Chapter 11 Managing Labor Relations Learning Objectives After studying this chapter, the student should be able to: 1. Describe the role of labor unions in organizations. 2. Identify and summarize trends in unionization. 3. Discuss the unionization process. 4. Describe the collective-bargaining process. 5. Discuss how labor agreements are negotiated. 6. Describe how impasses get resolved and agreements are administered. 7. Discuss emerging labor union issues in the twenty-first century. Chapter Outline Opening Case: Unionizing in the New Age Today, unions at many “old-line” businesses still wield power and represent thousands of workers. On the other hand, many newer businesses have successfully avoided unionization among their employees. Their arguments against unions include: unions constantly push for higher wages and expensive benefits, to the point of reducing business competitiveness; unions usually want businesses to retain and reward workers based on seniority rather than performance; unions aggressively fight job cuts and employee benefits; unions have the ability to strike, potentially crippling a business for an extended period of time; and unions push for highly restrictive work rules, limiting a firm’s flexibility to reassign workers to other jobs or change the scope of a worker’s job. Firms like Walmart, Starbucks, and Amazon are at the forefront of large, younger businesses work diligently to thwart efforts to unionize their employees. Some Walmart workers complain about low wages, poor benefits, a lack of full-time jobs, and erratic and unpredictable work schedules. For its part, Walmart warns that unionization could mean the end of employee perks like paid vacation and quarterly bonuses. The United Food and Commercial Workers Union has made Walmart its major battleground and has won several small battles. Still, most of Walmart’s employees remain nonunionized, and the UFCW faces an uphill battle. Starbucks has also faced union concerns. For its part, the coffee giant has helped minimize unionization interest among its employees by treating them very well. Still, the Industrial Workers of the World Union continues to explore unionization interest among Starbucks employees. Various unions including the International Association of Machinists and Aerospace, a trade union of the AFL-CIO, have tried to unionize workers at Amazon. While the majority of workers ended up voting against unionization, the mere fact that they managed to secure the election was seen by the union’s leaders as at least a minor victory. Introduction Walmart, Starbucks, and Amazon are contending with a significant issue that has confronted business leaders for decades: dealing with organized labor in ways that optimize the needs and priorities of both the organization and its employees. When the challenge is handled effectively and constructively, both sides benefit. I. The Role of Labor Unions in Organizations Labor relations can be defined as the process of dealing with employees who are represented by a union. A labor union, in turn, is a legally constituted group of individuals working together to achieve shared job-related goals. These goals often include issues such as higher wages, enhanced benefits, and/or better working conditions. Collective bargaining, a specific aspect of labor relations, is the process by which managers and union leaders negotiate acceptable terms and conditions of employment for those workers represented by the unions. Although collective bargaining is a term that technically and properly is applied only in settings where employees are unionized, similar processes often exist in nonunionized settings as well. In these cases, however, they are likely to be labeled employee relations rather than labor relations. A. Historical Development of Unions Figure 11.1 shows the major historical events in the emergence and growth of labor unions in the United States. For example, the earliest unions in the United States emerged during the Revolutionary War. These associations were called craft unions, meaning that each union limited itself to representing groups of workers who performed common and specific skilled jobs. The first major union to have a significant effect in the United States, however, was the Noble and Holy Order of the Knights of Labor, or more commonly, the Knights of Labor, which was founded in 1869. Unlike most other national unions, the Knights of Labor expanded its goals and its membership to include workers in many different fields. The Knights admitted anyone to membership, regardless of race or creed (which typically were important considerations for memberships in unions at the time), except for those they considered to be “social parasites” (such as bankers). In addition to improving wages, the Knights of Labor sought to replace capitalism with worker cooperatives. The single event that led to its demise, however, was a meeting in Chicago’s Haymarket Square on May 4, 1886. The meeting was held to protest some earlier violence stemming from an attempt to establish an 8-hour workday. When the May 4 meeting was over, further violence left 200 wounded and resulted in the hanging of several leaders of the Knights. Founded in 1886 by Samuel Gompers, the American Federation of Labor (AF of L) was also composed of various craft unions, but unlike the Knights of Labor, the AF of L avoided legislative and political activities and focused instead on improved working conditions and better employment contracts. Also unlike the Knights of Labor, the AF of L served as an umbrella organization, with members joining individual unions affiliated with AF of L, as opposed to joining the AF of L itself. While the AF of L focused exclusively on the “business” of unions, several more radical and violent movements