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Lecture #1: History of Personnel Management and Industrial Relations

The following was primarily taken from Bruce E. Kaufman, _The Origins and Evolution of the Field of Industrial Relations in the United States_ (Ithaca, NY: ILR Press, 1993). The transformation of the U.S. economy form an agrarian to industrial base began in earnest around 1870. This fundamental shift brought more severe fluctuations in the business cycle, a remarkable accumulation and concentration of wealth in the hands of industrialists, and economic competition based on wage cutting. The last item in particular gave rise to conflict and violence in the workplace and presented the "labor problem" to policy makers. The Taft Commission of 1912 contained the first use of the term, industrial relations, and by the 1920's industrial relations (IR) had evolved into a full fledged field of academic inquiry, although degrees and programs in the field did not mature until the 1940's.. IR arose in the context of three distinct theoretical views of the economic system. One was the laissez faire view that government should minimize its role and influence in the economy, and thus in the affairs of labor-management relations. The second was Marxism, which essentially rallied the energies of revolutionaries to the view that labor created all wealth and thus should control and enjoy the fruits of all its efforts. The IR view was something of a middle ground, and for a brief period united both pragmatists and academics in the pursuit of alternatives to the above extremes. The unifying professional organization was the Industrial Relations Association of America, founded in 1920. Part of the impetus for the need for such an organization was the experience of different institutional structures and organizational changes brought by the National War Labor Board during WWI. However, the intellectual harmony of academics and practitioners under the IRAA was to be short lived, and a split was evident in the 1920's. The IRAA was succeeded by the American Management Association, under which the distinctly practitioner oriented field of Personnel Management (PM) arose. PM focused on "better management" via combining the principles of scientific management and human relations, this era in the 1920's often being referred to as corporate welfare capitalism, or paternalism. To consolidate its organizational legitimacy PM had to wrest power from the old foreman "drive system" of control in the employment process. This marked a shift to a professional cadre withing the organization to handle such matters. The orientation was on problem solving and related applications were drawn from such fields of study as engineering, management, and psychology. The scope of activity was intraorganizational. With the split in the IRAA, the IR field gravitated toward the

Institutional Labor Economics school of thought, which essentially viewed unions and collective bargaining as central to the solution of U.S. labor problems. This scope of inquiry was interorganizational in nature and held the belief that democracy (via unions) had an essential role in the employer-employee relationship. The Great Depression ended the era of welfare capitalism, gave rise to intense labor strife, and ultimately lead to the legitimization of the role of unions and collective bargaining as American institutions. The ensuing legislation also outlawed "company unions." WWII and the re-establishment of the NWLB served to accelerate the evolution of numerous institutions which continue to play large roles in both PM and IR. These include employee benefits, job analysis, and arbitration. The body of law defining labor relations continued to evolve until the 1960's, when a defining turn was taken in the direction of legislating individual, as opposed to collective, rights in the workplace. Also, by the 1960's the dichotomy between PM and IR was complete. PM went the theoretical route which is nurtured by human capital theory, viewing people as assets, eventually evolving into what we know as human resources management. IR consolidated its alliance with the study of collective bargaining (CB), and as the fortunes of CB have gone, so to has IR. As was demonstrated in class, the academic curriculum tends to reflect both this intellectual heritage, and the current state of confusion and overlap in these and related fields of study. Present issues, such as the TEAM Act before congress, should be viewed with a historical perspective, but tend to return to the interorganizational and CB heritage of IR. Finally, with the PM/IR split undisputed by the 1960's, attempts to define a theoretical framework for IR began. This is the focus of the next lecture.

