How Union can bargian with Management in this case study ?

APPENDIX B COLLECTIVE BARGAINING SIMULATION: WALLY'S JANITORIAL SERVICES! / SIMULATION INSTRUCTIONS AND BACKGROUND INFORMATION INTRODUCTION In this simulation, you will play a member either of the management bargaining team representing Wally's Janitorial Services Incorporated (WJS) or of the union bargaining team representing the emplLyees of WJS. You will deal with a complex mix of bar- gaining issues, and you will be subjected to a variety of pressures during negotiations. ADVANCE PREPARATION Before the bargaining session, you should read two sets of information: 1. The "Background Information," presented in this document under that heading. This is information that both management and union teams have access to. 2. The private team information. This information is not to be shared with your 2. The private team information. This information is not to be shared with your bargaining opponents. It will be provided by your instructor once he/she assigns you to a management or union team. SPECIFIC BARGAINING INSTRUCTIONS Confidentiality of negotiations. It is not necessary to conduct the negotiations in con- fidence. You are free to discuss your negotiations with other students in the class; however, negotiating may only be conducted during the allotted class time. Bargaining issues. Teams may only propose changes with respect to the issues provided in the case instructions. As members of bargaining teams, students may not manipulate any costs other than janitor salary costs. In addition, stu- dents cannot manipulate the level of firm revenue. They may only negotiate the four issues specified in the case. Legal environment. The legal framework for this simulation will be the Employment (or Labour) Standards Act and the Labour Relations Act of your prov- ince. Citing legislation is not appropriate for this simulation. 393 NEL pyright 2016 Nelson Education Lid. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in pert. Due to electronic rights, some third party content be suppressed from the eBook and/or Chapter(). Nelson Education reserves the right to remove addnional content at any time if subsequent rights restrictions require il Role profiles. Students may adopt specific roles as indicated in the text, but no detailed role profiles will be given. Duration of agreement. The agreement shall be effective for one full year (i.c., the teams are negotiating a one-year contract). Teams may not negotiate an agree ment longer than one year. Bargaining in good faith. "Teams are expected to bargain in good faith. In partic ular, they are required to meet and to bargain with the intention of reaching an agreement. Furthermore, once an item has been agreed upon by both teams, it is not appropriate to reopen negotiation of that item except by mutual agreement of the teams. BACKGROUND INFORMATION Wally's Janitorial Services Incorporated (WJS) was founded in 1980 by three com- petitors who had been working separately as independent janitors in large office set- tings.Ms independent providers of janitorial services, these three men would bid on jobs to clean office or retail space for large companies who owned their own facilities or for landlords who included maintenance as part of their rental fee. Compared to an in-house janitorial department, the independent contractors could provide a lower cost option (because they were always bidding against each other) and superior quality (because they were held accountable for their services because their contracts could be terminated). As a result of this fierce competition, the three independent janitors found they could only make a profit by staying in one location per shift. Generally, an office/retail space was cleaned twice a week. This meant that ideally a contractor would have only three clients at one time (each client is cleaned twice a week for six days of work per week). For an independent contractor to keep himself and his small crew busy for an A Cindy As a result of this fierce competition, the three independent janitors found they could only make a profit by staying in one location per shift. Generally, an office/retail space was cleaned twice a week. This meant that idcally a contractor would have only three clients at one time (each client is cleaned twice a week for six days of work per week). For an independent contractor to keep himself and his small crew busy for an entire shift (8 p.m. to 4 a.m.), he would require very large clients. Having a number of smaller clients meant additional costs in terms of vehicles and time to transport equip- ment and labour from one client's site to another. At the time there were only a few large office/retail spaces in Saskatoon, so the independent contractors would fight over these few profitable clients and then fill the remainder of their work week with non-profitable smaller clients as a means of keeping their labour employed. One particularly bleak February evening, the most junior of these men, Wally Wentworth, approached his two main competitors and pitched his idea to consolidate their efforts and form a new firm. The other two agreed to accept minority ownership and employment as executives in the new firm. Since its inception in 1980, Wally's Janitorial Services Incorporated (WJS) has been growing along with the city of Saskatoon. It has retained market domination and con- tinues to focus on large clients. WJS presently employs 95 people. Of this total 15 are nqgunionized employees and work as clerical staff, managers, or executives. The remaining 80 employees are all unionized and are classified into 11 categories of jani- tors based on seniority. In Table 1 the total number of janitors in each classification and their yearly income is presented. Notice that after 10 years of service an employee is in the 10th classification and earns $50,000 a year. For these employees there is no further classification advancement or pay increase in subsequent years. ESTIMATED 2010 COSTINS 96,000 100,000 1 4 4 ON 156,000 84,000 BO WALLY'S JANITORIAL SERVICES, SALARY SCHEDULE FOR JANITORS CURRENT SALARY ANNUAL INCOME 2009 NUMBER 2009 JANITOR NUMBER OF SCALE IN $ OF JANITORS SALARY COST INS JANITORS 0 24,000 4 96,000 4 1 25,000 6 150,000 2 26,000 104,000 6 3 28,000 8 224,000 3 30,000 0 7 5 32,000 6 192,000 0 6 36,500 5 182,500 6 7 40,000 3 120,000 5 44,000 176,000 3 9 50,000 5 250,000 4 10 35 56,000 38 1,960,000 Totals 80 3,454,500 80 4 0 210,000 0 3 CS 219,000 200,000 132,000 00 4 200,000 2,128,000 3,525,000 "The estimated 2010 cost multiples the 2009 Incomes by the current number of jan tors. WALLY'S JANITORIAL SERVICES BUDGET INFORMATION $21.222,320 CURRENT YEAR (NOVEMBER 2010-NOVEMBER 2011) PROJECTED BUDGET Total Revenue (net of taxes) EXPENDITURES Administration: Professional salaries $1,137,500 Clerical/secretarial salaries $ 281,250 Other $ 250,000 Subtotal Capital and Other Business Functions: Equipment and vehicles $ 6,558,100 Marketing and sales $ 1,420,000 $1,668,750 Continued $10,109,450 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION CURRENT YEAR (NOVEMBER 2010 NOVEMBER 2011) PROJECTED BUDGET Aldes $1,187,600 Materials/supplies $ 943,750 Subtotal Janitorial staff: Salaries $3,525,000 Training and certification $ 975,000 Insurance and safety $ 258,750 Subtotal Fixed charges: Retirement $ 1,176,450 Other $ 425,700 $4,278,750 $1,602,150 Subtotal $1,026,000 Debt servicing Transportation: Salaries $ 400,000 $ 395,000 Other $ 400,000 $ 395,000 Transportation: Salaries Other Subtotal Total expenditures Budget surplus (shortfall) $795,000 $19,960,100 $1,262,220 to $22,099,897 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION PREVIOUS YEAR (NOVEMBER 2009 NOVEMBER 2010) Total Revenue (net of taxes) EXPENDITURES Administration: Professional salaries $ 1,137,248 Continued $1,679,444 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION PREVIOUS YEAR (NOVEMBER 2009-NOVEMBER 2010) Clerical/secretarial salaries $ 281,067 Other $ 261,129 Subtotal Capital and Other Business Functions: Equipment and vehicles $7,748,000 Marketing and sales $ 1,394,643 Aides $1,183,275 Materials/supplies S 842,633 Subtotal Janitorial Staff Salaries $3,454,500 Training and certification $ 812,268 Insurance and safety $ 225,198 Subtotal Fixed charges: Retirement $ 1,120,428 $11,168,551 $4,011,966 $ 812,268 $ 225,198 $4,011,966 $ 1,120,428 $ 324.774 Training and certification Insurance and safety Subtotal Fixed charges: Retirement Other Subtotal Debt servicing Transportation: Salaries Other Subtotal Total expenditures Budget surplus (shortfall) $1,445,201 $900,260 $ 399,698 $ 301,527 $701,225 $20,386,647 $1,713,250 The ownership and management team is particularly proud of the work culture at WJS, which is considered a key to the firm's success. Most of the people who work for WJS have had trouble fitting into traditional jobs. Some of there have criminal records, while others are recovering alcoholics and/or drug addicts. Partly because of the diffi- culty in recruiting night workers who perform routine and sometimes distasteful work, the hiring philosophy at WJS has been much more inclusive than at other firms. An applicant's past is considered less important than an honest handshake and a promise from applicants to do their best and conduct themselves with integrity. This approach has worked very well. With few exceptions the employees are grateful for the oppor- tunity and work very hard. The City of Saskatoon and the Saskatoon Police Services have recognized WJS efforts to successfully reintegrate felons into society with several Corporate Citizenship Awards. In the late 1990s the city of Saskatoon suffered from an economic downturn. Several of WJS's clients went out of business or left the city. The downturn also created a second problem for WJS. A surplus of office/retail space caused rent levels to fall dramatically. With falling rent prices, the landlords who include janitorial services as part of their rental fee turned to WJS to renegotiate cheaper or reduced services (and sometimes both). The WJS leadership reacted by increasing the pace of work, freezing wages, and replacing any workers who were not willing to accept the "new economic reality." This led to widespread discontent among the janitors and the successful certification of a trade union. In January of 1999, the janitors of WJS formed Local 45 of the Canadian Union of Service Employees (CUSE). After negotiations a first collective agreement was constructed that provided some basic protections for workers. Since then the collective agreement has been successfully