developed after the demise of the Knights of Labor. Under the leadership of Eugene V. Debs, for example, the American Railway Union battled the railroads (especially the Pullman Palace Car Company, which made railroad passenger cars), mostly over wages, and many people were killed during strike violence. The Industrial Workers of the World (IWW) consisted mostly of unskilled workers and advocated extreme violence as a means of settling labor disputes. The mining companies and textile mill owners with which they battled also believed in violence as a means of settling labor disputes, and many people killed during strikes organized by the “Wobblies,” as the IWW members were called. For the mainstream organized labor movement, many of these fringe groups were too radical, and workers preferred the businesslike approach of the AF of L. As a result, the federation grew rapidly throughout the early decades of the twentieth century, reaching a peak membership of 5 million by the end of World War I. Its membership declined over the next several years, and by the mid-1930s membership stood at appropriately 2.9 million. One of AF of L’s weaknesses was its continued focus on crafts, accepting only skilled craftspersons for specifically designed jobs. Rather than organizing workers across companies or across industries based on their craft, this new type of union activity focused on organizing employees by industry, regardless of their crafts, skills, or occupation. In the late 1930s, John L. Lewis of the United Mine Workers led a dissenting faction of the AF of L to form a new labor organization called the Congress of Industrial Organizations (CIO). The CIO quickly began to organize the automobile, steel, mining, meatpacking, paper, textile, and electrical industries. Eventually, in 1955, the AFL-CIO was formed with a total membership of around 15 million employees. B. Legal Context of Unions Partly because of the tumultuous history of labor unions in the United States, a great many laws and regulations have been enacted to deal with unions, and this legislative history is critical to understanding the development of the U.S. labor movement. The earliest legislation simply dealt with the question of whether unions were legal. The first significant piece of legislation was the National Labor Relations Act, which was passed in 1935. This act is more commonly referred to as the Wagner Act and still forms the cornerstone of contemporary labor relations law. The basic purpose of the Wagner Act was to grant power to labor unions and put them on a more equal footing with mangers in terms of the rights of employees. It gives workers the legal right to form unions, to bargain collectively with management, and to engage in group activities such as strikes to accomplish their goals. This act also forces employers to bargain with properly elected union leaders and prohibits employers from engaging in certain unfair labor practices, including discriminating against union members in hiring, firing, and promotion. The Wagner Act also established the National Labor Relations Board (NLRB) to administer its provisions. The NLRB still administers most labor law in the United States. Congressional activity in the years after World War II curtailed the power of unions. The most important piece of legislation in this era was the Labor-Management Relations Act, also known as the Taft-Hartley Act, which was passed in 1947. The basic purpose of the Taft-Hartley Act was to curtail and limit union practices. It also outlawed an arrangement called the closed shop, which refers to a workplace in which only workers who are already union members may be hired by the employer. Section 7 of the Taft-Hartley Act also allowed states, if they wished, to restrict union security clauses such as closed-shop agreements. Roughly twenty states took advantage of this opportunity and passed laws that also outlaw union shop agreements (where a nonunion member can be hired but must join the union within a specified time to keep his or her job) and various other types of union security agreements. These laws are known as right-to-work laws, and the states that have adopted them (predominantly in the Southeast) are known as right-to-work states. The Taft-Hartley Act also established procedures for resolving strikes deemed threatening to the national interest. For example, the president of the United States has the authority under the Taft-Hartley Act to request an injunction to prohibit workers from striking for 60 days, a so-called cooling-off period in which labor and management have a greater chance of resolving their differences. A final significant piece of legislation affecting labor relations is the Landrum-Griffin Act, which was passed in 1959. Officially called the Labor Management Reporting and Disclosure Act, this law focused on eliminating various unethical, illegal, and undemocratic union practices. For instance, the Landrum-Griffin Act requires that (1) national labor unions elect new leaders at least once every five years and (2) convicted felons cannot hold national union office. It also requires unions to file annual financial statements with the Department of Labor. Finally, the Landrum-Griffin Act stipulates that certain information regarding their internal management and finances to all members. C. Union Structures Figure 11.2 shows the most common basic structure. Locals are unions organized at the level of a single company, plant, or small geographic region. Each local has an important elected position called the shop steward, who is a regular employee who functions as a liaison between union members and supervisors. The national affairs of large unions are generally governed by an executive board and a president. These individuals are usually elected by members