Lecture #2: The Early Evolution of an IR Theoretical Construct


Like it or not, the juxtaposition of whatever alternative theory explored is with the market, and in most cases this requires a thorough understanding of the neoclassical theory of markets, which treats wages in the microeconomic context of marginal analysis of value added and cost. In the macroeconomic context the focus is on market adjustments in the supply and demand context of wages and labor. But as we shall see IR theories do not accept this view as all-commanding. A seminal work in IR theory, _Trade Union Wage Policy_, was published by Arthur M. Ross in 1956 (Univ. of California Press). The target of

Ross's inquiry was the process of wage determination in an industrialized society. He was particularly keen on pointing out the divergence of the market view (wages determined by marginal productivity theory) and the view that in a modern socio-economic system, humans can be the masters rather than the servants of the market. Ross argued that mastery required the ability to influence the big decisions, and this in turn required collective bargaining and unions, which were characterized as political institutions with practical objectives (business unionism) including equity, justice, and rational organization, none of which necessarily conformed to the laws of marginal productivity or supply and demand. Essentially, Ross's theory comes to rest on the dynamics of comparative wage relationships--e.g., the percent vs. absolute amount of wage increases, equitable comparisons, and patterns and interdependencies of wage relationships. To crystallize this perspective, Ross coins the phrase "orbits of coercive comparison," which suggests the framework of IR analysis and critical questions to be addressed, such as when comparisons are most compelling, when a difference becomes an inequity, the paths of political pressures created by comparisons, corporate ownership and union organizing patterns, and product market relationships. He further remarks that the pressure for uniform treatment is irresistible, and government has a large role to play in this process. Equilibrium in the Ross context is a balancing of these forces. However, he views such an equilibrium as unstable. The next major contribution to IR theory was John Dunlop's _Industrial Relations Systems_ (NY: Henry Holt and Company, 1958). Like Ross, and the comments from Gerald Somers which follow after this summary, Dunlop was writing during the golden era for unions. Hence, IR theory during this period, though it took into account the broader context of institutions and even the market, was essentially all about unions, or their influences. Dunlop's systems approach contained more of an inherent tendency of stability than did Ross's view. Dunlop took Ross's conceptual a bit further by introducing a framework required for theoretical rigor and consistency. His definition of a system required an inner rationality and compatibility of views (ideology). This meant stable and predictable relationships, such as patterns of wage relationships, which in the more abstract context were referred to as wage contours (but kin to the essence of comparative dynamics of Ross). This systems view categorized the actors (workers, managers, and the relevant government agencies), and the environments within which the IR systems fit (technology, markets, and power relationships). Within this context the analytic focus then became the web of rules emerging in the collective bargaining relationships. Dunlop then proceeded to declare his vision of the purpose of IR theory. "The central task of a theory of industrial relations is to explain why particular rules are established in particular industrial relations systems and how an why they change in responses to changes affecting the system." (p. ix) This view clearly had appeal for international IR comparisons. [Note: The recently revised Dunlop text has not been reviewed for this summary.]

Despite Dunlop's appeal, by the end of the 1960's Gerald G. Somers' book, _Essays in Industrial Relations Theory_ (Iowa State University Press, 1969), clearly indicated a disarray in IR theory, in part due to the continued fragmentation of the field, a point noted by Somers' need for such inclusiveness in the following quote. "All the forces of society, community, human motivation, and the labor market propel the worker [to the workplace]. All the forces of the product market and personnel recruitment pull him there. Technology, group behavior, union and management organization, government regulation, and personnel administration help determine the terms and conditions of his employment." (p. 44) Also in the Sommers text is an essay by Milton Derber, who essentially defines the current rationalization for unions and the collective bargaining process ("Industrial Democracy as an Organizing Concept for a Theory of Industrial Relations"). He concludes that the organization of labor is primarily justified because of its contribution to the democratic way of life in the U.S., though unions do not necessarily lead to a more democratic workplace. The achievement of this state requires that a number of conditions be met, itemized below. Shared power & authority Workers' freedom to choose their own representatives without interference Majority rule form appropriate constituencies Participation (voice) and consultation on workplace affairs Equal rights for individuals Due process--fair hearing, just decisions, ability to complain Minority rights--dissent, free speech, orderly opposition Responsibility--contractual duties, violations and penalties defined Minimum employment standards--wages, hours, working conditions Information--no secret or collusive agreements We come full circle in this lecture by noting that Derber's ideas of industrial democracy have essentially remained the core IR for the past quarter century. This view is upheld by Kaufman's historical review previously summarized. Kaufman states, "True democracy means that decisions are reached only with the consent of the governed, implying that workers must be able to elect representatives of their own choosing, engage in collective bargaining over wages and other conditions of employment, and go on strike if agreement can not be reached." (p 42) Other Topics Covered in this Class Session Unions and Internet Stagnation of Real Wage Growth Since Early 1980s Earnings Inequality

