1. Working with Organized Labor
Chapter 15
Working with Organized Labor
Working with organized labor can be challenging. One of the greatest challenges managers experience is when union representatives and management are unable to come to an agreement on employee wages, hours, and working conditions and the union decides to exercise its right to strike. In this chapter, we will look at all aspects of working with organized labor.
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2. Chapter Challenges Understand why employees join unions
Describe labor relations and the legal environment
Understand labor relations in the United States
Become aware of labor relations in other countries
After reading Chapter 15, you will understand why employees join unions, describe labor relations and the legal environment, understand labor relations in the United States, and become aware of labor relations in other countries.
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3. Chapter Challenges Gain familiarity with labor relations strategy
Learn practices for managing the labor relations process
Recognize the impact of unions on human resource management
In Chapter 15, you will also gain familiarity with labor relations strategy, learn practices for managing the labor relations process, and
recognize the impact of unions on human resource management.
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4. The Managerial Perspective
In a unionized environment:
Relationship between managers and employees changes
Strikes and collective action are possible
Increases the need for HR presence
The relationship between managers and their employees changes in a unionized organization. The law requires managers to meet and confer with elected union representatives when making decisions that affect pay, hours of employment, or working conditions. When unionized employees are dissatisfied with pay or other job factors, the company faces the possibility of a strike or other form of collective action designed to pressure the firm to respond to employees’ preferences.
The presence of a union increases the need for HR services. HR specialists in labor relations can help managers develop tactics and strategies to work constructively with the union and its representatives in areas such as negotiating the terms of new labor contracts, interpreting a labor contract, or responding to an employee grievance.
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5. Why Do Employees Join Unions?
When they are dissatisfied with certain aspects of their job
When they feel that they lack influence with management to make the needed changes
When they believe that their pay and benefits are non-competitive
When they see unionization as a solution to their problems
Employees seek union representation:
When they are dissatisfied with certain aspects of their job
When they feel that they lack influence with management to make the needed changes
When they believe that their pay and benefits are non-competitive
When they see unionization as a solution to their problems
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6. Unions Unions defined The Origins of U.S. Labor Unions
The Role of the Manager in Labor Relations
Labor Relations Specialist
A union is an organization that represents employees’ interests to management on such issues as wages, work hours, and working conditions.
Employees participate in administering the union and support its activities with union dues, fees they pay for the union’s services.
The origins of U.S. labor unions: Unions were largely unprotected by law in the United States until The approach of the U.S. government to unions prior was that it was a free market economy, the employment relationship is essentially a private one, and both employees and employer are free to accept or reject this relationship if they find it unsatisfactory. The employer had power over the employee.
In the 1930s, during the Great Depression, when millions of workers lost their jobs as employers were pressured to cut production costs, union activity was legalized by the Wagner Act (discussed in the following slides).
In 1981, President Reagan ordered firing of striking air traffic controllers, two days after they had begun an illegal strike. This shifted the public perception, and unions were viewed as having become too powerful.
The role of the manager in labor relations: When a union represents a group of employees in a company, the company needs a staff of specialists who can represent management and its interests to the union. Managers bear the majority responsibility for day-to-day labor–management relations.
The labor relations specialists is someone (often an HR member) who is knowledgeable about labor relations and can represent management’s interests to a union.
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7. The Legal Environment Wagner Act, 1935 Taft-Hartley Act, 1947
Important laws from the past have helped shape the way unionized environments respond. The three acts discussed in detail in the next few slides are the Wagner Act of 1935, the Taft-Hartley Act of 1947, and the Landrum-Griffin Act of 1959.
Landrum-Griffin Act, 1959
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8. The Wagner Act, 1935 National Labor Relations Board (NLRB)
To administer certification election
To prevent and remedy unlawful acts
Issues Cease and Desist Order
Identified Five Illegal Practices
Interfering with, restraining, or coercing employees
Dominating or interfering with formation
Discriminating against an employee
Discharging an employee
Refusing to bargain collectively
The Wagner Act, also known as the National Labor Relations Board (NLRB), was passed in 1935 and was designed to protect employees’ rights to form and join unions and to engage in activities such as strikes, picketing, and collective bargaining. The Wagner Act was created by the NLRB, which is a federal agency charged with administering U.S. labor law.
The NLRB remedies unfair labor practices by issuing a cease and desist order.
