UNIT 6 AND 8 ASSIGNMENTS - DUE IN 48 HOURS

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Unit6and8Readings.docx

Unit 6: Compensation and Benefits

When hiring new employees, business managers must decide how much they will compensate their potential new human capital. Since this expense is often their highest overhead cost, employers need to understand this element of financial planning to avoid business failure. A generous compensation package can be an important recruitment tool: some employees value direct financial compensation while others prefer to receive more indirect benefits, such as healthcare, child care, and tuition reimbursement.

During times of recession, employers often have more leverage to decrease employee salaries and benefits because they have a larger pool of eager unemployed workers to choose from. However, retaining good people with appropriate compensation and benefits, during periods of low and high growth can foster a productive and committed workforce that appreciates a proper work/life balance. Meanwhile the growing disparity between executive and employee pay continues, as firms continue to align executive compensation with overall company performance. In this unit we explore this issue and others pertaining to employee compensation and benefits.

Completing this unit should take you approximately 6 hours.

· Upon successful completion of this unit, you will be able to:

· identify and apply the concepts/issues associated with compensation and benefits to create an attractive environment that draws valuable resources to an organization;

· identify key laws and legislation with regard to compensation and benefits that shape how human capital decisions should be made; and

· differentiate among direct financial compensation, indirect financial compensation, and non-financial compensation and give examples of each.

· 6.1: Compensation of Human Capital

· The Comfort of CompensationPage

Before you begin this unit, take some time to play this brief game, which will help you develop a better understanding of the comfort of compensation.

· Human Resource Management: "Chapter 6: Compensation and Benefits"URL

Read this chapter after watching the short video introduction. The overall objective of a compensation plan is to recruit the best human capital, motivate employees to perform at their peak, and to retain employees.

The compensation package is a critical component of the strategic HRM plan since a great deal of an organization's budget is devoted to employee compensation. This chapter details compensation options, compensation theories, and applicable laws regarding compensation. It also differentiates among financial compensation, indirect financial compensation, and non-financial compensation. Under section 6.1, "Goals of a Compensation Plan", perform and answer exercise question one, which asks you to research your intended career and think about your compensation expectations with what you learn.

· Northwestern University: Courtney Calinog's "Team Based Rewards Structures and Their Impact on Team Trust"URL

This article documents the advantages and disadvantages of team based rewards as it relates to compensation. At the center of this debate is trust. An organization must have an established culture of trust in order for this type of compensation to be effective. Teams built on a solid foundation of trust can benefit from team based rewards such as incentive pay, recognition, profit sharing, and gain sharing. Make a pro and con list regarding this compensation structure.

· 6.2: The Basics on 401k Plans

· Cheryl Krueger's "How Employers Can Help Employees Plan for Retirement"Page

As noted in the textbook chapter on compensation and benefits, there are a multitude of retirement options that employers can provide their employees, not limited to 401k plans and employee stock option plans. This short video provides insight as to how employers can go a step further and providing training or understanding to employees regarding their financial options.

The Comfort of Compensation

In order to play this game, you will need to download a free image of a bar stool by clicking here or draw the bar stool yourself on a piece of paper. Now that you have your stool in your possession, let me take this time to visually explain compensation and benefits. 

When an organization makes the decision to create a compensation and benefits system, there are actually three components at play. The mix of these three elements must attract and sustain qualified people, and can be collectively referred to as "what a company does to make a job attractive/sexy." They are:

1. Direct Financial Compensation: This is how most of us view compensation. Direct financial compensation refers to wages, salary, commissions—essentially any compensation that is disbursed in a monetary form.

2. Indirect Financial Compensation: This is an area of compensation that relates to any benefits a company might offer. A benefit would be something like a 401k or tuition reimbursement.

3. Non-Financial Compensation: This is an area of compensation not many of us think about or even consider compensation. This area of compensation might include having sound policies and procedures, a boss who is skilled and able to provide you with guidance and direction, and even your ability to have some kind of autonomy in determining your workplace outcomes.

Now that you know the basics of what each of these elements entail, I would like you to take a writing utensil and write the name of each of the elements, placing one element on a separate leg of the stool. Once you have written all of the elements on the stool, take the piece of paper and sit on it. That's right—take the piece of paper and sit on it. Now, while you are sitting on this piece of paper, think about how all of the legs of this stool are in fact even, and if this was a real stool, you would likely be able to sit on it without any issues. This is the goal every organization wants to or should be trying to achieve when they are developing a compensation and benefits program. 

Now—remove the piece of paper and look at the three legs with the individual compensation elements listed. As you are looking at the stool this time, think about your current place of employment. Using your foundational understanding of compensation and benefits as listed above, I want you to rip the leg on this sheet of paper if this leg of compensation at your current place of employment is deficient. If more than one leg is deficient, rip each leg. Please keep in mind that you should only rip the leg relative to the percentage you feel this area of your compensation is lacking. Example: if an element in your opinion is 50% lacking, then you should rip that leg in half. 

Now that you have ripped the legs, think about trying to sit back on this broken stool. This is the challenge an employer faces when trying to manage human capital. He or she must be able to create a system that is attractive to each employee in the organization. Whenever an employee feels a leg is deficient, he or she responds in a number of ways, up to and including leaving the company. The ultimate goal in defining compensation and benefits is to create a system that is going to allow all human capital to sit comfortably on their stool. Hopefully, this exercise has piqued your interest to want to know more about compensation and benefits—so let's begin!

Last modified: Friday, October 11, 2019, 4:00 PM

Unit 8: Labor Relations and Internal Employee Relations

In our final unit, we discuss labor and employee relations and conclude with a brief exploration of how ethical concerns pervade all aspects of human resource management. Employers and employees have specific expectations. Employers should create an environment that is attractive to potential and current employees. When discrepancies occur, labor unions, third parties hired to represent the collective interest of the employees in certain industries, can help strengthen the employer/employee relationship.

