are generally consistent with past studies indicating that social science and Table 1.
Faculty Signature of Authorization Cards.
College Affiliation Applied Science & Technology Arts & Sciences Business Education Fine Arts Library Nursing
Percentage Signed 24.3 51.4 41.3 40.0 48.8 48.3 0.0
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humanities professors are more likely to support faculty unionization than professors in business or related applied fields (Feuille & Blandin, 1974; Ladd & Lipset, 1973). While the union was collecting cards during the 1999 Fall Semester, the ISUFA attempted to obtain support from the ISU chapter of the AAUP. The ISUFA believed that the AAUP's endorsement of the organizing drive might help sway undecided faculty members to support unionization. Although the organization's membership was somewhat passive and fairly inactive throughout the 1990s, the chapter's activist leadership did a good job of keeping the faculty informed of developments at the university that could negatively impact the faculty. Even though approximately two-thirds of the AAUP membership had signed authorization cards by the end of November 1999, there was still a significant percentage of AAUP members who were opposed to both faculty unionization and to the organization's endorsement of the organizing drive. While a number of undecided AAUP members had grown more sympathetic to the organizing drive from fall 1998 to fall 1999, certain members were concemed with the views of the national AAUP office concerning the organizing drive. In order to resolve this issue, Pat Shaw of the national office attended a meeting of the local chapter in November 1999. Shaw stated that the national AAUP's position was that whenever an organizing drive occurred among faculty on a campus, the AAUP would not interfere with organizing efforts but would support the unionization drive. A meeting of the ISUFA Steering Committee was held on the evening of November 22, 1999 to discuss when to file with the IELRB for a certification election. The choice of the dates boiled down to December 6, 1999 or early January 2000 although it was determined that a final decision would not be made until the meeting with the AAUP in early December. However, most of the Steering Committee members were leaning towards early January so that the election could be held by early March 2000. Although no faculty anti-union group had emerged during the collection of authorization cards, as was the case during the last organizing drive at ISU, the feeling was that filing in early January 2000 would provide the ISUFA with a better opportunity to respond to a potential anti-union campaign conducted by the administration over the four-week break between the two semesters. At the meeting of the ISUFA and the AAUP held in the late afternoon on December l, 1999, the AAUP representatives present favored the endorsement of the ISUFA organizing drive and they promised the ISUFA representatives that they would poll the AAUP membership in January concerning an endorsement. In addition, the AAUP representatives requested that the ISUFA endorse the AAUP's principles on academic freedom, tenure and shared governance.
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On the evening of December 1, 1999, the ISUFA Steering Committee met to discuss the ISUFA/AAUP meeting held earlier in the day and to finalize the date concerning when the ISUFA should file for a certification election with the IELRB. After a short discussion of the meeting, the ISUFA Steering Committee agreed to endorse the AAUP's principles. An animated discussion occurred of when to file for the certification election. Peter Miller, the IEA staff organizer, argued in favor of delaying this decision and called for the Steering Committee to spend the next three months continuing to collect authorization cards, or until the ISUFA had signed authorization cards from at least 50% of the potential bargaining unit. Miller felt that filing with only a little over 40% of cards was too risky in terms of the union winning the certification election. Although the Steering Committee members were not philosophically opposed to Miller's position, from a practical standpoint, they felt that this position was untenable. Since the number of signed authorization cards had slowed to a trickle within the past two weeks, committee members believed that even if an intensive effort was made over the next three months, the 50% mark could not be achieved. In addition, only a handful of Steering Committee members were still actively soliciting cards and they concurred with the other committee members concerning the possibility of collecting many more cards. While there was not a clear consensus among the committee members of whether to file in early to mid-December or in early January, the Steering Committee members decided to file for an election around December 10, 1999 with the goal of having the election by the middle of February 2000. Six days later, on December 7, the ISUFA Steering Committee met to discuss the establishment of committees for work on the union organizing drive once the ISUFA filed for an election with the IELRB. THE
ELECTION
CAMPAIGN,
JANUARY 2000-MARCH 2000 The campaign for ISUFA's representation election was officially kicked off on January 20, 2000 with a buffet lunch held for all tenure-line faculty members. One day later, on January 21, a four-page memorandum was prepared by Sharon Stanford, Associate Vice President for Academic Administrative Services, which was composed of "frequently asked questions" concerning collective bargaining with answers and was distributed to all tenure-line faculty members. In both tone and content, the memorandum appeared to be neutral, objective and informative. However, the second question - " W h a t is negotiable under collective bargaining?" - answered, "In short, almost everything" and provided a list of "negotiated items" included as provisions of the collective bargaining
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agreement negotiated between The Board of Trustees of SIU and the SIUCFA IEA/NEA. In addition, the answer concluded, "The agreement also included a section on Board of Trustee Rights including the following": Section 1: As long as such actions and decisions are consistent with the other express
Articles of this Agreement, it is understood and agreed that the Board, on behalf of the University, retains and reserves all of its powers and authorityto direct, manage,and control all operations and activites (sic) of the Universityto the full extent of the law... (Stanford, 2000). The inclusion of this section of the contract in the memorandum was clear; even with a negotiated collective bargaining agreement, the Board of Trustees would still retain the right to run the university as it wishes to, thus attempting to undercut one of the union's major issues that it was trying to rally faculty members around - the threat to shared governance by the current Board of Trustees. At the end of January and the beginning of February, an e-mail ballot concerning whether the ISU AAUP chapter would officially endorse the ISUFA organizing drive was held. During this period, a spirited debate occurred over the proposed endorsement through the exchange of e-mails. Requiring a two-thirds majority to obtain endorsement of the union organizing drive, the proposal was decisively voted down by a margin of 12 votes for endorsement to 14 votes against endorsement. In an attempt to continue to educate the faculty concerning collective bargaining, the ISUFA organized a weekly forum series, beginning on January 27 and running through February 24, which included topics such as what unions can do for faculty, an open discussion of faculty collective bargaining at ISU, collective bargaining in higher education, collective bargaining among physicians, and the use of interest-based (also known as "win-win" or mutual gains) bargaining by faculty unions and university administrations. The first forum, in which Professor Stanley Aronowitz of the City University of New York spoke, had the best attendance with approximately 70 people in the audience. The open discussion of faculty collective bargaining at ISU, the second forum, produced a lively discussion among union supporters and union opponents and had 30 faculty members in the audience. The remaining forums only had approximately l0 people in the audience. Through early February, the major problem confronting the ISUFA was trying to educate and mobilize a faculty that had little knowledge of the mechanics of collective bargaining. Up to this point in time, there had been little overt opposition to the organizing drive by the university administration and no organized opposition from any anti-union faculty groups. The only visible opposition to the ISUFA's campaign came from a small number of individual faculty members, from different departments, who appeared to
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operate in a disorganized and independent manner. However, this situation had changed by the middle of February with the organization of an anti-union faculty group named the Faculty for Shared Governance (FSG). Although not explicitly identifying itself or its organizational structure until relatively late in the campaign, the group described itself as "a loosely-knit alliance of faculty members from all across campus" with "no formal leadership structure" or "official "steering committee" ," but with "an editorial board in crafting and editing our memoranda." Three faculty members from different departments in the CAS "served as the public spokespersons for the group" which included Neil Skaggs, a conservative economics professor, George Gordon, a self-described "pro-labor liberal" out of the Political Science Department and Charles Harris, a former chair of the English Department and an AAUP member. An additional eight faculty members from a variety of departments served as editorial board members. Finally, the FSG argued that none of its members was an "administrator" but that all of its members were "full-time, tenure-track faculty members." As an organization, the FSG engaged in two major activities during its short life. It distributed, what it referred to as "informational memoranda" to faculty though the university's e-mail system as well as organizing "debates" between ISUFA representatives and FSG representatives in half of the university's colleges. However, FSG members did not appear to engage in much, if any, one-on-one contact with ISU faculty members. The ISUFA/FSG Debates on Collective Bargaining
Upon the organization of the FSG, there were a number of colleges throughout the university that wanted to hear the positions of these two organizations with respect to unionization. In a period of a little over a week from the middle to late February, debates were held in the following three of the six colleges in the university: CAST, Education, and CAS. The best attended of these debates (based on the percentage of faculty in the college) was the one in the CAST which also happened to be the first of the college debates held. The structure of these debates followed a standardized format. After the ISUFA and FSG panelists presented their positions, faculty members in the audience were provided with the opportunity to ask the panelists questions. From the audience's questions, it is clear that the issue of a perceived loss of departmental flexibility and how the union would deal with departmental issues was on the minds of those who attended these debates. Although a number of the questions dealt with clarifications of what had been presented by the two panels, a majority of the questions directed to the union team by audience
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members focused on technical departmental issues. While the FSG continually emphasized the negative effects to individual departments of the standardization that would occur under collective bargaining, the ISUFA argued that it had no interest in either micro-managing or regulating issues of concern to individual departments. The union team's response was that the union supported the handling of these issues at the departmental (or program) level and that such issues would not be covered in the contract. In retrospect, the union should have been better prepared for handling such queries as opposed to giving this "blanket" response whenever such questions were raised.
The FSG and Other Union Opponents' E-Mail Informational Memoranda Campaign In the FSG memos, the group used the "standardization of resources" argument as a primary strategy to play on the fears of the ISU faculty but also emphasized, at times, that unionization would foster an adversarial relationship among faculty members and administrative staff, and thus lead to the damage, of an otherwise harmonious academic community. For example, concerning the issue of shared governance, the FSG argued that collective bargaining would interfere with and undermine the cooperation, needed between faculty, the university administration and the Board of Trustees to have a meaningful shared governance system. In memo number 7, written by FSG leader Charles Harris, Harris pointed out why collective bargaining is incompatible with the practice of shared governance: But collective bargaining should not be confused with shared governance. If the structure of shared governance is relatively horizontal, the structure of collective bargaining is binary. Whereas the mode of shared governance is deliberative and cooperative, the mode of collective bargaining is legalistic and adversarial . . . Collective bargaining replaces the ethos of collegial decision making with a legal contract. The very concept of bargaining implies negotiation between separate parties. While these negotiations needn't be rancorous, the adversarial structure of collective bargaining threatens the basic meaning of collegiality: "the sharing of authority among colleagues" (Harris, 2000).
In addition, the group stated that faculty unionization could not protect shared governance. In terms of the contract negotiated between the SIUCFA and SIU, the FSG claimed that "shared governance at SIUC is above the contract" so that "the continuance of shared governance at SIUC rests on exactly the same willingness to cooperate upon which it depends here at ISU" ("Has Shared Governance Broken Down at ISU?" 8 February 2000). Although it appears that the FSG took the offensive in the union organizing campaign at this time, ISUFA activists and supporters continued to meet on a
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one-on-one basis with faculty members, to promote the union's platform and to distribute union leaflets. In addition, the ISUFA responded to the FSG's informational memoranda by distributing the union's response over the university e-mail system, shortly after the FSG's positions appeared. For example, addressing Harris' argument concerning the relationship between collective bargaining and shared governance, ISUFA President Ron Strickland argued that collective bargaining would not replace the structure of shared governance and that these two models of university governance were not incompatible. Strickland stated: Collective bargaining agreements at institutions with faculty unions affiliated with the National Education Association provide a "safety net" for shared governance, and a legal foundation upon which faculty can enter into shared governanceon equal footing with the administration and the Board of Trustees. We can strengthen and protect our traditional role in shared governance with the ISUFA (Strickland, 2000a). Besides emphasizing how faculty unionization would undermine and threaten shared governance, the FSG, through its communications, argued that collective bargaining would actually lead to worse conditions for the majority, if not all, of the faculty. Since the group claimed that "(t)he process of collective bargaining is one of give-and-take," and since "few faculty members are willing to participate," the bargaining team will be composed of faculty members "with axes to grind" who will be required to make "tradeoffs," implying that the final negotiated contract will only serve the interest of a small percentage of the faculty, instead of representing the best interests of all faculty members. Using the SIU contract as a model, the FSG claimed that "the contract contains many articles that are likely to raise concerns among ISU faculty members" which regulated "the minutiae of faculty life" such as "the number of office hours, the content of syllabi, and procedures for canceling an occasional class" ("Promise Us Everything, Give Us . . . What?" 14 February 2000). Once more, implementing the "standardization of resources" argument, the FSG argued that collective bargaining would interfere with departmental flexibility, that is, collective bargaining would not be sensitive to the varying needs of individual university departments. The FSG argued that "the most important academic issues" to faculty are departmental issues that would be insufficiently handled under collective bargaining. According to the group, with faculty unionization, standardization of conditions across departments would be "inevitable," which "would actually diminish faculty voice on most of the issues that concern us" ("Can You Hear My Voice?" 16 February 2000).
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Since "(t)he major concerns of members of one department fail to resonate with their colleagues in other departments," a department's faculty, as a minority in the bargaining unit, would not be able to muster the votes needed to pursue their issues through the collective bargaining process. However, because of the negotiated contract, the F S G claimed that the department would no longer be able to press its concerns "through "ordinary" administrative channels either." This would be the case because the departmental chair would now serve as "a manager in charge of ensuring that the collectively determined rules are followed," rather than as an advocate pursuing the department's best interests in front of both the college and university administrations ("Can You Hear My Voice?" 16 February 2000). Besides pointing out that the I S U F A would be unable to sufficiently represent the faculty's major concems at the departmental level, the F S G also claimed that the ISUFA, would be ineffective in lobbying for the faculty's interests at the state capitol in Springfield because of the competition for resources between the different constituencies that the union was responsible for representing. The F S G argued that since the l E A "represents 93,000 primary and secondary school teachers" in Illinois, even if the I S U F A won the certification election, the number of I E A members at the university level (SIU and ISU) would be extremely small with respect to the number of l E A members who teach at elementary, middle, and high schools. Based on the limitation of time and resources and the competition between the l E A sufficiently representing the interests of the primary/secondary schoolteachers and the interests of the university faculty, the group claimed that the I E A ' s priority in lobbying at the state level would be, out of necessity, the primary and secondary school teachers. The F S G concluded: Think about it logically. Whose interests are likely to be a priority with the IEA lobbyists in Springfield? We think we know the answer to that one ("Can the Tail Really Wag the Dog?" 21 February 2000). In response to the F S G ' s concerns that the I S U F A would not be sufficiently represented by the IEA in lobbying at the state capitol, the I S U F A argued that all educators have similar, rather than opposing, interests. In an e-mail response to "Can the Tail Really W a g the Dog?" union president Ron Strickland stated: ... (E)ducators hold many things in common, and working together we all achieve more. The lEA has over 100,000 members, it is the largest political action committee in the state, it contributes more to political campaigns in Illinois than any other organization. To extend the FSG's metaphor of "dogs" and "tails," the IEA is a big dog. As university faculty, we will benefit considerably by having access to IEA lobbying resources (Strickland 2000b).
