The current collective agreement with the Union has expired, but all parties have agreed to continue on a day-to-day basis and would prefer to avoid a work stoppage.

WJS needs to remain competitive to compete and needs to consider the marketplace when thinking of a new agreement.

The Union recognizes that there is rising cost of living in Saskatoon but labour cost is an issue for Management

The majority of the union membership prefers an agreement but is willing to strike.

There is new competition for the Union from out of province.

Based on the information in the text and from the case Wally's Janitorial Services, represent the Union side and report on following:

1. If you were in actual negotiations with the other side, what bargaining strategy would your team engage in and why?

2. What would be the priorities of the four areas - Wages/Benefits/Performance Management/Reduction in Staff? rank these hoped-for changes in order of importance (1 = most important, 4= least important). Justify your ranking (in other words, why)

3. Analyze the potential outcome for each area - Wages, Benefits, Performance Management, Reduction in Staff in other words, what difficulties/opportunities might affect a successful/unsuccessful negotiation for each of the areas. For example, Reduction in Staff might be a major focus as job security is important to the union. On the other hand, Management might see this as insignificant as they are focussed on cutting costs.

the format with an introduction, definitions of collective bargaining and application of other concepts, conclusion

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. As 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 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 nonunionized 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. TABLE 1 WALLY'S JANITORIAL SERVICES, SALARY SCHEDULE FOR JANITORS CURRENT SALARY ANNUAL INCOME 2009 NUMBER 2009 JANITOR NUMBER OF SCALE INS OF JANITORS SALARY COST INS JANITORS 0 24,000 4 96,000 4 1 25,000 6 150,000 4 2 26,000 4 104,000 6 3 28,000 8 224,000 3 4 30,000 0 0 7 5 32,000 6 192,000 0 6 36,500 5 182,500 6 7 40,000 3 120,000 5 8 44,000 4 176,000 3 9 50,000 5 250,000 4 10 56,000 35 1,960,000 38 Totals 80 3,454,500 80 "The estimated 2010 cost multiples the 2009 incomes by the current rumber of juntos ESTIMATED 2010 COST IN S 96,000 100,000 156,000 84,000 210,000 3 0 6 9 219,000 200,000 132,000 200,000 2,128,000 3,525,000 $21,222,320 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION 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 $10,109,450 $4,278,750 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION CURRENT YEAR (NOVEMBER 2010 NOVEMBER 2011) PROJECTED BUDGET Aides $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 Subtotal Debt servicing Transportation: Salaries $ 400,000 Other $ 395,000 Subtotal Total expenditures Budget surplus (shortfall) $1,602,150 $1,026,000 $795,000 $19,960,100 $1,262,220 $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 $1,679,444 $11,168,551 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 $ 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 Other $ 324,774 Subtotal Debt servicing Transportation: Salaries $ 399,698 Other $ 301,527 Subtotal Total expenditures Budget surplus (shortfall) $4,011,966 $1,445,201 $900,260 $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 them 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 these 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. 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 dramatically increased. The workers feel they are entitled to a cost-of-living 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. 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 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. As 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 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 nonunionized 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. TABLE 1 WALLY'S JANITORIAL SERVICES, SALARY SCHEDULE FOR JANITORS CURRENT SALARY ANNUAL INCOME 2009 NUMBER 2009 JANITOR NUMBER OF SCALE INS OF JANITORS SALARY COST INS JANITORS 0 24,000 4 96,000 4 1 25,000 6 150,000 4 2 26,000 4 104,000 6 3 28,000 8 224,000 3 4 30,000 0 0 7 5 32,000 6 192,000 0 6 36,500 5 182,500 6 7 40,000 3 120,000 5 8 44,000 4 176,000 3 9 50,000 5 250,000 4 10 56,000 35 1,960,000 38 Totals 80 3,454,500 80 "The estimated 2010 cost multiples the 2009 incomes by the current rumber of juntos ESTIMATED 2010 COST IN S 96,000 100,000 156,000 84,000 210,000 3 0 6 9 219,000 200,000 132,000 200,000 2,128,000 3,525,000 $21,222,320 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION 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 $10,109,450 $4,278,750 WALLY'S JANITORIAL SERVICES BUDGET INFORMATION CURRENT YEAR (NOVEMBER 2010 NOVEMBER 2011) PROJECTED BUDGET Aides $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 Subtotal Debt servicing Transportation: Salaries $ 400,000 Other $ 395,000 Subtotal Total expenditures Budget surplus (shortfall) $1,602,150 $1,026,000 $795,000 $19,960,100 $1,262,220 $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 $1,679,444 $11,168,551 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 $ 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 Other $ 324,774 Subtotal Debt servicing Transportation: Salaries $ 399,698 Other $ 301,527 Subtotal Total expenditures Budget surplus (shortfall) $4,011,966 $1,445,201 $900,260 $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 them 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 these 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. 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 dramatically increased. The workers feel they are entitled to a cost-of-living 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. 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