Please click here to access the new HRM Failures case associated with this chapter. HRM
Failures features real-life situations in which an HR conflict ended up in court. Each case
includes a discussion questions and possible answers for easy use in the classroom. HRM
Failures are not included in the text so that you can provide your students with additional
real-life content that helps engrain chapter concepts.
Chapter Summary
This chapter provides an overview of private-sector labor-management relations in the United
States, with brief attention to public-sector differences and international labor relations. After a
model of labor-management relations and a context for current relationships are provided,
various aspects of the process of collective bargaining are described. Cooperative forms of
labor-management relations are then presented. Finally, an explanation is given for how changes
in competitive challenges are influencing labor-management interactions.
Learning Objectives
After studying this chapter, the student should be able to:
1. Describe what is meant by collective bargaining and labor relations.
2. Identify the labor relations, goals of management, labor unions, and society.
3. Explain the legal environment’s impact on labor relations.
4. Describe the major labor-management interactions: organizing, contract negotiations, and
contract administration.
5. Describe the new, less adversarial approaches to labor-management relations.
6. Explain how changes in competitive challenges (e.g., product-market competition and
globalization) are influencing labor-management interactions.
7. Explain how labor relations in the public sector differ from labor relations in the private
sector.
Extended Chapter Outline
Note: Key terms appear in boldface and are listed in the “Chapter Vocabulary” section.
1.1 Opening Vignette:
Unions and Evolving Worker Rights in Low-Wage Countries
This vignettes describes the changes in union and labor activity in other parts of the world. In
particular, it overviews conditions at one Chinese factory, Ohms Electronics, concerning worker
rights and union representation. In this case, striking workers received not only an increase in
salary, but also an agreement that the company would allow workers to vote for who would
represent them in the government approved labor union. Although it is supposed to be law that
the workers vote on these representatives, most organizations typically appoint a worker who
would better represent the company’s interest. There appears to be concern on the part of
China’s ruling Communist Party concerning worker representation, although as long as the
unions stay out of politics the government seems to be becoming more tolerant. The vignette
also addresses the fact that workers throughout the world also need union representation to
protect their very safety (i.e. the garment factory tragedy in Bangladesh that killed 1,100 people).
Discussion Question
1. Is the time of necessity for labor unions passed here in the United States? Is the same
true for other growing regions of the world?
Students will have a variety of opinions on this issue. The argument can certainly be
I. Introduction—The events in China illustrate that unions can help achieve important
worker goals, including not only higher wages, but also worker protection, and giving
workers a say in their workplaces..
II. The Labor Relations Framework (text Figure 14.1)
A. John Dunlop suggested a labor relations system that consists of
four elements:
1. An environmental context (technology, market forces, etc.).
2. Participants: employees and their unions, management, and the
government.
3. A web of rules (rules of the game) that describe the process by which labor
and management interact and resolve disagreements.
4. Ideology (acceptance of the system and participants).
B. Katz and Kochan have presented a model that focuses on the decision-making
process and outcomes.
1. At the strategic level, management makes basic choices such as whether to
work with its union or develop nonunion operations.
2. These labor and management choices made at the strategic level affect
interaction at the second level, the functional level, where contract
negotiations occur.
3. These strategic decisions also affect the workplace level, the arena in
which the contract is administered.
2 III. Goals and Strategies
A. Society—Labor unions’ major benefit to society throughout history has been the
balancing of power and the institutionalization of industrial conflict in the least
costly way. The National Labor Relations Act (NLRA, 1935) sought to provide a
legal framework conducive to collective bargaining.
B. Management must decide whether to encourage or discourage the unionization of
its employees. Based upon issues of wage cost, flexibility, and labor stability, as
well as ideology, management must decide. If management has a union, it has the
option of supporting a decertification vote, an election in which employees have a
chance to vote out the union.
C. Labor unions seek to give workers formal representation in setting the terms and
conditions of employment. (See text Table 14.1 for categories of provisions in
collective bargaining agreements).
2.1.1.1.1.1.1
Integrity in Action:
Who Pays for Cheap Clothing?
This case discusses the safety concerns for many workers in developing economies where cheap
products and produced. One issue that is brought up is that while people are appalled by the
conditions the workers work under, they are not willing to give up the bargain priced products.
Many European retailers have signed the “Bangladesh Safety Pact” – an agreement under which
they agree to help pay for building improvements and fire safety of some producers. US retailers
have so far not signed the agreement due to legal concerns their European counterparts do not
face (class action lawsuits).
Discussion Question 1
1. Does your clothing purchasing decision depend on where the clothing was made and
whether the working conditions and treatment of employees is acceptable?
