Learning Objective 10-7:
Explain why workers organize into labor unions and describe the collective bargaining
process.
Dealing with Organized Labor
A labor union is a group of individuals working together to achieve shared job-related
goals, such as higher pay, shorter working hours, more job security, greater benefits, or
better working conditions. Labor relations refers to the process of dealing with employees
who are represented by a union.
A. Unionism Today
Since the mid-1980s, U.S. labor unions have experienced increasing difficulties in
attracting new members. In 2016, only 11.1 percent of the U.S. labor force is
represented by a labor union.
The Future of Unions. The American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO), as well as independent major unions such as the Teamsters
and the National Education Association (NEA), still play a major role in U.S. business.
Unions in the traditional strongholds of goods-producing industries continue to wield
considerable power as well. But, even large and influential unions such as the United
Auto Workers (UAW) were forced to make significant concessions during the large–
scale restructuring of the U.S. auto industry in 2008-2009. Also, auto plant closures will
reduce the number of auto jobs in the future.
B. Collective Bargaining
Collective bargaining is the process by which labor and management negotiate
conditions of employment for union-represented workers and draft a labor contract.
1. Reaching Agreement on Contract Terms. By law, union leaders and management
representatives must negotiate “in good faith.” Each party will have its starting point
2. Contract Issues. The contract can address any number of issues, including control
procedures. Some of the issues that are typically most important to union negotiators
are:
a. Compensation. A cost-of-living adjustment (COLA) is one of the most
common tools for securing wage increases. Wage reopener clauses provide
for renegotiating wage rates at preset times during the duration of the
contract.
3. When Bargaining Fails. An impasse occurs when, after a series of bargaining
sessions, management and labor have failed to agree on a new contract or a contract
to replace an agreement that is about to expire. Each side has tactics at its disposal
once an impasse is reached.
a. Union Tactics. When their demands are not met, unions may bring a variety
of tactics to the bargaining table. Historically, one of the most common
tactics has been a strike. A strike occurs when employees walk off the job
and refuse to work. Beginning in the 1990s, the number of strikes per year
has declined dramatically.
b. Management Tactics. Lockouts occur when employers deny employees
access to the workplace. A firm can also hire temporary or permanent
replacements called strikebreakers. In some cases, an employer can obtain
legal injunctions that either prohibit workers from striking or prohibit a
union from interfering with its efforts to use replacement workers.
4. Mediation and Arbitration. In mediation, a neutral third-party offers advice and
suggestions in settling a labor-management dispute; in arbitration, the neutral third
KEY TEACHING TIPS
Remind students that the official term describing the process of dealing with
employees represented by a labor union is labor relations.
Remind students that collective bargaining is much like the negotiation process.
When involved with collective bargaining, both labor and management present
demands and then focus on identifying the bargaining zone.
Be sure students understand that a contract involves many more topics than simply
pay scales. Benefits and job security frequently are very important topics in a
negotiation.
Students often confuse mediation and arbitration. Mediation involves a third party
who makes recommendations to solve a dispute; arbitration involves a third party
who makes a legally binding decision to solve a dispute.
QUICK QUESTIONS
In most sectors, unions are in a weakened position compared with many decades
ago. How has this affected the way in which labor works with management?
What issues are typically most important to union negotiators when collective
bargaining with management?
Learning Catalytics is a “bring your own device” student engagement,
assessment, and classroom intelligence system. It allows instructors to engage
Pearson Representative.
IN-CLASS ACTIVITIES
In-Class Activity 1: Ice-Breaker: Writing a Job Description
Activity Overview:
This activity asks students to write a job description for an instructor and for a student.
Time Limit: 45 minutes
What to Do:
1. Review what is included in a job description, then ask students to think about what
2. Split the class into small groups, asking members of each group to share what they came
up with in Step 1. (10 minutes)
3. Ask each group to further discuss what should be included in their instructor’s job
4. Reassemble the class and discuss each group’s suggestions. (15 minutes)
Don’t Forget:
In-Class Activity 2: Up for Debate: Performing Appraisals, Laying It On
the Line
Activity Overview:
This activity asks students to consider the steps involved in determining whether to fire
someone.
Time Limit: 30 minutes
What to Do:
2. Ask groups to consider the points Dan Yoo describes in the case. Do you think these
points make sense? Do they make sense for employees? Do they make sense for
employers? (10 minutes)
3. Regroup the class as a whole and discuss each group’s input, then ask the class to come
up with a final decision. (10 minutes)
Don’t Forget:
In-Class Activity 3: Small-Group Discussion: What Motivates Employees?
Activity Overview:
This activity asks students to consider what companywide incentives might motivate
workers who work in specific jobs.
