Chương 11

CHAPTER 11
LEARNING OBJECTIVES
After studying this chapter,
you will be able to:
' Identify two main types of

labor unions.
* Outline the organizational

structure of unions.
"* Identify the two main

steps in the process by which a
union becomes the bargaining
agent for a group of workers.
^ Describe the four main

stages in collective bargaining.
"* List five general issues that

may be addressed in a labor
contract.
° Identify four options that

unions have if negotiations with
management break down.
Identify five options that

management has if negotiations
with the union break down.
o
° Describe four major
practices that management and
unions are using to respond to
changes in the structure of the
economy.
Union-
Management
Relations
Hospitals Go into Labor
First, the clerks, and dishwash-

bed-pan carriers, food-cart pushers, records
ers who toil facelessly in and nursing homes. Then the
the nation's hospitals
nurses. Then doctors, dentists, and psychologists. These have been the tar-
gets of the National Union of Hospital and Health Care Employees, AFL-CIO,
and of its president, Henry Nicholas. About 20 percent of the 6 million people
working in the health-care industry are currently organized (75,000 of them
members of what is known as the National Hospital Union), but the unions
are expecting substantial gains among health-care workers in the coming
years.
Although this group of workers seems a good target for union organizers,
they face an uphill battle. Hospitals can no longer easily pass on higher labor
costs to the government, and layoffs in the industry are more common than
they were. Workers are also better paid than before. And ironically, one of the
biggest impediments for individual unions may be competition with others.
In Ohio, for example, the National Hospital Union was in competition with
BUSINESS CLOSE-UP several other unions and associations for 9,000 state hospital employees. Al-
though it spent $1.3 million over 21 months, it won the right to represent
only 3,500 workers.
One other factor making life tough for health-care labor organizers is the
changing face of the industry. The move is toward getting patients out of
hospitals as quickly as possible and into small private facilities — or even
back home, to be cared for by visiting nurses or aides. An aggressive union
like the National Hospital Union must therefore look beyond the big hospi-
tals for members. Organizers in Philadelphia have had to hang around bus
stops on the lookout for white uniforms, because such workers are not likely
to be found in one central, unchanging location. In response, some employers
have begun telling employees to dress in street clothes on their way to and
from work. But the union is not giving up its quest to recruit these low-paid
workers. At one organizing session, union president Nicholas commented:
"They say pull off your uniform so we can't find you. Well, we are going to
find you."
265
266 Part Three: Managing Human Resources
This is only one of the tactics used by the National Hospital Union to find
new members. In the early 1970s, organizers appealed to the urban blacks
who formed the core of its target membership by passing out tape-recorded
messages from Martin Luther King, Jr., along with union cards. More re-
cently, it has become more discreet in its activities: Organizers work "under-
ground," meeting quietly with workers off the hospital or nursing-home

premises to forestall management's discovery of —
and efforts against the —
union's activities. And union staffers have infiltrated management meetings
to learn how management plans to fight organizing activities. Then the union
deliberately exposes workers to management's arguments and shoots them
down, so that workers are "inoculated" before exposure.
Henry Nicholas is president The union must be doing something right: It won 70-80 percent of its
of the National Union of representation elections in the past three years versus an average of little
Hospital and Health Care more than half for all unions in the health-care industry. Its members have
Employees and leader of the made dramatic strides in wages, hours, working conditions, employer-spon-
union's campaign to orga- sored training, and fringe benefits. And they enjoy a wide array of social,
nize health-care workers at
cultural, and educational programs sponsored by the union. For them, the
all levels.
union has truly lived up to its aims: "to improve [health-care workers']
wages and working conditions, advance their professional interests and par-
ticipate in protecting and advancing the concept of decent health care for
Labor Organizations in the American Economy

In the American economic system, there are certain unavoidable differences
of interest between workers and those who pay them. On the one hand, own-
ers and managers of businesses have a right to use their resources as they see
fit in order to increase productivity and profits. On the other hand, workers
feel that they should have job security, safe and comfortable working condi-
tions, and rewards commensurate with their contributions to the organiza-
tion. In the best of times and in the most enlightened companies, these two
sets of needs can often be met simultaneously. But in uncertain times, when
the economy slows down and competition speeds up, the desires of workers
and management tend to conflict. Because of this potential for conflict, work-
labor unions Organizations ers form labor unions, organizations that seek to protect workers' interests
of workers that are formed when these interests conflict with those of management.
to protect and advance their One thing workers have in common with management is that both have
members' interests
something to sell: management a product and workers their own labor, the
services they can perform for the employer. Naturally, both want to get the
best possible price. And just as the price that a company charges for a prod-
uct is by the forces of supply and demand, so is the price that work-
affected
ers charge for their services. A labor union alters the supply-and-demand
equation by representing most or all of the workers —
the supply of labor —
that the company needs. In that sense, a labor union is monopolistic. By
using their combined bargaining strength, workers can put more pressure on
management than they could as individuals. An individual worker can easily
be replaced, but the whole group cannot. Workers have known this since
early in our history.
In 1792, a group of shoemakers held a meeting in Philadelphia to discuss

A history of
matters of common
interest. Without meaning to, they made history: The
unions result of their modest assembly was the formation of the first known union in
America. During the next several decades, other unions appeared. They were
Chapter 11: Union-Management Relations 267
craft unions Unions made made up of skilled artisans belonging to a single

chiefly local craft unions,
up of skilled artisans be- profession or craft and concerned only with trade-related matters.
longing to a single profes- In the 1840s and 1850s, as improved transportation cut shipping costs,
sion or practicing a single
created a national market, and made workers more mobile, local craft unions
craft
banded together into national craft unions. And in 1869, several national
craftunions joined forces as the Knights of Labor. Over the next two decades,
membership in this national union reached 700,000. However, several mem-
ber unions became dissatisfied with the leadership's emphasis on moral bet-
terment instead of improvements in wages and working conditions. Further-
more, the 1886 Haymarket Riot — during which a bomb exploded among
Chicago police trying to break up a labor rally — turned public opinion
against the labor movement, of which the Knights were the most visible
symbol. By 1890, control of the union movement had passed to a rival group,
the American Federation of Labor (AFL), founded in 1886. The AFL domi-
nated the labor movement for the next 40 years.
During the 1930s, labor unions expanded their membership enormously,
especially among unskilled workers. They benefited greatly from legislation
passed during President Franklin D. Roosevelt's four terms in office. (The
most significant laws relating to unions, many dating from this era, are de-
scribed in Exhibit 11.1.) They also benefited from the work of an unofficial
Committee for Industrial Organization, which was set up within the AFL in
industrial unions Unions 1935. Its goal was to organize industrial unions representing both skilled and
representing both skilled unskilled workers from all phases of a particular industry.
and unskilled workers from The committee organized the auto and steel industries, boosting AFL
all phases of a particular
membership to over 4 million. But three years later, the AFL formally ex-
industry
pelled the committee. The craft unionists who controlled the AFL viewed the
industrial unions as a threat. The committee thus became a fully indepen-
dent federation of industrial unions and changed its name to the Congress of
Industrial Organizations (CIO).
During World War II, full employment helped unions grow even more. In
exchange for a no-strike pledge, unions were able to win many concessions
from management. After the war, labor's demands for wage increases erup-
ted into a series of severe strikes. In 1947, pro-industry legislators in Wash-
ington responded by enacting legislation that restricted some of the practices
used by labor to force its demands on industry, such as making union mem-
bership a condition of employment.
From 1955, when the AFL and the CIO merged their 16 million members,
union growth began to level off. In the late 1950s, disclosures of corruption
and links to organized crime further tarnished labor's image. To curb abuses,
Congress imposed stiff new regulations on unions' internal affairs in 1959.
Since then, union membership has declined for a number of reasons, but up
through the late 1970s, unions continued to enjoy considerable clout in the
American economv.
Like Henry Nicholas of the National Union of Hospital and Health Care
The labor Employees, labor leaders today are rethinking their methods. That adjust-
movement today ment is a response to some distressing trends in union participation. Exhibit
11.2 shows how badly union strength has eroded, particularly in the past
decade. A tarnished image, leadership out of touch with the concerns of a
changing work force, deregulation, an unsympathetic administration —
these are some of the causes for the dramatic decrease in union membership
in the 1980s. Unions now represent only 17 percent of nonfarm American
workers, down from a peak of over 40 percent in 1955.
EXHIBIT 11.1 LEGISLATION PROVISIONS