The agency identified five illegal practices that can be remedied by the NLRB:
Interfering with, restraining, or coercing employees from exercising their rights to form unions, bargain collectively, or engage in concerted activities for mutual protection
Dominating or interfering with formation or administration of a union or providing financial support for it
Discriminating against an employee to discourage union membership
Discharging an employee who has filed charges or given testimony under the act’s provisions
Refusing to bargain collectively with the union that employees chose to represent them
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9. The Taft-Hartley Act, 1947 Remedies for six unfair union practices:
Restraining or coercing employees
Causing or attempting to cause an employer to discriminate
Refusing to bargain in good faith
Asking or requiring members to boycott products
Charging employees excessive union dues
Causing an employer to pay for services not performed
The Taft-Hartley Act, enacted in 1947, was designed to limit some of the power that unions acquired under the Wagner Act and to protect the rights of management and employees. The Taft-Hartley included remedies for the NLRB for six unfair union labor practices:
Restraining or coercing employees in exercising their rights guaranteed under the act, and/or coercing an employer’s choice of a representative in collective bargaining
Causing or attempting to cause an employer to discriminate against an employee who is not a member of a labor union for any reason other than failure to pay the union dues and initiation fees uniformly required as a condition of acquiring or retaining membership in the union
Refusing to bargain in good faith with an employer after a majority of the employees in a unit have elected the union as their representative
Asking or requiring its members to boycott products made by a firm engaged in a labor dispute with another union
Charging employees excessive union dues as a condition of membership in a union under a union shop clause
Causing an employer to pay for services not performed
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10. The Landrum-Griffin Act, 1959
Key provisions for unions:
Must have a bill of rights
Must adopt a constitution
Must report financial activities
Union elections are regulated by the government
Union leaders have a fiduciary responsibility
The Landrum-Griffin Act was enacted in 1959 to protect union members and their participation in union affairs. The following are key provisions of the act:
Unions must have a bill of rights for union members to ensure minimum standards of internal union democracy.
Unions must adopt a constitution and provide copies of it to the Department of Labor.
Unions must report their financial activities and the financial interests of their leaders to the Department of Labor.
Union elections are regulated by the government and union members have the right to participate in secret ballot elections.
Union leaders have a fiduciary responsibility to use union money and property for the benefit of the membership and not for their own personal gain.
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11. Labor Relations in the United States
Key Factors
Business Unionism
Unions Structured by Type of Job
Focus on Collective Bargaining
Labor Contracts
The Adversarial Nature
The Growth of Unions
Labor relations in the United States evolved from the philosophy of the U.S. labor movement, which accepted the country’s capitalist economic structure and wanted to operate within it. Unions have avoided permanent affiliation with a political party and have focused on improving their members’ welfare through dealing directly with the companies that employ their members. The key factors that characterize labor relations in the U.S. are:
Business Unionism: focuses on “bread-and-butter” issues such as wages, benefits, and job security. Unions have traditionally tried to avoid the influence of running the company, and they provide little input to management on strategic decisions.
Unions Structured by Type of Job: The AFL-CIO is a confederation of many different unions. It represents about 11.6 million people and has tremendous influence on federal labor policies.
Focus on Collective Bargaining: Unions and management dominate the U.S. labor relations system. The mechanism of choice for developing these rules is collective bargaining. With collective bargaining, management and unions negotiate with each other to develop work rules under which union members will work for a stipulated period of time.
Labor Contracts: The product of collective bargaining is a labor contract that spells out the conditions of employment and work rules that affect employees in the unit represented by the union.
The Adversarial Nature of Labor–Management Relations and Shrinking Union Membership: The U.S. labor laws view labor and management as natural adversaries that will disagree over the distribution of the firm’s profits. For this reason, rules have been put in place so that the pie is distributed peacefully.
The Growth of Unions in the Public Sector: As the percentage of unionized workers in the private sector has declined, the percentage of unionized workers in the public sector has increased substantially. This is due in part to the expansion of local government in the 1980s and in part to organizing efforts that have targeted both public-sector and service-sector employees.
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12. Union Membership in the United States
About 11% of the U.S. labor force is unionized. This is down from a peak of about 35% in And, only 6.6% of the U.S. private-sector workforce is unionized. Despite shrinking union membership, unions continue to be an important part of the U.S. labor relations system because they establish wage and benefit patterns that influence nonunion employers. Unions indirectly affect about 40% to 50% of the U.S. labor force.
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13. Labor Relations in Other Countries
France: more politically involved; less concerned with economic issues
China: unions are low in both economic and political involvement
Sweden: involves national wage setting
Great Britain: involves union affiliation with the Labour Party
Germany: involves union representation on the company’s board of directors
Japan: involves enterprise unions that cooperate with management
Labor relations systems vary from country to country because unions means different things in different countries.
France: more politically involved; less concerned with economic issues. Strikes in France tend to focus on political change as the primary means of protecting or improving conditions for union members.
China: unions are low in both economic and political involvement, because of the pervasive control of the Chinese Communist Party over both political and economic affairs. China is now considering a law that will relax the ban on strikes if the union first attempts to negotiate peacefully with management over the relevant economic issues.
Sweden: involves national wage setting and tends to have a high degree of economic and political involvement. Swedish trade unions are often represented on governmental commissions in addition to actively representing their workers in economic affairs.
