The Southwest Airlines Way

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Make Unions Your Partners, Not Adversaries

We treat all as family, including outside union representatives. We walk into the room not as adversaries but as working on something together. Our attitude is that we should both do what’s good for the company. . . . [Unions] have their constituency, their cus- tomer base. We respect that. We have a great relationship with the Teamsters and they have a reputation for being tough negotiators. We try to stress with everybody that we really like partnerships.

—Colleen Barrett, President and Chief Operating Officer, Southwest Airlines

Southwest has helped me make a wonderful contribution in my world. I am not look- ing to abuse the company or take advantage. I just want the right thing. There are things we need to have represented. But there is no need to threaten the company. . . . It’s fine to strike if you can’t settle your differences any other way. But we don’t need to strike. . . . We don’t want to fight. We belong to this company. It’s a system that works and that’s been working for years.

—Marcie Means, Customer Service Agent and Union Activist, Southwest Airlines

BECAUSE OF ITS reputation for teamwork, most people assume that Southwest Airlines has no unions, or very few unionized employees rela- tive to the rest of the airline industry. Indeed, a vice president of the United Auto Workers said in 1994 that Southwest’s competitive advan- tage was its nonunion status. Similarly, a top airline industry analyst recently told a group of students at the Massachusetts Institute of Tech- nology that “Southwest is not shackled by traditional unions.” In fact,

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Gittell, Jody Hoffer. Southwest Airlines Way, McGraw-Hill Trade, 2000. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/erau/detail.action?docID=4654913. Created from erau on 2022-09-17 04:22:26.

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Southwest is the most highly unionized airline in the U.S. airline indus- try, and since its founding has been one of the five most highly unionized airlines in the industry (see Exhibit 13–1). Because the airline industry is more unionized than almost any other industry in the United States, this means that Southwest is one of the most highly unionized companies in the United States. Southwest’s employees are represented by several tra- ditional unions, including the Transport Workers Union, the Interna- tional Association of Machinists, and the International Brotherhood of Teamsters, as well as a pilots’ union that is unique to Southwest (the Southwest Airlines Pilots’ Association, similar to American Airline’s com- pany-specific pilots’ union, the Allied Pilots Association) (see Exhibit 13–2). It is remarkable that Southwest, a well-recognized success story in the business world, has gained almost no recognition for its remarkable accomplishments in the realm of labor-management relations.

The airline industry is highly unionized, and managers in the indus- try often blame their unions for high costs and inefficiencies. But across the industry, there are important variations in the quality of labor rela- tions, and in the strategies managers have used to work with or against their unions.1 Union representation within an organization can give that

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Exhibit 13–1 Percent of Employees Represented by Unions in U.S. Major Airlines

(Source: Airline Industrial Relations Conference)

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organization increased legitimacy with its employees, and thus serve as a key element of a system of coordination and control2 if employee repre- sentatives are respected and communication is open.3 However, the lead- ers of some unionized organizations attempt to build trust with frontline employees by bypassing their selected representatives and communicat- ing directly with them, while others pursue a dual strategy of both com- municating directly with frontline employees and working in partnership with their union representatives. The risks and rewards of the two strate- gies are well established.4 By attempting to compete with union repre- sentatives, managers risk losing the trust of employees who remain loyal to their representatives. Managers also risk dividing the group against itself, and groups against each other. This adversarialism undermines

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(Source: Airline Industrial Relations Conference)

Exhibit 13–2 The Unions That Represent Airline Employees*

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relationships among frontline employees and throughout the company, reducing the potential for high performance.

This chapter explores the effects of union representation on relation- ships, and on performance of the flight departure process. Southwest’s experience as one of the most highly unionized airlines in the industry, with some of the most traditional unions representing its employees, yet with the lowest rates of labor conflict (see Exhibit 13–3) and the shortest time to contract (Exhibit 13–4), shows that union representation by itself is not an impediment to strong relationships or high performance.5 In fact union leaders can be highly supportive of an organization’s perfor- mance goals, as they have tended to be at Southwest Airlines and more recently at Continental Airlines, when they are cultivated as partners rather than adversaries of management.