renegotiated several times without a strike or lockout. It is now November 16, 2010. The contract between WJS and CUSE expired on June 30, 2010. Since then the WJS bargaining team and the CUSE bargaining team have met on several occasions in an attempt to finalize the contract, but chese attempts have not been successful. There are several remaining bargaining issues, and while both sides are adamant that they wish to avert a work stoppage, they are facing tremendous pressure. a Despite the strong Saskatchewan economy, profits have fallen below acceptable levels. Out-of-province competitors from eastern Canada, fleeing contracting econo- mies, have established a foothold in Saskatoon. Increased competition has forced WJS to lower their fees and reduced revenue. The WJS bargaining team believes that without concessions that allow management to reduce costs and improve productivity, the com- pany is not likely to avoid massive layoffs. For the members of CUSE, the strong Saskatchewan economy has meant the cost of living has bramatically increased. The workers feel they are entitled to a cost-ofliving adjust- ment to reflect rising costs of housing, food, transportation, etc., in the city of Saskatoon. They also believe management should stick to their original instincts to trust the employees to do their best. They are resentful of policies that either monitor their work or speed it up. Since the expiration of the collective agreement, there has been more and more talk among the membership of CUSE about the possibility of calling a strike if the contract is not finalized by the end of the fall. However, the executive of the union agreed that, in the interest of demonstrating their willingness to work with the WJS bargaining team, their members would continue with their normal duties, without a contract, on a day-to-day basis. The union and the leadership team at WJS wish to reach a settlement and avert a strike; however, the union is adamantly committed to improving the conditions of its membership, and the management is just as committed to keeping its costs as low as pos- sible so that it can reposition itself in the new, more competitive market. Nevertheless, each side feels it has room to negotiate on certain issues. APPENDIX B Collective Bargaining Simulation: Wally's Janitorial Services NEL Education Ltd. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content the eBook and/or eChapter(s). Nelson Education reserves the right to remove additional content any time if subsequent rights restrictions require it a Despite the strong Saskatchewan economy, profits have fallen below acceptable levels. Out-of-province competitors from eastern Canada, fleeing contracting econo- mies, have established a foothold in Saskatoon. Increased competition has forced WJS to lower their fees and reduced revenue. The WJS bargaining team believes that without concessions that allow management to reduce costs and improve productivity, the com- pany is not likely to avoid massive layoffs. For the members of CUSE, the strong Saskatchewan economy has meant the cost of living has bramatically increased. The workers feel they are entitled to a cost-ofliving adjust- ment to reflect rising costs of housing, food, transportation, etc., in the city of Saskatoon. They also believe management should stick to their original instincts to trust the employees to do their best. They are resentful of policies that either monitor their work or speed it up. Since the expiration of the collective agreement, there has been more and more talk among the membership of CUSE about the possibility of calling a strike if the contract is not finalized by the end of the fall. However, the executive of the union agreed that, in the interest of demonstrating their willingness to work with the WJS bargaining team, their members would continue with their normal duties, without a contract, on a day-to-day basis. The union and the leadership team at WJS wish to reach a settlement and avert a strike; however, the union is adamantly committed to improving the conditions of its membership, and the management is just as committed to keeping its costs as low as pos- sible so that it can reposition itself in the new, more competitive market. Nevertheless, each side feels it has room to negotiate on certain issues. APPENDIX B Collective Bargaining Simulation: Wally's Janitorial Services NEL Education Ltd. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content the eBook and/or eChapter(s). Nelson Education reserves the right to remove additional content any time if subsequent rights restrictions require it Final Settlement Form for the Four Outstanding Issues between Wally's Janitorial Services and CUSE Local 45 (Hand in one form once negotiations are complete.) 1. Reduction in Staff 2. Salary 3. Benefits 4. Performance Evaluation ENDNOTE . 1. The authors gratefully acknowledge and thank Scott Walsworth (creator of this case) for allowing us to use it in the textbook. NEL APPENDIX B Collective Bargaining Simulation: Wally's Janitorial Services Copyright 2016 Nelson Education Lid. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some may be suppressed from the eBook and/or eChapter(s). Nelson Education reserves the right to remove additional content at any time if subsequent rights