Management Chapter 11 Managing Labor Relations Managing Labor Relations Learning Objectives Opening Case

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Chapter 11: Managing Labor Relations

Chapter 11

Managing Labor Relations

Learning Objectives

Opening Case: Unionizing in the New Age

Chapter Outline

Closing Case: “Give and Take”

Discussion Questions

Additional Resource: Why We Need Unions More Than Ever

Learning Objectives

After studying this chapter, the student should be able to accomplish the following objectives.

2. Identify and summarize trends in unionization

4. Describe the collective-bargaining process

6. Describe how impasses get resolved and agreements are administered

7. Discuss emerging labor union issues in the 21st century

Opening Case: Unionizing in the New Age

Case Summary

Today, unions at many “old–line” businesses still wield power and represent thousands of

workers. On the other hand, many newer businesses have successfully avoided unionization

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priorities of both the organization and its employees. When this challenge is handled effectively

and constructively, both sides benefit.

I. The Role of Labor Unions in Organizations

Labor relations can be defined as the process of dealing with employees who are represented by

a union. A labor union, in turn, is a legally constituted group of individuals working together to

A. Historical Development of Unions

Figure 11.1 shows the major historical events in the emergence and growth of labor unions in

the United States. For example, the earliest unions in the United States emerged during the

Revolutionary War. These associations were called craft unions, meaning that each union

limited itself to representing groups of workers who performed common and specific skilled

jobs.

Founded in 1886 by Samuel Gompers, the American Federation of Labor (AF of L) was

Chapter 11: Managing Labor Relations

also composed of various craft unions, but unlike the Knights of Labor, the AF of L avoided

legislative and political activities and focused instead on improved working conditions and

better employment contracts. Also unlike the Knights of Labor, the AF of L served as an

umbrella organization, with members joining individual unions affiliated with the AF of L, as

opposed to joining the AF of L itself.

B. Legal Context of Unions

Partly because of the tumultuous history of labor unions in the United States, a great many

laws and regulations have been enacted to deal with unions, and this legislative history is

critical to understanding the development of the U.S. labor movement. The earliest legislation

simply dealt with the question of whether unions were legal.

1977.

The Taft–Hartley Act also established procedures for resolving strikes deemed threatening to

the national interest. For example, the president of the United States has the authority under

the Taft–Hartley Act to request an injunction to prohibit workers from striking for 60 days, a

so-called cooling-off period in which labor and management have a greater chance of

A final significant piece of legislation affecting labor relations is the Landrum–Griffin Act,

which was passed in 1959. Officially called the Labor Management Reporting and

Disclosure Act, this law focused on eliminating various unethical, illegal, and undemocratic

union practices. For instance, the Landrum–Griffin Act requires that (1) national labor unions

C. Union Structures

Figure 11.2 shows the most common basic structure. Locals are unions organized at the level

of a single company, plant, or small geographic region. Each local has an important elected

position called the shop steward, who is a regular employee functioning as a liaison between

union members and supervisors.

II. Trends in Unionization

A. Trends in Union Membership

Since the mid-1950s, labor unions in the United States have experienced increasing difficulty

in attracting new members. For example, in 1977, more than 26 percent of the U.S. wage and

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salary employees belonged to labor unions. Today, that figure is about 12.4 percent of those

from manufacturing to service jobs, they have lost members every year. There was a small

rise in the number of union members in 2017, but the percentage of employees who are union

members stayed steady at 10.7 percent. The overall trends since 1990 are shown in Figure

11.3.

Declining numbers are not the only threat to the U.S. labor union movement. In 2011, Scott

Walker, the governor of Wisconsin, proposed to end all collective bargaining for public

employees in Wisconsin. He was able to implement massive restrictions for public employees

and even transformed Wisconsin into a right to work state. More recently, however, there was

members have been predominantly white males in blue-collar jobs, but today’s workforce is

increasingly composed of women and ethnic minorities. These groups have a much weaker

tradition of union affiliation, so their members are less likely to join unions when they enter

the workforce.

A corollary to these trends has to do with the fact that much of the workforce has shifted

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been to minimize the attractiveness of labor unions for employees.

B. Trends in Union–Management Relations

The gradual decline in unionization in the United States has been accompanied by significant

trends in union–management relations. In some sectors of the U.S. economy, perhaps most

notably the automobile and steel industries have a large membership and considerable power

C. Trends in Bargaining Perspectives

Building on the trends in membership and union–management relationships, bargaining

perspectives have also altered in recent years. For example, previous union–management

bargaining situations were usually characterized by union demands for dramatic increases in

III. The Unionization Process

A. Why Employees Unionize

In the early days of labor unions, people joined them because their working conditions were

unpleasant in many cases. In many parts of the United States and in many industries, these

B. Steps in Unionization

The general steps are shown in Figure 11.4 and are described in more detail below.