Employee relations is the subfield of human capital management concerned with preventing and resolving workplace challenges. It encompasses the way employers: gage poor performance and impose disciplinary action, identify and promote policies and procedures, and communicate awareness of rules, laws and regulations. These activities ensure employers and employees can achieve efficiency, equity, and voice in the workplace.

Efficiency relates to the ability to achieve workplace goals with a minimal investment of resources.

· Employers seek efficiency by engaging the most productive employees while using the least amount of resources.

· Employees seek efficiency by balancing their time contributions with their economic output to their employer.

· Employers and employees want workplace processes to be structured so they feel they are making a valuable contribution.

· Efficiency addresses the questions: Does your employer respond appropriately to the amount of work you are contributing? Is your employer helping you be successful? Do you believe your employer has your best interests in mind?

Equity refers to the ideal employer/employee partnership. The business environment is not a democracy: employers expect employees to follow their workplace rules and business processes. However, you should feel that your workplace environment is stable and fair. Is there room to grow and do more? Are employees treated like subordinates or true partners?

Employers and employees frequently feel their voice is not being heard. Most organizations try to help both sides open these critical avenues of communication, such as by creating an open-door policy, offering opportunities for respectful listening during meetings, and providing an anonymous tip or complaint hotline.

When the employer appears to be holding all the cards, since they can fire employees who do not comply with their wishes, representatives from labor and employee relations may need to step in to negotiate and restore balance to promote efficiency, equity, and voice.

Companies also need to employ ethical decision making and legal compliance with relevant laws and regulations. Unfortunately, individuals sometimes violate professional and ethical codes of conduct, and ignore the policies written to protect the employee, organization, customers, and the community at large. Meanwhile, companies lose billions of dollars in class action lawsuits when ethical lapses occur.

We conclude this unit by exploring explore the issues and challenges human resource professionals face to ensure these codes of conduct, codes of ethics, and company policies are disseminated, acknowledged, followed, and reflect the values and mission of their organization.

Completing this unit should take you approximately 11 hours.

· Upon successful completion of this unit, you will be able to:

· define the concept of labor relations;

· identify key laws and legislation with regard to labor relations that shape how human capital decisions should be made;

· define the concept of internal employee relations; and

· identify key laws and legislation with regard to internal employee relations that shape how human capital decisions should be made.

Team-Based Rewards Structures and Their Impact on Team Trust

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Introduction and Objectives

By Courtney Calinog (MSLOC student)

Trust is a critical ingredient to ensuring a healthy team dynamic, with its absence dramatically hindering team success in any organizational context. As a result, the establishment and continual fostering of team trust is an important yet challenging task facing managers, coaches, consultants and organizational effectiveness practitioners alike.

Team trust can be influenced by a variety of factors, including the structures organizations put in place to reward their employees. An analysis of team-based rewards, in particular, suggests several interesting implications regarding their impact on team trust. While they can be highly effective when implemented correctly, team-based rewards can also be a trigger for team trust challenges. A deeper understanding of these dynamics can help the MSLOC community design and promote healthy team reward structures in their academic and professional pursuits.

This article will provide an overview of trust in teams as a well as a summary of team-based rewards structures. Through the lens of team trust, it will review the perceived benefits of team-based rewards, including a summary of the conditions where they can be the most effective. In addition, it will explore potential drawbacks to team-based rewards and their impact on trust. Finally, a case study demonstrating the successful implementation of team-based rewards in a low trust team will be reviewed.

Trust and Team-Based Rewards Defined

Trust

According to Ferrin and Dirks (2003), interpersonal trust is defined as “an individual’s belief that another individual makes efforts to uphold commitments, is honest, and does not take advantage given the opportunity” (p. 19). At the same time, Rousseau, Sitkin, Burt and Camerer (1998) recognize interdependence and risk as the two conditions that must exist for trust to arise. In other words, trust is best built in an interdependent team context where individuals must come together to share information and collaborate. Furthermore, there is a notable element of risk involved for individuals deploying effort towards a team goal when there is no guarantee that team members will reciprocate (Ferrin & Dirks, 2003).

Team-Based Rewards

For an increasing number of organizations, implementing a compensation plan that rewards employees for successful teamwork provides great synergy with their organizational model. Companies that have such plans take various approaches to structuring team-based rewards, including programs such as incentive pay, recognition, profit sharing and gainsharing. (See Table 1) Human resources professionals that use these plans indicate they can be an effective way to reward team performance, but “must be carefully structured to avoid unintended consequences that could undermine individual initiative and business goals” (Bolch, 2007, p.91).

Types of Team-Based Pay

Benefits and Acceptance of Team-Based Rewards

With the increasing emphasis on team-based work in organizations, research suggests a growing acceptance and interest in team-based rewards, with organizations embracing the “conventional wisdom that team-based pay is the best way to encourage cooperation” (Merriman, 2008). According to a survey conducted by a leading compensation association called WorldatWork, 83 percent viewed team-based variable pay programs as effective (Thompson, 2008). In addition, the University of Southern California’s Center for Effective Organizations indicates that 85% of Fortune 1000 companies used team-based pay to some degree in 2005, up from 59% in 1990 (Merriman, 2008, p. 32).

Fueling this interest is the perception that “such pay systems are likely to enhance members’ pro-social behaviors and as a result, boost members’ capabilities, flexibility, responsiveness, and productivity” (Bamberger & Levi, 2009, p. 301). Among many benefits, team-based rewards can foster collaboration and teamwork, allow team goals to be clearly integrated with organizational objectives and provide incentive for the whole team to improve (Haines & Taggar, 2006).