Key Legislation Limits companies' ability to obtain injunctions against
Norris-La Guardia Act
Relating to Unions of 1932 union strikes, picketing, membership drives, and other
activities
Most major labor legislation
National Labor Relations Prohibits employers from interfering with employees' right
was enacted in the 1930s
Act of 1935 (Wagner Act) to form, join, or assist labor organizations; from interfering
and 1940s. with labor organizations by dominating them or by making
financial contributions to them; from discouraging
membership in labor organizations by discriminating
against members in employment or by requiring promise
not to join union as condition of employment; from
refusing to bargain collectively with labor organization
chosen by employees to represent them; from discharging
employee because he or she has testified or filed charges
against employer under act
Taft-Hartley Labor Act of Amends Wagner Act to restrict unions (declares closed
1947 shop illegal, requires 60-day notice before strike or
lockout, empowers federal government to issue injunctions
to prevent strikes that would endanger national interest);
declares jurisdictional strikes (in disputes between unions),
featherbedding, refusal to bargain in good faith, and
secondary boycotts illegal; requires union officers to certify
that they are not Communists; requires unions to submit
financial reports to secretary of labor; allows unions to sue
employers for contract violations; permits employers to
petition National Labor Relations Board for elections
under certain circumstances
Landrum-Griffin Act Aims to control union corruption by penalizing bribery of
of 1959 union officials by employers; closing loopholes in law
forbidding secondary boycotts; prohibiting hot-cargo
clauses in employment contracts, which give unions right
not to handle goods of company whose employees are on
strike; requiring all unions to file constitutions and bylaws
with secretary of labor; requiring all unions to publish
financial records open to inspection by members; making
union officials more personally responsible for unions'
financial affairs, making embezzlement of union funds a
federal offense, and forbidding union loans of more than
$2,000 to officers; denying convicted felons right to hold
union office for five years following release from prison;
giving every member of union equal rights to vote on
issues, attend meetings, and speak freely; forbidding
unions from raising dues unless majority of members vote
for increase by secret ballot; giving union members right to
sue unions; requiring that members be formally charged
and given fair hearing before being fired, expelled, or
punished in any way by union
Another reason for the overall decline is a massive shift in American

industry. Older, less efficient industries are falling victim to more efficient,
lower-cost foreign competitors. Since 1980, a fifth of large unionized compa-
nies have gone bankrupt, unable to compete against companies with lower
wage expenditures. 2 Furthermore, while heavy industry is on the decline,
high-technology and service industries are on the rise. Some of these new
industries are much harder to unionize than the blue-collar "smokestack"
industries, where the unions have a long tradition. An estimated 60 percent
of the decline in union membership is due to changes in the kinds of workers
that are needed in today's economy and the kinds of jobs that are available. 3
But unions are by no means giving up the fight. Instead, they are seeking
members among professionals, white-collar workers, women, and youth —
EXHIBIT 11.2
Union Membership 1955: Merger of AFL-CIO
solidifies labor's political power.
among Nonagricultural
Workers
1962: Federal employees
The influence of labor un- are granted limited
ions has declined since they bargaining rights.
gained strength in the

first
1930s and peaked in the 1980-1983 Severe

1940s and 1950s. recession and high
unemployment set
record for years
after World War II.
[. - 2000 (est.)
1990 (est.)
groups that they have traditionally ignored but that are rising to prominence
as the economy shifts from heavy industry to services. Union membership
has increased in a few of these areas despite a general decrease in the number
of unionized workers. One of the major growth areas has been among govern-
ment employees. Whereas the proportion of nonfarm private-sector workers
is only 14 percent, the percentage of unionized public employees has grown
4
to more than 33 percent in the past decade.
Why workers join
Once, when a prominent labor leader was asked what labor wanted, he re-
plied simply, "More." Union members are still pursuing their traditional
goals, including higher wages, better benefits and working conditions, more
job security, and greater safety. But they also seem to be seeking greater
involvement in decision making that affects them. For example, when West-
ern Electric announced a pay cut for the engineers at its plant in North
Andover, Massachusetts, the engineers decided to form a chapter of the non-
union Association of Engineers and Associates. Then further conflict arose.
Management instituted changes in methods and performance-evaluation
systems — changes that the engineers thought were unfair — and refused to
discuss these changes. Result: The nonunion group reorganized itself as part
of a national union, the Communications Workers of America. Now, under
the requirements of the labor laws, management must discuss the changes
5
with the engineers.
Polls have found that most of today's workers believe that unions stifle
individual initiative and are not necessary in order to receive fair treatment
from employers; about half believe that unions make it harder for companies
6
to stay in business. Indeed, the companies that have most successfully re-
sisted unionization seem to have adopted participative management styles
and an enhanced sense of responsibility toward employees. Workers seem
interested in unions only when they feel that they are being treated unfairly
or have lost management's ear and control over their own work lives.
How unions are structured

national union Nationwide A national union is a nationwide organization representing workers in a par-
organization representing ticular craft or industry;examples include the United Automobile Workers of
workers in a particular craft America, the United Steel Workers, and the Service Employees International
or industry Union. The national union is typically composed of several locals, or local
locals Relatively small unions, each representing workers in a specific geographic area or facility.
union groups, usually part The National Union of Hospital and Health Care Employees, for example,
of a national union or a includes the locals District 1199/New England and District 1199C in Phila-
labor federation, composed delphia. A national union is responsible for such activities as organizing new
of those who work in a sin-
areas or industries, negotiating industrywide contracts, assisting locals with
gle facility or in a certain
negotiations, administering benefit and lobbying programs, and lending as-
geographic area
sistance in the event of a strike. In return, local unions send representatives
to the national delegate convention, submit negotiated contracts to the na-
tional union for approval, and provide financial support in the form of dues.
They have the power to negotiate with individual companies and to under-
take their own membership activities.
labor federations Um- Labor federations, such as the AFL-CIO, consist of a variety of national
brella organizations of na- unions and of local unions not associated with a national union. With so
tional unions and unaffili- many constituents, it is no surprise that labor federations enjoy great politi-
ated local unions that cal power. They also have the power to resolve disputes between competing
undertake large-scale activi-
unions.
ties on behalf of their mem-
Each local union is a hierarchy with a broad base of "rank and file"
bers and that resolve con-
flicts between unions
members, the workers the union represents. These members elect a presi-
dent. Each department or facility also has or elects a shop steward, who
shop steward Union mem- works in the facility as a regular employee and serves as a go-between with
ber and worker, elected as
supervisors when a problem arises. In large locals and in locals that repre-
a representative by other
sent workers at several locations, an elected full-time business agent visits
union members, who at-
the various work sites and handles member problems.
tempts to resolve employee
grievances with National unions and federations have a full complement of officers and
management often a sizable staff of experts. The organizers who go out seeking to set up
new locals are an essential element at this level. Delegates elected by the
business agent Full-time
locals attend regularly scheduled national conventions to elect the officers
union staffer who negotiates
with management and at-
and approve changes to the umbrella organization's constitution.
tempts to resolve grievances
brought up by union
members
How unions organize
For unions seeking to survive the 1980s, organizing is a constant activity (see
Exhibit 1 1 .3). The main goal is to find a group of dissatisfied employees and
convince them that unionization is the solution to their problems. Some-
times, the employees must also be convinced that they are dissatisfied. Under
the guise of conducting a survey, union organizers might call the employees
of a company and ask such questions as "Have you ever been treated unfairly
authorization cards Sign- by your supervisor?" Employees who seem ripe for unionization are sent
up cards designating a information about the union and authorization cards, which designate the
union as the signer's pre- union as their bargaining agent. If 30 percent or more of the employees in the
ferred bargaining agent group sign the union's authorization cards, the union may ask management
EXHIBIT 11.3
The Union-Organizing
Process
This diagram summarizes
the steps a labor union
takes in organizing a group
of workers and becoming
certified to represent them
in negotiations with
management.
to recognize it. Usually, however, unions do not seek to become the group's
bargaining agent unless a majority of the employees sign.
Management is generally unwilling to recognize the union at this stage,
so the union asks the National Labor Relations Board (NLRB) to supervise a
certification Process by certification election. If a majority of the affected workers choose to make the
which a union is officially union their bargaining agent, the union becomes certified. If not, that union
recognized by the National and al! other unions have to wait a year before trying again. Employees may
Labor Relations Board as also take a decertification vote, which removes the union as bargaining
the bargaining agent for a
agent.
group of workers
One of the reasons union membership has dropped in recent years is that
decertification Process by management has become more aggressive in challenging unionization. To
which workers take away a maintain a union-free relationship with employees, management often tries
union's right to represent to keep workers satisfied with high wages and pleasant working conditions.
them If itbecomes aware that a union is seeking a certification election, manage-
ment may mount an active campaign to point up the disadvantages of union-
ization. The company is not allowed, however, to make specific threats or
promises about how it will respond to the outcome of the election, and it is
not allowed to change general wages or working conditions until the election
has been concluded. Perhaps one sign of management's vigorous efforts to
win the hearts and minds of employees is the dramatic shift in decertification
elections: In 1988 the number of decertifications was twice the number in
1974 and four times the number in 1964; employees chose to decertify' in
7
three-quarters of the recent elections.
Collective Bargaining
As long as a union has been certified as the bargaining agent for a group of
workers, its main job is to negotiate employment contracts with manage-
collective bargaining Pro- ment in a process known as collective bargaining. Together, union and man-
, which unions and agement negotiators forge the human resource policies that will apply to the
management negotiate work unionized workers —
and other workers covered by the contract for a cer- —
contracts tain length of time.
Most labor contracts are a compromise between the desires of union mem-
The negotiation bers and of management. The union tries to guess how far management can
process afford to go, and management tries to guess at what point the union will call
off negotiations and vote for a strike. Because neither side really wants a
strike, it is in the best interests of both to bargain to a reasonable compro-
mise. Exhibit 11.4 illustrates the process described in the following
paragraphs.
Preparing to meet
Before meeting with management, the union negotiating team must thor-
oughly understand the key needs of its members. The management side,
meanwhile, tries to anticipate the union's demands and calculates the point
at which labor's proposals are likely to cost the company more than a strike
will.
These realistic estimates are often withheld from the other side at the
beginning of negotiations, because each side is trying to outguess the other.
Both may come to the bargaining table with extreme positions from which
they can fall back during actual bargaining. Management may offer a con-
tract with no wage gains, for instance, and the union may demand an outra-
geous pay increase. Neither expects these demands to be met.
Before or during negotiations, the union may flex its muscle by calling a
strike vote. This vote does not signal an actual strike; it is called merely to
show management that the members are solidly behind their negotiating
team and to remind management that a strike is possible when the current
contract expires.
EXHIBIT 11.4 Meeting and reaching an agreement