Labor Relations at Southwest Airlines

Although Southwest is highly unionized, Southwest has experienced lit- tle labor conflict relative to its competitors. Looking more closely inside

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Exhibit 13–3 Labor Conflict Index*

*Number of strikes, arbitrations, mediations, and releases since 1985. (Source: National Mediation Board)

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the organization, one learns that Southwest has long emphasized the importance of labor/management partnerships. One of Southwest’s chief pilots characterized Southwest’s relationship with the pilots’ union.

We have an excellent relationship with SWAPA (Southwest Airlines Pilots’ Association). Not a lot of finger pointing. I never see any, to tell you the truth. We share opinions openly. The groundwork for this was established a long time ago. We do not lose memories of where we’ve been, how it all started. We have a shared responsibility with the association. Some differ- ences will occur. Sometimes there’s the need for disciplinary action, but we always maintain respect for the person.

A Southwest flight attendant base manager described a similar rela- tionship with the Transport Workers Union, which represents South- west’s flight attendants:

The relationship is the best you’ll ever see. The union representative is in my office three to five times a week. There is openness and communication. Our

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Exhibit 13–4 Length of Time Required to Reach Contract Agreement*

*Average months required to reach agreement, since 1985. (Source: National Mediation Board)

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general philosophy is the more knowledge you give the more they are equipped to do their job. We do that with the union too.

The respect that Southwest managers demonstrated for employees and their elected representatives reinforced frontline employees’ trust for the company and their identification with the company’s goals. In addition, the respect demonstrated by top management also helped to foster respectful relationships between the unions themselves. A long- time operations agent explained:

At Southwest, everybody supports everybody else’s union—in the whole aspect of the thing. That’s just the way it is here.

This respectful attitude between unions stands in stark contrast to the other airlines, where derogatory comments were frequently heard about the unions that represented other employee groups.

The strong identification between frontline employees and top man- agement in turn helps to keep union representatives in line. In the mid- 1990s, one of the unions at Southwest was accused by its employee members of being “hard ass” in its relationship with the company, and unresponsive to legitimate employee needs. Discontent came to a head when the union proposed to set up a strike fund. According to Marcie Means, a customer service agent who helped lead the effort to replace that union with another:

Unions can make or break a company. [This particular union] has been real stressful for Southwest . . . they want to fight. We don’t want to fight. We be- long to this company. It’s a system that works and that’s been working for years.

In the meantime, Colleen Barrett took the position that “we really want them to have whoever they want,” suggesting that employee representa- tives are respected for the fact that they were chosen by employees, and that Southwest managers trust employees to make that choice.

In another case, Southwest’s ramp and operations employees voted to replace their independent union—the Ramp, Operations and Provision- ers Association (ROPA)—with a more established union—the Transport Workers Union (TWU)—which represents Southwest’s flight atten- dants, as well as ramp and maintenance employees at American Airlines. Once the TWU was in place, its representatives took a more aggressive

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stance regarding wages for Southwest employees, leading to an impasse in contract negotiations and resulting in Southwest’s first mediation in decades. While in mediation in the spring of 2001, Southwest employees conducted informational picketing at many of Southwest’s stations. Despite the aggressive stance of the TWU regarding wages, Southwest managers spoke positively of the change employees had made in choosing the TWU to replace their own independent union. According to Balti- more station manager Mike Miller:

The members felt they needed a more experienced union. We had become a major carrier. I think it’s been easier to work with the TWU than with ROPA.

Miller also found that partnering with Southwest’s unions was an effective way to think through and implement changes at the station level:

We have a very positive relationship with the unions. . . . Union leadership here is good. I like those guys. They support the union perspective, we support the company perspective. Our conversations get heated, then we shake hands and move on. If we have a concept we want to kick around, we want to get the union involved, from a selling standpoint, and also to see if there are flaws.

