1. BUILDING UNION ENGAGEMENT IN EXXONMOBIL
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