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15 16

PA R

T F

IV E

Meeting Other HR Goals

Chapter

Collective Bargaining and Labor Relations

Chapter

Managing Human Resources Globally

Chapter

Creating and Maintaining High-Performance Organizations

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chapter fourteen

Collective Bargaining and Labor Relations

What Do I Need to Know? After reading this chapter, you should be able to:

LO1 Define unions and labor relations and their role in organizations.

LO2 Identify the labor relations goals of management, labor unions, and society.

LO3 Summarize laws and regulations that affect labor relations.

LO4 Describe the union organizing process.

LO5 Explain how management and unions negotiate contracts.

LO6 Summarize the practice of contract administration.

LO7 Describe more cooperative approaches to labor-management relations.

Introduction The costs of health care are skyrocketing. As we dis- cussed in the previous chapter, individuals, insur- ance companies, and government agencies that pick up the tab are crying out that mounting increases must be slowed. So health care providers are look- ing for ways to improve efficiency. At many hospi- tals, cost control involves asking fewer workers to do more. Nurses and other workers are expected to handle more patients, perform more tasks, and work more hours. Often, health professionals are troubled by these changes. They worry that they will burn out and that patient care will suffer. Or they worry that their employer will control costs by laying them off or refusing pay increases. These changes and pressures have led some health care workers to join labor unions. Recently, union membership among professional and technical health care workers, such as registered nurses and laboratory technologists, in- creased by more than 10 percent. 1 The presence of unions at a hospital changes some aspects of human resource management by di- recting more attention to the interests of employees as a group. In general, employees and employers share the same interests. They both benefit when the organization is strong and growing, providing employees with jobs and employers with profits. But although the interests of employers and employees overlap, they obviously are not identical. In the case of pay, workers benefit from higher pay, but high pay cuts into the organization’s profits, unless pay in- creases are associated with higher productivity or better customer service. Workers may negotiate dif- ferences with their employers individually, or they may form unions to negotiate on their behalf. This chapter explores human resource activities in orga- nizations where employees belong to unions or where employees are seeking to organize unions. We begin by formally defining unions and labor relations, and then describe the scope and impact of union activity. We next summarize government laws and regulations affecting unions and labor re- lations. The following three sections detail types

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CHAPTER 14 Collective Bargaining and Labor Relations 401

of activities involving unions: union organizing, contract negotiation, and contract administration. Finally, we identify ways in which unions and management are working together in arrangements that are more cooperative than the traditional labor-management relationship.

Role of Unions and Labor Relations In the United States today, most workers act as individuals to select jobs that are ac- ceptable to them and to negotiate pay, benefits, flexible hours, and other work condi- tions. Especially when there is stiff competition for labor and employees have hard-to-replace skills, this arrangement produces satisfactory results for most employ- ees. At times, however, workers have believed their needs and interests do not receive enough consideration from management. One response by workers is to act collec- tively by forming and joining labor unions , organizations formed for the purpose of representing their members’ interests and resolving conflicts with employers. Unions have a role because some degree of conflict is inevitable between workers and management. 2 As we commented earlier, for example, managers can increase profits by lowering workers’ pay, but workers benefit in the short term if lower profits result because their pay is higher. Still, this type of conflict is more complex than a simple trade-off, such as wages versus profits. Rising profits can help employees by driving up profit sharing or other benefits, and falling profits can result in layoffs and a lack of investment. Although employers can use programs like profit sharing to help align employee interests with their own, some remaining divergence of interests is in- evitable. Labor unions represent worker interests and the collective bargaining pro- cess provides a way to manage the conflict. In other words, through systems for hearing complaints and negotiating labor contracts, unions and managers resolve conflicts be- tween employers and employees. As unionization of workers became more common, universities developed training in how to manage union-management interactions. 3 This specialty, called labor rela- tions , emphasizes skills that managers and union leaders can use to foster effective labor-management cooperation, minimize costly forms of conflict (such as strikes), and seek win-win solutions to disagreements. Labor relations involves three levels of decisions: 4

1. Labor relations strategy —For management, the decision involves whether the orga- nization will work with unions or develop (or maintain) nonunion operations. This decision is influenced by outside forces such as public opinion and competition. For unions, the decision involves whether to fight changes in how unions relate to the organization or accept new kinds of labor-management relationships.

2. Negotiating contracts —As we will describe later in the chapter, contract negotia- tions in a union setting involve decisions about pay structure, job security, work rules, workplace safety, and many other issues. These decisions affect workers’ and the employer’s situation for the term of the contract.

3. Administering contracts —These decisions involve day-to-day activities in which union members and the organization’s managers may have disagreements. Issues include complaints of work rules being violated or workers being treated unfairly in particular situations. A formal grievance procedure is typically used to resolve these issues.

Later sections in this chapter describe how managers and unions carry out the ac- tivities connected with these levels of decisions, as well as the goals and legal con- straints affecting these activities.

LO1 Define unions and labor relations and their role in organizations.

unions Organizations formed for the purpose of representing their members’ interests in dealing with employers.

labor relations Field that emphasizes skills managers and union leaders can use to minimize costly forms of conflict (such as strikes) and seek win-win solutions to disagreements.

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402 PART 5 Meeting Other HR Goals

National and International Unions

Most union members belong to a national or international union. Figure 14.1 shows the membership of the 10 largest national unions in the United States. Half of these have memberships of over a million workers.

These unions may be either craft or industrial unions. The members of a craft union all have a particular skill or occupation. Examples include the International Brotherhood of Electrical Workers for electricians and the United Brotherhood of Carpenters and Joiners of America for carpenters. Craft unions are often responsible for training their members through apprenticeships and for supplying craft workers to employers. For example, an employer would send requests for carpenters to the union hiring hall, which would decide which carpenters to send out. In this way, craft workers may work for many employers over time but have a constant link to the union. A craft union’s bargaining power depends greatly on its control over the supply of its workers.

In contrast, industrial unions consist of members who are linked by their work in a particular industry. Examples include the United Steelworkers of America and the Communication Workers of America. Typically, an industrial union represents many different occupations. Membership in the union is the result of working for a particular employer in the industry. Changing employers is less common than it is among craft workers, and employees who change employers remain members of the same union only if they happen to move to other employers covered by that union. Another difference is

craft union Labor union whose members all have a particular skill or occupation.

industrial union Labor union whose members are linked by their work in a particular industry.

Figure 14.1

10 Largest Unions in the United States

0.0

Service Employees International Union

National Education Association

United Food and Commercial Workers International Union

International Brotherhood of Teamsters

International Brotherhood of Electrical Workers

American Federation of State, County and Municipal Employees

Laborers’ International Union of North America

United Automobile, Aerospace and Agricultural Implement

Workers of America International Association of Machinists

and Aerospace Workers

American Federation of Teachers

0.5 1.0 1.5 2.0 2.5 3.0 Number of Members (Millions)

SOURCE: C. D. Gifford, Directory of U.S. Labor Organizations (Washington, DC: Bureau of National Affairs, 2006).

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CHAPTER 14 Collective Bargaining and Labor Relations 403

that whereas a craft union may restrict the number of skilled craftsmen—say, carpenters—to maintain higher wages, industrial unions try to organize as many employees in as wide a range of skills as possible. Most national unions are affiliated with the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) . The AFL-CIO is not a labor union but an asso- ciation that seeks to advance the shared interests of its member unions at the national level, much as the Chamber of Commerce and the National Association of Manufacturers do for their member employers. Approximately 55 national and international unions are affiliated with the AFL-CIO. An im- portant responsibility of the AFL-CIO is to represent labor’s interests in public policy issues such as labor law, economic policy, and occupational safety and health. The organization also provides information and analysis that member unions can use in their activities. In 2005, several unions broke away from the AFL-CIO to form an alliance called Change to Win. This group includes seven unions representing a membership of 5 to 6 million workers. Since the split, both groups have increased national unions’ focus on strategy and organizing. 5

Local Unions

Most national unions consist of multiple local units. Even when a national union plays the most critical role in negotiating the terms of a collective bargaining con- tract, negotiation occurs at the local level for work rules and other issues that are lo- cally determined. In addition, administration of the contract largely takes place at the local union level. As a result, most day-to-day interaction between labor and manage- ment involves the local union. Membership in the local union depends on the type of union. For an industrial union, the local may correspond to a single large facility or to a number of small facili- ties. In a craft union, the local may cover a city or a region. Typically, the local union elects officers, such as president, vice president, and treasurer. The officers may be responsible for contract negotiation, or the local may form a bargaining committee for that purpose. When the union is engaged in bargaining, the national union provides help, including background data about other settlements, technical advice, and the leadership of a representative from the national office. Individual members participate in local unions in various ways. At meetings of the local union, they elect officials and vote on resolutions to strike. Most of work- ers’ contact is with the union steward , an employee elected by union members to represent them in ensuring that the terms of the contract are enforced. The union steward helps to investigate complaints and represents employees to supervisors and other managers when employees file grievances alleging contract violations. 6 When the union deals with several employers, as in the case of a craft union, a business representative performs some of the same functions as a union steward. Because of union stewards’ and business representatives’ close involvement with employees, it is to management’s advantage to cultivate positive working relation- ships with them.

American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) An association that seeks to advance the shared interests of its member unions at the national level.

union steward An employee elected by union members to represent them in ensuring that the terms of the labor contract are enforced.

Andrew Stern is president of the Service Employees International Union, the fastest-growing union in North America. He led the SEIU and six other unions in breaking away from the AFL-CIO to form Change to Win, a federation that emphasizes representation of the many workers in the high-growth service sector of the economy.

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404 PART 5 Meeting Other HR Goals

Trends in Union Membership Union membership in the United States peaked in the 1950s, reaching over one- third of employees. Since then, the share of employees who belong to unions has fallen. It now stands at 12.1 percent overall and 7.5 percent of private-sector employ- ment. 7 As Figure 14.2 indicates, union membership has fallen steadily since the 1980s. Until a few years ago, the decline mostly affected the private sector, but in 2007, a slight uptick in union membership for health care, construction, and education held overall union membership steady. The decline in union membership has been attributed to several factors: 8

• Change in the structure of the economy —Much recent job growth has occurred among women and youth in the service sector of the economy, while union strength has traditionally been among urban blue-collar workers, especially middle-aged work- ers. Women are less likely than men to belong to unions, and services industries such as finance, insurance, and real estate have lower union representation than manufacturing. Also, much business growth has been in the South, where workers are less likely to join unions. 9

• Management efforts to control costs —On average, unionized workers receive higher pay than their nonunionized counterparts, and the pressure is greater because of in- ternational competition. In the past, union membership across an industry such as

Figure 14.2

Union Membership Density among U.S. Wage and Salary Workers, 1973–2007

40%

0 73 74 75 76

Year 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

P e rc

e n ta

g e U

n io

n M

e m

b e rs

h ip

Public

Total

Private

Private Public Total a Percentage of total, private-sector, and public-sector wage and salary workers who are union members. Beginning in 1977, workers belonging to “an employee association similar to a union” are included as members.

SOURCE: Data for 1973–2001 from B. T. Hirsch and D. A. MacPherson, Union Membership and Earnings Data Book 2001 (Washington, DC: Bureau of National Affairs, 2002), using data from U.S. Current Population Surveys. Data for 2002 through 2007 from Bureau of Labor Statistics, “Union Affiliation Data from the Current Population Survey,” http://data.bls.gov, accessed March 10, 2008.

