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Industrial Relations Strategy: A Local Government Case Study:

Fairfield City Council

Introductory Comment

“They always say time changes things, but you actually have to change them

yourself.”  ― Andy Warhol, The Philosophy of Andy Warhol

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Why are we talking to you?

Andrew McLeod - Group Manager, Corporate Services

Charles McElroy - Senior Industrial Officer LGNSW

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Council covers an area of 102.5 km2

and incorporates 27 suburbs

It is estimated that 206,168 people live in

the City of Fairfield.

42 workplaces across the City

Over 1,000 employees

Who we are…?

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So why did we choose to eat the elephant?

• 12 out of time EA’s

• Unqualified custom and practices

• MoU signed with Unions 2007 – commitment to workplace reform

• WorkChoices: “Dead, buried and cremated”

• Local Government (Status) Amendment Act 2008

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So why did we choose to eat the elephant?.... $$$$$$$$$

• $17,800 per day incremental leave liability…which was compounding

• 250 employees with paid out sick leave• 20 days entitlement per year

• Significant disparity in salaries & wages• Historical Red Circles - <30% but paid >30%

more….up to $250pw in some cases

• Historical provisions prevented management of the situation

How on earth did we come to be here?

• Historical reluctance to address legacy issues

• Strong Labor Council and working class community

• Previous “Please sir I want some more?”

negotiations

• “But we are special….• Award based Council Agreements across business units

•Lack of Industrial relations expertise to

take the issues on

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What are the rules of our game?

Legislation will tell us what to do?• Local Government Act 1993• Industrial Relations Act 1996

My tribunal is better than yours • State vs Federal system

Everyone gets along...mainly!• Industry Award: Local Government State Award

• Fair and reasonable conditions • Consent agreements preferentially

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So where are we going…?

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So what did we need ….?

1. Detailed Award and EA analysis conducted

• Clause by clause• Business Unit by Business Unit• Wish list vetted…against objectives

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So what do we need ….?(cont.)

2. Detailed Financial Analysis

i. Maintaining status quo not financially viable – incremental leave liability

ii. Cash reserves

iii. Forecast of future financial position

iv. Forecast of operating position

v. Net Present Value of conditions

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3. State Award was meeting most of Council’s needs

4. Effective engagement & communication would be critical

5. Consent based enterprise agreement preferred outcome

6. Multiple negotiation cycles would be required to achieve our aims

So what do we need …?(cont.)

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How do we herd these cats…?Managing the managers….

1. “Real Engagement” with Leadership Team – approval of Industrial Objectives– Direction & Enterprise Bargaining Strategy Key

2. Strong Governance Structure– Steering Committee– Working Party

– Negotiation Team

3. City Manager as interface with Mayor & Councillors

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Winning the hearts and minds of our crew

•A compelling case for change

•Open book accounting

•Tell em, and tell ‘em often

•Consistent, Transparent and clear in our resolve

to “do what is necessary to change”

How do we herd these cats…? (cont.)

A strategy for negotiations….

“Take the teeth out of the Tiger…”

• Identify industrial weak points

• Identify key industrial influencers

• Undertake contingency actions to mitigate impact

• Pre-determine responses to industrial action

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A strategy for negotiations (cont.)….

EA Strategy developed for each negotiation …• Situation analysis• Objectives• Risk and contingency• Anticipated claims based on industry intelligence• Best Alternative to Negotiated Agreement(BATNA)

developed for each claim

Most importantly…

Our approach for negotiations…

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Approach to negotiations…

Balancing the scales …

• Negotiation training –- Management, Staff & Unions- 3 days-off site

• Genuine interest based / mutual needs bargaining

• Selective use of Independent facilitator

(CoSolve)

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Approach to negotiations (cont.)

Shining light on the shadows•Regular Executive Leadership

Team briefings •Staff Consultations:

- Multiple Surveys- Weekly staff email updates- FAQ’s updated weekly

•Captivate Presentations Headphones purchased for staff

Key messaging at key milestones

Presentations at Toolbox Talks – Outdoor staff

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Approach to negotiations(cont.)

Shining light on the shadows…• Real time intranet updates• FAQ’s / Agreements emails• Joint communications with Union (where

agreed)• Media releases (where necessary)

The importance of your Negotiation Team

Pick your team purposefully … • Consider relationships (management & staff)

• Consider objectivity and conflicts of interest• Consider conscious incompetence• Balance operational and IR expertise

“Keep the bear in the cage, unless needed”

They will need support… LGNSW

- Importance of a watching brief

- Independent discussion on tactics & strategy 20

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The Negotiations we undertook…

1. Concessional Leave 2009 – accrued leave liability

2. Senior Management Team conditions 2011

3. Domestic Waste Collection 2012 - continuity (incentive) payments

4. Paid Out Sick Leave 2013 - $7.2M liability – NPV of $24M (based on retirement age of 67 years)

5. Corporate Enterprise Agreement - allowances and conditions

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“Debugging” Negotiation Myths

1. “We are going to take you to the Commission”

2. “You will lose all of the affected staff”

3. “Let the mature staff keep their entitlements until retirement”

4. “You can’t withdraw your offer!”

5. “We will continue to bid against ourselves”

6. “Its what we’ve got now plus…”

But we don’t agree….

• Stalemate – no deal on corporate EA

• Decision to terminate EAs and LGNSW involvement

• What next?

• Who cares – what is the dynamic now?

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Stick to the strategy…always?• Thinking ahead

– actions and reactions

• Facilitation of external advice – Why? When? Who?

• Communication:•Purpose, •Controlling communications•When to say nothing.

“This report, by its very length, defends itself against the risk of being read.”Winston Churchill

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If you see the bus coming, don’t step off the curb…! 1. We wanted a fair and reasonable outcome for all

2. We were not going to negotiate against ourselves

3. We were not going to be reactionary, yet we understood and would hold to our BATNA

However, eventually, we had

gone as far as we could… so we

served notice on all existing

EA’s.

Let the games begin….

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• Strike

• Council response

• IRC role/powers

• Notification of dispute

• Continuing negotiations

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Application for Award

• Award application filed by USU.

• NSWIRC wage fixing principles – “Fair and reasonable” conditions of employment

• Status quo and limited undertakings

• Evidence – arbitrated case

• Taking advice and making strategic decisions

• LGNSW as intervener

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What did we achieve?• Enterprise Agreements reached for:

a. Concessional Leave 2009 – accrued leave liability

b. Senior Management Team

c. Domestic Waste Collection 2012 - continuity (incentive) payments

d. Paid Out Sick Leave 2013 - $7.2M liability – NPV of $24M (based on retirement age of 67 years)

e. Corporate Enterprise Agreement - allowances and conditions

• Expired Enterprise Agreements concluded, settlement reached on Agreement Allowances & return to State Award conditions

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What did we learn? 1. Have an agreed industrial strategy…

2. Do your homework…

3. Know your numbers – what are the financial implications of status quo – net present value

4. Clearly, directly and continually message for change

5. Play to strengths of your team…

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What did we learn? (cont.)

6. Ensure an effective working relationship with your advocate –

“Give advice – but act on instructions”

7. Don’t bargain against yourself – know your BATNA (Best Alternative to a Negotiated Agreement)

8. You don’t have to react…

9. The definition of insanity….

10. There is no such thing as rapid change!

Questions….

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