The When the negotiating teams actually sit down together, management's chief
Collective-Bargaining negotiator may be the vice president in charge of industrial relations or
Process someone hired from the outside. The union's chief negotiator may be the
Contract negotiations go local's business agent or a negotiator supplied by national headquarters. Al-
through the four basic steps
shown here.
Preparing to Meet Meeting Reaching an / Voting and

Union negotiating Both sides present Agreement / Ratification
team determines demands, and
their bargaining rank-and-file
If is suc- If
Contract
key needs of its bargaining follows. members approve of
cessfuland tentative
members. Meanwhile, Union may the agreement, _l <Z_ -"1
call agreement is it's
management tries to for strike vote at drafted,agreement ratified and can be
anticipate the union's this time to demon- signed by negotiators.
goes out to
demands and to strate to manage- If not, negotiators
union members for
calculate point at
which it would make
ment its
solidarity.
members' ratification by vote. V x return to bargaining
table.
/ /
economic sense to give
in and avoid strike. J V.
though insiders might be expected to know more about their side's needs,
outsiders often do a better job in tough negotiations because their nerves are
less likely to become frayed in grueling bargaining sessions. Near the end of
negotiations, meetings may hours
last 12 to 15 —
and calm discussion may
give way But labor and management negotiators gener-
to personal insults.
ally try to remain calm and reasonable, especially in an era when coopera-
tion between management and labor is necessary to combat foreign
competition.
Once the negotiating teams have assembled, they state their opening po-
and each side discusses them point by point. Labor usually wants
sitions,
additions to the current contract. Management counters with the changes it
givebacks Contract provi- wants, sometimes including givebacks, or deletions from the contract. In a
sions that represent a de- cooperative atmosphere, the real issues behind the demands gradually come
crease in union members'
to light. For example, management may begin by demanding the right to
pay and other benefits determine the sizes of work crews when all it really wants is smaller crews;
the union is unlikely to give up total control over crew sizes, which is a key
element of its power, but may agree to specific reductions. After many stages
of bargaining, each party presents its package of terms. Any gaps between
what labor wants and what management is willing to concede are then dealt
with.
What if one side or the other simply refuses to discuss a point? If one side
permissive subject Topic is unwilling even to talk, the other side can ask the NLRB to rule on whether
thatmay be omitted from the topic is one that can be omitted (a permissive subject) —
such as health
collective bargaining insurance for retired employees —
or one that must be discussed (a manda-
mandatory subject Topic tory subject) —such as wages, hours, pension benefits, and medical
that must be discussed in insurance.
collective bargaining If negotiations reach an impasse, outside help may be needed. The most
mediation Process for re-

—
common alternative is mediation bringing in an impartial third party to
solving a labor-contract dis-
study the situation and make recommendations for resolution of the differ-
pute in which a neutral third ences. Mediators are generally well-respected community leaders whom
party meets with both sides both sides will listen to. However, the mediator can only offer suggestions —
and attempts to steer them his o T her solutions are not binding. For a binding decision to be made by a
toward a solution third party, the negotiators may resort to arbitration. In this case, union and
arbitration Process for

management bring in an impartial arbitrator who listens to both sides and
resolving a labor-contract then makes a judgment that is binding to both parties.
dispute in which an impar-
tial third party studies the
issues and makes a binding Voting and ratification
decision The contract constructed and agreed to during the collective-bargaining ses-
ratification Process by sions then goes to the union members for ratification, a vote by the majority
which union members ac- to accept or reject the contract in its entirety. If the contract is rejected, the
cept or reject a contract negotiators return to the bargaining table to try to bring the contract more in
negotiated by union leaders line with the workers' wishes.
The signing of a contract between union and management doesn't mark the
Resolving end of negotiations. Rather, it lays the groundwork for discussions that will
disagreements continue throughout the life of the contract to iron out unspecified details
grievances Complaints that and to deal with grievances. Grievances, or complaints of management viola-
management is violating tion of some aspect of the contract, typically arise when a worker feels that he
some aspect of a labor or she has been passed over for promotion, isn't getting a fair share of over-
contract time, or is being asked to work too much overtime.
Although grievance steps vary somewhat from contract to contract, prob-

lems like these are usually referred first to the shop steward, who discusses
them with the employee's immediate supervisor. If these discussions fail, the
problem may then be discussed by the chief steward and the department
head. The next step in the process brings together the union grievance com-
mittee and the human resource (or personnel) manager. If they fail to solve
the grievance, it is then up to the union business agent and the plant manager
to try to resolve the issue.
If the workers' complaint still goes to an arbitrator,
cannot be satisfied, it
whose powers are defined in the contract and whose ruling

is usually final.
Arbitration is generally considered a last resort because it removes control

from both union and management, and it may be complicated and expensive.
As a result, there has been a shift to grievance mediation, in which a neutral
third party meets with both sides and attempts to steer them toward a solu-
tion to the problem.
Among issues that commonly appear on

the bargaining table for labor and
Basic contract management union security and management rights, com-
to negotiate are
issues pensation, job security, work rules, and worker safety and health.
Union security and management rights

Once a union has been established, the contracts it negotiates begin with a
provision guaranteeing the security of the union. This provision is included

because unions want a firm institutional base from which to work.
"It's a natural way to run gantly simple, as in the following excerpt from the let-
an organization," says ter of intent:

Ernest D. Schaefer of
GM, commenting on the "team concept" method of The manufacturing environment will be based on
management. "Members of teams have more control teamwork, mutual trust and respect that gives recog-
nition to the axiom that people are the most impor-
over their destiny." But not everyone agrees about
tant resource of the company. We are cognizant that
the team concept. Some believe it is unrealistic to
if this endeavor is to be a success, labor and manage-
expect a change in the distrustful relationship be-
tween managers and workers. Yet the team concept ment must work together as members of a team.
appears to have been a rousing success at NUMMI Ninety-two percent of the workers approved the
(New United Motor Manufacturing, Inc.), GM's joint NUMMI contract, a rare occurrence in the U.S. auto
venture with Toyota in Fremont, California. industry. The team concept at NUMMI is spelled out
The team concept was solidified in a historic col- in seven core goals:
lective-bargaining agreement at NUMMI. In contrast to
1. To seek perfection in self, team, company, and community
the 1986 GM-UAW 400-page contract, NUMMI's 1984
(by using collaborative problem solving at all levels in order
letter of intent is a lucid, 15-page (double-spaced
to Find win-win solutions)
typewritten) agreement that contains no legal jargon.
2. To develop human potential (by facing and conquering
full
The NUMMI philosophy is basically Japanese and ele-
difficulties that may seem insurmountable)
Ideally, a union would like to see all workers under its jurisdiction, but
closed shop Workplace in the closed shop, which compelled workers to join the union as a condition of
which union membership is being hired, was outlawed by the Taft-Hartley Act. The next best alternative
a condition of employment for labor is the union shop: It allows an employer to hire new people at will;
union shop Workplace in but after a probationary period —
usually 30 days —
the workers must join
which the employer may the union. Another alternative is the agency shop, which requires nonunion
hire new people at will but workers covered by any agreements that the union has negotiated to pay
only for a probationary pe- service fees to that union. Least desirable to unions is the open shop, in which
riod, after which they must nonunion workers pay no dues. Certain states —
mostly in the Sunbelt, as
join the union Exhibit 1 1 .5 shows —
have passed right-to-work laws, which give employees
agency shop Workplace in the explicit right to keep a job without joining a union.
which nonunion workers
covered by agreements ne-
gotiated by the union are Compensation
required to pay service fees
Until recently, most new labor contracts won by unions contained wage in-
to that union
creases. But the recession of the early 1980s, coupled with tough foreign
open shop Workplace in competition, has led to a new pattern: Many unions have entered into "con-
which nonunion workers cession bargaining," agreeing to contracts freezing wages at current levels or
pay no dues even to wage cuts. Such givebacks are usually accepted in return for job-
right-to-work laws Laws security guarantees of various types in the belief that it is better to have a job
giving employees the explicit at a lower wage than to have no job at all.
right to keep a job without As a result of such concessions and of otherwise small wage increases in
joining a union most 1980s labor contracts, union wages have sometimes increased at a
slower rate than nonunion wages —
and sometimes more slowly than the
cost of living (see Exhibit 11.6). Today, union wage gains are at the lowest
point in the past few decades, although union workers still average 36 per-
8
cent higher wages than nonunion workers.
To pursue superior quality (by giving team members con-

