1. Labor-Management Relations
Understanding
Labor-Management Relations
Chapter 11
THE FUTURE OF BUSINESS
Gitman & McDaniel
5th Edition
Prepared by
Deborah Baker
Texas Christian University

2. Learning Goals
What is the historical development of American labor unions?
What role did federal law play in the development of the union-management relationship?
What is the union organizing process?
What is the collective bargaining process, and what key issues are included in the union contract?
How do employees file a grievance?
What economic tactics do unions and employers use in labor-management conflicts?
What trends will affect American workers and labor-management relations?
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3. Principles of Labor-Management Relations
Chapter 1
Chapter 11
Principles of Labor-Management Relations
Labor Union
An organization that represents workers in dealing with management over disputes involving wages, hours, and working conditions
Collective Bargaining
The process of negotiating labor agreements that provide for compensation and working arrangements mutually acceptable to the union and to management
Tens of thousands of American firms are unionized and millions of American workers belong to unions. If you work in the mining, manufacturing, construction, or transportation industries, you will probably deal with or be affected by labor unions.
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4. The Labor Relations Process
Chapter 1
Chapter 11
The Labor Relations Process
3. Day-to-Day administration of agreement
2. Negotiating a labor agreement
The labor relations process that produces a union-management relationship consists of three phases:
union organizing
negotiating a labor agreement
daily administering of the labor agreement
1. Union organizing
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5. What is the historical development of American labor unions?
Learning Goal 1 1
What is the historical development of American labor unions?
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6. Emergence of Unions and Collective Bargaining
Chapter 1
Chapter 11
Emergence of Unions and Collective Bargaining 1
Congress of Industrial Organizations
1935
AFL-CIO
1955
American Federation of Labor
1881
Industrial unions
Merger of AFL and CIO
Craft unions
Early labor organizations began to develop toward the end of the 1700s, as the U.S. started to shift from an agricultural to an industrial economy. Craft guilds were made of skilled artisans who pushed for better working conditions. The Knights of Labor, formed in 1869, was the first major national labor organization. Its concern was with broad social and economic issues such as child labor, public education, and business monopolies.
The American Federation of Labor was formed in 1881, and pressed for better recognition and more power for union members, collective bargaining, and the right to strike to improve wages, hours, and working conditions.
The CIO was formed as a collection of industrial unions, and succeeded in organizing unions in mass-production industries.
The AFL and CIO merged in 1955, and is an umbrella organization for most American labor unions.
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7. The Labor Movement Today
Chapter 1
Chapter 11
The Labor Movement Today 1
Collective bargaining
Local Unions
Worker relations / member services
Community / Political activities
National and International Unions
The basic structure of the modern labor movement consists of local unions, national and international unions, and the AFL-CIO.
A local union is a branch of a national union that represents workers at a specific plant or geographic area. Its three main functions are collective bargaining, worker relations and membership services, and community and political activities.
AFL-CIO
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8. Union Membership Trends, 1955-2003
Chapter 1
Chapter 11
Union Membership Trends, 1
There are approximately 60,000 local unions and 80 national and international unions. Unions, in general, have experienced a steady decline in membership.
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9. Learning Goal 2 2
What role did federal law play in the development of the union-management relationship?
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10. The Legal Environment of Unions
Chapter 1
Chapter 11
The Legal Environment of Unions 2
Norris-LaGuardia Act of 1932
The Anti-Injunction Act
Banned the use of injunctions to prevent strikes
Made yellow-dog contracts unenforceable
Union-management relations have not always been peaceful and businesslike. The respectful relationship that now exists has resulted, in part, from laws passed from the 1930s to the late 1950s.
Before 1932, a company faced with striking workers could get the court to order them back to work. Employers also used the courts to enforce yellow-dog contracts, in which employees agree not to join a labor union as a condition of being hired. The Norris-LaGuardia Act of 1932 largely ended the use of injunctions, and made yellow-dog contracts unenforceable.
