CH-14 Collective Bargaining and Labor Relations – Human Resource Management : Book Guide

Chapter 14 - Collective Bargaining and Labor Relations Please click here to access the new HRM Failures case associated with this chapter. HRM Failures features real-life situations in which an HR conflict ended up in court. Each case includes a discussion questions and possible answers for easy use in the classroom. HRM Failures are not included in the text so that you can provide your students with additional real-life content that helps engrain chapter concepts. Chapter Summary This chapter provides an overview of private sector labor management relations in the United States, with brief attention to public sector differences and international labor relations. After a model of labor management relations and a context for current relationships are provided, various aspects of the process of collective bargaining are described. Cooperative forms of labor management relations are then presented. Finally, an explanation is given for how changes in competitive challenges are influencing labor management interactions. Learning Objectives After studying this chapter, the student should be able to: 1. Describe what is meant by collective bargaining and labor relations. 2. Identify the labor relations, goals of management, labor unions, and society. 3. Explain the legal environment's impact on labor relations. 4. Describe the major labor management interactions: organizing, contract negotiations, and contract administration. 5. Describe the new, less adversarial approaches to labor management relations. 6. Explain how changes in competitive challenges (e.g., product market competition and globalization) are influencing labor management interactions. 7. Explain how labor relations in the public sector differ from labor relations in the private sector. Extended Chapter Outline Note: Key terms appear in boldface and are listed in the "Chapter Vocabulary" section. Opening Vignette: Unions and Evolving Worker Rights in Low-Wage Countries This vignettes describes the changes in union and labor activity in other parts of the world. In particular, it overviews conditions at one Chinese factory, Ohms Electronics, concerning worker rights and union representation. In this case, striking workers received not only an increase in salary, but also an agreement that the company would allow workers to vote for who would represent them in the government approved labor union. Although it is supposed to be law that the workers vote on these representatives, most organizations typically appoint a worker who would better represent the company’s interest. There appears to be concern on the part of China’s ruling Communist Party concerning worker representation, although as long as the unions stay out of politics the government seems to be becoming more tolerant. The vignette also addresses the fact that workers throughout the world also need union representation to protect their very safety (i.e. the garment factory tragedy in Bangladesh that killed 1,100 people). Discussion Question 1. Is the time of necessity for labor unions passed here in the United States? Is the same true for other growing regions of the world? Answer: Students will have a variety of opinions on this issue. The argument can certainly be made that US workers do not face the same types of workplace conditions or dangers that workers in other parts of the world do. The necessity for labor unions has not passed in the United States or in other growing regions of the world. Here's why: 1. U.S. Context: Labor unions continue to play a crucial role in advocating for workers' rights, fair wages, and safe working conditions. Although union membership has declined in some sectors, unions are still important in addressing income inequality, workplace safety, and ensuring equitable treatment in a rapidly changing job market. 2. Global Context: In growing regions, such as parts of Asia and Latin America, labor unions remain vital for advocating workers' rights and improving working conditions. In countries like China, despite some reforms, unions often still face challenges with representation and political interference. Unions are essential for protecting workers against exploitation and ensuring fair labor practices in these rapidly developing economies. 3. Safety and Rights: As highlighted by tragedies like the garment factory collapse in Bangladesh, unions are critical in pushing for safer working environments and better labor standards. The need for strong labor representation remains pressing as global supply chains continue to expand and as new industries emerge. Overall, while the role of unions may evolve, their function in protecting workers' rights and promoting fair labor practices remains relevant both in the U.S. and globally. I. Introduction—The events in China illustrate that unions can help achieve important worker goals, including not only higher wages, but also worker protection, and giving workers a say in their workplaces.. II. The Labor Relations Framework (text Figure 14.1) A. John Dunlop suggested a labor relations system that consists of four elements: 1. An environmental context (technology, market forces, etc.). 2. Participants: employees and their unions, management, and the government. 3. A web of rules (rules of the game) that describe the process by which labor and management interact and resolve disagreements. 4. Ideology (acceptance of the system and participants). B. Katz and Kochan have presented a model that focuses on the decision making process and outcomes. 1. At the strategic level, management makes basic choices such as whether to work with its union or develop nonunion opera¬tions. 2. These labor and management choices made at the strategic level affect interaction at the second level, the functional level, where contract negotiations occur. 3. These strategic decisions also affect the workplace level, the arena in which the contract is administered. III. Goals and Strategies A. Society—Labor unions' major benefit to society throughout history has been the balancing of power and the institutionalization of industrial conflict in the least costly way. The National Labor Relations Act (NLRA, 1935) sought to provide a legal framework conducive to collective bargaining. B. Management must decide whether to encourage or discourage the unionization of its employees. Based upon issues of wage cost, flex¬ibility, and labor stability, as well as ideology, management must decide. If management has a union, it has the option of supporting a decertification vote, an election in which employees have a chance to vote out the union. C. Labor unions seek to give workers formal representation in setting the terms and conditions of employment. (See text Table 14.1 for categories of provisions in collective bargaining agreements). Integrity in Action: Who Pays for Cheap Clothing? This case discusses the safety concerns for many workers in developing economies where cheap products and produced. One issue that is brought up is that while people are appalled by the conditions the workers work under, they are not willing to give up the bargain priced products. Many European retailers have signed the “Bangladesh Safety Pact” – an agreement under which they agree to help pay for building improvements and fire safety of some producers. US retailers have so far not signed the agreement due to legal concerns their European counterparts do not face (class action lawsuits). Discussion Question 1 1. Does your clothing purchasing decision depend on where the clothing was made and whether the working conditions and treatment of employees is acceptable? Answer: This question will obviously receive very personalized and varied responses. Yes, many people’s clothing purchasing decisions are influenced by where the clothing was made and the working conditions involved. Consumers increasingly consider ethical factors, such as fair labor practices and safe working conditions, when making purchasing choices. Brands that transparently share information about their supply chain and commit to ethical practices often attract conscientious consumers who prioritize these values. 2. Should retailers stop sourcing garments from Bangladesh? Answer: This question as well will be answered in very different ways depending on the student. Since both of these questions are moral questions, there is no black and white right or wrong answers. Stopping sourcing garments from Bangladesh entirely may not be the most effective solution and could negatively impact the workers who depend on these jobs for their livelihood. Instead, retailers should work towards improving conditions within the supply chain. This includes: • Collaborating on Safety Improvements: Support initiatives like the Bangladesh Safety Pact to enhance working conditions and safety measures. • Promoting Fair Labor Practices: Advocate for fair wages, safe working conditions, and the right to unionize. • Engaging in Continuous Monitoring: Ensure that suppliers adhere to ethical standards through regular audits and oversight. A balanced approach that seeks to address and improve conditions while continuing to engage with local economies may be more sustainable and beneficial for workers in the long run. Evidence-Based HR This vignette speaks to the issue of subsistence wages being paid in the developing countries many goods are produced in and the slender cost structure of the companies they work for. In this case, Bangladesh, where the minimum wage for a garment worker is $64 per month – not enough to pay for rent and food for a family of 3. Solutions being proposed include increasing the minimum wage. However, an increase in the minimum wage would likely put many producers out of business. Additionally, recent calls for increased safety conditions for workers that resulted from recent workplace tragedies call to question who will ultimately pay for the increased costs. The resulting increased cost structure may cause retailers to purchase their products elsewhere, which would crush the fragile economy of the country. Other proposed solutions included increase worker rights to form labor unions which would allow for negotiation for better wages and safety conditions. Exercise Have students form groups and explore the differential cost structures for a family in Bangladesh (based on the information in the case) and for a family in the US. Have them consider the differences in lifestyle as well as the difference an increase in salary of $26 per month would have on each family’s lifestyle. Next have them look at the cost structure outlined in the case for a garment producer and compare that with cost factors US producers would face. Ask them to discuss ideas for their proposed solutions to the issues outlined in the case (i.e. balancing between subsistence wages and the safety of workers, etc.). IV. Union Structure, Administration, and Membership A. National and international unions are composed of multiple local unions, and most are affiliated with the American Federation of Labor and Congress of Industrial Organizations (AFL CIO) (see Table 14.2 in the text for a list). 1. Craft unions are those that organize members of a particular skill or trade, such as electricians or plumbers. Craft unions are likely to be responsible for training programs called appren¬ticeships. 2. Industrial unions are made up of members who work in any number of positions in a given industry, such as the auto or steel industry. Whereas craft unions may wish to control the number of members, industrial unions wish to maximize the number of members. B. Local unions are frequently responsible for the negotiations of a contract as well as the day to day administration of the contract, including the grievance procedure. Typically, an industrial local corresponds to a single manufacturing facility. C. The AFL CIO is not a union but rather an association that seeks to advance the shared interest of its member unions at the national level. It represents labor's interests in public policy issues and provides numerous services to its members, in terms of research and education (text Figure 14.2). D. Union security depends upon its ability to ensure a stability of members and dues. Unions typically negotiate two contract provisions that defines the relationship an employer has to employees and that critical to a union’s security or viability: 1. A checkoff provision is an automatic deduction of union dues from an employee's paycheck. 2. A closed shop is a union security provision under which a person must be a union member. 3. A union shop requires a person to join the union within a certain length of time after beginning employment. 4. An agency shop is similar to a union shop, but does not require union membership, only that an agency fee be paid. 5. Maintenance of membership requires only that those who join the union remain members through the life of the current contract. 