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While the I S U F A presented convincing evidence that ISU faculty members were underpaid with respect to peer institutions and argued that higher salary increases were needed, the F S G agreed with the union that unionization would lead to higher faculty salaries. However, the F S G claimed that these salary increases would come at a cost because of competition over resources. Therefore, according to the FSG, the only reasonable way to fund higher salaries would be through "internal reallocation within ISU" ("Would a Union Raise Faculty Salaries?" 10 February 2000). The faculty anti-union group argued that there were a number o f realistic possibilities o f where salary increases could come from: "decreased administrative expenditures; reductions in funds for library or technological services, departmental and college contractual and travel budgets, and other academicsupport areas; or a decreased number o f tenure-track faculty positions." Because the university administration was in the process o f reorganizing in order to make additional funds available for increased faculty salaries, the F S G claimed that because o f this, "support services would almost certainly suffer." Once more invoking the " p r o b l e m s " with the SIUC contract, the group concluded: Given steady enrollments, probable consequences include more temporary-line faculty positions, larger average class sizes, and higher faculty teaching loads. Nothing in the SIUC contract prohibits any of these effects from occurring ("Would a Union Raise Faculty Salaries?" 10 February 2000). The handful of e-mail m e m o s that were circulated in the COB by the administration and faculty members opposed to the unionization drive also utilized the "standardization of resources" argument by pointing out that business faculty would be worse off with collective bargaining because o f the c o l l e g e ' s munificent funding level. Outlining his personal position in a m e m o a few days before the certification election, F S G m e m b e r Ken Newgren o f the Management and Quantitative Methods Department argued that faculty members in the other ISU colleges were jealous of the resources of COB faculty members and that under collective bargaining, the COB would ultimately lose out because the faculty members in the other colleges would not fight for its interests. He stated: One thing I have learned from my time on the Academic Senate is that many faculty members across campus are highly envious of the COB faculty in terms of salary and teaching loads. Beginning salaries in some departments are under $40,000, and release time often means 9 hours instead of a 12-hour load; I see no advantage for us. Since a union negotiates all terms of employment, I see no incentive for it to improve the status of what many of its members already refer to as the "rich college" (Newgren, 2000).
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And in a memo distributed the day before the election by ten anti-union COB faculty members, the m e m o ' s authors appealed to the major issues raised by the FSG. They argued that an adversarial environment would be created in the academy through the implementation of collective bargaining and that unionization would decrease flexibility in the university. The authors of this memo queried, "Why create an adversarial environment, especially when the board and our top on-campus administrators have taken significant recent steps to help assure faculty's strong role?" (Celuch et al., 2000). In reference to decreased flexibility in the university, the authors claimed that "(w)e also perceive a loss in valued freedom, as unionization would (based on what the SIU-C contract shows) micro-manage much of our existence." In one of the most bizarre claims appearing in the literature circulated by anti-union forces, the authors provided an example of this micro-management: We fear that it could also reduce the protection of tenure by spelling out our responsibilities in such detail that it would actually become easier for an antagonistic administration (a future scenario that union backers seem to fear) to terminate a faculty member "for just cause" (see Article XI, Section 2 of the SIU-C contract) (Celuch et al., 2000).
In a last minute appeal to the COB faculty (the e-mail message arrived at 4:45 p.m. on March 7, the day before the election), Dean Dixie Mills also referred to the "standardization of resources" argument in opposing unionization and keeping things status quo: I believe that we are better served by a governance and resource allocation model that recognizes the differences in staffing needs and other priorities across departments and colleges. We need this to allow the College of Business to reach its full potential (Mills, 2000).
And in their only written public communication to the faculty in which they took a position with respect to the upcoming certification election, President Victor Boschini and Provost Alvin Goldfarb, sent a letter to all tenured/tenure-track faculty which arrived by mail on March 6, two days before the election. In a carefully worded letter that did not appear on university letterhead, the two leading university administrators counterposed the tradition of the shared governance model with that of collective bargaining. Arguing that they were committed to achieving competitive salaries for ISU faculty with peer institutions, Boschini and Goldfarb pointed out that they had made significant progress within the last three years and that they planned to continue to increase faculty salaries in the future. In a similar vein to the FSG, Boschini and Goldfarb stated that collective bargaining would lead to standardization across academic departments and a loss of flexibility for individual academic departments to pursue their best interests:
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We believe that collective bargaining arrangements tend to standardize and centralize relationships. The flexibility and open communication that currently exists in individual academic departments may be replaced by a "one-size-fits-all" contract. Each academic department at Illinois State has unique characteristics and needs. Faculty, working with department chairs, can champion these needs to college deans, administrators and governing bodies. A contract that places everyone under the same umbrella might circumvent that flexibility. We wonder, as many others have wondered, is this the right time for Illinois State to change its faculty/administration governance relationship? (Boschini & Goldfarb, 2000).
ANALYZING THE CERTIFICATION ELECTION RESULTS As stated in the introduction to this paper, the I S U F A lost the certification election held on March 8, 2000. Voter turnout was high, with 89% of the eligible faculty casting a vote in the election. The I S U F A obtained 283 votes (45.8%) and the "no union" option obtained 335 votes (54.2%). W h i l e the outcome o f the election came as a surprise to many of the Steering C o m m i t t e e m e m b e r s who b e l i e v e d that the union had w i d e s p r e a d support among the faculty, I was not surprised by the results because, as a labor relations scholar, I am aware o f the difficulties confronting unions in winning certification elections. I will admit that for a t w o - w e e k period in February, I shared m y Steering C o m m i t t e e c o l l e a g u e s ' confidence and o p t i m i s m in the outcome o f the election. However, a p p r o x i m a t e l y two weeks before the election, I had my doubts that we w o u l d win the election. I felt that many of the Steering C o m m i t t e e m e m b e r s were overconfident and were not going all out to bolster and maintain contact with union supporters. M y doubts were confirmed a couple of days before the election. Since we had 334 faculty members (48.1% of the bargaining unit) indicate that they were union supporters at the peak of our strength and 307 faculty members had actually signed cards (Miller, 2000), we needed to have virtually all of these faculty members vote in favor of the union in order to win the election because of the expected high voter turnout. This meant that we could afford to have only minimal slippage, an unlikely occurrence. In calling our union supporters in a final "Get Out The Vote" on March 5-6, of the 174 faculty members contacted, 159 were still supporters (91%), 10 had become neutral (6%) and five (3%) were no longer in favor of the union. W h e n I learned of these numbers on March 7, I knew that the union did not have a good chance to win the election.
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CONCLUSION: LESSONS ON ISUFA'S FAILED ORGANIZING DRIVE From the election results, it is apparent that the ISUFA was not able to successfully utilize the rational calculation, the emotional and the political/ideological belief paths (Wheeler & McClendon, 1991) in its union organizing campaign. The union was unable to build a sufficient community of interest for the ISU faculty over the perceived benefits that unionization would bring concerning university and national level issues as outlined by the ISUFA's platform. In addition, the union was not able to exploit any single issue that resulted in a majority of faculty members feeling threatened or frustrated by any of the university administration's behaviors or actions. Rather, because of the "standardization of resources" argument and the argument that an adversarial workplace climate would be created was continually reinforced through communications by the administration and the FSG, it appears that a majority of ISU faculty came to believe that collective bargaining would not lead to an improvement in either their departmental or individual situations but would lead to more adversarial relations between faculty members, university administrators and the Board of Trustees. The oft-repeated threats of collective bargaining bringing about the standardization of resources across university departments while creating an adversarial workplace climate, unfortunately resonated with too many faculty members who already were uncertain or lacked sufficient knowledge concerning faculty unionization in the first place. As stated in the introduction to this article, the success of the "standardization of resources" argument in leading to the ISUFA's certification election loss is best explained by the median voter model of union behavior. This concern over salary and resource leveling from high salary/high resource departments to low salary/low resource departments is supported by a post-election survey conducted by Abacus Associates for the NEA in September 2000. The survey indicated that 27% of the faculty earned less than $46,000 per year, 32% earned between $46,000 and $59,999 per year and 41% earned over $60,000 per year. Using salary level as a rough proxy for departmental membership, the study found that union opponents were more likely to be faculty members with salaries over $60,000 per year (or from high salary/high resource departments). The survey also discovered that fine arts and liberal arts faculty members, that is low salary/low resource departmental faculty members, were much more likely to be union supporters. Finally, consistent with predictions of the median voter model of union behavior, the study found that union supporters were more likely to support pay equity across academic disciplines (or to put it in other words, internal redistribution from high salary to low salary faculty) although
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the study concluded that for the union to succeed in the future, it should not focus its campaign around the issue of achieving pay equity across the disciplines (Abacus Associates, 2000). The median voter model also can be used to explain the union's certification loss because of the faculty members' concerns that unionization would lead to a standardization and loss of flexibility among the heterogeneous departments and colleges at the university. At ISU (as well as at many other universities), the working conditions of faculty members are actually rather heterogeneous because of differential salaries, teaching loads, research expectations, graduate student assistance, travel support, etc. among the various departments and colleges within the university. Based on the election's outcome and the results of a post-election survey, many ISU faculty members perceived that they benefit from this heterogeneity (or flexibility) and believed that collective bargaining will impose a standardization (or a forced homogeneity) with respect to resources and working conditions at the university. The NEA post-election survey indicated that 67% of union opponents believed that it was either extremely likely or very likely that if the union won the election, faculty members would lose autonomy in negotiating salary and/or course loads. With respect to departments losing autonomy, 63% of union opponents believed that such an outcome was either extremely likely or very likely to occur if the ISUFA had won the certification vote (Abacus Associates, 2000). Since the bargaining unit is composed of heterogeneous faculty members, raising the threat of standardization of resources under collective bargaining will appeal to the median voter and will result in the defeat of the union in the certification election. Or to put it another way: an appeal to maintaining the heterogeneity and flexibility among the faculty is a winning strategy if a heterogeneous faculty exists. Thus, the FSG accomplished what the ISUFA failed to do; it successfully focused its message around two major issues in order to generate and sustain sufficient opposition to the union. On the other hand, the union was unable to build commitment to the union centered on a major issue, or a couple of related issues, that affected all faculty members. Rather, the union attempted to cobble together a coalition of supporters by trying to appeal to as many faculty members as possible in as broad a coalition as possible. The hope was that a majority of faculty members would be attracted to the union through their support of at least one plank in the platform. The ISUFA attempted to be, in essence, "everything to everyone" which explains why the platform was maddeningly amorphous and lacked sufficient detail in its ten planks. This belief in the need for the maintenance of both individual faculty member autonomy and departmental autonomy with respect to the negotiation of resources
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keeps the faculty divided, further reinforcing the lack of trust and cooperation among the faculty. And with a lack of trust and cooperation, why should faculty members from one department, who are numerically a minority in the bargaining unit, believe that the union would fight for their individual interests? This argument is intertwined with, and reinforces, a broader ideological orientation to their situation that is present in university faculty. This orientation, known as professionalism, according to Meisenhelder (1986, p. 382), "is grounded in an individualistic consciousness." For the professoriate, professionalism requires that faculty respond to their work situation "through competition within themselves, other faculty, and, particularly, with other workers in order to secure the rewards of professional status." This professionalism strengthens the professional culture and political beliefs of faculty members, encouraging them to oppose unionization, which means that the political/ideological beliefs path of the Wheeler and McClendon (1991) model will generally be a negative influence in faculty unionization campaigns. This was certainly the case with respect to the ISU organizing drive. Unfortunately, the operation of professionalism in practice fails to address the problems facing university faculty as a collective entity. Faculty members continue to compete against each other for continually dwindling resources and because they view themselves "as a self-governing community of independent intellectuals," they do not see the need to organize as employees on the job. Furthermore, refusing to view themselves as employees has other consequences, most notably the reluctance of faculty to form alliances with other university employees (non-tenure track faculty members, clerical/administrative workers, maintenance workers, food service workers, etc.) or with other intellectual workers in the teaching profession, such as primary and secondary school teachers, who are also viewed as competitors for the state's educational resources. In addition, during the campaign, the ISUFA did not sufficiently address the other major concem raised by the FSG, specifically that the presence of a union would create an adversarial climate between faculty members and the administration. As indicated by the election outcome and the NEA's post-election survey, this issue also resonated with the faculty. According to the survey, 81% of union opponents believed that if the ISUFA had been certified, it would lead to an increase in polarization between faculty members and university administrators (Abacus Associates, 2000). Although the union argued that it would cooperate and work with a faculty-friendly administration, the union did admit that if the administration was antagonistic to the union, then it "would have to play hardball" with the administration. Research has demonstrated that a major concem of white-collar workers during unionization drives is the fear that a unionized future will lead to a