3. threatening to close plants. The UAW has several con-
trolof the production line, by utilizing just-in-time, and by cerns about the team approach. It sees the seniority
making "total quality control" a companywide goal — all of system being threatened because team leaders are
which strive toward "establishing harmony between people chosen not by length of service but on the basis of
and machines and product and process")
leadership skills. The union may also see its own role
A. To build mutual trust (through collaborative problem being threatened. "Team concept dilutes the tradi-
solving)
tional feeling that 'We, the union, represent the
5. To develop team performance (by working together) worker,'" says Richard Block, director of the Michigan
6. To make every employee a manager (by having each and State University's School of Labor and Industrial Rela-
every person accept responsibility for everything concerning tions. Finally, the union may even view this new man-
the company)
agement method as a placebo. "Team concept is not
7. To provide a stable livelihood (by not laying off employees a substitute for poor management," says a UAW offi-
until after management salaries have been reduced and vol- cial in Detroit.
untary layoffs have been sought — a Japanese idea called
The International Labor Organization has already
"Equality of Sacrifice")
named NUMMI "one of the four plants worldwide
In contrast to this seventh goal, Western managers (and the only one in North America) with the best
usually attempt to boost productivity by reducing the record of labor-management cooperation." Will other
costs of direct labor and substituting complex American companies follow suit and be able to
technology. achieve the balance and harmony that the team con-
Instead of being implemented elsewhere at GM, cept promises, or is NUMMI simply an exceptional
theteam concept has often become a bargaining case?
chip — the union fighting for job security, and GM
EXHIBIT 11.5
States with
Right-to-Work Laws
The 21 highlighted states
have laws that give workers
the right to get a job with-
out joining a union.
two-tier wage plans Meanwhile, other complexities have entered into wage
two-tier wage plans Com- negotiations. For example, some companies have instituted two-tier wage
pensation agreements in plans, in which the pay scale of new employees differs from that of senior
which new employees are employees. This approach has been widely used in the airline industry since
put on a wage scale lower American Airlines instituted it in 1984 to compete against airlines whose
than that of veteran
wage expenditures were significantly lower. In a two-tier system, B-scale
employees
employees (the newly hired) are paid as low as 50 percent of what compara-
ble A-scale (veteran) employees receive and do not reach A-scale pay levels
for a period ranging from 5 to 20 years.
In 1985, two-tier wage systems appeared in 11 percent of all industry
9
contracts, and in 1986, a survey of nearly 200 unionized companies found
that two-thirds already had or were planning to institute two-tier pay
10
scales. But unions and employers are anticipating morale problems from
the lower-paid newcomers somewhere down the road. At first, it seems,
many of them are just happy to have a job. After six months or a year, how-
ever, they start resenting the fact that they are receiving unequal pay for
equal work, and they often blame the union. Thus, many of the new contracts
have not renewed two-tier wage plans.
The existence of two-tier wage plans is one indication of erosion in the
pattern bargaining Negoti which similar wages and bene-
traditional practice of pattern bargaining, in
ating similar wages and fitsare negotiated with all companies in a particular industry or for all
benefits for allcompanies plants within a particular company. For example, up until 1980, union as-
within a particular industry
semblers at all General Motors, Ford, Chrysler, and American Motors plants
earned within 3 cents an hour of each other. 11 But in the 1980s many compa-
nies began to break away from patterns in their industries and negotiated
separately with the unions. In particular, the major steel companies have
abandoned pattern bargaining, as have several of the largest railroads, coal
companies, and meat packers. 12
EXHIBIT 11.6
Wages, Inflation, colas In 1950, the United Auto Workers and General Motors Corporation
and Unions adopted an innovative policy. To guarantee that workers' pay would keep
pace with inflation, their contract adopted a cost-of-living adjustment
In recent years, union wage
(COLA) clause. During the term of the contract, workers' wages would auto-
increases have been smaller
than nonunion wage in- matically be increased in proportion to inflation in the general economy. By
creases and in many cases 1976, over 60 percent of workers covered by labor contracts benefited from
13
have not even kept pace COLA provisions.
with inflation. COLAs remain popular because they seem to maintain workers' buying
power without any particular effort in negotiating contracts or raising pro-
cost-of-living adjustment ductivity. In reality, however, some analysts have found major flaws in them.
Clause in a union contract For one thing, COLAs are believed to magnify the effects of inflation in the
that ensures that wages will general economy, especially when inflation jumps suddenly, as in the oil
rise in proportion to crises of the 1970s.The cost of COLAs is also less predictable than standard
inflation
wage agreements and therefore complicates management's strategic plan-
ning. In the climate of the mid-1980s, when unions and management began
trying to work together to save industries and when the inflation rate re-
mained low, COLAs lost some of their appeal. By 1987, only 38 percent of
workers covered bv labor contracts benefited from COLAs. 14
profit sharing Profit sharing is not a new idea; some companies provide
employees with deferred income that may be claimed on retirement as an
incentive to produce more in the present. Now, however, both management
and unions are looking at profit sharing as a means of reducing wage infla-
tion and increasing productivity. By mid- 1987 429,000 profit-sharing plans
were in force, and an estimated 18-20 percent of the work force is included in
such plans. 13 General Motors, Ford Motor Company, Uniroyal, Hewlett Pack-
ard, and Publix Super Markets are among the companies with profit-sharing
or stock-ownership plans for union members.
employee benefits Management can also avoid increasing basic wage rates
in labor contracts by providing additional benefits. In particular, unions
have been stressing higher pensions. But employers are fighting these de-
mands because in the past few years they have had to absorb large increases
in Social Security taxes and unemployment compensation rates. Employers
have also been trying to persuade workers to pay more of the $100 billion
that medical insurance costs companies every year.
Job security
In the face of continuing deregulation and competition from importers and
nonunionized domestic companies, unions have been stressing job security
lifetime security Arrange- over wage increases since the early 1980s. Unions often demand lifetime
ment that gives workers security, protection for workers against temporary layoffs due to economic
some protection against slowdowns and against permanent layoffs due to closing outmoded plants or
temporary layoffs due to expanded subcontracting (getting another company to do work previously
economic slowdowns and done "in house").
against job loss due to Automation is a special source of discomfort for unions. They are de-
downsizing or plant closings
manding that management give them advance notice of any attempts to in-
troduce new equipment that would cost their members jobs, and they are
demanding that those workers already on the job not be laid off because of
the introduction of automated equipment. Two unions acutely aware of the
potential of automation for reducing the number of jobs have been the Com-
munications Workers of America (CWA) and the International Brotherhood of
Electrical Workers (IBEW), which represent nearly 90 percent of the tele-
phone work force. In 1980, both unions negotiated the creation of labor-
management "technology committees" at American Telephone & Telegraph
(AT&T), through which unions and management discuss the introduction of
new equipment. The CWA has also been arranging retraining programs for
its members so that they may learn high-technology skills ranging from com-
puter programming to the repair of electronic equipment. 16

In large industries often plagued by job insecurity, such as the automo-
tive industry, unions have been making a variety of concessions in return for
job guarantees. In 1987, the United Auto Workers won unprecedented job-
security provisions in contracts with U.S. automakers. Under the pacts, all
currently held union jobs at auto plants were guaranteed. For example, at
Ford a guaranteed number of UAW jobs was set at 104,000, and none of these
jobs could be eliminated, except by attrition. Layoffs are permitted only if
sales drop significantly. In return for these job-security guarantees, the union
agreed to set up joint union-management committees, both locally and na-
17
tionally, to come up with plans for increasing efficiency at auto plants.
Work rules and job descriptions

One thing that union/management committees will be scrutinizing in the
auto industry is traditional work rules and restrictive job classifications,
work rules Policies set both of which tend to reduce productivity. Work rules are definitions of the
during collective bargaining types of work that covered workers may do and the working conditions they
thatgovern what type of must have. In the past, unions seized on narrow work rules as a means of
work union members will preserving jobs. For example, if there was too much work for one carpenter,
do and the conditions under
which they will work
another had to be hired — even if an electrician already on the payroll was
sitting idly by (this practice was called "featherbedding"). But in the late
1970s and early 1980s, management and unions both began to realize that for
productivity to be increased, some fundamental changes had to be made in
work rules. For example, after tough negotiations, unions at Chrysler Corpo-
ration agreed to change many job definitions. A welder who had been kept on
the payroll for many years to handle occasional welding jobs was dismissed,
and one of the maintenance workers was trained to handle the welding jobs.
Under the old rules, only an electrician could unplug one of the plant's sew-
ing machines; now anyone can do that. The result of the joint union-manage-
ment effort has been the rescue of a doomed plant, increased production, and
savings of $6.4 million a year —even without automation. 18
Worker safety and health