6. Right to work laws—As a function of the Taft Hartley amend¬ment to the NLRA, states may decide to make mandatory union membership (or even dues paying) illegal. E. Union Membership and Bargaining Power—Employers are increasingly resisting unionization. Unions are making new attempts to organize new memberships and to provide new services. Union membership has consistently declined since 1950 and now stands below 10 percent of private sector employment (text Figure 14.3). Reasons for this decline are noted below: 1. Structural Changes in the Economy—These changes include decline in core manufacturing and increase in the service sector. But these changes, according to studies, only account for 25 percent of the overall union membership decline. 2. Increased Employer Resistance—Almost 50 percent of large employers in a survey reported that their most important labor goal was to remain union free. Unions' ability to organize whole industries has declined, and therefore wages are rarely taken out of competition. Additionally, studies have shown that if a union wins an election, it is frequently the case that managers lose their jobs (see Figure 14.4 for the increase in employee resistance to union organizing). 3. Substitution with HRM—In large nonunion companies, HRM policies and practices may encourage positive employee rela¬tions, and therefore union representation is not desired by employees. 4. Substitution by Government Regulation—Employment laws have been passed that reduce the areas in which unions can make a contribution. 5. Worker Views—The lack of a U.S. history of feudalism and class distinctions has limited the class consciousness needed to support a strong union movement. 6. Union Actions and Industry Structure - Corruption, resistance to obvious economic change, and openness to women and minorities have all hurt the perception of union. V. Legal Framework—Legislation and court decisions that provide the structure within which unions must operate have had an effect upon membership, bargaining power, and the degree to which unions and managements are successful in achieving their goals. The 1935 NLRA enshrined collective bargaining as the preferred mechanism for settling labor management disputes. The Great Depression of the 1930s shifted public attitudes toward business and the free-enterprise system. Section 7 of the act sets out the rights of employees, including the "right to self organization, to form, join, or assist labor organizations, to bargain collectively through representa¬tives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining." Table 14.3 shows that there are some notable exclusions to the NLRA in the private sector. A. Unfair Labor Practices (ULPs)—Employers: The National Labor Relations Act (1935) prohibits certain activities by both employers and labor unions. Section 8(a) of the NLRA contains ULPs by employers. 1. Employers cannot interfere with, restrain, or coerce employees in exercising their Section 7 rights. 2. Employers cannot dominate or interfere with a union. 3. Employers may not discriminate against an individual for exer¬cising his or her right to join or assist a union. 4. Employers may not discriminate against employees for providing testimony relevant to enforcement of the NLRA. 5. Employers cannot refuse to bargain collectively with a certi¬fied union (other examples are given in text Table 14.4). B. Unfair Labor Practices—Labor Unions: Originally the NLRA did not list any union unfair labor practices. These were added by the 1947 Taft Hartley Act. 1. These ULPs parallel those listed previously. For example, unions may not restrain or coerce employees in the exercise of their Section 7 rights (see Table 14.5 in the text for additional examples). C. Enforcement—The National Labor Relations Board (NLRB) has the primary responsibility for enforcing the NLRA. 1. The NLRB is a five member board appointed by the president. Additionally, there are 33 regional offices. 2. Only businesses involved in interstate commerce are covered by the NLRA and therefore subject to the NLRB. 3. The NLRB has two major functions: a. To conduct and certify representation elections. b. To prevent unfair labor practices. 4. ULP charges are filed at and investigated by the regional offices. 5. The NLRB may defer to the parties' grievance process instead of holding a hearing. 6. The NLRB can issue a cease and desist order to halt a ULP. It may order reinstatement and back pay. The court of appeals can choose to enforce the NLRB's orders. VI. Union and Management Interactions: Organizing A. Why Do Employees Join Unions? 1. Is there a gap between pay, benefits, and other conditions of employment that employees actually receive versus what they believe they should receive? 2. If such a gap exists, is it sufficiently large enough to motivate employees to remedy the situation? B. The Process and Legal Framework of Organizing—An election may be held if at least 30 percent of the employees in the bargaining unit sign authorization cards. A secret ballot election will be held. The union is certified by the NLRB if a simple majority of employees vote for it (Figure 14.5). 1. A decertification election may be held if no other election has been held within the year or if no contract is in force. 2. The NLRB must define the appropriate bargaining unit and the employees who are eligible to participate in organizing activities. 3. Certain categories of employees cannot be included. C. Organizing Campaigns: Management and Union Strategies and Tactics (see text Tables 14.6 and 14.7 for common campaign issues). 1. Table 14.8 in the text indicates employers use a variety of methods to oppose unions in organizing campaigns. Additionally, note the significant increase in employer ULPs since the late 1960s. 2. The consequence of breaking the law in this situation is minimal. 3. The NLRB may set aside the results of an election if the employer has created "an atmosphere of confusion or fear of reprisals” (Table 14.9). 4. Associate union membership is a form of union membership in which the union receives dues in exchange for services but does not provide representation in collective bargaining. 5. Corporate campaigns seek to bring public, financial, or political pressure on employers during the organizing and negotiating process. VII. Union and Management Interaction: Contract Negotiation— Bargaining structures, the range of employees and employers that are covered under a given contract, differ, as shown in text Table 14.10. A. The Negotiation Process—Walton and McKersie suggested that negotiations could be broken into four subprocesses: 1. Distributive bargaining occurs when the parties are attempting to divide a fixed economic pie into two parts. What one party gains, the other loses. 2. Integrative bargaining has a win win focus; it seeks solutions beneficial to both sides. 3. Attitudinal structuring refers to the rela¬tionship between labor and management negotiators. 4. Intraorganizational bargaining is the consensus building and negotiations that go on between members of the same party. B. Management's preparation for negotiations is critical to labor costs and productivity issues. The following steps are suggested: 1. Establish interdepartmental contract objectives among industrial relations and finance, production, and so on. 2. Review the old contract to focus on provisions needing change. 3. Prepare and analyze data on labor costs, your own and competitors'. Data on grievances, compensation, and benefits must be examined as well. 4. Anticipate union demands by maintaining an awareness of the union perspective. 5. Establish the potential costs of various possible contract provisions. 6. Make preparations for a strike, including possible replacements, security, and supplier and customer. 7. Determine the strategy and logistics for the negotiators. C. Negotiation Stages and Tactics 1. The early stages may include many individuals, as union proposals are presented. 2. During the middle stages, each side makes decisions regarding priorities, theirs and the other parties'. 3. In the final stage, momentum may build toward settlement or pressure may build as an impasse becomes more apparent. May involve interaction with negotiators or facilitators. More small groups are used to address specific issues. 4. Getting to Yes by Fisher and Ury presents four principles of negotiations: a. Separate the people from the problem. b. Focus on interests, not positions. c. Generate a variety of possibilities before deciding what to do. d. Insist that the results be based on some objective standard. E. Bargaining Power, Impasses, and Impasse Resolution—An important determinant of the outcomes of negotiations is the relative bargaining power of each party. Strikes impose various economic costs on both sides and therefore, in part, determine the power. Competing Through Technology: Longshoremen and Automation: Competing Company and Worker Interests This vignette discusses a legacy contract issue revolving around royalties paid to longshoremen based on the weight of containers handled each year to compensate for lost wages due to automated shipping container handling technology. These royalties cost as much as $1.8 billion annually (over and above the average longshoreman’s wages and benefits of $124,000 per year), and the representative of the container handling companies the US Maritime Alliance Ltd. says they are no longer sustainable. The big issue here is whether or not the union representing these workers can strike over this issue (their work allows about half of the containerized maritime trade to enter the US through East and Gulf ports), or whether the White House would consider using emergency powers under the Taft-Hartley Act to order strikers back to work. Discussion Questions 1. Should the longshoremen be paid to compensate for lost jobs and lost hours that resulted from employers introducing labor-saving technology? Answer: Students will have various views of these issues, likely related to their political philosophy. As such, this may be a heated discussion and there is not cut and dried right or wrong answer. Compensation for Lost Jobs and Hours: Paying longshoremen to compensate for lost jobs and hours due to labor-saving technology is a complex issue. On one hand, compensating workers for the impact of automation acknowledges their contribution and mitigates the negative effects of technological advancements on their livelihoods. On the other hand, excessive royalty payments may become unsustainable for companies and could hinder their ability to invest in future improvements. 2. What are the consequences of the royalty payments for workers, companies, and consumers? Answer: At first glance, the $1.8 billion in royalties annually would seem to add a large cost factor to US trade. However, one could argue that this is simply part of the cost of doing business and given the volume of trade that goes through those ports, it is not a large contributor. Consequences of Royalty Payments: • For Workers: The royalty payments provide financial support to longshoremen whose jobs and hours are reduced due to automation. This can help cushion the impact of technological changes on their income and standard of living. • For Companies: The high cost of royalty payments ($1.8 billion annually) imposes a significant financial burden on companies, potentially affecting their profitability and competitive edge. Companies may seek to cut costs, reduce operations, or automate further to offset these expenses. • For Consumers: Increased costs for companies could lead to higher shipping costs and, consequently, higher prices for consumers. If companies pass on the cost of royalties to customers, it could impact the affordability of goods. In summary, while compensating workers is important, balancing this with the financial health of companies and the potential impact on consumers is crucial. Finding a sustainable solution that addresses the needs of workers without overly burdening companies and consumers would be ideal. G. Management's Willingness to Take a Strike—Willingness is determined by the answers to two questions. 1. Can the company remain profitable over the long run if it agrees to the union's demands? 2. Can the company continue to operate in the short run despite a strike? 3. The following factors help determine whether management is able to take a strike: a. Product Demand—If it's strong, there is greater potential loss for management. b. Product Perishability—A strike timed with perishability of a crop results in permanent revenue loss. c. Technology—A capital intensive firm is less dependent on labor for continued operation. d. Availability of Replacement Workers—(Note that the Clinton Administration issued an executive order that at the time of publication was under an injunctive order. This executive order prohibits federal contractors from permanently replacing striking workers). e. Multiple Production Sites and Staggered Contracts—These permit the shifting of work from a struck site. f. Integrated Facilities—If parts are not available from a struck plant, other facilities may be shut down. g. Lack of Substitutes for the Product—A strike is less costly if customers cannot purchase substitute goods. H. Impasse Resolution Procedures: Alternatives to Strikes 1. Mediation is provided by the Federal Mediation and Conciliation Service. While a mediator has no formal authority to force a solution, he or she acts as a facilitator for the parties, trying to help find a way to resolve an impasse. 2. A fact finder is most commonly used in the public sector. The fact finder's job is to investigate and report on the reasons for the dispute and both sides' positions. 