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CHAPTER 14 Collective Bargaining and Labor Relations 405

automobiles or steel resulted in similar wages and work requirements for all com- petitors. Today, U.S. producers must compete with companies that have entirely different pay scales and work rules, often placing the U.S. companies at a disadvantage.

• Human resource practices —Competition for scarce human resources can lead em- ployers to offer much of what employees traditionally sought through union membership.

• Government regulation —Stricter regulation in such areas as workplace safety and equal employment opportunity leaves fewer areas in which unions can show an ad- vantage over what employers must already offer.

As Figure 14.3 indicates, the percentage of U.S. workers who belong to unions is lower than in many other countries. More dramatic is the difference in “coverage”— the percentage of employees whose terms and conditions of employment are governed by a union contract, whether or not the employees are technically union members. In Western Europe, it is common to have coverage rates of 80 to 90 percent, so the influ- ence of labor unions far outstrips what membership levels would imply. 10 Also, em- ployees in Western Europe tend to have a larger formal role in decision making than in the United States. This role, including worker representatives on boards of direc- tors, is often mandated by the government. But as markets become more and more global, pressure to cut labor costs and increase productivity is likely to be stronger in every country. Unless unions can help companies improve productivity or organize new production facilities opened in lower-wage countries, union influence may de- cline in countries where it is now strong.

0% 10% 20% 30% 50% 70% 90%40% 60% 80% 100%

United States Membership Coverage

Canada

Japan

Korea

France

United Kingdom

SOURCE: J. Visser, “Union Membership Statistics in 24 Countries,” Monthly Labor Review, January 2006, pp. 38–49.

Figure 14.3

Union Membership Rates and Coverage in Selected Countries

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Although union members are a smaller share of the U.S. workforce, they are a sig- nificant part of many industries’ labor markets. Along with strength in numbers, large unions have strength in dollars. Union retirement funds, taken together, are huge. Unions try to use their investment decisions in ways that influence businesses. The “ Did You Know? ” box presents some statistics on union members.

Unions in Government

Unlike union membership for workers in businesses, union membership among gov- ernment workers has remained strong. Union membership in the public sector grew during the 1960s and 1970s and has remained steady ever since. Over one-third of government employees are union members, and a larger share are covered by collec- tive bargaining agreements. One reason for this strength is that government regula- tions and laws support the right of government workers to organize. In 1962 Executive Order 10988 established collective bargaining rights for federal employees. By the end of the 1960s, most states had passed similar laws. An interesting aspect of union growth among government workers is that much of it has occurred in the service industry and among white-collar employees—groups that have been viewed as difficult to organize. The American Federation of State, County and Municipal Employees (AFSCME) has about 1.4 million members. Among

406

Did You Know? Many Union Workers Hold Government Jobs

Compared with the overall U.S. workforce, union workers are more likely to have a government job, to be 35 or older, and to work

full-time. Union workers also earn more on average than nonunion workers.

Source: “Profile of Union Workers,” Business- Week, Images, December 3, 2007, http://images. businessweek.com, citing data from Bureau of Labor Statistics.

Total Workforce Union Members

20 30 40 500 10

In Government

Jobs

48.0%

16.1%

24.5%

35.1%

7.1%

14.0%

$16.99

$11.76

Workers Under 35

Average Hourly Wage

In Part-Time Jobs*

*Hourly Wage Workers

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CHAPTER 14 Collective Bargaining and Labor Relations 407

them are nurses, park rangers, school librarians, corrections officers, and many work- ers in clerical and other white-collar occupations. 11 Labor relations with government workers is different in some respects, such as re- garding the right to strike. Strikes are illegal for federal workers and for state workers in most states. At the local level, all states prohibit strikes by police (Hawaii being a partial exception) and firefighters (Idaho being the exception). Teachers and state employees are somewhat more likely to have the right to strike, depending on the state. Legal or not, strikes by government workers do occur. Of the 39 strikes involv- ing 1,000 or more workers in 2000, eight involved workers in state and local government.

Impact of Unions on Company Performance

Organizations are concerned about whether union organizing and bargaining will hurt their performance, in particular, unions’ impact on productivity, profits, and stock performance. Researchers have studied the general relationship between unionization and these performance measures. Through skillful labor relations, organizations can positively influence outcomes. There has been much debate regarding the effects of unions on productivity. 12 One view is that unions decrease productivity because of work rules and limits on work- loads set by union contracts and production lost to such union actions as strikes and work slowdowns. At the same time, unions can have positive effects on productivity. 13 They can reduce turnover by giving employees a route for resolving problems. 14 Unions emphasize pay systems based on seniority, which remove incentives for em- ployees to compete rather than cooperate. The introduction of a union also may force an employer to improve its management practices and pay greater attention to em- ployee ideas. Although there is evidence that unions have both positive and negative effects on productivity, most studies have found that union workers are more productive than nonunion workers. Still, questions remain. Are highly productive workers more likely to form unions, or does a union make workers more productive? The answer is un- clear. In theory, if unions caused greater productivity, we would expect union mem- bership to be rising, not falling as it has been. 15 Even if unions do raise productivity, a company’s profits and stock performance may still suffer if unions raise wage and benefits costs by more than the productivity gain. On average, union members receive higher wages and more generous benefits than nonunion workers, and evidence shows that unions have a large negative effect on profits. Also, union coverage tends to decline faster in companies with a lower return to shareholders. 16 In summary, companies wishing to become more competitive must continually monitor their labor relations strategy. The studies tend to look at the average effects of unions, not at individual companies or innovative labor relations. Some organi- zations excel at labor relations, and some have worked with unions to meet business needs. For example, even though U.S. manufac- turers have outsourced or automated many jobs, a study by the National Association of Manufacturers found that 8 out of 10 had at least a moderate shortage of production workers, machinists, and craft workers. Many of these companies traditionally

Harley-Davidson and the International Association of Machinists and Aerospace Workers have cooperated to produce good results. In general, though, companies wishing to become more competitive need to continually monitor their labor relations strategies.

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408 PART 5 Meeting Other HR Goals

depended on unions to recruit and train new workers through apprenticeship programs. Some still do. At U.S. Steel, the United Steelworkers of America trains apprentices in trades including metalworking. 17

Goals of Management, Labor Unions, and Society Resolving conflicts in a positive way is usually easiest when the parties involved un- derstand each other’s goals. Although individual cases vary, we can draw some general conclusions about the goals of labor unions and management. Society, too, has goals for labor and business, given form in the laws regulating labor relations.

Management Goals

Management goals are to increase the organization’s profits. Managers tend to prefer options that lower costs and raise output. When deciding whether to discourage em- ployees from forming a union, a concern is that a union will create higher costs in wages and benefits, as well as raise the risk of work stoppages. Managers may also fear that a union will make managers and workers into adversaries or limit management’s discretion in making business and employment decisions. When an employer has recognized a union, management’s goals continue to em- phasize restraining costs and improving output. Managers continue to prefer to keep the organization’s operations flexible, so they can adjust activities to meet competi- tive challenges and customer demands. Therefore, in their labor relations managers prefer to limit increases in wages and benefits and to retain as much control as they can over work rules and schedules.

Labor Union Goals

In general, labor unions have the goals of obtaining pay and working conditions that satisfy their members and of giving members a voice in decisions that affect them. Traditionally, they obtain these goals by gaining power in numbers. The more workers who belong to a union, the greater the union’s power. More members translates into greater ability to halt or disrupt production. Larger unions also have greater financial resources for continuing a strike; the union can help to make up for the wages the workers lose during a strike. The threat of a long strike—stated or implied—can make an employer more willing to meet the union’s demands. As we noted earlier, union membership is indeed linked to better compensation. In 2007, private-sector unionized workers received, on average, wages 30 percent higher than nonunion workers. 18 Union membership has an even greater effect on benefits packages. Total compensation (pay plus benefits) was 43 percent higher for union members in 2007. Taking into account other influences, such as the greater ease with which unions are able to organize relatively highly paid, productive workers, research- ers estimate that the total “union effect” on wages is about 10 to 15 percent. 19 In other words a union worker would earn $1.10 to $1.15 for every dollar earned by a non- union worker. Unions typically want to influence the way pay and promotions are determined. Unlike management, which tries to consider employees as individuals so that pay and promotion decisions relate to performance differences, unions try to build group soli- darity and avoid possible arbitrary treatment of employees. To do so, unions focus on equal pay for equal work. They try to have any pay differences based on seniority, on

LO2 Identify the labor relations goals of management, labor unions, and society.

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CHAPTER 14 Collective Bargaining and Labor Relations 409

the grounds that this measure is more objective than performance evaluations. As a result, where workers are represented by a union, it is common for all employees in a particular job classification to be paid at the same rate. The survival and security of a union depend on its ability to ensure a regular flow of new members and member dues to support the services it provides. Therefore, unions typically place high priority on negotiating two types of contract provisions with an employer that are critical to a union’s security and viability: checkoff provi- sions and provisions relating to union membership or contribution. Under a checkoff provision , the employer, on behalf of the union, automatically deducts union dues from employees’ paychecks. Security provisions related to union membership are closed shop, union shop, agency shop, and maintenance of membership. The strongest union security arrangement is a closed shop , under which a person must be a union member before being hired. Under the National Labor Relations Act, discussed later in this chapter, closed shops are illegal. A legal membership ar- rangement that supports the goals of labor unions is the union shop , an arrangement that requires an employee to join the union within a certain time (30 days) after be- ginning employment. A similar alternative is the agency shop , which requires the payment of union dues but not union membership. Maintenance of membership rules do not require union membership but do require that employees who join the union remain members for a certain period of time, such as the length of the contract. As we will discuss later in the chapter, some states forbid union shops, agency shops, and maintenance of membership. All these provisions are ways to address unions’ concern about “free riders”—em- ployees who benefit from union activities without belonging to a union. By law, all members of a bargaining unit, whether union members or not, must be represented by the union. If the union must offer services to all bargaining unit members but some of them are not dues-paying union members, the union may not have enough financial resources to operate successfully.

Societal Goals

The activities of unions and management take place within the context of society, with society’s values driving the laws and regulations that affect labor relations. As long ago as the late 1800s and early 1900s, industrial relations scholars saw unions as a way to make up for individual employees’ limited bargaining power. 20 At that time, clashes between workers and management could be violent, and many people hoped that unions would replace the violence with negotiation. Since then, observers have expressed concern that unions in certain industries have become too strong, achiev- ing their goals at the expense of employers’ ability to compete or meet other objec- tives. But even Senator Orrin Hatch, described by BusinessWeek as “labor’s archrival on Capitol Hill,” has spoken of a need for unions:

There are always going to be people who take advantage of workers. Unions even that out, to their credit. We need them to level the field between labor and management. If you didn’t have unions, it would be very difficult for even enlightened employers not to take advantage of work- ers on wages and working conditions, because of [competition from less-enlightened] rivals. I’m among the first to say I believe in unions. 21

Senator Hatch’s statement implies that society’s goal for unions is to ensure that workers have a voice in how they are treated by their employers. As we will see in the next section, this view has produced a set of laws and regulations intended to give workers the right to join unions if they so wish.

checkoff provision Contract provision un- der which the employer, on behalf of the union, automatically deducts union dues from em- ployees’ paychecks.

closed shop Union security arrange- ment under which a person must be a union member before being hired; illegal for those covered by the National Labor Relations Act.

union shop Union security arrangement that requires employees to join the union within a certain amount of time (30 days) after begin- ning employment.

agency shop Union security arrangement that requires the payment of union dues but not union membership.

maintenance of membership Union security rules not requiring union membership but requiring that employ- ees who join the union remain members for a certain period of time.

checkoff provision Contract provision un- der which the employer, on behalf of the union, automatically deducts union dues from em- ployees’ paychecks.

closed shop Union security arrange- ment under which a person must be a union member before being hired; illegal for those covered by the National Labor Relations Act.

union shop Union security arrangement that requires employees to join the union within a certain amount of time (30 days) after begin- ning employment.

agency shop Union security arrangement that requires the payment of union dues but not union membership.

maintenance of membership Union security rules not requiring union membership but requiring that employ- ees who join the union remain members for a certain period of time.