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conflict-ridden workplace (Cohen & Hurd, 1998). Although such workers are less likely to vote for a union if they believe that unionization will contribute to the occurrence of strikes (Maranto & Fiorito, 1987; Hurd & McElwain, 1988), this fear extends beyond the proliferation of strikes to the idea that workplace life on an everyday basis will be in "a state of perpetual conflict if the organizing campaign succeeds" (Cohen & Hurd, 1998, p. 182). One solution for dealing with this problem, according to Cohen and Hurd (1998, pp. 194-195), is "to demonstrate the potential for the union to coexist as an equal with management not only in negotiations and grievance handling but also in solving a wide variety of workplace problems." These researchers state that if management introduces and generates conflict, the union needs to respond "without assuming responsibility for that conflict." What lessons were learned from this organizing drive? I think the first, and a primary, lesson is that many faculty members will not support a unionization drive unless they feel that a union will be able to address the micro-issues, such as the standardization/flexibility concerns, that affect them as faculty members of individual departments. Unlike the FSG and the administration, which successfully communicated their feelings of how collective bargaining could negatively impact a wide range of micro-issues of concern to the faculty, the ISUFA did a rather poor job of addressing these faculty members' concerns. Addressing these micro-issues is of crucial importance for obtaining success in any faculty organizing campaign because only a relatively small number of faculty members have an ideological predisposition towards supporting unionism or will be swayed by issues confronting the university or the profession as a whole. Although the union did a good job of addressing faculty members' concerns with respect to the issues outlined in the platform, I think that the ISUFA should have been better prepared to provide sufficient answers to many of the faculty members' detailed and technical questions concerning standardization and department level issues. A typical response that union supporters provided to these types of questions was that "we will encourage decision making to occur at the lowest possible level in the university and we will respect departmental autonomy and flexibility." In retrospect, the union should have researched other faculty collective bargaining agreements to demonstrate how these issues have been handled by other unionized faculties in order to alleviate faculty members' concerns about standardization and micro-management. In the final analysis, this response was not sufficient in convincing faculty members who lacked sufficient knowledge or who already had considerable doubts about faculty unionization. A second lesson to be learned from this campaign is that significant additional support for the union will not be obtained upon the completion of
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the authorization card drive. I think that there was an unspoken belief among many ISUFA Steering Committee members that we would be able to pick up additional support from faculty members in the weeks before the certification election. Absent a major crisis or tactical error on the part of the administration, after the conclusion of the card drive, the union's major job is to consolidate and maintain faculty members' support for the union in light of opposition from the administration and any anti-union groups that emerge. While a small amount of additional support might be obtained from faculty members, the more serious possibility is the loss of a significant number of supporters who signed authorization cards; this is what happened with respect to the ISUFA organizing drive. As stated earlier in this article, although the union obtained 307 signed authorization cards, only 283 bargaining unit members cast a vote in favor of the union. Thus, 8% fewer faculty members actually voted for the union than signed cards. This indicates that the union should be prepared to experience at least some erosion of support once an opposition campaign is launched. Related to the second lesson, a third lesson, under normal circumstances, is that the union should not file for a certification election unless the union has collected a minimum of 50% of authorization cards from union supporters in the potential bargaining unit. Even though the ISUFA filed with a little over 40% of cards signed by bargaining unit members, many Steering Committee members believed that we could still win the election because we would retain virtually all of our support as well as be able to pick up the support of a decent number of "undecided" voters at the last minute. However, empirical research demonstrates the importance of collecting a high percentage of authorization cards from bargaining unit members in order for the union to have a good chance to win the representation election. For example, one study found that when 0nly 30% (the legal minimum) of bargaining unit members signed cards, unions won only 11.1% of certification elections. However, in organizing drives where 80 to 89% of the employees signed cards, the union achieved victory in 71.4% of the elections (Graham & Neilsen, 1991). This rule should be strictly adhered to unless there is convincing support that many faculty members are union supporters but are not signing cards because they feel intimidated, which is the situation that occurred at SIU. However, this was not the case at ISU. In my experience in collecting cards during this campaign, only a small number of union supporters refused to sign cards. These were primarily non-tenured faculty who refused to sign because they feared administration retribution if for some reason this information became public. Although, as mentioned earlier in the article, there is empirical evidence that a significant percentage of employers retaliate against union activists and union
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supporters during organizing campaigns (Lawler, 1990), there was no evidence (or even any allegations) that the university administration, college deans or department chairs retaliated in any way against either union activists or supporters throughout the duration of the unionization drive at ISU. A fourth lesson is that the organizational structure of the union should be established before filing authorization cards for the certification election. A major problem with the campaign of the ISUFA was that it did not have active (or even any) departmental representatives in many departments throughout the university. Since the success of union organizing campaigns depends on effective one-on-one communication (Bronfenbrenner, 1997, 1998) within departments, these efforts will be the most successful if the people doing the convincing of fellow faculty members are actual members of the departments rather than faculty members from other departments. In my experience of collecting authorization cards from faculty members in the Department of Art, having me promote collective bargaining was better than nothing but not as effective as if I was a member of that department who could have contact with these faculty members on a regular, one-on-one basis. This is, in fact, what occurred in a number of departments. Since we did not have a departmental representative that was doing effective work, we sent in a faculty member from another department in order to have some coverage in that department although the coverage was in many cases less than adequate. Even though we knew that this was a problem, we thought that we could recruit additional departmental representatives, or at least activate the ones that we had, upon filing for the certification election, which we believed would generate an increased level of excitement and enthusiasm for the union and its campaign. A fifth lesson is that, if it all possible, a unionization campaign should fully utilize the emotional path (Wheeler & McClendon, 1991) towards support for unionization by conducting the drive around some kind of "crisis" issue which a significant percentage, if not the majority, of the faculty feel directly affects them. This appears to be an important factor for union certification election success because as I noticed at ISU, outside of many Steering Committee members and a number of faculty members in the CAS, very few faculty members at ISU arrived at their support for the union through the political/ ideological beliefs path (Wheeler & McCiendon, 1991). That is, only a small number of faculty members were ideologically committed to unionization under virtually any circumstance. Thus, in order to have a successful unionization campaign, there must be a single issue, or a couple of related issues, for uniting the faculty in their drive towards unionization. This certainly was not the case with respect to the unionization campaign at ISU; as mentioned before, there was no single issue which unified the faculty
The Fears of Resource Standardization and the Creation of an Adversarial Workplace Climate 175
in their support for faculty unionization. From my experience as the major organizer in the COB, and consistent with the ISUFA's organizing strategy of appealing to as many faculty members as possible, there was not one but a variety of issues that led to faculty members in the college supporting collective bargaining. For example, for some faculty members in the college, salary issues were predominant while for other faculty, the threat of a loss of shared governance or the increased (and increasing) power of the administration and the loss of individual autonomy were perceived as the major problems confronting ISU faculty. In addition, the feeling that the university was moving towards a "customer" orientation and watering down the educational experience led to support for unionization. Finally, perceived external threats to the profession from the Illinois Board of Higher Education (IBHE) or the Illinois State Legislature was sometimes enough to garner faculty support for unionization from a handful of professors. It appears unlikely that there was a single issue that would have been able to unite the faculty in support of the union in March 2000. If the certification election had been held five years earlier, the emotional path (Wheeler & McClendon, 1991) may have been successfully used by exploiting faculty dissatisfaction with the Wallace administration. This may have been the issue that could have united and catalyzed faculty support for the union. The issue of inadequate salaries was potentially a rallying point for the union but the feeling that the faculty-friendly Boschini administration was working on improving salaries prevented this issue from becoming the unifier for faculty support for unionization. The only remaining issue that potentially could have unified all ISU faculty members was the external threats posed by the ISU Board of Trustees, the IBHE and the state legislature to the individual faculty member's autonomy. The ISUFA could have spent more time discussing and focusing on this issue although it is unlikely that such an orientation would have changed the outcome of the election. When the union did raise this issue throughout the campaign, it failed to resonate with a large number of faculty members. One final (but nevertheless crucial) lesson learned from the ISUFA unionization campaign: organizing college and university faculty does not end with the holding of the certification election. Many members of the Steering Committee viewed the certification election as the single defining event for organizing ISU faculty; they believed that organizing faculty ended once the certification election had taken place. If the ISUFA had actually won the election, many Steering Committee members did not realize that the union would have to continue to organize the faculty for the upcoming struggles. For example, few committee members realized that we would have to continue to organize (and to recruit) faculty in order to build a viable local union. Besides
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recruiting members to build a strong union local, continued faculty organizing would also be necessary to obtain a strong first contract in order to establish a base for obtaining future union gains from the university administration. Since the ISUFA did not win the certification election, organizing of the ISU faculty still must occur if the university's faculty members are to eventually obtain representation. Summers (1991) points out a wide range of activities that a union can participate in even after it has lost a certification election; one of his suggestions is to have the union act as the employees' voice on all employment-related issues that might arise in the workplace. The focus, of course, is to build towards another unionization campaign, hopefully culminating in a successful certification election outcome so that the ISUFA can be the collective bargaining agent that represents the ISU faculty. ACKNOWLEDGMENTS
I would like to thank the editors, David Lewin and Bruce E. Kaufman, and an anonymous referee for putting me through a stimulating reviewing process. Because of their efforts, the quality of this article has been dramatically improved. REFERENCES Many of the cited references in this article are based on material distributed by either the ISUFA, the FSG, the university administration or other union opponents during the ISU organizing drive. Copies of these cited references are in the author's possession. For any questions with respect to this material, please contact the author at his university address. Abacus Associates (2000). Illinois State University Faculty Opinions On Certifying ISUFA. Commissioned by The National Education Association (September). Ali, S. M., & Karim, A. R. (1992). An Empirical Examination of Determinants of Faculty Attitudes Toward Collective Bargaining. Journal of Collective Negotiations in the Public Sector, 21(1), 79-91. Allen, R. E., & Keaveny, T. J. (1981). Correlations of University Faculty Interest in Unionization: A Replication and Extension. Journal of Applied Psychology, 66(5), 582-588. Annunziato, F. R. (1994). 1994 Directory of Faculty Contracts and Bargaining Agents in Institutions of Higher Education, The National Center for the Study of Collective Bargaining in Higher Education and the Professions - Baruch College, The City University of New York, New York. Aronowitz, S. (2000). The Knowledge Factory: Dismantling The Corporate University And Creating True Higher Learning. Boston: Beacon Press. Aronowitz, S. (1997). Academic Unionism and the Future of Higher Education. In: C. Nelson (Ed.), Will Teach For Food: Academic Labor in Crisis (pp. 181-214). Minneapolis: University of Minnesota Press.
The Fears of Resource Standardization and the Creation of an Adversarial Workplace Climate 177 Aussieker, B. (1976). Students and Bargaining at Public and Private Colleges. Monthly Labor Review, 99(4), 31-33. Babcock, L., & Engberg, J. (1999). Bargaining Unit Composition and the Returns to Education and Tenure. Industrial and Labor Relations Review, 52(2), 163-178. Barbezat, D. A. (1989). The Effect of Collective Bargaining on Salaries in Higher Education. Industrial and Labor Relations Review, 42(3), 443455. Begin, J., & Browne, S. (1974). The Emergence of Faculty Bargaining in New Jersey. Community and Junior College Journal, 44(4), 18-19. Bigoness, W. J. (1978). Correlates of Faculty Attitudes Toward Collective Bargaining. Journal of Applied Psychology, 63(2), 228-233. Boschini, V. J., & Goldfarb, A. (2000). A Letter to Colleagues. (March 3). Bronfenbrenner, K., & Juravich, T. (1998). It Takes More Than House Calls: Organizing to Win with a Comprehensive Union-Building Strategy. In: K. Bronfenbrenner, S. Friedman, R. W. Hurd & R. L. Seeber (Eds), Organizing to Win: New Research on Union Strategies (pp. 19-36). Ithaca, New York: CorneU University Press. Bronfenbrenner, K. (1997). The Role of Union Strategies in NLRB Certification Elections. Industrial and Labor Relations Review, 50(2), 195-212. Cameron, K. (1982). The Relationship Between Faculty Unionism and Organizational Effectiveness. Academy of Management Journal, 25(1), 6-24. Can the Tail Really Wag the Dog? (2000). Faculty for Shared Governance Informational Memorandum Number 6. (February 21). Can You Hear My Voice? (2000). Faculty for Shared Governance Informational Memorandum Number 4. (February 16). Celuch, K., Goodwin, S., Leinicke, L., Love, D., Newgren, K., Osaosky, J., Rexroad, M., Showers, L., Trefzger, J., & Williams, M. (2000). Letter to COB Colleagues. (March 7). Cohen, L., & Hurd, R. W. (1998). Fear, Conflict, and Union Organizing. In: K. Bronfenbrenner, S. Friedman, R. W. Hard & R. L. Seeber (Eds), Organizing to Win: New Research on Union Strategies (pp. 181-196). Ithaca, New York: Cornell University Press. Demsetz, R. S. (1993). Voting Behavior in Union Representation Elections: The Influence of Skill Homogeneity and Skill Group Size. Industrial and Labor Relations Review, 47(1), 99-113. Douglas, J. M. (1990). The Impact of NLRB v. Yeshiva University on Faculty Unionism at Public Colleges and Universities. Journal of Collective Negotiations in the Public Sector, 19(1), 1-28. Feuille, P., & Blandin, J. (1974). Faculty Job Satisfaction and Bargaining Sentiments: A Case Study. Academy of Management Journal, 17(4), 678-692. Garabino, J. (1980). Faculty Unionization: The Pre-Yeshiva Years, 1966-1979. Industrial Relations, 19(2), 221-230. Garabino, J. (1973). The Emergence of Collective Bargaining. In: E. D. Duryea, R. S. F i s k & Associates (Eds), Faculty Unions and Collective Bargaining (pp. 1-19). San Francisco: JosseyBass. Graf, L. A., Hemmasi, M., Newgren, K. E., & Nielsen, W. R. (1994). Profiles of Those Who Support Collective Bargaining in Institutions of Higher Learning and Why: An Empirical Examination. Journal of Collective Negotiations in the Public Sector, 23(2), 151-162. Graham, H. E., & Neilsen, K. N. (1991). Union Representation Elections: A View From the Heart of It All. Labor Law Journal, 42(7), 438-441. Gress, J. (1976). Predicting Faculty Attitudes Toward Collective Bargaining. Research in Higher Education, 4(3), 247-256. Harris, C. (2000). What Are the Options? Faculty for Shared Governance Informational Memorandum Number 7. (February 23).