of the union themselves. The president is almost always a full-time union employee and may earn as much money as a senior manager of a business. Just as large businesses have various auxiliary departments, so do large national unions. These auxiliary departments may handle issues such as the legal affairs of the union. They may oversee collective-bargaining issues and may provide assistance and services to the local unions as requested and needed. II. Trends in Unionization A. Trends in Union Membership Since the mid-1950s, labor unions in the United States have experienced increasing difficulty in attracting new members. For example, in 1977, more than 26 percent of U.S. wage and salary employees belonged to labor unions. Today, that figure is about 12.4 percent of those workers. In recent years, however, unions are winning certification less than 50 percent of the times when workers are called on to vote. Several factors explain declining membership. One common reason is changing composition of the workforce itself. Traditionally, union members have been predominantly white males in blue-collar jobs, but today’s workforce is increasingly composed of women and ethnic minorities. These groups have a much weaker tradition of union affiliation, so their members are less likely to join unions when they enter the workforce. A corollary to these trends has to do with the fact that much of the workforce has shifted toward geographic areas in the South and toward occupations in the service sector that have also been less unionized. A second reason for the decline in union membership in the United States is more aggressive antiunionization strategies undertaken by businesses. Some companies have also tried to create a much more employee-friendly work environment and are striving to treat all employees with respect and dignity. One goal of this approach has been to minimize the attractiveness of labor unions for employees. B. Trends in Union–Management Relations The gradual decline in unionization in the United States has been accompanied by significant trends in union–management relations. In some sectors of the U.S. economy, perhaps most notably the automobile and steel industries have a large membership and considerable power vis-à-vis the organizations in which their members work. In most sectors of the economy, however, labor unions are clearly in a weakened position. As a result, many have had to take more conciliatory stances in their relations with managers and organizations. C. Trends in Bargaining Perspectives But now unions are often bargain for different goals such as job security. Of specific interest in this area is the trend toward moving jobs to other countries to take advantage of lower labor costs. As a result of organization downsizing and several years of relatively low inflation in this country, many unions opt to fight against wage cuts rather than strive for wage increases. An issue that has become especially important in recent years that needed improving, was pension programs for employees. III. The Unionization Process A. Why Employees Unionize In the early days of labor unions, people joined them because their working conditions were unpleasant in many cases. In many parts of the United States and in many industries, these early pressures for unionization became an ingrained part of life. Union values and expectations are passed down from generation to generation. In general, parents’ attitudes toward unions are still an important determinant of whether or not an employee will elects to join a union. B. Steps in Unionization The general steps are shown in Figure 11.4 and are described in more detail below. First, employees must figure some interest in joining a union. If interest in forming a union exists, the National Labor Relations Board is asked to define the bargaining unit, or the specifically defined group of employees who will be eligible for representation by the union. Once the bargaining unit has been defined, organizers must strive to get 30 percent of the eligible workers within the bargaining unit to sign authorization cards requesting a certification election. If the organizers cannot get 30 percent of the workers to sign the authorization cards, then the process ends. If the required number of signatures is obtained, the organizers petition the NLRB to conduct an election. If a simple majority of those voting approve union certification, then the union becomes the official bargaining agent of the eligible employees. But if a majority fails to approve certification, the process ends. If the union becomes certified, then its organizers create a set of rules and regulations that govern the conduct of the union. They also elect officers, establish a meeting site, and begin to recruit members from the labor force in the bargaining unit to join the union. C. Decertification of Unions Just because a union becomes certified, however, does not mean it will exist in perpetuity. Under certain conditions, an existing labor union can be decertified. For decertification to occur, two conditions must be met. First, no labor contract can currently be in force (that is, the previous agreement must have expired and a new one is awaiting approval). Second, the union must have served as the official bargaining agent for the employees for at least 1 year. As with the certification process, if 30 percent of the eligible employees in the bargaining unit sign the decertification cards, then the NLRB conducts a decertification election. Again, a majority decision determines the outcome. Thus, if a majority of those voting favor decertification, the union is removed as the official bargaining agent for the unit. Once a union has been decertified, a new election cannot be requested for certification for at least 1 