3. Arbitration is a process through which a neutral party makes a final and binding decision. Traditionally, rights arbitration (the interpretation of contract terms) is widely accepted, while interest arbitration (deciding upon the outcome of contract negotiation) is used much less frequently. VIII. Union and Management Interactions: Contract Administration A. The grievance procedure is a process developed to resolve labor management disputes over the interpretation and implementation of the contract. The two processes—negotiation and administration—are linked. 1. The WWII War Labor Board first institutionalized the use of a third party neutral, called an arbitrator (now, the final step in the grievance process). 2. The effectiveness of grievance procedures may be judged on three criteria: a. How well are day to day problems resolved? b. How well does the process adjust to changing circum¬stances? c. In multi unit contracts, how well does the process handle local contract issues? 3. The duty of fair representation is mandated by the NLRA and requires that all bargaining unit members, whether union members or not, have equal access to and appropriate represen¬tation in the grievance process. An individual union member may sue the union over negligent or discriminatory representation. 4. Most grievance procedures have several steps prior to arbitra-tion, each including representatives from increasingly higher levels of management and the union (Text Table 14.11). 5. Arbitration is a final and binding step. The Supreme Court, through three cases known as the Steelworkers' Trilogy, confirmed the credibility and binding nature of the arbitrator's decision. 6. Criteria arbitrators use to reach decisions include: a. Did the employee know the rule and the consequences of violating it? b. Was the rule applied in a consistent and predictable way? c. Were the facts collected in a fair and systematic way? d. Did the employee have the right to question the facts and present a defense? e. Does the employee have the right of appeal? f. Is there progressive discipline? g. Are there mitigating circumstances? Competing Through Globalization: Renault Plays France against Spain in Hopes of Improving Production Costs and Flexibility This is the case of French auto manufacturer, Renault, and their attempt to achieve greater workforce flexibility and lower costs in France as they were able to achieve in Spain. In France and much of Europe, the auto manufacturer is still maintaining the same levels of workers when production is low as when production and sales were at higher levels. CEO Carlos Ghosn claims reductions of the size of the workforce and changes in work rules are necessary for the company to return to profitability and being competitive. Discussion Question 1. Do you believe that Renault will succeed in its proposal to its French workers? Answer: Answers to this question will be a function of the students’ attention to culture and recognition of the potential for Renault to move production facilities. 1. Worker Acceptance: Success hinges on the willingness of French workers and their unions to accept changes. French labor laws and strong union presence may make it challenging to implement significant workforce reductions and work rule changes. 2. Management-Worker Negotiations: Effective negotiation and communication between management and workers are crucial. If Renault can demonstrate the necessity of changes and negotiate terms that address workers' concerns, it may gain the necessary support. 3. Economic Conditions: The broader economic environment will also play a role. If Renault's proposal aligns with a strategy that improves the company's financial health and competitiveness, it may be more likely to succeed. 4. Implementation Strategy: A well-designed implementation strategy that includes support for affected workers and gradual adjustments may increase the likelihood of success. 5. Comparative Performance: Renault's success in Spain suggests that similar strategies could work in France, but the differing labor environments may present unique challenges. In conclusion, Renault's success will depend on navigating labor relations effectively, demonstrating the necessity of changes, and aligning the proposal with broader economic and organizational goals. 2. What leverage does Renault have? Answer: The short answer here is to move production. In today’s global economy, organizations must follow the best economic solutions to their company needs – in this case, workforce flexibility which results in a lower cost structure. If workers in France do not want to be a profitable and efficient workforce for Renault, the company may not have an economic choice other than to move production to where they can achieve these goals. Renault has several forms of leverage in negotiating with its French workforce: 1. Economic Pressure: Renault can use its financial situation as leverage. By demonstrating that workforce adjustments are critical to returning to profitability and sustaining jobs in the long run, Renault can make a case for the necessity of its proposals. 2. Competitiveness: Renault's need to remain competitive with other manufacturers who may have more flexible labor costs or lower production expenses can serve as leverage. If Renault can show that changes are essential to compete effectively, it may persuade workers of the need for concessions. 3. Success in Other Regions: The success of similar strategies in Spain provides Renault with leverage. They can argue that the changes are not unprecedented but have proven effective in other markets, potentially leading to increased production efficiency and job security elsewhere. 4. Company Health and Job Security: Renault can emphasize that making necessary adjustments will help secure the company's long-term health and the job security of the remaining workforce. By focusing on the benefits of maintaining a stable and profitable company, Renault can argue that these changes are in everyone's best interest. 5. Support from Shareholders and Stakeholders: Renault can leverage support from shareholders and other stakeholders who may be pressing for cost reductions and efficiency improvements. This external pressure can add weight to Renault's proposals. 6. Government and Regulatory Environment: Renault might also leverage its relationship with the French government and the potential for support in implementing necessary reforms, especially if they can demonstrate the broader economic benefits of their proposals. Overall, Renault's leverage lies in its ability to demonstrate the necessity and benefits of proposed changes for both the company's sustainability and the workforce's long-term job security. B. New Labor Management Strategies 1. There are signs of a transformation from an adversarial approach to a less adversarial and more constructive approach to union management relations. 2. The transformation includes increasing worker involvement and participation and reorganizing work to increase flexibility. 3. Union leaders have frequently resisted such change, fearing an erosion of their influence. 4. In the Electromation case, the NLRB ruled that setting up worker management committees was a violation of the NLRA, given certain circumstances (see Table 14.12 for a description of what makes teams illegal). 5. These new approaches (with the boundaries of legality) to labor relations may add to an organization's effectiveness. Table 14.13 in the text illustrates the patterns of tradi¬tional and transformational approaches. IX. Labor Relations Outcomes A. Strikes—See Table 14.14 in the text for U.S. strike data. Note that strikes occur very infrequently. B. Wages and Benefits—In 2012, private sector unionized workers received, on average, wages that were 27% higher than nonunion counterparts. 1. The union nonunion gap is most likely overestimated due in part to the ease of organizing higher skilled (therefore more highly paid) workers. The "union threat" more than likely causes an underestimation of the differences. The net union advantage in wages are 10 to 15%. 2. Unions influence the way in which pay is given (across the¬-board wages on top of occupational wage rates). Promotions are in large part based on seniority. C. Productivity 1. Unions are believed to decrease productivity in three ways: a. The union pay advantage motivates management to use more capital per worker, which is inefficiency. b. Union contracts may limit workload, and so on. c. Strikes and other job actions result in some lost productivity. 2. Unions, alternatively, may increase productivity: a. Unions provide more efficient communication with manage¬ment, which may reduce turnover. b. The use of seniority decreases the competition between workers. c. The presence of a union may encourage management to tighten up in terms of consistency on work rules, and so on. 3. Overall, studies have concluded that union workers are more productive than nonunion workers although the explanation is not clear. D. Profits and Stock Performance—These may suffer under unioniza¬tion if costs are raised or decrease investment by a greater amount. Recent studies have shown negative effects on profit and shareholder wealth. These research findings describe the average effects of unions. The consequences of more innovative union management relationships for profits and stock performance are less clear. X. The International Context—The United States has both the largest number of union members and the lowest unionization rate of any Western European country or Japan, aside from France and Korea (Text Table 14.15). A number of potential explanations exist. A. The growing globalization of markets (EC common market, NAFTA, etc.) will continue to put pressure on labor costs and productivity. Unless U.S. unions can increase productivity or organize new production facilities, union membership may continue to decline. Competing Through Sustainability Saving Multi-Employer Pensions: Employees Pay the Price This vignette speaks to a coalition of unions requesting changes to pension laws (ERISA) concerning pension benefits paid out. These laws impact multi-employer pension plans (such as those found in the construction, trucking or retail food industries). This coalition claims that these changes are necessary to ensure the solvency of up to 150 such plans. A counter argument (proposed by the Pension Rights Center) claims that the long-term survival of the plans might not be consistent with the best interests of older retirees who would also see a decrease in their pension benefits. Discussion Question 1. Do you agree with the proposed changes to ERISA? If not, do you have an alternative solution? Answer: Since this is an opinion question, student responses will vary. Creative thinking is going to be needed to solve this problem and that is what students should be providing in their discussion. Agreeing with Proposed Changes: • Rationale for Support: The proposed changes to ERISA could be seen as necessary to preserve the solvency of multi-employer pension plans, which are crucial for ensuring continued benefits for current and future retirees. Without adjustments, many plans may become insolvent, jeopardizing the financial security of a significant number of workers. • Protecting the System: Changes may include reforms aimed at improving the sustainability of these plans by adjusting funding requirements or restructuring benefits, potentially preventing more drastic cuts or failures in the future. Disagreeing with Proposed Changes: • Impact on Older Retirees: If the proposed changes lead to reduced benefits for older retirees, it could disproportionately affect those who have already planned their retirements based on existing benefits. Protecting the well-being of current retirees is a critical consideration. • Alternative Solution: An alternative approach could involve a phased transition to reduce the impact on current retirees. This might include a combination of gradual benefit reductions for future retirees and targeted support measures for those already receiving benefits. Additionally, exploring ways to increase funding, such as higher contributions from employers or changes in investment strategies, might help balance the need for plan sustainability with protecting retirees. Ultimately, any changes to ERISA should carefully weigh the need to ensure the long-term viability of pension plans against the immediate needs and rights of current retirees. Balancing these interests is crucial for maintaining fairness and financial stability within multi-employer pension systems. 