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410 PART 5 Meeting Other HR Goals

Laws and Regulations Affecting

Labor Relations The laws and regulations pertaining to labor relations affect unions’ size and bargain- ing power, so they significantly affect the degree to which unions, management, and society achieve their varied goals. These laws and regulations set limits on union structure and administration and the ways in which unions and management interact.

National Labor Relations Act (NLRA)

Perhaps the most dramatic example of labor laws’ influence is the 1935 passage of the Wagner Act (also known as the National Labor Relations Act , or NLRA), which actively supported collective bargaining. After Congress passed the NLRA, union membership in the United States nearly tripled, from 3 million in 1933 to 8.8 million (19.2 percent of employment) in 1939. 22 Before the 1930s, the U.S. legal system was generally hostile to unions. The courts tended to view unions as coercive organizations that hindered free trade. Unions’ focus on collective voice and collective action (such as strikes and boycotts) did not fit well with the U.S. emphasis on capitalism, individualism, freedom of contract, and property rights. 23 Then the Great Depression of the 1930s shifted public atti- tudes toward business and the free-enterprise system. Unemployment rates as high as 25 percent and a steep fall in production between 1929 and 1933 focused attention on employee rights and the shortcomings of the economic system of the time. The nation was in crisis, and President Franklin Roosevelt responded dramatically with the New Deal. On the labor front, the 1935 NLRA ushered in an era of public policy for labor unions, enshrining collective bargaining as the preferred way to settle labor- management disputes. Section 7 of the NLRA sets out the rights of employees, including the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted ac- tivities for the purpose of collective bargaining.” 24 Employees also have the right to refrain from these activities, unless union membership is a condition of employment. The following activities are among those protected under the NLRA:

• Union organizing. • Joining a union, whether recognized by the employer or not. • Going out on strike to secure better working conditions. • Refraining from activity on behalf of the union.

Most employees in the private sector are covered by the NLRA. However, workers employed under the following conditions are not covered: 25

• Employed as a supervisor. • Employed by a parent or spouse. • Employed as an independent contractor. • Employed in the domestic service of any person or family in a home. • Employed as agricultural laborers. • Employed by an employer subject to the Railway Labor Act. • Employed by a federal, state, or local government. • Employed by any other person who is not an employer as defined in the NLRA.

LO3 Summarize laws and regulations that affect labor relations.

National Labor Relations Act (NLRA) Federal law that supports collective bargaining and sets out the rights of employees to form unions.

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State or local laws may provide additional coverage. For example, California’s 1975 Agricultural Labor Relations Act covers agricultural workers in that state. In Section 8(a), the NLRA prohibits certain activities by employers as unfair labor practices. In general, employers may not interfere with, restrain, or coerce employees in exercising their rights to join or assist a labor organization or to refrain from such activities. Employers may not dominate or interfere with the formation or activities of a labor union. They may not discriminate in any aspect of employment that attempts to encourage or discourage union activity, nor may they discriminate against employ- ees for providing testimony related to enforcement of the NLRA. Finally, employers may not refuse to bargain collectively with a labor organization that has standing un- der the act. For more guidance in complying with the NLRA, see the examples in the “ HR How To ” box. When employers or unions violate the NLRA, remedies typically include ordering that unfair labor practices stop. Employers may be required to rehire workers, with or without back pay. The NLRA is not a criminal law, and violators may not be assigned punitive damages (fines to punish rather than merely make up for the harm done).

411

AVOIDING UNFAIR LABOR PRACTICES

HR How To

The National Labor Relations Act prohibits employers and unions from engaging in unfair labor practices. For employers, this means they must not interfere with employees’ decisions about whether to join a union and en- gage in union-related activities. Employers may not discriminate against employees for being in- volved in union activities or testi- fying in court about actions under the NLRA. Here are some specific examples of unfair labor practices that employers must avoid:

• Threatening employees with loss of their jobs or benefits if they join or vote for a union.

• Threatening to close down a plant if it is organized by a union.

• Questioning employees about their union membership or ac- tivities in a way that restrains or coerces them.

• Spying or pretending to spy on union meetings.

• Granting wage increases timed to discourage employees from forming or joining a union.

• Taking an active part in orga- nizing a union or committee to represent employees.

• Providing preferential treat- ment or aid to one of several unions trying to organize employees.

• Discharging employees for urging other employees to join a union.

• Refusing to hire applicants because they are union members.

• Refusing to reinstate workers when job openings occur, on the grounds that the workers participated in a lawful strike.

• Ending operations at one facility and opening the same operations at another facility with new employees because employees at the first joined a union.

• Demoting or firing employees for filing an unfair labor prac- tice complaint or testifying at an NLRB meeting.

• Refusing to meet with employ- ees’ representatives because the employees are on strike.

• Refusing to supply the em- ployees’ representative with cost and other data concerning a group insurance plan cover- ing employees.

• Announcing a wage increase without consulting the em- ployees’ representative.

• Failing to bargain about the effects of a decision to close one of the employer’s facilities.

Source: National Labor Relations Board, Basic Guide to the Law and Procedures under the Na- tional Labor Relations Act (Washington, DC: U.S. Government Printing Office, 1997); and National Labor Relations Board, “The National Labor Relations Board and You: Unfair Labor Practices,” www.nlrb.gov, accessed March 17, 2008.

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412 PART 5 Meeting Other HR Goals

Laws Amending the NLRA

Originally, the NLRA did not list any unfair labor practices by unions. In later amend- ments to the NLRA—the Taft-Hartley Act of 1947 and the Landrum-Griffin Act of 1959—Congress established some restrictions on union practices deemed unfair to employers and union members. Under the Taft-Hartley Act, unions may not restrain employers through actions such as the following: 26

• Mass picketing in such numbers that nonstriking employees physically cannot enter the workplace.

• Engaging in violent acts in connection with a strike. • Threatening employees with physical injury or job loss if they do not support union

activities. • During contract negotiations, insisting on illegal provisions, provisions that the

employer may hire only workers who are union members or “satisfactory” to the union, or working conditions to be determined by a group to which the employer does not belong.

• Terminating an existing contract and striking for a new one without notifying the employer, the Federal Mediation and Conciliation Service, and the state media- tion service (where one exists).

The Taft-Hartley Act also allows the states to pass so-called right-to-work laws , which make union shops, maintenance of membership, and agency shops illegal. The idea behind such laws is that requiring union membership or the payment of union dues restricts the employees’ right to freedom of association. In other words, employ- ees should be free to choose whether they join a union or other group. Of course, unions have a different point of view. The union perspective is that unions provide services to all members of a bargaining unit (such as all of a company’s workers), and all members who receive the benefits of a union should pay union dues. Figure 14.4 indicates which states currently have right-to-work laws. The Landrum-Griffin Act regulates unions’ actions with regard to their members, including financial disclosure and the conduct of elections. This law establishes and

right-to-work laws State laws that make union shops, mainte- nance of membership, and agency shops illegal.

SOURCE: National Right to Work Legal Defense Foundation, “Right to Work States,” www.nrtw.org, accessed March 17, 2008.

Figure 14.4

States with Right-to- Work Laws

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protects rights of union members. These include the right to nominate candidates for union office, participate in union meetings and secret-ballot elections, and examine unions’ financial records.

National Labor Relations Board (NLRB)

Enforcement of the NLRA rests with the National Labor Relations Board (NLRB) . This federal government agency consists of a five-member board, the general counsel, and 52 regional and other field offices. Because the NLRB is a federal agency, its en- forcement actions are limited to companies that have an impact on interstate com- merce, but as a practical matter, this extends to all but purely local businesses. For federal government workers under the Civil Service Reform Act of 1978, Title VII, the Federal Labor Relations Authority has a role similar to that of the NLRB. Many states have similar agencies to administer their laws governing state and local govern- ment workers. The NLRB has two major functions: to conduct and certify representation elec- tions and to prevent unfair labor practices. It does not initiate either of these actions but responds to requests for action. The HR Oops! box shows how managers’ comments and actions can considered by the NLRB as illegally interfering with union organizing.

Representation Elections The NLRB is responsible for ensuring that the organizing process follows certain steps, described in the next section. Depending on the response to organizing efforts, the NLRB conducts elections. When a majority of workers vote in favor of a union, the

National Labor Relations Board (NLRB) Federal government agency that enforces the NLRA by conduct- ing and certifying representation elections and investigating unfair labor practices.

413

HR Oops! Thou Shalt Not Threaten

A meatpacking company and a steel fabrication company re- cently ran afoul of the NLRB’s requirement that employers may not interfere with union organiz- ing by threatening or coercing employees. According to court documents, the problem at the meatpacker started when a man- ager saw a newspaper photo of the employee at a union rally. The manager commented to him that his presence at the rally meant he would not get a promotion. Al- though the manager later ex- plained that he had intended his remark as a joke, the federal court failed to see the humor and required the company to post a

notice saying it would not inter- fere with or coerce employees who are exercising their rights to organize. At the steel company, the only two members of a facility’s main- tenance department got involved in a unionization effort. The shop foreman asked one of the mainte- nance workers if he thought the employees were trying to orga- nize. When the employee said yes, the foreman said he would make the employee a manager so he couldn’t be involved. He re- quired the employee to write up disciplinary reports on two of his co-workers—a supervisory task. Later that day, the maintenance

worker was fired. Again, the fed- eral court held that these actions amounted to unlawful coercion.

Sources: Venita Jenkins, “Ruling Forbids Use of Threats,” Fayetteville (N.C.) Observer, March 5, 2008, downloaded from General Reference Center Gold, http://find.galegroup.com; and Mary Kathryn Zachary, “Labor Law: Union Organizing Efforts Fraught with Legal Pitfalls,” Supervision, April 2007, http://find.galegroup.com.

Questions 1. Do you agree that a comment

meant as a joke can feel intim- idating to an employee?

2. How can HRM professionals help supervisors avoid missteps such as the ones described here?

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414 PART 5 Meeting Other HR Goals

NLRB certifies it as the exclusive representative of a group of employees. The NLRB also conducts elections to decertify unions, following the same process as for represen- tation elections. The NLRB is also responsible for determining the appropriate bargaining unit and the employees who are eligible to participate in organizing activities. As we stated earlier, bargaining units may not include certain types of employees, such as agricul- tural laborers, independent contractors, supervisors, and managers. Beyond this, the NLRB attempts to group together employees who have a community of interest in their wages, hours, and working conditions. A unit may cover employees in one facil- ity or multiple facilities within a single employer, or the unit may cover multiple em- ployers. In general, employees on the payroll just before the ordering of an election are eligible to vote, although this rule is modified in some cases, for example, when employment in the industry is irregular. Most employees who are on strike and who have been replaced by other employees are eligible to vote in an election (such as a decertification election) that occurs within 12 months of the onset of the strike.