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Has Shared Governance Broken Down at ISU? (2000). Faculty for Shared Governance Informational Memorandum Number 1. (February 8). Hemmasi, M., & Graf, L. A. (1993). Determinants of Faculty Voting Behavior in Union Representation Elections: A Multivariate Model. Journal of Management, 19(1), 13-32. Heneman, H. G., & Sandver, M. H. (1983). Predicting the Outcome of Union Certification Elections: A Review of the Literature. Industrial and Labor Relations Review, 36(4), 537-559. Holley, W. H. Jr., Jennings, K. M., & Wolters, R. S. (2001). The Labor Relations Process. (7th ed.). Fort Worth, TX: Harcourt College Publishers. Hurd, R. W., & McElwain, A. (1988). Organizing Clerical Workers: Determinants of Success. Industrial and Labor Relations Review, 4l(3), 360-373. Illinois State University Faculty Association Platform (1999). (January 21). Jones, L. (1986). The Impact of Faculty Unions on Higher Education: A Reconsideration. Journal of Collective Negotiations in the Public Sector, 15(1), 79-87. Karim, A. R., & Ali, S. M. (1993). Demographic Differences and Faculty Attitude Toward Collective Bargaining. Journal of Collective Negotiations in the Public Sector, 22(1), 87-97. Kaufman, B. E., & Martinez-Vazquez, J. (1988). Voting for Wage Concessions: The Case of the 1982 GM-UAW Negotiations. Industrial and Labor Relations Review, 41(2), 183-194. Kochan, T. A. (1980). Collective Bargaining and Industrial Relations. Homewood, IL: Irwin. Ladd, E. C., & Lipset, S. M. (1973). Professors, Unions, and Higher Education. Berkeley, CA: Carnegie Commission on Higher Education. Lawler, J. J. (1990). Unionization and Deunionization: Strategy, Tactics, and Outcomes. Columbia, SC: University of South Carolina Press. Magney, J. R. (1999). Faculty Union Organizing on the Research Campus. Thought & Action, 15(1), 111-126. Maranto, C. L., & Fiorito, J. (1987). The Effect of Union Characteristics on the Outcome of NLRB Certification Elections. Industrial and Labor Relations Review, 40(2), 225-240. McClure, B. (1999). Tenure at the University of Minnesota: A Postmortem. Thought & Action, •5(2), 97-104. Meisenhelder, T. (1986). The Class Position of College and University Faculty. The Social Science Journal, 23(4), 375-389. Miller, P. (2000). Illinois State University Faculty Association Post-Election Meeting Minutes (29 March). Mills, D. (2000). Letter to Colleagues in the College of Business. (March 7). Newgren, K. (2000). Letter to COB Colleagues (March 7). Ponak, A., Harel, G., Thompson, M. & Kedem, D. (1987). Faculty Collective Bargaining: A CrossCultural Survey. Journal of Collective Negotiations in the Public Sector, 18(3), 219-232. Ponak, A., Thompson M., & Zerbe, W. (1992). Collective Bargaining Goals of University Faculty. Research in Higher Education, 33(4), 415--431. Pratt, L. R. (1997). Disposable Faculty: Part-time Exploitation as Management Strategy. In: C. Nelson (Ed.), Will Teach For Food: Academic Labor in Crisis (pp. 264-277). Minneapolis: University of Minnesota Press. Pratt, L. R. (1994). A New Face for the Profession. Academe, (September-October), 38--41. Promise Us Everything, Give U s . . . What? (2000). Faculty for Shared Governance Informational Memorandum Number 3. (February 14). Rastin, S. (2000). Organizing Tactics in a Faculty Unionization Drive at a Canadian University. Labor Studies Journal, 25(2), 99-116. Rhoades, G. (1998). Managed Professionals: Unionized Faculty and Restructuring Academic Labor. Albany, NY: State University of New York Press.
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Rosenthal, J. T., Cogan, M. L., Marshal, R., Meiland, J. W., Wion, P. K., & Molotsky, I. F. (1994). Report: The Work of Faculty: Expectations, Priorities, and Rewards. Academe, (January-February), 35-48. Stanford, S. (2000). Frequently Asked Questions Concerning the Upcoming Union Vote (January 21). Strickland, R. (2000a). The Best Option (February 23). Strickland, R. (2000b). The Big Dog and its Tail (February 23). Summers, C. (1991). Unions Without Majorities: The Potentials of the NLRA. Proceedings of the 43rd Meeting of the Industrial Relations Research Association, Madison, WI.: IRRA: 154-162. Thompson, K. (1997). Alchemy in the Academy: Moving Part-time Faculty from Piecework to Parity. In: C. Nelson (Ed.), Will Teach For Food: Academic Labor in Crisis (pp. 278-290). Minneapolis: University of Minnesota Press. Watt, S. (1997). On Apprentices and Company Towns. In: C. Nelson (Ed.), Will Teach For Food: Academic Labor in Crisis (pp. 229-253). Minneapolis: University of Minnesota Press. Wheeler, H. N., & McClendon, J. A. (1991). The Individual Decision to Unionize. In: G. Strauss, D. G. Gallagher & J. Fiorito (Eds), The State of the Unions (pp. 47-83). Madison, WI: Industrial Relations Research Association. White, M. D. (1982). The Intra-Unit Wage Structure and Unions: A Median Voter Model. Industrial and Labor Relations Review, 35(4), 565-577. Williams, G. B., & Zirkel, P. A. (1989). Shift in Collective Bargaining Issues in Higher Education: A Review of the Literature. Journal of Collective Negotiations in the Public Sector, 18(1), 73-86. Would a Union Raise Faculty Salaries? (2000). Faculty for Shared Governance Informational Memorandum Number 2 (February 10). Zalesny, M. D. (1985). Comparison of Economic and Noneconomic Factors in Predicting Faculty Vote Preference in a Union Representation Election. Journal of Applied Psychology, 70(2), 243-256.
THE AGING WORKFORCE AND THE NEXT TURNING POINT Daniel J. B. Mitchell
INTRODUCTION The most important thing we do know from the 20th century that continues into the 21st is that there was a baby boom in the former that is now aging in the latter. Until the elderly boomers disappear - presumably in the 2060s absent a medical miracle - they will have a major influence on American society. The last act of the boomers will be to cause a turning point in the employment relationship and related social policy. In the 20th century, two such turning points were triggered by economic fluctuations. But the next one will be demographic.
TURNING POINT h THE DEPRESSION/ WORLD WAR II PERIOD Before the Great Depression, the American economy was laisser-faire in character with a thin veneer of welfare capitalism at some large firms. The onset of the Depression tended to undermine welfare capitalism, although - as my colleague Sanford Jacoby (1997) points out - welfare capitalism was not obliterated. Business as an institution was blamed for the economic debacle. A move toward government intervention and the rise of unions produced mutual reinforcement. Public policy supported unionization; unions - especially the more radical CIO variety - supported a wider government role in the economy.
Advances in Industrial and Labor Relations, Volume 11, pages 181-188. Copyright © 2002 by Elsevier Science Ltd. All rights of reproduction in any form reserved. ISBN: 0-7623-0853-2 181
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Demographics also played a role in creating new institutions in the 1930s. Elderly assistance had been the responsibility of local authorities and private charities before the New Deal. Poorhouses and (very) limited cash relief were the basic instruments of old-age support. For men, working until health or death forced an end to such activity was the norm. But the Depression made work unavailable and families, localities, and charities much less able to care for elderly persons. The result was formation of what was termed at the time an "army of the aged" that sought government pensions (Neuberger & Loe, 1936). Mainstream history points to Social Security as the response to these elderly concerns. Yet even when enacted, Social Security did not pay benefits until the 1940s, and many elderly were ineligible. In fact, the army of the aged backed more radical schemes such as the federal Townsend Plan, inadvertently providing Roosevelt's Social Security proposal with a critical margin of support. 1 California, home of the Townsendite agitation, saw the rise of the Ham and Eggers and other wacky social movements aimed at harnessing electoral strength of elderly voters behind state-level pension plans 2 (Mitchell, 2000). W o r d War II required another dose of government economic control.3 And the government's need for uninterrupted production of war materiel led to a reinforcement of union growth. Employers came under pressure to recognize unions to avoid strikes over recognition. Meanwhile, wartime wage controls spread norms of contractual labor-management relationships.
THE NEW POSTWAR EQUILIBRIUM Postwar America produced a new employment relationship centered on collective bargaining in major industries. Government would provide social insurance for non-workers, e.g. Social Security pensions (and later Medicare) for retirees. It would aid other non-workers through unemployment insurance, disability benefits, and "welfare" (later supplemented with Medicaid). But at the workplace, welfare capitalism revived with government subsidy through the tax code. Employers would provide health insurance for employees and their dependents and pensions to be paid on top of the basic Social Security entitlement. Workers could win or enhance such benefits through collective bargaining. Or employers might simply choose to provide or improve them. For those workers unlucky enough to find themselves at workplaces where neither bargaining nor employer beneficence prevailed, government would set a minimum wage and designate other limited labor standards.
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TURNING POINT I1: THE 1980S The 1980s began with a severe slump - the worst since the Great Depression that pushed unemployment above 10%. A shift to the right occurred politically with the advent of the Reagan administration. The union sector experienced substantial erosion. Union-representation fell by 3.1 million workers between 1980 and 1985. Concession bargaining blossomed. Wages were frozen or cut at many union workplaces. In others, de-unionization was pursued. Unions had been the strongest manifestation of the postwar employment relationship. But other aspects of that relationship began to crumble, too. Contingent work began to grow. Job-based health care coverage began to slip. A shift occurred from defined-benefit pension plans (favored by unions) to defined-contribution plans. There was much rhetoric about workers managing their own careers, saving for their own retirements, and generally being responsible for themselves. Security was said to be a thing of the past. Job tenure of older male workers began to erode. By the early 1990s, a mild recession produced layoffs among managers and professionals, groups that had previously been relatively immune from the business cycle.
THE S ~ F T I N G BALANCE OF ~ W E R Although the prevailing view was that the labor market had become more "competitive" by the 1990s, there was a puzzling element in pay determination. In the second half of the 1990s, a notable drop in unemployment occurred as part of the Internet/stock market boom. Unemployment fell to levels not seen since the Vietnam War. Employers around the country complained of labor shortages and not just for high-tech employees. Construction workers, truck drivers, and restaurant personnel were all said to be in short supply) In truly competitive markets (gold futures, pork bellies, T-bills), shortages bring about sharp price rises. Surely, in a competitive labor market, a wage explosion should have occurred in the late 1990s. But it didn't. Since that Great Depression experience, economists have been fretting over why wages don't fall continuously in recessions. Usually, the economist's answer has been some variant of the idea that wage cuts are bad for morale and productivity (Bewley, 1999). Even in Hard Times, employee resistance, whether organized or not, is able to prop up the wage. But this explanation is not symmetrical since wage increases in boom times are not bad for morale and employees surely do not resist them. So if wages don't respond like pork belly prices to shortages, the answer must lie in the area of employer resistance. Labor shortages during the Vietnam boom, roughly 1965-1969, did
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push up wage inflation, with unions leading the way. 5 During the Internet/stock market boom (1995-2000), wage inflation was relatively quiescent despite labor shortages and certainly not more responsive than in the 1960s. 6 Employer power was retarding upward wage responsiveness.
THE COORDINATED LABOR MARKET Unlike some corporatist European countries, the U.S. has relatively decentralized labor market institutions. Yet as Arthur Ross (1948) pointed out in the 1940s, the American labor market has certain propensities for coordination. In a formal sense, postwar pattern bargaining produced wage imitation across certain union settlements. But in a less formal way, norms of wage setting and personnel practice spread much wider, spilling over from the union to the non-union sector. Providing health insurance and adjusting wages for inflation - even during recessions - were examples of such norms. The norms were reinforced through government action, e.g. tax-favored treatment of employer-provided insurance, timely publication of the CPI so that wage setters could respond. To put it controversially, the Depression/World War II experience fostered a loose "employee cartel," activated through unions and favorable government action and coordinated through imitation. But like OPEC and other cartels, the employee cartel could overreach. And it did in the 1970s when the union/ non-union wage premium was pushed up in the face of adverse market conditions, setting the stage for the second turning point. American employers, too, can behave as an informal cartel. Through trade associations, personnel publications, management consultants, and the popular press, they discover and imitate what other employers are doing. At times employers, too, can harness government action. Business-friendly think-tanks can foster ideas about deregulating the labor market. Columnists and TV talking heads can push the idea that old postwar employment norms are dead. They can popularize the idea that employees should manage their own careers and not expect security or benefits from employers. As these ideas circulate, employers are cued to act in a loosely coordinated manner, implementing the new norms. No conspiracy is implied; just the institution of imitation and "benchmarking." It is not surprising in retrospect that the 1980s should have seen the ascendancy of employer power and the eclipse of its employee counterpart. The cost to employers of providing job security varies with the risk being insured. By the 1980s, uncertainty over economic conditions such as inflation was greater than before. 7 Profit variability was also rising, in part because of the marked shift to debt finance. 8 American abandonment of fixed exchange rates in the early 1970s added to the uncertainty of the 1980s. Floating exchange rates had proved volatile
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and - as the dollar peaked relative to foreign currencies in the mid-1980s American competitiveness was undermined. New sources of foreign competition were arising in Asia. Product market deregulation in transportation, finance, and communications made the outlook there more uncertain from the employer perspective. The postwar deal became increasingly costly. Initially, union wage premiums began to crumble at distressed firms during the early phase of concession bargaining in the 1980s. And the message conveyed to other not-so-distressed firms was that unions were not as invincible as once thought. More and more finns demanded concessions. With the Reagan administration in office, there was less political constraint on such behavior. Ultimately, if wages and benefits of union workers were shown to be vulnerable, why should not the same be true of non-union? Why not look for savings in labor costs throughout the workforce? Why bear the burden of the cost of providing job security, even for managers and professionals? To summarize, the 20th century saw a kind of jockeying between de facto employer and employee cartels. Starting in the 1930s, the employee side exercised power through unions and favorable government regulation. As Table 1 suggests, once strengthened by the Depression/World War II experience, employees managed to increase their share of the corporate pie through the late 1970s. 9 The employer side tried to weaken unions and counter government regulation in response. It sought to attenuate commitments entailed in postwar employment norms. Table 1 suggests that employers checked the power of employees during the 1980s and rolled it back in the 1990s. But this employer success will soon collide with demographics. DEMOGRAPHICS
OF THE 21ST CENTURY
Throughout their history, baby boomers have been perceived as "trouble." As children in the 1950s, they were the Johnnies who couldn't read. Then they were teenage delinquents. In the 1960s, they were protesting college students, urban rioters in minority neighborhoods, and rebellious strikers on factory floors. They were said to push up structural unemployment in the 1970s, as they entered the job market in large numbers. And in the 1990s, they were self-indulgent consumers who were not saving for retirement. Whatever the justification for these past images, as the boomers move through the labor force and into retirement during the next few decades, they will pose two problems. First, as aging workers, they will want job security, a commitment from which employers have sought to escape. Second, as retirees, they will want adequate income and health care, demands that require diverting consumption from younger active workers.
