Housing Helpers Case Study:
It has now been one week since the last time the groups met. Although final negotiations were going quite well, the two sides could not reach agreement on two mandatory conditions of employment. The two issues are drug screening and medical benefits contribution. Last, best, and final offers are being made. A vote to strike has been performed and has been authorized.
Players
Company: Housing Helpers, a union-based, residential housing general contractor. The company is located in the southeastern United States and specializes in quality affordable housing. Their largest client is a non-profit organization that helps single parents find safe housing. The company employs 1,942 people and has several non-union competitors.
President: Jim Adams, a 45-year old African American male, in his second marriage with three wonderful sons, 8, 10 and 12. Jim’s father Roland started the company in 1972. Jim has never worked anywhere else.
Vice President of Marketing: Samuel Adams, no relation to Jim. African American and 37-years old, Samuel received his B.A. in business from Duke University. He has held several marketing positions for several companies in his career. He has never married and is a workaholic. He brokered the deal with the non-profit organization above.
Vice President of Operations: Raul Fernandez. Raul, like Jim, has come up through the company. He still carried his signatory card from the union until five years ago when he was promoted to Project Manager. He has since served as area manager and has just accepted the role of Vice President of Operations. At 34, he is the youngest VP of Operations the company has ever hired.
Human Resource Director: Susan Brown is 42-years old, Caucasian, and a single parent of a teenage daughter. Susan graduated from Phoenix University last year and has over 20 years of experience.
Attorney for the Contractor: Vicki Park is 63-years old. She joined Housing Helpers 10 years ago after she sold her solo practice. She just remarried her first husband after a 15 year hiatus.
Union Organizer: Gerry Accent is 59-years old. He has held every position conceivable in the union. He and his wife of 30 years are expecting their second grandchild at the end of the month.
Union Business Agent: Beth Fossom is 29-years old and has worked for the union since she was a teenager, except during her college years when she graduated from the University of Colorado on an academic scholarship.
Negotiation Discussion
Beth: As we have been discussing for several weeks, regarding medical benefits, the employees want to return to the percent of contribution model the company had in the contract prior to the current contract.
Susan: The company cannot continue to absorb large increases in the cost of medical care each year. As you know, we are self-funded, which helps the problem a little bit, and as a gesture of good faith, we will absorb this year’s increase without passing cost to the employees. However, in the current contract, we have already agreed to pay a fixed dollar amount for each employee’s benefits. While we may adjust this amount, we cannot tie ourselves to a number we cannot control, that is, the increasing medical premiums.
Beth: So let me get this straight, in future years, you would pay the same amount that you are paying today, and you would simply pass any increase on to the employee?
Susan: No, I am not saying that. We would be willing to adjust the dollar figure upwards by as much as 10% each year. We expect the employee to….
Beth: (Interrupting.) You expect the employee to absorb the rest of the increase, thereby effectively reducing the 95% employer contribution to our employee’s healthcare. You are taking away wages from our employees. While this has not been a problem historically, this was a huge problem for our members this last year, when the increase from the insurance company was 35%.
Jim: Beth, you knew this would be a risk when we changed the contract last time around. Besides, in order to continue operating competitively in this marketplace, we must keep the current structure. Our non-union competition does it. We must do it as well.
Gerry: Are you talking about the non-union competition that offers benefits, or the competition that does not even offer benefits?
Jim: Precisely my point. In this marketplace, we have to compete with companies who do not even offer insurance to their employees.
Beth: Our members work hard, and they deserve to work for a company that will take care of their benefits and keep them focused on their work. Speaking of which, what about your change in practices? Random drug screening? We already do post-employment-offer drug screening and post-accident drug screening.
Susan: Yes but we need to institute random drug screening so that we do not repeat the accident caused by the carpenter who was high on marijuana. Do you realize what happened to our experience modification number as a result of that accident alone? Not to mention the funeral for Mr. Abeyta, or the two others besides himself he put into the hospital.
Beth: It was a tragic incident. The carpenter’s worker’s compensation benefits will be cut in half, and we were also at Tyronne Abeyta’s funeral. His wife will be well taken care of.
Susan: What about the two others who will not be going home to their families for two more weeks of hospitalization? Not to mention the physical therapy they will need. The only way to ensure this does not happen again is through a preemptive strike. We cannot budge on this issue.
Beth: Then it appears we have an impasse.
That evening, Jim Adams, Samuel Adams, Susan Brown, Vicki Park, and Raul Fernandez sitting around the conference table at Housing Helpers. It is 6:30 p.m. on Thursday. The group has been meeting for several hours.
Jim: So that is it guys, it looks like we are at an impasse. We negotiated for weeks, but I am not willing to give up on the drug testing and they are not willing to budge on us providing health insurance at those ridiculous prices. I am not going to re-sign the contract with the union. What are your final thoughts on the matter?