Prevention of Unfair Labor Practices The handling of complaints regarding unfair labor practices begins when someone files a charge. The deadline for filing a charge is six months after the alleged unfair practice. All parties must be served with a copy of the charge. (Registered mail is rec- ommended.) The charge is investigated by a regional office. If, after investigating, the NLRB finds the charge has merit and issues a complaint, two actions are possible. The NLRB may defer to a grievance procedure agreed on by the employer and the union; grievances are discussed later in this chapter. Or a hearing may be held before an administrative law judge. The judge makes a recommendation, which either party may appeal. The NLRB has the authority to issue cease-and-desist orders to halt unfair labor practices. It also can order the employer to reinstate workers, with or without back pay. The NLRB can set aside the results of an election if it believes either the union or the employer has created “an atmosphere of confusion or fear of reprisals.” 27 If an employer or union refuses to comply with an NLRB order, the board has the authority to petition the U.S. Court of Appeals. The court may enforce the order, recommend it to the NLRB for modification, change the order itself, or set it aside altogether.

Union Organizing Unions begin their involvement with an organization’s employees by conducting an organizing campaign. To meet its objectives, a union needs to convince a majority of workers that they should receive better pay or other employment conditions and that the union will help them do so. The employer’s objectives will depend on its strategy— whether it seeks to work with a union or convince employees that they are better off without union representation.

The Process of Organizing

The organizing process begins with authorization cards, such as the example shown in Figure 14.5 . Union representatives make contact with employees, present their mes- sage about the union, and invite them to sign an authorization card. For the organiza- tion process to continue, at least 30 percent of the employees must sign an authorization card.

LO4 Describe the union organizing process.

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CHAPTER 14 Collective Bargaining and Labor Relations 415

If over half the employees sign an authorization card, the union may request that the employer voluntarily recognize the union. If the employer agrees, the NLRB certi- fies the union as the exclusive representative of employees. If the employer refuses, or if only 30 to 50 percent of employees signed cards, the NLRB conducts a secret-ballot election. The arrangements are made in one of two ways:

1. For a consent election, the employer and the union seeking representation arrive at an agreement stating the time and place of the election, the choices included on the ballot, and a way to determine who is eligible to vote.

2. For a stipulation election, the parties cannot agree on all of these terms, so the NLRB dictates the time and place, ballot choices, and method of determining eligibility.

On the ballot, workers vote for or against union representation, and they may also have a choice from among more than one union. If the union (or one of the unions on the ballot) wins a majority of votes, the NLRB certifies the union. If the ballot in- cludes more than one union and neither gains a simple majority, the NLRB holds a runoff election. As noted earlier, if the NLRB finds the election was not conducted fairly, it may set aside the results and call for a new election. Conduct that may lead to an election result’s being set aside includes the following examples: 28

• Threats of loss of jobs or benefits by an employer or union to influence votes or or- ganizing activities.

• A grant of benefits or a promise of benefits as a means of influencing votes or orga- nizing activities.

• Campaign speeches by management or union representatives to assembled groups of employees on company time less than 24 hours before an election.

• The actual use or threat of physical force or violence to influence votes or organiz- ing activities.

I, the undersigned employee of

Name (print) Date Home Address Phone

City State Zip Job Title Sign Here

Dept. Shift

(Company)

Note: This authorization to be SIGNED and DATED in employee’s own handwriting. YOUR RIGHT TO SIGN THIS CARD IS PROTECTED BY FEDERAL LAW.

RECEIVED BY (Initial)

YES, I WANT THE IAM

authorize the International Association of Machinists and Aerospace Workers (IAM) to act as my collective bargaining agent for wages, hours and working conditions. I agree that this card may be used either to support a demand for recognition or an NLRB election, at the discretion of the union.

Figure 14.5

Authorization Card

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416 PART 5 Meeting Other HR Goals

After certification, there are limits on future elections. Once the NLRB has certi- fied a union as the exclusive representative of a group of employees, it will not permit additional elections for one year. Also, after the union and employer have finished negotiating a contract, an election cannot be held for the time of the contract period or for three years, whichever comes first. The parties to the contract may agree not to hold an election for longer than three years, but an outside party (another union) cannot be barred for more than three years.

Management Strategies

Sometimes an employer will recognize a union after a majority of employees have signed authorization cards. More often, there is a hotly contested election campaign. During the campaign, unions try to persuade employees that their wages, benefits, treatment by employers, and chances to influence workplace decisions are too poor or small and that the union will be able to obtain improvements in these areas. Manage- ment typically responds with its own messages providing an opposite point of view. Management messages say the organization has provided a valuable package of wages and benefits and has treated employees well. Management also argues that the union will not be able to keep its promises but will instead create costs for employees, such as union dues and lost income during strikes. Employers use a variety of methods to oppose unions in organizing campaigns. 29 Their efforts range from hiring consultants to distributing leaflets and letters to pre- senting the company’s viewpoint at meetings of employees. Some management ef- forts go beyond what the law permits, especially in the eyes of union organizers. Why would employers break the law? One explanation is that the consequences, such as reinstating workers with back pay, are small compared to the benefits. 30 If coercing workers away from joining a union saves the company the higher wages, benefits, and other costs of a unionized workforce, management may feel an incen- tive to accept costs like back pay. Supervisors have the most direct contact with employees. Thus, as Table 14.1 indi- cates, it is critical that they establish good relationships with employees even before there is any attempt at union organizing. Supervisors also must know what not to do if a union drive takes place. They should be trained in the legal principles discussed ear- lier in this chapter.

Union Strategies

The traditional union organizing strategy has been for organizers to call or visit employees at home, when possible, to talk about issues like pay and job security. Local unions of the Teamsters have contacted dock workers at UPS Freight termi- nals in 11 states and invited them to sign authorization cards. When a majority of the workers at a terminal sign cards, UPS agrees to bargain with the Teamsters at that location. 31 Beyond encouraging workers to sign authorization cards and vote for the union, or- ganizers use some creative alternatives to traditional organizing activities. They some- times offer workers associate union membership , which is not linked to an employee’s workplace and does not provide representation in collective bargaining. Rather, an associate member receives other services, such as discounts on health and life insur- ance or credit cards. 32 In return for these benefits, the union receives membership

associate union membership Alternative form of union membership in which members receive discounts on insurance and credit cards rather than representation in collective bargaining.

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CHAPTER 14 Collective Bargaining and Labor Relations 417

dues and a broader base of support for its activities. Associate membership may be attractive to employees who wish to join a union but cannot because their workplace is not organized by a union. Another alternative to traditional organizing is to conduct corporate campaigns — bringing public, financial, or political pressure on employers during union organiza- tion and contract negotiation. 33 The Amalgamated Clothing and Textile Workers Union (ACTWU) corporate campaign against textile maker J. P. Stevens during the late 1970s was one of the first successful corporate campaigns and served as a model for those that followed. The ACTWU organized a boycott of J. P. Stevens products and threatened to withdraw its pension funds from financial institutions where J. P. Stevens officers acted as directors. The company eventually agreed to a contract with ACTWU. 34 Another winning union organizing strategy is to negotiate employer neutrality and card-check provisions into a contract. Under a neutrality provision, the employer pledges not to oppose organizing attempts elsewhere in the company. A card-check provision is an agreement that if a certain percentage—by law, at least a majority—of employees sign an authorization card, the employer will recognize their union repre- sentation. An impartial outside agency, such as the American Arbitration Associa- tion, counts the cards. Evidence suggests that this strategy can be very effective for unions. 35

corporate campaigns Bringing public, financial, or political pressure on employers during union organiza- tion and contract negotiation.

Table 14.1

What Supervisors Should and Should Not Do to Discourage Unions

WHAT TO DO:

Report any direct or indirect signs of union activity to a core management group. Deal with employees by carefully stating the company’s response to pro-union arguments. These responses should be coordinated by the company to maintain consistency and to avoid threats or promises. Take away union issues by following effective management practices all the time: Deliver recognition and appreciation. Solve employee problems. Protect employees from harassment or humiliation. Provide business-related information. Be consistent in treatment of different employees. Accommodate special circumstances where appropriate. Ensure due process in performance management. Treat all employees with dignity and respect.

WHAT TO AVOID:

Threatening employees with harsher terms and conditions of employment or employment loss if they engage in union activity. Interrogating employees about pro-union or anti-union sentiments that they or others may have or reviewing union authorization cards or pro-union petitions. Promising employees that they will receive favorable terms or conditions of employment if they forgo union activity. Spying on employees known to be, or suspected of being, engaged in pro-union activities.

Source: From J. A. Segal, “Unshackle Your Supervisors to Stay Union Free,” HR Magazine, June 1998. Copyright © 1998 by Society for Human Resource Management. Reproduced with permission of Society for Human Resource Management via Copyright Clearance Center.

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418 PART 5 Meeting Other HR Goals

Decertifying a Union

The Taft-Hartley Act expanded union members’ right to be represented by leaders of their own choosing to include the right to vote out an existing union. This action is called decertifying the union. Decertification follows the same process as a representation elec- tion. An election to decertify a union may not take place when a contract is in effect. Research indicates that when decertification elections are held, unions typically do not fare well. 36 During the mid-1990s, unions lost about 7 out of 10 decertification elections. In another blow to unions, the number of decertification elections has increased from about 5 percent of all elections in the 1950s and 1960s to about 14 percent in recent years.

Collective Bargaining When the NLRB has certified a union, that union represents employees during con- tract negotiations. In collective bargaining , a union negotiates on behalf of its mem- bers with management representatives to arrive at a contract defining conditions of employment for the term of the contract and to resolve differences in the way they in- terpret the contract. Typical contracts include provisions for pay, benefits, work rules, and resolution of workers’ grievances. Table 14.2 shows typical provisions negotiated in collective bargaining contracts. Collective bargaining differs from one situation to another in terms of bargaining struc- ture —that is, the range of employees and employers covered by the contract. A contract may involve a narrow group of employees in a craft union or a broad group in an indus- trial union. Contracts may cover one or several facilities of the same employer, or the bar- gaining structure may involve several employers. Many more interests must be considered in collective bargaining for an industrial union with a bargaining structure that includes several employers than in collective bargaining for a craft union in a single facility. The majority of contract negotiations take place between unions and employers that have been through the process before. In the typical situation, management has come to accept the union as an organization it must work with. The situation can be very differ- ent when a union has just been certified and is negotiating its first contract. In over one- fourth of negotiations for a first contract, the parties are unable to reach an agreement. 37

LO5 Explain how man- agement and unions negotiate contracts.

collective bargaining Negotiation between union representatives and management rep- resentatives to arrive at a contract defining conditions of employ- ment for the term of the contract and to ad- minister that contract.

Table 14.2

Typical Provisions in Collective Bargaining Contracts

Establishment and administration of the agreement

Bargaining unit and plant supplements Contract duration and reopening and renegotiation provisions Union security and the checkoff Special bargaining committees Grievance procedures Arbitration and mediation Strikes and lockouts Contract enforcement

Functions, rights, and responsibilities

Management rights clauses Plant removal Subcontracting Union activities on company time and premises Union–management cooperation Regulation of technological change Advance notice and consultation

(Continued)

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CHAPTER 14 Collective Bargaining and Labor Relations 419

Source: T. A. Kochan, Collective Bargaining and Industrial Relations (Homewood, IL: Richard D. Irwin, 1980), p. 29. Original data from J. W. Bloch, “Union Contracts—A New Series of Studies,” Monthly Labor Review 87 (October 1964), pp. 1184–85.

