Statement by
John Calhoun Wells, Director
Federal Mediation and Conciliation Service
before the
Labor, Health and Human Services, Education
and Related Agencies Subcommittee
of the
House Committee on Appropriations

Mr. Chairman and Members of the Subcommittee:

It is my pleasure to present to you the Fiscal Year 1999 appropriation request for the Federal Mediation and Conciliation Service (FMCS). Before I do so, I hope you will grant me a moment of personal privilege.

This is the fifth time I have appeared before this Subcommittee to present the appropriation request for FMCS. This will be my last such appearance. I have announced my intention to step down as Director and to return to the private sector.

When I was appointed by President Clinton in November 1993, my charge was to take an organization with a distinguished history of service to our nation’s collective bargaining and labor-management communities, and prepare it for an even more crucial role in America’s 21st Century economy.

My job is now largely complete. The Strategic Redirection of FMCS is well underway, and by its nature, will continue to be. The process has been driven by a vision of a customer-focused, performance-based organization, with "360-degree" mediators providing a full range of labor-management mediation and conflict resolution services at least equal to the best in the private sector. The redirection has required a quantum change within FMCS, including more flexible hiring criteria and more rigorous mediator selection; a redefinition of field and national office leadership roles and responsibilities; recruiting and promoting a higher-qualified, more diverse workforce; major investments in employee education and training; in technology modernization; and, major changes in our workplace processes. We have learned to "listen to the marketplace" through the agency's first National Customer Survey, customer focus groups, and have put emphasis on customer outreach by field mediators, managers and senior executives.

I will take with me a great deal of personal satisfaction in the agency’s accomplishments during my tenure. Our commitment to the reinvention effort was affirmed by Vice President Gore last September with the National Performance Review’s Hammer Award. Even more important than the Hammer Award was the endorsement by our customers, firms and unions alike, of the vision and the achievement of a more vigorous, proactive, strengthened FMCS.

However, I am mindful that none of the changes within FMCS would have been possible without the support and trust of many people, in the labor-management community, in the Administration, and on this Subcommittee.

Mr. Chairman, you, your colleagues and your staff have taken the time to understand the Federal Mediation and Conciliation Service, what we do, and what we are capable of doing in the future. You have been very demanding in responding to our appropriation requests. You have made us "prove our case" and justify every dollar in every budget. And when we have been able to do that, you entrusted us with additional funding to upgrade our communications technology, provide education and training for our employees and conduct the agency’s first National Customer Survey. You gave us the resources needed to transform FMCS into a customer-focused, performance-based organization.

Enabled by the foresight and judgment of you and this Subcommittee, I will leave an FMCS much better prepared to meet its responsibilities to the nation’s labor-management and conflict resolution communities, the government of the United States and the American taxpayer. I shall always be grateful to you, your committee colleagues and your staff for your support.

Government Performance and Results Act

Mr. Chairman, like every agency of the government, FMCS has been hard at work incorporating the concepts, requirements and opportunities afforded us by the Government Results and Performance Act of 1993 into every aspect of service delivery, customer outreach, planning, budgeting and employee education and training. I believe that we are ahead in the process because of our own reinvention initiative, begun four and a half years ago with the creation of The Mediator Task Force on the Future of FMCS. The Task Force’s vision provided a blueprint for building the kind of customer responsive, outcome-oriented organization that GPRA now requires. The changes we have made since then, with the support of the Administration, our customers and, importantly, you and this Subcommittee, have moved us well along toward that goal.

GPRA now gives us the impetus to establish annual and long-term goals to determine whether those changes are producing the intended results. By requiring that we measure our progress toward those goals, and use the metrics to make programmatic and operational changes when necessary, GPRA becomes a crucial management tool.

In our Strategic Plan and the first Annual Performance Plan, we established levels of goals and objectives which seemed reasonable and attainable, focusing on realistic, practical performance measurements. Because our goals were set before we had final Fiscal Year 1997 data available, the performance targets are based on Fiscal Year 1996 figures.

We believe that this was the most sensible approach to take in beginning the process. Our GPRA Committee has already made recommendations which improve on and add specificity to our goals and measurements, and before the fiscal year begins will be reflected in a revised Plan. We see this evaluation and amendment process as continual, part of our internal capacity to adapt to the certain change which lies ahead.

Dispute Mediation - This is a voluntary process which occurs when a mediator assists labor and management in reaching agreement in collective bargaining negotiations. These include initial contract negotiations which involve an employer and newly-certified union, renewals and mid-term contracts. Dispute mediation has been the primary focus and most visible service of this agency for 50 years, with mediators working to avert or reduce the duration of work stoppages. In Fiscal Year 1997, FMCS mediators were assigned 20,844 dispute cases. In 5,643 of those, the mediators were actively involved in negotiations, an increase of 7 percent from the previous year, and only the second increase in ten years. In 4,875, or 86.3 percent of those cases, the mediators helped the parties reach contract agreement.