2. Should retailers stop sourcing garments from Bangladesh?
2.1.1.1.1.1.2
Evidence-Based HR
This vignette speaks to the issue of subsistence wages being paid in the developing countries
many goods are produced in and the slender cost structure of the companies they work for. In
this case, Bangladesh, where the minimum wage for a garment worker is $64 per month – not
enough to pay for rent and food for a family of 3. Solutions being proposed include increasing
the minimum wage. However, an increase in the minimum wage would likely put many
producers out of business. Additionally, recent calls for increased safety conditions for workers
that resulted from recent workplace tragedies call to question who will ultimately pay for the
increased costs. The resulting increased cost structure may cause retailers to purchase their
products elsewhere, which would crush the fragile economy of the country. Other proposed
solutions included increase worker rights to form labor unions which would allow for negotiation
for better wages and safety conditions.
Exercise
Have students form groups and explore the differential cost structures for a family in Bangladesh
(based on the information in the case) and for a family in the US. Have them consider the
differences in lifestyle as well as the difference an increase in salary of $26 per month would
have on each family’s lifestyle. Next have them look at the cost structure outlined in the case for
a garment producer and compare that with cost factors US producers would face. Ask them to
discuss ideas for their proposed solutions to the issues outlined in the case (i.e. balancing
between subsistence wages and the safety of workers, etc.).
2.1.1.1.1.1.3 IV. Union Structure, Administration, and Membership
A. National and international unions are composed of multiple local unions, and
most are affiliated with the American Federation of Labor and Congress of
Industrial Organizations (AFL-CIO) (see Table 14.2 in the text for a list).
B.
1. Craft unions are those that organize members of a particular skill or trade,
such as electricians or plumbers. Craft unions are likely to be responsible
for training programs called apprenticeships.
2. Industrial unions are made up of members who work in any number of
positions in a given industry, such as the auto or steel industry. Whereas
craft unions may wish to control the number of members, industrial unions
wish to maximize the number of members.
B. Local unions are frequently responsible for the negotiations of a contract as well
as the day-to-day administration of the contract, including the grievance
procedure. Typically, an industrial local corresponds to a single manufacturing
facility.
C. The AFL-CIO is not a union but rather an association that seeks to advance the
shared interest of its member unions at the national level. It represents labor’s
interests in public policy issues and provides numerous services to its members, in
terms of research and education (text Figure 14.2).
D. Union security depends upon its ability to ensure a stability of members and dues.
Unions typically negotiate two contract provisions that defines the relationship an
employer has to employees and that critical to a union’s security or viability:
1. A checkoff provision is an automatic deduction of union dues from an
employee’s paycheck.
2. A closed shop is a union security provision under which a person must be
a union member.
3. A union shop requires a person to join the union within a certain length of
time after beginning employment.
4. An agency shop is similar to a union shop, but does not require union
membership, only that an agency fee be paid.
5. Maintenance of membership requires only that those who join the union
remain members through the life of the current contract.
6. Right-to-work laws—As a function of the Taft-Hartley amendment to the
NLRA, states may decide to make mandatory union membership (or even
dues paying) illegal.
E. Union Membership and Bargaining Power—Employers are increasingly resisting
unionization. Unions are making new attempts to organize new memberships and
to provide new services. Union membership has consistently declined since 1950
and now stands below 10 percent of private-sector employment (text Figure 14.3).
Reasons for this decline are noted below:
1. Structural Changes in the Economy—These changes include decline in
core manufacturing and increase in the service sector. But these changes,
according to studies, only account for 25 percent of the overall union
membership decline.
2. Increased Employer Resistance—Almost 50 percent of large employers in
a survey reported that their most important labor goal was to remain union
free. Unions’ ability to organize whole industries has declined, and
therefore wages are rarely taken out of competition. Additionally, studies
have shown that if a union wins an election, it is frequently the case that
managers lose their jobs (see Figure 14.4 for the increase in employee
resistance to union organizing).
3. Substitution with HRM—In large nonunion companies, HRM policies and
practices may encourage positive employee relations, and therefore union
representation is not desired by employees.
4. Substitution by Government Regulation—Employment laws have been
passed that reduce the areas in which unions can make a contribution.
5. Worker Views—The lack of a U.S. history of feudalism and class
distinctions has limited the class-consciousness needed to support a strong
union movement.
6. Union Actions and Industry Structure – Corruption, resistance to obvious
economic change, and openness to women and minorities have all hurt the
perception of union.
V. Legal Framework—Legislation and court decisions that provide the structure within
which unions must operate have had an effect upon membership, bargaining power, and
the degree to which unions and managements are successful in achieving their goals. The
1935 NLRA enshrined collective bargaining as the preferred mechanism for settling
labor-management disputes. The Great Depression of the 1930s shifted public attitudes
toward business and the free-enterprise system. Section 7 of the act 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 activities for the purpose of collective bargaining.” Table
14.3 shows that there are some notable exclusions to the NLRA in the private sector.
A. Unfair Labor Practices (ULPs)—Employers: The National Labor Relations Act
(1935) prohibits certain activities by both employers and labor unions. Section
8(a) of the NLRA contains ULPs by employers.
1. Employers cannot interfere with, restrain, or coerce employees in
exercising their Section 7 rights.
2. Employers cannot dominate or interfere with a union.
3. Employers may not discriminate against an individual for exercising his or
her right to join or assist a union.