Lecture #3: Historical and Legal Foundations of Unions and Collective Bargaining
This section of the course covers the first 5 chapters of Leap, which provide background on labor history and the evolution of collective

bargaining in the U.S. The labor theories discussed by Leap are somewhat of a separate doctrinal area than what has been covered above, but you should see the connection in some streams of thought. Strictly speaking, Leap includes traditional labor economists explanations to describe the labor movement and underlying causes, where the IR/HR overview was a narrower focus. In order to understand the role unions play in our socio-economic system developing a good working knowledge of the history and legislative evolution is absolutely essential. Within this context an appreciation of the complexity of the collective bargaining system in U.S. is a crucial conceptual framework for applying the nuts and bolts of practice. For example, whether the economic environment is in the public or private sector, defined by specific states, or even specific industries (e.g., air or rail transportation) will largely dictate the rules of labor-management relations. These rules include the progression from the determination of the bargaining unit to certification elections, contract negotiations, collective bargaining agreements, contract administration (with such provisions as wages, hours, working conditions, joint consultation, and grievance procedures), mediation, arbitration, and whether there is a right to strike (and related conditions). This is the practical stuff of Dunlop's web of rules previously mentioned. Once you understand the broader context of the particular issue at hand, then the specific rules come into play. For example, Sections 7 and 8 of the Wagner Act, and Section 7 of the Taft-Hartley Act are particularly crucial for private sector labor relations, but have no bearing on public employees. A more recent development in the private sector is the Teamwork for Employees and Mangement Act (TEAM) before Congress which is intended to promote legitimate employee involvement and genuine worker-management co-operation (without necessarily involving unions. Critics of this bill argue that it is a direct attack on Section 8(a) of the NLRA. Why? I pose a related question: If progressive or enlightened management makes extensive efforts to involve employees by seeking their ideas and input with respect to improving the production process, is it not reasonable and logical to invite the same meaningful input on wages, hours, and working conditions? Does this require a union? Explain. Organizing your notes into a form that facilitates your grasp of the historical process of labor relations is essential for addressing questions and issues which rely on your ability to synthesize the material. For example, How would you envision the condition of the American worker today if unions had played no role in the American workplace? You must be able to evaluate unions beyond their immediate impacts by including the spillover effects, and some sense of how they may need to change to remain viable in the future. A good test of your conceptual and practical grasp of the collective bargaining process is to examine the cases presented at the

end of Chapter 4 of Leap, particularly the Cooper Union scenario. The inclusion of the material on the coal indusry is to provide a more in-depth analysis of one industry, one which has a long history of unions and encompasses most aspects of the American labor movement in general. Of particular importance, and as will be discussed in class, is the relationship of the industrial relations environment with the regulatory and product market environments. The importance of different variables extends to influences of demographic shifts, environmental legislation, the shifting resource base, production technology changes, geographic shifts in the location of production, occupational safety and health, and interindustry relationships--e.g., with transportation and electric utilities. How would contrast this broad based view with earlier discinctions between HR and IR? Also, to return to an earlier theme, how does this framework of analysis compare to the industrial relations systems theory put forth by Dunlop?

Lecture #4: Union and Management Structures, Goals, and Policies


Most of our lives we are caught up in work day problems and don't have the opportunity to reflect on the larger scheme of things. Chapters 6 and 7 of Leap provide a broad survey of the structure and goals of unions and management at the micro and macro levels. These, more often than not, opposing institutions with all their political and economic history are essentially what define the collective bargaining relationships in the U.S. It is particularly important to keep in mind that the institution of collective bargaining is a blend of market and political forces, and hence understanding how the fortunes and evolution of CB have varied with business cycles, philosophical shifts, and political changes help us make sense of the current environment and consider the prospects for the future. You should become intimately familiar with the general structure of organized labor from the AFL-CIO to the shop floor steward, and likewise for management's top tier organizations such as the AMA, NMA, SHRM, etc...to the suprervisor level. The two readings for this section of this course on reengineering and horizontal corporations are intended to illustrate how sweeping organizational changes are, or will, impact both management, unions, and the collective bargaining process. Can you write an essay on the possible implications?