Samuel: You know they are going to strike. As I have stated before, Jim, this is going to make my job significantly more difficult. I anticipate we will lose 40% of our customer base.
Raul: I cannot believe you are actually going to go through with it! We are either going to bust out of the contract, bust the union out of the company, or bust the company. Although we are going to see a huge hit in our jobs, and I am going to have to deal with the strike, Susan and I are going to have a lot fewer headaches if we come out on the other side of this thing.
Samuel: If….
Susan: (Optimistically.) If Phelps-Dodge could do it in the 80s in Phoenix, we can do it in the south. Given the severe blows the weather has dealt this region, the company is sure to have the public support. All we are trying to do is build affordable housing for displaced families. The union will not allow us to do random drug testing to ensure our workforce is safe. They claim it is an infringement of their rights. I say it is a way to stop accidents before they begin.
Vicki: You are absolutely right about the union striking. It is their right to strike when we reach what they consider an impasse. As we have discussed, in order to make this stick and not get overruled by the NLRB for bargaining in bad faith, we will have to stick to the rules of the old contract. We will still have to make our pension and benefits payments, and if there are scabs who come across picket lines, we will have to pay them according to the contract. By the book, that is how we will win. Of course, employees hired outside of the contract are not subject to the contract. The Phelps-Dodge battle was long and nasty, but the company ultimately prevailed.
Jim: See, that is the kind of attitude I need around here—realistic but positive. Ladies and gentlemen, we are about to undertake a tremendous effort. By me not signing the agreement with the union, it will send a shockwave through the industry. And Samuel, we may lose 40% of our customer base. Matter of fact, when my father founded this company in 1972, the union helped him get up and running. I think we absolutely needed a union then. They helped ensure our employees were well-trained and safe. But make no mistake, times have changed. We can have our own in-house training, drug screening, and safety programs. We can find our own benefits, and we will not have to deal with the negotiations or the grievances. We will be able to write our own rule book. It will likely be a smaller company, but I think we can be more efficiently run and more profitable without the union. Now who is with me?
Raul: I am in.
Susan: Count me in too, Jim.
Vicki: You know I am in.
Samuel: Oh, of course I am in.
Raul: I will get the supervisors in here for a meeting first thing tomorrow. There have been rumors floating around for weeks that we are not going to sign. I will get them prepared.
Susan: I will call the temporary labor force to get replacement workers.
Jim: Great. We will need to meet this weekend.
Vicki: Do you want me to make the call?
Jim: No thanks, Vicki. I would prefer to do this one myself.
Monday morning at the union hall, 6:30 a.m.
Beth: Gerry, I just got off the phone with Jim Adams over at Housing Helpers.
Gerry: Oh yeah, what did Jim have to say? Is H Squared going to drop the drug testing issue and sign the agreement?
Beth: No. He says we have reached an impasse and he will not sign until we allow the drug screening. He also says it would make him non-competitive to sign the agreement paying the benefits for the members and their families.
Gerry pauses for a moment as the magnitude of what has just transpired hits him. Mentoring now, he turns to the youthful Beth.
Gerry: I have been here many times before; we have been negotiating this contract for weeks. They do not like it, we do not like it. Now he wants to play hardball and call it an impasse. We will play hardball. We have contacts at the ACLU and we will tell our field to strike their jobs. We will see how a couple of weeks without any work getting done sit with them. Beth, get a hold of the guys on the jobsites. We are pullin’ em off the jobs.
Beth: You got it, Boss. But the word on the street is that the staffing houses have been busy all weekend. I do not think this will be resolved in a few weeks. In fact, I think he may be trying to bust us. Better call your contact.
Gerry: Excellent! I cannot wait for one of his managers to do something that will allow us to slap him with a bad faith bargaining charge.
In the meantime, I will call my friend at the Times-Picayune. I can see the title now: Hardworking Americans, locked out by ruthless corporation….
You’re Assignment
Submit a paper that addresses the following components:
1. Assess the ability to continue operations (or take a strike) . Is a strike imminent?
2. Analyze the bargaining power of both the union and the organization.
o Who do you believe has the upper hand in this negotiation? Support your position.
3. You will be assigned to a side in this impasse. Determine your side’s best course of action.
o Do you think a strike is in your side’s best interest? If so, play it out here. Include the details of what will happen to the workers, the company, and the union if a strike occurs. If, on the other hand you believe a strike is not in your best interest, what alternative method would you implement? Role play that scenario by including details of your chosen method.
o Whom do you involve? You may introduce any characters you need in your role play.
o Identify steps you would take to ensure your side wins. Use historical data to support your case.