Union negotiators are concerned with maintaining a safe and pleasant work-
ing environment for their members. Thus, the great majority of today's union
contracts have provisions covering workers' safety and health, although the
contracts rarely do more than restate federal regulations already in force.
But the combination of escalating health-care costs and greater awareness of
environmental hazards has given rise to important new demands in labor
negotiations.
When Negotiations Break Down

The vast majority of management-union negotiations are settled quickly,
and in a businesslike manner. This was not always the case. In the
easily,
early days of unionism, conflicts often arose over such basic issues as money
yellow-dog contract and working conditions, and both sides used pressure tactics that are now
Agreement forcing workers illegal. To defy management, the unions used threats of property damage,
to promise, as a condition violence against workers siding with management, and sabotage of plants
of employment, not to join and equipment. To try to prevent the spread of unionism, management used
or remain in a union the yellow-dog contract, an agreement that forced workers to promise not to
blacklist Secret list circu-
join or remain in a union, and the blacklist, a secret list circulated among
lated among employers to employers to keep union organizers from getting jobs. These tactics were
keep union organizers from outlawed in the 1930s. Today, both sides are able to draw on an arsenal of
getting jobs powerful options when negotiations or mediation procedures break down.
Strikes and picket perhaps labor's best-known tactics, but a number

lines are
Labor's options of others are also used. In a slowdown, for example, workers continue to do
slowdown Decrease in their jobs, but at a snail's pace. However, employees who participate in slow-
worker productivity, used as downs are not protected under the National Labor Relations Act and thus
a tactic to pressure may be disciplined by management. Other tactics include boycotts and the
management judicious use of financial influence, political influence, and publicity.
Strikes and picket lines

strike Temporary work The most powerful weapon that organized labor can use is the strike, a tem-
stoppage aimed at forcing porary work stoppage aimed at forcing management to accept union de-
management to accept mands. The basic idea behind the strike is that, in the long run, it costs
union demands management more in lost earnings to resist union demands than to give in.
picketing Strike activity in An essential part of the strike is picketing: Union members are positioned at
which union members entrances to company premises, where they march back and forth with signs
march in front of entrances and leaflets, trying to persuade nonstriking workers to join them and others
to company premises to try
to cease doing business with the company. In most instances, one union will
to persuade nonstriking
honor another's picket line, so that even a relatively small union can shut
workers to walk off the job
down an employer. For example, striking department-store employees can
and others to cease doing
close down a business if union truckers won't cross their picket line to make
business with the company
deliveries.
Since the early 1980s, the number of strikes in the United States has
dropped dramatically. In fact, in 1988 the number of major work stoppages
reached an all-time low. One reason for the decline in use of this tactic is that
many companies are able to continue operating throughout a strike, either
because thev are highly automated or because they are able to put manage-
ment and temporary hirees to work in the union jobs. They can usually hold
out longer than the strikers can. And nonstriking workers seem to have less
respect for picket lines, perhaps because of the uncertain outlook for jobs,
perhaps because of a general decline in union popularity.
Boycotts
boycott Union activity in A less direct but equally powerful weapon is the boycott, in which union
which members and sympa- members and sympathizers refuse to buy or handle the product of a target
thizers refuse to buy or han- company. Millions of union members form an enormous bloc of purchasing
dle the product of a target
power, which may be able to pressure management into making concessions.
company
One of the best-known boycotts of the past couple of decades was the
grape boycott organized by Cesar Chavez in the early 1970s. In order to pres-
sure California growers into accepting the United Farm Workers as the bar-
gaining agent for previously unorganized farm laborers, he and his col-
leagues persuaded an estimated 17 million people in the United States to
stop buying grapes. Eventually, the California legislature passed the
country's first law guaranteeing farmworkers the right to hold union elec-
19
tions, and today the UFW has about 100,000 members.
A 1988 Supreme Court decision paved the way for more aggressive boy-
cotting activities by clarifying the legality of secondary boycotts, or boycotts
of companies that do business with the targeted union employer. Such boy-
cotts are now legal if they do not involve coercive tactics or picketing. One of
the first unions to take advantage of this ruling was the United Paperworkers
International, which had been in a year-long strike against International
Paper. The union immediately began boycotts against two banks that finance
International Paper. Members handed out leaflets in front of the banks urg-
20
ing customers not to do business there.
Financial and political influence
Many unions have huge financial assets, including the more than $500 billion
in their members' pension funds, that they may use to exert influence. In the
International Paper strike, for example, union organizers threatened to with-
draw unions funds from banks that shared directors with International
Paper. They were also able to convince other unions, such as the American
Federation of State, County and Municipal Employees, to make similar
threats.
21
But the threats didn't work at International Paper —
the strike
ended with 2,300 union members being permanently replaced.
Unions may also exercise significant political power by endorsing candi-
dates and (theoretically, at least) delivering the votes of union members.
They often raise funds for candidates as well. For example, the Committee on
Political Education (COPE), founded by the AFL-CIO in 1955, solicits funds
from union members for distribution to candidates favorable to labor's posi-
tions. In 1987-1988, eight union Political Action Committees each contrib-
uted more than $500,000 to candidates; the Teamsters PAC alone gave $5.5
million. The direct participation of union members in the electoral process
may be even more effective. In 1988, more than a fifth of the delegates to the
Democratic presidential nominating convention were union members; the
Teamsters, among others, came out in support of Republican party presiden-
tial candidate George Bush. 22
Publicity
One of the newer tactics that labor has used is the publicity attack, a con-
certed "corporate campaign" of news and promotion mounted not only
1
against the target company but also against all companies affiliated with it.
When J. P. Stevens, the textile giant, continued to resist direct efforts to
organize its workers, the Amalgamated Clothing and Textile Workers Union
unleashed ads, letters, phone calls, and news releases on the company's lend-
ers, major stockholders, and outside board members. Although J. P. Stevens
had become notorious as America's number anti-union employer, it finally
1
succumbed to the pressure of the corporate campaign in 1983, after a 20-year

23
battle.
, Companies are not helpless when it comes to fighting unions. Management

v a ag 5 can resort to a num ber of legal methods to pressure unions when negotia-
Options t ons break down.
i
Strikebreakers and management-run operations

When union members walk off their jobs, management has the right to re-
strikebreakers People place them with strikebreakers, people who cross the picket line to work.
who cross a picket line to (Union sympathizers brand them as "scabs.") Even when NFL football play-
work ers struck in 1987, team owners were able to hire 1,600 replacements, and
within a month the players' union dropped the strike. But it is often difficult
for companies to find qualified substitutes because many of those with the
necessary skills are union members. In some cases, management has suc-
ceeded in diminishing the impact of strikes by substituting white-collar and
supervisory personnel for the striking workers.
In certain industries, some large companies have found it possible to
survive strikes simply by depending on their computers. At AT&T, for exam-
ple, 97 percent of all telephone calls go through automatically; human beings
process calls only when operator assistance is required. Over the past 20
years, the computer has shifted the ratio of workers to supervisors from 5 :
to 2:1, which makes it easier for supervisors to take over. But this type of
victory comes at a price. During one strike at AT&T, more than 2,000 cases of
vandalism were reported as workers took out their frustration on the new
24
electronic "scabs."
Union strikers do their best

to discourage "scabs" who
cross picket lines to fill their
jobs.
Lockouts
lockout Management activ- The United States Supreme Court has upheld the use of the lockout, in which
ity in which union members management locks out union workers in order to pressure a union to accept a
are prevented from entering contract proposal. A lockout is legal only if union and management have
a struck business in order to come to an impasse in negotiations. During a lockout, the company may hire
force union acceptance of temporary replacements as long it has no anti-union motivation and negotia-
management's last contract 25
tions have been amicable.
proposal
Although the lockout is rarely used in major industries today, some in-
stances still occur. For example, during the Wheeling-Pittsburgh steel strike
in 1985, state officials in Ohio identified the labor dispute as a lockout and
approved unemployment-compensation payments to the idled workers.
Pennsylvania authorities also agreed because when the company canceled
the last year of the labor contract as part of bankruptcy proceedings, workers
were, in effect, locked out.
Injunctions
injunction Court order di- An injunction is a court order directing someone to do something or to re-
recting someone to do frain from doing it. Management used this weapon without restriction in the
something or to refrain from early days of unionism, when companies typically sought injunctions to
doing it order striking workers back to work on the grounds that the strikers were
interfering with business. Today, injunctions are legal only in certain cases.
For example, the president of the United States has the right, under the Taft-
Hartley Act, to obtain a temporary injunction to halt a strike deemed harm-
ful to the national interest. In 1978 President Carter invoked the Taft-Hartley
Act in order to get striking miners in the bituminous-coal industry back to
work, stating that coal production was in the national interest. However, the
courts ruled that the strike did not constitute a national emergency.
Industry pacts and organizations

Some industries have copied the united-front strategy of the AFL-CIO by
forging mutual-assistance pacts: They temporarily agree to abandon compe-
tition in order to assist a competitor singled out for a strike. Such agreements
provide a form of strike insurance to help the company hold out against
union demands. Certain industries have also formed national organizations
such as the National Association of Manufacturers to counterbalance the
powerful national unions. These organizations try to coordinate industry-
wide strategy and to keep wage and benefit levels even among companies.
They also lobby for legislation to protect management against union
demands.
Union-Management Relations in a Changing Environment