year. IV. The Collective-Bargaining Process A. Preparing for Collective Bargaining Management can take several actions to prepare for collective bargaining. For example, the firm can look closely at its own financial health to work out a realistic picture of what it can and cannot offer in terms of wages and salaries for its employees. Management can also conduct a comparative analysis to see what kinds of labor contracts and agreements exist in similar companies and what this particular union has been requesting—and settling for—in the past. The union can and should undertake several actions to be effectively prepared for collective bargaining. It too should examine the financial health of the company through sources such as public financial records. Like management, the union can also determine what kinds of labor agreements have been reached in other parts of the country and can determine what kinds of contracts other divisions of the company or other businesses owned by the same corporation have negotiated recently. B. Setting Parameters for Collective Bargaining In general, two categories of items may be dealt with during labor contract negotiations. One set of items, as defined by law, consists of mandatory items. Mandatory items include wages, working hours, and benefits. If either party expresses a desire to negotiate one or more of these items, then the other party must agree. Almost any other aspect of the employment relationship is also subject to negotiation, provided both sides agree. These items are called permissive items. Some items are not permissible for negotiation under any circumstances. However, legal barriers prohibit such clauses from being written into labor contracts, and therefore this item would not be permissible. V. Negotiating Labor Agreements A. The Negotiation Process A useful framework for understanding the negotiation process refers to the bargaining zone, which is illustrated in Figure 11.5. During preparations for negotiation, both sides are likely to attempt to define three critical points. For the organization, the bargaining zone and its three intermediate points include the employer’s: Maximum limit Expectation Desired result on items being negotiated On the other side of the table, the labor union also defines a bargaining zone for itself that includes three points: The union’s minimum acceptable limit on what it will take from management (the union resistance point may be the settlement level below which the union will strike) Its own expectations about what management is likely to agree to The most it can reasonably expect to get from management (the union target point) Much of the actual negotiation revolves around each party trying to discover the other’s resistance point without revealing its own. The resulting agreement is not necessarily the end of the bargaining process. First, the new contract agreement must be ratified by the union membership. If the union membership votes to reject the contract (which typically reflects internal union politics more than anything else), the parties must return to the bargaining table. As soon as an agreement is reached, both parties begin to make public statements about how a negotiator the other party was. Both acknowledge that they really wanted a lot more and that they hope they can live with this agreement, but the other party was such a good negotiator that this agreement was the best they could come up with. This posturing helps both parties “sell” the agreement to their constituencies and also allows both parties to maintain their image as strong as strong negotiators no matter how one-sided the final agreement might be. B. Barriers to Effective Negotiation The foremost barrier to effective negotiation between management and labor is the lack of overlap for bargaining zones of the respective sides (i.e., there is a negative settlement zone). For example, sometimes a long history of acrimonious relationships between management and labor makes it difficult for the two sides to negotiate in good faith. Negotiations can also be complicated by inept negotiators and poor communication between negotiators. If management and labor cannot agree on a new contract or one to replace an existing contract after a series of bargaining sessions, then either side or both sides might declare that they have reached an impasse. An impasse is simply a situation in which at least one party believes that reaching an agreement is not imminent. VI. Resolving Impasses If labor and management have reached an impasse, several actions can be taken by either side or both sides in an attempt to break the impasse. A strike occurs when employees walk off their jobs and refuse to work. During a strike, workers represented by the union frequently march at the entrance to the employer’s facility with signs explaining their reasons for striking. This action is called picketing and it is intended to elicit sympathy for the union and intimidate management.
HR in the 21st Century: All Shapes and Sizes Many people associate unions, union members, collective bargaining, and strikes with blue-collar manufacturing jobs in factories and on assembly lines. But in reality, of course, unions and their members come in all shapes and sizes today. For instance, airline pilots, teachers, firefighters, hotel employees, police officers, and writers belong to unions. And just like factory workers, union members have gone on strike against television networks, airlines, and public school districts. Labor unions represent players and officials in virtually all sports. And within the last 25 years professional baseball, basketball, and football have all significant labor crisis, ranging from strikes to lockouts and led by players, officials, or team owners.