• First, employees must have some interest in joining a union.

• If interest in forming a union exists, the National Labor Relations Board is asked to

define the bargaining unit, or the specifically defined group of employees who will be

C. Decertification of Unions

Just because a union becomes certified, however, does not mean it will exist in perpetuity.

Under certain conditions, an existing labor union can be decertified. For decertification to

occur, two conditions must be met.

• First, no labor contract can currently be in force (i.e., the previous agreement must have

expired and a new one is awaiting approval).

IV. The Collective-Bargaining Process

A. Preparing for Collective Bargaining

Management can take several actions to prepare for collective bargaining. For example, the

firm can look closely at its own financial health to work out a realistic picture of what it can

and cannot offer in terms of wages and salaries for its employees. Management can also

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conduct a comparative analysis to see what kinds of labor contracts and agreements exist in

similar companies and what this particular union has been requesting—and settling for—in

the past.

The union can and should undertake several actions to be effectively prepared for collective

bargaining. It too should examine the financial health of the company through sources such as

public financial records. Like management, the union can also determine what kinds of labor

agreements have been reached in other parts of the country and can determine what kinds of

contracts other divisions of the company or other businesses owned by the same corporation

have negotiated recently.

B. Setting Parameters for Collective Bargaining

In general, two categories of items may be dealt with during labor contract negotiations.

• One set of items, as defined by law, consists of mandatory items.

 Mandatory items include wages, working hours, and benefits.

V. Negotiating Labor Agreements

A. The Negotiation Process

A useful framework for understanding the negotiation process refers to the bargaining zone,

which is illustrated in Figure 11.5. During preparations for negotiation, both sides are likely to

attempt to define three critical points. For the organization, the bargaining zone and its three

intermediate points include the employer’s:

• Maximum limit

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resistance point may be the settlement level below which the union will strike)

• Its own expectations about what management is likely to agree to

• The most it can reasonably expect to get from management (the union target point)

Much of the actual negotiation revolves around each party trying to discover the other’s

resistance point without revealing its own. The resulting agreement is not necessarily the end

of the bargaining process. First, the new contract agreement must be ratified by the union

membership. If the union membership votes to reject the contract (which typically reflects

internal union politics more than anything else), the parties must return to the bargaining

table.

As soon as an agreement is reached, both parties begin to make public statements about how

B. Barriers to Effective Negotiation

The foremost barrier to effective negotiation between management and labor is the lack of

overlap for the bargaining zones of the respective sides (i.e., there is a negative settlement

zone). For example, sometimes a long history of acrimonious relationships between

VI. Resolving Impasses

If labor and management have reached an impasse, several actions can be taken by either side or

both sides in an attempt to break the impasse. A strike occurs when employees walk off their

jobs and refuse to work. During a strike, workers represented by the union frequently march at

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management.

Contemporary Challenges in HR: All Shapes and Sizes

Many people associate unions, union members, collective bargaining, and strikes with blue–

collar manufacturing jobs in factories and on assembly lines. But in reality, of course, unions

and their members come in all shapes and sizes today. For instance, airline pilots, teachers,

firefighters, hotel employees, police officers, and writers belong to unions. And just like

factory workers, union members have gone on strike against television networks, airlines, and

public school districts. Labor unions represent players and officials in virtually all sports. And

within the last 25 years, professional baseball, basketball, and football have all significant

labor crisis, ranging from strikes to lockouts and led by players, officials, or team owners.

Think It Over

1. What might most reasonably account for the differences in labor relations at the NFL

and the NBA versus the MLS?

Students’ answers will vary. Team owners and players in the MLS decided not to

2. Some people feel little sympathy for NFL and NBA players, given the large salaries

most make. Others defend those salaries in part based on the likelihood of serious

injury. What is your opinion?

Student’s answers will vary. Some may say that the risks players take contribute to the

popularity of sports such as football and basketball. Players in the NFL and NBA may

Two less extreme tactics that unions sometimes use are boycotts and slowdowns.

• A boycott occurs when union members agree not to buy the products of a targeted

employer.

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 A variation on the slowdown occurs when union members agree, sometimes

informally, to call in sick in large numbers on certain days, an action called a sickout.