Job or income security

Hiring and transfer arrangements Employment and income guarantees Reporting and call-in pay Supplemental unemployment benefit plans Regulation of overtime, shift work, etc. Reduction of hours to forestall layoffs Layoff procedures; seniority; recall Worksharing in lieu of layoff Attrition arrangements Promotion practices Training and retraining Relocation allowances Severance pay and layoff benefit plans Special funds and study committees

Plant operations Work and shop rules Rest periods and other in-plant time allowances Safety and health Plant committees Hours of work and premium pay practices Shift operations Hazardous work Discipline and discharge

Paid and unpaid leave

Vacations and holidays Sick leave Funeral and personal leave Military leave and jury duty

Employee benefit plans

Health and insurance plans Pension plans Profit-sharing, stock purchase, and thrift plans Bonus plans

Special groups Apprentices and learners Workers with disabilities and older workers Women Veterans Union representatives Nondiscrimination clauses

Table 14.2

Concluded Wage determination and administration

General provisions Rate structure and wage differentials Allowances Incentive systems and production bonus plans Production standards and time studies Job classification and job evaluation Individual wage adjustments General wage adjustments during the contract period

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420 PART 5 Meeting Other HR Goals

Bargaining over New Contracts

Clearly, the outcome of contract negotiations can have important consequences for la- bor costs, productivity, and the organization’s ability to compete. Therefore, unions and management need to prepare carefully for collective bargaining. Preparation in- cludes establishing objectives for the contract, reviewing the old contract, gathering data (such as compensation paid by competitors and the company’s ability to survive a strike), predicting the likely demands to be made, and establishing the cost of meeting the demands. 38 This preparation can help negotiators develop a plan for how to negoti- ate. Different situations and goals call for different approaches to bargaining, such as the following alternatives proposed by Richard Walton and Robert McKersie: 39

• Distributive bargaining divides an economic “pie” between two sides—for example, a wage increase means giving the union a larger share of the pie.

• Integrative bargaining looks for win-win solutions, or outcomes in which both sides benefit. If the organization’s labor costs hurt its performance, integrative bargaining might seek to avoid layoffs in exchange for work rules that improve productivity.

• Attitudinal structuring focuses on establishing a relationship of trust. The parties are concerned about ensuring that the other side will keep its part of any bargain.

• Intraorganizational bargaining addresses conflicts within union or management groups or objectives, such as between new employees and workers with high senior- ity or between cost control and reduction of turnover.

The collective bargaining process may involve any combination of these alternatives. Negotiations go through various stages. 40 In the earliest stages, many more people are often present than in later stages. On the union side, this may give all the various internal interest groups a chance to participate and voice their goals. Their input helps

Patrick Dempsey and many other actors and actresses demonstrated in the Writer’s Guild strike which suspended television and film production for months.

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CHAPTER 14 Collective Bargaining and Labor Relations 421

communicate to management what will satisfy union members and may help the union achieve greater solidarity. At this stage, union negotiators often present a long list of proposals, partly to satisfy members and partly to introduce enough issues that they will have flexibility later in the process. Management may or may not present proposals of its own. Sometimes management prefers to react to the union’s proposals. During the middle stages of the process, each side must make a series of decisions, even though the outcome is uncertain. How important is each issue to the other side? How likely is it that disagreement on particular issues will result in a strike? When and to what extent should one side signal its willingness to compromise? In the final stage of negotiations, pressure for an agreement increases. Public negotia- tions may be only part of the process. Negotiators from each side may hold one-on-one meetings or small-group meetings where they escape some public relations pressures. A neutral third party may act as a go-between or facilitator. In some cases, bargaining breaks down as the two sides find they cannot reach a mutually acceptable agreement. The out- come depends partly on the relative bargaining power of each party. That power, in turn, depends on each party’s ability to withstand a strike, which costs the workers their pay during the strike and costs the employer lost production and possibly lost customers.

When Bargaining Breaks Down

The intended outcome of collective bargaining is a contract with terms acceptable to both parties. If one or both sides determine that negotiation alone will not produce such an agreement, bargaining breaks down. To bring this impasse to an end, the union may strike, or the parties may bring in outside help to resolve their differences.

Strikes A strike is a collective decision of the union members not to work until certain demands or conditions are met. The union members vote, and if the majority favors a strike, they all go on strike at that time or when union leaders believe the time is right. Strikes are typically accompanied by picketing —the union stations members near the worksite with signs indicating the union is on strike. During the strike, the union members do not re- ceive pay from their employer, but the union may be able to make up for some of the lost pay. The employer loses production unless it can hire replacement workers, and even then, productivity may be reduced. Often, other unions support striking workers by refus- ing to cross their picket line—for example, refusing to make deliveries to a company dur- ing a strike. When the Writers Guild of America went on strike, production of television shows came to a standstill. The strike also affected the Golden Globe Awards, as actors and other union employees in the media industry refused to cross their picket lines. The vast majority of labor-management negotiations do not result in a strike, and the number of strikes has plunged since the 1950s, as shown in Figure 14.6 . The per- centage of total working time lost to strikes in 2004 was a mere 0.01 percent—that is, one-hundredth of 1 percent of working time. A primary reason strikes are rare is that a strike is seldom in the best interests of either party. Not only do workers lose wages and employers lose production, but the negative experience of a strike can make future in- teractions more difficult. During the Writers Guild of America strike, screenwriters won some compensation for their work that is distributed over the Internet. But while television shows switched to reruns, viewers were finding new, often free content on- line. That could ultimately damage network TV’s future. 41 When strikes do occur, the conduct of each party during the strike can do lasting harm to labor-management relations. Violence by either side or threats of job loss or actual job loss because jobs went to replacement workers can make future relations difficult. Finally, many

strike A collective decision by union members not to work until certain demands or conditions are met.

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422 PART 5 Meeting Other HR Goals

government employees do not have a right to strike, and their percentage among unionized employees overall has risen in recent decades, as we discussed earlier.

Alternatives to Strikes Because strikes are so costly and risky, unions and employers generally prefer other methods for resolving conflicts. Three common alternatives rely on a neutral third party, usually provided by the Federal Mediation and Conciliation Service (FMCS):

• Mediation is the least formal and most widely used of these procedures. A mediator hears the views of both sides and facilitates the negotiation process. The mediator has no formal authority to dictate a resolution, so a strike remains a possibility. In a survey studying negotiations between unions and large businesses, mediation was used in almost 4 out of 10 negotiation efforts. 42

• A fact finder , most often used for negotiations with governmental bodies, typically reports on the reasons for the dispute, the views and arguments of both sides, and (sometimes) a recommended settlement, which the parties may decline. The pub- lic nature of these recommendations may pressure the parties to settle. Even if they do not accept the fact finder’s recommended settlement, the fact finder may iden- tify or frame issues in a way that makes agreement easier. Sometimes merely devot- ing time to this process gives the parties a chance to reach an agreement. However, there is no guarantee that a strike will be avoided.

• Under arbitration , the most formal type of outside intervention, an arbitrator or ar- bitration board determines a settlement that is binding, meaning the parties have to

mediation Conflict resolution procedure in which a mediator hears the views of both sides and facilitates the negotiation process but has no formal authority to dictate a resolution.

fact finder Third party to collec- tive bargaining who reports the reasons for a dispute, the views and arguments of both sides, and possibly a recommended settle- ment, which the parties may decline.

500

400

300

200

100

0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007

Year

N u m

b e r

o f

S tr

ik e s

Figure 14.6

Strikes Involving 1,000 or More Workers

Note: Because strikes are most likely in large bargaining units, these numbers represent most lost working time in the United States.

SOURCE: Bureau of Labor Statistics, “Work Stoppage Data,” http://data.bls.gov.

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CHAPTER 14 Collective Bargaining and Labor Relations 423

accept it. In conventional arbitration, the arbitrator fashions the solution. In “final- offer arbitration,” the arbitrator must choose either management’s or the union’s final offer for each issue or for the contract as a whole. “Rights arbitration” focuses on en- forcing or interpreting contract terms. Arbitration in the writing of contracts or set- ting of contract terms has traditionally been reserved for special circumstances such as negotiations between unions and government agencies, where strikes may be ille- gal or especially costly. Occasionally, arbitration has been used with businesses in sit- uations where strikes have been extremely damaging. However, the general opinion is that union and management representatives are in the best position to resolve con- flicts themselves, because they are closer to the situation than an arbitrator can be.

Contract Administration Although the process of negotiating a labor agreement (including the occasional strike) receives the most publicity, other union-management activities occur far more often. Bargaining over a new contract typically occurs only about every three years, but administering labor contracts goes on day after day, year after year. The two activ- ities are linked, of course. Vague or inconsistent language in the contract can make administering the contract more difficult. The difficulties can create conflict that spills over into the next round of negotiations. 43 Events during negotiations—strikes, the use of replacement workers, or violence by either side—also can lead to difficul- ties in working successfully under a conflict. Contract administration includes carrying out the terms of the agreement and re- solving conflicts over interpretation or violation of the agreement. Under a labor contract, the process for resolving these conflicts is called a grievance procedure .

LO6 Summarize the practice of contract administration.

grievance procedure The process for resolv- ing union-management conflicts over interpre- tation or violation of a collective bargaining agreement.

Strikes such as this one between security officers and management of several office buildings in San Francisco are costly. Both unions and employees generally prefer to resolve contract conflicts in other ways.

arbitration Conflict resolution pro- cedure in which an arbitrator or arbitration board determines a binding settlement.

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424 PART 5 Meeting Other HR Goals

This procedure has a key influence on success in contract administration. A grievance procedure may be started by an employee or discharged employee who believes the employer violated the contract or by a union representative on behalf of a group of workers or union representatives. For grievances launched by an employee, a typical grievance procedure follows the steps shown in Figure 14.7 . The grievance may be settled during any of the four steps. In the first step, the employee talks to his or her supervisor about the problem. If this conversation is unsatisfactory, the employee may involve the union steward in further discussion. The union steward and employee decide whether the problem has been resolved and, if not, whether it is a contract violation. If the problem was not resolved and does seem to be a contract violation, the union moves to step 2, putting the griev- ance in writing and submitting it to a line manager. The union steward meets with a management representative to try to resolve the problem. Management consults with the industrial relations staff and puts its response in writing too at this second stage. If step 2 fails to resolve the problem, the union appeals the grievance to top line man- agement and representatives of the industrial relations staff. The union may involve more local or international officers in discussions at this stage (see step 3 in Fig- ure 14.7 ). The decision resulting from the appeal is put into writing. If the grievance

Figure 14.7

Steps in an Employee- Initiated Grievance Procedure

SOURCE: Adapted from T. A. Kochan, Collective Bargaining and Industrial Relations (Homewood, IL: Richard D. Irwin, 1980), p. 395; J. A. Fossum, Labor Relations (Boston: McGraw-Hill/Irwin, 2002), pp. 448–52.