There had been one strike in Southwest’s history, however, and top management was willing to take another if necessary to maintain South- west’s basic commitments. Colleen Barrett explained:

We’ve had one strike—a six-day strike with the mechanics in 1980. We got them temporary jobs with the census during the strike. We are very proud of our employee relationships. We treat people with respect. But we would take a strike if it got down to it—if the demands would hurt all employees. Espe- cially if . . . we simply couldn’t concede without hurting all employees by the decision. We are loving but very realistic and very pragmatic.

Jim Parker, Southwest’s general counsel for years and recently chosen as Southwest’s new CEO, explained Southwest’s approach to contract negotiations:

Our goal is to keep productivity high, keep the business model in place. I go to Herb [now chairman of the board] before the union negotiations, then I put as much money on the table as I can, right at the start. There is not

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always harmony, but we know our employees at Southwest have realistic expectations. I would say there are different degrees of harmony.

Most labor disputes are not really about money. There is something else—respect. It comes down to personal contact between the company and its employees.

This personal contact between the company and its employees was achieved in part through the frontline supervisor, noted Donna Conover, Southwest’s executive vice president of customers:

This is one reason our supervisors are so important. It is easier to walk out on people who do not give you respect than to walk out on a friend. You can- not make up for long-standing problems in the two months before a negoti- ation. Communication needs to be consistent.

Even members of the National Mediation Board, which oversees labor disputes in the airline industry, noticed the unique approach taken by Southwest in its labor relations. Maggie Jacobson, chair of the Medi- ation Board, described the Southwest difference:

In a service industry, your people are your most important thing. Companies have to treat their people with respect. They have to be open with information. Everybody knows anyway. You can’t get away with it—the company telling unions we’re doing poorly while telling the public we’re doing great. The Southwests of the world use the process efficiently. What does it take? Day-to- day communication by CEOs. Be as honest as you can possibly be. . . . Credi- bility is a daily process.

Respectful relationships between management and frontline em- ployee unions helped to set the tone for respectful relationships through- out Southwest Airlines.

Labor Relations at Continental Airlines

Thanks to Frank Lorenzo’s successful union-busting efforts of the 1980s, Continental’s workforce was largely nonunion in the early 1990s. Under Lorenzo, Continental had put in place an alternative form of employee representation in 1985. Customer service, ramp, and maintenance em-

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ployees were represented by employee interest groups (EIGs), and supervisory employees had a parallel form of representation called man- agement interest groups (MIGs). Customer service and ramp employees at the Boston station took these interest groups quite seriously, and reportedly the EIGs often formed alliances with the MIGs to pursue matters of mutual interest. According to a Boston supervisor:

EIGs have been going on, in various forms, for the past 10 years. They’ve had different focuses and have organized under different titles, as the com- pany has changed. Prior to 1987 and the merger of all the various companies, it was different. How much input they have has varied. Probably since 1990 there’s been a far greater reliance and inclusion.

As Lorenzo’s power began to wane, there became more emphasis on relying on employees. There was more pressure to go union from the East- ern people who came in. A lot of concern to get communication strength- ened so we wouldn’t blow our cost structure. There was a lot of advantage from making employees feel they were getting a fair shake.

EIGs and MIGs were active in Boston, and their representatives also participated in regional and companywide forums. Employees at the Boston station expressed high expectations for inclusion in issues of companywide importance, such as the formulation of the Continental Lite strategy and the rewriting of Company Policies and Procedures.