Two less extreme tactics that unions sometimes use are boycotts and slowdowns. A boycott occurs when union members agree not to buy the products of a targeted employer. A slowdown occurs when workers perform their jobs but at a much slower pace than normal. A variation on the slowdown occurs when union members agree, sometimes informally, to call in sick in large numbers on certain days, an action called a sickout. Some kinds of strikes and labor actions are illegal. Foremost among these illegal actions is the wildcat strike, which occurs when workers suddenly go on strike, without the authorization (presumably) of the striker’s union and while a binding labor agreement is still in effect (which is what makes it illegal). Management also has certain tactics that it may employ in its efforts to break an impasse. One possibility is a lockout, and it occurs when the employer denies employees access to the workplace. In some cases, management can try to bring in temporary workers as replacements for striking employees. These individuals are called strikebreakers. In mediation, a neutral third party called the mediator listens to and reviews the information presented by both sides. The mediator then makes an informed recommendation and provides advice to both parties about what he or she believes should be done. Another alternative to resolving impasses is arbitration, or the process in which both sides agree in advance that they will accept the recommendations made by an independent third-party arbitrator. In arbitration, however, the information that results is placed in the form of a proposed settlement agreement that the parties have agreed to in advance to accept. Thus, the settlement is imposed on the parties and the impasse is ended. Under final-offer arbitration, the parties bargain until impasse. At that point, the two parties’ final offers are submitted to the arbitrator. Under traditional arbitration, the arbitrator is then free to impose a settlement at any point he or she wishes. But under final-offer arbitration, the arbitrator has only two choices for the imposed settlement—the two parties’ final offers—and the arbitrator must select either one as the imposed settlement. Under such system, the parties are more willing to try to reach a settlement on their own rather than go to the arbitrator. A. Administering Labor Agreements Another key clause in the labor contracts negotiated between management and labor defines how the labor agreement will be enforced. Wage increases can be calculated mathematically, and union members will see the effects in their paychecks. Other provisions of many labor contracts, however, are more subjective in nature and thus more prone to misrepresentation and different perceptions. VII. Labor Unions in the Twenty-First Century The labor movement in the United States focused on bread-and-butter issues such as wages and hours of work, unlike the labor movements in many European countries. U.S. labor unions have become quite vocal in several areas where they have traditionally been silent, speaking out against child labor in Third World countries and the general exportation of jobs to lower paying countries. A. “Replacement” Sources of Labor For example, in 2010, there were roughly 1.6 million people serving time in federal or state correctional institutions. Although many of these inmates work in paid jobs, they are paid much less than the minimum wage, meaning the goods they produce can be sold for less causing serious problem for unskilled workers in the general population. Furthermore, many critics of the U.S. prison system argue that these prison jobs do not prepare prison inmates for outside jobs once they are released and thus do not lessen the rate of subsequent arrest and incarceration. B. Contingent Workers Another source of “replacement labor” is the pool of contingent workers. Although, the representatives of unions focus on the social implications of these practices, and probably are concerned about these social costs, clearly labor unions have more to lose in these cases than do others. Nonetheless, U.S. labor unions have been able to form coalitions with other community groups who oppose the use of prison labor or are concerned about exporting jobs overseas, and they have become very vocal in this movement. C. Unions and the Electronic Age The Internet also presents many interesting challenges for U.S. labor unions. Although unions must oppose some of the technical advances for the sake of their members’ jobs if nothing else, they cannot simply reject these advances wholesale. Clearly, in many cases the firms involved will lose business and perhaps even be forced out of business if they cannot keep pace with the technology (and cost controls) of their competitors. The Internet presents a challenge to these no-solicitation rules. For example, if the organization allows employees to use the Internet (even if the computers are company owned) to post thank-you notes, it may be forced to allow union-solicitation as well. The NLRB will have to deal with these issues in the coming years, but the key seems to be nondiscrimination. In other words, companies cannot (apparently) forbid employees from using the Internet for union-solicitation, if companies allow employees to use the Internet for nonbusiness-related purposes. Finally, unions have found that the Internet has significant effects on the way they conduct their own internal business. It has also enabled unions to mobilize international resources to deal with issues that all union members face wherever they work such as the lower wages and looser labor regulations associated with agreements under the World Trade Organization. Instructor Manual for Human Resources Angelo Denisi, Ricky Griffin 9781285867571
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