HRM 6304 V DB

HRM 6304, Labor Relations and Collective Bargaining 1

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

2. Examine the challenges for union members in the modern workplace. 2.1 Identify common factors that impact both unions and union members, to include

communication, health care, job changes, wages, strikes, lockouts, and unfair labor practices.

7. Analyze alternative dispute resolutions 7.1 Discuss the purpose and use of mediation and arbitration as options for resolution.

Required Unit Resources Chapter 7: Economic Issues, pp. 326–364 Chapter 8: Administrative Issues, pp. 388–420 Chapter 9: Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure, pp. 438–475 Unit Lesson In this unit, we will be looking at the myriad of challenges for unions and employers in the modern workplace, including communication, strikes, health care, and other market factors. Finding meaningful resolutions is critical for success for all concerned. In the last unit, we looked at the old contract and the different areas that management and the union will want to bargain over before a new contract can be reached. Those areas included management rights, hours of work, grievances, wages, insurance, pension plans, holidays and miscellaneous days, vacation, sick leave, strikes and lockouts, facility upgrades, office staff, and shareholder concerns. The collective bargaining process will consist of offers and counteroffers, but the better supported those offers and counteroffers are, the more likely they will be to get serious consideration. Both teams need to look at what the trends are in the industry, the community, the state, and across the nation in terms of wages and benefits. We know, for example, that the United Chemical and Plastics Union (UCPW) workers were mindful of the state of the company and the economy during the last contract, and now the union members see the economy picking up, so they want to also see a raise in wages. Of course, they want an immediate jump to their counterparts in order to be equal or at least competitive. The company, on the other hand, has a $2 million investment to upgrade the equipment and facilities to be federally compliant. This is not to say that management does not want to increase wages; after all, they have a reputation of being an organization that cares about employees. Instead, the negotiation process comes to a matter of establishing priorities. Both sides have to work together to look at the reality of the situation and come to an agreement that both parties can live with. Let’s look at the challenges in the modern workforce. The first challenge is a lack of communication. Going back to our divorce analogy, a lack of communication is one of the main issues between couples. Couples often try therapy as a way to increase their communication skills. Lack of communication can also create problems in an organization, although an organization cannot typically go to therapy. In our case, there are some rumors floating around that have created some tension and anxiety among the union workers. For example, there are rumors that the company is going to cut benefits, reduce the workforce, and close the plant or, alternatively, move the plant overseas. Naturally, the members are concerned because some members have been at Harper Container Company (HCC) for a very long time, and no one wants to lose their

UNIT V STUDY GUIDE Administrative and Economic Considerations: The Use of Leverage

HRM 6304, Labor Relations and Collective Bargaining 2

UNIT x STUDY GUIDE Title

job. The union has already voted to go on strike if they do not get higher wages. Management, on the other hand, has not bothered to tell the union that they are required to upgrade the equipment to meet customer demands for higher quality, comply with federally mandated environmental regulations, and reduce production costs. Additionally, the upgrade will cost $2 million within the next 3 years and will mean a reduction in 30 jobs. Both sides need to communicate with each other as to the current state of affairs. Another challenge in the modern workplace is the increasing costs of health care. In the United States, health care is expensive and continues to rise each year. Consequently, health insurance plans are increasing. Employers can no longer afford to absorb all of the costs, so they often pass on some of those costs to the employees in terms of deductibles, copayments, and health maintenance organizations (HMOs). An HMO is a network of health providers that the employees use first and foremost. This network provides reduced rates for its members, which means lower out-of-pocket costs for employees. This is important if you have to meet a deductible before your insurance kicks in. For example, if I have to see a doctor and I have a $500 yearly deductible, I pay the first $500 of the bill and the insurance picks up the rest. This is different than a copay. A copay means I have a specified amount for the service rendered. For example, my current insurance has a $40 copay for a doctor’s visit and a $500 deductible. This means I pay $40 to see the doctor, and I will contribute the first $500 toward anything else (e.g., labs, shots, scans). Employees have access to medical benefits, but there are some out-of-pocket expenses. This was not the case before at HCC. During the last contract, the employees had a first-dollar (no deductible or copay) health benefits package. The current market is such that the company can no longer offer a first-dollar benefit package. The company cannot afford to bear the full health care costs when the projections are a 10% increase each year for the next 3 years. A change here will come at a cost to the employees. Also, the current proposal from management on health care insurance requires a 3-year commitment to the health care insurance provider, but the union only wants to see a 1-year contract. This will become a bargaining issue.