Great Britain: involves union affiliation with the Labour Party.
Germany: involves union representation on the company’s board of directors. German law requires that all corporations involve workers in decisions at both the plant and the corporate level. This system is sometimes called industrial democracy.
Japan: involves enterprise unions that cooperate with management. Japan has developed a successful labor relations system characterized by a high degree of cooperation between unions and management. A key factor in this success has been the Japanese enterprise union.
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14. Labor Relations Strategy
Union Acceptance Strategy
Union Avoidance Strategy
Union Substitution
Union Suppression
A company’s labor relations strategy is its management’s overall plan for dealing with unions. A company’s labor relations strategy sets a tone that can range from open conflict with the union to labor–management cooperation.
The union acceptance strategy is a labor relations strategy in which management chooses to view the union as its employees’ legitimate representative and accepts collective bargaining as an appropriate mechanism for establishing workplace rules.
The union avoidance strategy is a labor relations strategy in which management tries to prevent its employees from joining a union, either by removing the incentive to unionize or by using hardball tactics.
Union substitution strategy is a union avoidance strategy in which management becomes so responsive to employees’ needs that it removes the incentives for unionization.
The union suppression is a union avoidance strategy in which management uses hardball tactics to prevent a union from organizing its workers or to get rid of a union.
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15. Labor Relations Process
Union Organizing
Union solicitation
Pre-election conduct
Certification election
The three steps in the labor relations process are union organizing, collective bargaining, and contract administration.
Union organizing takes place when employees work with a union to form themselves into a cohesive group. The key issues that managers confront in a union organizing campaign are union solicitation, pre-election conduct, and the certification election. Unions often conduct the early stages of their solicitation effort in private homes or public facilities so that management will not be aware of the organizing drive until the required percentage of workers has signed authorization cards. A minimum of 30% of the employees must sign an authorization card indicating that they want union representation. If there is not a majority then there must be a 12-month wait until the next election.
Pre-election conduct: If the union can show sufficient employee interest in forming a union, the NLRB will schedule a certification election. During the period before the election, management and union leaders should allow employees to freely exercise their right to vote for or against representation.
Certification election: The NLRB supervises the certification election, determining who is eligible to vote and counting the ballots. The voting is done by secret ballot, and the outcome is determined by the participating voters.
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16. Collective Bargaining
Bargaining Behavior
Bargaining Power
Bargaining Types
Distributive
Integrative
If union organizing results in certification, the next step in the labor relations process is collective bargaining that results in a labor contract. Most labor contracts last for two to three years, after which they are subject to renegotiation. Four important issues related to collective bargaining are bargaining behavior, bargaining power, bargaining topics, and impasses.
Bargaining behavior: Parties must show good faith. Good faith occurs when both parties are willing to meet and confer with each other at a reasonable time and place. Both parties must also be willing to negotiate over wages, hours, and conditions of employment.
Bargaining power: In collective bargaining sessions, both parties are likely to take opening positions that favor their goals but leave them some room to negotiate. Bargaining power is one party’s ability to get the other party to agree to its terms. If management has greater bargaining power than the union, it is likely to get the union to agree to a 5% pay increase.
Two bargaining tactics are:
Distributive bargaining, which is bargaining that focuses on convincing the other party that the cost of disagreeing with the proposed terms would be very high.
Integrative bargaining is bargaining that focuses on convincing the other party that the benefits of agreeing with the proposed terms would be very high.
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17. Bargaining Etiquette Show courtesy to the other bargaining team
Set the tone by being friendly to the other team
Maintain team solidarity
Establish ground rules
Keep negative emotions under control
Guidelines for management and unions regarding bargaining are followed so that good faith can be maintained during collective bargaining sessions:
Show courtesy to the other bargaining team.
Set the tone by being friendly to the other team.
Maintain team solidarity.
Establish ground rules to deal with difficult bargaining issues.
Keep negative emotions under control.
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18. Guidelines for Integrative Bargaining
Attempt to understand the needs and objectives
Create a free flow of information
Emphasize the commonalities
Integrative bargaining is the process of identifying a common, shared, or joint goal and developing a process to achieve it. An emphasis on integrative bargaining can lead to cooperation between union and management and the possibility of mutual gains for both. To achieve this, both parties should:
Attempt to understand the needs and objectives of the other negotiators.
Create a free flow of information.
Emphasize the commonalities, and minimize the differences, between the parties.
Search for solutions that meet both parties’ goals and objectives.
Develop flexible responses to the other negotiator’s proposals.
Search for solutions
Develop flexible responses
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19. Mandatory Bargaining Topics
The NLRB and courts classify bargaining topics into three categories: mandatory, permissive, and illegal. This slide shows the mandatory topics that are discussed in collective bargaining.