2. Have you seen other companies (e.g., in the automobile industry) that have faced similar problems? What was done in those cases? Answer: Again responses here will be based on the student’s experience. One unfortunate but great example they may recall is the GM bankruptcy and changes in their retirement plan that ensued. Yes, several companies, particularly in the automobile industry, have faced similar challenges related to pension costs and benefits. Here are a few examples and how they addressed these issues: 1. General Motors (GM): • Problem: GM faced significant financial difficulties partly due to its massive pension and healthcare liabilities. The company’s pension obligations were a major burden, contributing to its bankruptcy filing in 2009. • Solution: GM restructured its pension obligations through the bankruptcy process. This included transferring its pension plans to the federal Pension Benefit Guaranty Corporation (PBGC), which took over responsibility for paying pensions to retirees. GM also negotiated with the United Auto Workers (UAW) to freeze pensions for some employees and shift new hires to a defined-contribution plan. 2. Ford Motor Company: • Problem: Ford also had substantial pension liabilities that contributed to its financial strain, though it avoided bankruptcy by restructuring before the 2008 financial crisis. • Solution: Ford made several moves to address its pension issues, including freezing its traditional pension plans for salaried employees and transitioning to a defined-contribution plan for new hires. Ford also negotiated with unions to address healthcare and pension costs and made substantial contributions to its pension fund to improve its funding status. 3. Chrysler (now Stellantis): • Problem: Chrysler faced significant pension and healthcare liabilities, which were exacerbated by the financial crisis and subsequent bankruptcy in 2009. • Solution: During its bankruptcy, Chrysler reached agreements with the UAW to restructure its pension and healthcare obligations. The company transferred its pension plans to the PBGC and made changes to employee benefits, including transitioning to a defined-contribution plan for new hires. 4. United Airlines: • Problem: United Airlines struggled with high pension costs, which were a major factor in its bankruptcy filing in 2002. • Solution: United Airlines restructured its pension obligations through bankruptcy, which included terminating its pension plans and transferring them to the PBGC. The company also renegotiated labor contracts to reduce costs and improve financial stability. General Approach in the Industry: • Defined-Contribution Plans: Many companies in the automobile and other industries have shifted from traditional defined-benefit pension plans to defined-contribution plans (e.g., 401(k)s) for new hires. This reduces future pension liabilities as the company's obligations are limited to the contributions made. • Negotiated Settlements: Companies often negotiate with unions to freeze or reduce pension benefits for current employees and retirees, while also making adjustments to future benefits to manage long-term costs. • Pension Funding: Companies may make additional contributions to their pension funds to improve their funding status and reduce the risk of underfunding. These measures help companies manage their pension liabilities while attempting to balance the needs of their employees and retirees. The United States differs from Western Europe in the degree of formal worker participation in decision-making. Work councils and codetermination are mandated by law in Germany. XI. The Public Sector—During the 1960s and 1970s, unionization in the public sector increased dramatically. As of 2012, 35.9% of government employees were covered by a union contract, and 42% of all government employees were covered by a collective bargaining contract. Strikes are illegal at the federal level and in many states for government workers. XII. Nonunion Representation Systems - With unions now representing just 11.3% of U.S. workers, the question is to what degree are forms of nonunion representation operating to cover the remaining 88.7% of workers? Table 14.16 indicates that in one survey, about one-third (274 of 823) of nonunion workers were covered by a representation system established by management. Clearly, nonunion representation systems play an important role in the workplace. A Look Back The membership rate, and thus influence, of labor unions in the United States and in many other countries has been on the decline in the private sector. As the chapter opening demonstrates however, unions recognize that one way to slow or reverse this downward trend would be to have greater success organizing workers in the new economy jobs and companies. Questions 1. Many people picture labor union members as being men in blue-collar jobs in manufacturing plants. Is that accurate? Are there certain types of jobs where an employer can be fairly certain that employees will not join a union? Give examples. Answer: Student responses will vary, but should include that although many blue-collar jobs are unionized and have been for many years, with the advancement of technology, white-collar jobs are becoming unionized as well. Students could mention that managers in high-tech fields with young workers may be able to assume that their employees will not join a union. Two examples of this are Amazon.com and CNBC. The traditional image of labor union members as men in blue-collar manufacturing jobs is indeed a historical stereotype, but it's not entirely accurate today. The labor landscape has evolved, and unions now organize in a variety of sectors beyond manufacturing. Here's a breakdown: 1. Evolving Union Membership: • Service Sector: Unions have successfully organized workers in the service sector, including healthcare workers, educators, and public employees. For example, nurses and teachers in both public and private institutions often belong to unions. • Technology and Gig Economy: There are growing efforts to unionize workers in technology and gig economy sectors. Companies like Google and Amazon have seen organizing efforts, though success varies. 2. Types of Jobs Where Unions Are Less Likely: • High-Skill, High-Pay Jobs: Employees in high-skill, high-paying jobs (e.g., senior management, specialized professionals in tech, finance, or law) may be less likely to join unions. These workers often have more negotiating power individually and may view unions as less necessary. For example, senior software engineers or investment bankers typically do not unionize. • Small Startups and Innovative Companies: In startups and tech firms with a strong focus on innovation and flexibility, unions might face challenges due to the company culture and younger workforce. Employees in these environments might prioritize flexibility and equity over traditional union benefits. • Creative Industries: Jobs in creative fields such as entertainment, arts, and media may have lower union membership. Many in these industries, like freelance artists or independent writers, may prefer independent contracts over union representation. Examples: • Tech Industry: Major tech firms like Google and Apple have seen limited unionization efforts, though there are notable exceptions and ongoing movements. • Startups: Many startups and innovative tech companies (e.g., Silicon Valley startups) often have lower union membership due to their unique work environments and culture. • Creative Professions: In the entertainment industry, while there are unions (e.g., SAG-AFTRA for actors), many creative professionals work freelance or on short-term contracts, which can reduce union membership rates. Conclusion: While unions have adapted and expanded into new sectors, certain job types and industries remain less unionized due to factors such as individual negotiating power, company culture, and the nature of the work. 2. Why do people join labor unions? Would you be interested in joining a labor union if given the opportunity? Why or why not? As a manager, would you prefer to work with a union or would you prefer that employees be unrepresented by a union? Explain. Answer: Student answers will vary but may include that people join labor unions for more job security, better benefits and working conditions, and higher wages. Students’ responses will vary about whether they would be interested in joining a union and why. Students will have different opinions on whether, as a manager, they would prefer to work with a union or not. People join labor unions for several reasons, including better wages and benefits, job security, improved working conditions, and a collective voice in negotiations with management. Unions can also offer legal support and representation in disputes. Personal Interest: Whether or not you’d join a union can depend on your priorities and work environment. If you value collective bargaining for better terms or seek protection in your workplace, joining a union could be appealing. Conversely, if you feel satisfied with your current working conditions and prefer direct communication with management, you might not find union membership necessary. Manager’s Perspective: As a manager, working with a union can offer structure and formal channels for resolving issues, potentially leading to clearer negotiations and agreements. However, it might also involve more formal procedures and could impact flexibility in decision-making. A preference for or against union representation can depend on the specific context of the workplace and the nature of employee relations. 3. What led to a change in labor relations at Chryler’s Dundee engine plant? What was the nature of the change and do you think it is an important and sustainable change? Answer: Student answers will vary but may cite the external environment and the global economy (along with global competition) as reasons for change. The change itself has 2 objectives: 1. to increase the involvement of individuals and work groups in overcoming adversarial relations and increasing employee commitment, motivation, and problem solving and 2. to reorganize work so that work rules are minimized and flexibility in managing people is maximized. The nature of the change is dramatic and important for the company strategically because it is attempting to change the company culture and improve financial performance. It is also important for workers as they are gaining more opportunity to be involved in their jobs. Most students would agree that such a change is sustainable. At Chrysler's Dundee engine plant, labor relations changed due to a significant shift towards more collaborative and flexible approaches. The company introduced innovative labor agreements that focused on performance-based incentives and greater involvement of workers in decision-making processes. Nature of the Change: The changes included improved communication between management and employees, performance-based pay, and more collaborative problem-solving. These adjustments aimed to enhance productivity and employee satisfaction. Importance and Sustainability: Such changes can be important as they foster a more engaged and motivated workforce. Sustainability depends on ongoing commitment from both management and employees to maintain open communication and adapt to evolving needs. If effectively managed, these changes can lead to long-term improvements in both worker morale and operational efficiency. 4. What role do (or can) labor unions play in low-wage countries such as China and Bangladesh? Answer: The role for labor unions in these regions seems to be similar to the roles unions played here in the US during the time of their inception: protect workers’ rights (i.e. work rules and wages) and promote their safety at work. It would appear that both of these functions are of critical importance in China and Bangladesh at this time. Chapter Vocabulary These terms are defined in the "Extended Chapter Outline" section. Checkoff Provision Closed Shop Union Shop Agency Shop Maintenance of Membership Right to Work Laws Taft Hartley Act, 1947 Associate Union Membership Corporate Campaigns Distributive Bargaining Integrative Bargaining Attitudinal Structuring Intraorganizational Bargaining Mediation Fact Finder Arbitration Duty of Fair Representation Discussion Questions 1. Why do employees join unions? Answer: Employees join unions because of dissatisfaction with wages, benefits, working conditions, and supervisory method. Employees believe that collective voice (representation) will increase the likelihood of improvement. Unionization provides a better balance of power between management and employees (as a group). 2. What has been the trend in union membership in the United States, and what are the underlying reasons for the trend? Answer: Since 1950, union membership has consistently declined as a percentage of employment to approximately 16 percent of all employment. Students may suggest a number of reasons for this (as discussed in the text): decline in the manufacturing "core" industries, increase in employer union resistance, more frequently adopted progressive HRM policies, increase in employment legislation, and a lack of union adaptation. 3. What are the consequences for management and owners of having a union represent employees? Answer: Various consequences may occur depending on the quality of the union management relationship. Management may find less flexibility, higher wage and benefit costs, higher productivity, and a negative impact on stock price and profitability. 