Economic pressures have brought new approaches to the twin goals of main-
taining the health of American companies and protecting the rights of work-
ers. To survive against foreign competition whose labor costs are often much
lower, unions and management alike have had to develop some new
strategies.
Companies sometimes decide to close an inefficient factory so that they can

Plant shutdowns institute sweeping improvements in a new one, and sometimes they are
and bankruptcy forced to close a factory because business is bad. Regardless of the reason, a
factory closing may

cause a wide variety of problems. Some, such as unem-
ployment and economic problems for the local area, are foreseeable. Less
obvious are alcoholism, drug abuse, depression, marital stress, and other
psychological difficulties among laid-off workers. Most plants close with lit-
tle advance planning, and workers bear the brunt of the problems.
In 1989, a new law went into effect requiring companies to give workers
at least 60 days' notice of impending plant closings or layoffs. But unions are
concerned that even 60 days is not enough for most workers to look for new
jobs, since a big plant is often the primary employer in a town.
If business is bad enough, a company may file for bankruptcy in order to
relieve some of the pressure from creditors. But shutting down an entire
company hurts everyone, and most companies prefer not to take such a dras-
tic step. Some employers have discovered, however, that filing for bank-
HT ON BUSINESS
Unions Are Collaring the
ssional
Having reached a point sell plastic kitchenware or cosmetics. These hosts are given
where organizing blue- points, which can be redeemed for valuable prizes, for get-
workers is no
collar tingco-workers to attend. At the party, employees are en-
longer rewarding, the unions are turning their atten- couraged to air their dissatisfactions with their jobs. The
tion to white-collar and professional workers: com-
host's friend, a union organizer, sympathizes with the em-
ployees, then passes out union literature and authorization
puter programmers, financial planners, nurses and
cards. The host is given additional points for each signed
other health personnel, insurance agents, and the like.
authorization card turned in.
Wages, working hours, and job safety are of less con- Informal meetings: Employee hangouts are frequented by
cern to these workers than self-esteem. Therefore, organizers, who advise disgruntled employees on ways to
unions focus on threats to worker dignity. They are protect their rights and offer to help change their working
finding that white-collar and professional workers conditions.
want Telephone interviews: Employees are telephoned at home
in the evening. Theymay be told that the caller represents a
Respect: the feeling that management values their knowl-
national polling firm or is a university graduate student who
edge and commitment (often the main source of discontent)
is gathering information for a thesis. The employee is then
A voice in management: a say in how they perform their
quizzed about conditions at work and about grievances. The
work
employee later receives union literature and an authorization
Comparable worth: equal pay for jobs of equal worth to
card by mail.
an employer or to society (a special concern of women, who
Concerted activities: These are defined as "any group
now outnumber men in the professions)
action by employees designed to advance legitimate com-
Grievance procedures: effective means of discussing job-
mon interests dealing with wages, hours, and working condi-
related grievances or concerns
tions." Two or more employees may act "in concert" for
When white-collar employees sense a lack of basic purposes of "mutual aid and protection." according to the
National Labor Relations Act. Union organizers help employ-
consideration for their worth, they are more willing to
ees of a Firm with similar problems to work together and in-
accept union help.
form them of their rights under the law.
Blue-collar workers have often sought the aid of
unions, but professional workers typically have not. These are just a few of the approaches that un-
Thus, union organizers are seeking them out, using ions are trying in an attempt to survive these difficult
such innovative approaches as these: times.
Sales parties: Employees sponsor parties in their homes to

ruptcy may haveits advantages. In 1982, Texas Air Corp. acquired Continen-
declared it bankrupt, and then reopened it as a nonunion carrier

tal Airlines,
with much lower wages. Other companies used this tactic as well, which led
to passage of federal legislation that limits the use of bankruptcy in labor
relations.
other employers have sought to rid themselves of unions by shutting
Still
down a plant and then selling it to a supposedly independent company that is
actually under the control of the old employer. Or the parent company —
which may be fully unionized —
solicits work that it then passes off to a
nonunion entity that it controls.
In the effort to reduce union influence and power, management has resorted
Employee rights to another approach: granting its nonunionized employees many of the same
without unions benefits enjoyed by union members. These benefits include salaries competi-
tive with those earned by union members, liberal work rules, and seniority
privileges. One study showed that 30 percent of all nonunion employers even
had formal grievance procedures in place. Employees who enjoy benefits like
26
these frequently feel that it is unnecessary to join a union.
Another factor in the changing balance of power between labor and man-
agement is the changing role of government. In recent years, no new legisla-
tion has been passed to protect the unions' right to organize, despite union
efforts. But there has been legislation that directly guides and controls the
actions of management without unions' having to step in. There are now laws
mandating health and safety standards on the job, as well as a variety of
federal and local laws that prohibit discrimination on the basis of race, gen-
der, or age (see Exhibit 11.7). New legislation has also clarified employers'
responsibility for pension plans, and the minimum-wage law has been stead-
ily expanded to include all workers. Unions once had to fight for these items;
now government regulates them.
Faced with increasing numbers of mergers and plant closings, unions con-
Worker ownership cerned about mounting job losses have pursued a number of innovative
means for ensuring that union companies stay in business. These options
have ranged from placing union representatives on company boards to in-
creasing employee stock ownership to actual leveraged buyouts.
In many cases, unions have granted givebacks in exchange for enhanced
employee-ownership programs that give workers a bigger say in how a com-
pany is run. Labor representatives now sit on the boards of Pan Am, Kaiser
Aluminum, Wheeling-Pittsburgh Steel, and many smaller companies. Unions
are encouraging workers to learn more about the business end of their indus-
try and are fighting for greater employee access to companies' financial rec-
ords. According to one steel-industry labor expert, "The sine qua non of being
an effective union today is having an understanding of the core business the
union is in, and communicating that understanding to members." 27
The primary means that unions have used to keep businesses in opera-
tion is the employee stock ownership plan (ESOP), described in Chapter 10.
The Weirton, West Virginia, In 1988, over 9,000 companies had such plans. With ESOPs, employees have
steel mill is an example of been able to gain partial or complete ownership of some 1,500 companies.
successful conversion to One of the more visible conversions to employee ownership was the Weirton
employee ownership. steel mill in West Virginia, once owned by National Steel. The mill was the
ISSUE LEGISLATION/COURT RULINGS
Privacy Limits onemployee data that government may disclose to Federal Privacy Act of 1974, 10
employers states
Limits on use of lie-detector tests for job applicants 20 states
Employee rights to access personnel files 9 states
Limits on use of arrest records in hiring 1 2 states
Safety/health Broad requirements for guaranteeing a safe and healthful Occupational Safety & Health
workplace Act of 1970, 24 states
Protections for mine workers Federal Mine Safety & Health
Act of 1977
Discrimination Broad protection against discrimination in hiring, promotion, Civil Rights Act of 1964
and discharge
Protection for older workers against age discrimination Age Discrimination in
Employment Act of 1967
Prohibition of any mandatory retirement age 19 states
Prohibition of policies mandating retirement before age 70 1978 amendment to Age
Discrimination in
Employment Act
Limits on discrimination on the basis of marital status and Various states and localities
sexual orientation
Limits on gender discrimination in pay Equal Pay Act of 1963
Requirements of equal pay for comparable work Some federal court decisions
Pension and other Funding, vesting, and other standards Employee Retirement Income
benefit plans Security Act of 1974, various
states
Wages and working Provisions for national minimum wage, 40-hour work week for Fair Labor Standards Act of
conditions regular pay, and other working conditions 1938, state wage and hour
laws (all states)
Union security Limits on employers' ability to discharge and discipline National Labor Relations Act
employees for union activity of 1935
Protection of union security in railroad industry Railway Labor Act of 1926
Right to know Requirement that companies divulge information on hazardous 25 states
substances used in workplace
Whistle-blowers Protection for corporate and government employees who 21 states

expose wrongdcmg
Employment at will Limits on employment-at-will doctrine, which holds that Court decisions in 30 states
employees may be fired at any time without cause
Plant shutdowns Requirement that workers receive 60 days' advance notice of Worker Adjustment and
plant shutdowns or massive layoffs Retraining Notification Act of
1988
EXHIBIT 11.7
Recent Guarantees of
Employee Rights
largest employer in the state, with 7,000 employees, and the economy of the
Nonunion as well as union
entire region depended on it. National had announced plans to scale back
employees have benefited
operations and ultimately phase out the plant. But closing would have been
from a number of state and
federal legislative actions.
expensive because the steelmaker had pension liabilities of $400 million.
Giving employees an opportunity to buy the mill solved this problem; more-
over, it gave them a chance to save their own jobs and help support the local
economy. Also, once they acquired the mill, the workers were able to do
things that National's management couldn't. For example, the workers voted
to take a 32 percent pay cut, which reduced operating costs by $128 million a
year. (Before the pay cut, the typical worker earned between $35,000 and
$40,000 annually.) After being acquired by its employees in 1983, Weirton
28
Steel emerged as one of the 10 largest steel mills in the United States. With
sales of over $1 billion a year, it also became one of the 100 largest private
companies in the United States.
Unions themselves have tried to buy companies outright, such as the Air
Line Pilots Association's attempt to buy United Airlines and rail unions'
$1 billion bid on Southern Pacific in 1987. Most such buyout attempts have
been unsuccessful, but unions did succeed in purchasing Chase Brass & Cop-
per Co. from Standard Oil (machinists union) and WFI Industries, a family-
owned tugboat company (maritime unions), thus paving the way for more
29
such actions in the future.
In light of declining memberships and increasing nonunion employee rights,