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11. The Legal Environment of Unions
Chapter 1
Chapter 11
The Legal Environment of Unions 2
Wagner Act of 1935
National Labor Relations Act
Encouraged the formation of unions and the use of collective bargaining
Provided a means for resolving disputes over union representation
Protected workers from unfair labor practices
Employers were still not obliged to bargain with unions. The unions urged Congress to pass a law that would require employers to deal with them, and Congress responded with the National Labor Relations act, commonly known as the Wagner Act.
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12. The Legal Environment of Unions
Chapter 1
Chapter 11
The Legal Environment of Unions 2
Taft-Hartley Act of 1947
Labor-Management Relations Act
Defined unfair union practices
Outlined the rules for dealing with strikes of major economic impact
Broadened employer options for dealing with unions
Further defined the rights of employees as individuals
In 1947, Congress amended the Wagner Act with the Taft-Hartley Act because many employers saw the Wagner Act as too pro-labor. The act also banned excessive or discriminatory dues and fees and made it unlawful for picketing union members to block nonstriking employees from entering the business to go to work.
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13. The Legal Environment of Unions
Chapter 1
Chapter 11
The Legal Environment of Unions 2
A method of attempting to settle labor disputes using a specialist as a “go-between.”
Mediation
A method of attempting to settle labor disputes using a specialist as a mediator.
Conciliation
Congress also created the Federal Mediation and Conciliation Service as part of the Taft-Hartley act. This service helps unions and employers negotiate labor agreements, through use of conciliation and mediation.
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14. The Legal Environment of Unions
Chapter 1
Chapter 11
The Legal Environment of Unions 2
Landrum-Griffin Act of 1959
Labor-Management Reporting and Disclosure Act
Deals with the internal affairs of labor unions
Bill of rights for members
Rules for electing union officials
Safeguards to help make unions financially sound
Requires that unions file annual financial reports
The Landrum-Griffin Act deals mostly with the internal affairs of labor unions.
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15. What is the union organizing process?
Learning Goal 3 3
What is the union organizing process?
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16. Benefits Stressed by Unions
Chapter 1
Chapter 11
Benefits Stressed by Unions 3
Almost Always Stressed
Often Stressed
Seldom Stressed
Grievance procedures
Job security
Improved benefits
Higher pay
More influence in decision making
Better working conditions
Lobbying opportunities
Higher-quality products
Technical training
More job satisfaction
Increased production
During the union organizing phase, the union and the employer engage in a preelection campaign to try to convince workers to vote in their favor. Exhibit 11.2, as summarized here and on the next slide, lists benefits usually stressed by the union and common arguments employers make to convince employees a union is unnecessary.
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17. Employer Arguments Against Unionization3
An employee can come directly to management
You will pay monthly dues of $15 to $30
Merit-based decisions are better than seniority-based
Pay and benefits are similar to the industry’s leading firms
We meet all health and safety standards of OSHA
Performance and productivity are more important than union representation in determining pay raises
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18. Union Organizing Process
Chapter 1
Chapter 11
Union Organizing Process 3
A nonunion employer becomes unionized through an organizing campaign. Once the union gets signed authorization cards from at least 30 percent of the employers, it can ask the National Labor Relations Board for a union certification election. This election, by secret ballot, determines whether the workers want to be represented by the union. The election is conducted by the NLRB. If a majority vote in favor, the employer has to bargain with the union over wages, hours, and other terms of employment.
The complete organizing process is summarized in Exhibit 11.3
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19. Learning Goal 4 4
What is the collective bargaining process, and what key issues are included in the union contract?
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20. Process of Negotiating Labor Agreements
Chapter 1
Chapter 11
Process of Negotiating Labor Agreements 4
A union contract is created through collective bargaining. Bargaining begins with union and management negotiators setting a bargaining agenda, a list of contract issues that will be discussed. The bargaining takes place through face-to-face meetings and the exchange of written proposals during several rounds of bargaining. The resulting contract must then be approved by top management and by union members. The collective bargaining process is shown here.
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21. Issues covered in the Union Contract
Chapter 1
Chapter 11
The Union Contract 4
Union Security
Management Rights
Wages
Job Benefits
Job Security
Issues covered in the Union Contract
The union contract is a legally binding agreement that covers such issues as are shown on this slide, and discussed on the following slides.
