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The AMA Handbook of Due Diligence by Andrew J. Sherman, William M. Crilly

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Organized Labor Agreements - Form 19-13 (Continued)
Organized labor agreements have, in the past, played a major role in shaping America’s competitive position
in many world markets. Domestically these agreements have influenced management’s decisions on new
equipment purchases and facility location.
The recession of the early 1990’s appears to be restoring some much needed balance to the contract
negotiation process. The firms that take advantage of this opportunity will reap the benefits in the second
half of the decade. Therefore, it is an important element of the due diligence process to determine where the
entity currently stands and what it is planning for its future labor negotiations.
Labor
- Management Relations - Form 19-14
This form is self-explanatory.
Hiring
And Termination Policies And Procedures - Forms 19-15 Through 19-16
These forms are self-explanatory.
T
raining Programs - Form 19-17
Training, or more appropriately “retraining,” is taking on increasing importance as new technologies replace
the more conventional ways of doing things. Also, the large scale reduction in defense related jobs is creating
the need for a massive retraining effort to adjust defense related skills to meet commercial employment needs.
Companies that ignore these trends will suffer the consequences.
WHAT TO LOOK FOR
How does the entity’s training program compare with those of its competitors?
Do the training programs appear to be adequate to meet the entity’s future needs?
What is the distribution of training hours by organizational activity (i.e., marketing, finance,
production, etc.)?
Approximately what percent of the training hours are conducted by in-house personnel?
WHAT TO LOOK FOR
By far the most important features to look out for are those that restrict management’s ability
to optimize the productivity of the work force under varying economic conditions.
Ideally, management would like to:
Efficiently increase or decrease the work force on short notice to meet varying customer
demands.
Assign work on the basis of skill rather than current job classification and/or seniority.
Promote on the basis of skill rather than seniority.
Relate wage increases to productivity gains.
DUE DILIGENCE HANDBOOK 19-05
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