LABOR-MANAGEMENT PARTNERSHIP A REPORT TO THE PRESIDENT

United States Office of Personnel Management

LABOR-MANAGEMENT PARTNERSHIP
A REPORT TO THE PRESIDENT
December 2000

Section I - Requirements of Executive Order 12871

Section 2 of Executive Order 12871 instructed Federal agencies to take the following five specific steps to help build labor-management partnerships throughout Government:

This section of the report describes the extent to which agencies have met these five specific directives.

1. Creation of Partnership Councils

Section 2(a) of Executive Order 12871 directs agencies to "create labor-management committees or councils at appropriate levels." We found that agencies and unions had more success implementing this aspect of the Executive Order than they did any other.

Of the 38 reports that OPM reviewed, 23 described partnership council implementation we would characterize as substantial. That is, partnership councils are in place in most parts of these 23 agencies. Eleven reports described agencies with moderate levels of partnership council implementation. These are agencies where partnership councils exist in some parts of the organization. Finally, 4 reports described agencies with minimal levels of council implementation. These are agencies where councils exist in few parts of the organization.

Not surprisingly, we found widespread agreement among agencies and unions that the most successful partnerships have well-organized and active partnership councils. Several agencies reported that crucial aspects of the Executive Order, such as training and pre-decisional involvement, work best through a partnership council. We also found that labor-management councils are often the exclusive vehicles for the successful implementation of partnership initiatives.

Listed in Table 1 are the agencies that have substantially fulfilled this Section of the Executive Order. Listed in Table 2 are agencies that have achieved moderate success.

Table 1

Agriculture
Commerce
Defense
Education
Environmental Protection Agency
Federal Emergency ManagementAgency
Federal Mediation and ConciliationService
Federal Trade Commission
Health and Human Services
Housing and Urban Development
International Trade Commission Labor
Merit Systems Protection Board

National Labor Relations Board
National Science Foundation
Nuclear Regulatory Commission
Office of Personnel Management
Overseas Private Investment Corporation
Small Business Administration
Social Security Administration
Treasury
United States Agency for International Development
Veterans Affairs

Table 2

Consumer Product Safety Commission
Energy
Federal Energy Regulatory Commission
Federal Labor Relations Authority
General Services Administration
Interior
Justice
National Aeronautics and Space Administration
Railroad Retirement Board
State
Transportation

Here are some leading examples of substantial partnership council implementation:

In October 1998, the Department of Veterans Affairs National Partnership Council developed a specific three-point labor-management strategy to foster partnership in the Department. The three fundamental points of the strategy are:
1. Using partnership at all levels in a clearly defined pre-decisional mode on major issues, with the goals of improving the effectiveness and the timely issuance of policy and minimizing or eliminating the need for traditional bargaining.
2. Fostering local partnerships resulting in an increase in the total number of effectively functioning partnerships in the field.
3. Marketing and publicizing VA National Partnership Council activities to increase field awareness and communication on partnership efforts.
In an effort to foster, support, and encourage the formation of successful partnerships, the Department of Interior Partnership Council publicizes the benefits of partnership through various initiatives, including a Labor-Management Partnership Council Award. In addition, the Council prepares a quarterly "Partnership Tracking Measure" which allows top management officials to monitor partnership activity throughout DOI.
Out of 92 union locals in the US Forest Service represented by the National Federation of Federal Employees (NFFE), the Forest Service and NFFE have established partnership councils in 85. This strong foundation of partnership activity has enabled the Forest Service (part of the Department of Agriculture) to achieve significant cost savings through reduced labor-management litigation and significantly shorter contract negotiations.

2. Pre-decisional Union Involvement

Section 2(b) of the Executive Order directs agencies to "involve employees and their union representatives as full partners with management representatives to identify problems and craft solutions to better serve the agency's customers and mission." This early and meaningful union involvement is often referred to as pre-decisional union involvement. Out of 38 reports, 14 agencies reported substantial levels of pre-decisional union involvement and 15 described moderate levels. Nine agencies reported a minimal level of such activity.

Many agencies extolled the benefits of pre-decisional involvement. They reported that restructuring, reorganization, and other kinds of workplace changes encounter much less resistance and can be accomplished more effectively and with greater employee support when management works closely with the union before changes are planned and decisions are made.

Listed in Table 3 are agencies that have substantially fulfilled this Section of the Executive Order. Listed in Table 4 are agencies that have achieved moderate success.