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CHAPTER 14 Collective Bargaining and Labor Relations 425

is still not resolved, the union may decide (step 4) to appeal the grievance to an arbi- trator. If the grievance involves a discharged employee, the process may begin at step 2 or 3, however, and the time limits between steps may be shorter. Grievances filed by the union on behalf of a group may begin at step 1 or step 2. The majority of grievances are settled during the earlier steps of the process. This re- duces delays and avoids the costs of arbitration. If a grievance does reach arbitration, the arbitrator makes the final ruling in the matter. Based on a series of Supreme Court deci- sions, courts generally avoid reviewing arbitrators’ decisions and focus only on whether the grievance involved an issue that is subject to arbitration under the contract. 44 From the point of view of employees, the grievance procedure is an important means of getting fair treatment in the workplace. Its success depends on whether it provides for all the kinds of problems that are likely to arise (such as how to handle a business slowdown), whether employees feel they can file a grievance without being punished for it, and whether employees believe their union representatives will follow through. Under the National Labor Relations Act, the union has a duty of fair repre- sentation, which means the union must give equal representation to all members of the bargaining unit, whether or not they actually belong to the union. Too many grievances may indicate a problem—for example, the union members or line supervi- sors do not understand how to uphold the contract or have no desire to do so. At the same time, a very small number of grievances may also signal a problem. A very low grievance rate may suggest a fear of filing a grievance, a belief that the system does not work, or a belief that employees are poorly represented by their union. What types of issues most commonly reach arbitration? According to data from the Federal Mediation and Conciliation Service, the largest share of arbitration cases in- volved discharge or other disciplinary actions. 45 Other issues that often reach arbitra- tion involve wages, benefits, and the use of seniority in promotions, layoffs, work schedules, and other decisions. In reaching decisions about these and other issues, arbitrators consider a number of criteria, such as employees’ understanding of the rules, the employer’s consistency and fairness, and the employees’ chance to present a defense and appeal a decision. 46

Labor-Management Cooperation The traditional understanding of union-management relations is that the two parties are adversaries, meaning each side is competing to win at the expense of the other. There have always been exceptions to this approach. And since at least the 1980s, there seems to be wider acceptance of the view that greater cooperation can increase employee commitment and motivation while making the workplace more flexible. 47 Also, evidence suggests that employees who worked under traditional labor relations systems and then under the new, more cooperative systems prefer the cooperative approach. 48 Cooperation between labor and management may feature employee involvement in decision making, self-managing employee teams, labor-management problem- solving teams, broadly defined jobs, and sharing of financial gains and business infor- mation with employees. 49 The search for a win-win solution requires that unions and their members understand the limits on what an employer can afford in a competitive marketplace. The nearby “ Best Practices ” box describes how Onex Corporation has met this challenge in operating Spirit AeroSystems. Without the union’s support, efforts at employee empowerment are less likely to survive and less likely to be effective if they do survive. 50 Unions have often resisted

LO7 Describe more cooperative approaches to labor-management relations.

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employee empowerment programs, precisely because the programs try to change work- place relations and the role that unions play. Union leaders have feared that such pro- grams will weaken unions’ role as independent representatives of employee interests. Indeed, the National Labor Relations Act makes it an unfair labor practice for an em- ployer to “dominate or interfere with the formation or administration of any labor or- ganization or contribute financial or other support to it.” This legal requirement gave rise to concern that self-managing work teams set up by an employer could violate the NLRA. Several widely publicized rulings by the Na- tional Labor Relations Board in the mid-1990s found that worker-management com- mittees were illegal when they were dominated by management and dealt with issues such as wages, grievances, and working conditions. 51 A team might violate national labor law when the following conditions exist: 52

• The team addresses issues affecting nonteam employees. • The team’s issues involve matters such as wages, grievances, hours of work, and

working conditions. • The team deals with supervisors, managers, or executives on some issues. • The company created the team or decided what it would do and how it would

function.

Although employers must be careful to meet legal requirements, the NLRB has clearly supported employee involvement in decision making. For example, in a 2001

426

A few years ago, Boeing was ea- ger to sell off its Wichita factory, where workers made fuselages and nose cones for commercial aircraft. High wages and inflexible work rules made it difficult for the company to earn a profit, so Boe- ing sold to a Canadian investment firm called Onex Corporation. The workers, represented by the International Association of Machinist & Aerospace Workers, were nervous. Often, this type of sale is followed by drastic mea- sures to rid the workplace of the union and its higher-paid workers. In fact, Onex did lay off 800 of the plant’s 4,000 employees, but it worked hard to build good rela- tions with those who remained as it began to build a new company, called Spirit AeroSystems. Management built up Spirit’s bottom line by slashing overhead

Union Cooperation Helps Spirit AeroSystems Soar

Best Practices

expenses and negotiating price reductions from suppliers. As managers made changes, they were open with the union and ex- plained that they needed to make a wage cut and eliminate 15 per- cent of the jobs. Spirit’s managers interviewed all the employees and hired the ones it thought would be most supportive of its new en- terprising culture. The union worked with management to re- vise work rules and streamline job classifications. Still, workers were frightened and angry, as well as determined to keep their union representation. So executives went to the union’s leaders and asked what the company would need to do to win the workers’ support. The union’s international president, Thomas Buffenberger, replied, “If you want to share some of the

pain, then give us a stake in the enterprise.” And that’s what Spirit did. The union members would become owners, receiving 10 per- cent of the ownership when the company made its initial public offering. Employee involvement teams got to work improving effi- ciency in every area. A year and a half later, Spirit went public, and each union member received $61,440 in cash and stock. Today, lower costs, more flexible opera- tions, and committed employees are helping Spirit take off.

Sources: Stanley Holmes, “Soaring Where Boeing Struggled,” BusinessWeek, February 19, 2007, downloaded from General Reference Center Gold, http://find.galegroup.com; Sidney Hill Jr., “How to Survive the ‘Interesting’ Times,” Manufacturing Business Technology, April 2006, p. 56; and Molly McMillin, “Two Years after Split, Boeing Wichita Bounces Back,” Wichita (Kan.) Eagle, September 9, 2007, http://find.galegroup.com.

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CHAPTER 14 Collective Bargaining and Labor Relations 427

ruling, the NLRB found that employee participation committees at Crown Cork & Seal’s aluminum-can factory did not violate federal labor law. 53 Those committees make and carry out decisions regarding a wide range of issues, including production, quality, training, safety, and certain types of discipline. The NLRB determined that the committees were not employer dominated. Instead of “dealing with” manage- ment, where employees make proposals for management to accept or reject, the com- mittees exercise authority within boundaries set by management, similar to the authority of a first-line supervisor. In spite of the legal concerns, cooperative ap- proaches to labor relations seem to contribute to an organization’s success. 54 Beyond avoiding any taint of misuse of employee empowerment, employers build cooperative relationships by the way they treat employees—with respect and fairness, in the knowledge that attracting talent and minimizing turnover are in the employer’s best interests. One company that does this is General Cable’s Indianapolis Com- pounds plant, where teams of employees, represented by the International Brother- hood of Electrical Workers, continually seek ideas to improve quality and cut inefficiency. Terry Jones, a team coordinator and union representative, says these efforts reflect “a shared attitude that’s driving the push for continuous improvement.” 55

THINKING ETHICALLY

COMPANY REPUTATIONS ON THE LINE

When union-organizing efforts succeed these days, they often include a tactic known as corporate campaigns or corporate social responsibility (CSR) campaigns. In these campaigns, the organizers combine a variety of measures to raise questions about a company’s reputation. For example, when the Service Employees Interna- tional Union (SEIU) set out to organize the cleaners, servers, and food preparers of Aramark, they put to- gether a 10-city corporate campaign called the Cam- paign for Quality Services. One element of the strategy involved contacting the businesses that purchase food services from Aramark and promoting the union’s con- cern that the workers were underpaid. In Philadelphia, Aramark’s headquarters city, a rally of 1,000 people gathered to voice the message that Aramark should improve the way it treats workers and customers. The union drew attention to the fact that Philadelphia’s public school district had terminated its food service contract with Aramark after its cafeterias, managed by Aramark, had experienced a multimillion- dollar loss. In Houston, city council members were invited to hear testimony from workers about how Aramark mis- treated them with unfair pay practices and lacked proper concern for food safety. Also in Houston, an em- ployee complained that she was expected to report half an hour before the start of her shift and was often not

allowed to take scheduled breaks. Aramark pointed out that arriving at work early can be a wise way to avoid heavy traffic, that rest breaks are not required by law, and that employees with wage and hour complaints are encouraged to call the company’s toll-free hotline.

SOURCES: L. M. Sixel, “Union Courting Aramark Workers Coast to Coast,” Houston Chronicle, November 10, 2007; L. M. Sixel, “Union Public Relations Tactic May Not Be Help- ing Cause,” Houston Chronicle , January 31, 2008; “Analysis: Unions’ ‘CSR’ Efforts Challenge Corporations,” PR Week (US), June 18, 2007, all downloaded from General Reference Center Gold, http://find.galegroup.com ; and SEIU, “1,000 Aramark Workers and Their Supporters March on Aramark’s World Headquarters to Demand Company Do Better for Customers, Taxpayers, and Workers across the Country,” news release, November 14, 2007, www.seiu.org .

Questions

1. Does a union have a right to make public state- ments about whether a company operates in a socially responsible manner? Why or why not? If a union engages in such a corporate campaign, what ethical obligations does it have?

2. In this example, do you think Aramark has an eth- ics challenge or a public relations challenge?

3. What ethical decisions can a company’s manage- ment make in order to prepare itself for the possibility of this type of corporate campaign?

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SUMMARY

LO1 Define unions and labor relations and their role in organizations.

A union is an organization formed for the pur- pose of representing its members in resolving con- flicts with employers. Labor relations is the management specialty emphasizing skills that man- agers and union leaders can use to minimize costly forms of conflict and to seek win-win solutions to disagreements. Unions—often locals belonging to national and international organizations—engage in organizing, collective bargaining, and contract administration with businesses and government or- ganizations. In the United States, union member- ship has been declining among businesses but has held steady with government employees. Unioniza- tion is associated with more generous compensation and higher productivity but lower profits. Unions may reduce a business’s flexibility and economic performance.

LO2 Identify the labor relations goals of management, labor unions, and society.

Management goals are to increase the organiza- tion’s profits. Managers generally expect that unions will make these goals harder to achieve. La- bor unions have the goal of obtaining pay and working conditions that satisfy their members. They obtain these results by gaining power in num- bers. Society’s values have included the hope that the existence of unions will replace conflict or vio- lence between workers and employers with fruitful negotiation.

LO3 Summarize laws and regulations that affect labor relations.

The National Labor Relations Act supports the use of collective bargaining and sets out the rights of employees, including the right to organize, join a union, and go on strike. The NLRA prohibits unfair labor practices by employers, including interference with efforts to form a labor union and discrimina- tion against employees who engage in union activi- ties. The Taft-Hartley Act and Landrum-Griffin Act establish restrictions on union practices that re- strain workers, such as their preventing employees from working during a strike or determining who an employer may hire. The Taft-Hartley Act also per- mits state right-to-work laws.

LO4 Describe the union organizing process. Organizing begins when union representatives

contact employees and invite them to sign an au- thorization card. If over half the employees sign a

card, the union may request that the employer vol- untarily recognize the union. If the employer refuses or if 30 to 50 percent of employees signed authoriza- tion cards, the NLRB conducts a secret-ballot elec- tion. If the union wins, the NLRB certifies the union. If the union loses but the NLRB finds that the election was not conducted fairly, it may set aside the results and call a new election.

LO5 Explain how management and unions negotiate contracts.

Negotiations take place between representatives of the union and the management bargaining unit. The majority of negotiations involve parties that have been through the process before. The process begins with preparation, including research into the other side’s strengths and demands. In the early stages of negotiation, many more people are present than at later stages. The union presents its de- mands, and management sometimes presents demands as well. Then the sides evaluate the de- mands and the likelihood of a strike. In the final stages, pressure for an agreement increases, and a neutral third party may be called on to help reach a resolution. If bargaining breaks down, the impasse may be broken with a strike, mediation, fact finder, or arbitration.