Another challenge in the modern workplace is a change in jobs. As more technology is entered into the workplace—especially in manufacturing facilities—the less need there is for employees. Often, technology either replaces employees, or the work becomes more efficient and the need for employees is reduced. The current market demands that organizations are competitive, and in order to be competitive and meet the needs of the customers in terms of quality, organizations must become more efficient and more effective. The HCC case explains that the plant has not had an upgrade in 10 years, and the last upgrade did not eliminate any jobs. Current technology is absolutely required. In our HCC and UCPW case, we know we now have foreign competition in our industry to contend with, and in order to be competitive, we have to be more efficient. However, technology comes with a price. It is estimated the once the equipment is upgraded, 30 piecework-molding jobs will be eliminated. At the same time, the plant will operate on a continuous 7-day, 24-hours-per-day schedule.

Management will want to see the elimination of the 30 jobs because they want to reduce labor costs by at least 4% each year over the next 3 years. The 30 jobs that will be eliminated by the equipment upgrades just happen to be the highest-paid workers in the union, earning $17.50 an hour. This will present a problem with the union. The union, on the other hand, wants to retain all workers at their current rate of pay—even if moved to another job. They do not want to see anyone laid off. The two teams will have to work together to agree on what can be done about the 30 positions eliminated and their rate of pay. Since the plant will now be able to operate 7 days a week instead of 5, there may be room to keep the 30 employees. The bargaining issue will become the rate of pay. Technology is a fact of life, and, as technology increases, jobs are unfortunately eliminated in most manufacturing plants.

Effects of technology

HRM 6304, Labor Relations and Collective Bargaining 3

UNIT x STUDY GUIDE Title

Wages also present a challenge in the modern workforce. People want to be paid a fair wage. States have a minimum wage established to ensure all wage earners are earning at least enough to survive. Also, people expect to see a pay increase as an organization starts to make money. Our case is no different. The union members want to be paid in such a way that is comparable to their counterparts in the plastics industry and in their community. Sometimes, an organization may pay a bit less but offer better benefits that are important to the employees. In our case, the union wants an increase in wages and an increase in benefits.

One of the main areas that all collective bargaining teams address is that of wages and the different elements that are a part of a pay package: benefits. As you may recall, wages are a part of the mandatory bargaining items. Pay and benefit costs are typically a large part of any organization’s budget. For example, an average organization can count on spending between 20–30% of its gross revenue on wages, and wages are about 70% of an employee’s compensation—benefits being the other 30%. Different industries spend differently; for example, in service industries, you would expect these rates to be higher. In the HCC and UCPW case study, you can see that HCC is currently paying, on average, $112,106 a week in wages for 200 employees. That comes to over $5,829,500 a year. If you add in vacation time, you need to increase those amounts by $561 a week and around $500,000 a year for the 200 employees. As you can see, wages will be a major part of the bargaining process—particularly when UCPW

members are earning less than their counterparts and because they made a wage concession for the last contract. Management needs to be prepared to address a wage and benefit increase and have a counteroffer ready. The last issues in the modern workforce, unfortunately, are strikes, lockouts, and unfair labor practices. It is common to see organizations on strike for higher wages, increased benefits, or working without a contract. Unfortunately, strikes and lockouts damage customer relations and often an organization’s reputation. Strikes and lockouts also cost money on both sides. Employees are not paid during a strike or a lockout. Management projects the gross sales will be reduced by 1%, and material costs will increase by 1%. Union members often get a small stipend from the union during a strike, but it is considerably less than their usual wages. Management can hire replacement workers during a strike, but the replacement workers often come at a higher cost. As times change, so must the realization and expectations of an organization and its members change. The world is global, meaning competition is everywhere. If an organization wants to compete and be successful, it must produce a quality product, meet the needs of the customer, and be efficient in doing so. HCC and UCPW must come to an understanding through their negotiation process of what the strategic goal is for the organization and how they can get there together if the organization is going to survive. It will mean compromises on both sides. In the next unit, we will look at the compromise process a bit more.

