A Tale of Two (Unionized) Companies

By Robert J. Grossman Sep 1, 2005
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HR Magazine, September 2005These two organizations offer valuable lessons on dealing with unions and creating great work environments.

Back in June when the Society for Human Resource Management and the Great Place to Work® Institute (GPTW) announced the 50 Best Small & Medium Companies to Work for in America, it would have been easy to miss the link between two companies in the heart of the medium company list.

On the surface, these two organizations seem very different. Graniterock (No. 19) is a privately owned mining, building products and asphalt construction company spread over 21 locations in Northern California. MidState Medical Center (No. 16) is a private, nonprofit hospital three time zones away in Meriden, Conn.

Yet, of all 50 companies cited this year, these were the only two with any unionized workers.

Given that union environments have a reputation for being potentially contentious workplaces, it can be surprising to see unionized organizations on a list that places a premium on employee opinions, respect and camaraderie.

“It’s interesting when any company with a union makes the list,” says Amy Baker, director of GPTW’s Best Companies Team. “So many people believe union workplaces are tough environments.”

How, then, did Graniterock and MidState beat the odds? How do they deliver great benefits and competitive pay, and still foster cooperative, respectful work environments with unions in their midst?

It turns out that in both cases, they do it despite the presence of the union. Both companies create a collaborative environment with employees, and both try to minimize the degree of union involvement in the business.

But these organizations also differ, particularly in terms of how well the top business leaders get along with union leaders, which executives get involved in union discussions and the overall temperature of union relations.

In short, each company follows a different path; both offer important managerial lessons for HR and others.

MidState Medical Center

In 1999, when Lucille Janatka returned to MidState Medical Center as president and CEO, she inherited a growing institution that only a year earlier had moved into a new, state-of-the-art facility in the central Connecticut city of Meriden.

For Janatka, it was a homecoming, having served as director of nursing at MidState a decade earlier. A seasoned executive, she’d worked her way up, beginning as a hospital nurse, then climbing through the administrative ranks.

When she returned to MidState, Janatka brought a clear vision for the organization based on open communications, free exchange of information and continuous improvement—spearheaded by a process that engaged all employees within their areas and across the organization.

She also brought decades of collective bargaining experience—useful background since nearly 30 percent of MidState’s 926 employees are unionized nurses represented by Connecticut Health Care Associates, which is affiliated with the National Union of Hospital and Health Care Employees/AFSCME (American Federation of State, County and Municipal Employees).

Janatka’s experience with organized labor certainly did not blind her to the potential limitations unions can impose on an organization. As she took the reins of MidState, Janatka saw the union as a vexing challenge—“a potential roadblock”—despite the fact that the union had been significantly weakened eight years before.

In 1991, with the hospital and the union deadlocked over a contract that had expired nine months earlier, the union reluctantly agreed to abandon the “union shop”—which required all nurses to pay dues whether or not they joined the union. Replacing it was an open shop, offering nurses an opportunity to opt out of paying union dues.

Since that day in 1991, active union membership at MidState has declined precipitously. Of the 275 current full- and part-time nurses, less than half (130) are dues-paying members, sending $13 a week to the union. Today, the union still represents all of MidState’s nurses, but only members are empowered to negotiate and ratify contracts.

If more nurses haven’t ditched the union it’s because veterans at MidState still remember bitter strikes that started in 1980—and the factors that sparked them.

“We wanted health insurance, but the management at MidState said no, because most nurses were married and eligible for health care through their husbands,” recalls Mary Lou Millar, president of Connecticut Health Care Associates. “If you were pregnant and got sick, you couldn’t use your sick time; when you had a child, you were terminated.”

“We don’t want to lose what we fought for,” says Susanne Service, staff RN and a union representative. “I’ve never forgotten that others worked hard to win the benefits we all enjoy.”

While times have changed, union representatives admit, they want to make sure they don’t change again for the worse.

“We’re operating in a different context than before,” says Geraldine Pierce, staff RN, a union representative with 24 years of service. “Now, the union is our insurance policy. What works today may be undermined by the next person to walk through the door. In the end, it’s about checks and balances. We’re only as good as those in power.”

Mutual Respect

If Janatka was not blind to the potential problems unions can cause, neither was she blind to the potential dangers of a radical anti-union stance.

And she possesses a few traits that work to her advantage in avoiding such conflicts, including the fact that she once was a nurse and thus understands the issues and concerns of RNs. And the nurses know that.