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1929 1949 1959 1969
Labor's Percentage Share of Corporate National Income. 74.5% 76.6 78.1 80.3
1979 1989 2000
82.3% 81.8 79.6
Source: Bureau of EconomicAnalysis, U.S. Departmentof Commerce
If employers persist in pushing their current advantage, they will soon meet resistance from its aging boomer workforce. Although some resistance might take the form of union revival, it is much more likely to take political and legal shape. Left/right political leanings of boomers concerning other socioeconomic issues may not be determinative. Neither liberals nor conservatives want to be laid off. Neither wish to have their health care benefits denied or rationed. Neither want to experience adverse conditions at work that threaten mortgages or junior's college tuition or support of elderly parents. Glimmers of this resistance can already be seen in legislative battles over aspects of health care and litigation over attempts by employers to shift from defined benefit pensions to cash balance plans. As the Dunlop Commission pointed out in the mid-1990s, battles that used to be fought at the bargaining table are now being joined in courtrooms. Look for matters related to age discrimination and job-based pensions and health care to be the future issues of choice for litigants. Rather than the pattern bargaining of the post-World War II era, we may well have patterns in lawsuits - successes triggering imitation suits - and legislation spilling from one state to another. And what happens when the boomers retire? Who will provide resources for their consumption, health needs, or long-term care? Virtually none of the proposals currently in play to "privatize" Social Security do anything to enlarge the economic pie in, say, 2030. They simply restructure the way in which consumption tickets will be provided to retired boomers. If the individual accounts which such proposals entail pay off for the boomers, i.e., provide them with more income than they would have obtained from the present system, there will be less of the pie available for active workers. That real wage squeeze - however it occurs - could well trigger employee dissatisfaction aimed at employers. If the accounts don't pay off, the boomers will feel cheated. The new army of the aged of the 21st century will then push for legal and legislative remedies regarding employer pensions and whatever Social Security has become. As in the 1930s, the army of the aged will become a third force along with employees and employers, demanding its share of the economic pie. Unless the "new economy" provides so much prosperity that everyone will be satisfied - an increasingly dubious proposition the 2030s may well be as exciting as the 1930s. I°
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NOTES 1. The Townsend Plan promised elderly persons over 60 $200 a month if they promised not to work (leaving jobs for the young) and to spend every penny during the month (to stimulate the economy). $200/month ($400 for a couple) was an enormous sum at the time. 2. The Ham and Eggs proposition on the California ballot in 1938 and 1939 offered those over age 50 "Thirty Dollars Every Thursday" to be paid in a new California currency. As in the Townsend proposal, recipients were forbidden to work. Ham and Eggs received 45% of the vote in 1938 and might well have passed had the antics of its con-men promoters not been brought to light. Pensionite movements in California, an elderly state at the time, roiled state politics in the 1930s and 1940s. Related movements developed in other parts of the country such as Colorado and Ohio, also elderly states. 3. At the war's peak, over 40% of GDP was going to the military. 4. I searched the phrase "labor shortage" in Nexis/Lexis under "NEWS" and "REGION" annually for 1995-2000. In 1995, the number of news media citations in the Midwest, Northeast, Southeast, and West were, respectively, 211, 52, 124, and 106. In 2000, the figures were 610, 566, 525, and 545. 5. Average hourly earnings inflation rose from around 4% per annum at the beginning of the Vietnam boom to about 7% at the end. First-year wage increases under major union settlements rose from about 4% to 8%. There were 268 major strikes in 1965 and 412 in 1969. Unemployment fell from 4.5% to 3.5%. 6. Union wages lagged non-union and strikes were rare in this period. According to the Employment Cost Index, union wage inflation accelerated from 2.6% in 1995 to 3.4% in 2000. Non-union wage inflation accelerated from 3.6% to 4.0%. Unemployment fell from 5.4% to 4.0%. There were 31 major strikes in 1995 and 39 in 2000. 7. The standard deviation of GDP price index inflation over the prior ten years had fallen below 1% by the early 1960s. By the mid-1980s, it was about 21/2%. The standard deviation of the percent share of before-tax profits in corporate national income over the prior ten years rose from 2% or less in the 1960s to about 4% in the mid-1980s. 8. Net interest as a percent of capital's share of corporate national income was essentially zero until the mid-1960s. By the 1980s, it varied within the 20-30% range. 9. Corporate national income can be divided into the share going to labor (wages, benefits, payroll taxes), the share going to profits (as defined in national income accounting terms), and the share going to net interest. Labor's share of income is very sensitive to the business cycle because profits are business-cycle sensitive. So labor's share is boosted by recessions. The dates shown in Table 1 represent rough business cycle peaks as dated by the National Bureau of Economic Research. At this writing, it remains to be seen whether 2000 was a peak, i.e. whether 2001 will mark a recession. 10. Note that the foreign equivalents of the baby boom - in Japan, Europe, and even China - have been accumulating claims on the U.S. thanks to large and ongoing American deficits in net exports. These claims will have to be "cashed in" as foreign boomers retire and consume more than they produce. Thus, active American workers will be supporting both foreign and domestic boomers.
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REFERENCES Bewley, T. F. (1999). Why Wages Don't Fall During a Recession. Cambridge, MA.: Harvard University Press. Jacoby, S. M. (1997). Modem Manors: Welfare Capitalism Since the New Deal. Princeton, N.J.: Princeton University Press. Mitchell, D. J. B. (2000). Pensions, Politics, and the Elderly: Historic Social Movements and Their Lessons for Our Aging Society. Armonk, N.Y.: M.E. Sharpe. Neuberger, R. L., & Low, K. (197311936]). An Army of the Aged: A History and Analysis of the Townsend Old Age Pension Plan. New York: Da Capo Press. Ross, A. M. (1948). Trade Union Wage Policy. Berkeley: University of California Press.
FROM WORKPLACE TO CORPORATE GOVERNANCE: LEVERAGING WORKER ASSETS IN THE 21ST CENTURY Stephen R. Sleigh
INTRODUCTION The last quarter century was a difficult time for organized labor in the United States. In the private sector, both absolute and relative measures of union strength were headed in the same direction: down. In 1973 unions represented nearly 15 million workers in the private sector, or 25% of the workforce; by 1999 that figure had dropped to 10 million workers and under 10% of the workforce.JThis decline has forced organized labor to take measure of their past and present position in the labor market and to make critical strategic decisions about the future. One such strategic approach is the harnessing and leveraging of organized labor's capital resources to further the goal of increasing its power in the labor market and balance the overwhelming power management have accumulated. This brief paper examines the recent development of capital strategies by one labor organization, the International
The viewspresentedin this paperare thoseof the authorand not necessarilythoseof the International Associationof Machinists and AerospaceWorkers. Advances in Industrial and Labor Relations, Volume 11, pages 189-200. © 2002 Published by Elsevier Science Ltd. ISBN: 0-7623-0853-2
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Association of Machinists and Aerospace Workers (IAM), and assesses how capital strategies may influence industrial relations in the years ahead. The 20th century experience for most unions in the United States is characterized as narrowly focnsing on bread and butter issues such as wages, hours, and working conditions. Both the business and industrial models of unionism adopted ~this focus, a~heit with di~erertt organizing strategies. As,a field of research, industrial relations studied the,ramifications of this workplace focus and help shape an understanding of how systerns~of governance work at the workplace. The genre reached its peak by mid,century with .the publication o f John Dunlop's Industrial Relations Systems. 2 I)unlop's system identified the salient components of modern industrial society as the interaction between workers and .their organizations, managers and their organizations, and government agencies concerned with the workplace) Until the turmoil in the labor market in the 1980s and 1990s, that description of a fairly stable system adequately characterized the attributes of labor-management relations in the :United States. The precipitous decline of organized labor and the cutting back of government's role 4n regulating the collective side of the labor market that occurred during the 1980s and 1990s occurred simultaneously with the ascendancy of the shareholder value 'model of corporate governance that drove much of the downsizing and union avoidance during that same period. In my view, the current state o f industrial relations has resulted in the most imbalanced relationship .between employees and employers since the 1920s. A result of this imbalance is Clearly seen in the detailed survey work done by ~ h a r d Freeman and Joel Rogers published 4n What Workers Want. 4 Employees are dissatisfied with the level and means Of representation at the workplace. One response to the imbalance between labor and management, and a means to increase workers voice in an increasing number of areas is the expansion of organized labor's role beyond the level of workplace governance to that of corporate governance. What may be different in the years ahead is how labor uses capital strategies to move up a notch in terms o f importance as partners in governance of the corporation. Organized labor, if it is to regain its vibrancy and central role as the collective voice for employees, will play a role in who makes investment decisions in corporations, what types of investments they make, and how returns from investments are distributed. 5 The first section reviews past union attempts to expand beyond the traditional sphere of wages, hours, and working conditions. This is a cursory overview at best. No doubt many creative attempts to move into co-management of industry can be cited particularly in the garment industry. 6 The point is that organized labor in the United States did not develop a systematic approach to expanding into corporate governance until fairly recently. After setting the context of
From W o r l ~ e to Corporate Governance
19t
today's labor market, and the heavy reliance on consumer debt to. mainlain living standards, the following sections look at two inila'atives latmched by the I_AM it~ the late 1990s that use capital strategies: creation of a mrtion-specific, mutual ftmd and efforts to bring executive compensation into alignment with overall organizational objectives. These two examples provide a snapshot of what is rapidly becomi~ag a streaming series of activities by unions in the area of corporate strategy. Taken together, the parts are beginning to add up to more than the pieces as organized labor comes to the realization that one of its greatest strengths is the combined purchasing power and retirement assets of its members. The conclusion will circle back to the main theme of what can IR in the 21st century learn from IR in the 20th century. LOOKING
BACKWARDS: SUCCESS AND FAILURE OF NON.TRADITIONAL TACTICS
The IAM, like other AFL unions, experimented with mutual aid programs and more sophisticated capital strategies from its earliest days. In the 1920s, for example, the IAM created the Mt. Vemon Savings Bank. For thirteen years, from 1920 to 1933, Mt. Vernon "brought a good return to the IAM, which had purchased some of the original s t o c k . . . [F]or most of the thirteen years of its existence, [the Bank] was a source of great pride to the [IAM]. ''7 Despite the apparent success of the Mt. Vernon Savings Bank the idea of leveraging its assets, of expanding the bank's activities into areas that supported the union's goals of expanding and servicing members, never really took off. With the collapse of so many savings banks during the depression in the 1930s, this effort fell apart. Many years later the idea of harnessing the pension power that union's had amassed during the fat years from World War II to the mid-1970s came to the fore. In their book, The North Will Rise Again, Randy Barber and Jeremy Rifldn provided a framework for harnessing employee pension funds. Written in 1978, some of the predictions now seem hopelessly naive and misguided - that for example, capitalism was on its last legs. Underneath the rhetoric was a compelling idea: workers, and their unions, had a tremendous tool to use in their pension funds if only they could learn how to manage these assets for growth, which would ensure the fund's objective of providing secure pensions, and investments in union-friendly businesses which would ensure the growth of union-represented enterprises. 8 At the same time Rifkin and Barber were laying out their framework for a socialized economy based on worker pensions, management's guru, Peter Drucker, also recognized the power of pension funds. In his book, The Unseen
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Revolution: How Pension Fund Socialism Came to America, written in 1976, Drucker takes the same set of facts and turns the analysis inside out arguing that all that ownership will add up to a more committed employee loyal to capital, not labor. 9 Despite the predictions from the left and right, pension fund activism did not live up to its hilling throughout the 1980s or 1990s. With the election of John Sweeney as head of the AFL-CIO in 1995, capital strategies received its first big push from the top of the labor movement. Shortly after taking office, Sweeney created the Office of Investments, and in 1999 launched the Center for Working Capital. Under the direction of the AFL-CIO's Richard Trnmka both of these initiatives gave capital strategies a front row seat in the ongoing effort to expand workers' voice opportunities. As Trumka noted in 1999, "Worker funds account for more than $3 trillion in capital investment, making them a major force in the global markets. We're making sure that worker beneficiary voices are heard on Wall Street. ''l° Through the efforts of the AFL-CIO and its affiliate unions, such as the IAM, many of the ideas that Rifkin and Barber, and Drucker, thought would come of age in the 1980s are now coming to fruition in the first decade of the 21 st century.
