Organizational Processes for TPP: Session 12

1. Organizational Processes for TPP: Session 12 Public-Private Partnerships and Institutional Change Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

2. Session Design • Welcome and Overview (5 min.) • Institutional Change: Case of the U.S. Aerospace Industry (30 min.) • Public Private Partnerships (45 min.) • Break (10 min.) • Support-Functional Alignment (from last session) (45 min.) • Skills Module (30 min.) • Final Assignment (15 min.) Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

3. Institutional Change • Opening Discussion Exercise: – Assume you are the chief of staff to the U.S. Commission on the Future of the Aerospace Industry. You want to make sure the Commission considers and hopefully adopts the recommendations in the report on “Building the 21st Century Aerospace Workforce.” You also want to ensure that the Commission takes the steps necessary to ensure that the recommendations are actually implemented. What would you do to make this happen? Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

4. Aerospace Mission and Vision • Overall Mission for the Aerospace Industry: – Enabling the global movement of people and goods; – Enabling the global acquisition and dissemination of information and data; – Advancing national security interests; and – Providing a source of inspiration by pushing the boundaries of exploration and innovation Source: Lean Enterprise Value: Insights from MIT’s Lean Aerospace Initiative (Palgrave / MacMillan, 2002) • 21st Century Workforce Vision: – Attract and retain a 21st Century aerospace workforce with the skills, capabilities and commitment to enable transformation and success in the aerospace industry Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

5. Aerospace Strategic Challenges • Knowledge and Capability – Demographic “cliff” – Gaps in “pipelines” – skilled apprenticeships and aerospace engineering programs – Changing skill mix requirements and new technologies – Fundamental changes in the nature of work and operations • Competitive Challenges – Global competition and organizational instability – Institutional barriers, monuments and gaps in the “social infrastructure” – Declining investment in research and development – Divisive dynamics around job security, benefits and flexibility – Reduced attractiveness of careers in aerospace Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

6. Aerospace Institutional Opportunities • Aerospace Inter-Agency Task Force – Spanning the Department of Defense, NASA, FAA, Departments of Labor, Education, Commerce and Homeland Security – to coordinate government aerospace workforce initiatives • Aerospace Capability Network – Public/private partnerships spanning all key stakeholders—business, labor, government, universities and community groups – Development of aerospace skill standards and certification programs – Public/Private R & D initiatives – Dissemination of information on occupations, job availability, high performance partnerships, and new work systems – Grants for demonstration projects at local and regional levels • Industry Promotion and Development – Best practices in career development, employment relations, and life-long learning across the industry – National campaign on aerospace opportunities – primary schools, secondary schools, community colleges and universities Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

7. Aerospace Workforce Knowledge, Skills and Abilities (KSAs): A Conceptual Map Government Policies and Initiatives (within and across agencies) on Aerospace Workforce Workplace-Specific Initiatives (public and private facilities) National, Regional& Local Aerospace Workforce Initiatives (Industry / Labor / Government) Skill Standards and Certification Industry/Workforce Skills Assessment Retention Initiatives Skills Assessment Industry/Workforce Needs Assessment Industry/Workforce Knowledge Management KSA Maintenance KSA Acquisition KSA Utilization School-to-Work Initiatives Knowledge-Driven Work Systems (Lean, Six Sigma, etc.) KSA Enhancement Aerospace Programs in the Schools Conception. . . Design/Development . . . Production . . . Sales/Sustainment Multiple Product / Service Value Streams Across the Enterprise Overall Stability, Capability, and Growth in the Aerospace Industry Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

8. Public-Private Partnerships Many Types of Strategic Partnerships: • Cross-Firm Partnerships – Core Competency Business Models need Partners – Customer-Supplier Strategic Partnerships – Rapidly Changing Technology & Knowledge – Required for Global Market Access • Cross-Institution (Public-Private Partnerships) – Increased Interdependence--problems require joint action of firms, community groups, government…. • Labor-Management Partnerships – Employees are key Source of Knowledge – Traditional Labor Relations no longer works…. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

9. Key Assumptions • Multiple stakeholders • Common and competing interests – Need for mechanisms to identify and pursue common interests – Need for mechanisms to surface and address conflicting interests • Interests/Contextual Conditions evolve – Need for periodic recalibration Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

10. Selected Principles of Partnership • Trust and Respect • Shared Vision • Negotiated Change • Joint Implementation and Governance • Learning and Adjustment Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

