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Presentation on theme: "BUILDING UNION ENGAGEMENT IN EXXONMOBIL"— Presentation transcript:

William R. Vickers August 2012

2 ExxonMobil in Australia
Number of employees 1700 Cumulative investment >$16 billion Annual payment to Government $202 billion 23 Offshore Oil and Gas Facilities Gas and oil Refining facilities onshore Distribution Terminals Major investment in Gorgon and PNG projects Global Corporate Earnings US$41 billion for 2011

3 Why build engagement? History of “forced” change had mixed results and created baggage Productivity and “discretionary effort” maximised when people feel valued Conservative: pragmatic not ideological Strong safety culture and positive lessons Unions are entrenched Is it worth it?

4 .

5 Key Drivers A “burning bridge” promotes (temporary) engagement and allignment with corporate goals Passionate management leadership and continuity of “message” Open and transparent communication with employees Business education/literacy Building an enduring relationship with influential union officials/delegates Do what you say

6 The Esso and Mobil Experience
Highly unionised since Bass Strait oil/gas field developed Profitable business Legacy of resistance to change Low workforce turnover Management turnover Workforce insulated from competitive pressures

7 The Esso & Mobil Experience
Opportunities created by enterprise bargaining Workforce exposed to domestic and international competition Continuity of line management Senior union leadership alignment with business interests Open and transparent communication with workforce Management commitment to drive change and acceptance of risk

8 “Happy Talk” or Actual Outcomes
Restructuring and downsizing of Altona Refinery Introduction of performance linked pay Introduction of annualised salaries Annual refinery operator pay reviews tied to non-unionised remuneration system ALL IMPLEMENTED WITHOUT INDUSTRIAL ACTION, UNFAIR DISMISSAL CASES OR FEDERAL COURT INTERVENTIONS

9 Impact of Fair Work Act A major shift in bargaining power of unions
Removal of alternative agreement making options: IFA sham IFAs ineffective Opportunity for unions to rebuild membership base and “grow their business” Major impact on cost of new projects via Greenfield agreement provisions Union influence enhanced via expanded scope of agreement content and availability of protected action Collective bargaining promoted at the expense of productivity FWA appointments have devalued independent and objective expertise

10 What Does This Mean for Corporate Relationships With Unions?
A positive relationship almost obligatory in unionised industry Non-unionised workplaces face more pressure to maintain direct relationship with employees IR skills gap after an era of declining private sector union membership Pressure on line management to exercise leadership in non-familiar territory Responsibility on union leadership NOT to abuse post FWA leverage

11 Experience Post FWA We are not interested in an ideological debate
No “bonus points” for our business decision to maintain constructive engagement during Workchoices Some unions cannot resist short term leverage opportunities

12 The Challenge of Major Projects
A Different Set of Rules

13 Development Concept

14 Our Engagement Initiative
Poor relationship between Union and lead contractor EM Management safety priority A legitimate safety initiative was undermined by pursuit of an industrial agenda Concession in WA Project Negotiations established precedent Fair Work Act provides zero protection

15 Esso’s People Strategy: From Adversarial Bargaining to Interest-Based Problem-Solving
Approach developed independently of IR legislation Consistent with long term business focus and approach to management of risk Structured problem solving process based on recognition of joint interests Why Now?

16 “Trying to get to heaven before they close the door”
Bob Dylan

17 Adversarial Bargaining versus Interest-Based Problem-Solving
What is IBPS? Adversarial Bargaining versus Interest-Based Problem-Solving Parties develop independent negotiation position(s) and fallbacks (ambit) Parties use power, influence and “facts” to achieve own desired outcome Parties accept, deny or discredit “facts” to achieve own desired outcome Parties win, lose or compromise for settlement Parties may distort settlement throughout implementation Parties agree upon issue(s) to be addressed Parties identify shared and separate interests and concerns Parties identify options which may address interests or concerns Parties agree key Criteria for acceptable solution(s) Parties develop options into draft solution(s) Jointly document, plan and implement best solution(s)

18 How we apply the Process
SCHNEIDER AUSTRALIA CONSULTING Building High performance Organization's

19 Outcomes: Report Card Improved relationships: transparent communication Measurable business gains limited Management turnover inhibits change Culture change in a profitable, low turnover company a marathon not a sprint Extensive use of contractors adds significant complexity

20 Barriers to Building Engagement
History of Adversarial Industrial Relations Career Shop stewards Management turnover in key leadership roles Cultural norms : “win/lose” mentality Risk aversion : short tem expediency No obvious imperative to drive change Traditional methods delivered union gains

21 Agreement-Making and Change Management
Keys to success Be clear on overall positioning of negotiations within business strategy EBAs should be an enabler of change not a barrier Articulate business requirements and performance objectives to all employees Build internal management and union alignment Set realistic expectations Allocate and manage resources/timelines Don’t take first-line Supervisors for granted Competitive Remuneration Package

22 A Warning from Bob Dylan
UNION SUNDOWN Well, my shoes, they come from Vietnam My flashlight’s from China My tablecloth’s from Cambodia My belt buckle’s from the Amazon You know, this shirt I wear comes from the Philippines And the car I drive is a Chevrolet It was put together down in Mexico By a guy makin’ 30 cents a day Well, its sundown on the union And what’s made in the USA Sure was a good idea ‘Til greed got in the way



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