4. What are the general provisions of the National Labor Relations Act, and how does it affect labor management interactions? Answer: The NLRA provides a detailed list of individuals' rights regarding organizing a union, bargaining a contract, and involvement (or lack thereof) in job (concerted) actions. These rights are referred to as Section 7 rights. Section 8 lists unfair labor practices for both employers and unions. Students could present and discuss each of these. The NLRB (the primary enforcement agency) was also mandated by the act. The NLRA encouraged unionization in order to provide employees with a balance of power vis a vis employers. It affects labor relations by providing a structure for negotiations and conflict resolution. Students could be called upon to provide some specific examples. 5. What are the features of traditional and nontraditional labor relations? What are the potential advantages of the "new" nontraditional approaches to labor relations? Answer: Traditional labor relations can be characterized as adversarial in nature. Negotiations are generally win lose, and grievances tend to be settled at the third and fourth levels of the process. Nontraditional labor relations include an emphasis on problem solving and win win negotiations. Grievances may be more frequently settled informally at the first step. Additionally, employees may be involved in team efforts and participate in decision making. 6. How does the U.S. industrial and labor relations systems compare with systems in other countries such as those in Western Europe? Answer: The U.S. industrial relations system has a very low relative union density rate. The union wage premium is higher in the United States. Western European unions have a much higher level of formal worker participation in decision making. Self-Assessment Exercise: Would you join a union? Refer to the self-assessment exercise in the text. Exercising Strategy: Boeing’s Labour Problems: Moving Factories to Flee Unions Boeing decided a few years ago to build its 787 Dreamliner not in Washington State, but in South Carolina, which is a “right to work” state. This means that it is illegal for companies and unions in that state to sign a contract in which anyone who works at the company has to join the union. Questions 1. In a capitalist society and in a competitive global market, a company should be able to choose where it locates its production. Do you agree? Why or why not? Answer: Student responses may vary. Arguments against: As the author of this essay observed: “if America had labor laws that were uniform from state to state like any other normal economic power, rather than a race to the bottom system where states are pressured to weaken labor laws in order to entice employees, then there would be no reason for Boeing to move production.” It is not appropriate, then, for companies to be able to choose where they locate production because it means displacing workers in order to move to locations where labor is cheaper and where workers are not unionized. Arguments in favor: Since state laws determine “right to work,” if there are right to work states, and if those states happen to be more attractive for companies to locate in order to keep costs down or otherwise increase their competitive advantage, it is appropriate for them to be able to do so in a capitalistic system. In a capitalist society and competitive global market, companies should indeed have the freedom to choose where they locate their production. This choice allows companies to optimize their operations based on factors such as cost efficiency, availability of skilled labor, and favorable regulatory environments. Reasons for Agreeing: 1. Cost Efficiency: Companies can reduce operational costs by locating in areas with lower labor costs or favorable tax incentives, which can contribute to more competitive pricing and higher profitability. 2. Regulatory Environment: Different regions have varying labor laws and regulations. Companies might seek locations with more flexible labor laws to avoid stringent union rules or high compliance costs. 3. Market Access: Strategic location decisions can provide better access to key markets, supply chains, and logistics networks. Considerations: • Ethical Implications: While the freedom to choose production locations is crucial for business success, it is also important to consider the ethical implications of such decisions. Moving operations to evade unions or labor laws might raise concerns about workers' rights and working conditions. • Impact on Local Communities: Relocating production can affect local economies and job markets. Companies should weigh the broader impact on communities when making location decisions. Overall, while companies should have the autonomy to choose their production locations to remain competitive, these decisions should be balanced with considerations of ethical practices and their impact on workers and communities. 2. Does Boeing have a legitimate concern regarding the effect of strikes at its Washington operations on its ability to compete? What effect do strikes have on company profits? Answer: Student responses could vary, with some students indicating that it if the company is operating fairly, in good faith, and treating workers well, it should not be concerned about the possibility of strikes. On the other hand, students could also respond that Boeing does have a legitimate concern about the effect of strikes because of the possibility that workers could make demands that lead the company to lose market share. Strikes can impact company profits because of the time that it takes to reconcile a strike, and also, the fact that managers have to substitute for striking workers in some cases, which results in lower overall company performance. This could have a deleterious effect on profits, depending on the length of a strike. Yes, Boeing's concern regarding the effect of strikes at its Washington operations on its ability to compete is legitimate. Strikes can significantly impact a company's operations and profitability in several ways: Effects of Strikes on Company Profits: 1. Production Disruptions: Strikes halt or slow down production processes, leading to delays in meeting customer orders and commitments. For a company like Boeing, which operates on tight production schedules, this can cause substantial delays and affect delivery timelines. 2. Increased Costs: During a strike, companies often incur additional costs such as paying for security, legal fees, and efforts to mitigate the strike’s impact. Additionally, companies might need to pay overtime or temporary workers to cover for the striking employees once operations resume. 3. Loss of Revenue: Disruptions in production and delivery can lead to lost sales and revenue. For Boeing, delays in aircraft deliveries can result in missed payments from customers and potentially lost contracts. 4. Reputational Damage: Prolonged strikes can harm a company's reputation, making it less attractive to potential customers and investors. Negative media coverage and public perception can have long-term impacts on the company’s brand and market position. 5. Long-Term Contracts and Relationships: Repeated strikes or prolonged labor disputes can strain relationships with clients and suppliers. For Boeing, maintaining strong relationships with airlines and suppliers is crucial for securing long-term contracts and maintaining a competitive edge. Legitimacy of Boeing’s Concerns: Boeing’s concern about strikes affecting its competitiveness is legitimate, especially in a highly competitive and global industry where timely delivery and cost efficiency are critical. Strikes can disrupt production schedules, increase costs, and harm relationships with clients, all of which can impact the company's ability to compete effectively in the market. 3. Should Boeing simply do a better job of managing labor relations with its union? If you say yes, how should it go about doing a better job? If you say no, explain why you do not think that it will be effective. Answer: Yes: Boeing could do a better job of managing labor relations because it has had worker strikes at its plants in Seattle in recent years. Additionally, Boeing took the path of least resistance in reconciling its problems with the union by fleeing to South Carolina, which is a right to work state. This in effect reduces or eliminates the problem by removing it, not by improving labor relations. No: Boeing does not owe a union anything other than to bargain in good faith when there is a contract negotiation. It is the prerogative of a company to locate where it feels it is best served. Therefore, Boeing has moved to South Carolina as a way of increasing its effectiveness. 4. Should all U.S. states have the same labor laws? Is it accurate to say that in most other countries, laws are the same throughout the country? Answer: Student responses can certainly vary in response to this question, depending on the extent to which they feel that states have rights to self-determine their position on unionizing. As has been discussed in prior chapters in this text, the southern states of the United States are less unionized than the northeastern states. This means that unions are less of a concern for companies who have locations in the south. This also means that there are disparities – or at least potential disparities – about the way that workers are paid and how they are treated in workplaces located in southern states. The United States is a relatively large country, and it is one of the few countries that has employment laws such as labor laws that can vary state to state. Pros: 1. Uniformity and Fairness: Standardized labor laws across all states would ensure that workers receive consistent protections and benefits, regardless of where they work. This can reduce confusion and ensure equitable treatment for employees. 2. Simplified Compliance: Employers operating in multiple states would benefit from having a single set of regulations to follow, reducing administrative complexity and compliance costs. 3. Prevention of Race to the Bottom: Uniform labor laws can prevent states from engaging in a "race to the bottom," where they lower labor standards to attract businesses, potentially harming workers' rights. Cons: 1. State Autonomy: States have different economic conditions, labor markets, and industries. Localized labor laws can be tailored to meet the specific needs and circumstances of each state, allowing for more flexible and relevant regulations. 2. Economic Diversity: Uniform labor laws might not address regional economic differences effectively. States with higher living costs might require different regulations compared to those with lower costs. 3. Innovation and Experimentation: States often act as laboratories for policy experimentation. Localized laws allow states to test different approaches and adapt to changing conditions, which might be lost with a uniform national system. Generally, yes, but with exceptions: 1. Centralized Systems: In many countries, labor laws are set at the national level and apply uniformly across the entire country. For example, countries like France, Germany, and Japan have national labor laws that are consistent throughout their territories. 2. Regional Variations: Some countries do have regional variations in labor laws or additional regional regulations. For example, in the United Kingdom, while there are national labor laws, certain regions may have additional regulations or different interpretations. 3. Federal Systems: Countries with federal systems, like Canada and Australia, have both national and regional (or state/provincial) labor laws. In these countries, federal laws provide a baseline of protections, while regional governments can introduce additional regulations or adapt the laws to local conditions. In summary, while many countries have uniform labor laws across their entire territory, there are notable exceptions where regional variations exist. In the U.S., the balance between uniformity and state autonomy in labor laws continues to be a topic of debate. Managing People: Twinkies, HoHos, and Ding Dongs: No Treat for Labor Unions This case overviews the story of Hostess, the former producer of snack the cakes known as Twinkies, and the new owner of the brand, Metropoulos & Co. and Apollo Global. Hostess went bankrupt, in part, due to a nationwide strike by one of its unions. The new owners will be re-opening bakeries, but with non-union employees. Questions 1. Why did Hostess Brands Inc. go into bankruptcy? Answer: Student responses may vary, but one reason identifies in the case was due to a nationwide strike by one of their unions, which crippled operations. Hostess Brands Inc. went into bankruptcy due to a combination of factors, including: • Declining Sales: The company's core products, such as Twinkies and other snack cakes, faced declining demand as consumers increasingly sought healthier food options. • High Labor Costs: Hostess had long-standing agreements with its unions, leading to high labor costs and complex work rules. These agreements included significant pension obligations and work rules that hindered operational efficiency. • Inefficient Operations: The company's operations were fragmented and inefficient, with many bakeries and distribution centers spread across the country. This led to high costs and difficulties in maintaining profitability. • Debt Load: Hostess was burdened with a substantial amount of debt, which it struggled to service, especially in the face of declining sales and rising costs. • Union Strikes: A nationwide strike by the Bakery, Confectionery, Tobacco Workers, and Grain Millers' International Union (BCTGM) in response to proposed wage and benefit cuts ultimately forced Hostess to cease operations and file for bankruptcy. 