Optimal Conditions for Team-Based Rewards

While the benefits of team-based rewards are clear, there are certain conditions strongly correlated to trust under which they are more likely to be successful. The first is in teams with a high level of task interdependence (noted by Rousseau et al. (1998) as a pre-condition to trust) and belief in the value of teamwork. When team members are highly interdependent and must rely on each other for support or information to reach their desired goals, they are more likely to realize the value of teamwork. Consequently, what Haines and Taggar refer to as a high “team rewards attitude” (TRA), reflecting a positive attitude toward receiving team-based rewards, would “flow from the realization that, in situations of high task interdependence, the desired performance or output can only be achieved through teamwork” (p. 197). Therefore, teams with high trust and task interdependence are more likely to achieve high team rewards attitude.

The establishment of objective, fair processes and measurable rewards criteria is also closely linked to the success and acceptance of team-based rewards. Generally speaking, team members feel more comfortable when performance criteria are based on objective standards (Thompson, 2008). According to Maurer (2010), “measurable project rewards seem to restrict opportunities for free-riding, opportunistic behavior or favoritism. This reduces suspicion and encourages project partners to trust each other” (p. 635). In addition, cooperation amongst team members is often enhanced by teams’ perception of fairness, which “starts with an allocation of rewards that members consider equitable” (Merriman, 2008, p. 32).

Pitfalls to Avoid: How Can Team-Based Rewards Undermine Team Trust Dynamics?

Although research suggests team-based rewards are most effective in high trust situations, their presence alone can be unsettling to team trust dynamics. As an example, even if a fair and objective team-based rewards system is in place, team members may still be reluctant or unwilling to monitor each other or determine their coworkers’ pay (Thompson, 2008). In addition, according to Bolch (2007), leveraging peer feedback to single out and reward individual team members with extra recognition (and pay) is “a surefire way to sabotage the team dynamic—unless the group receives a bonus and divvies the funds among themselves… When teams perform highly, it is the interaction [among] team members, not the members themselves, that creates the high performance. If you ask such members who was singly responsible for the high performance of the team, they'll say 'Huh?' or 'We were,' and mean it" (Avery, 2007, as cited in Bolch, 2007, p. 92).

Perceived disparity regarding the contributions of individual team members can also generate reduced cooperation and/or motivational loss in a team-based rewards environment. According to Haines and Taggar (2006), team-based rewards “may fail to recognize individual differences and can sometimes encourage free riding (withholding effort in the belief that rewards can be received by letting others do the work), potentially leading to reduced cooperation and team failures” (p. 194). Consequently, team-based rewards “‘may be difficult for people to accept,’ says Jay Schuster, a partner in the Los Angeles-based compensation consulting firm Schuster-Zingheim and Associates. ‘The notion that some of an individual’s pay is at risk based on someone else’s behavior or by the team overall is a hard sell’ ”(Garvey, 2002, p.74). Thompson (2008) also recognizes the potential for motivational loss, characterized by social loafing or free riding, when team-based rewards are used. This may be driven by feelings of inequity when other team members don’t pull their weight, but rewards are still allocated based on equality. This perception of unfairness may be particularly prominent for high performers who have “a general tendency to evaluate team-based rewards as distributively unfair” (Cable & Judge, 1994; DeMatteo & Eby, 1997; DeMatteo et al., 1997; Duffy, Shaw & Stark, 1999; Yamagashi, 1988; as cited by Haines & Taggar, 2006, p. 202).

Finally, if implemented incorrectly, team-based rewards can increase destructive and/or competitive behavior between and within teams in organizations, rather than fostering cooperation. This can lead to the sub-optimization of organizational goals (Thompson, 2008). According to Bolch (2007), fostering competition for rewards between teams “promotes impermeable boundaries on the teams—i.e., a lack of information sharing and collegiality. Therefore, attempting to award the best of middling or low-performing teams among a group of middling or low-performing teams will provide a negative return on investment" (p. 92). Similarly, team performance appraisal systems that provide a fixed reward to be divided within a team are destructive because they put individual team members in competition for rewards (Thompson, 2008).

A Case Study: One Organization’s Journey Implementing Team-Based Rewards in a Low Trust Team Environment

As cited by the Harvard Business Review (Merriman, 2008), one U.S.-based global manufacturing company implemented a successful, multi-faceted approach to designing rewards for teams. The guidelines, which take into account both individual and team performance, were outlined by Merriman (2008) to include:

· "Listen to employees. When converting three siloed departments to a dozen multifunctional teams focused on customer accounts, the company queried a cross section of employees and learned that they were very resistant to team-based compensation.

· Identify specific roles. The firm established a system of differentiated compensation based on the specialized skills each member provides to a team. Because each person has a unique function, it’s relatively easy for managers to identify individual contributions. Employees are evaluated on measures such as job knowledge and work quality.

· Be consistent about evaluation. All members of a given team are evaluated by one manager rather than an array of functional managers.

· Unite teams through recognition. The company encourages teamwork and cooperation by acknowledging individuals’ contributions to their teams and explicitly tracking and communicating the teams’ role in the company’s success" (p. 32).

Within this case study, the organization acknowledged their employees’ feeling that it was unfair to have a significant portion of pay tied to the performance of team members they didn’t fully trust, and deduced that this feeling of unfairness was disruptive to teamwork. Consequently, they made no attempt to forcibly unite teams through collective compensation. Instead, by acknowledging individuals’ contributions to their teams while explicitly recognizing and communicating the teams’ role in the company’s success, they successfully avoided the challenges that can be encountered by low-trust teams in a team-based rewards environment. (Merriman, 2008)

Conclusion

Team-based rewards have both potential benefits and drawbacks for an organization, especially in the context of team trust. While they can be successful in highly interdependent team environments when reward measurements are fair and clear, they can also result in motivational loss, competitive behavior and feelings of discomfort by team members who are reluctant to determine each other’s pay when such preconditions aren’t in place. As evidenced in the HBR case study, it’s important for managers to take these dynamics into account when designing a team-based rewards program and remember that there is not a one size fits all approach.