Time Limit: 30 minutes
What to Do:
1. Divide the class into small groups and assign each group to one of the jobs below: (5
minutes)
2. Ask each group to brainstorm what incentives would be especially motivating for a
3. Reassemble the class and ask each group to share their results, allowing all students to
share input. (15 minutes)
Don’t Forget:
ANSWERS FOR END OF CHAPTER ACTIVITIES
QUESTIONS FOR REVIEW
10-1. What are the advantages and disadvantages of internal and external recruiting? Under
what circumstances is each more appropriate?
Internal recruiting builds morale and motivation for other employees who see peers
being promoted; in addition, with internal recruiting, there is no need to teach the culture
10-2. Why is the formal training of workers so important to most employers? Why don’t
employers simply let people learn about their jobs as they perform them?
Employers need to ensure that workers are performing their jobs correctly and
efficiently in order to prevent costly errors. Also, in order to be socially responsible to
10-3. What different forms of compensation do firms typically use to attract and keep
productive workers?
Individual incentives may include bonuses, merit pay, or pay-for-performance.
Companywide incentives include profit-sharing plans, gain-sharing plans, and pay-for–
10-4. What is a knowledge worker? What strategies do companies use to retain knowledge
workers?
Copyright © 2019 Pearson Education, Inc.
10–22
may include financial compensation at market rates as well as training opportunities to
help them maintain and update their knowledge and skills. (Learning Objective 6 –
AACSB – application of knowledge)
QUESTIONS FOR ANALYSIS
10-5. What are your views on drug testing in the workplace? What would you do if your
employer asked you to submit to a drug test?
10-6. Workers at Ford, GM, and Chrysler are represented by the UAW. However, the UAW
has been much less successful in its attempts to unionize U.S. workers employed at
Toyota, Nissan, and Honda plants in the United States. Why do you think this is so?
10-7. What are the advantages and challenges of having a diverse workforce?
Answers will vary, but many students will recognize that a diverse workforce provides
10-8. How much will benefit considerations affect your choice of an employer after
graduation? What types of benefits would be most and least appealing to you and why?
Student answers will vary, as age, experience, and life-stage (single, married, with or
without children, living arrangements, etc.) will influence their decisions. Students do
APPLICATION EXERCISES
10-9. Go online and search for at least three companies that are considered great places to
work. Describe the compensation, benefits, and perks at each of these companies. Of the
three, which is most appealing to you and why?
10-10. Interview the HR manager at a local company about their hiring processes. Describe
how they recruit employees to apply for jobs, the steps in the selection process, and their
orientation program for new employees.
Answers will vary based on the company and the position. However, most HR managers
BUILDING A BUSINESS: CONTINUING TEAM EXERCISE 10-11 TO 10-15
(Learning Objectives 2, 3, and 4 – AACSB – interpersonal relations and teamwork,
reflective thinking)
Answers will be determined by the type of business (brick and mortar, e-commerce, etc.),
the numbers and types of employees needed, the competition, prevailing wages, projected
company finances, normal industry practices, etc.
TEAM EXERCISE: THE DOWNSIDE OF DOWNSIZING 10-16 TO 10-20
(Learning Objectives 2 and 6 – AACSB – ethical understanding and reasoning,
interpersonal relations and teamwork, reflective thinking)
This should be an interesting discussion because students will bring their own perspectives
on race, gender, and job performance to this exercise. Students should focus on job
performance and contributions to the company when making their decisions but the
discussion will be wide ranging covering the legal issues, diversity, perception, etc.
10-16. Students must keep in mind all the non-discrimination laws, including Title VII of
10-20. The Entrepreneurship and New Ventures feature provides some insight into how to
EXERCISING YOUR ETHICS: OPERATING TACTICALLY
(Learning Objective 7 – AACSB – ethical understanding and reasoning, reflective
thinking)
10-21. What are the ethical issues in this situation?
10-22. What are the basic arguments for and against extreme measures to fight unionization
efforts?
Basic arguments for extreme measures to fight unionization include the need to limit
10-23. What do you think most managers would do in this situation? What would you do?
CASES:
A UNIQUE PARTNERSHIP DRIVES WEGMANS
(Learning Objective 4 – AACSB – reflective thinking)
When discussing this case, students should focus on the pros and cons of internal and
external recruiting, recognizing that internal recruitment builds loyalty and often leads to
lower employee turnover but recognizing that not every position can be filled from
within. Plus, external recruits can bring a different and valuable perspective.
When discussing the training program, students need to focus on the skills that the
managers will ultimately need. The employee appraisal question should generate much
discussion with many students basing their answers on how effective they think their
company’s annual appraisal is.
10-24. If you were an HR executive at Wegmans, would you focus more on internal
recruiting or on external recruiting? Would your strategy for higher-level positions
differ from your strategy for lower-level positions? How would current economic
conditions influence your strategy?