Reference Holley, W. H., Jr., Ross, W. H., & Wolters, R. S. (2017). The labor relations process (11th ed.). Cengage

Learning. https://online.vitalsource.com/#/books/9781337025959

Organization budget example

HRM 6304, Labor Relations and Collective Bargaining 1

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

2. Examine the challenges for union members in the modern workplace. 2.1 Identify common factors that impact both unions and union members, to include

communication, health care, job changes, wages, strikes, lockouts, and unfair labor practices.

7. Analyze alternative dispute resolutions 7.1 Discuss the purpose and use of mediation and arbitration as options for resolution.

Required Unit Resources Chapter 7: Economic Issues, pp. 326–364 Chapter 8: Administrative Issues, pp. 388–420 Chapter 9: Resolving Negotiation (Interest) Disputes and the Use of Economic Pressure, pp. 438–475 Unit Lesson In this unit, we will be looking at the myriad of challenges for unions and employers in the modern workplace, including communication, strikes, health care, and other market factors. Finding meaningful resolutions is critical for success for all concerned. In the last unit, we looked at the old contract and the different areas that management and the union will want to bargain over before a new contract can be reached. Those areas included management rights, hours of work, grievances, wages, insurance, pension plans, holidays and miscellaneous days, vacation, sick leave, strikes and lockouts, facility upgrades, office staff, and shareholder concerns. The collective bargaining process will consist of offers and counteroffers, but the better supported those offers and counteroffers are, the more likely they will be to get serious consideration. Both teams need to look at what the trends are in the industry, the community, the state, and across the nation in terms of wages and benefits. We know, for example, that the United Chemical and Plastics Union (UCPW) workers were mindful of the state of the company and the economy during the last contract, and now the union members see the economy picking up, so they want to also see a raise in wages. Of course, they want an immediate jump to their counterparts in order to be equal or at least competitive. The company, on the other hand, has a $2 million investment to upgrade the equipment and facilities to be federally compliant. This is not to say that management does not want to increase wages; after all, they have a reputation of being an organization that cares about employees. Instead, the negotiation process comes to a matter of establishing priorities. Both sides have to work together to look at the reality of the situation and come to an agreement that both parties can live with. Let’s look at the challenges in the modern workforce. The first challenge is a lack of communication. Going back to our divorce analogy, a lack of communication is one of the main issues between couples. Couples often try therapy as a way to increase their communication skills. Lack of communication can also create problems in an organization, although an organization cannot typically go to therapy. In our case, there are some rumors floating around that have created some tension and anxiety among the union workers. For example, there are rumors that the company is going to cut benefits, reduce the workforce, and close the plant or, alternatively, move the plant overseas. Naturally, the members are concerned because some members have been at Harper Container Company (HCC) for a very long time, and no one wants to lose their

UNIT V STUDY GUIDE Administrative and Economic Considerations: The Use of Leverage

HRM 6304, Labor Relations and Collective Bargaining 2

UNIT x STUDY GUIDE Title

job. The union has already voted to go on strike if they do not get higher wages. Management, on the other hand, has not bothered to tell the union that they are required to upgrade the equipment to meet customer demands for higher quality, comply with federally mandated environmental regulations, and reduce production costs. Additionally, the upgrade will cost $2 million within the next 3 years and will mean a reduction in 30 jobs. Both sides need to communicate with each other as to the current state of affairs. Another challenge in the modern workplace is the increasing costs of health care. In the United States, health care is expensive and continues to rise each year. Consequently, health insurance plans are increasing. Employers can no longer afford to absorb all of the costs, so they often pass on some of those costs to the employees in terms of deductibles, copayments, and health maintenance organizations (HMOs). An HMO is a network of health providers that the employees use first and foremost. This network provides reduced rates for its members, which means lower out-of-pocket costs for employees. This is important if you have to meet a deductible before your insurance kicks in. For example, if I have to see a doctor and I have a $500 yearly deductible, I pay the first $500 of the bill and the insurance picks up the rest. This is different than a copay. A copay means I have a specified amount for the service rendered. For example, my current insurance has a $40 copay for a doctor’s visit and a $500 deductible. This means I pay $40 to see the doctor, and I will contribute the first $500 toward anything else (e.g., labs, shots, scans). Employees have access to medical benefits, but there are some out-of-pocket expenses. This was not the case before at HCC. During the last contract, the employees had a first-dollar (no deductible or copay) health benefits package. The current market is such that the company can no longer offer a first-dollar benefit package. The company cannot afford to bear the full health care costs when the projections are a 10% increase each year for the next 3 years. A change here will come at a cost to the employees. Also, the current proposal from management on health care insurance requires a 3-year commitment to the health care insurance provider, but the union only wants to see a 1-year contract. This will become a bargaining issue.