She also has a good track record with the union brass. She and union president Millar, also a nurse and former MidState employee, share a deep reservoir of trust.

“Mary Lou knows me and my values,” Janatka says. “We’ve lived through 2 a.m. standoffs with threats flying across the table. That history helps me, and I know it helps her too.”

Millar agrees. “I’ve always seen Lucille as a person who looked at the whole picture, not a person who has a grudge against the union. She shares our vision of greater patient care, and I respect the fact that she’s moved up the ladder.”

Push It Down the Ladder

Now that Janatka has landed on the top rung, however, she has no intention of elevating the union to her level, or of making it a business partner. “I never call her or consult with her,” she says of Millar. “I’m not interested in empowering the union. You don’t want to validate or enhance the credibility of an adversary.”

Instead, she delegates union business down the management chain to HR director Ken Cesca and nursing vice president Linda Spivak. “Staff manages union relations,” Janatka explains. “Their focus is on relationship-building at the supervisory level where union meets supervisor.”

From the union perspective, Millar finds the marginalization frustrating but understandable. “Our goal is to be partners,” she says. “Other employers consult us on critical problems. The distinction at MidState is there’s a certain level at which they look for input from the union; then it stops.”

Although labor relations fall within Cesca’s domain, he says it takes little effort to manage. “I don’t spend a lot of time on union matters; it does not change my job.” In his last 12 monthly meetings to discuss HR issues with his boss, executive vice president Jeff Flaks, only twice did Cesca bring a union issue to Flaks’ attention.

“The union is just another complication in what we do,” says Cesca. “It’s not something that drives what I do from day to day. It only comes up every three years when we negotiate a new contract.”

Containment

Rather than attack the union, Janatka’s strategy is to bypass it entirely and treat nurses as individuals. Union officers never see the artwork in the executive suite, but nurses, like all other employees, have open access. They serve on teams, participate in decision-making, and receive briefings and information.

They also retain their union contract rights to bring a formal grievance, but that happens rarely. Cesca says there have been six grievances over the past two years; all were resolved informally at the supervisory level or in early stages of the process.

In the end, Cesca says, the vacancy rate tells the tale. In an environment where salary can be replicated or increased elsewhere, MidState enjoys a nurse vacancy rate of 2.8 percent; statewide it’s 7.1 percent.

“We treat the union with respect and honor all our responsibilities required by collective bargaining,” Janatka says. “But we work with the union only to the extent required; we don’t glorify it.”

Of course, the administration still must negotiate wages, benefits and working conditions. In these legally mandated areas, Janatka enjoys a reputation for evenhandedness and flexibility. She even agreed to re-open a contract to adjust wages upward to ensure that nurses continued to be paid competitively.

However, she’s quick to point out she did it not for the union, but for the nurses, who are “our people, and on our team.”

Neutralize/Minimize

What makes the MidState union strategy so effective is that it fits into Janatka’s management philosophy: empower everyone, create a first-rate physical environment and a caring culture, and the issues that unions rely on will fade away.

“Things have changed since the days of labor strife,” observes Kathy Wietrak, manager of outpatient cardiac services and, until recently, a union member for 20 years. “The whole working environment is new. The former administration was autocratic. Now we do things more as a team.”

The 70 percent of the staff who are nonunion pay little attention to the union. For them, collective bargaining could be MidState’s best-kept secret. “If we hear the word union once a year, that’s a lot,” says Jen Comerford, director of information services. “I don’t think about the union; it’s not part of the atmosphere,” agrees Karen Darley, a social worker. “Union issues are not part of our lives. You hear about union negotiations, but it means nothing to us. It doesn’t drive the atmosphere.”

‘Along for the Ride’

How important is the union in making MidState a great place to work? Union leaders cite few benefits they provide that nurses wouldn’t have anyway.

For her part, Janatka clearly would prefer the flexibility and autonomy that a union-free environment would offer, but she sees the union as a manageable hindrance. “It would be easier for us not to have a union,” she says, “but for us, it’s a nonissue. I think we’d be on the GPTW list either way.”

“The union is along for the ride; it doesn’t deserve any credit,” Darley says. “What explains our success is our culture of teamwork. We do what we need to do, and we do it together as a team.”

Even union representative Service concedes that the union is not a major player. “I can’t give the credit for being a great place to work to the union,” she says. “I love my job; it’s a nice place to work. But I can’t say I love it because of the union.”