Permissive topics may be discussed during collective bargaining if both parties agree to do so, but neither party is obligated to bargain on these topics. Some permissive bargaining topics are provisions for union members to serve on the company’s board of directors and benefits for retired union members.
Illegal bargaining topics may not be discussed in collective bargaining. Examples of illegal topics are closed shop agreements, featherbeading, and discriminatory employment practices.
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20. Impasses Bargaining
Role of Mediator Economic Strike Wildcat Strike Lockout
Impasses in bargaining: A labor contract cannot be finalized until the bargaining representatives on both sides go back to their organizations and obtain approval of the contract. Union negotiators typically ask the members to vote on the contract. Most unions require a majority of union members to approve the contract. Management’s negotiating team may need approval from the company’s top executives. If parties cannot agree on one or more mandatory issues, they have reached an impasse in bargaining.
The role of the mediator is to be a neutral third party that attempts to help the parties in a dispute come to a voluntary agreement. Mediators do not have the power to impose their ideas for settlement onto the other parties.
An economic strike is a strike that takes place when an agreement is not reached during collective bargaining. A wildcat strike is a spontaneous work stoppage that happens under a valid contract. It is usually not supported by union leadership. Finally, a lockout is when the employer shuts down its operations before or during labor disputes.
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21. Contract Administration
Grievance Procedure
Steps in the Grievance Procedure
Types of Grievances
Contract Interpretation
Employee Discipline
Benefits of Union Grievance Procedures
The last phase of labor relations is contract administration, which involves application and enforcement of the labor contract in the workplace. Disputes occasionally arise between labor and management over such issues as who should be promoted or whether an employee has abused sick leave privileges. The steps taken to resolve such disputes are spelled out in the labor contract.
The grievance procedure and steps are shown in the next slide in detail.
Types of grievance: Employees initiate two type of grievances. The first is contract interpretation grievance based on union members’ rights under the labor contract. If the contract’s language is too ambiguous, this type of grievance may go to arbitration for clarification. The second type of grievance involves employee discipline. In such cases, the grievance procedure examines whether the employee in question was disciplined for just cause, and management has the burden of proof.
Benefits of union grievance procedures: Union grievance procedures provide benefits to both management and employees. Specifically, the grievance procedure protects union employees from arbitrary management decisions, it also helps management quickly and efficiently settle conflicts, and it involves upward communication flow, to name some benefits.
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22. A Union Grievance Procedure
The grievance procedure is the step-by-step process designed to settle disputes regarding the interpretation of a labor contract. This is a four-step grievance procedure. Usually a time limit is set for resolution of the grievance at each step. Later steps in the procedure require more time than earlier steps, and the degree of formality increases with each step. Because the grievance procedure is time consuming and distracts several people from their regular job duties, it is generally advantageous for the company to resolve disputes as early as possible.
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23. The Impact of Unions on HR
Staffing
Employee Development
Compensation
When unions enter the picture, management must develop policies that reflect the preferences of the majority of workers who are represented by the union.
Staffing: Under the labor contract, job opportunities are allocated to people on the basis of seniority. Seniority is the length of time a person works for an employer.
In a unionized company, promotions, job assignments, and shift preferences are given to the employee with the most seniority in the union. Layoffs in unionized firms are also governed.
Employee development: In unionized companies, the uses of performance appraisal are very limited because the appraisal data usually come from the supervisor, a source that many unions find problematic. Unions tend to balk at using performance appraisal as the basis for making pay and staffing decisions. Performance appraisals provide feedback on their performance.
Compensation: A company experiences an increase in total compensation costs when a union organizes its employees. On average, union employees earn 10% to 20% percent higher wages than comparable nonunionized employees. Across the board, pay plans are often based on cost-of-living adjustments (COLAs) that are tied to inflation indicators such as the consumer price index.
Employee relations: The union is an empowerment mechanism that gives employees a voice in the development of work rules that affect their jobs. The labor contract gives employees specific rights. For example, an employee overlooked for promotion may file a grievance and be reconsidered for the promotion if the contract stipulates that the employee has a right to that promotion.
Employee Relations
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24. Summary and Conclusions
Why Do Employee Join Unions?
Labor Relations and the Legal Environment
Labor Relations in the United States
Labor Relations in Other Countries
Labor Relations Strategy
Managing the Labor Relations Process
The Impact of Unions on Human Resource Management
To summarize, unions thrive when employees are dissatisfied and management does not have the influence needed to prevent unionization. This chapter covered the following topics:
Why Do Employee Join Unions?
Labor Relations and the Legal Environment
Labor Relations in the United States
Labor Relations in Other Countries
Labor Relations Strategy
Managing the Labor Relations Process
The Impact of Unions on Human Resource Management
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25. Pearson Education, Inc. Copyright
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