Aside from customer service and the ramp, however, Continental employees were not satisfied with this form of representation and either had found or were seeking to find their own forms of representation through more traditional unions. In 1993, the pilots voted in a new, inde- pendent union. Soon after, the flight attendants’ union, which had never been destroyed, became active again after 10 years of dormancy. And the mechanics became involved in a union drive that ultimately proved suc- cessful. Interestingly, in a company that was associated with the aggres- sive union-busting efforts of Frank Lorenzo, there was little evidence of local or top-level management opposing these efforts to re-unionize in the mid-1990s. A flight attendant base manager expressed what appeared to be the new attitude toward unions:

When you have a union on board . . . in today’s environment it’s different from even seven years ago. It used to be combative. Now in the United

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States we work together more. We are not trying to get as much as possible for the least work. These days everybody knows we have got to be lean.

In other words, Continental was no longer actively opposing unions, in part because the unions were now trusted to be more restrained with respect to their demands, in recognition of the competitive environment in which Continental was operating.

This new acceptance of unions also reflected the values of Continen- tal’s new leadership team, headed by CEO Gordon Bethune, and Vice President of Employee Relations Mike Campbell. Indeed, in Bethune’s “Go Forward” plan for turning around Continental Airlines, unveiled in January 1995, one of the four components was “Working Together (to improve labor relations).” Bethune appeared to be striving for partner- ship with Continental’s employee unions. However, this partnership was threatened by Continental’s plan to create a code-sharing alliance with Northwest Airlines in 1998. Continental’s pilots began informational picketing at selected airports, concerned that their job security was at stake. Clearly, a communication gap had opened up. According to the president of Continental’s pilot union:

If they really want this pilot group, this employee group, to buy off onto this transaction, they need to provide us with the information we need to make decisions about our careers. And if they won’t share that information with us, that raises doubts. That raises suspicions. And they have nobody to blame but themselves.6

That problem was averted through more open communication between the company and its unions, but the incident demonstrated that Continental’s new leaders could not relax their efforts to build trusting relationships with Continental’s employees and their unions.

Labor Relations at United Airlines

The United employee buyout of 1994, in which employees purchased 55 percent of United’s stock through wage concessions in return for board representation, seemed to be an ideal way to align employees’ interests with those of management, and to do so in a way that would foster coop- eration between employee groups. Under the employee stock ownership

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plan (ESOP), United’s unions were represented on the board of direc- tors, as well as in cross-functional problem-solving teams. However, sup- port for the ESOP was shaky from the start. United’s pilots, represented by the Air Line Pilots Association, took the lead in the employee buyout, though internal dissent among the pilots continued to surface through- out the period of the ESOP. United’s mechanics and ramp workers, rep- resented by the International Association of Machinists (IAM), joined the buyout but supported it by a narrow margin.

Nonunion employees, who made up a substantial percentage of United’s frontline employees, including customer contact positions such as ticket agents, gate agents, and reservations agent, were given repre- sentation on the board of directors in return for their participation in the employee buyout. After the buyout, these customer contact employees who had been traditionally opposed to unionization decided to join the International Association of Machinists, the same union that already rep- resented United’s mechanics and ramp employees.

United’s flight attendants, represented by the Association of Flight Attendants, agreed to join the buyout only if United agreed to stop its efforts to hire foreign-domiciled flight attendants, a move that they felt threatened their job security and that took some of the best-paying jobs away from their members. This condition was not met, and more signif- icantly, the other unions did not back the flight attendants’ position. As a result, United flight attendants did not participate in the buyout and were not represented on the board of directors. As United’s new CEO at the time of the ESOP, Gerald Greenwald said that he was “committed to forging a mutually beneficial agreement with [the flight attendants].” The flight attendants’ union responded: “If someone would come up with a good solution, I think we would entertain it.”7

Rather than becoming more unified around the buyout over time, however, as observers had hoped, employees became increasingly divided over the buyout. The mechanics voted to leave the IAM and their ramp and customer service colleagues to join a new union just for mechanics, in part to reopen the question of whether to participate in the ESOP. The vote failed by only a narrow margin. The flight atten- dants’ union continued to oppose the company plan to move some flight attendant jobs to overseas bases—and continued to withhold their support for the ESOP. Meanwhile, pilots pressured company leadership to make changes in management, in part to demonstrate to

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themselves that the power they had achieved through board represen- tation was a reality.