References

Bamberger, P. A. & Levi, R. (2009). "Team-based reward allocation structures and the helping behaviors of outcome-interdependent team members " Journal of Managerial Psychology 24(4): 300-327.

Bolch, M. (2007). "Rewarding the Team." HRMagazine 52(2): 91-93.

Ferrin, D. L. & Dirks, K. T. (2003). "The Use of Rewards to Increase and Decrease Trust: Mediating Processes and Differential Effects " Organization Science 14(1): 18-31.

Garvey, C. (2002). "Steer Teams with the Right Pay." HRMagazine 47(5): 70.

Haines, V. & Taggar, S. (2006). "Antecedents of Team Reward Attitude." Group Dynamics: Theory, Research, and Practice 10(3): 194-205.

Maurer, I. (2010). "How to build trust in inter-organizational projects: The impact of project staffing and project rewards on the formation of trust, knowledge acquisition and product innovation." International Journal of Project Management 28(7): 629-637.

Merriman, K. (2008). "Low Trust Teams Prefer Individualized Pay." Harvard Business Review 86(11): 32.

Rousseau, D. M., Sitkin, S. B., Burt, R.S. & Camerer, C. (1998). "Not so different after all; A cross-discipline view of trust." Acad. Management Rev. 23(3): 393-404.

Thompson, L. L. (2008). Making the team: a guide for managers Upper Saddle River, New Jersey, Pearson Education, Inc.

· 8.1: Labor Relations and Human Capital Management

· Human Resource Management: "Chapter 12: Working With Labor Unions"URL

This chapter discusses labor unions: what unions are, why they exist, major legal acts that shape unions, the unionization process, union's impact on organizations, collective bargaining, and the grievance process. Think of industries that have a large union impact and how it might change the dynamic between employees and employers.

· Thomas Woods' "American Labor History"Page

Watch these lectures, where Thomas Woods provides a liberal view of labor history and relations in the United States.

· John T. Dunlap's "The Bargaining Table"URL

Read this essay, which chronicles the evolution of collective bargaining.

· The State of Working America: "Collective Bargaining"URL

This article discusses the collective bargaining process and how it impacts income inequality.

· Dean Baker's "Scott Walker Ends Freedom of Contract in Wisconsin"Page

This 2015 article discusses legislative changes in the state of Wisconsin that have impact worker's rights. Although presented as a victory for worker's rights, the author argues that the legislation actually takes away employee's freedom of contract and weakens their bargaining power.

· 8.2: Employee Relations and Human Capital Management

· Human Resource Management: "Chapter 9: Successful Employee CommunicationURL

Read this chapter that documents the important concepts of communication strategies and management styles. Complete the Chapter Case at the end regarding developing an outline for a training program on effective management as well as communicating to employees.

· National Aeronautics and Space Administration: "What Is Employee Relations?"URL

Read this brief definition of employee relations.

· 10 Myths About Your Employee Manager RelationshipPage

This short video notes, through 10 myths, the tremendous value in effective employee relations.

· Mrityunjay Kumar's "Trust in Manager-Employee Relationship"Page

This important article notes the critical importance of trust between managers and employees and its impact on performance. Undoubtedly, trust is a necessary component in all industries. But, can you think of some industries that trust may play an even more important role in organizational effectiveness?

· Workplace Discrimination (Title VII) and the Supreme CourtPage

In this short video, Laurie Leader documents two workplace discrimination cases from the University Texas Southwestern Medical Center and explains how these cases impact future employee-employer relations.

· 8.3: The Role of Ethics in Human Resource Management

· Boundless Business: "Chapter 3, Section 1: Business Ethics: Ethical Issues at an Organizational Level"Page

This chapter discusses the ethical issues that arise in organizations, in the areas of human resources, finance, sales, marketing, and production. The chapter also notes the Enron scandal, a highly-publicized case regarding ethics. Take some time to Google "Enron Scandal" and note the ongoing affect this case has on business today.

· Pallavi Sharma's "Building an Ethical Culture"URL

This article notes the conflict that sometimes arises between organizational cultures that are driven by numbers and ethics. Training, mentoring, rewards, recognition, and continuous monitoring and reinforcing describe methods for creating and maintaining an ethical culture. As noted in previous chapters, some debate whether corporate culture is the most critical component of an effective organization. Within this culture, an ethical climate is mandatory.

· Hendrik R. Lloyd and Michelle R. Mey's "An Ethics Model to Develop an Ethical Organization"URL

This journal study notes the most effective steps in creating an organizational culture focused on ethics. As noted, it all starts at the top. The first step is a clear commitment to ethics from top management. After this, a code of ethics, ethics training, and an appropriate rewards structure reinforces the organization's commitment to ethics.

Chapter 12Working with Labor Unions

Unhappy Employees Could Equal Unionization

As the HR manager for a two-hundred-person company, you tend to have a pretty good sense of employee morale. Recently, you are concerned because it seems that morale is low, because of pay and the increasing health benefit costs to employees. You discuss these concerns with upper-level management, but owing to financial pressures, the company is not able to give pay raises this year.

One afternoon, the manager of the marketing department comes to you with this concern, but also with some news. She tells you that she has heard talk of employees unionizing if they do not receive pay raises within the next few months. She expresses that the employees are very unhappy and productivity is suffering as a result. She says that employees have already started the unionization process by contacting the National Labor Relations Board and are in the process of proving 30 percent worker interest in unionization. As you mull over this news, you are concerned because the organization has always had a family atmosphere, and a union might change this. You are also concerned about the financial pressures to the organization should the employees unionize and negotiate higher pay. You know you must take action to see that this doesn’t happen. However, you know you and all managers are legally bound by rules relating to unionization, and you need a refresher on what these rules are. You decide to call a meeting first with the CEO and then with managers to discuss strategy and inform them of the legal implications of this process. You feel confident that a resolution can be developed before the unionization happens.