New directions for unions are beginning to pursue new issues and different workers and in —
unions different ways. For example, in high-technology companies, unions are mak-
ing headway with workers who face layoffs and delays in pay increases when
employers get caught in an old-fashioned economic squeeze. Unions are also
actively seeking women by offering them more leadership roles and by em-
phasizing such concerns as child care, pregnancy leave, and the minimum
wage. 30
Unions are also beginning to realize that if they are to remain relevant in
today's economy, they will have to make changes in their basic approach.
One analyst believes that unions must do the following in order to stay
healthy between now and the end of the century:
Win job guarantees —

perhaps not lifetime jobs but at least guarantees that
workers will get another job in the company before being laid off
Make imaginative pay deals that exchange a piece of the profits for tradi-
tional wages and benefits
Communicate with members to find out how they feel and to let them know
the facts of economic life
Accept new technology that will make employers more competitive and
therefore more stable sources of jobs
Attract new members from the service industries, perhaps by hiring more
female union executives and organizers 31
Some unions, like the National Union of Hospital and Health Care Em-
ployees, have already begun experimenting. For example, they are finding
that hard facts may be more persuasive with today's workers than rallies and
pep talks. They are using union pension funds to finance projects that use
organized labor. And they are offering insurance to selected groups of work-
ers who sign up as associate members, with the hope that the associate mem-
bers will someday become full-fledged unionists.
More fundamentally, faced with a basic change in the relationship be-
tween management and labor, unions have started reconsidering their posi-
tion and have begun to emphasize the benefits that they can provide to em-
ployers as well as to workers. For one thing, unions can provide skilled
workers who are less likely to quit; they offer a source of responsible
32
labor. Unions have also been stressing their ability to help train people and
upgrade their skills. And they have tried to expand their appeal to members
by offering such nontraditional services as free legal advice and low-interest
MasterCards. 33 These are new directions, but union officials are proving that
they can adjust to changing realities.
SUMMARY OF LEARNING OBJECTIVES
m Identity two main types of contract by the union's rank-and- have experimented with new orga-
labor unions. file members. nizing tactics designed to make
Craft unions, which developed first,
them more appealing to groups of
are composed of people who all C List five general issues that workers who have not traditionally
perform a particular type of work.
may be addressed in a labor belonged to unions.
contract.
Industrial unions organize people
who perform different types of Among the issues that may be sub-
work within a single industry, such ject to negotiation are union secu- KEY TERMS
as automobiles and steel. rity and management rights, com-
pensation, job security, work rules,
•y Outline the organizational and worker safety and health. agency shop (275)
structure of unions. arbitration (273)
#- Identify four options that
National unions are composed of authorization cards (270)
unions have if negotiations
local unions; labor federations are blacklist (279)
with management break down.
composed of national unions and boycott (280)
unaffiliated local unions. Each Unions may conduct strikes, orga- business agent (270)
local has a hierarchy consisting of nize boycotts, exercise financial
certification (271)
rank-and-file members, an elected and political influence, and use
closed shop (275)
president, elected shop stewards, publicity to pressure management
collective bargaining (272)
and perhaps a business agent. into complying with its proposals.
cost-of-living adjustment (277)
National unions and federations
consist of delegates elected by the 7 Identify five options that craft unions (267)
local unions, who in turn elect offi- management has if negotia- decertification (271)
cers; staff experts and organizers tions with the union break down. givebacks (273)
are hired to carry out the unions' To pressure a union into accepting grievances (273)
programs. its proposals, management may industrial unions (267)
continue running the business with injunction (282)
3 two main steps
Identify the
strikebreakers and managers, insti- labor Federations (270)
in the process by which a
tute a lockout of union members, labor unions (266)
union becomes the bargaining
seek an injunction against a strike lifetime security (278)
agent for a group of workers. or other union activity, seek a pact
locals (270)
First, at least30 percent (but usu- with other companies in the indus-
lockout (282)
ally a majority) of the target group try, or undertake lobbving and
must sign authorization cards des- mandatory subject (273)
public-relations campaigns.
ignating the union as their bargain- mediation (273)
ing agent. Then the National Labor O Describe four major practices national union (270)
Relations Board sponsors a certifi- that management and unions open shop (275)
cation election. If a majority of the are using to respond to changes in pattern bargaining (276)
workers vote in favor of being rep- the structure of the economy. permissive subject (273)
resented bv the union, the union First, management has tried using picketing (279)
plant shutdowns and bankruptcy to ratification (273)
void burdensome labor contracts. right-to-work laws (275)
m Describe the four main stages
Second, as a result of legislation,
in collective bargaining. shop steward (270)
court rulings, and changing man-
slowdown (279)
The first stage is preparing to agement philosophies, companies
strike (279)
meet. The second stage is the have given nonunionized employees
actual negotiation session. The strikebreakers (281)
most of the same rights and bene-
third stage is formation of a tenta- fits that unions demanded in the
two-tier wage plans (276)
tive agreement. And the fourth past. Third, employees sometimes union shop (275)
stage is ratification of the proposed become owners of a company to work rules (278)
safeguard their jobs. Fourth, unions yellow-dog contract (279)
of losses was short-lived, and by cannot realize a profit without

1986, the IAM was calling for a sharp cuts in wages. They maintain
REVIEW QUESTIONS that Eastern's labor costs account
change in top management. In Feb-
ruary of that year, Eastern was for 37 percent of operating expend-
1. Why do workers join labor
bought out by Lorenzo, who has itures, compared to the industry
unions? Why don't they join
since been relentless in his at- average of about 35 percent. Man-
labor unions?
tempts to cut what he sees as unre- agement defends the sale or lease
2. What factors are contributing to
alistic employee costs. He wants to of some 20 aircraft, saying the
the current decline in union
reduce machinists' pay, by as much planes were either unnecessary
power?
as 60 percent in some cases, and to after cutting routes or the wrong
3. What are grievances, and how
eliminate productivity-inhibiting size for their current routes. Man-
arc they resolved?
practices such as work rules, se- agement also insists that the spin-
4. What is the conflict between
niority rights, and limits on using off ofEastern assets to other com-
union security and management
outside contractors. "We had a few panies has been necessary in order
rights?
moments of Camelot," says Charles to recoup costs.
5. In an era when wage increases
E. Bryan, IAM District 100 presi-
are moderating, what sorts of com- In August 1988, a federal judge
dent. "The people in charge now
pensation plans are being adopted? blocked Eastern's plan to cut 4,000
seem to want to put the unions
6. What is the relationship between jobs and rendered a 50-page opin-
back down where they think we
automation and job security? ion, calling various Texas Air trans-
belong."
7. How do unions attempt to im- actions "questionable," "shocking,"
prove the quality of members' The IAM argues that Eastern's or "suspect." He charged that the
work lives?
management is attempting to foist actions were intended to injure
8. What new groups of workers are
gross wage cuts on union members Eastern, a unionized carrier, while
unions trying to reach, and what
by exaggerating the company's fis- benefiting nonunionized Continen-
strategies are the unions using?
cal problems. When Eastern an- tal, another of Texas Air's holdings.
nounced layoffs of about 4,100 Even though the company has

workers (out of a total of 40,000) shown huge losses, he said, "East-
early in 1988, employees were out- ern has served as a lending institu-
raged, and they reproached Lo- tion to meet the needs of Texas Air
renzo for selling off planes and and Continental." Even as Eastern
spinning off airline assets. "He's filed an appeal, union spokesper-
The Big Battle at dismantling the airline," says sons hailed the decision as the
Eastern Air Lines Bryan, "making a shell company "sweetest victory yet."
At Eastern Air Lines, management out of it, in order to convince the
world that Eastern cannot be prof- Eastern management thought it
and unionized employees are at
war. Frank Lorenzo, chairman of itable." Bryan worked for Eastern was prepared for a strike. The com-
Texas Air (Eastern's parent com- as a mechanic for 15 years before pany had a war chest of $300 mil-
becoming a full-time union worker. lion in cash, and in October 1988,
pany) wants to cut labor costs, but
the International Association of Now he has been organizing a pub- Lorenzo sold Eastern's shuttle (its
Machinists (IAM) — also represent- lic campaign against