Graniterock

When Graniterock became a best place to work finalist, it was just another day at the office. Since 1986, under the progressive leadership of owner Bruce Woolpert, who holds an MBA from Stanford and is an alumnus of Hewlett-Packard, the company has been racking up national awards and recognition.

The company—which builds roads and airports, as well as mines, manufactures and distributes basic construction materials such as rock, sand, gravel, asphalt and concrete—was founded in 1900 by Woolpert’s grandfather, A. W. Wilson. Since then, family members have succeeded each other as chief executive: first his grandmother, Anna Wilson; then his mother, Betsy; and now Woolpert.

Workers love that Woolpert is a regular guy. He drives an old Taurus wagon, dresses informally and works out of a cubicle in Graniterock’s impressive Watsonville, Calif., headquarters. Workers who have a problem with their job or personal life can call Bruce anytime, and many do.

This year Graniterock finished 19th in the GPTW rankings of medium companies, dropping from 10th the previous year, a statistically insignificant change, according to GPTW co-founder Robert Levering. What’s amazing is that in both years the company went through major labor strikes before employees completed their confidential GPTW surveys.

Most recently, in the summer of 2004, while managers struggled to keep the business going, 400 of Graniterock’s 750 workers—members of major unions including the Teamsters, Laborers, Operating Engineers and Machinists—stayed off the job as long as three months.

“The fact that our employees could still rate us so highly demonstrates their ability to draw distinction between union issues and their relationship with the company,” says Shirley Ow, HR director. “No matter how we treat the union, our people will still love us. This is a strong family culture. People bend over backwards to help each other. They might complain about a boss or a particular issue, but it’s the people they like. These feelings override all else.”

Ow may be right for now, but it remains to be seen, given Woolpert’s passionate, in-your-face approach to labor relations, whether Graniterock’s union workers will continue to give him and the company such high grades down the road.

From Idealist to Pragmatist

Graniterock has been a union shop since the 1930s when Anna Wilson, without a worker vote, recognized the Operating Engineers. After that, as Graniterock expanded, unions came along unchallenged.

“We’ve never had an election for any of the unions that are here,” Woolpert says. “Each one was recognized by management each time we opened a location.”

Woolpert has never wavered from his belief that unions should be tolerated, but not celebrated. “Bruce has always made it clear that everything outside of the terms and conditions in the contract is not the union’s business and that we would not give them any more power than we have to under law,” says Ow, who has been with Graniterock for 27 years, initially working for Bruce’s mother, Betsy.

“In some companies,” says Ow, “unions are too involved. We don’t want them to be business partners. It should be up to us to decide what’s best for our workers.”

From 1930 until 1990, Graniterock faced a strike every 10 years or so, but usually the company was not the unions’ focus. “This company has no history of its employees going out on strike over something that’s come up here,” Woolpert says. Instead, he explains, strikes of Graniterock employees have tended to be walkouts that were aimed at industrywide work rules, rather than issues that arose specifically and solely at Graniterock.

When Woolpert became chief executive in 1986, he assumed if workers were happy, the unions would leave him alone. “I believed that if I maintained good communications with my team members [employees] and they didn’t complain to the union about what we were doing, the union would let us do what we wanted to do,” he recalls.

In the years leading up to the company’s receipt of the coveted Malcolm Baldrige Quality Award in 1992, his approach seemed to be working brilliantly. But by 1995, the era of good feelings had started to come to an end. Woolpert didn’t mind offering his union employees higher salaries, but in exchange he wanted greater workplace flexibility, including the ability to cross-train unionized workers so they could perform multiple jobs, rather than calling in union specialists.

But the unions balked. Since then, disagreements have increased in number, intensified and become more personal. Woolpert finds himself spending more and more time jousting with union officials.

Ideological Divide

According to Woolpert, he’s in a desperate fight for survival, a last stand against militant union bosses who threaten employers’ autonomy. Previously in the construction industry, he says, employers could tolerate unions and still make a profit. But now it’s a new ballgame.

“Since 1968, the construction industry went from 80 percent unionized to 20 percent,” Woolpert says. Today, he adds, all but one of Graniterock’s main competitors is nonunion, which reduces their labor costs and gives them a significant price advantage.

Therefore, Graniterock competes not on price, but on quality and customer service. So far, Woolpert’s customers have been willing to pay the price differential. But he sees the price gap widening and worries customers will look elsewhere if he can’t keep costs in check. He says to stay competitive he needs union concessions regarding training, work rules and no-strike guarantees.