Working with Labor Unions Introduction

(click to see video)

The author introduces the chapter on labor unions.

12.1 The Nature of Unions

LEARNING OBJECTIVES

1. Be able to discuss the history of labor unions.

2. Explain some of the reasons for a decline in union membership over the past sixty years.

3. Be able to explain the process of unionization and laws that relate to unionization.

A labor union, or union, is defined as workers banding together to meet common goals, such as better pay, benefits, or promotion rules. In the United States, 11.9 percent of American workers belong to a union, down from 20.1 percent in 1983.“Union Members: 2010,” Bureau of Labor Statistics, US Department of Labor, news release, January 21, 2011, accessed April 4, 2011, http://www.bls.gov/news.release/pdf/union2.pdf. In this section, we will discuss the history of unions, reasons for decline in union membership, union labor laws, and the process employees go through to form a union. First, however, we should discuss some of the reasons why people join unions.

People may feel their economic needs are not being met with their current wages and benefits and believe that a union can help them receive better economic prospects. Fairness in the workplace is another reason why people join unions. They may feel that scheduling, vacation time, transfers, and promotions are not given fairly and feel that a union can help eliminate some of the unfairness associated with these processes. Let’s discuss some basic information about unions before we discuss the unionization process.

History and Organization of Unions

Trade unions were developed in Europe during the Industrial Revolution, when employees had little skill and thus the entirety of power was shifted to the employer. When this power shifted, many employees were treated unfairly and underpaid. In the United States, unionization increased with the building of railroads in the late 1860s. Wages in the railroad industry were low and the threat of injury or death was high, as was the case in many manufacturing facilities with little or no safety laws and regulations in place. As a result, the Bortherhood of Locomotive Engineers and several other brotherhoods (focused on specific tasks only, such as conductors and brakemen) were formed to protect workers’ rights, although many workers were fired because of their membership.

Labor Union AFL-CIO Perspective

(click to see video)

A video from the AFL-CIO shows a history of labor unions, from its perspective.

The first local unions in the United States were formed in the eighteenth century, in the form of the National Labor Union (NLU).

The National Labor Union, formed in 1866, paved the way for other labor organizations. The goal of the NLU was to form a national labor federation that could lobby government for labor reforms on behalf of the labor organizations. Its main focus was to limit the workday to eight hours. While the NLU garnered many supporters, it excluded Chinese workers and only made some attempts to defend the rights of African-Americans and female workers. The NLU can be credited with the eight-hour workday, which was passed in 1862. Because of a focus on government reform rather than collective bargaining, many workers joined the Knights of Labor in the 1880s.

The Knights of Labor started as a fraternal organization, and when the NLU dissolved, the Knights grew in popularity as the labor union of choice. The Knights promoted the social and cultural spirit of the worker better than the NLU had. It originally grew as a labor union for coal miners but also covered several other types of industries. The Knights of Labor initiated strikes that were successful in increasing pay and benefits. When this occurred, membership increased. After only a few years, though, membership declined because of unsuccessful strikes, which were a result of a too autocratic structure, lack of organization, and poor management. Disagreements between members within the organization also caused its demise.

The American Federation of Labor (AFL) was formed in 1886, mostly by people who wanted to see a change from the Knights of Labor. The focus was on higher wages and job security. Infighting among union members was minimized, creating a strong organization that still exists today. In the 1930s, the Congress of Industrial Organizations (CIO) was formed as a result of political differences in the AFL. In 1955, the two unions joined together to form the AFL-CIO.

Currently, the AFL-CIO is the largest federation of unions in the United States and is made up of fifty-six national and international unions. The goal of the AFL-CIO isn’t to negotiate specific contracts for employees but rather to support the efforts of local unions throughout the country.

Currently in the United States, there are two main national labor unions that oversee several industry-specific local unions. There are also numerous independent national and international unions that are not affiliated with either national union:

1. AFL-CIO: local unions include Airline Pilots Association, American Federation of Government Employees, Associated Actors of America, and Federation of Professional Athletes

2. CTW (Change to Win Federation): includes the Teamsters, Service Employees International Union, United Farm Workers of America, and United Food and Commercial Workers

3. Independent unions: Directors Guild of America, Fraternal Order of Police, Independent Pilots Association, Major League Baseball Players Association

The national union plays an important role in legislative changes, while the local unions focus on collective bargaining agreements and other labor concerns specific to the area. Every local union has a union steward who represents the interests of union members. Normally, union stewards are elected by their peers.

A national union, besides focusing on legislative changes, also does the following:

1. Lobbies in government for worker rights laws

2. Resolves disputes between unions

3. Helps organize national protests

4. Works with allied organizations and sponsors various programs for the support of unions

For example, in 2011, the national Teamsters union organized demonstrations in eleven states to protest the closing of an Ontario, California, parts distribution center. Meanwhile, Teamster Local 495 protested at the Ontario plant.“Teamsters Escalate BMW Protests across America,” PR Newswire, August 2, 2011, accessed August 15, 2011, http://www.teamster.org/content/teamsters-escalate-bmw-protests-across-america.

Figure 12.1 The Complicated Structure of AFL-CIO

Source: AFL-CIO.

Current Union Challenges

The labor movement is currently experiencing several challenges, including a decrease in union membership, globalization, and employers’ focus on maintaining nonunion status. As mentioned in the opening of this section, the United States has seen a steady decline of union membership since the 1950s. In the 1950s, 36 percent of all workers were unionized,Gerald Friedman, “Labor Unions in the United States,” Economic History Association, February 2, 2010, accessed April 4, 2011, http://eh.net/encyclopedia/article/friedman.unions.us. as opposed to just over 11 percent today.