relations only consistent money-maker) to
ing baggage handlers, fuelers, cabin Eastern management. "We will Donald Trump for another $365
cleaners,and other ground show how evil and how wrong Lo- million in cash. Eastern recruited
workers —
refuses to budge. In fact, renzo is," says Bryan. "By the time and trained 195 flight crews, at a
the union has been battling Lo- we are through, no one will want cost of $6 million per month. In
renzo since 1986, when he bought to be associated with him." Not addition, the company was pre-
the carrier. only has Bryan's group been utiliz- pared to add 2,500 airplane me-
ing local and national media, it has chanics, 300 security guards, 6,000
Union relations were not always so been working on political levels as airport services employees, and
rocky at Eastern. In December well. For example, Bryan gained 1,250 flight attendants. Manage-
1983, Eastern's employees received support from democratic candi- ment was also confident they
25 percent of the company's stock dates Richard Gephardt and Mi- would be able to maintain opera-
and four seats on the board in ex- chael Dukakis in the 1988 presiden- tions during a strike, in part, be-
change for $380 million in conces- tial primaries. cause they did not expect Eastern's
sions, wage and increased
cuts, unionized pilots to honor an IAM
productivity. But the turnaround Nevertheless, Eastern's managers picket line.
that was supposed to end five years are convinced that the company
1
But when the strike was called, now control 73 percent of the com-
Eastern's pilots baeked the IAM by pany's common stock with a ma-
walking off their jobs, thus ground- jority vote on its board, and Liddle
ing all but a handful of the com- has given up his presidency of the
pany's 250 planes. Eastern began From Union President 4,000-member Inlandboatmen's
losing $4 million a day. The com- toCEO Union to become chief of Unimar,
pany sold eight boarding gates for now the largest union-led, worker-
$70 million and two Canadian
"You don't have to rent your job.
owned company on the West Coast.
routes for another $15 million to
You can own it," says Donald
Liddle, chairman and CEO of The previous owner of WFI, Rich-
USAir. It also leased landing slots
Unimar International Inc. In the ard Woeck, is now chief operating
on its New York-Miami routes to
Continental —
all of which brought
mid-1950s, Liddle started work in officer at a Unimar subsidiary, and
the Seattle-Tacoma area as a ware- he owns 5 percent of Unimar's
more accusations that Lorenzo was
houseman. Later, working as a stock, with an option to get an-
dismantling the airline even during
forklift operator at a rubber com- other 5 percent as a bonus. Drexel
the strike.
pany in Portland, Oregon, he was also owns 5 percent of Unimar's
Then, six days into the strike, the active in the United Rubber Work- stock, and if it can arrange refi-
airline filed for protection from ers union, and in 1969, he became nancing of the company's $55 mil-
creditors under Chapter 1 1 of the president of his local. In 1975, lion debt, the investment banking
bankruptcy laws the same tactic— Liddle was elected director of the firm will receive another 5 percent.
used by Lorenzo 5'/2 years before to Inlandboatmen's Union Columbia The remaining 7 percent is held bv
break the unions and reorganize River region, and in 1979, he was unsecured creditors.
Continental. But bankruptcy is not elected national president of the
There are those, both inside and
a victory for either side. Manage- Inlandboatmen's Union of the Pa-
outside the company, who distrust
ment will not be able to toss out His reputation for loyalty and
cific.
Unimar's new organization. Says
union contracts under Chapter 1 negotiating skills became well
Alex Baroumes, an officer at the
without court approval, and the known throughout the Northwest.
Seattle local of the International
deals with Trump and USAir will In 1980 he even spent two days in
Longshoremen and Warehouse-
also have to be approved by the jail for refusing to call off a strike.
men's Union, "It's not our job to be
court. The union loses clout too
in management. Labor is labor.
because the court can set terms for In 1986, during the maritime reces-
Management is management." But
a contract settlement. Says Lo- sion in the Northwest, Liddle was
for the most part, Unimar workers
renzo, "The issue is whether a . . . working to save union members'
seem willing to try out the new
troubled and sick business in a jobs at a subsidiary of WFI Indus-
plan.
competitive marketplace should be tries,one of the largest shipbuild-
allowed to change itself." But says ers and tugboat companies on the Liddle's initial task is "temporarily
one Eastern machinist, "If it takes West Coast. But that same year, restructuring" the wage system for
me to lose my job, I'll do it be- WFI filed for bankruptcy, and 1,100 which he fought so hard during the
cause I'm making a stand. It's not workers lost their jobs. During the previous 13 years. But he is opti-
just the pay. This is a test case
. . . next year, a few hundred workers mistic. Says Liddle: "We've got
34
for the whole labor movement." maintained a shoestring operation three ways to maximize a worker's
at WFI, while Liddle worked with income: through wages, dividends
1. What tactics are being used by
Michael Milken of Drexel Burnham and upping the value of their
IAM against Eastern Air Lines? Are Lambert Inc. (an investment bank- stock." In an attempt to avoid any
there other tactics the union could
ing firm) to set up an employee conflict of interest, the team that
be using? ownership plan. Joining them in will negotiate with workers on be-
2. What steps are being taken by efforts to save WFI were the Inter- half of the management will be a
Eastern's management to insure national Brotherhood of Masters, three-member committee of per-
that the company will be
able to Mates & Pilots and members of the sons who have no affiliation with
continue operating should union Metal Trades Council. After a year the unions and who are appointed
workers strike? of negotiations, the consortium by the board. Another goal is to
3. How effective will the union's reached an agreement with WFI's restore Unimar's bonding so that
public relations campaign be? If creditors, and in August 1988 the the company can bid for large con-
public opinion swings toward the company emerged from bankruptcy myself as some
tracts. "I don't see
union, how many travelers will re- with a new name, Unimar. Under big-shot boss — I work
for them,"
fuse to fly Eastern in support of the an Employee Stock Ownership says Liddle of Unimar's employees.
union's position? Plan, the company's 400 workers
"That's
it."
35
why we're going to make ers own the company? Will em-
ployees be as interested in future
at the helm
negotiations?
affect Unimar's
.
profits as they are in today's 3. How
does profit sharing differ
1. Will the negotiations between
wages? from workers actually owning the
Unimar's management and employ-
2. How will having a union man controlling interest of a company?
ees be different now that the work-
KEEPING CURRENT USING

THE WALL STREET JOURNAL
Choose one or two Wall Street Union givebacks and major reasons behind a drive to
Journal articles illustrating one concessions unionize, or the major issues sur-
rounding the government-mandated
of the following aspects of Government-mandated labor labor practices?
labor-management relations: practices 3. Are the issues or problems still
Union organizing 1. Whatare the major issues de- unresolved, or has some kind of
scribed in the article? agreement or solution been reached?
Collective-bargaining
If so, what are the terms of the
negotiations 2. From the information presented
agreement? What did each side
what seem to be the
in the article,
Strikebreakers or lockouts gain? What did each side concede?
major sources of disagreement be-
Worker layoffs and plant tween management and labor, the
closings

Chương 11

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chương 11

Uploaded by

Copyright:

Available Formats

CHAPTER 11

' Identify two main types of

* Outline the organizational

"* Identify the two main

^ Describe the four main

"* List five general issues that

° Identify four options that

Identify five options that

Hospitals Go into Labor

First, the clerks, and dishwash-

ground," meeting quietly with workers off the hospital or nursing-home

Labor Organizations in the American Economy

In 1792, a group of shoemakers held a meeting in Philadelphia to discuss

craft unions Unions made made up of skilled artisans belonging to a single

EXHIBIT 11.1 LEGISLATION PROVISIONS

Another reason for the overall decline is a massive shift in American

gained strength in the

1930s and peaked in the 1980-1983 Severe

Why workers join

How unions are structured

EXHIBIT 11.4 Meeting and reaching an agreement

Preparing to Meet Meeting Reaching an / Voting and

mediation Process for re-

arbitration Process for

Although grievance steps vary somewhat from contract to contract, prob-

whose powers are defined in the contract and whose ruling

Arbitration is generally considered a last resort because it removes control

Among issues that commonly appear on

Union security and management rights

provision guaranteeing the security of the union. This provision is included

an organization," says ter of intent:

To pursue superior quality (by giving team members con-

puter programming to the repair of electronic equipment. 16

Work rules and job descriptions

Worker safety and health

When Negotiations Break Down

Strikes and picket perhaps labor's best-known tactics, but a number

Strikes and picket lines

Financial and political influence

Chapter 11: Union-Management Relations 281

succumbed to the pressure of the corporate campaign in 1983, after a 20-year

, Companies are not helpless when it comes to fighting unions. Management

Strikebreakers and management-run operations

Union strikers do their best

Industry pacts and organizations

Union-Management Relations in a Changing Environment

Companies sometimes decide to close an inefficient factory so that they can

factory closing may

Sales parties: Employees sponsor parties in their homes to

declared it bankrupt, and then reopened it as a nonunion carrier

now government regulates them.

ISSUE LEGISLATION/COURT RULINGS

Whistle-blowers Protection for corporate and government employees who 21 states

In light of declining memberships and increasing nonunion employee rights,

Win job guarantees —

SUMMARY OF LEARNING OBJECTIVES

of losses was short-lived, and by cannot realize a profit without

nounced layoffs of about 4,100 Even though the company has

Machinists (IAM) — also represent- lic campaign against

Chapter 11: Union-Management Relations 289

KEEPING CURRENT USING

You might also like