Table 3

Commerce
Education
Federal Emergency Management Agency
Federal Energy Regulatory Commission
Federal Labor Relations Authority
General Services Administration
Health and Human Services
International Trade Commission
Merit Systems Protection Board
National Science Foundation
Overseas Private Investment Corporation
Social Security Administration
Transportation
Agency for International Development
Veterans Affairs

Table 4

Agriculture
Defense
Environmental Protection Agency
Federal Communications Commission
Federal Trade Commission
Housing and Urban Development
Interior
Justice
Labor
National Aeronautics and Space Administration
National Archives and Records Administration
Nuclear Regulatory Commission
Office of Personnel Management
Railroad Retirement Board
Small Business Administration
State
Treasury

Here are some leading examples of pre-decisional union involvement:

Beginning in January 1998, the Internal Revenue Service partnered with the National Treasury Employees Union in a massive effort to modernize the IRS. With a direct impact on all 115,000 IRS employees in more than 800 locations, the IRS modernization is perhaps the most ambitious civilian reorganization in the history of the Federal Government. Early on, the parties signed a formal Restructuring Agreement establishing the basic principles that were to guide them as they created new business divisions and began to implement final design plans. The IRS Commissioner and the President of NTEU jointly announced the plans for modernization. Throughout the modernization effort, IRS and NTEU continued to jointly deliver messages and updates to IRS employees. NTEU members served on modernization teams, where they worked side-by-side with management proposing solutions to complex business problems. Over 1400 employees representing management and NTEU were involved in this effort. Just two short years after beginning modernization, there have been measurable improvements in customer service and employee job satisfaction has risen for the first time since 1993.
At the Department of Transportation, management and union members of the agency's Partnership Council participate with career and political executives in high- level agency initiatives, including strategic planning and Secretary Slater's Leadership Conferences. These sessions are setting the direction of transportation initiatives for the next quarter century.
Since early 1994, the President of the American Federation of Government Employees (AFGE) Council of Locals at the Department of Education has been a full participant in discussions and deliberations that take place in weekly senior leadership meetings conducted by the Deputy Secretary and attended by assistant secretaries and other senior officers. The Council President has also joined Senior Officers in budget planning retreats over the last few years.
The Raytheon Missile Systems facility in Tucson, Arizona (part of the Defense Contract Management Command) designs, develops, and supports virtually all tactical missiles in the U.S. inventory. Pre-decisional involvement is viewed by AFGE Local 3973 and management as the highlight of their Labor-Management Partnership Council and the main reason for the organization's success. Working together, labor and management helped achieve an overwhelming improvement in customer service ratings, even as the workload increased by over 100 percent and the organization downsized. There have also been no grievances or unfair labor practice charges over the past two years. The agency estimates that the reduction in labor-management litigation saved nearly $900,000.

3. Training in ADR and Interest-Based Bargaining Techniques

Section 2(c) of the Executive Order directs agencies to "provide systemic training of appropriate agency employees (including line managers, first line supervisors, and union representatives who are Federal employees) in consensual methods of dispute resolution, such as alternative dispute resolution techniques and interest-based bargaining approaches."

Next to the creation of partnership councils, this aspect of Executive Order 12871 has received the most attention and achieved the widest implementation by Executive departments and agencies. Eighteen agencies described substantial levels of training activity consistent with the Executive Order mandate, 14 reports noted moderate training activity, and four described minimal training activity. Two reports did not mention training at all. There was almost unanimous agreement among reporting agencies and unions that an investment in training is the best strategy to help labor and management learn the skills they need to develop effective partnerships.

Listed in Table 5 are agencies that have substantially fulfilled this Section of the Executive Order. Listed in Table 6 are agencies that have achieved moderate success.

Table 5

Agriculture
Commerce
Consumer Products Safety Commission
Defense
Education
Federal Emergency Management Agency
Federal Labor Relations Authority
Federal Mediation and Conciliation Service
Health and Human Services
Labor
Merit Systems Protection Board
National Archives and Records Administration

National Labor Relations Board
Nuclear Regulatory Commission
Office of Personnel Management
Overseas Private Investment Corporation
Transportation
Treasury
United States for International Development
Social Security Administration

Table 6

Corporation for National Service
Energy
Environmental Protection Agency
Federal Energy Regulatory Commission
Federal Trade Commission
General Services Administration
Interior
International Trade Commission
Justice
National Endowment for the Humanities
National Science Foundation
Small Business Administration
Veterans Affairs

Here are two leading examples of successful partnership training:

The Social Security Administration and AFGE began a major partnership training effort for executives of the agency and representatives of AFGE. To date, employees at 20 regional offices have received training in conflict resolution, consensus decisionmaking, and interest-based problem solving.
At the Department of Agriculture, all the agency-level partnerships and the vast majority of local partnerships have invested heavily in training. Labor and management have been trained -- and in many cases retrained -- in interest based bargaining, alternative dispute resolution techniques, basic labor relations principles, change management, and consensus decisionmaking. The training has been offered to managers, supervisors, union representatives, and employees.