2. Did unions act in the best interests of the workers they represented? Did the two unions involved follow the same strategy? Answer: This is an opinion question and will likely garner passionate responses from students. In this case, in the long run, it appears the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union did not act in the best interest of workers (who ultimately permanently lost their jobs). The Teamsters (the largest union in the Hostess company at the time) did not stop work and agreed to a new collective bargaining agreement after the company entered bankruptcy court. • Best Interests of Workers: • The unions acted to protect the wages, benefits, and working conditions of their members, which is their primary responsibility. However, their refusal to accept concessions may have contributed to the company's liquidation, resulting in job losses for all employees. • While the unions were trying to secure the best possible deal for workers in the short term, the long-term consequence was the loss of thousands of jobs when the company shut down. This outcome suggests that while their intentions were aligned with protecting workers' interests, the strategy may have backfired. • Different Strategies: • The Teamsters, which represented the delivery drivers, agreed to the concessions proposed by Hostess, recognizing the financial difficulties the company faced. They believed that accepting concessions was a better alternative than risking the loss of jobs. • The Bakery, Confectionery, Tobacco Workers, and Grain Millers' International Union (BCTGM) took a more hardline approach, rejecting the proposed concessions and opting to strike, which contributed to the company's decision to close operations. • The difference in strategy between the two unions highlights a lack of unity, which ultimately weakened their collective bargaining power. 3. Will the new company, Hostess Brands LLC, perform better? Why or why not? Answer: From what seems to be indicated in the case, the new company will hire non-union workers. This should prevent a work stoppage, which was a large contributing factor to the previous company going bankrupt. • Reasons for Potential Better Performance: • Lower Labor Costs: By reopening bakeries with non-union employees, the new owners can significantly reduce labor costs and improve operational flexibility, leading to better profitability. • Streamlined Operations: The new owners can focus on streamlining operations, closing underperforming facilities, and optimizing production and distribution to meet current market demands. • Capital and Expertise: The new owners, Metropoulos & Co. and Apollo Global, have experience in turning around struggling brands. Their capital and expertise could help the company navigate challenges and capitalize on the strong brand recognition of Hostess products. • Focus on Core Brands: The new company can focus on its most profitable products and possibly expand into new markets or product lines, leveraging the nostalgic appeal of the Twinkies and other Hostess brands. • Challenges and Uncertainties: • Market Demand: The snack food market has changed, with consumers increasingly favoring healthier options. The new company will need to innovate and adapt its product offerings to meet changing consumer preferences. • Brand Perception: Hostess products have a strong nostalgic appeal, but the brand's association with bankruptcy and labor disputes could impact consumer perception. The new owners will need to manage this carefully. • Competition: The snack food industry is highly competitive, with many established players and private-label brands. The new Hostess Brands LLC will need to differentiate itself and maintain relevance in this competitive landscape. In summary, while the new company has the potential to perform better due to lower labor costs and more efficient operations, it will face challenges in adapting to market conditions and consumer preferences. The outcome will depend on how well the new management navigates these challenges. HR in Small Business: Republic Gets Serious This vignette tells the story of the failed Republic Windows and Doors company – which went bankrupt amidst several questionably unethical moves and decisions. The company was purchased by Kevin Surace, and chief executive of Serious Materials, a maker of eco-friendly building products, including energy-efficient windows. Before making an offer to the bank for the company, Surace approached the leaders of the union to ensure he would have a trained and motivated workforce. Questions 1. Richard Gillman attempted to stay in business by transferring work to a nonunion facility, and Kevin Surace plans to make the operation profitable as a union shop. Do you think the decision to rely on union or nonunion labor spells the difference between the success and failure of this enterprise? Why or why not? Answer: Student responses may vary, but in this case, it appears clear that the problems faced by Gillman and his company were not related to the workers being union or non-union. Students’ reasoning as to why will likely vary, but it appears Gillman is not the most scrupulous business leader. The decision to rely on union or nonunion labor alone is not necessarily the determining factor in the success or failure of an enterprise like Republic Windows and Doors. The success of the business depends on various factors, including management strategy, market conditions, operational efficiency, and the alignment between labor and management. Here's an analysis: 1. Management Strategy and Labor Relations: • Union Labor: Kevin Surace's approach to involving the union leaders before purchasing the company suggests a strategy focused on collaboration and mutual respect. By ensuring he has a trained and motivated workforce, Surace is likely aiming to foster a positive working environment, which can lead to increased productivity and loyalty. Successful unionized workplaces often benefit from clear communication, fair treatment, and strong worker engagement. • Nonunion Labor: Richard Gillman’s attempt to transfer work to a nonunion facility might have been driven by a desire to reduce labor costs and avoid what he perceived as restrictive union work rules. However, this approach may have led to negative outcomes, such as lower worker morale, decreased loyalty, or potential legal and reputational risks, especially if the move was seen as an attempt to undermine unionized workers. 2. Operational Efficiency: • The efficiency and competitiveness of the company are more likely to be influenced by how well the management and workforce collaborate, whether unionized or not. Unionized environments can be just as efficient and productive as nonunion environments, provided that both sides work together to align on goals and practices. Surace’s willingness to work with the union might facilitate smoother operations and a more committed workforce, contributing to long-term success. 3. Market Conditions and Business Strategy: • The broader market conditions, demand for energy-efficient products, and the company’s ability to innovate and stay competitive in the eco-friendly building products sector are crucial. Surace’s focus on eco-friendly and energy-efficient products aligns with growing market trends, which could significantly contribute to the company’s success, regardless of its union status. 4. Union-Management Relations: • Strong, cooperative relationships between management and unions can lead to shared goals and collective problem-solving. Surace’s approach suggests he values these relationships, which could help in navigating challenges and ensuring the company’s sustainability. In contrast, adversarial relationships, as seen in Gillman’s strategy, can lead to disputes, strikes, and other disruptions that hinder business success. In summary, while the choice between union and nonunion labor can impact certain aspects of business operations, it is not the sole factor determining success or failure. The broader context, including management strategies, market conditions, and the quality of labor-management relations, plays a more significant role in shaping the outcome of the enterprise. Kevin Surace’s collaborative approach with the union has the potential to contribute to the company’s success by leveraging the strengths of a motivated and well-organized workforce. 2. How (if at all) do you think Kevin Surace’s initial approach to the union when acquiring the company will influence the business success of the window factory? Answer: Again this is a speculator question so answers will vary. However, it appears that by including the union in the initial discussions, Surace solidified a positive relationship with the union and its workforce. This positive relationship should lead to success in the business. Kevin Surace's initial approach to the union—reaching out to union leaders before acquiring the company—sets a positive tone for labor relations and demonstrates a commitment to collaboration and mutual respect. This approach is likely to have several beneficial effects on the business success of the window factory: 1. Trust and Goodwill: • By engaging the union early in the process, Surace likely built trust and goodwill with the workforce. This trust can lead to smoother negotiations, fewer conflicts, and a more cooperative relationship, which are essential for maintaining productivity and avoiding costly disruptions like strikes. 2. Employee Morale and Motivation: • Workers who feel respected and valued are more likely to be motivated and committed to the company’s success. Surace’s approach likely boosted employee morale, leading to increased productivity, better quality of work, and lower turnover rates. 3. Operational Stability: • A positive relationship with the union can contribute to operational stability by ensuring that workers are aligned with the company’s goals and are willing to go the extra mile during challenging times. This stability is crucial for meeting production targets and maintaining customer satisfaction. 4. Reputation and Public Perception: • Surace’s willingness to work with the union may enhance the company’s reputation both locally and in the broader market. Positive public perception can lead to stronger customer loyalty, better recruitment opportunities, and potentially favorable conditions from suppliers and other business partners. 5. Long-Term Success: • Building a collaborative relationship from the start can set the foundation for long-term success. When management and labor work together towards common goals, the company is better positioned to innovate, adapt to market changes, and sustain growth. 3. Imagine that Serious Materials has hired you as an HR consultant for the Chicago window factory. Suggest how the company can build on its initial goodwill with workers to create positive labor relations and a highly motivated workforce for the long run. Answer: Students’ responses will be creative here. One potential direction the consultant might suggest would be giving the workers some say in how the business operates. Including the union leadership in the initial discussions was met with positive results, so including the union where possible may lead to further good will and cooperation. As an HR consultant for Serious Materials at the Chicago window factory, here are some strategies to build on the initial goodwill with workers and create positive labor relations and a highly motivated workforce: 1. Open and Transparent Communication: • Regular Meetings: Establish regular meetings between management and union representatives to discuss ongoing issues, share company updates, and solicit feedback from employees. This transparency can prevent misunderstandings and build trust. • Employee Forums: Create opportunities for direct communication between employees and management through town halls, suggestion boxes, or digital platforms where workers can voice concerns and ideas. 2. Fair and Equitable Treatment: • Consistent Policies: Ensure that all HR policies, such as promotions, pay increases, and job assignments, are applied consistently and fairly. Clear communication of these policies can reinforce trust and reduce perceptions of favoritism or bias. • Recognition Programs: Implement employee recognition programs that reward outstanding performance, innovation, or teamwork. Recognizing and celebrating employee contributions can enhance motivation and loyalty. 3. Continuous Training and Development: • Skills Development: Offer continuous training and development opportunities to help employees upgrade their skills and advance within the company. This investment in employees’ careers can increase job satisfaction and reduce turnover. • Leadership Training: Provide leadership training for both management and union leaders to foster a collaborative approach to problem-solving and conflict resolution. 