Human Resource Recall

When you are hired for your first job or your next job, do you think you would prefer to be part of a union or not?

Claude Fischer, a researcher from University of California Berkeley, believes the shift is cultural. His research says the decline is a result of American workers preferring individualism as opposed to collectivism.Claude Fischer, , “Why Has Union Membership Declined?” Economist’s View, September 11, 2010, accessed April 11, 2011, http://economistsview.typepad.com/economistsview/2010/09/why-has-union-membership-declined.html. Other research says the decline of unions is a result of globalization, and the fact that many jobs that used to be unionized in the manufacturing arena have now moved overseas. Other reasoning points to management, and that its unwillingness to work with unions has caused the decline in membership. Others suggest that unions are on the decline because of themselves. Past corruption, negative publicity, and hard-line tactics have made joining a union less favorable.

To fully understand unions, it is important to recognize the global aspect of unions. Statistics on a worldwide scale show unions in all countries declining but still healthy in some countries. For example, in eight of the twenty-seven European Union member states, more than half the working population is part of a union. In fact, in the most populated countries, unionization rates are still at three times the unionization rate of the United States.Federation of European Employers, “Trade Unions across Europe,” accessed April 4, 2011, http://www.fedee.com/tradeunions.html. Italy has a unionization rate of 30 percent of all workers, while the UK has 29 percent, and Germany has a unionization rate of 27 percent.

In March 2011, Wisconsin governor Scott Walker proposed limiting the collective bargaining rights of state workers to save a flailing budget. Some called this move “union busting” and said this type of act is illegal, as it takes away the basic rights of workers. The governor defended his position by saying there is no other choice, since the state is in a budget crisis. Other states such as Ohio are considering similar measures. Whatever happens, there is a clear shift for unions today.

Globalization is also a challenge in labor organizations today. As more and more goods and services are produced overseas, unions lose not only membership but union values in the stronghold of worker culture. As globalization has increased, unions have continued to demand more governmental control but have been only somewhat successful in these attempts. For example, free trade agreements such as the North American Free Trade Agreement (NAFTA) have made it easier and more lucrative for companies to manufacture goods overseas. This is discussed in Chapter 14 "International HRM". For example, La-Z-Boy and Whirlpool closed production facilities in Dayton and Cleveland, Ohio, and built new factories in Mexico to take advantage of cheaper labor and less stringent environmental standards. Globalization creates options for companies to produce goods wherever they think is best to produce them. As a result, unions are fighting the globalization trend to try and keep jobs in the United States.

There are a number of reasons why companies do not want unions in their organizations, which we will discuss in greater detail later. One of the main reasons, however, is increased cost and less management control. As a result, companies are on a quest to maintain a union-free work environment. In doing so, they try to provide higher wages and benefits so workers do not feel compelled to join a union. Companies that want to stay union free constantly monitor their retention strategies and policies.

Labor Union Laws

The Railway Labor Act (RLA) of 1926 originally applied to railroads and in 1936 was amended to cover airlines. The act received support from both management and unions. The goal of the act is to ensure no disruption of interstate commerce. The main provisions of the act include alternate dispute resolution, arbitration, and mediation to resolve labor disputes. Any dispute must be resolved in this manner before a strike can happen. The RLA is administered by the National Mediation Board (NMB), a federal agency, and outlines very specific and detailed processes for dispute resolution in these industries.

The Norris-LaGuardia Act of 1932 (also known as the anti-injunction bill), barred federal courts from issuing injunctions (a court order that requires a party to do something or refrain from doing something) against nonviolent labor disputes and barred employers from interfering with workers joining a union. The act was a result of common yellow-dog contracts, in which a worker agreed not to join a union before accepting a job. The Norris-LaGuardia Act made yellow-dog contracts unenforceable in courts and established that employees were free to join unions without employer interference.

In 1935, the Wagner Act (sometimes called the National Labor Relations Act) was passed, changing the way employers can react to several aspects of unions. The Wagner Act had a few main aspects:

1. Employers must allow freedom of association and organization and cannot interfere with, restrain, or coerce employees who form a union.

2. Employers may not discriminate against employees who form or are part of a union, or those who file charges.

3. An employer must bargain collectively with representation of a union.

The National Labor Relations Board (NLRB) oversees this act, handling any complaints that may arise from the act. For example, in April 2011, the NLRB worked with employees at Ozburn-Hessey Logistics in Tennessee after they had been fired because of their involvement in forming a union. The company was also accused of interrogating employees about their union activities and threatened employees with loss of benefits should they form a union. The NLRB utilized their attorney to fight on behalf of the employees, and a federal judge ordered the company to rehire the fired employees and also to desist in other antiunion activities.“Federal Judge Orders Employer to Reinstate Three Memphis Warehouse Workers and Stop Threatening Union Supporters While Case Proceeds at NLRB,” Office of Public Affairs, National Labor Relations Board, news release, April 7, 2011, accessed April 7, 2011, http://www.nlrb.gov/news/federal-judge-orders-employer-reinstate-three-memphis-warehouse-workers- and-stop-threatening-un.

The Taft-Hartley Act also had major implications for unions. Passed in 1947, Taft-Hartley amended the Wagner Act. The act was introduced because of the upsurge of strikes during this time period. While the Wagner Act addressed unfair labor practices on the part of the company, the Taft-Hartley Act focused on unfair acts by the unions. For example, it outlawed strikes that were not authorized by the union, called wildcat strikes. It also prohibited secondary actions (or secondary boycotts) in which one union goes on strike in sympathy for another union. The act allowed the executive branch of the federal government to disallow a strike should the strike affect national health or security. One of the most famous injunctions was made by President Ronald Reagan in 1981. Air traffic controllers had been off the job for two days despite their no-strike oath, and Reagan ordered all of them (over eleven thousand) discharged because they violated this federal law.