Some kinds of strikes and labor actions are illegal. Foremost among these illegal actions is the

wildcat strike, which occurs when workers suddenly go on strike, without the authorization

(presumably) of the striker’s union and while a binding labor agreement is still in effect (which is

what makes it illegal).

Another alternative to resolving impasses is arbitration, or the process in which both sides agree

in advance that they will accept the recommendations made by an independent third-party

arbitrator. In arbitration, however, the information that results is placed in the form of a proposed

A. Administering Labor Agreements

Another key clause in the labor contracts negotiated between management and labor defines

how the labor agreement will be enforced. Wage increases can be calculated mathematically,

and union members will see the effects in their paychecks. Other provisions of many labor

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steward has the option of advising the employee that the supervisor handled the matter

appropriately. But other appeal mechanisms are also available so that the employee, even if

denied by the shop steward, still has channels for appeal.

VII. Labor Unions in the 21st Century

The labor movement in the United States focused on bread-and-butter issues such as wages and

hours of work, unlike the labor movements in many European countries. U.S. labor unions have

become quite vocal in several areas where they have traditionally been silent, speaking out

against child labor in Third World countries and the general exportation of jobs to lower paying

countries.

A. “Replacement” Sources of Labor

The U.S. labor movement has become quite interested in trends such as exporting jobs

overseas and has generally argued that these trends lead to job losses in the United States. For

example, in 2015, there were roughly 1.82 million people serving time in federal or state

B. Contingent Workers

Another source of replacement labor is the pool of contingent workers. Although the

representatives of unions focus on the social implications of these practices, and probably are

C. Unions and the Digital Age

The Internet also presents many interesting challenges for U.S. labor unions. Although unions

must oppose some technological advances for the sake of their members’ jobs if nothing else,

they cannot simply reject these advances wholesale. Clearly, in many cases, the firms

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The Internet presents a challenge to no-solicitation rules. For example, if the organization

allows employees to use the Internet (even if the computers are company owned) to post

thank-you notes, it may be forced to allow union solicitation as well. The NLRB will have to

deal with these issues in the coming years, but the key seems to be nondiscrimination. In other

words, companies cannot (apparently) forbid employees from using the Internet for union

solicitation if companies allow employees to use the Internet for nonbusiness-related

purposes.

Finally, unions have found that the Internet has significant effects on the way they conduct

their own internal business. It has also enabled unions to mobilize international resources to

deal with issues that all union members face wherever they work such as the lower wages and

looser labor regulations associated with agreements under the World Trade Organization.

Closing Case: “Give and Take”

Case Summary

The general view of management and labor unions is that they are antagonists: When one wins,

the other loses—and vice versa. In reality, of course, there are many situations where businesses

and unions coexist quite peacefully. One notable example came from Harley-Davidson, which

needed to reduce its overall costs to remain competitive.

Case Questions

1. Do you think the Harley deal was too one-sided? Why or why not?

2. If you were a Harley or GM employee and a union member, would you have voted for the

new deal? Why or why not?

3. Do you think it is appropriate for a government entity (e.g., the state of Pennsylvania) to

take an active role in union–management negotiations? Why or why not?

Students’ answers will vary. Two sides to these questions are apparent. (1) Government

Discussion Questions

1. Discuss the historical evolution of labor unions in the United States.

Students’ answers will vary. Early organizations of labor during the Revolutionary War

were known as craft unions. The first major union to have a significant impact in the

United States was the Knights of Labor, founded in 1869. The Knights of Labor grew from

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Students’ answers will vary. The popularity of unions in the United States has declined.

However, there was a show of unsuspected power in 2018. Teachers in West Virginia went

6. What steps would you take to increase union membership?

7. Summarize the basic steps employees must follow to create a union.

Students’ answers will vary. First, employees express interest in forming a union, or a

union organizer creates interest. Then, the National Labor Relations Board (NLRB) is

8. What is the bargaining zone?

9. Identify and describe the three general areas that relate to collective bargaining.

Students’ answers will vary. Both parties must negotiate in good faith over mandatory

10. Identify and discuss the methods for resolving impasses.

Students’ answers will vary. Unions use tactics such as strikes, picketing, boycotts,

slowdowns, and sickouts in an attempt to break negotiation impasses with management.

Management can use a lockout as a defensive measure as long as it is not used in an

Additional Resource

Why We Need Unions More Than Ever

Watch Arturo Rodriguez’s talk titled Why We Need Unions More Than Ever at TEDx

1. List probable reasons why the governor struck down the granting of voting rights to farm

workers five consecutive times?