4. Joint Problem-Solving Initiatives: • Collaborative Committees: Create joint committees of union representatives and management to address specific workplace issues, such as safety, productivity, or employee wellness. This collaboration can lead to practical solutions and a sense of shared ownership of outcomes. • Continuous Improvement: Encourage a culture of continuous improvement where workers are empowered to suggest and implement changes that enhance efficiency, safety, or quality. Recognizing these contributions can build a sense of pride and ownership in the company’s success. 5. Focus on Work-Life Balance: • Flexible Work Arrangements: Where possible, offer flexible work arrangements, such as adjusted shifts or remote work options, to help employees balance their work and personal lives. This flexibility can lead to higher job satisfaction and lower absenteeism. • Wellness Programs: Introduce wellness programs that support employees' physical and mental health, such as fitness challenges, counseling services, or stress management workshops. A focus on well-being can improve overall morale and reduce burnout. 6. Clear Pathways for Advancement: • Career Development Plans: Work with employees to create clear career development plans that outline potential pathways for advancement within the company. Providing opportunities for growth can increase employee engagement and retention. • Mentorship Programs: Establish mentorship programs where experienced workers can guide and support newer employees, fostering a culture of learning and collaboration. By implementing these strategies, Serious Materials can build on the initial goodwill established by Kevin Surace and create a work environment that promotes positive labor relations, high motivation, and long-term success for both employees and the company. Additional Activities Twitter Focus: Serious Materials is a maker of eco-friendly building products that stepped in to buy Republic Windows and Doors. Republic’s owners, with little warning, closed the plant without giving workers severance pay and secretly began to transfer machinery to a non-union plant in another state. The employee’s union filed complaints against Republic with the National Labor Relations Board. At the same time, the owner of Serious Materials bought the Republic facility and saw it as a chance to expand the business into the Midwest. When he decided to make an offer, the owner talked first to the employee’s union rather than to Republic’s creditors. This unusual move helped seal the business deal, and all 300 employees were rehired by Serious. Question: Which owners—Serious Materials or Republic—strike you as the more ethical and honest? Do you think that makes them or would make them a better employer? Answer: Serious Materials strikes me as the more ethical and honest owner compared to Republic Windows and Doors. Serious Materials demonstrated a commitment to ethical business practices by prioritizing discussions with the employees' union before making an offer to purchase the company. This approach shows respect for the workers and a desire to maintain positive labor relations, which is crucial for long-term success. On the other hand, Republic's actions—closing the plant without warning, failing to provide severance pay, and secretly moving machinery to a non-union facility—indicate a disregard for both their employees and ethical business practices. Ethical behavior in business often correlates with being a better employer. Serious Materials' transparent and worker-focused approach suggests they value their employees and are likely to foster a more positive, supportive work environment. This can lead to higher employee satisfaction, better productivity, and a stronger overall company culture. In contrast, Republic's unethical actions could lead to low morale, distrust, and high turnover, making them a less desirable employer. Manager’s Hot Seat Exercise: Partnerships: The Unbalancing Act-Please refer to the Asset Gallery on the OLC for Hot Seat videos and notes. I. Introduction This scenario highlights a business partnership that is in decline. The conflict that this creates and the resolution of it provide a good background for discussion of the types and causes of conflict in organizations. Partnership agreements and issues with venturing into business with personal friends are also explored. II. Learning Objectives 1. To assess students’ understanding of the sources of conflict in organizations. 2. To analyze and evaluate approaches to conflict in a novel situation. 3. To identify issues concerning business partnerships. III. Scenario Description: Overview: Jonas Goldberg and Rande Gedaliah, lifelong friends, went into business together to establish The LivingRoom, a café bookstore. Lately, Jonas has not been doing his fair share of the work and has been unreliable, shirking many of his important duties. Rande has reached the point of confronting Jonas and wants to take immediate action to resolve this situation. Profile: •Rande Gedaliah is a Partner, manager, and co-owner of The LivingRoom, a café and bookstore with an active community center and bakery. She is solely responsible for overseeing the bakery, which distributes to local restaurants and stores. In addition, she also manages the café and its community events along with her partner. •Jonas Goldberg co-founded The LivingRoom. As Co-owner and Manager, Jonas oversees all bookstore needs and manages the café and community events portion of the business with his partner and long-time friend, Rande Gedaliah. References: The references included in the DVD are: •Sources of Conflict in Organizations (PPT 7-3) •Types of Conflict in Organizations (PPT 7-5) •Partner’s Duties (PPT 7-7) •Nonwrongful Dissociations of Partnerships (PPT 7-8) Back History: “The Living Room” is a small business located in the Boston suburbs. The business is a new spin on the café bookstore, with the additions of an active community center and bakery, with distribution to local restaurants/stores. Jonas is a freelance writer and stay at home Dad with three young children. His wife is a District Attorney. He was looking for a side venture as well as supplemental income. Rande is a divorced mother of two young schoolboys and a successful sculptor who needed income with a schedule she could control. Randee is very level-headed and generally calm, as long as all the balls she’s juggling stay in the air. Rande and Jonas opened The LivingRoom two years ago and have recently expanded the hours/customer flow drastically in an attempt to finally make a decent income. They split most of the business duties, share the larger tasks, and each spend a certain number of hours in the café supervising – they are 50-50 partners. They have known each other for years and years [their parents are family-friends] and have had a generally smooth relationship. Jonas and Rande had agreed completely about increasing business hours so drastically about two months ago. But Jonas did not anticipate the impact this would have on his life and is struggling to deal with it. In the past six weeks Jonas has canceled meetings last minute, missed the Tax Accountant meeting altogether, forgot to do employees weekly payroll twice, and has not brought in a single community event for the month [both are responsible for booking at least three lucrative events/month]. Meanwhile the change in hours is exhausting Rande and Jonas’ unreliability is totally stressing her out. Scene Set-up: After calling Jonas three times to remind him, Rande and Jonas are finally meeting to discuss Rande’s dissatisfaction with Jonas’ contribution to the company. Scene Location: Back-room coffee-break area The Meeting - Summary: Rande indicates to Jonas that the distribution of the workload and his repeatedly missing meetings and other major responsibilities (e.g., payroll) is not acceptable. Jonas understands this but contends he is doing the best he can and is still contributing significantly to the business. Rande asks him what can be done to improve this situation. Jonas cuts the meeting off because he has to pick up his daughter. Rande tries to pin him down on another meeting time which he half-heartedly agrees to. 6 Days Later – Rande finally meets with Jonas again and asks him what solutions he came up with. He says he’d like to bow out gracefully but wants to reserve the right to sell his share to whomever he wants in order to make the most money. Rande seems relieved at his decision but explains that she has the first right of refusal and that she has already discussed their partnership agreement with their lawyer. They agree to meet with the lawyer the following Monday. Afterthoughts – Summary: Rande is shocked at Jonas’ expectation that he could sell his share of the business to anyone he wants. She feels the interaction went very poorly and is saddened that he didn’t seem to make their friendship or the success of the business a priority in his life. She feels he never truly appreciated the impact of his actions on their business or friendship. She notes the difficulty of going into business with a friend. Dossier: The specific artifacts included in the DVD are: 1. Meeting notes on establishing the business 2. Three voice messages from Rande’s assistant to Jonas 3. Email from Rande to their lawyer IV. Discussion Questions: The References and related Discussion Questions may be found in PowerPoint slides 7-1 to 7-9 on the instructor’s side of the text’s Website. Learning Objective #1: To assess students’ understanding of the sources of conflict in organizations. 1. Jonas and Rande are facing a difficult situation. What sources of conflict contributed to the problems they are having? See PPT 7-3. Answer: Several of the sources on PPT 7-3 could be offered. Specifically, scarce resources seem to be a primary source because they need to operate the store longer to be able to reach their financial goals. This increase in operations causes an added burden on the partners and increases their need to be effective time managers. Also, the partners have overlapping authority so Jonas has been abdicating his share of the responsibility because of his family demands causing Rande to do his share of the work.  1. What is the key problem? A. Time management B. Communication C. Overlapping tasks Time management is a critical issue because Jonas has not been able to manage his time to fulfill his responsibilities.  2. Jonas’ behavior indicates: A. Disinterest B. Burn-out C. Distraction Jonas’ behavior indicates distraction from the business due to family obligations. This is demonstrated when he needs to leave the meeting to pick up his daughter. Learning Objective #2: To analyze and evaluate approaches to conflict in a novel situation. 1. Which type of conflict is depicted in this scenario? (see PPT 7-5) Answer: Interpersonal conflict because the problem is between two individuals, Jonas and Rande. 2. Evaluate Rande’s approach to resolving this conflict. What conflict management style did she use: avoiding, accommodating, forcing, compromising, or collaborating? Support your answer with examples from the scene. Answer: Rande used a problem oriented approach, rather than person oriented. She maintained ownership of the problem and described it in specific behavioral terms rather than being judgmental or evaluative. She never raised her voice or became overly emotional. She was firm when she felt it was necessary (e.g., refusing to let him sell his share to someone else). She did not avoid or accommodate, she attempted to collaborate to reach a mutually beneficial solution.  3. How was this meeting? A. A success B. A good start C. A failure Rande feels that this meeting was a failure because she could not get Jonas to understand her point of view. However, the meeting could have gone a lot worse. The issue didn’t get completely resolved so it wasn’t a success but Jonas agreed to further communications and admitted that he had trouble meeting his responsibilities so it was not a complete failure. Learning Objective #3: To identify issues concerning business partnerships. 1. What unique challenges did Rande and Jonas face when entering into this partnership? Answer: They both have family obligations to juggle as well as shared responsibility of every aspect of the business. They were friends prior to embarking on this business. Jonas was used to a slower paced job in which he had more control over his time (as a freelance writer). Rande was used to running her own agency and being in control of all aspects of it. 2. What impact did their friendship seem to have on this partnership? Answer: Their friendship did not prevent them from creating a legal partnership agreement which was a good decision. However, Jonas may have taken advantage of his friendship with Rande figuring that she would pick up the slack when he couldn’t fulfill his responsibilities. Rande may have delayed this conversation because she didn’t want to have a difficult discussion with a friend. 3. What partner duties did Jonas fail to perform? See PPT 7-7. Answer: Jonas failed to serve the partnership and exercise care. This is demonstrated by missing critical meetings and failing to issue paychecks on time to employees. 4. What should happen to ensure that a nonwrongful dissociation of the partnership occurs? See PPT 7-8. Answer: The partner is volunteering to leave but he needs to abide by the partnership agreement. Rande has been informed by her lawyer that the agreement reads that she has the opportunity to buy Jonas’ share before he can seek other buyers.  