But union leaders can’t afford to give Woolpert a better deal than everyone else. They’re targeting Graniterock to send a message to all employers, Woolpert says, and that’s a practice to which he objects. “I am against uniform contracts that apply across-the-board in an industry. They want to define their markets rather than adapt to true business needs of individual employers.”

HR’s Critical Roles

Woolpert delegates day-to-day union relations to Ow, but there’s no question who calls the shots. At negotiation time, he’s at the table. And when he believes Graniterock’s autonomy is threatened or impeded, he’s in no mood for compromise.

Ow is the buffer. “Bruce charges ahead even if it causes chaos,” she says. “He can’t let it go; he’s more emotionally engaged than I am. He takes it more personally; it has consumed more of him.”

In contrast, Ow prefers to work quietly behind the scenes. “I put the balance back in, help neutralize stuff. I have good relationships with union leaders. They know I’m a straight shooter and they can work with me. We understand each other. I’ll confer with them and give them a heads up if we’re planning to do something they need to know about. They hate to be caught off guard.”

She spends upwards of 30 percent of her time on union matters. Together, Ow and Woolpert negotiate 18 separate contracts. She manages the contracts, interprets them and handles grievances. From nine months to a year before each contract comes up for renewal, she meets with company managers, identifies key issues and discusses them with Woolpert.

“We review all the ideas, decide what we want,” Woolpert says. “We go into negotiations with 30 issues, maybe get 15.”

Trouble in Paradise

In June 2004, Woolpert entered into a negotiation destined to escalate into Graniterock’s worst labor dispute to date. Teamster’s Local 287 in San Jose, representing 27 drivers, sought wage increases for its members. For Woolpert, the money was a minor issue. In exchange, he sought greater flexibility to cross-train, greater ability to deploy nonunion workers (in special situations) and a guarantee not to strike in sympathy if other Graniterock unions walked out.

When Woolpert and union negotiator George Netto locked horns, the drivers voted to strike and things began to unravel. Both sides accused each other of bad faith, and each filed unfair labor practice complaints with the National Labor Relations Board. Woolpert sued in the U.S. District Court in San Jose, a case that is still on appeal, claiming the strike was illegal because union leaders misinformed their members.

Fifteen days later, after the cooling-off period required in their contracts, Graniterock’s other unions walked out in support of their Teamster brothers. Then a unified contract—covering 100 sympathy strikers from all the major unions at the A. R. Wilson Quarry in Aromas, Calif., Graniterock’s largest facility—expired.

“We were out in solidarity at the time; then we took a strike vote on our own contracts; it was unanimous,” says David Clay, a member of the Machinist’s Union for 22 years and the maintenance team leader at Wilson Quarry.

Dog Fight

Woolpert contends his conflict is not with Graniterock workers but with the union leaders who represent them. He says workers were coerced into supporting their unions primarily because of fear and intimidation. Union members disagree.

“At the end of the day, the union leaders don’t vote to go out on strike—the workers do,” Clay says.

Attacks on the union leadership and tactics are not true, adds Carl Wolters, warehouseman and union shop steward. “It’s really union bashing,” he says. “I know the strike was not entirely the union’s fault. It took two people clashing to cause it.”

Woolpert insists he’s fighting over the big picture. He denies claims that his personal feelings about Netto have something to do with it. “Netto is no different than any of the other union officials,” he says. Yet, Woolpert repeatedly says Netto is “a liar” and that his “lying” caused the strike. When Graniterock’s litigation against the Teamsters runs its course, he says he’ll be proved right.

Comments from union and nonunion workers suggest that both Woolpert and Netto may have put a little too much of themselves into the negotiations.

“No question the confrontation between Netto and Bruce became personal,” says Henry Ramirez, sand and gravel business manager at Wilson Quarry. “We don’t know what happened. We’re like the children of divorcing parents. The father tells us one thing; the mother another. We don’t know who to believe. All we know is that we’re suffering.”

“Bruce and George shouldn’t have negotiated themselves,” says Clay. “Those two guys don’t get along; they’ll never see eye to eye. Each time the situation gets nastier. Truth is, I don’t believe either side. They’re just out to prove each other is wrong. It was a situation with two powerful guys holding everybody hostage.”

‘Us vs. Them’

Much of Graniterock’s mystique centers on egalitarianism—an extended family environment built on mutual respect. But especially since the last strike, when management successfully stepped in to do union jobs, there may be more of an “us vs. them” dynamic than meets the eye.