Lecture #5: Collective Bargaining Theory

Negotiating and bargaining theory eventually evolved into a subfield of economics (and other disciplines) and in the end became quite mathematical and meshed with game theory. For our purposes the graphical representations of a minimal number of models suffice to convey the theoretical concepts, process, and illusory outcomes. First, I recommend you have a firm grasp of the neoclassical labor market model which analyzes the demand and supply of labor in in the competitive market context. Within this context you should be capable of explaining such phenomenon as shortages, surpluses, spillover effects--and relating the wage rate, demand for labor, vale of marginal product of labor, marginal revenue product of labor, supply of labor, with the resultant equilibrium solution. Second, a modification of the perfectly competitive neoclassical model, the bi-lateral monopoly model should be understood from the perspectives of the underlying economic assumption, the indeterminate (bargaining) range of solutions, and especially the idea of the convergence of one possible outcome of the bilateral solution coinciding with the perfectly competitive solution. Third, the Pigou model is of interest because it essentially centers on the immediate negotiating process and the initial ranges of consideration by the employer and union. What do you think determines these ranges? This model also leaves us with an indeterminate theoretical outcome. Fourth, the Hicks model bends more toward the psychology of the bargaining process through time, for example, how well can the company resist raising wages from their existing level vs. how well can the union resist lowering its initial bargaining point of wages. Somewhat related to this notion is a model more embedded in economics, which expresses the ratio of the cost of disagreeing with the cost of agreeing. When this ratio is greater than one a settlement is predicted. While I think these models are interesting teaching devices, as a practical matter, they will not have precise predictive power. This is one reason bargaining theory is not central to the study of IR, which is so heavily dependent on understanding the institutional arrangements. However, from a policy perspective, the bilateral monopoly has appeal because of its implication that power on one side of the market (big company) should be balanced with power on the other side of the market (big union). This argument is grounded in the idea that these countervailing powers reduce the possibility of exploitation of workers and at least hold out the prospect of a negotiated solution approximating the socially and economically desirable competitive solution (generally stated in economic welfare theory as lower prices and more output).

Lecture #6: Collective Bargaining Process

Much of the practical material can be found in Leap (Ch. 9) and I will not dwell on it here. The preparations, legal requirements, strategies and tactics are fundamental to getting to more complex issues. One of these is the ability to compute costs (or benefits) to firms and workers. As a technical matter an understanding of time values, roll up costs, and other simple financial impacts of negotiations are crucial. These computations should be generated as close to real time as possible in order to accommodate the other dynamics of the negotiating process. Second, we should perhaps not be too foucsed on the formal negotiating period, if there is one. When a contract expires, any number of things can happen--a general economic strike, selective strike, continuation of work and negotiations, etc... Also, in a sense "negotiations" may have been ongoing long before the contract expiration via such informal mechanisms as joint committees, collaborative efforts, and the duties to advise and confer.

Lecture #7: Impasse and Conflict Resolution


When labor and management are at an impasse, the most drastic actions remaining are strikes or lockouts. Historically, there have been fewer lockouts since unions took the measure of a strike. Beginning in the early 1980's (usually marked by the failure of the PATCO strike) however, this strategy has backfired since the balance of political and economic power shifted in favor of management during the the Reagan Administration. Companies effectively employed permanent striker replacements and significantly weakened the unions. In the past few years unions seem to be shifting strategies to bring more pressure on companies by PR efforts, boycotts, and directly approaching existing or potential shareholders and directors (a good paper topic). Keep in mind that most discussion on strikes applies to the private sector since most public employees are prohibited from striking by law. Why? If workers give up the right to strike, what should they receive in return? Your understanding of arbitration as third party intervention should also be clear with respect to differentiating between interest and grievance arbitration. Knowledge of the formal institutional mechanisms is also important--e.g., FMCS and AAA. Alternative Dispute Resolution (ADR), third (neutral) party intervention, and the objectives and powers of such are rather diverse. The following is a fairly comprehensive list of the possibilities. Factfinding without recommendations Factfinding with recommendations Facilitation Mediation Mediation-Arbitration Arbitration--Advisory Arbitration--Final & Binding Arbitration--Final Best Offer

Labor arbitrator decisions have a rather scantified place in our system of Industrial Relations. You should be well versed in the constraints and special conditions which could limit or set aside the arbitrator's decision. Finally, the most dramatic and largest scale of intervention is from the federal government, especially if a national emergency is declared. What are the institutional mechanisms set up to cope with such a situation?