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22. Union Security 4 Closed Shop Union Shop Agency Shop Open Shop
Chapter 1
Chapter 11
Union Security 4
Closed Shop
Only union members can be hired
Union Shop
Nonunion workers can be hired, but they must join the union
Agency Shop
Does not require workers to join the union
From the union’s perspective, the most secure arrangement is the closed shop, a company where only union members can be hired. Today, the most common form of union security is the union shop, where nonunion workers must join the union within 30 or 60 days. An agency shop does not require union membership, but must pay the union a fee to cover its expenses in representing them.
Under the Taft-Hartley act, any state can make all forms of union security illegal by enacting right-to-work laws. In this arrangement, common known as an open shop, workers don’t have to join the union or pay dues or fees.
Open Shop
Workers can work at a unionized company without having to join the union
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23. Chapter 1
Chapter 11
Benefits 4
Higher wages for overtime, holiday work, and less desirable shifts
Insurance programs
Payment for certain nontime work
Pensions
Income-maintenance plans
In addition to requests for wage increases, unions usually want better fringe benefits. In some industries, such as steel and auto manufacturing, fringe benefits are 40 percent of the total cost of compensation.
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24. How do employees file a grievance?
Learning Goal 5 5
How do employees file a grievance?
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25. Grievance and Arbitration
Chapter 1
Chapter 11
Grievance and Arbitration 5
Grievance
A formal complaint, filed by the employee or by the union, charging that management has violated the contract
Arbitration
The process of settling a labor-management dispute by having a third party make a decision, which is binding on both the union and the employer
The union’s main way of policing the contract is the grievance procedure. The typical grievance procedure is illustrated in Exhibit 11.7.
If top management and the union president can’t resolve the grievance, it goes to arbitration.
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26. The Grievance Procedure
Chapter 1
Chapter 11
The Grievance Procedure 5
Step 1:
oral presentation
Step 3:
higher-level grievance meeting
Step 4:
arbitration
Step 2:
grievance in writing
Employee with grievance
Summarized from Exhibit 11.7
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27. Learning Goal 6 6
What economic tactics do unions and employers use in labor-management conflicts?
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28. Managing Labor-Management Conflict
Chapter 1
Chapter 11
Managing Labor-Management Conflict 6
Union Strategies
Employer Strategies
Strike
Boycott
Picketing
Corporate campaign
Lockout
Strike replacements
Mutual-aid pact
Shift production
Both sides to labor-management conflicts have powerful tools for exerting economic pressure. Unions can fight with strikes, product boycotts, picketing, and corporate campaigns. Employers can fight with lockouts, strike replacements, and mutual-aid pacts. Furthermore, they can shift production to nonunion plants or out of the country.
A wildcat strike is a strike by a group of union members without the approval of the national union while the contract is still in effect. This action is often illegal because it violates the contract.
A selective strike strategy is a union strategy of conducting a strike at a critical plant that supplies parts to other plants.
A sickout occurs when a group of employees claim they can’t work because of illness. The corporate campaign is a fairly new union strategy, in which a union disrupts a corporation’s relations with its shareholders or investors as a means of attacking the company.
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29. Learning Goal 7 7
What trends will affect American workers and labor-management relations?
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30. Trends in Labor-Management Relations
Chapter 1
Chapter 11
Trends in Labor-Management Relations 7
Effort to reverse the decline in union memberships
Shortages of skilled labor in the unionized crafts
Layoffs in several highly-unionized industry sectors
Corporate restructures, technological changes, and the shifting of manufacturing offshore reduced manufacturing employment, and therefore, union membership dropped. However, service-sector workers increased their memberships in the last decade.
A trend we may see in the 21st century is the developing shortage of skilled workers in all of the construction crafts.
Concession bargaining involves the union giving contract gains for the workers back to management. A firm in severe financial difficulty, like United Airlines was in 2003, proposes to its unions that contract-scheduled wage increases must be eliminated to generate cost savings necessary for ongoing operation.
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