made to the workplace rules: they needed to become far stricter. The absentee policy, in particular, needed adjustment. The warehouse workers were afforded far too many chances to miss work without being disciplined. Koch Industries proposed an absenteeism policy that would allow them to miss less than 1 percent of their total scheduled time.
Neither Hammond, nor Bucknum, nor anyone else on the IBU team had experienced anything like this. Typically, the union asked for a 6 percent raise, and the company countered with 3 percent. Now the union was asking for 5 percent and being offered an overhaul to the entire labor agreement in return.
The proposal that the IBU abandon its existing health care plan was particularly offensive. Since the 1960s, the warehouse workers’ health care plan had been owned and operated by the IBU and administered through a health care trust. The union owned it, controlled it, and set the rules. When Koch Industries revealed the rules of its own health plan, it was apparent that they violated almost everything that the union stood for. Koch’s health plan used a so-called “cafeteria-style” membership, whereby members could pick and choose their levels of health care coverage. This meant that a young employee who was single and had no children might pay a monthly premium of $150. An older employee who had four children, on the other hand, might pay a monthly premium of $500. In the IBU trust plan, every member paid the same premium. The single employee paid $300. The father of four paid $300. It was an economic embodiment of the union’s solidarity. The Koch health plan would institutionalize division between the workers. The drivers were already competing against each other in the LMS rankings. Now it would be each worker for themselves in the health care plan.
The Koch negotiating team insisted that their proposals were not simply a way to save money, but reflected Koch’s principles. Employees needed to act like owners and entrepreneurs. That was why, for example, Koch Industries didn’t just want the workers to join a cafeteria-style health care plan; the company also wanted workers to pay more money out of pocket for their premiums. Previous versions of the IBU plan had covered the entire monthly premium. Now Koch Industries insisted that it would only pay 80 percent of the cost, with employees picking up the rest of the tab. The logic behind this proposal traced back to the earliest days of Market-Based Management. Charles Koch believed that if a service was free to an employee, then the employee would overuse it. Employees needed to have “skin in the game” when it came to receiving health insurance.
Koch’s principles made labor negotiations difficult. It was hard to meet in the middle when Koch believed that the union’s approach was destructively misguided. Still, the IBU tried to argue. That’s when they discovered an infuriating pattern to Koch’s bargaining method. David Franzen or Steve Hammond would propose something to Barnard. Barnard would nod his head, look at his binder, write some notes, and then say that he needed to contact Atlanta to share the new idea. The IBU team came to believe that Barnard wasn’t in charge of the process and needed to get clearance from headquarters. After the IBU made a proposal, the Koch team would gather its things, get up, and leave the negotiating room, promising to return soon with an answer.
Hours passed. Afternoons passed. Bucknum took the negotiating committee out for lunch. Guys paced on the sidewalks outside and smoked cigarettes and talked on their cell phones. Finally, the Koch team returned.
“They’d say, ‘Well, we’ve looked at your proposal,’ ” Bucknum said. “They wouldn’t say ‘No’ directly. They’d just go: ‘This is our counterproposal to what you said.’ Or: ‘We’re sticking with our prior proposal on line eleven,’ or whatever. It was like watching paint dry, talking to these people.”
Koch dragged out the bargaining in another way: Barnard only agreed to meet three days a week. Monday was a travel day, as Barnard flew to Oregon from Atlanta. Friday was also a travel day, when he flew home. The meetings sometimes ended at two in the afternoon, because it was five o’clock in Atlanta, when people started to go home from work.
Negotiations took on a predictable tempo. The teams sat down in the morning. The IBU proposed something. The Koch people left for hours, returned, conceded nothing, and then indicated it was time to go home for the day. After negotiations wrapped up on Thursday,