PIECES
OF A CAPITAL
STRATEGY:
THE IAM E X P E R I E N C E News about the economy over the past eight years (1992-2000) tends towards a relentlessly optimistic view. From all reports it appears the business cycle has officially been repealed. President Clinton summarized this view in his State of the Union speech in 1999 by saying, "Because of the hard work and high purpose of the American people, these are good times for America. We have more than 14 million new jobs. The lowest unemployment in 24 years. The lowest core inflation in 30 years. Incomes are rising, and we have the highest home ownership in history." The business community second's the motion with the recent statement from the Business Council, You could title our economic report as The Best of Times . . . . [n]ot one of us has seen better times than these.tl Working families see the world differently. Despite the eight-year long economic expansion, working families are working longer and harder to maintain their standard of living. One measure of the mismatch between the view from the top and that from the middle is the surging consumer debt that working families are taking on. Recognizing the economic reality our members face the IAM undertook an effort to create a union friendly savings device the IAM Shares mutual fund.
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UNEQUAL TIDES: INCOME INEQUALITY DURING BOOM TIMES By now, the subject of income inequality has become commonplace among economic analysts, policy makers, and union leaders. The Economic Policy Institute, a labor-supported but fully independent economic think tank, has virtually made careers out of documenting the dual nature of the U.S. economy. The latest figures do show that, finally, low and middle wage workers are benefitting from the growing economy. Nonetheless, workers' wages have remained stagnant for the past twenty years, with real wage increases occurring only in the last two years since 1979. With unemployment down to 4.3% in April, 1999, the tight labor market is producing real gains in hourly earnings for the first time in almost twenty years. The real median wage grew 3.1% from the first quarter of 1998 to the first quarter in 1999. j2 Overall the increase in real, inflation-adjusted, wages brought the median earner back to the level attained in 1989. Male wage earners still lag behind the level of ten years ago, trailing by 2.1% compared to 1989 for the median wage earner. The gains of the past year were particularly strong at both the bottom and top 10% of the hourly wage distribution. Male workers' wages increased 5.1% over the last year at the bottom decile, and 3.9% at the top decile. The increase at the lower end of the wage spectrum appears to be tied to the minimum wage, as their percentage gains were greatest in the two periods over this business cycle when the minimum wage was increased, j3 While these gains are certainly welcome to working families they pale in comparison to the poor performance of the U.S. economy in lifting the living standards of the vast group of people who work for wages and who make up the middle class. From 1989 through 1997, median family income rose by only $285 a year, or 0.6%. The typical family got their 0.6% raise through hard work. The typical family worked 247 hours more per year in 1997 compared to 1996, while at the same time the productive capacity of the economy improved about 8%. Bottom line, American families are working harder to stay in the same place and are seeing little of the gains in the overall economy. ~4 That is in fact what is going on in today's economy. One of my tasks at the IAM is to provide assistance to our negotiators in the collective bargaining process. We also do a quarterly summary of wage and contact settlement trends. In this tight labor market, with skilled workers in high demand, we should be negotiating wage packages that make up for the last twenty years of stagnation. Instead, most of our agreements are coming in around 3% for initial wage increases. That is better than concession bargaining for sure; and, it is true that
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more settlements are coming in over 4% than under 2%, which again is a measure of the strength of today's economy. The truth, however, is that our members, and I believe this is true for other wage earners, are more concerned about job security than about wage increases. The threat of job loss in the manufacturing sector, where production can and often is moved to lower labor cost areas, particularly industries that don't compete in fight just-in-time delivery cycles where production can be moved overseas, explains why job security is issue number one in all of the prebargaining surveys we conduct. The effect of globalization, with its threat to move production and resulting job loss, has been to weaken workers resolve to capture their fair share of productivity increases. Unions, like the IAM, are determined to put resolve back into a workforce that has been beaten down pretty low.
KEEPING UP WITH THE JONESES Workers may not have the same determination or organizational capacity to take on employers for their fair share of the economic pie as they did twenty years ago, but they have not changed their consuming habits. Indeed, the way working families have coped with stagnant wages and aggressive employers is to work more hours. For men, that means on average three hours per week more in overtime than twenty years ago. For women, it has meant that the opportunity to stay home and not to join the work force is increasingly a distant option. Think about the forty-hour work week. The labor struggles at the end of the last century were waged to bring down the work day to eight hours. One hundred years later, just try to be a union official selling the idea of flex time, work sharing, or reducing overtime opportunities. There is no surer path to getting a one-way ticket back into the plant! What we have is an economy that no longer produces regular gains for typical wage earners, that no longer corresponds productivity gains and wage gains, but which lives on the precept of ever greater consumption. How to afford the middle-class lifestyle and expanding consumption? Work longer hours, have more family members work, and run up ever increasing levels of debt. Juliet Schor has written a wonderful book about this titled, The Overspent American, which is a sequel to her earlier book, The O v e r w o r k e d A m e r i c a n , S5 Schor contends that keeping up with the Joneses is passe that the Joneses lifestyle is too quaint. We now set our sights on the lifestyles of those higher up the organizational chart. "See-want-borrow-and-buy" is how she summarizes today's consumers. When you earn less per hour than you did ten or twenty
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years ago but you want to buy more there are two ways for workers to accomplish this: work longer hours and borrow more. CONSUMER
DEBT
TODAY
In addition to doing many pre-bargaining surveys of specific groups of members, we conduct an annual random sample survey of our membership which numbers over 750,000 including retirees. One of the questions we track is the satisfaction they have with the amount of money they are making (take home pay) and the amount they are saving. On the pay front, 22% say they are "Very Dissatisfied" while 35% say they are "Very Dissatisfied" with the amount they are saving. At the other end of the spectrum, 9.8% say they are "Very Satisfied" with take home pay while 4% say they are "Very Satisfied" with savings/6 In fact, the latest data shows that the national savings rate in the United States reached zero in 1998 and may have gone into the red in the first quarter of 1999. The results are consistent with trends across the country. Indeed recent reports have indicated that the national savings rate is now approaching zero. Home mortgage debt constitutes the largest portion of household debt today, as it has since the boom in home ownership began in the late 1940s. Today, home mortgage debt makes up just over two-thirds of household debt. The robust economy, especially low interest rates have mitigated further increases in home mortgage debt for those refinancing while also allowing many households to borrow significantly more than they would have just a few years ago. The ratio of debt payments to family income increases dramatically as you move down the income scale. For those making below the median income of $25,000 debt constitutes nearly 20% of total family income. More troubling, each year since 1989 that figure has gone u p . j7 Beyond home mortgage debt, two debt areas stand out for consumers: auto loans and credit card installment payments. Since 1980 automobile credit has soared from $350 billion to nearly $1.3 trillion. Credit card debt has also soared, from $243 billion in 1990 to a projected $677 billion in 2000. j8 The percent of family households with a general purpose credit card has slowly increased from 55% in 1989 to 66% in 1995 with an estimated 75% by the year 2000. A large percentage of credit card holders pay off their purchases within a month and do not incur financing charges. However, those families making less than $50,000 - over 31% - hardly ever pay off the balance, according to the Federal Reserve System.
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STRATEGIC
INITIATIVES
One response the IAM has come up with to address the savings problem is to create the first union-focused mutual fund. About half of IAM members participate in some form of tax advantaged savings plan administered by their employer. On June 1, 1999, the IAM through State Street Global Advisors, a nationally prominent mutual fund management company, launched an index fund that is comprised of IAM-represented companies. The fund, called IAM Shares, is structured to parallel the S&P 500. All investments entail some risk, particularly those based on the equity market, but this new savings device will provide a much needed way for IAM members to invest back into the companies they work for while diversifying risk away from an over reliance on their specific firm's performance. IAM Shares is a publicly traded no-load mutual fund and can be bought for a minimal initial investment and has extremely low operating expenses (traded under the ticker symbol SIAMX). In the first nine months since inception the IAM Shares fund tracked the S&P 500 very closely and managed a total return of 14.2%. 19 Workers are working harder and longer hours in an attempt to maintain a middle-class lifestyle. Easy access to credit cards and home mortgages have made debt the easiest way to make up for shortcomings in wages. Of course, in the long run, that does not seem like the fight formula for a good society. As people work longer hours and fall deeper into debt it is no wonder that they tend to see civil society and government as an impediment. Taxes take away hard earned dollars that could be used to buy more things. Arguments for stricter credit policy or for increasing burdens on working people's ability to purchase a home are certainly misplaced. Indeed, job creation in the manufacturing sector is heavily dependent on low interest rates. Juliet Schor's somewhat utopian call for a society of "downshifters", who make the decision to get off of the see-want-borrow-and-buy track, holds scant appeal in the real world. I for one would not want to get up in front of a group of our members and tell them they should stop buying new cars or tools, or that they should think about vacationing at home this year. The fundamental underlying problem in our economy today is the unequal distribution of power that results in some doing extremely well while most see stagnant or declining incomes. In his two recent books, Luxury Fever and The Winner-Take-All Society, Robert Frank has detailed the shift that income inequality has created at the top of society. The pay at the top of America's largest corporations exemplify this problem. Years ago J.P. Morgan, no friend of organized labor or working people, said that the head of an organization should get paid no more than 20 times what the average worker gets at that
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organization. In the last few years that ratio has become so bloated as to be out of sight. The CEO of General Electric, for example, was paid $97 million in salary, bonus, and stock options in 1998, or 2,425 times what the average GE worker earned. The IAM has a unique approach to this problem as well. In 1998, utilizing the employee's ownership stake in United Air Lines where the members of the IAM and air line pilots own roughly 55% of the common stock, the IAM proposed a new system of contingent compensation for senior managers. Instead of a strict reliance on basing compensation on financial performance, the IAM worked with UAL's management to adopt a new compensation formula that includes employee satisfaction and customer service as equal parts to financial performance. The goals of the company are aligned more closely in this way: satisfied employees deliver better service resulting in more customers which creates a financially healthier company. The ownership structure of UAL allowed for this innovative measure to go forward. In 1994 the IAM and the Airline Pilots Association (ALPA) negotiated the largest employee ownership deal in history. With a six year concessionary period during which labor costs were reduced an average of 10%, union members purchased 55% of the common stock of UAL. The UAL transaction represented the zenith of employee stock ownership plans both in the airline industry and throughout the United States. A detailed account of this transaction, and its implications for labor relations in the airline industry can be found elsewhere. Despite the success of UAL's innovative ownership structure, the past CEO of UAL noted that, "We have not been copied in any big way. ''2° Ownership clearly is the ultimate in terms of corporate govemance, so the UAL, and other airline ESOPs at Northwest Airline and TWA, deserve closer scrutiny then what is provided here. These transactions, however, all occurred during a period of time during which the U.S. airline industry was faced with almost insurmountable financial difficulties. Ownership was not sought as a strategic approach by labor but rather as a defensive tactic to save financially troubled companies} 1 The executive compensation proposal was adopted as a strategic initiative to show the power of ownership to employees. The UAL effort provides a glimmer of hope that excessive executive compensation can be reined in. Still, the effects of these wide gaps is slowly tearing the fabric of society. Spending your way into debt is one way that working families have found to keep afloat. That doesn't make long term economic sense. What we need is a strengthening of the labor market institutions that govern the distribution of productivity gains. Clearly today shareholders and executive management control those levers. In the interest of the entire society we' should take a closer look at making the economy work for the workforce in a fairer more efficient manner. Encouraging
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collective action through representatives, of their choosing is one obvious solution. Encouraging workers arid~their representatives to exercise: control over capital, instead of being passive consumers, is another avenue worth pursuing in the interest of all of society.22 In. addition to these twc~ specific initiatives the IAM is actively invol~ed in, two other areas that utilize capitol strategies. One dicect way of harnessing organized labor's capital resources is to become more active shareholders. With pension: fund assets iaa joiatly trusteed pians of over $I0 billion fine IAM has the ability to pursue good corporate governance issues that have positive effects on the workforce white also improving the company's bottom line. One such shareholder resolution, for General. Electric to adopt a code of condt~ct on labor standards based on internationally recognized core rights, was voted on irr Apri~ 2000. The effort attracted the support of over 120 million shares at the 2000 GE shareholder meeting. This was far. short of a majority, in fact representing just shy of 8% of all shares cast, but the support of several key institutional investors such. as the California Public Employees Retirement System (CalPers) and others made the effort worthwhile. The IAM, with the support and encouragement of the AFL-CIO's Office of Investment, and wor~ng through the Council of Institutionat Investors, sees shareholder activism as an important avenue through which workers' concerns for a fairer society can be addressed. Another area of capital strategy that is just being developed is the active creation of tmion-friend|y ventt~re capital. Despite many serious efforts, for example at the Be|oit Corporation, a division of Harnischfeger Industries, successful union-initia~ed bu~outs have proven elusive. These buyouts are different then the employee stock ownership plans (ESOPs) that were commott in the 1980s ~ early 1990s. W i ~ equity ready to be deployed, the union brings an entirely different perspective to the process of saving and reinvigorating financially troubled companies. The jury is stil,| out as to how effective the application of trojan-friendly capital will be on corporate performance and the creation of good jobs that pay prevailing union wages and benefits.
THE I M P L I C A T I O N S F O R I N D U S T ~ A L
RELATIONS
At the start of this paper I pointed to the decline of unions in the United States using density as a measure of strength. Density is h a l however, a good measure of institutional strength or of the ability of institutional innovation. As John Dunlop has said, "The share of the nonagricultural workforce in labor organ~zations,.is scarcely an all-purpose measure of union strength or influenceBat the workplace, in a community, or in the larger society.''23 The development of capital strategies in many different forms through shareholder resolutions,
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creation, of union-friendly venture capital, the creation~ of union-specific savings and investing vehicles, and controlli~ excessive executive compensation, as examples has a very real potential to transform the traditional model of industrial relations in the United States. Against the backdrop of changes in corporate strategy, particularly the relentless focus on shareholder value that has swept across from Wall Street into the executive suite of corporations, labor's capital strategy stands in stark contrast. Rather than using the downsize and distribute model championed by General Electric, and emulated' across major corporations, labor's interest is in long-term growth and stability. In the long-term the retain and reinvest model may well prove more economically attractive to employees and shareholders alike. 24 Allan Kennedy's recent book, The End o f Shareholder Value, provides a wealth of examples showing the limitations of the present short-term focus on quarterly returns for employees, communities and shareholders alike. 25 With the capital strategies highlighted in this paper, unions are showing that the traditional scope of industrial relations in the United States - wages, hours, and working conditions - are byproducts of a larger set of variables that unions are just now beginning to learn how to harness. Expanding from a narrow focus on workplace governance into the broader arena of corporate governance is one of the areas that will broadly redefine the field of industrial relations. Workers and unions will have to assess their respective roles as adversaries to capital, and to address new ways to deal with management. As labor comes to grip with its power in the capital market the need to reconfigure long standing relationships will take great prominence.