Among the significant dispute cases in 1997 were the United Parcel Service/Teamsters contract negotiations, which saw 185,000 UPS workers on strike, the largest work stoppage in two decades. In two and a half weeks of intense bargaining, we were able to help the Teamsters and UPS reach agreement on a new contract; Wheeling Pittsburgh Steel Company and the United Steelworkers - agreement on a contract in August brought to an end the longest strike in steel manufacturing history; and, the Chicago Sun-Times and the Chicago Newspaper Guild, in which mediators, who had worked with the parties before, averted a contentious situation by training and assisting the parties in a non-adversarial form of negotiation we call Interest-Based Bargaining.

I am pleased to report to the Subcommittee that just last month FMCS was able to play an important role in the settlement of a seven-year contract dispute between Caterpillar Inc. and the United Auto Workers, involving more than 12,000 workers at Caterpillar facilities in Illinois, Pennsylvania, Colorado and Tennessee. This was among the longest and most contentious labor-management disputes in decades. I first met with representatives from the union and company within 30 days of my assuming office in 1993. Over the last 4 ½ years, I was personally involved in 27 joint and separate meetings with the parties.

 Initial Contracts - An important subset of Dispute Mediation is the negotiation of initial contracts between employers and unions in newly-represented bargaining units. Initial contract negotiations are critical as they form the foundation for the parties’ future relationship. A bad start in the relations between the employer and the employees’ union may be felt for years afterward, and ultimately injure the economic health of the organization. Such negotiations are often more difficult than contract renegotiations since they frequently follow contentious representation election campaigns in which the parties often adopt hardened positions toward each other. The negotiations can be further complicated by one or both of the parties’ inexperience in collective bargaining and labor-management relations. FMCS has placed special emphasis on the mediation of initial contracts, issuing a Policy Statement in January 1995 that all initial contract cases be promptly assigned for mediation unless there is a specific reason not to, and that mediators make every effort to become actively involved in assisting the parties in achieving agreements. In 1997, mediators were assigned in percent of the initial contract negotiations, and helped the parties reach contract agreement in 82.1 percent, compared to 63.7 percent of contract agreements without mediation.

Preventive Mediation - In the changing workplace and economic environment, labor-management relations range from very antagonistic to very cooperative, with parties experimenting with new ways of working together. The role of mediators is evolving, as well.

Beyond the traditional crisis intervention in contract disputes, the mediators are becoming purveyors of best practices - catalysts for change - able to assist, train, motivate and encourage labor and management to transform their relationship, to become more participative, collaborative and creative. These services are not as well known as our dispute mediation services, but over my tenure, demand has grown from 10 percent of the agency’s total mediation caseload to approximately 30 percent of total FMCS collective bargaining cases. As you can see, Mr. Chairman, we have placed a far greater emphasis than was previously done on educating and training unions and firms in the skills to help them work cooperatively together. The expanding interest in these services is driven by competitive pressures to improve economic performance in the workplaces of America and the standard of living of American citizens - profits and good jobs.

In 1997, our mediators provided these services in 2,505 cases, assisting 4,685 organizations and providing training for 32,095 individuals.

Education, Advocacy and Outreach - A critical part of the strategic redirection of FMCS, and reflected in our Strategic Plan and Annual Performance Plan, is an enhanced effort to reach out to customers and potential customers:

In the FMCS National Customer Survey, respondents frequently stated that the agency needed to do a better job of "marketing" its services. This viewpoint has also been raised consistently in customer feedback sessions throughout the country. Customer outreach is now part of every mediator’s job. We contemplate using this process to conduct customer satisfaction interviews and focus groups to obtain qualitative data between biannual customer surveys.

 Additionally, mediators lecture at educational institutions, showcase FMCS services at conferences, work with local labor-management committees and other community organizations, and meet one on one with members of the collective bargaining community, our primary

customer base. Through outreach and strategic alliances with other practitioners and organizations, we can leverage our resources and thereby extend our reach. This will directly promote achievement of our top goal - the diffusion of "best practices." In 1997, our mediators recorded 5,619 such outreach activities, up 66 percent from the previous year.

Arbitration Services - Today, virtually all collective bargaining agreements contain grievance and arbitration provisions. Upon request from a party for an arbitrator, FMCS will supply a panel of names from which the parties may choose an arbitrator to hear and decide their dispute. Upon their selection, FMCS will appoint the arbitrator. In this way, FMCS contributes to the smooth functioning of the everyday collective bargaining relationship.

FMCS arbitration rules and regulations have been revised, effective October 1, 1997, for the first time since 1979. We did so after convening a focus group of arbitrators and representatives of management and labor to elicit their views on our service and on the proposed rule changes. Among those changes is the option for parties to request a panel of arbitrators according to their specified criteria, or to request a list of all arbitrators in their area, with whom the parties may communicate directly. In 1997, FMCS issued 31,295 panels of arbitrators. There are approximately 1,450 arbitrators on our roster.