11. Selected Tensions Underlying the Principles Individual Institutiona Trust and Respect Big Picture Details Matter Shared Vision Forcing Fosterin Negotiated Change Dialogue Action Joint Implementation/Governance Short Term Long Term Learning and Adjustment Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

12. Public-Private Partnership Exercise • Form into your industry groups • Identify a public-private partnership that is likely to be essential to the effective implementation of your policy recommendations • Assess the likely strengths and weaknesses of this partnership – with recommendations on how to build on the strengths and mitigate the weaknesses Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

13. Conceptual framework for Labor-Management Partnerships • Basic Model of Change – Factors that unfreeze or motivate change – Implementing the change process – Diffusing and institutionalizing change • Changes must be consistent across three levels of activity—workplace, negotiations, strategic • Process will encounter periodic pivotal events • Substantive results must address bottom line interests & objectives of workforce and the employer Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

14. Strategic partnership case study: Kaiser Permanente and the Coalition of Kaiser Permanente Unions (CKPU) – Kaiser Foundation Health Plan and Hospitals in a business partnership with Permanente Medical Groups (PMGs) • K-P serves 8.6 million members in 18 states with 80% in California • Employment: 110,000 • Eligible for union membership: 92,032 • Covered by the labor-management partnership: 76,000 – Partnership coverage: • 8 international unions (largest is SEIU) • 26 local agreements • The California Nurses Association with 10,000 members in northern California is not a member, other unions are Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

15. Pivotal Events • Confrontation Meeting in Dallas 1996 • Partnership Agreement 1997 – Key agreements: employment and income security, interest- based problem-solving, marketing union healthcare • Clarification of Employment Security 1999 • SEIU Strike in Oregon 1999 • Agreement to Negotiate a National Agreement 1999 • Interest Based Process 2000 • Additional key “unfreezing” factors: – Strong union presence—avoidance not an option – Both parties dissatisfied with past – Credible union threat of escalation (corporate campaign) – Strong leadership with alternative vision • David Lawrence & Peter diCicco – All the unions involved Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

16. 2000 Negotiations • Prerequisites: – Extensive training in concept and tools of IBN – Agreement that local market rates have weight – Local agreements would be extended without a common expiration date – Either side could opt out • The Process: – Feb to Sept 2000 with almost 400 participants – Seven Bargaining Task Groups – Common Interest Committee (coordination role) • The Agreement – Five year agreement – Ratified by 92% Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

17. Further pivotal events • Outcomes of the 2000 Negotiations – Substantive terms • A Joint Staffing Process • Reducing Errors and Improving Patient/Member Safety • Workforce Flexibility Principles • Work-Life Balance • Compensation • Medical Benefits • Issue Resolution and Corrective Action – Confidence, converts to power of IBN and Partnership Principles • Partnership Infrastructure—governance structures, training, joint funding, etc. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

18. Joint LMP Contractual Committees Kaiser Permanente Partnership Group (KPPG)* Coalition of Kaiser Permanente Unions (CKPU)* National Labor Management Partnership Strategy Group** Regional Partnership Teams** National Partnership Council (NPC)** Service Area/ Facility Teams** Service Area/ Facility Teams** Service Area/ Facility Teams** Joint Staffing Issue Resolution Work-Life Balance Transitional Work*** Structure Performance Sharing Education Benefits Subcontracting Workplace Safety *Independent Governance Bodies ** JointLMP Contractual Committee/Team *** Functional Responsibility Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

19. Key events diffusion examples • Baldwin Park: Opening a new facility in record time and with work innovations • Optical Laboratory—Jointly saving and turning around a facility likely to close, involvement of key managers and union people • Main effect: Highly visible success stories with clear results on key interests of employer and workforce Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

20. Achievements to date include : • Largest partnership in the country • Most extensive partnership agreement • Most successful example of IBN in labor negotiations • Some key visible, tangible achievements • Infrastructure and resources in place to support diffusion • Developing penetration of on-going operations- working with middle managers • Developing capacity and skills among union leaders, sense of improvement for workers Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

21. Future challenges • Strategic Level: – Clarifying Union Participation at Strategic Level – Gaining Buy in from Doctors & Line Mgrs. – Building Union Capacity to Add Value • Negotiations Level: – Preparing for Follow up Agreement in 2005 • Workplace Level: – Delivering Tangible Benefits to Rank & File – Grievance handling and problem resolution – Day to day work environment improvements – Achieving Tangible Cost Savings and Performance Improvements System-wide Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”