NOTES 1. Barry Hirsch and David Macpherson, Union Membership and Earnings Data Book, BNA Publications, Washington, D.C., 2000, pp. 9-t0. 2. John T. Dunlop, Industrial Relations System: Revised Edition, Harvard University Press, Boston, MA, 1993. 3. Bruce Kaufman, The Origins & Evolution of Industrial Relations in the United States, Cornell University Press, Ithaca, NY, 1993, p. 99. 4. Richard Freeman and Joel Rogers, What Workers Want, Comell University Press, Ithaca, NY, I999. 5. This definition of what corporate governance mean is from Mary O'Sullivan, Corporate Governance in Germany, Public Policy Brief from the Jerome Levy Economics Institute of Bard College, 1998, p. 7. 6. See for example, Labor Will Rule, Steven Fraser, The Free Press, New York, NY, 1991. 7. Mark Pertman, The Machinists, Haveard University Press, Cambridge, MA, 196 I, p. 66.
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8. Jeremy Rifkin and Randy Barber, The North Will Rise Again, Beacon Press, Boston, MA, 1978. 9. Peter Drucker, The Unseen Revolution: How Pension Fund Socialism Came to America, Harper and Row, New York, 1976. 10. Richard Trumka, AFL-CIO press statement, February 16, 2000. 11. Business Leaders See Best of Times As They Predict Growth, Efficiencies, Daily Labor Report, BNA, May 7, 1999. 12. Jared Bernstein, Real median wages finally recover 1989 level, QWES, 1999, 1, p. 1. 13. EPI Press Release, April 29, 1999. 14. Lawrence Mishel, The State of Working America 1998-1999, Cornell University Press, Ithaca, NY, 1999, p. 2. 15. Juliet Schor, The Overspent American, Harper Collins, New York, NY, 1998; and, The Overworked American, Basic Books, New York, NY, 1993. 16.Stephen Sleigh, AIAM Pulse of the Union, IAM Strategic Resources, 1998. Data available upon request. 17. U.S. Statistical Abstract 1999, Government Printing Office, Washington, D.C., Table 802. 18. Ibid, Table 820 and 822. 19. State Street Global Advisors Bulletin, April 2000. 20. Frank Swoboda, Departing Chairman Says United Is Worth Copying, Washington Post, p. e-I, July 7, 1999. 21. See for example, Stephen R. Sleigh, The Difficulty of Sticking Together in Tough Times, in: Airline Labor Relations in the Global Era, ILR Press, Ithaca, NY, 1994. The UAL transaction was conceived during a period of financial difficulty but certainly did not face the same dire circumstances that Northwest or TWA did. 22. See, Beth Almeida, Executive Compensation: A Window on Corporate Strategy, IAM Strategic Resources, mimeo of presentation done April 12, 2000, for an example of the IAM's strategy on executive compensation. 23. Quoted in Marick Masters, Unions at the Crossroads, Quorum Books, Westport, CT, 1997, p.3. 24. See, William Lazonick, Japanese Corporate Governance and Strategy, Jerome Levy Economics Institute Public Policy Brief 48, 1998. 25. Allan Kennedy, The End of Shareholder Value, Perseus Publishing, Cambridge, MA, 2000.
GLOBALIZATION: SOME IMPLICATIONS FOR 21ST CENTURY U.S. LABOR MARKETS Kenneth McLennan
INTRODUCTION In the 1960s exports and imports represented only about 10% of the U.S. gross domestic product (GDP). Starting in the mid-1970s, trade expanded rapidly and by the end of the 1990s exports and imports were equivalent to about 24% of GDP. Economic interdependence has also accelerated as U.S. direct investment abroad and foreign direct investment in the United States increased more than five-fold over the past two decades. The globalization of the U.S. economy affected the competitive position of many manufacturing industries whose product markets had previously been sheltered from international competition. The critical issue for management and labor in these industries was, to borrow from the title of Professor Robert Z. Lawrence's book, "Can America Compete?" This powerful late 20th century economic development, and how management in many industries responded to globalization, had a profound impact on U.S. labor markets and labor-management relations. The key to restoring the competitive position of U.S. industry was the higher rates of productivity growth. This changed demand and supply in U.S. capital and labor markets. Capital and labor resources moved out of industries in which the United States had no comparative advantage and into industries producing high value added
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goods and services. To remain competitive in global markets, U.S. industry had to invest more heavily in new technologies - technologies which ultimately produced the so-called "new economy." The higher skill requirements of the new economy are changing the occupational and industrial composition and the nature of employment for most workers in the United States. These labor market changes also had, and will continue to have, a profound effect on labor-management relations as unions and management in the private sector are forced to adjust to the need for greater work force flexibility. Globalization and the related changes in technology and productivity increased the demand for a skilled work force. Most new labor market entrants responded by increasing their investment in education. At the same time, for some new entrants the poor quality of education at the K-12 level placed them at a serious disadvantage, which has been reflected in a more unequal wage distribution. Similarly, U.S. immigration policy continued to encourage an increase in the proportion of poorly educated, low-skilled workers in the immigrant population and at the same time restrict the number of highly skilled foreign professionals who can enter the United States annually. If U.S. public policies are to respond successfully to the future demand in U.S. labor markets, education reform at K-12 and immigration reform should be high on the political agenda. PRODUCTIVITY
GROWTH AND OCCUPATIONAL RESTRUCTURING
In the 1970s U.S. industry had relatively low rates of productivity improvement, and most industrialized countries and the rapidly growing Asian economies had much higher rates of manufacturing productivity increases than U.S. manufacturers. As globalization emerged, many U.S. manufacturers were no longer the leaders in global markets. For businesses in many U.S. industries, such as autos, electronics, primary metals, computers, and textiles, economic survival depended on technological innovation, more efficient manufacturing, and much higher product quality. While many factors influence manufacturing excellence and efficiency, globalization of competition was a major stimulus for the rapid adoption of new technologies by the end of the 1990s. During the 1980s and 1990s, U.S. industry demonstrated the ability to compete in global markets through reliance on the market system rather than government industrial policies. In the 1980s and the 1990s, the rate of capital investment, especially in equipment, increased and was especially strong in the 1990s, investment in equipment varied by industry. For example, in 1980 almost
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10% of the net stock of total non-residential equipment was in informationprocessing equipment - computers and peripherals and telecommunications equipment. By 1986 it had grown to about 16% and now has risen to about 17%. l By the end of the 1990s, annual gross investment in software exceeded investment in computers and peripheral equipment and was almost 90% of gross expenditures on telecommunications equipment including business machines. These changes in the rate and pattern of capital investment are now paying off in higher rates of productivity growth. The dispersion of innovative ideas, practices, and processes throughout the economy brought this surge in productivity with extraordinarily high rates in a number of manufacturing industries. Table 1 shows large variations in average productivity improvement in manufacturing and in the non-farm business sector in each of the past three decades. The manufacturing growth rate for the 1970s declined to an average of 1.9% per annum. This poor performance was reversed in the 1980s with an average growth rate of 3.0% which in turn escalated to an extraordinary rate of 5.1% per annum toward the end of the 1990s. Toward the latter part of the last century the relative importance of major industries in the U.S. economy changed significantly. Over the past two decades, manufacturing's share of GDP has declined, to be surpassed by services, the most rapidly growing sector of the economy. Within manufacturing, high growth in output was concentrated in a limited number of industries. Industries such as electrical and electronic equipment, which includes telecommunications equipment, and machinery, except electrical, which includes computers, substantially increased their relative contribution to GDP. Traditional manufacturing industries such as primary metals and motor vehicles and equipment, while continuing to contribute importantly to GDP, no longer dominated U.S. manufacturing as they did in the 1950s and 1960s. Table 1.
Years 1973-1980 1981-1990 1991-1999 1990-1995 1996-1999
U.S. Productivity Growth: Average Annual Rate of Growth in Output per Hour. Manufacturing (Percent)
Non-farm Business (Percent)
1.9 3.0 4.3 3.5 5.1
1.3 1.5 2.0 1.5 2.6
Source: U.S. Department of Labor, Bureau of Labor Statistics.
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According to the 1998-2008 Occupational Outlook prepared by the Bureau of Labor Statistics, business services employment will be the most rapidly growing sector of the economy over the next decade. For example, for the period 1998-2008, the average annual increase in employment in computer and data processing services will be 187,200 jobs; for health services, including offices of health practitioners, about 196,000. 2 The continuing growth in services is in sharp contrast to the expected loss of manufacturing jobs. Strong productivity growth in manufacturing industries is likely to result in a net annual loss of some 9,000 jobs through 2008 despite overall growth in manufacturing output. Some manufacturing industries will have relatively strong employment growth. In terms of absolute number of manufacturing jobs created over the next decade, electronic components, aerospace, and plastics are the leaders. The industries with the largest job losses are concentrated in the primary metals and fabricated metal products sector. Job losses also are projected for some industrial machinery and equipment industries such as metalworking machinery and engines and turbines. The motor vehicles and equipment industry is expected to lose jobs at the rate of 5,000 jobs per year through 2008. The growing importance of the information-technology sector in the U.S. economy has dramatically changed the occupational outlook. According to the U.S. Department of Commerce: By 2006, almost half of the U.S. workforce will be employed by industries that are either major producers or intensive users of information technology products and services. Innovation has increased demand for high paid, "core IT workers" (e.g. computer scientists, engineers), created new IT occupations, changed skill requirements for some non-IT occupations, and raised minimum skill requirements for many other jobs. Wage gaps between workers in IT industries and all other workers will continue to widen. 3 The U.S. Department of Commerce report on the emerging digital economy points out that employment growth in the information-technology-producing industries (e.g. computer and semiconductor industries) outperformed employment growth in the economy for 1989-1997 and predicts these industries will employ about six million workers by 2006. The greatest job growth will be in information technology-using industries (e.g. business services, finance, insurance and real estate, and wholesale and retail trade) which will have some 45 million workers by 2006. In addition to the changing industrial composition of U.S. employment, there will be a significant shift toward information-technology-related jobs ranging from engineering and computer systems professionals to data processing equipment repairers. On average, these occupations require a higher level of
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educational attainment than the average level for the work force and "workers [will find] that they must be 'multi-skilled' and must commit to a lifetime of learning and retraining in order to remain competitive in rapidly changing labor markets. ''4 These powerful economic changes have changed the type of skills demanded in the "new economy." The technological changes of the 1980s and 1990s have biased labor demand toward much higher skills than in the 1960s and 1970s.