Labor-Management Grants - Authorized by the Labor-Management Cooperation Act of 1978, FMCS has provided grant money and technical assistance for the establishment and operation of labor-management committees at the plant, industry and area level, and in the public sector. In awarding grants, FMCS looks for innovative approaches to collaborative labor-management relations and problem-solving. Committees funded under this grants program have addressed a wide array of issues, from health care cost containment to total quality management and industry competitiveness issues.

Since 1981, FMCS has awarded more than $17.6 million to more than 200 labor-management committee grant applicants experimenting with creative joint approaches to workplace issues.

The National Labor-Management Conference - an adjunct of the Labor-Management Grants program, this biennial conference is recognized as the premiere labor relations learning event in the nation, and brings together leaders of business, labor and government to explore and share successful joint approaches to labor-management cooperation. Our 1998 conference was held in Chicago earlier this month and attracted more than 1,900 participants.

Alternative Dispute Resolution (ADR ) - FMCS provides a variety of dispute resolution services to government agencies outside of the collective bargaining arena. Mediators provide facilitation and mediation services as well as consultation, conflict resolution systems design, and education, training and mentoring on conflict resolution techniques. Currently, mediators are helping to reduce backlogs of employment discrimination charges for the Equal Employment Opportunity Commission and the Department of Agriculture, are mediating age discrimination cases for the Department of Health and Human Services; and, are developing curriculum for schoolyard conflict resolution programs.

We are committed to exploring new opportunities to use our conflict resolution and consensus building expertise, particularly in cases with broad public policy implications. For example, mediators convene and facilitate regulatory negotiations for a variety of agencies and have conducted other multi-party, multi-issue public policy dialogues. These range from rulemaking over Indian Self-Determination issues to environmental and public land use disputes. FMCS also plans to continue promoting the greater use of ADR in government in accordance with the 1996 Administrative Dispute Resolution Act.

For government, the use of ADR is intended to reduce litigation costs and result in better decision making. While hard data showing the results of ADR usage in quantifiable terms is so far limited, anecdotal evidence of its returns is largely positive. We will be tracking our experience over the next few years as well as external research on the subject.

In 1997 FMCS conducted five regulatory negotiations and closed 464 cases assisting 45 different government agencies, a 122 percent increase over 1996.

GPRA Initiatives - We are proposing two initiatives in Fiscal Year 1999 which support FMCS’s highest level goal of diffusing "best practices" in conflict management and resolution into a broad range of organizations in the private, public and federal sectors.

The first would authorize and provide funding for the establishment of an FMCS Best Practices Clearinghouse to capture the latest trends and most innovative approaches being used in mediation, conflict resolution and collective bargaining, and integrate this information into our internal mediator training, and through our mediators, into the delivery and content of mediation services to our customers.

The second initiative, requiring no appropriated funds, makes the important conflict resolution and partnership training offered to government agencies and their employee unions more accessible. Government managers and employees, particularly those in smaller agencies or located away from government centers, will be offered one to four day training sessions in key cities across the country. Our efforts here are to take our services "to the people," rather than requiring them to come to us. Based on customer response to this initiative, FMCS may explore the possibility of offering similar decentralized training to the private sector.

Resources Required

Our Fiscal Year 1999 Performance Plan, appended to our budget submission, treats the different aspects of FMCS mediation services: dispute, preventive mediation, customer outreach and ADR, as one "strategic enterprise." While our different services have distinct objectives, through the GPRA planning process, we have come to recognize that they share common goals. FMCS services, in the aggregate, are all aimed at ensuring the achievement of our first-level goal - that collective bargaining, mediation and other mechanisms for strengthening relationships and resolving conflict be used by the organizations which we serve. Together, they contribute to achievement of our higher agency goal: adoption of the best practices in conflict management and resolution by a broad range of private, public and federal organizations.

Additionally, the resources required for the delivery of all these services are shared: a sufficient complement of skilled personnel, with resources for administrative and operational support which enables them to do their jobs. Mediators are now required to attain proficiency in the delivery of every mediation and ADR service. We do not, therefore, allocate resources to a specific service or activity, but rather consider the same resources necessary to reach our outcome goals.

To prepare itself for the future, and to remain the nation’s premier conflict resolution agency, FMCS must hire, train and retain the most qualified workforce possible. Staff must be provided the resources to carry out our important statutory mandates and mission. We will continue to do our part, through the programs and activities outlined in this submission, to resolve disputes and improve relations between labor and management in the organized sector of the economy, to enhance the nation’s economic performance and competitive position, and to promote the use of constructive, peaceful methods of conflict resolution.

FMCS will also continue to build on its 1997-2002 Strategic Plan and the Annual Performance Plans for 1999 and beyond. We will constantly evaluate the impact and results of our services by measuring our progress toward achievement of each performance goal and through other forms of customer feedback, and to use that information to improve the delivery of our mediation services. FMCS intends to meet every requirement of the Government Performance and Results Act of 1993, and more importantly, to use the processes outlined in the Act as a tool for the effective management of this public agency.

To meet the challenges facing us, FMCS seeks a full-time equivalent level of 290 and an appropriation of $34.62 million for Fiscal Year 1999.

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