Lecture #8: Grievance Procedures


Most discussion about grievance procedures pertains to CB agreements and administration. However, the growth of nonunion grievance mechanisms should be noted. In the 1992 issue of the IRRA's _Research Frontiers in IR and HR_ Richard Peterson's piece, "The Union and Nonunion Grievance System," reports that recent surveys indicate as high as 50% on nonunion firms have grievance systems. One survey estimated that grievances filed by nonunion employees ranged from .7% to 43% of the workers, but in most cases the figure is less than 5%. Peterson also concludes that it is the larger companies which tend to have grievance systems. Some systems have a peer review system, but very few have third party intervention. I think an essential question for students to think about is whether a union contract tends to clarify working rules and hence reduce the prospect of disagreement and consequent grievances, or is a roadmap generating the propensity for more grievances. In the nonunion environment, many attorneys take the position that the less that is written down, the better. How does this issue play in the larger context of the role of information in the workplace? Finally, with respect to union or nonunion grievances (public or private sector), the one rule that is the root of any such process is "do your homework." The weaknesses of being unprepared in a grievance hearing will be glaringly and embarrassingly exposed by an opponent of even average competency and experience. You should also be well versed in such grievance dimensions as the duty of fair representation and due process.

Lecture #9: Compensation and Benefits


Leap's (chapters 14 and 15) treatment of this subject matter is rather narrowly confined to the collective bargaining environment. A crucial point made with respect to the impact of unions is the approximate 15% differential in compensation attributable to unions. This observation must be juxtaposed with to factors. The first is whether unions in reality are raising wages above the market equilibrium which in turn generates unemployment. The second is just as fundamental to our economic system. Coupled with the observation that unions raise wages, relative to nonunion environments, is the added observation that this increase

consequently lowers profits (dubious argument?), and subsequently returns to invested capital (shares). Hence, one of the premises of Marxian theory, the inevitable divergent interests between workers and capitalists (or stockholders). How do you square this with the partnership model? Another interesting theoretical point to be drawn is the idea of teams in compensation theory and practice. If in neoclassical theory we see that the equivalency of the ratio of the marginal products to prices of inputs yields an optimal solution, in practice it is still extremely difficult and often costly to obtain such information. Now lets narrow the theory further and consider the ratio of MP/W for heterogeneous labor units. Since people have different productive qualities, and compensation systems are generally a hodgepodge combination of items, isn't it possible this problem is just complex to solve administratively? Consider two additional questions. Since unions tend to homogenize pay, does this lead to homogenized productivity? Second, does the creation of teams, with workers cross-trained and substitutable for one another, tend to homogenize productivity, and hence pay? Both of these approaches would appear, in theory, to greatly simplify the pay-productivity problem. Where does the whole scheme of job descriptions, job analysis, and job evaluation fit into this team framework? There is also a great deal more which can be said about pay equity, especially outside the realm of collective bargaining. You should make sure to read my article from BENEFITS QUARTERLY on this topic. The article from the CUPA Journal points out the messy administrative (practical) difficulties when one wades into the equity problem. With respect to both direct compensation and benefits, you should become quite familiar with the legal framework, especially with respect to the argument that governement policies undermine the need for unions, and with respect to applicability in the public vs. private sectors. A clear distinction between what is social vs. private insurance is essential. Also, one conceptual difficulty with benefits is the likely divergence of the value of benefits to the employee, the cost to the employer, and the the value on the market. An looming administrative issue is how to communicate and educate employees about benefits, and how benefits plans are governed. What are the implications for partnerships in this area? Finally, although Leap's coverage of the basic components of benefits plans is well-rounded, note that this is nowhere near a comprehensive treatment. For example, interesting items missing are executive benefits packages, flexible benefits plans, sick leave banks, etc... Such material will be covered at length in my employee benefits course (Econ 439/539). You can also find considerable sources on

compensation and benefits on my related web pages: http://www.mtsu.edu/~rlhannah/IR_HR.HTML http://www.mtsu.edu/~rlhannah/employee_benefits.html