4. Employers may not discriminate against employees for providing
testimony relevant to enforcement of the NLRA.
5. Employers cannot refuse to bargain collectively with a certified union
(other examples are given in text Table 14.4).
B. Unfair Labor Practices—Labor Unions: Originally the NLRA did not list any
union unfair labor practices. These were added by the 1947 Taft-Hartley Act.
1. These ULPs parallel those listed previously. For example, unions may not
restrain or coerce employees in the exercise of their Section 7 rights (see
Table 14.5 in the text for additional examples).
C. Enforcement—The National Labor Relations Board (NLRB) has the primary
responsibility for enforcing the NLRA.
1. The NLRB is a five-member board appointed by the president.
Additionally, there are 33 regional offices.
2. Only businesses involved in interstate commerce are covered by the
NLRA and therefore subject to the NLRB.
3. The NLRB has two major functions:
a. To conduct and certify representation elections.
b. To prevent unfair labor practices.
4. ULP charges are filed at and investigated by the regional offices.
5. The NLRB may defer to the parties’ grievance process instead of holding a
hearing.
6. The NLRB can issue a cease-and-desist order to halt a ULP. It may order
reinstatement and back pay. The court of appeals can choose to enforce the
NLRB’s orders.
2.1.1.1.1.1.4 VI. Union and Management Interactions: Organizing
2.1.1.1.1.1.4.1.1 A. Why Do Employees Join Unions?
1. Is there a gap between pay, benefits, and other conditions of employment
that employees actually receive versus what they believe they should
receive?
2. If such a gap exists, is it sufficiently large enough to motivate employees
to remedy the situation?
2.1.1.1.1.1.4.1.2 B. The Process and Legal Framework of Organizing—An election may
be held if at least 30 percent of the employees in the bargaining unit
sign authorization cards. A secret ballot election will be held. The union is
certified by the NLRB if a simple majority of employees vote for it (Figure 14.5).
1. A decertification election may be held if no other election has been held
within the year or if no contract is in force.
2. The NLRB must define the appropriate bargaining unit and the employees
who are eligible to participate in organizing activities.
3. Certain categories of employees cannot be included.
C. Organizing Campaigns: Management and Union Strategies and Tactics (see text
Tables 14.6 and 14.7 for common campaign issues).
1. Table 14.8 in the text indicates employers use a variety of methods to
oppose unions in organizing campaigns. Additionally, note the significant
increase in employer ULPs since the late 1960s.
2. The consequence of breaking the law in this situation is minimal.
3. The NLRB may set aside the results of an election if the employer has
created “an atmosphere of confusion or fear of reprisals” (Table 14.9).
4. Associate union membership is a form of union membership in which
the union receives dues in exchange for services but does not provide
representation in collective bargaining.
5. Corporate campaigns seek to bring public, financial, or political pressure
on employers during the organizing and negotiating process.
VII. Union and Management Interaction: Contract Negotiation— Bargaining structures, the
range of employees and employers that are covered under a given contract, differ, as
shown in text Table 14.10.
A. The Negotiation Process—Walton and McKersie suggested that negotiations
could be broken into four subprocesses:
1. Distributive bargaining occurs when the parties are attempting to divide
a fixed economic pie into two parts. What one party gains, the other loses.
2. Integrative bargaining has a win-win focus; it seeks solutions beneficial
to both sides.
3. Attitudinal structuring refers to the relationship between labor and
management negotiators.
4. Intraorganizational bargaining is the consensus-building and
negotiations that go on between members of the same party.
B. Management’s preparation for negotiations is critical to labor costs and
productivity issues. The following steps are suggested:
1. Establish interdepartmental contract objectives among industrial relations
and finance, production, and so on.
2. Review the old contract to focus on provisions needing change.
3. Prepare and analyze data on labor costs, your own and competitors’. Data
on grievances, compensation, and benefits must be examined as well.
4. Anticipate union demands by maintaining an awareness of the union
perspective.
5. Establish the potential costs of various possible contract provisions.
6. Make preparations for a strike, including possible replacements, security,
and supplier and customer.
7. Determine the strategy and logistics for the negotiators.
2.1.2 C. Negotiation Stages and Tactics
1. The early stages may include many individuals, as union proposals are
presented.
2. During the middle stages, each side makes decisions regarding priorities,
theirs and the other parties’.
3. In the final stage, momentum may build toward settlement or pressure
may build as an impasse becomes more apparent. May involve interaction
with negotiators or facilitators. More small groups are used to address
specific issues.
4. Getting to Yes by Fisher and Ury presents four principles of negotiations:
a. Separate the people from the problem.
b. Focus on interests, not positions.
c. Generate a variety of possibilities before deciding what to do.
d. Insist that the results be based on some objective standard.
D. Bargaining Power, Impasses, and Impasse Resolution—An important determinant
of the outcomes of negotiations is the relative bargaining power of each party.
Strikes impose various economic costs on both sides and therefore, in part,
determine the power.