Management: Busco Challenges


Busco Electric Utility

You are the very first vice president of human resources for Busco, an electric utility company with corporate headquarters in Denver, Colorado. None of Busco’s employees are union, in spite of the fact that the utility industry is heavily organized. To date, Busco has no unions at any of its 8 plants across the United States, Canada, and Mexico. One of your objectives is to assure that the company has appropriate programs and policies in place to continue to operate union-free. You immediately are assigned to deal with a potential disaster regarding Mildred Smit, the recently hired plant manager for the Busco-Chicago facility. She reports to Steve Zellner, the vice president of operations at the headquarters. The Chicago plant has 350 employees of which approximately 275 work in the plant as skilled, semiskilled, and unskilled laborers. The rest of the employees work in the office as managers, supervisors, and clerical workers.
Through interviews with Mildred and others, you learn that Buddy Montgomery is the first-shift operations manager, who acts as the team leader for managers and supervisors on all three shifts in your plant. Buddy is experienced in hiring and safety and is a good leader. Mildred feels he can handle any personnel issues that arise in the plant. Likewise, she has designated the plant accountant, Joey Van Cleave, as the team leader for office operations to handle personnel issues as needed in the office.
Budgets for the new fiscal year have just been approved. The budget guidelines provided funds for the placement of a personnel supervisor at every Busco plant and for a 3.5% pay increase for all the laborers in the U.S. plants.
Mildred believed that a 2% pay increase in the plant will be sufficient. Unlike her counterparts, she planned to save money by not hiring a personnel supervisor because Buddy and Joey have handled the extra duties well. She also planned to eliminate the traditional annual plant picnic and only have it every other year. These budget adjustments would have her plant coming in under target for the year and will earn a big bonus pool for her and her plants management staff. She said she wanted to demonstrate her ability to have the business grow efficiently.
Buddy showed Mildred how hiring one skilled laborer on the third shift will save money by reducing overtime expense, so she allocated a position. Buddy extended an offer to Linda Porter, a skilled utility tradesperson from a unionized competitor across town. He was elated at having been able to hire her expertise for the Busco wage rate, which is less than Linda earned at her other job. She said she was willing to take less to work closer to home. The day before Linda came on board, Mildred told Buddy he must retract the offer because she did not want "any union troublemakers." She explained to you that she was certain that the pay differential will be a problem. Linda did not take the news well because she already quit her former job. Buddy was very nervous but explained to Linda that "headquarters wouldn’t authorize a budget for the position." The slot Mildred authorized went unfilled.
A week later, Joey Van Cleave distributed the "What’s Happening at Busco" employee newsletter with a small notice that the annual picnic will not be held this year to help manage the plant budget without wage freezes. There is not much feedback on this issue from employees. Three months pass, and the Chicago plant’s first quarter actual expenses were well under budget. As she predicted, Mildred’s numbers were better than any of the other U.S. Busco plants. Employees seemed to have taken the 2% increase well, understanding Mildred’s position that everyone has to sacrifice for the sake of job security in these bad economic times.
A week after Mildred submitted her quarter-end reports, Steve Zellner called her and you from corporate headquarters at the end of the day saying that they received a request for recognition from the Utilities Workers Union. Mildred was astonished, and you started working on this potential disaster. Mildred tells Steve she will talk to the employees about staying nonunion and clear it up. You and Steve tell her not to do or say anything until Art King, the consulting labor attorney Busco has engaged, comes and speaks with her about the representation request and the unfair labor practice charge that the Utilities Workers Union alleges. You will assist Art in cleaning up this situation and trying to avert unionization. It seems that Linda Porter, the employee whose employment offer Busco retracted, lodged a complaint with the union. In the course of interviewing Joey and Buddy, they tell you Kendall Leander, a quiet, long-term plant worker with a good record, is Linda’s brother.
Attorney Art King is flying to Chicago tonight and will be in your office at 7:00 a.m. tomorrow morning.


As VP of HR, you are also responsible for benefits management. The cost of health care is spiraling upward and, at the same time, there is pressure on the cost of raw materials for production. Management’s objective is to contain employee health care benefit costs at a minimum and reduce those costs, if at all possible. A union’s objective is to keep any reduction in benefits at a minimum and to increase benefits, if at all possible. Management often considers using temporary help or contracting out some of the work to avoid having to deliver benefits to additional workers. The union focuses on increasing its membership base and is firmly against the use of outsourcing or the hiring of employees who are not eligible for benefits. This challenge could be another consequence of the union representation request.

You bring this challenge to your local society of human resource managers (SHRM) chapter meeting. The members agree to help you work on this challenge.

Research the issue. Then, discuss it from both the management and labor perspectives. Present alternatives that could create a win-win situation for the company and the union. Hypothesize what could happen if an agreement is not reached on approach.

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