Lecture #10: The Public Sector


The public sector arena of CB has three distinctive features not typically found in the private sector. They are multilateral bargaining, prohibition against the strike, and numerous administrative procedures, protections, and prohibitions of worker and union behavior in addition to the negotiated settlement. Leap covers these quite well in chapters 17. I suspect one of the looming issues with respect to the public sector is a potential wave of privatization sweeping through state and local governments. Of the many changes in labor-management relations this could impact, particularly those listed above, one is that privatized services open the door to union activity, including strikes, as in any other part of the private sector. This seriously questions the assumption that any public service is an essential service.

Lecture #11: Uncertainty and New Directions for Unions


Chapter 18 of Leap gets us closer to future's edge. What can we expect of the evolution of CB? We have both international comparisons, and the view (particularly Mitchell's "island unionism") that the the U.S. situation is likely to further decline. Current thinking seems to gravitate toward the reading of the potential of reshaping CB in particular and IR in general via the interrelated themes of the TEAM Act Dunlop Commission Report. I think this has to be balanced with the realities of attitudes expressed in the Freeman/Rogers report and even the AFL-CIO's "Being Heard" study. On one hand U.S. workers seem to long for a democratic voice and process in the workplace, while on the other largely rejecting the traditional union model. Thus the overriding question we are left with is, What strategies and policies can fill this gap?

Lecture #12: Demographics and IR


This class meeting primarily covered the evolving role of females in labor markets, and particular the increasing participation rates of females who are married and have children. The child care and potentially even the elder care problems imposing the double and triple burdens on females continues to build increasing pressures for labor market, employer, or government solutions--because the alternative of men allocating more time to household work and caregiving has not proven viable. In other words, men are very slow to alter their behavior with respect to these activities. The other demographic variable examined is age, and in particular

the adaptability to new work environments, skills, and the investment of training. The human capital model is introduced, and distinctions are drawn for private vs. social investing in human capital.

Lecture #13: Technology and IR


Training is a key component within this topic. Compared to other large industrialized economies, there is a rather unique character to the U.S. in that we have no real national training policy. When we examine the evolution of training programs beginning with the Job Corps in the 1960s to the School-to-Work legislation of 1994, a rather fragmented series of efforts emerges. This should not be taken as an evaluative statement, because in the ebb and flow of economic evolution, this relative "hands-off" policy by the federal government may yield more effective and efficient market solutions. However, today's policy debate is whether the U.S. can enhance its competitive position in the global economy by pursuing a national training policy. This issue even spills over into the appropriate role of our educational systems (e.g., Tennessee's split of secondary education tracs into vocational and college preparation). The extension of fundamental questions about work force preparedness touches higher education as well. Since this is my environment of familiarity, I offer a few comments. First, I draw a distinction between training and education. Even within training there are conflicts as to whom the benefits should accrue--the indivdual or the corporation. This leads directly to the question of who pays--e.g., how is tuition reimbursement handled for this class? If labor is relatively moble, workers can take the new skills and walk. The analytic approach to these kinds of problems--the general and specific training models--are covered in class. My view of how education differs from training is simply a list of commonly held beliefs amongst academics. (1) The benefits of education can accrue to society as well as the individual (e.g., better citizens, better leaders, more knowledgeable voters). (2) Within the more narrow realm of economic activities, the benefits of education can accrue through the consumption, investment, and saving sides of individual behavior, as well as the employment (wage enhancement) prospects. (3) But in my view even closer to the mark of what quality higher education should be is the preparation for how the world will be, rather than how it is, which is the focus of training. Furthermore, employers' criticisms that higher education is not delivering graduates to the marketplace with needed skills MUST be evaluated with the above criteria in mind. Turning this question around is a useful exercise. What do employers want? Do they know themselves?