Some United leaders found that initially there were positive changes associated with the ESOP. A ramp supervisor described the initial impact of the ESOP:

There’s been a significant amount of buy-in by the groups involved. . . . United has had a rancorous labor history—lots of strikes, ill will, very much “us and them” philosophy. With the ESOP, we’re not talking about a little shift here—we’re talking about 180 degrees. From open hostility to “we’re all in this together.”

I used to have to come in here with a whip and a chair. In almost all cases it’s taken a noticeable turn for the better. It’s not to say that everybody runs out the door ready to load the airplanes. But it’s made my job considerably easier.

Over time, other United leaders began to question the value of the ESOP. A Boston manager explained his disappointment with the ESOP:

After the ESOP things got better. We would have hoped there would be a real change in attitude. But the IAM has a real difficult attitude. Their basic philosophy is different from managers. They think about what they can get out rather than what they can put in. You’d think the ESOP would bring a different attitude, but so far not. Instead it’s “how can I get an easy hour? How can I get a paid lunch?”

The IAM called in sick one day after Thanksgiving, then called a work slowdown, work by the rule book. Flights were delayed just long enough that you had to explain it. . . . It was happening all over sporadically, places with the strong union-type ties. This caused a lot of resentment between the employee groups. Customer services would have to deal with customers, bags would be piled up, it was difficult and hazardous. Relations were at an all time low. We are trying to get it back to where it was.

In addition to continuing problems in day-to-day workplace rela- tions, the influence that employees had hoped to gain through board representation was not achieved, in the view of many. Rick Dubinsky, head of the pilots union for United and representative to the United board of directors, expressed disappointment in his farewell speech to members in October 2001:

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I view the Board of Directors seat as “golden” but only as it relates to pro- viding [us] with unparalleled access to information and the most secret inner workings of the company for which we fly. However, for the 25 percent-plus of the stock of this corporation that is held by the pilots, to be limited to only one board seat with minimal influence is a travesty.

In the last year and a half that I have been attending their meetings, the United board hasn’t spent even 30 minutes discussing any issues germane to its employee owners, with the exception of complaining just how unreason- able and greedy are the pilots. This airline is being run and managed purely as a public company. Management has deep-sixed any vestiges of employee ownership and is patiently biding its time until the ESOP and its corporate governance structure “sunsets” about 15 years from now.

Partly as a result of disenchantment with the limited influence gained by employees through the ESOP and its failure to include the flight attendants, labor relations at United Airlines deteriorated significantly in the late 1990s.8 United flight attendants began using a new form of strik- ing developed by their colleagues at Alaska Airlines, called CHAOS (Create Havoc Around Our System), in which members publicly de- clared their intent to stage strikes selectively throughout the company, but without announcing beforehand when or where the strikes would occur. United flight attendants used this strategy during negotiations in 1997, 2000, and 2001, protesting outside airports and passing out CHAOS information to passengers. In addition to the uncertainty this strategy created for the company, it also created, by intent, a high level of uncertainty and anxiety on the part of customers.

Under these pressures, United’s CEO Gerald Greenwald and Presi- dent John Edwardson began to lose the support of United’s board, partic- ularly its employee representatives. In 1998, John Edwardson resigned as a result of lack of support from the board, and in 1999 the board elected James Goodwin to succeed Greenwald as chairman and CEO. Goodwin, a 32-year veteran of United Airlines, enjoyed the strong support of the Air Line Pilots Association and the International Association of Machin- ists. He brought in a new management team, including Rono Dutta as president, and Bill Hobgood as the senior vice president of people.