Woolpert doesn’t see it. Although a combative approach to unions is common in the construction industry, he says, “we are far better than our competitors when it comes to the ‘us vs. them’ dichotomy.” In fact, he adds, “three managers left us because of their attitude [toward union workers]. It was not acceptable.”

For their part, managers say union and nonunion workers are a happy family, but their comments reveal ambiguity.

“I don’t treat my guys like they’re in the union,” says Mike Chernetsky, branch manager at Monterey Concrete & Building Materials in Seaside, Calif., and a former Teamster. “I was alongside them when I was driving a truck; they’re my co-workers. But the union mentality can be a problem in those who live and die by the letter of the contract.”

Supervisors who are accustomed to working until a job is done and having everyone pitch in no matter their union certification admit they find the union mentality frustrating. “It makes my life more difficult,” says Mark Clarke, dispatcher with Monterey Concrete and a former Teamster. “It’s like managing a baseball team with 15 players on the roster. You want to put your best nine on the field, but because of seniority you can’t do it.”

“I’ve known most of our people forever, hired many of them,” says Mike Martin, branch manager of Salinas Concrete & Building Materials in Salinas, Calif. “No one thinks of them as union. We work more on a peer basis.” In more than 30 years, Martin has never had a grievance. “I try to get along with both sides,” he says.

Still, Martin’s 17 union workers have gone on strike twice in two years, leaving him in the lurch. How come? “It’s their willingness to be led around by union bosses,” he says. “Only a few union leaders on a power trip have jeopardized this entire operation. These guys look up to the union like it was their teacher, and everyone knows teachers are always supposed to be right. Now they’re learning that’s not necessarily true.”

Why It’s Still a Great Place

Thus far, and in spite of any ongoing labor difficulties, Graniterock continues to enjoy a positive working environment and a good relationship with its workers. And as good as Graniterock is, its star shines even brighter in a construction industry that is not known for progressive labor practices.

For example, work in the construction industry often is day to day; involuntary furloughs—both short and long—are common. And union workers, unlike nonunion salaried workers, get paid only when they work. Yet Graniterock workers know the company will do everything possible to keep them on the books full time.

“They make sure you’re working,” says Hans Maschmeyer, an operating engineer, currently a custom job estimator at Graniterock’s Pavex Construction Division in Watsonville, Calif. “Of the eight years I was in the union, I only missed two weeks of work. In other companies, guys are lucky to work three days a week. And the pay is top-notch.”

Pay and stability is where it begins. A culture that encourages people at all levels to do their job without being micromanaged, an exceptional continuing education and training package, and an owner who everyone knows will treat them well, union or not, complete the circle.

“Bruce is a fair guy. Union or not, it would be a great place to work,” says Audie Winter, field supervisor at Pavex and a member of Operating Engineers Union, Local #3. “I can actually go to the owner, sit down and talk with him, and feel comfortable. That’s the best. It just doesn’t happen at other places.”

Winter joined Graniterock after 24 years at nearby competitor Granite Construction in Watsonville. “Coming here was the best move I ever made—the intimacy, the tight-knit workforce. It’s been great every day.”

Justin Robinson, plant engineer and an operating engineer for Graniterock’s Monterey Concrete branch, says: “I like this company; it’s my home. If I have to leave the union, so be it. I’d leave tomorrow. I don’t like someone other than the person who pays the bills telling me if I can work or not.”

Storm Clouds on the Horizon

But even ardent Graniterock supporters may be growing weary of the percolating conflicts between the company and the union. After the last strike, 20 workers did not return. “One of my co-workers, who started with me 25 years ago, left,” says Bruce Riechers, secondary plant foreman at Wilson Quarry. “He’d had enough. The stress, anxiety and waiting is the worst part, even worse than losing money.”

It seems likely that if Woolpert is hoping for a “three-peat” in next year’s Great Place to Work sweepstakes, right or wrong, he’ll have to do some fence-mending. There are indications he may have tried to move too fast, and is perceived as too unyielding in his insistence on union concessions. Unless he is able to broker a truce, his hands-on management style—such a plus in other areas of his business—may limit his effectiveness as a leader. Of course, the unions may also want to moderate their hard-line tactics or else run the risk of hurting their members more than helping them.

In the end, some companies can pick up and leave when they believe unions are unreasonable. Not Graniterock. With its mining and other construction interests in Northern California, there’s no place to go.

Robert J. Grossman, a contributing editor of HR Magazine , is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

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