And if they think they do, are they taking a long-term view? There is not a great deal of survey work on this last topic, but one interesting was reported in 1988 in the _Training and Development Journal_ (42:10, pp. 23-30), titled, "The Skills Employers Want." The following is a list in order of highest to lowest. 1) Employees who show up on time and don't steel. 2) Ability to learn to learn. 3) Reading, writing, and computational skills. 4) Creative thinking and problem solving. 5) Self-esteem, ability to set goals, motivation. 6) Interpersonal, negotiation, and team work skills. 7) Leadership for organizational effectiveness.

Lecture #14: Organizational Differences and IR


I recommend reviewing the first two lectures in this series in order to consolidate your thoughts with the following material. The introduction to _Research Frontiers in Industrial Relations and Human Resources_ by Lewin, et al contains a theme distilled from the same pot as part of the rationale in the previous lecture--the driving force of international competition. If we conclude that capital flows freely around the world, that technology is readily transferred, and that information is becoming in many respects rather ubiquitous--then where can (American) firms pin there competitive edge? When we look at the tremendous differences in wages around the world, economic logic dictates that the offsetting factor for us MUST be a much higher level of productivity. With capital, technology, and information easily transferred, what is left? The Lewin theme is the quality of our labor force as a whole, and our market and institutional approaches to human resource management. This goes directly to the heart of examining how people are brought together and interact to work in organizations. A great deal of the material covered in this course has centered on differences between the union and nonunion environments. This dichotomous view of the world of industrial relations may not be sufficient as we advance into the next century. The evolution from the Electromation case to the Dunlop Commission to the TEAM Act shows us that a true dilemma exists. Richard Freeman and Joel Rogers, in Chapter 1: "Who Speaks for Us? Employee Respresentation in a Nonunion Labor Market" of Kaufmann and Kleiner's _Employee Representation_ point out that union density in the private sector was a mere 11.5% in 1993 (a pre-Wagner Act level) and at current rates of new organizing, the level will be 5% by 2000. If this happens, IR models which focus on unions might continue to make interesting analytics, but will not tell us much about what is really happening in the world of work. What new models are emerging? quote. Freeman and Rogers go on to offer some insights in the following "Assuming that an alternative workplace institution ought to address seriously the concerns of union disapprovers, the Gallup

figures suggest that such an organization would have to advance employee interests in nonadversarial ways that contribute to economic performance and that accommodate individual ambition. It is not, we believe, a demand that organizations be weak.... Rather, the responses point to concerns about how goals are advanced: Americans want workplace institutions that will advance their interests in a manner compatible with the goals of the firm." (p. 34) Two other chapters from the _Employee Representation_ text offer additional insights which may at least help define the boundaries in this emerging zone of change. The first is chapter 4: "Evolving Modes of Work Force Governance: An Evaluation," by Thomas Mahoney and Mary Watson. These authors contend that in the absence of collective bargaining, there is no explicit model of workforce governance. True governance they assert must include the treatment of equity and justice in the workplace. Their assessment of the economic model of organizations, which focuses on effectiveness (accomplishing objectives) and efficiency (resource use), is that it is concerned with survival, not social approval to be gained with immersion in equity and justice. They also point out that unlike other types of economic exchanges, the employment relationship has the unique characteristic of the worker acceptance of authority. The second model examined by Mahoney and Watson is the social-psychology model, which focuses on power relationships and the concepts of distributive and procedural justice. Within this power dynamic they dissect the possibilities of more broadly based participative HRM. The context of this essay also includes sketches of three models. The first is the authoritarian model, which is predicated on the superior-subordinate relationship and limited information flow, and perhaps low levels of trust or respect. The second is the traditional collective bargaining model, which is described as an institution to balance the power relationship by constraining managerial discretion, but it is nontheless consistent with the authoritarian model, having a parallel evolution. An interesting question raised is whether the CB model can evolve apart from its traditional adversial role and into a more participative framework. I am compelled to point out here that the CB model includes BOTH management and labor, and that while they do point out exceptional cases like Saturn, I'm not convinced that Mahoney and Watson