The Landrum Griffin Act, also known as the Labor Management Reporting and Disclosure (LMRDA) Act, was passed in 1959. This act required unions to hold secret elections, required unions to submit their annual financial reports to the U.S. Department of Labor, and created standards governing expulsion of a member from a union. This act was created because of racketeering charges and corruptions charges by unions. In fact, investigations of the Teamsters Union found they were linked to organized crime, and the Teamsters were banned from the AFL-CIO. The goal of this act was to regulate the internal functioning of unions and to combat abuse of union members by union leaders.

Figure 12.3 Major Acts Regarding Unions, at a Glance

The Unionization Process

There are one of two ways in which a unionization process can begin. First, the union may contact several employees and discuss the possibility of a union, or employees may contact a union on their own. The union will then help employees gather signatures to show that the employees want to be part of a union. To hold an election, the union must show signatures from over 30 percent of the employees of the organization.

Figure 12.4 The Unionization Process

Once the signatures are gathered, the National Labor Relations Board is petitioned to move forward with a secret-ballot election. An alternative to the secret-ballot election is the card check method, in which the union organizer provides the company with authorization cards signed by a simple majority (half plus one). The employer can accept the cards as proof that the employees desire a union in their organization. The NLRB then certifies the union as the employees’ collective bargaining representative.

If the organization does not accept the card check method as authorization for a union, the second option is via a secret ballot. Before this method is used, a petition must be filed by the NLRB, and an election is usually held two months after the petition is filed. In essence, the employees vote whether to unionize or not, and there must be a simple majority (half plus one). The NLRB is responsible for election logistics and counting of ballots. Observers from all parties can be present during the counting of votes. Once votes are counted, a decision on unionization occurs, and at that time, the collective bargaining process begins.

Once the NLRB is involved, there are many limits as to what the employer can say or do during the process to prevent unionization of the organization. It is advisable for HR and management to be educated on what can legally and illegally be said during this process. It is illegal to threaten or intimidate employees if they are discussing a union. You cannot threaten job, pay, or benefits loss as a result of forming a union. Figure 12.5 "Things That Shouldn’t Be Said to Employees during a Unionization Process" includes information on what should legally be avoided if employees are considering unionization.

Figure 12.5 Things That Shouldn’t Be Said to Employees during a Unionization Process

Obviously, it is in the best interest of the union to have as many members as possible. Because of this, unions may use many tactics during the organizing process. For example, many unions are also politically involved and support candidates who they feel best represent labor. They provide training to organizers and sometimes even encourage union supporters to apply for jobs in nonunion environments to actively work to unionize other employees when they are hired. This practice is called union salting. Unions, especially on the national level, can be involved in corporate campaigns that boycott certain products or companies because of their labor practices. The United Food and Commercial Workers (UFCW), for example, has a “Wake Up Walmart Campaign” that targets the labor practices of this organization.

Strategies Companies Use to Avoid Unionization

Most organizations feel the constraints of having a union organization are too great. It affects the cost to the organization and operation efficiency. Collective bargaining at times can put management at odds with its employees and cost more to produce products and services. Ideally, companies will provide safe working conditions, fair pay, and benefits so the employees do not feel they need to form a union. There are three main phases of unionization:

1. Phase 1: Your organization is union free and there is little or no interest in unionizing.

2. Phase 2: You learn that some employees are discussing unionization or you learn about specific attempts by the union to recruit employees.

3. Phase 3: You receive a petition from the National Labor Relations Board filed by a union requesting a unionization vote.

Because of increased costs and operational efficiency, it is normally in a company’s best interest to avoid unionization. While in phase 1, it is important to review employee relations programs including pay, benefits, and other compensation. Ensure the compensation plans are fair so employees feel fairly treated and have no reason to seek the representation of a union.

Despite your best efforts, you could hear of unionization in your organization. The goal here is to prevent the union from gaining support to ask for a National Labor Relations Board election. Since only 30 percent of employees need to sign union cards for a vote to take place, this phase to avoid unionization is very important. During this time, HR professionals and managers should respond to the issues the employees have and also develop a specific strategy on how to handle the union vote, should it get that far.

In phase 3, familiarization with all the National Labor Relations Board rules around elections and communications is important. With this information, you can organize meetings to inform managers on these rules. At this time, you will likely want to draw up an antiunion campaign and communicate that to managers, but also make sure it does not violate laws. To this end, develop specific strategies to encourage employees to vote “no” for the union. Some of the arguments that might be used include talking with the employee and mentioning the following:

1. Union dues are costly.

2. Employees could be forced to go on strike.

3. Employees and management may no longer be able to discuss matters informally and individually.

4. Unionization can create more bureaucracy within the company.

5. Individual issues may not be discussed.

6. Many decisions within a union, such as vacation time, are based on seniority only.

With unionization in decline, it is likely you may never need to handle a new union in your organization. However, organizations such as Change to Win are in the process of trying to increase union membership. This organization has four affiliated unions, with a goal to strengthen the labor movement. Teamsters, United Food and Commercial Workers, United Farm Workers, and Service Employees International Union are all unions affiliated with this organization.Change to Win website, accessed April 7, 2011, http://www.changetowin.org. The next few years will be telling as to the fate of unions in today’s organizations.