LO6 Summarize the practice of contract administration. Contract administration is a daily activity under

the labor agreement. It includes carrying out the terms of the agreement and resolving conflicts over interpretation or violation of the contract. Conflicts are resolved through a grievance procedure. Typi- cally, the grievance procedure begins with an em- ployee talking to his or her supervisor about the problem and possibly involving the union steward in the discussion. If this does not resolve the con- flict, the union files a written grievance with a line manager, and union and management representa- tives meet to discuss the problem. If this effort fails, the union appeals the grievance to top line manage- ment and the industrial relations staff. If the appeal fails, the union may appeal the grievance to an arbitrator.

LO7 Describe more cooperative approaches to labor- management relations.

In contrast to the traditional view that labor and management are adversaries, some organiza- tions and unions work more cooperatively. Cooper- ation may feature employee involvement in decision making, self-managing employee teams,

428 PART 5 Meeting Other HR Goals

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labor-management problem-solving teams, broadly defined jobs, and sharing of financial gains and business information with employees. If such coop- eration is tainted by attempts of the employer to dominate or interfere with labor organizations,

however, such as by dealing with wages, grievances, or working conditions, it may be illegal under the NLRA. In spite of such legal concerns, cooperative labor relations seem to contribute to an organiza- tion’s success.

KEY TERMS

agency shop, p. 409 American Federation of Labor and

Congress of Industrial Organiza- tions (AFL-CIO), p. 403

arbitration, p. 423 associate union membership, p. 416 checkoff provision, p. 409 closed shop, p. 409 collective bargaining, p. 418

corporate campaigns, p. 417 craft union, p. 402 fact finder, p. 422 grievance procedure, p. 423 industrial union, p. 402 labor relations, p. 401 maintenance of membership,

p. 409 mediation, p. 422

National Labor Relations Act (NLRA), p. 410

National Labor Relations Board (NLRB), p. 413

right-to-work laws, p. 412 strike, p. 421 union shop, p. 409 union steward, p. 403 unions, p. 401

REVIEW AND DISCUSSION QUESTIONS

1. Why do employees join labor unions? Did you ever belong to a labor union? If you did, do you think union membership benefited you? If you did not, do you think a union would have benefited you? Why or why not?

2. Why do managers at most companies prefer that unions not represent their employees? Can unions provide benefits to an employer? Explain.

3. How has union membership in the United States changed over the past few decades? How does union membership in the United States compare with union membership in other countries? How might these patterns in union membership affect the HR decisions of an international company?

4. What legal responsibilities do employers have re- garding unions? What are the legal requirements affecting unions?

5. Suppose you are the HR manager for a chain of clothing stores. You learn that union representatives

have been encouraging the stores’ employees to sign authorization cards. What events can follow in this process of organizing? Suggest some ways that you might respond in your role as HR manager.

6. If the parties negotiating a labor contract are unable to reach an agreement, what actions can resolve the situation?

7. Why are strikes uncommon? Under what conditions might management choose to accept a strike?

8. What are the usual steps in a grievance procedure? What are the advantages of resolving a grievance in the first step? What skills would a supervisor need so grievances can be resolved in the first step?

9. The “Best Practices” box near the end of the chapter gives an example of union-management cooperation at Spirit AeroSystems. What does the company gain from this effort? What do workers gain?

10. What are the legal restrictions on labor-management cooperation?

BUSINESSWEEK CASE

A Comeback for the UAW? As strikes go, Chrysler’s wasn’t all that impressive. When Chrysler’s unionized workers nationwide left their assem- bly line positions in early October 2007 to protest the holdup in securing a new four-year labor contract, the me- dia reported “the second major UAW walkout in a

month”—but it seemed more like a long lunch with pick- eting during dessert. By nightfall the parties had come to an agreement, and the next morning the newspapers cho- rused such headlines as “It’s a New Day in Detroit” and “Detroit’s 3 Finally on Track.”

CHAPTER 14 Collective Bargaining and Labor Relations 429

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430 PART 5 Meeting Other HR Goals

Really? It seems to me we’ve read those headlines a hundred times in the past 25 years. And each time they’re wrong. Many observers seem to believe that the Big Three’s woes are all tied to union wages and the benefits its blue- collar workforce receives. But those are not their biggest problems. While the new agreements with the UAW could help, cutting labor costs won’t cure what ails Detroit. In fact, just the opposite could happen. General Motors has cried loudest about the “unfair” wage advantage the Japanese automakers enjoy. It has be- moaned what it sees as a $1,500 to $1,900 price disadvan- tage (owing to active and retiree health care costs) on every product it sells. Detroit spends approximately $78 an hour in blue-collar wages and benefits, while Toyota Motor spends less than $50. But a plant’s productivity may be more important than actual wages paid there. Auto executives know real labor costs aren’t framed just by the per-hour pay but are measured by how many vehi- cles the fewest workers can build in one shift. And con- sider Ford’s last minivan attempt. No matter what Ford spent to develop or build a new minivan, it was DOA at Ford and Lincoln-Mercury dealerships. When a new ve- hicle comes to market and fails, the manufacturer loses hundreds of millions—if not billions—no matter what its labor costs are. Much has been made of the fact that Detroit already spent much more than Japanese automakers in the United States for health insurance. Yet GM admitted something important after the union contracts were signed: Fully 56,000 of its remaining 74,500 blue-collar workers will be eligible for retirement by 2011. So the average age of GM’s factory workers will be coming down rapidly in the near future. Theoretically this would lower costs associated with health care per employee. At first glance, this looks to be a huge financial win for General Motors, and in the near term it is. However, it could all too easily bring the United Auto Workers roar- ing back to life.

Here’s how it is likely to backfire. First, retired auto- workers don’t get to vote on new contracts. Second, up to 56,000 of GM’s 74,500 workers might be replaced either by the time of the next union negotiations or by the 2015 negotiations at the latest. Do you think the new and younger workers, paid less and getting fewer benefits, will fight to keep the retirees’ benefits? A younger worker might well feel cheated and resentful. This time around, the UAW could sign up the Ameri- can workforce of foreign car companies for the same rea- son. The Detroit News reported that a secret internal Toyota report written by Seiichi Sudo, president of Toyota Engi- neering & Manufacturing for America, suggests that Toyota needs to get its labor costs down to whatever the prevailing wages are in the region where the factories are located. If Toyota can move more quickly to cut its labor costs be- cause its $25 hourly wage is high compared to GM’s possi- ble $14 in some positions, then GM is putting downward pressure on Japanese wages. So the Japanese could use GM’s lower wages to put downward pressure on some of their employees—and those earning Japanese wages might start to think that union representation isn’t a bad idea.

SOURCE : Excerpted from Ed Wallace, “A Comeback for the UAW?” BusinessWeek, November 6, 2007, downloaded from General Reference Center Gold, http://find.galegroup.com .

Question 1. Why does this business writer believe union mem-

bership might become more attractive to workers at auto companies in the future? Do you agree? Why or why not?

2. Besides compensation costs, what HRM challenges do auto companies face? Which of these challenges involve labor relations?

3. Suppose GM or Toyota (choose one) hired you to ad- vise the company about its strategy for working with or fighting the UAW. What issues would you advise the company to emphasize? What tactics would you recommend?

CASE: UNION BARISTAS AT STARBUCKS?

Starbucks, ranked near the top of Fortune magazine’s list of the 100 Best Companies to Work for in 2008, might not seem like an obvious candidate for a union organizing campaign. But for several years, the Industrial Workers of the World (IWW) has been leading a drive to organize Starbucks workers, and the company has fought back. Daniel Gross, a volunteer organizer for the IWW, com- plains that Starbucks is not as socially responsible as man- agement would like people to think, at least not when it comes to treatment of employees. For example, only 42 percent of Starbucks employees have company-provided

health insurance. That percentage is even lower than the 47 percent at Wal-Mart, which has been widely criticized for poor compensation and benefits. Starbucks responds that over 90 percent of employees have health coverage from some source, such as a spouse or parent, and that, un- like most companies, it makes health insurance available to employees who work just 20 hours a week. In fact, Starbucks is thought to be the first major U.S. company to offer health insurance to part-timers. In New York, its typ- ical wage for baristas—$8.75 per hour—exceeds the indus- try median of $7.76.

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CHAPTER 14 Collective Bargaining and Labor Relations 431

The IWW typically focuses on “direct action” to build grassroots support for unionization. Pressure on companies comes from tactics like Internet campaigns and picketing in front of stores. According to Gross, the IWW played a “substantial” role in wage increases and better working conditions at Starbucks stores. Starbucks spokesperson Tara Darrow denies that the IWW made a difference. Darrow says an employee survey found that workers want to earn more, and those results were the main reason for the pay increase that followed. Whether or not employees need a union, Starbucks is legally required to avoid penalizing employees for the effort. In that regard, Starbucks has come under fire. The IWW claimed that in New York the company fired three employees for supporting the union, gave other union sup- porters negative performance appraisals, and prohibited employees from wearing union pins. The National Labor Relations Board found enough merit to the claims to schedule hearings. The company denies the charges. Starbucks’s defense grew more awkward when e-mail messages among managers became public. For example, messages indicate that when some managers learned two pro-union employees had graduated from a labor program at Cornell University, they gathered the names of other graduates and checked them against company lists to iden-

tify other employees who had been in the same program. Although the research itself is not necessarily illegal, it raises questions about how managers would use what they had learned. Company spokesperson Tara Darrow has this response: “Starbucks respects the free choice of our partners [em- ployees] and remains committed to complying fully with all laws governing the right to organize collectively. We also are confident that our progressive, pro-partner work environment, coupled with our outstanding compensation and benefits, make unions unnecessary at Starbucks.”

SOURCE : Moira Herbst, “A Storied Union Takes on Starbucks,” Business- Week , August 2, 2007, General Reference Center Gold, http://find.galegroup. com ; and Kris Maher, “Starbucks E-mails Describe Efforts to Stop Unionization,” Wall Street Journal , January 9, 2008, http://online.wsj.com .

Questions 1. What challenges might the IWW expect to face in

organizing workers at Starbucks? 2. How well do you think Starbucks is defending itself

against the claims of the IWW? What other responses should it consider using?

3. If the IWW were to succeed in organizing baristas at Starbucks, what changes would you expect in the way the company manages those workers?

IT’S A WRAP!

www.mhhe.com/noefund3e is your source for R eviewing, A pplying, and P racticing the concepts you learned about in Chapter 14.

Practice • Chapter quiz

Review • Chapter learning objectives • Narrated lecture and iPod

content

Application • Manager’s Hot Seat segment:

“Partnership: The Unbalancing Act”

• Video case and quiz: “Hollywood Labor Unions”

• Self-Assessment: Labor relations • Web exercise: Understanding

unions

NOTES

1. M. Evans, “Health Workers Saying, ‘Union, Yes,’” Modern Healthcare , February 4, 2008, downloaded from General Reference Center Gold, http://find. galegroup.com .

2. J. T. Dunlop, Industrial Relations Systems (New York: Holt, 1958); C. Kerr, “Industrial Conflict and Its Mediation,” American Journal of Sociology 60 (1954), pp. 230–45.