accurately portray the traditional CB model as non-participative. After all, how much more participative can a negotiated contract be? The third model is the employee involvement (EI) model with the usual descriptors such as teams, TQM, QWL, partnerships, etc... Here, the authors are on the mark with two observations. One is the potential conflict of this model, with emphasis on small group and even individual decision making and participation, with the CB model, which emphatically, and with legal backing, is concerned with the collective aspect of participation. The second point is need to clarify the potential costs and benefits of these organizational alternatives. Chapter 5: "Representatives of Their Own Choosing: Finding Workers' Voice in the Legitimacy and Power of Their Unions," by Patricia Greenfield and Robert Pleasure, add an important dimension to the search for alternative models. Power is defined as the ability to bring about desired outcomes, and legitimacy is defined as the right to exercise power. Their point is that whatever alternative emerges, these ingredients must be present. The debate over the TEAM Act is an excellent example of the the conflicts abounding these concepts. I offer another model, which I confess is more of an intellectual exercise than a potential practicality at this point. When we think of the evolution from the foreman drive system to centralized personnel functions, originally the employment and record keeping office, and then to the conflict management and regulatory compliance functions, the view of HR is clearly as a functionally defined reactive institution. Though there is much literature of late espousing the strategic or proactive aspects of HRM, I think the question is still open as to whether this cadre of professionals is a true agent of institutional change. An empirical test of this matter is to examine if HR executives have equal footing with other executives in organizations, and if the governing boards of organizations have expert and influential representation from this perspective. When all is said and done, we are still left with a troubling questions. Is there something morally right about democracy in the workplace (or conversely, something wrong with its absence)? Do legitimacy and power require elected representatives? If the answer is no, then doesn't this cast a chill on other institutions we presume to be democratic? Is the decline of unions an indication that workers don't really care about democracy in the workplace?

Lecture #15: International Competition and IR


in As Americans we often conceive of international competition as

competing businesses. However, this is a one-dimensional view which obscures our deeper understanding of government motivations and policy making. From another perspective, the competition is for jobs. With the high population growth rates in developing countries, there will be an estimated 500 million young adults added to the labor force in the 1985-2000 period. Large segments of unemployed populace in this group is a formula for revolution and massive disruption is global social order. In the U.S. and other prosperous industrialized countries our concept of jobs is directly tied to expectation of rising living standards, rather than mere survival. We often overlook the power of job allocation and creation, especially when we consider that in either totalitarian or democratic societies, legal or illegal activities, prosperous or impoverished economies, a job largely reflects one's economic worth, social status and self-esteem. With increasing global mobility of capital, technology, and information, the discussion in the previous class focused on the importance of HR as the remaining key variable which firms can exercise some potentially decisive economic control. This variable is also of societal importance and thus is a matter of public policy concern as well, particularly when viewed in light of what our major international competitors may be doing to enable a competitive edge. Given the heavy emphasis in this course on unions and collective bargaining, some importance accrues to an examination of this topic at the global level. Pages 687-690 of Leap provides a very good summary of comparative industrial relations systems in industrialized countries. A noticeable weakness in Leap's list is information in major emerging economies like China. Other Asian economies, Latin America, and even Australia and Russia are not described. I mention these because they add to the mix of models which are emerging and must find mutually cooperative principles (among unions). This is unfortunately a topic for another course given our time limit is near expiration. The crucial point here is that with respect to unionization, the U.S. is only ranked 16th in union density (chart discussed in class). This reality casts great doubt on any simplistic arguement that U.S. unions inhibit international competitiveness. We have slightly touched on the potential for greater international cooperation among unions via the Internet. Two other factors are herein mentioned. The first is the International Labor Organization (ILO), which has existed for 75 years, and has made efforts to develop employment standards for a global community. This institution is apparently re-assessing its function in light of the end of the cold war, and the unfolding world trade talks. With respect to the latter point, we will probably hear more of the prospects of a social charter in

the context of GATT--a mechanism in part insuring certain worker rights. To some degree this fabric has been weaved into the Maastricht and NAFTA Treaties. Perhaps more than any other factor, we in the U.S. play a somewhat tenuous role on the world stage in work force preparedness (read training or education). As previously discussed in this course, we have seen that the U.S. is not distinguished in terms of policy or content (other than--perhaps--our higher education model). The global contest and consequences of our path is not about the present, but the future. Can we remain a super economy without massive upgrades in the quality of our human resources? Or, is the key to our success that we have left more solutions to the market than to government policy?