Another challenge in the modern workplace is a change in jobs. As more technology is entered into the workplace—especially in manufacturing facilities—the less need there is for employees. Often, technology either replaces employees, or the work becomes more efficient and the need for employees is reduced. The current market demands that organizations are competitive, and in order to be competitive and meet the needs of the customers in terms of quality, organizations must become more efficient and more effective. The HCC case explains that the plant has not had an upgrade in 10 years, and the last upgrade did not eliminate any jobs. Current technology is absolutely required. In our HCC and UCPW case, we know we now have foreign competition in our industry to contend with, and in order to be competitive, we have to be more efficient. However, technology comes with a price. It is estimated the once the equipment is upgraded, 30 piecework-molding jobs will be eliminated. At the same time, the plant will operate on a continuous 7-day, 24-hours-per-day schedule.

Management will want to see the elimination of the 30 jobs because they want to reduce labor costs by at least 4% each year over the next 3 years. The 30 jobs that will be eliminated by the equipment upgrades just happen to be the highest-paid workers in the union, earning $17.50 an hour. This will present a problem with the union. The union, on the other hand, wants to retain all workers at their current rate of pay—even if moved to another job. They do not want to see anyone laid off. The two teams will have to work together to agree on what can be done about the 30 positions eliminated and their rate of pay. Since the plant will now be able to operate 7 days a week instead of 5, there may be room to keep the 30 employees. The bargaining issue will become the rate of pay. Technology is a fact of life, and, as technology increases, jobs are unfortunately eliminated in most manufacturing plants.

Effects of technology

HRM 6304, Labor Relations and Collective Bargaining 3

UNIT x STUDY GUIDE Title

Wages also present a challenge in the modern workforce. People want to be paid a fair wage. States have a minimum wage established to ensure all wage earners are earning at least enough to survive. Also, people expect to see a pay increase as an organization starts to make money. Our case is no different. The union members want to be paid in such a way that is comparable to their counterparts in the plastics industry and in their community. Sometimes, an organization may pay a bit less but offer better benefits that are important to the employees. In our case, the union wants an increase in wages and an increase in benefits.

One of the main areas that all collective bargaining teams address is that of wages and the different elements that are a part of a pay package: benefits. As you may recall, wages are a part of the mandatory bargaining items. Pay and benefit costs are typically a large part of any organization’s budget. For example, an average organization can count on spending between 20–30% of its gross revenue on wages, and wages are about 70% of an employee’s compensation—benefits being the other 30%. Different industries spend differently; for example, in service industries, you would expect these rates to be higher. In the HCC and UCPW case study, you can see that HCC is currently paying, on average, $112,106 a week in wages for 200 employees. That comes to over $5,829,500 a year. If you add in vacation time, you need to increase those amounts by $561 a week and around $500,000 a year for the 200 employees. As you can see, wages will be a major part of the bargaining process—particularly when UCPW

members are earning less than their counterparts and because they made a wage concession for the last contract. Management needs to be prepared to address a wage and benefit increase and have a counteroffer ready. The last issues in the modern workforce, unfortunately, are strikes, lockouts, and unfair labor practices. It is common to see organizations on strike for higher wages, increased benefits, or working without a contract. Unfortunately, strikes and lockouts damage customer relations and often an organization’s reputation. Strikes and lockouts also cost money on both sides. Employees are not paid during a strike or a lockout. Management projects the gross sales will be reduced by 1%, and material costs will increase by 1%. Union members often get a small stipend from the union during a strike, but it is considerably less than their usual wages. Management can hire replacement workers during a strike, but the replacement workers often come at a higher cost. As times change, so must the realization and expectations of an organization and its members change. The world is global, meaning competition is everywhere. If an organization wants to compete and be successful, it must produce a quality product, meet the needs of the customer, and be efficient in doing so. HCC and UCPW must come to an understanding through their negotiation process of what the strategic goal is for the organization and how they can get there together if the organization is going to survive. It will mean compromises on both sides. In the next unit, we will look at the compromise process a bit more.

Reference Holley, W. H., Jr., Ross, W. H., & Wolters, R. S. (2017). The labor relations process (11th ed.). Cengage

Learning. https://online.vitalsource.com/#/books/9781337025959

Organization budget example