3. See A. M. Glassman and T. G. Cummings, Industrial Relations: A Multidimensional View (Glenview, IL: Scott, Foresman, 1985); and W. H. Holley Jr. and K. M. Jennings, The Labor Relations Process (Chicago: Dryden Press, 1984).

4. T. A. Kochan, Collective Bargaining and Industrial Rela- tions (Homewood, IL: Richard D. Irwin, 1980), p. 25;

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and H. C. Katz and T. A. Kochan, An Introduction to Collective Bargaining and Industrial Relations, 3rd ed. (New York: McGraw-Hill, 2004).

5. R. J. Grossman, “Reorganized Labor,” HRMagazine , January 2008, downloaded from General Reference Center Gold, http://find.galegroup.com .

6. Whether the time the union steward spends on union business is paid for by the employer, the union, or a combination is a matter of negotiation between the employer and the union.

7. Bureau of Labor Statistics, “Union Affiliation Data from the Current Population Survey,” http://data.bls. gov , accessed March 10, 2008; and J. Smerd, “Unions Reverse Decline,” Workforce Management , February 4, 2008, downloaded from General Reference Center Gold, http://find.galegroup.com .

8. Katz and Kochan, An Introduction to Collective Bar- gaining, building on J. Fiorito and C. L. Maranto, “The Contemporary Decline of Union Strength,” Contemporary Policy Issues 3 (1987), pp. 12–27; G. N. Chaison and J. Rose, “The Macrodeterminants of Union Growth and Decline,” in The State of the Unions, ed. G. Strauss et al. (Madison, WI: Industrial Relations Research Association, 1991).

9. Bureau of Labor Statistics Web site, www.bls.gov ; AFL-CIO Web site, www.aflcio.org .

10. C. Brewster, “Levels of Analysis in Strategic HRM: Questions Raised by Comparative Research,” Confer- ence on Research and Theory in HRM, Cornell Uni- versity, October 1997.

11. American Federation of State, County and Municipal Employees “About AFSCME,” www.afscme.org , accessed March 10, 2008.

12. J. T. Addison and B. T. Hirsch, “Union Effects on Productivity, Profits, and Growth: Has the Long Run Arrived?” Journal of Labor Economics 7 (1989), pp. 72–105; R. B. Freeman and J. L. Medoff, “The Two Faces of Unionism,” Public Interest 57 (Fall 1979), pp. 69–93.

13. L. Mishel and P. Voos, Unions and Economic Competi- tiveness (Armonk, NY: M. E. Sharpe, 1991); Freeman and Medoff, “Two Faces”; S. Slichter, J. Healy, and E. R. Livernash, The Impact of Collective Bargaining on Management (Washington, DC: Brookings Institu- tion, 1960).

14. A. O. Hirschman, Exit, Voice, and Loyalty (Cam- bridge, MA: Harvard University Press, 1970); R. Batt, A. J. S. Colvin, and J. Keefe, “Employee Voice, Hu- man Resource Practices, and Quit Rates: Evidence from the Telecommunications Industry,” Industrial and Labor Relations Review 55 (1970), pp. 573–94.

15. R. B. Freeman and J. L. Medoff, What Do Unions Do? (New York: Basic Books, 1984); Addison and Hirsch, “Union Effects on Productivity”; M. Ash and J. A.

432 PART 5 Meeting Other HR Goals

Seago, “The Effect of Registered Nurses’ Unions on Heart-Attack Mortality,” Industrial and Labor Rela- tions Review 57 (2004), p. 422; and C. Doucouliagos and P. Laroche, “What Do Unions Do to Productiv- ity? A Meta-Analysis,” Industrial Relations 42 (2003), pp. 650–91.

16. B. E. Becker and C. A. Olson, “Unions and Firm Prof- its,” Industrial Relations 31, no. 3 (1992), pp. 395–415; B. T. Hirsch and B. A. Morgan, “Shareholder Risks and Returns in Union and Nonunion Firms,” Industrial and Labor Relations Review 47, no. 2 (1994), pp. 302–18.

17. K. Maher, “Skills Shortage Gives Training Programs New Life,” Wall Street Journal, May 3, 2005, http:// online.wsj.com .

18. Bureau of Labor Statistics, “Employer Costs for Em- ployee Compensation Summary,” news release, March 12, 2008, www.bls.gov ; and Bureau of Labor Statistics, “Union Affiliation Data from the Current Population Survey,” http://data.bls.gov , accessed March 12, 2008.

19. S. B. Jarrell and T. D. Stanley, “A Meta-Analysis of the Union-Nonunion Wage Gap,” Industrial and La- bor Relations Review 44 (1990), pp. 54–67; and L. Mishel and M. Walters, “How Unions Help All Workers,” Economic Policy Institute Briefing Paper, August 2003, www.epinet.org .

20. S. Webb and B. Webb, Industrial Democracy (London: Longmans, Green, 1897); J. R. Commons, Institutional Economics (New York: Macmillan, 1934).

21. “Why America Needs Unions, but Not the Kind It Has Now,” BusinessWeek, May 23, 1994, p. 70.

22. E. E. Herman, J. L. Schwatz, and A. Kuhn, Collective Bargaining and Labor Relations (Englewood Cliffs, NJ: Prentice Hall, 1992).

23. Kochan, Collective Bargaining and Industrial Relations, p. 61.

24. National Labor Relations Board, Basic Guide to the National Labor Relations Act (Washington, DC: U.S. Government Printing Office, 1997).

25. National Labor Relations Board, “Employees/Employers Not Covered by NLRA,” Workplace Rights, www. nlrb.gov , accessed March 12, 2008.

26. National Labor Relations Board, Basic Guide . 27. Ibid. 28. Ibid. 29. R. B. Freeman and M. M. Kleiner, “Employer Behav-

ior in the Face of Union Organizing Drives,” Indus- trial and Labor Relations Review 43, no. 4 (April 1990), pp. 351–65.

30. J. A. Fossum, Labor Relations, 8th ed. (New York: McGraw-Hill, 2002), p. 149.

31. J. Gallagher, “Driving to Organize,” Traffic World , March 3, 2008; and “UPS Freight Teamsters Gain Steam,” Traffic World , January 28, 2008, both

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downloaded from General Reference Center Gold, http://find.galegroup.com .

32. Herman et al., Collective Bargaining; and P. Jarley and J. Fiorito, “Associate Membership: Unionism or Con- sumerism?” Industrial and Labor Relations Review 43 (1990), pp. 209–24.

33. Katz and Kochan, An Introduction to Collective Bargain- ing; and R. L. Rose, “Unions Hit Corporate Campaign Trail,” Wall Street Journal, March 8, 1993, p. B1.

34. Katz and Kochan, An Introduction to Collective Bargaining.

35. A. E. Eaton and J. Kriesky, “Union Organizing under Neutrality and Card Check Agreements,” Industrial and Labor Relations Review 55 (2001), pp. 42–59.

36. National Labor Relations Board annual reports. 37. Chaison and Rose, “The Macrodeterminants of

Union Growth and Decline.” 38. Fossum, Labor Relations, p. 262. 39. R. E. Walton and R. B. McKersie, A Behavioral Theory

of Negotiations (New York: McGraw-Hill, 1965). 40. C. M. Steven, Strategy and Collective Bargaining Nego-

tiations (New York: McGraw-Hill, 1963); and Katz and Kochan, An Introduction to Collective Bargaining.

41. “The Show Will Resume,” Global Agenda , Febru- ary 12, 2008; and “Writer’s Strike Ends, Viewers to Get Network Shows Again,” Information Week , Feb- ruary 13, 2008, both downloaded from General Refer- ence Center Gold, http://find.galegroup.com .

42. Kochan, Collective Bargaining and Industrial Relations, p. 272.

43. Katz and Kochan, An Introduction to Collective Bargaining.

44. United Steelworkers v. American Manufacturing Com- pany, 363 U.S. 564 (1960); United Steelworkers v. Warrior Gulf and Navigation Company, 363 U.S. 574 (1960); United Steelworkers v. Enterprise Wheel and Car Corporation, 363 U.S. 593 (1960).

45. U.S. Federal Mediation and Conciliation Service, Fifty- Ninth Annual Report, Fiscal Year 2006, www.fmcs.gov .

46. J. R. Redecker, Employee Discipline: Policies and Practices (Washington, DC: Bureau of National Affairs, 1989).

47. T. A. Kochan, H. C. Katz, and R. B. McKersie, The Transformation of American Industrial Relations (New York: Basic Books, 1986), chap. 6; and E. Appelbaum, T. Bailey, and P. Berg, Manufacturing Advantage: Why High-Performance Work Systems Pay Off (Ithaca, NY: Cornell University Press, 2000).

48. L. W. Hunter, J. P. MacDuffie, and L. Doucet, “What Makes Teams Take? Employee Reactions to Work

Reforms,” Industrial and Labor Relations Review 55 (2002), pp. 448–472.

49. J. B. Arthur, “The Link between Business Strategy and Industrial Relations Systems in American Steel Minimills,” Industrial and Labor Relations Review 45 (1992), pp. 488–506; M. Schuster, “Union Manage- ment Cooperation,” in Employee and Labor Relations, ed. J. A. Fossum (Washington, D.C.: Bureau of Na- tional Affairs, 1990); E. Cohen-Rosenthal and C. Burton, Mutual Gains: A Guide to Union-Manage- ment Cooperation, 2nd ed. (Ithaca, NY: ILR Press, 1993); T. A. Kochan and P. Osterman, The Mutual Gains Enterprise (Boston: Harvard Business School Press, 1994); and E. Applebaum and R. Batt, The New American Workplace (Ithaca, NY: ILR Press, 1994).

50. A. E. Eaton, “Factors Contributing to the Survival of Employee Participation Programs in Unionized Set- tings,” Industrial and Labor Relations Review 47, no. 3 (1994), pp. 371–89.

51. A. Bernstein, “Putting a Damper on That Old Team Spirit,” BusinessWeek, May 4, 1992, p. 60; Bureau of National Affairs, “Polaroid Dissolves Employee Com- mittee in Response to Labor Department Ruling,” Daily Labor Report, June 23, 1992, p. A-3; and K. G. Salwen, “DuPont Is Told It Must Disband Nonunion Panels,” Wall Street Journal, June 7, 1993, p. A2.

52. T. Kochan and P. Osterman, The Mutual Gains Enter- prise (Boston: Harvard Business School Press, 1994), p. 202; and A. Bernstein, “Making Teamwork Work— and Appeasing Uncle Sam,” BusinessWeek , Janu- ary 25, 1993, p. 101.

53. “NLRB 4–0 Approves Crown Cork & Seal’s Use of Seven Employee Participation Committees,” HR News, September 3, 2001.

54. Kochan and Osterman, The Mutual Gains Enterprise; J. P. MacDuffie, “Human Resource Bundles and Man- ufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto In- dustry,” Industrial and Labor Relations Review 48, no. 2 (1995), pp. 197–221; W. N. Cooke, “Employee Par- ticipation Programs, Group-Based Incentives, and Company Performance: A Union-Nonunion Com- parison,” Industrial and Labor Relations Review 47, no. 4 (1994), pp. 594–609; and C. Doucouliagos, “Worker Participation and Productivity in Labor-Managed and Participatory Capitalist Firms: A Meta-Analysis,” In- dustrial and Labor Relations Review 49, no. 1 (1995), pp. 58–77.

55. J. Teresko, “Continuing a Winning Culture,” Industry Week , January 2008, p. 42.

CHAPTER 14 Collective Bargaining and Labor Relations 433

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