4. How should Rande respond [to Jonas’ suggestion that he find a buyer]? A. Accept offer B. Refuse offer C. Negotiate Her appropriate response would depend on the specific language of the agreement. If in fact it states that she has first right of refusal then she should refuse Jonas’ suggestion that he find a buyer. If the language in the agreement was unclear than she may try to negotiation a better situation.  5. What are Rande’s rights? A. Choose partner B. Buy out Jonas C. None Rande says that the lawyer says she can buy out Jonas.  6. What is the best solution? A. End partnership B. Solve problems C. Redistribute work Given the fact that Jonas admits he is overwhelmed and unable to contribute enough to the business, they should probably end the partnership. Teaching Suggestions Students are frequently quite interested in how labor relations work. Additionally, they may have fairly strong opinions about unions and their effectiveness. Discussions are therefore quite easy to start and keep going. Below are a number of activities that can be added to the text material. One role play is included that allows students to try out the first step in a grievance procedure. The HBR case on the clerical and technical employees organizing campaigns gives students a good chance to think about how HRM policies and practices truly play a role in employee relations. Finally, the Tong Yang Indonesia end of part case is very useful with this chapter, illustrating the benefits of a constructive joint union management relationship. 1. An interesting case from the Harvard Business School is listed below with questions for discussion. This may be assigned to groups as a written case analysis or used in class to discuss and illustrate a number of points regarding why employees join unions and what sort of union organizing techniques are used. Case 9 490 027: Clerical and Technical Workers Organizing Campaign at Harvard University (A) Case 9 490 081: Part (B) Teaching Note (5 490 083) Supplement (9 490 081) This case describes a successful organizing drive among clerical and technical workers at Harvard. The union (HUCTW) relied on unusual strategies: espousing cooperation, avoiding specific demands, emphasizing the need for worker voice, and making use of volunteer organizers. Discussion Questions a. Should Harvard oppose unionization? Answer: Harvard should carefully consider the implications of opposing unionization. While opposition might align with a desire to maintain flexibility in managing labor costs and operational decisions, it could also lead to negative perceptions among employees and the broader community. Harvard, as an academic institution, values dialogue, diversity of thought, and respect for differing viewpoints. Opposing unionization could be seen as contrary to these values, potentially damaging the university's reputation. Moreover, opposing the union might exacerbate existing tensions and lead to an adversarial relationship between the administration and the workforce, which could harm morale and productivity. b. How would a union affect the university's "business" needs? Answer: A union could impact Harvard's business needs in several ways. On one hand, unionization could lead to higher labor costs due to demands for better wages, benefits, and job security. This might strain the university’s budget and necessitate adjustments in other areas. On the other hand, a union could foster better communication between employees and management, leading to improved job satisfaction, lower turnover rates, and a more motivated workforce. These factors could enhance productivity and the quality of services provided to students and faculty, ultimately benefiting the university’s long-term goals. c. How effective were Harvard's campaign tactics? Answer: Harvard’s campaign tactics appear to have been somewhat effective in delaying the unionization process but may not have fully addressed the underlying issues that led to the organizing drive. If Harvard focused on traditional anti-union tactics such as emphasizing the potential drawbacks of unionization, it might have created an atmosphere of fear or uncertainty among employees. However, such tactics might have been counterproductive if they ignored the legitimate concerns of the workforce. The union's success suggests that Harvard’s tactics were not entirely successful in persuading employees to reject unionization, indicating that the university may have underestimated the strength of the employees' desire for representation and voice in the workplace. d. What did you learn about managing human resources from reading and analyzing this case? Answer: This case highlights the importance of understanding employee needs and motivations in managing human resources effectively. It underscores that merely opposing unionization without addressing the underlying concerns of employees can backfire. The case also demonstrates the value of proactive communication, transparency, and engagement with employees. A key takeaway is that fostering a positive work environment and open dialogue with employees can help prevent the conditions that lead to unionization efforts. Additionally, the case shows that cooperative and inclusive approaches to management, as demonstrated by the union’s strategy, can be highly effective in building trust and solidarity among workers. 2. Assign the following article from The Wall Street Journal (May 24, 1993): "Why Ms. Brickman of Sarah Lawrence Now Rallies Workers" by Kevin Salwen. Note also that as part of the AFL CIO's new "union summer program," more than 1,600 young people, mostly college students, have applied for pro labor candidates and help organize workers. In addition to the article from In addition to the article from The Wall Street Journal, have students find relevant recent articles as a research project. Ask the students to discuss this quote: "Every successful social movement in history, including the civil rights movement, was run by young people. If the labor movement is going to succeed and grow again, they need to be a big part of it." 3. A role-play is useful in talking about the grievance procedure. Using the following scenario, assign the roles of union steward, supervisor, employee, and observer to students in groups of four. Give them 20 minutes to try to resolve the issue informally, but if they are unable to, have them "write it up" as a grievance. Those groups that do resolve it may hand in their resolution. Observers should provide feedback to the students in the other roles on interpersonal skills, empathy, listening, idea generation to resolve the issue, and so on. It is Friday afternoon in the special order fabrications section of the Caseville plant. As the supervisor Mary Reed is checking work orders, she notes that there is one order that has not been handled, and delivery is due the next week. Clearly, Mary is going to have to find several people to work a second shift on overtime. Under the Caseville Local 484 contract, overtime must be distributed by seniority. The supervisor quickly pulls her seniority list from the file and, beginning at the top, walks around her area talking to the employees and asking about their interest in overtime immediately after the current shift ends. After talking with five men, Mary has only one who will work. Quitting time is five minutes away, and the whereabouts of Brooke Youngblood is not known (Brooke is next on the list). In desperation, Stevens asks three employees standing at their benches who are about to leave. Two of these people agree to work (both are junior to Brooke). That afternoon and evening the order is completed. Monday morning, upon arrival, Brooke is greeted and asked about his weekend. It turns out that he had taken a trip into the city with his son for a major league baseball game Friday afternoon. The tickets had been purchased a month before, and the special event was a birthday present. In the course of the discussion, Brooke learns about the overtime and realizes he hadn't been asked about it by his supervisor. He immediately calls his union steward, Carry Stevens. A discussion ensues. HRM Failures Top Case 14: Limiting a Union’s Activities When members of the Graphic Communications International Union Local 432-M had a dispute with their employer, the San Diego Union-Tribune, they stood outside a department store in a local shopping mall and distributed leaflets. The leaflets explained that the department store placed advertisements with the Union-Tribune. The mall owner informed the union members that they were trespassing because they didn’t have a permit. According to mall rules, activities like leafleting can take place only if a permit is obtained first. The laws also prohibit activities that interfere with business operations at the mall and specifically forbid activities intended to create a boycott. The union subsequently filed a claim with the National Labor Relations Board (NLRB), charging that the mall owner had interfered with their NLRB rights by barring them from leafleting. An administrative law judge for the NLRB ruled that when the mall enforced its antiboycotting rule, it had violated the National Labor Relations Act. The case found its way to the state supreme court, which acknowledged that the mall had the right to regulate activities like leafleting so that they didn’t interfere with normal business operations. However, it said that the mall couldn’t bar certain types of speech based on its content—in other words, it couldn’t specifically prohibit leaflets that urged a boycott. Question Suppose you’re the owner of the shopping mall. How would you have handled this situation? Possible answers •Create a handbook outlining the mall rules; before distributing it, have a lawyer review it for completeness and accuracy. •Distribute the handbook to all tenants. •Install signage at mall entrances that advises groups to register with mall management if they want to conduct activities on the property. If I were the owner of the shopping mall, I would approach the situation with a balanced strategy that respects both the mall's business interests and the legal rights of the union members. 1. Understanding Legal Obligations: First, I would ensure a thorough understanding of the legal framework governing such activities, including the National Labor Relations Act (NLRA) and relevant state laws. It's crucial to recognize that union members have certain rights to express their views, especially in matters related to labor disputes, as long as they do not disrupt business operations. 2. Communication with the Union: Before taking any action, I would initiate a dialogue with the union representatives. By communicating directly, I could better understand their objectives and explain the mall's policies regarding leafleting and other activities. This approach might also allow us to reach a mutual agreement on how the union could exercise its rights without negatively impacting mall operations. 3. Permit Process: If the mall requires permits for leafleting or other activities, I would offer the union members an opportunity to apply for the necessary permit. This process would ensure that the union's activities are coordinated with the mall's operations and do not disrupt business. I would also consider whether the permit process is being applied consistently to all groups and activities, to avoid any claims of discriminatory enforcement. 4. Designating a Leafleting Area: To balance the union's rights with the mall's business interests, I might designate specific areas within the mall property where leafleting could take place. These areas would be chosen to minimize disruption to shoppers and businesses while still allowing the union to communicate its message. This solution would aim to protect the mall's commercial interests while respecting the union's rights to free speech. 5. Content Neutrality: In line with the state supreme court's ruling, I would ensure that any restrictions on leafleting or other activities are content-neutral. This means that the mall's policies would apply equally to all groups, regardless of the content of their message. The focus would be on maintaining a peaceful and orderly environment rather than regulating the specific message being conveyed. 6. Legal Compliance and Advice: Throughout this process, I would work closely with legal counsel to ensure that the mall's actions comply with applicable laws and regulations. This approach would help prevent legal challenges and ensure that the mall's policies are defensible if a dispute arises. By handling the situation with a focus on open communication, legal compliance, and fairness, I would aim to resolve the issue in a way that protects the mall's interests while respecting the union members' rights. This approach would also demonstrate a commitment to upholding the principles of free speech and fair treatment for all parties involved. Case: Fashion Valley Mall LLC v. NLRB, Cal., No. S144753 (12/24/2007). Source: James E. Hall, Mark T. Kobata, Marty Denis and D. Diane Hatch, “Distributing Union Leaflets at Shopping Mall,” Workforce Management, February 4, 2008, p. 6. Solution Manual for Human Resource Management Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright 9780077164126