Both kinds of recruiting are important for Wegmans. Internal recruiting should be used
10-25. As an HR executive at Wegmans, you need to hire a group of new employees as part
of your management-trainee program—people who will be put on a track leading,
ultimately, to positions as store managers. Briefly outline your program for developing
these employees.
Students will need to create a training and development plan, focused on moving people
10-26. If you were an employee at Wegmans, how would you expect your annual
performance appraisal to be conducted? Given the company’s customer-relations
strategy, which appraisal methods do you think would be most appropriate?
Common appraisal methods include objective measures of performance, such as sales
volume, and judgmental methods, including ranking and rating techniques. Each has
A REALLY GREAT PLACE TO WORK
(Learning Objective 4 – AACSB – reflective thinking)
Students’ perspective will frame their answer to this question based on their current
experience in the workforce, their experiences with wages and salaries, and other
benefits described. Students at different life stages will find that different benefits appeal
to them.
One possible trade-off is the location of the company, though Cary is near the Research
Triangle area in North Carolina. Another trade-off is that the company is privately-held,
meaning that publicly-traded stock options are unavailable as an incentive.
10-27. After reading about SAS Institute, what would appeal to you most about working
there?
10-28. What trade-offs is SAS making to offer the benefits and culture described?
10-29. What types of policies and benefits do you believe are most supportive of work/life
balance?
10-30. What challenges might you face as a manager working in this environment? How
could you overcome these challenges?
CRAFTING A BUSINESS PLAN
PART 3: PEOPLE IN ORGANIZATIONS
This part of the business plan asks students to think about their employees, the jobs they will
be performing, and the ways in which they can lead and motivate them. Students take the
different job titles they created in the organizational chart in Part 2 and give thought to the
skills that employees will need to bring to the job before they begin. They also consider the
training they’ll need to provide employees after they are hired, as well as how they’ll
compensate their employees. Part 3 of the business plan also asks students to consider how
they’ll lead employees and keep them happy and motivated.
Files to Provide Students:
For this part of the project, students will be asked to complete Part 3: People in
Organizations (see below). If students have already started working on the business plan
project, they should continue using the student.
Part 3 Estimated At-Home Completion Time:
If done well, this section will require a minimum of 3 to 5 hours. As noted previously,
because some companies will have more job descriptions and job specifications than others,
you may want to limit the number you ask students to complete.
Homework Deliverable from Students:
The length of this section should be somewhat consistent, although some variance can be
expected depending on the size and complexity of the business. You should expect at least 3
to 5 pages in this section.
STUDENT BUSINESS PLAN PROJECT TEMPLATE
PART 3: PEOPLE IN ORGANIZATIONS
CORPORATE CULTURE
What do you see as the ―corporate culture‖ of your business? What types of employee
behaviors, such as organizational citizenship, will you expect?
LEADERSHIP PHILOSOPHY
What is your philosophy on leadership? How will you manage your employees day–to–
JOB DESCRIPTIONS
Looking back at your organizational chart in Part 2, briefly create a job description
for each team member.
Hint: As you learned in Chapter 10, a job description lists the duties and responsibilities of
a job, its working conditions, and the tools, materials, equipment, and information used to
JOB SPECIFICATIONS
Next, create a job specification for each job, listing the skills, credentials, and
qualifications needed to perform the job effectively.
Hint: As you write your job specifications, consider what you would write if you were
making an ad for the position. What would the new employee need to bring to the job in
order to qualify for the position?
Insert Job Title #1:
Insert Needed Skills/Credentials/Qualification for Job:
Insert Job Title #2:
Insert Needed Skills/Credentials/Qualification for Job:
Insert Job Title #3:
Insert Needed Skills/Credentials/Qualification for Job:
TRAINING EMPLOYEES
What sort of training, if any, will your employees need once they are hired? How will
you provide this training?
Hint: Refer to the discussion of training in Chapter 10. Will you offer your employees on–
the-job training? Off-the-job training? Vestibule training?
COMPENSATION
A major factor in retaining skilled workers is a company’s compensation system—the
total package of rewards that it offers employees in return for their labor. Part of this
compensation system includes wages/salaries. What wages or salaries will you offer for
each job? Why did you decide on that pay rate?
Hint: Refer to Chapter 10 for more information on forms of compensation. You may also
INCENTIVES
As you learned in Chapter 10, incentive programs are special programs designed to
motivate high performance. What incentives will you use to motivate your workforce?
Hint: Be creative and look beyond a simple answer, such as giving pay increases. Ask
yourself, who are my employees and what is important to them? Refer to Chapter 10 for
more information on the types of incentives you may want to consider.