4. Negotiation of Permissive Subjects

Section 2(d) of Executive Order 12871 directs agencies to negotiate with their unions "over the subjects set forth in 5 U.S.C. 7106(b)(1), and instruct subordinate officials to do the same." These subjects are the numbers, types, and grades of employees assigned to any organization, work project, or tour of duty; and the technology, methods, and means of performing work. These are often called "permissive" subjects of bargaining because, under the express terms of Section 7106(b)(1), they are negotiable only "at the election of the agency."

The President understood that discussions between labor and management about the number of employees assigned to a job, the way the job gets done, and the technology needed to do the job well are essential to any conversation about how to improve the performance of Federal agencies. He directed agencies to negotiate over the (b)(1) subjects to help promote partnerships in which labor and management work together to solve crucial workplace issues.

Unfortunately, no other section of the Executive Order has yielded such mixed results nor stimulated more controversy. Not long after the Order was issued, litigation arose over the fundamental issue of whether the Executive Order constitutes an "election" to bargain as required by the Labor-Management Relations Statute. In a case decided June 19, 1998, the Federal Labor Relations Authority held that the Executive Order does not constitute an election to bargain over the (b)(1) subjects. Department of Commerce and POPA, 54 FLRA No. 43. While acknowledging that the President had clearly directed agencies to elect to bargain over the (b)(1) subjects and expected them to do so, the FLRA distinguished between a Presidential mandate to bargain and an agency's statutory election to bargain. The FLRA's ruling has been upheld by the U.S. Courts of Appeal in the Ninth Circuit and the District of Columbia Circuit.

Only 9 agencies reported agreements to negotiate over the (b)(1) subjects and only 6 apply such agreements to their entire agencies. Of the remaining agencies, 21 reported that they address (b)(1) subjects in partnership with their unions but do not negotiate in the traditional sense. Eight agencies did not report any activities at all with respect to this Section of the Executive Order.

Of the 21 agencies that reported using a "partnership" approach to (b)(1), only 3 are working with their unions on (b)(1) issues in ways we would characterize as substantial. By substantial, we mean agencies emphasizing early and meaningful union involvement when (b)(1) subjects are being discussed and making serious efforts to resolve (b)(1) issues through consensus. Eleven agencies in this category make moderate efforts to involve their unions on (b)(1) matters, while another six agencies report only minimal union involvement on (b)(1).

Many of the separate union reports noted the reluctance or refusal of management to negotiate over the (b)(1) topics. Some union officials argued that management's refusal to bargain over (b)(1) demonstrated their overall lack of commitment to partnership. They also said it tainted other aspects of the labor-management relationship. There is no question that the controversy surrounding (b)(1) bargaining remains a significant barrier to partnership in many places.

Listed in Table 7 are agencies that have substantially fulfilled this Section of the Executive Order. Listed in Table 8 are agencies that have achieved moderate success.

Table 7

Agriculture
Federal Communications Commission
General Services Administration
Health and Human Services
Labor
Merit Systems Protection Board
Office of Personnel Management
Railroad Retirement Board
Social Security Administration
Transportation
Treasury
Veterans Affairs

Table 8

Commerce
Defense
Education
Federal Energy Regulatory Commission
Federal Trade Commission
Housing and Urban Development
Interior
NASA

National Archives and Record Administration
National Labor Relations Board
Nuclear Regulatory Commission
Small Business Administration

Here are some examples of best practices when it comes to bargaining over (b)(1):

