A major cigarette manufacturing plant was capacity-bound due to increased international sales. Management studies indicated that it would cost several hundred million dollars to add the additional equipment required to meet the increased production demand.
Alternately, by expanding the plant from a 5 day operation to continuous 24/7 production, negligible capital investment would be required.
Since there was enabling language in their union contract for 7-day, alternative work schedules, a new 12 hour, work schedule was mutually agreed upon by labor and management and presented for membership ratification. However, to everyone’s surprise, the proposed schedule was unanimously rejected by the 1924 shift workers, who subsequently proceeded to vote the entire slate of incumbent union officials out of office, and threatened to go on strike.
Management then took the matter to mediation and ultimately to binding arbitration, as provided for in their Collective Bargaining Agreement, and retained Circadian Technologies, Inc. (CTI) as their technical expert to participate in the hearings and advise on strategy.
At stake for the company was its international competitive status, plus a projected cost of approximately $250 million in capital investment (to purchase and install sufficient new equipment to essentially achieve the equivalent production that a change in shift schedules would yield). In addition, the company estimated a direct cost impact of $40-50 million if they maintained the current schedule and worked overtime to achieve the needed production level. The challenge was to find a continuous schedule that would be acceptable to the people but that would not create additional costs for the company.
CTI collaborated with company attorneys and manufacturing management to critique the schedule that management brought to arbitration. CTI’s recommendations reinforced the company’s thinking that it would be cost neutral for the company and the employees. Moreover, the schedule would require a minimum lifestyle change on the part of the shiftworkers to address some of their family/social concerns.
Conversely, the 8-hour schedule selected was known to be fatiguing and socially unacceptable for most employees, given that it provided for a minimum number of weekends off.
Since there was no turning back at this late juncture, CTI recommended that the new schedule be installed on a trial basis, and that the company offer to facilitate an employee-driven process to self-select a different continuous schedule if the arbitrated one proved undesirable.
The company was successful in achieving a favorable arbitration decision on the 8-hour schedule, and, in a show of good faith that was well received by both the International and Local Unions, followed-up on CTI’s recommendation by offering to immediately allow the employees an opportunity to undertake a
Shift Schedule Optimization Process (SSOP) selection process and determine a new schedule of their own choosing. However, the employees and the union felt it politically expedient to try the arbitrated schedule first, and to reserve the right to exercise the offer at a later date if desired.
Particularly gratifying were comments made by the union officials to management regarding CTI’s participation in the arbitration hearings: "If you would have brought Circadian in six months ago, we wouldn’t have had to go through all of this!"
As anticipated by CTI, the arbitrated schedule proved unsatisfactory to the majority of employees over a short period of time. Morale decreased, fatigue levels were high, and with only seven weekends-off per year inherent in the arbitrated schedule—quality of life became a burning issue. Consequently, the plant was struggling to meet its productivity goals and objectives. When it then came time to re-negotiate the union contract, the company offered many costly incentives to encourage acceptance by the employees—in return for a resolution to the shift scheduling/productivity issues. Unfortunately, the contract offer was unanimously rejected over the scheduling issue.
CTI was then retained as a neutral third party expert to work with the union and employees, to resolve the scheduling issue, and help to facilitate ratification of the contract. CTI developed a very close working relationship with the new union leadership. Comprehensive employee education, training, and communication programs were developed and implemented to replace emotions and mistrust with factual information.
After building support and establishing credibility with the employees, CTI facilitated its SSOP process which, once again, achieved the self-selection of a new schedule by the employees. Remarkably, the employee turnout for the schedule vote was the highest ever recorded in the history of the local union. Moreover, a 12-hour schedule was in fact chosen by the employee membership.
The new union contract was consequently ratified by a 2:1 vote, and the new 12-hour schedule was incorporated. Employee morale and quality of life immediately improved, and the company has avoided some $40 million in direct cost impact and $250 million in new capital investment.