Under Goodwin’s leadership in 1999 and 2000, however, the pro- posed merger with US Airways became a source of heightened conflict for all workgroups:

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Pilots, fearful of pay and seniority changes as well as layoffs that could result from such a merger, created a slowdown that was quickly followed with sim- ilar actions by the mechanics. The summer of 2000 left United management with a sorry figure to cut in front of the flying public, who were outraged by delays and cancelled flights, not to mention unhappy United employees.9

Labor relations appeared to become even more adversarial in the wake of September 11, when proposals by labor representatives to cush- ion the impact of the layoffs were rejected by management. In addition, United’s unions continued to question management’s commitment to the concept of employee ownership. Goodwin abruptly resigned Octo- ber 28, apparently in response to pressure from the board of directors and particularly its employee representatives. In his place, the board appointed John Creighton, a board member with the reputation of hav- ing worked successfully with Weyerhauser’s unions in the 1990s to turn that company around. Upon his appointment, Creighton announced his intention “to work hand-in-hand with our employees and unions to accomplish this task by developing innovative solutions to the issues we collectively face.”10 However, the obstacles he faced in repairing United’s broken labor relations were clearly considerable.

Labor Relations at American Airlines

At American Airlines, pilots, flight attendants, ramp workers, and mechan- ics were unionized, but a substantial number of its workgroups—gate, ticket, reservations, and operations agents—were not. Under the leader- ship of former CEO Robert Crandall, labor–management relations at American fluctuated between tentative and adversarial. American had fairly adversarial relations with the unions that represented its pilots (the Allied Pilots Association) and its flight attendants (the Association of Pro- fessional Flight Attendants). A leader of the pilots’ union explained:

Crandall always gets people mad. One example was when Crandall put that ad in the paper during the Christmas time conflict with the pilots in 1989. The ad was called AApology and basically blamed the pilots for everything, tried to make us look bad to the public.

Bob Baker [executive vice president of operations], on the other hand, is really respectful of employees. I can call him anytime I need to talk. The new

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VP of flight operations [who reports to Bob Baker] and the new chief pilot are also very good. The new VP is spending a lot of money and time trying to smooth relations with the pilots.

Sometimes it appears Crandall is acting unilaterally, without consulting with other members of management. Like when Crandall announced in Chicago recently, at a President’s Conference, that 500 pilots would be fur- loughed. According to others who were there, Baker about fell out of his seat when Crandall announced that.

The union that represented American’s ramp employees and mech- anics (the Transport Workers Union) had more of a mixed relationship with the company, at times fairly cooperative and at other times con- flict-ridden.

Under Crandall’s leadership, American had been the first airline in the industry, in the early 1980s, to initiate two-tier wage contracts. Two- tier wage contracts were an attempt to reduce wage costs by negotiating separate lower rates for new employees, while protecting the wage levels of current employees. Although American was successful, the two-tier wage structure bred resentment among new employees. A representative for the ramp workers explained later:

Until the 1983 contract, we had good contracts. Our contracts were democ- ratic and fair. We wouldn’t sell out one group to help another group. But starting in 1983, this principle was abandoned. The contract called for lower starting rates for new people and a slower progression once they got there. The new ramp workers would come in at $4.50 and never get beyond $5.50. They also did not get benefits for the first year.

You should understand, being a woman. It’s an ERA issue, equal pay for equal work. The guy beside me is doing the same work as I am, and he’s mak- ing less. It’s divisive.

By the time those new employees became the majority, they were ripe for dissent, and American suffered several labor-management conflicts in the late 1980s and early 1990s.

In addition to these controversial and only somewhat successful ini- tiatives to reduce costs and increase productivity, Crandall’s approach toward communicating with frontline employees was different from that of his predecessors. He began to communicate directly with frontline

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employees rather than solely through their union representatives. This approach in and of itself did not necessarily signal a lack of respect for employee representation—Southwest has always taken the approach of communicating directly with frontline employees as well as with their union representatives, and Continental Airlines under Gordon Bethune is well known for doing the same.