In September 1998, USDA Secretary Dan Glickman issued a memorandum stating that, under Executive Order 12871, "agencies must, and USDA agencies will, bargain over [the 7106(b)(1) subjects]." He went on to say that negotiations should occur in an interest-based manner relying on consensus decision-making and trust: "[I]t is essential that bargaining on permissive areas be conducted in a constructive and well-planned manner andnot conducted in an adversarial setting." Two follow-up memoranda issued by the Assistant Secretary for Administration reinforced the agency's decision to bargain over the (b)(1) subjects.
As part of the massive effort to modernize the IRS, NTEU and the agency jointly discussed and agreed upon all aspects of the reorganization, including Section 7106(b)(1) issues. It was critical to the success of the modernization effort to determine the number and type of employees who would work in new business divisions. In some cases, entirely new jobs had to be developed. NTEU and IRS management jointly determined what those new positions should be, where they should be located, and which existing positions might migrate into the new jobs. Joint labor-management teams also developed the methods and means of performing much of this new work.
The Department of Labor and the AFGE National Council of Field Labor Locals responded to Executive Order 12871 by forming a partnership council, working toward the goals of an effective labor-management partnership, and agreeing to negotiate the subjects in Section 7106(b)(1) through an interest-based approach that relies on consensus decisionmaking. The principles of this partnership have been memorialized in the parties negotiated agreement and are included in their jointly published Partnership Handbook for managers, supervisors, and union officials.
In a letter to all components of the Department of Transportation, Secretary Slater had this to say about the importance of bargaining over the subjects in Section 7106(b)(1):
The current collective bargaining agreement between the Office of Personnel Management and AFGE Local 32 includes a comprehensive contract article covering labor-management partnership. In that article, the parties emphasize the importance of an effective partnership and agree to bargain the substance of 7106(b)(1) subjects.
Following a recommendation from the Health and Human Services Partnership Council, Secretary Donna Shalala and Deputy Secretary Kevin Thurm elected to negotiate over the (b)(1) subjects in a "partnership context." Here is the way they described the impact of this decision on HHS and its employees:

HHS and its unions agreed on a number of important underlying principles that support the agency's decision to bargain over the (b)(1) subjects. They agreed (b)(1) issues should be addressed in the "partnership arena," although traditional negotiations were not ruled out; most negotiations over (b)(1) should not reach impasse, but if an impasse occurs it should be resolved in a way that strengthens partnership; and (b)(1) discussions should focus on accomplishing the agency's mission and improving the quality of worklife.

5. Evaluation

Section 2(e) of Executive Order 12871 directs agencies to "evaluate progress and improvements in organizational performance resulting from labor-management partnership."

We found only 6 agencies have substantially evaluated the impact of partnership on organizational performance. Another 7 agencies have engaged in what we would characterize as moderate evaluation efforts while the largest number of agencies -- 17 in all -- reported only minimal efforts in this area. Eight agencies reported no information with respect to evaluation.

We suspect the absence of good evaluation models accounts for much of the inactivity in this area. The National Partnership Council recognized this problem and is taking steps to remedy the situation. The Council has sponsored a research study to take an in-depth look at the impact of partnership in eight Federal agencies. One product of this study will be an evaluation template that will have widespread applicability to Federal agencies and unions. We anticipate that more agencies and unions will evaluate their partnerships once the study is completed and the template becomes available in the next few months.

Listed in Table 9 are agencies that have substantially fulfilled this Section of the Executive Order. Listed in Table 10 are agencies that have achieved moderate success.

Table 9

Defense
Federal Emergency Management Agency
Federal Mediation and Conciliation Service
Health and Human Services
Social Security Administration
Transportation
Treasury

Table 10

Education
Environmental Protection Agency
Federal Energy Regulatory Commission
International Trade Commission
Justice
Labor
Office of Personnel Management
United States Agency for International Development

Here are two leading examples of partnership evaluations:

The Department of Defense Partnership Council conducted a comprehensive examination of partnership, partnership-related training, and labor-management relations in the Department of Defense. The purpose was to identify the principles, practices, and training strategies that could strengthen partnership and improve labor relations. Information was gathered through a random survey of 262 Defense locations. The sample was drawn after sorting organizations into one of three categories: those currently engaged in partnership; those where no partnership ever existed; and those where partnerships had dissolved.
The Transportation Partnership Council has undertaken a comprehensive examination of partnerships within DOT to determine the current state of partnership and to identify factors leading to success or failure of partnership efforts. Working with the US Coast Guard Academy, DOT conducted a two-part evaluation. Phase 1 involved the development of a labor-management climate survey, which is completed. Phase 2 involved site visits and an in-depth analysis of a significant sampling of union-management partnerships across DOT.
The Social Security Administration and AFGE conducted a top-to-bottom assessment of their partnership and its impact on the agency, its customers, and employees. Labor and management compiled an extensive inventory of agency initiatives that grew out of partnership; surveyed and interviewed members of partnership councils, work teams, front-line employees, and managers about their perceptions of partnership; identified improvements in organizational performance and cost savings resulting from partnership; and made a series of recommendations for the future.

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