R E S P O N D I N G TO FUTURE L A B O R M A R K E T DEVELOPMENTS The challenges posed by globalization over the past two decades and how the U.S. economy adapted to globalization can form the basis for how industry and the work force responds to labor markets in the early part of this century. The first lesson from the response to globalization is that reliance on free adjustment to market forces rather than a series of market interventions through new government programs is the most effective strategy for meeting the increasing demand for a more skilled work force. Second, government policies can assist in the adjustment to the technology bias toward greater skills by providing some incentives for individuals to acquire skills and by changing current policies that now tend to lower the average skill level of the work force. Finally, the U.S. labor movement has generally failed to respond successfully to the changes in the structure of U.S. industry and unions now represent a declining proportion of private sector employees. This has had a dramatic effect on labor relations. The implications for labor relations, changing demand for work force skills, and the role of labor market public policies in the 21st century are discussed briefly. Flexibility in Labor Relations and Human Resource Management In the public sector, labor unions continue to play a relatively important role in determining public employees' wages and conditions of employment. While public sector collective bargaining varies considerably among federal, state, and local jurisdictions, since the early 1990s some 42% of public employees are unionized. In this sector the multilateral bargaining model with unions, management, politicians, and taxpayers is likely to continue in the 21st century as it did in the past. In contrast, collective bargaining in the private sector is now a much less important institution than in the past as the rate of private sector unionization has plummeted to a little less than 10% of the work force from a peak of about
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40% following World War II. h ~ private sector, glob ~:zation and technological imaovation have forced management in ma~tffacturing industries to strive to. improve productivity and reduce the costs of producfiorL This has resu~t~t in a decline in manufacturing employment and a rapid shift in the distribution of employment by industry. Globalization changed the competitive environment for many industries which in the 1970s faced little competition in U.S. markets.. The era of collective agreements with large annuat wage increases and generous benefits was no longer feasible in the new competitive environment. Resources in the rnanafacturi'ng sector have moved from the o l d - l , ~ industries in the primary metals, textile, and automotive sectors - sectors with relatively high rates of unionization - to computers, electronics, telecommunications, and pharmaceuticals - sectors with little or no unionizatioa. Labor resources also have moved to notwaanufacturing industries such as business services. This is the major reason for the huge decline in the proportion of private-sector workers represented by unions since the 1960s. Unions, with few exceptions, have been unable to attract workers in the expanding industries. Workers in these industries areola average younger and more mobile than workers in the traditional "old-line" manufacturing industries. As a result, workers in expanding industries are less interested in the typical wage-and-benefits packages traditionally negotiated by unions. To increase private sector unionization in the 21st century, it will be necessary for unions to take a more flexible approach to collective bargaining and offer workers the contract provisions which are appropriate for a more mobile work force. This means promoting defined contribution, and cash balance, pension plans and recognizing that defined benefit plans are tess beneficial to a more mobile work force. Unions also have to recognize that the work force of the future is likely to be more interested in pay-for-performance and the opportunity to participate in stock options. The traditional union-collective-bargaining strategy of improving base pay and negotiating for first-dollar health care plans and defined pension plans, which tends to encourage workers to remain with their current employers and continue to be union members, is not particularly attractive to workers in emerging industries. In general, unions have failed to recognize that workers in these industries are potential customers and that their needs vary by type of industry. Globalization has forced management to adopt more flexible human resource strategies, not only for employee benefits but also for how work is organized in the business and especially at the plant level. Most businesses have found that to be competitive in global markets, corporate offices need to he non-bureaucratic and decision making decentralized to operational levels with increasing
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worker :participation in a wide range of decisions affecting product development, work processes, and ,quality of products and services. To restore collective bargaining as an important labor market institution, unions need to adopt bargaining strategies which recognize the need for variations in agreements to enhance :plant level productivity and offer greater flexibility in the terms and conditions of employment they negotiate .for the work force of the future. Automatic Labor Market Adjustments Globalization and the increased interdependence of the U.S. economy with economies around the world have resulted in a higher standard of living for most Americans. At the same time, workers displaced from industries due to foreign competition and low-skilled U.S. workers forced to compete with lowskilled workers in emerging economies have suffered economically. In responding to globalization, U.S. industry has increased the pace of technological change which has required a more skilled work force than in the past. Globalization and technological change biased toward greater skills has increased the demand for skilled workers and reduced the demand for unskilled workers which in turn has led to a more unequal distribution of wages. For example, in the first half of the 1970s, the ratio of wages at the eightieth percentile to wages at the twentieth percentile of the wage distribution was about 2.1. By 1995 the ratio was about 2.6. 5 Over the past two decades, more and more developed economies are relying on the market system to determine what and how products and services are provided in their economies. The unique advantage of the market system is that it adjusts automatically to changes in demand. The labor market also adjusts automatically to the increasing demand for a more skilled work force than in the past. Two types of adjustments are currently occurring and will play an important role in meeting the demand for greater skills and help reverse the wage inequality trend which has developed over the past two decades. First, the labor market is now increasing the return to investment in human capital. In the early 1970s, the ratio of wages of college graduates to high school graduates was actually declining; in 1976 it was about 1.25. By 1995 the ratio had risen to a little over 1.50. The labor market has automatically rewarded those who acquire greater skills. The increasing return from investing in human capital development will affect the supply of skilled workers. Currently there is a great deal of discussion about the rising cost of a college education. No doubt institutions of higher learning need to improve productivity to avoid raising tuition costs at a higher rate than the rate of inflation, but for the future work force investing
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in a college education is a good deal. The increasing return to a college education will gradually increase the supply of skilled workers. The second adjustment is the change in relative wage rates as employers experiencing skill "shortages" offer greater-than-average wage increases to workers in specific occupations in strong demand. For example, over the period 1991-1998 the average annual earnings increase for private sector production and nonsupervisory employees in private industry was relatively stable, fluctuating between a low of a little over 2% to a high of 4% in 1997. The average annual increases for employees in computer and data processing services were more volatile and generally significantly higher than the average for private industry. In 1997, for example, the annual increase in earnings for this group of workers was almost 8%. 6 The lesson learned from the extraordinary changes in the U.S. economy stimulated by globalization is that flexibility in the operation of labor markets is critical in meeting the changing demand for skills in the work force.
Public Policies and the Demand for Work Force Skills Flexibility in labor markets is a necessary condition for meeting the demand for a skilled work force in the 21st century but sometimes it is not a sufficient condition. Public policies can play an important role in stimulating the supply of skilled workers. Several types of policies are relevant to achieving a more skilled work force.
Training and Education Policies Over the last 40 years, the government has introduced a wide range of training programs to meet a wide variety of goals and serve an array of constituency groups. As these training efforts proliferated into a huge number of programs their impact in assisting workers meet the demand for skills in the labor market was generally modest at best. After many years Congress successfully consolidated most of these numerous programs with passage of The Workforce Investment Act of 1998. While this act is now in the process of implementation and it is clearly too early to judge its success, it appears to be a step in the right direction. The act offers considerable flexibility for local communities in program design and includes considerable participation of business representatives in determining the type of training that will be offered. The government can play a small role in attracting students into disciplines which are critical to the training of high skilled professionals. The recent acceleration in technological change has increased the demand for electrical
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engineers, mathematicians, and computer scientists. U.S. colleges and universities have responded by increasing the number of graduates in most, but not all, of these fields. In the 1990s employees with at least a bachelor's degree responded to the increasing demand for high-skilled workers. The number of scientists and engineers increased 7.9% over the period 1993-1997. The increase in computer and information sciences professionals was significantly higher at 12.8%. For electrical engineers specializing in computer systems, the increase was 11.6%, well above the average increase for all scientists and engineers. The increase in professionals in mathematics, however, was well below average. The rate of increase for this specialty was only 4.3%, and there were fewer operations research engineers in 1997 than in 1993, by 4.7%. The annual number of bachelor's degrees awarded in mathematics/computer sciences peaked in 1986 and declined steadily through 1995. 7 Through a scholarship program targeted on the basic discipline underlying the skill in short supply the government can accelerate the number of professionals entering an occupation critical to the work force of the early 21 st century. Such programs should, however, be small in scope and only available for education in a well-defined basic discipline. Changes in relative earnings should be the major means for increasing the supply of skilled workers. Ultimately, however, the key to increasing the supply of highly skilled workers depends on the quality of education at the K-12 levels. Improved performance in basic skills, especially in science and mathematics, is critical to the future flow of graduates from higher education institutions. States and local communities are responding to the need to improve educational performance at the K-12 level of education. Many school systems are adopting achievement standards and reforming school governance with more local control over the teaching curriculum. Teacher unions are accepting payfor-performance compensation systems and promoting quality measures for improving education. Globalization produced foreign competition which forced a number of U.S. industries to improve quality and restore their leadership in global markets. Public school systems can learn from this experience. To improve the quality of underperforming public schools, it is essential to introduce some degree of competition within the public school system and between public and private schools.
Reform of U.S. Immigration Polices In the past, immigration was an important source of skilled labor for the United States. On average, immigrants who entered the United States in the 1950s and 1960s had levels of education and skills similar to the average for native
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workers. The skills composition of successive waves of immigrants has declined over much of the post-World War II period. For example, relative to natives, immigrants were about 21% more likely to be high school dropouts in 1970, but by 1990 they were more than twice as likely to be high school dropouts, s This relative decline in educational attainment among immigrants is an important source of the increasing wage gap between immigrants and natives. For immigrant males who arrived in 1965-1969, wages were 16.6% lower than native males. By 1990 wages of this group had risen to about the same level as native males. But for successive waves of immigrants the wage gap has widened. For 1970-1974 arrivals, the differential in 1980 was 18.9% lower and by 1990 was 9.3% lower. The 1990 differential for 1985-1989 arrivals was 31.7% lower. In contrast, immigrants who arrived before 1964 had significantly higher wages in 1990 than native males because they arrived with a relatively higher level of education. 9 Recent immigrants, on average, are clearly at a serious economic disadvantage in an economy that now requires, and will continue to require, a higher level of work force skills than in the past. A major reason for the high proportion of relatively unskilled workers in the current generation of immigrants is the increasing number now coming from countries with relatively low levels of educational achievement. The proportion of male immigrants from countries with well-educated workers, such as Germany and the United Kingdom, declined dramatically from 1961-1970 to 1981-1990. In the 1960s, 5.7% of male immigrants came from Germany, but by the 1980s only 1.3% were German. For the United Kingdom, the decline was from 6.4% to 2.2%. For citizens of both countries the average number of years of schooling is 14 years or more. In contrast to immigration from countries with strong education and training systems, the proportion of male immigrants from Mexico increased from 13.7% in the 1960s to 22.6% in the 1980s. The average years of schooling in Mexico is about one-half the number for Germany and the United Kingdom. Other countries in Latin America and Africa, with low levels of educational achievement, also have become more important sources of immigrants. The trend toward a higher proportion of low-skilled immigrants from countries with much lower levels of academic achievement is reflected in significantly lower average wages for immigrants compared to native workers. Such wage differentials either did not exist, or were very small, for immigrants entering in the 1960s. ~° Reform of U.S. immigration policies should be high on the policy agenda for the next Congress and the Administration. Reaching a consensus between business and labor and other groups will be extremely difficult since any change
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in policy to increase the average skill level of the immigrant population will require modifying the current family preference system, the employment-based visa program, and several temporary immigration programs including the H-1B program for highly skilled foreign workers. Reform of U.S. immigration policies to increase the skill level of the annual flow of immigrants is perhaps the most important policy to reduce wage inequality at the lower end of the wage distribution and at the same time increase the net economic benefit of immigration to the country. The AFL-CIO, and some business groups, oppose this type of immigration reform. Indeed, the AFLCIO has proposed providing illegal immigrants now in the country another amnesty since unions believe they can increase membership by unionizing lowwage workers in the service industry. Another amnesty for the five to seven million illegal immigrants will simply encourage more illegal aliens to seek entry to the United States, and it will depress further the wages of workers at the bottom of the wage continuum. Such proposals may benefit union organizers, but they will do nothing for American workers, and they will fail to maximize the net benefits from immigrant workers. It will be difficult to reform immigration policies. Given the low rate of unemployment and the apparent shortage of skilled workers, it should be possible to increase the cap on the annual number of high-skilled workers who can fill jobs under the H-IB program. The current cap on the annual number of H-IB visas is 115,000 for 2000, 107,500 for 2001, and 65,000 for 2002. The annual visa cap is typically set for only three years in advance. In recent years the annual ceiling for visas is reached well before the end of the year. For example, the Immigration and Naturalization Service (INS) announced in March of 2001 that it was accepting no more applications for visas since it had received sufficient applications to meet the annual limit of 115,000. The program grants temporary resident status; visas are valid for three years and can be renewed for an additional three years for a maximum of six years. It is relatively easy for employers and workers with H-IB visas to receive the three-year extension. To remain permanently in the United States, the H-1B worker must be sponsored by an employer for one of the 140,000 annual employment-based immigrant visas, which requires a separate and lengthy approval process. Several criteria define the level of skills necessary to qualify for a visa. For example, applicants must have theoretical and practical experience in the application of specialized knowledge, a bachelor's degree or higher or equivalent certification, and meet licensure requirements if available. Employers must attest that H-1B workers are receiving the prevailing wage paid to native workers and attest (in a Labor Condition Application) that working conditions for native
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workers will not be affected adversely. Employers must inform bargaining agents in union situations, or in nonunion facilities post notification prominently in the workplace, that application for H-1B visas has been made. There also is an appeal process and a fine and debarment system if employers violate the regulations. If the current cap on the annual number of temporary visas made available for hiring high-skilled workers were raised, or eliminated for a period of three years, immigration policy would move in the direction of increasing the average skill level of the immigration policy. Similarly, if the number of employmentbased visas available for permanent resident status were increased from its current annual level of 140,000, perhaps to 300,000, the human capital level of the immigrant population would increase. Ultimately, to raise the educational level of the immigrant population, achieve a reduction in wage inequality, and increase the net benefit from immigration to the U.S. economy, it will be necessary to modify the preference for family members - children, spouses, parents, and siblings of U.S. citizens or permanent residents who hold "green cards" but are not citizens. Obviously, family preference should be afforded for spouses and children. Should parents and siblings also have preference? The dominance of family preference in the annual flow of 900,000 immigrants limits the proportion of "independent" immigrants who enter the United States in response to employer demand for employees. The proposal to deny preference to some family relatives is not new; the U.S. Presidential Commission on Immigration Reform has recommended that siblings and adult children not be included in family preferenceJ ~ To migrate to the United States, siblings and adult children of a permanent resident would be required to enter with a temporary visa or a permanent employment-based visa. If the primary goal of public policy is to maximize the contribution of immigrants to economic growth, then the move toward skills-based criteria for entry as a legal immigrant is essential. As stated in the recommendations of the U.S. Commission on Immigration Reform, an immigration strategy more weighted to skills will maximize immigrants' fiscal contribution, minimize any fiscal cost of immigration, and protect economic opportunities for the small proportion of U.S. workers who are unskilled. If the basic program for legal permanent residents is reformed, changes in the temporary immigration programs can permit flexibility in the supply of skills required in labor markets in the next several decades. CONCLUSION The rapid changes in the structure of the U.S. economy resulting from globalization has shown that if business and the work force respond rapidly to
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accelerating technical changes, the overall benefits in terms of economic growth are substantial. The key to successful adjustment is flexibility in labor markets, in collective bargaining arrangements, and in employee compensation and benefits systems. Both management and labor should avoid rigidity in wages and conditions of employment and adopt policies that accelerate adjustment to change. The technological changes spawned by increased competition from globalization are likely to continue well into the future as new phases of innovation follow the information revolution. If management and labor fail to recognize the continuous need for the development of a flexible and skilled work force, the growth of GDP will be less than optimal and reduce the nation's ability to maximize social benefits.
NOTES 1. Jeremy A. Leonard, Stimulating Manufacturing Productivity Growth Through Investment in Computers, ER-449, Manufacturers Alliance/MAPI, June 1998. 2. See Monthly Labor Review, Bureau of Labor Statistics, U.S. Department of Labor, November 1999, for series of five articles which include detailed employment projections. 3. The Emerging Digital Economy I1, Executive Summary, U.S. Department of Commerce, June 1999. 4. Ibid., p. 42. 5. Marvin H. Kosters, Wage Levels and Inequality, American Enterprise Institute, 1998. 6. Trends in Labor Costs: 1997-1997, Manufacturers Alliance/MAPI, February 1998, p. 8. 7. National Science Foundation, www.nsf.gov. 8. George J. Borjas, The Economics of Immigration, Journal of Economic Literature, XXXII, December 1994, p. 1677. 9. Ibid., p. 1674. 10. George J. Borjas, Heaven's Door: Immigration Policy and the American Economy, Princeton University Press, pp. 42-44, 1996. 11. U.S. Commission on Immigration Reform, Becoming an American: Immigration and Immigration Policy, Washington, D.C., GPO, 1997.