Crandall, however, had a tendency to question publicly whether American’s unions were in fact representing the views of their members, thereby questioning the legitimacy of his employees’ unions. When the unions expressed opposition to company initiatives, Crandall tended to express the view that the unions’ opposition was not reflective of its members’ views, then was taken by surprise by the strength of frontline opposition to management policies, as, for example, in the 1993 flight attendants’ strike. Rather than working with the unions, Crandall appeared to be competing with them for the trust and loyalty of Ameri- can’s frontline employees. The strategy of going around the unions, and suggesting that they did not truly represent their members, was a risky one to pursue, particularly as a strategy for winning the trust of front- line employees.

By questioning the legitimacy of union representatives, Crandall helped to build an atmosphere of disrespect that infected relationships between employee groups, including those whose cooperation with each other was critical for American’s operating performance. Crandall’s ques- tioning of union legitimacy threatened to undermine the teamwork that the company had worked so hard to build through training. According to an American gate agent in the Boston station:

After the flight attendant strike, they tried to pit us union against nonunion. They made it look like the flight attendants were out to screw the company. They pitted us against another work group. They preach team but they don’t practice it.

Other employees spoke with disrespect of their colleagues in other functions, and of the unions that represented those colleagues. An Amer- ican pilot suggested to me:

You know, if American really wanted cost savings, they should bust the TWU [the union that represented mechanics, ramp agents, baggage transfer

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agents, cabin cleaners, and so forth]. They should get the mechanics out since they’re the only skilled workers in the group. And bust the rest.

This comment was from a pilot who believed strongly in the right to organize, and who was a long-standing leader of the pilots’ union. Pilots expressed similar attitudes toward the flight attendants’ union. These patterns of disrespect for colleagues and their union representatives mir- rored top-management attitudes at American under Crandall, and boded ill for coordination of the flight departure process.

American has experienced more harmonious labor relations overall since Crandall was replaced by Don Carty. A leader of the pilots’ union looked back on the Crandall era and reflected on the changes brought by American’s new leadership:

Crandall once said at a critical point in negotiations that pilots were nothing but high-paid bus drivers. He paid for that comment. The company is more under the control of the operations people now, like Bob Baker, and they recognize the value employees can bring to operations. The lines of com- munication are opening up.

Summing Up

We have seen in this chapter that the quality of the labor/management relationship can influence relationships throughout the organization, with likely effects on organizational performance. Consistent with the argument made by Kochan, Katz, and McKersie in their classic book, The Transformation of American Industrial Relations,11 a recent study shows that it is not the level of union representation, but rather the quality of the relationship, that determines organizational performance. Conflict reduces quality, efficiency, and financial performance, while a positive workplace culture improves these outcomes. Unionization by itself has little impact on these outcomes, either positive or negative.12

But surely there is some basis for the deeply held American belief that unions are bad for business. In What Do Unions Do? Richard Freeman and James Medoff report that union membership can produce loyalty to union goals at the expense of loyalty to company goals.13 However, they found that union representation can also provide an avenue for employee voice in the organization, potentially creating a greater sense of shared

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goals with their employer, so long as employees are not forced to choose between loyalty to their union and loyalty to their employer. That is, union represen- tation can reinforce shared goals between employees and employers so long as the employer recognizes and respects the role of the union, and seeks its partnership.14

Similarly, union membership can foster strong ties among employ- ees.15 When multiple unions are present, it may be even more critical for management to show the utmost respect for each one. Any disrespect shown by management toward one union tends to result in disrespect shown by employees toward their fellow employees, undermining criti- cal relationships throughout the organization. Union representation can support cross-functional coordination and performance so long as employers show respect for employee interests as articulated through their collective voice.

At Southwest Airlines, respectful relationships between company management and the unions chosen by frontline employees appear to set the tone for respectful relationships throughout the company. As South- west’s leaders pointed out on several occasions, however, positive labor/management relations are not achieved once and for all. Rather they have to be reproduced every day. The relationship is never com- plete. As Beverly Carmichael, Southwest’s newly appointed vice presi- dent of people, pointed out recently: “It’s like any other relationship. You have to live it every day.”

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