Fortune 500 Focus

Perhaps no organization is better known for its antiunion stance than Walmart. Walmart has over 3,800 stores in the United States and over 4,800 internationally with $419 billion in sales.“Investors,” Walmart Corporate, 2011, accessed August 15, 2011, http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome. Walmart employs more than 2 million associates worldwide.“Investors,” Walmart Corporate, 2011, accessed August 15, 2011, http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome. The billions of dollars Walmart earns do not immunize the company to trouble. In 2005, the company’s vice president, Tom Coughlin, was forced to resign after admitting that between $100,000 and $500,000 was spent for undeclared purposes, but it was eventually found that the money was spent to keep the United Food and Commercial Workers union (UFCW) out of WalmartLos AngelesTimes Wire Services, “Wal-Mart Accused of Unfair Labor Practices,” accessed September 15, 2011, http://articles.latimes.com/2005/apr/13/business/fi-walmart13. (he was found guilty and sentenced to two years of house arrest).

Other claims surrounding union busting are the closing of stores, such as the Walmart Tire and Lube Express in Gatineau, Quebec,UFCW Canada, “Want a Union? You’re Fired,” n.d., accessed August 15, 2011, http://www.ufcw.ca/index.php?option=com_multicategories&view=article&id=1935&Itemid=98&lang=en. when discussions of unionization occurred. Other reports of union busting include the accusation that company policy requires store managers to report rumors of unionizing to corporate headquarters. Once the report is made, all labor decisions for that store are handled by the corporate offices instead of the store manager. According to labor unions in the United States, Walmart is willing to work with international labor unions but continues to fiercely oppose unionization in the United States. In one example, after butchers at a Jacksonville, Texas, Walmart voted to unionize, Walmart eliminated all US meat-cutting departments.

A group called OUR Walmart (Organization United for Respect), financed by the United Food and Commercial Workers* (UFCW) union, has stemmed from the accusations of union busting. Walmart spokesperson David Tovar says he sees the group as a Trojan horse assembled by labor organizations to lay the groundwork for full-fledged unionization and seek media attention to fulfill their agenda. While the organization’s activities may walk a fine line between legal and illegal union practices under the Taft-Hartley Act, this new group will certainly affect the future of unionization at Walmart in its US stores.

*Note: UFCW was part of the AFL-CIO until 2005 and now is an independent national union.

The Impact of Unions on Organizations

You may wonder why organizations are opposed to unions. As we have mentioned, since union workers do receive higher wages, this can be a negative impact on the organization. Unionization also impacts the ability of managers to make certain decisions and limits their freedom when working with employees. For example, if an employee is constantly late to work, the union contract will specify how to discipline in this situation, resulting in little management freedom to handle this situation on a case-by-case basis. In 2010, for example, the Art Institute of Seattle faculty filed signatures and voted on unionization.“Union Push in For-Profit Higher Ed,” Inside Higher Ed, May 24, 2010, accessed August 15, 2011, http://www.insidehighered.com/news/2010/05/24/union. Some of the major issues were scheduling issues and office space, not necessarily pay and benefits. While the particular National Labor Relations Board vote was no to unionization, a yes vote could have given less freedom to management in scheduling, since scheduling would be based on collective bargaining contracts. Another concern about unionization for management is the ability to promote workers. A union contract may stipulate certain terms (such as seniority) for promotion, which means the manager has less control over the employees he or she can promote.

Section 12.2 "Collective Bargaining" and Section 12.3 "Administration of the Collective Bargaining Agreement" discuss the collective bargaining and grievance processes.

KEY TAKEAWAYS

· Union membership in the United States has been slowly declining. Today, union membership consists of about 11.9 percent of the workforce, while in 1983 it consisted of 20 percent of the workforce.

· The reasons for decline are varied, depending on whom you ask. Some say the moving of jobs overseas is the reason for the decline, while others say unions’ hard-line tactics put them out of favor.

· Besides declining membership, union challenges today include globalization and companies’ wanting a union-free workplace.

· The United States began its first labor movement in the 1800s. This was a result of low wages, no vacation time, safety issues, and other issues.

· Many labor organizations have disappeared, but the American Federation of Labor (AFL) still exists today, although it merged with the Congress of Industrial Organizations (CIO) and is now known as the AFL-CIO. It is the largest labor union and represents local labor unions in a variety of industries.

· The United States has a low number of union members compared with other countries. Much of Europe, for example, has over 30 percent of their workforce in labor unions, while in some countries as much as 50 percent of the workforce are members of a labor union.

· Legislation has been created over time to support both labor unions and the companies who have labor unions. The Railway Labor Act applies to airlines and railroads and stipulates that employees may not strike until they have gone through an extensive dispute resolution process. The Norris-LaGuardia Act made yellow-dog contracts illegal and barred courts from issuing injunctions.

· The Wagner Act was created to protect employees from retaliation should they join a union. The Taft-Hartley Act was developed to protect companies from unfair labor practices by unions.

· The National Labor Relations Board is the overseeing body for labor unions, and it handles disputes between companies as well as facilitates the process of new labor unions in the developing stages. Its job is to enforce both the Wagner Act and the Taft-Hartley Act.

· The Landrum Griffin Act was created in 1959 to combat corruption in labor unions during this time period.

· To form a union, the organizer must have signatures from 30 percent of the employees. If this occurs, the National Labor Relations Board will facilitate a card check to determine more than 50 percent of the workforce at that company is in agreement with union representation. If the company does not accept this, then the NLRB holds secret elections to determine if the employees will be unionized. A collective bargaining agreement is put into place if the vote is yes.

· Companies prefer to not have unions in their organizations because it affects costs and operational productivity. Companies will usually try to prevent a union from organizing in their workplace.

· Managers are impacted when a company does unionize. For example, management rights are affected, and everything must be guided by the contract instead of management prerogative.

EXERCISES

1. Visit the National Labor Relations Board website. View the “weekly case summary” and discuss it in at least two paragraphs, stating your opinion on this case.

2. Do you agree with unionization within organizations? Why or why not? List the advantages and disadvantages of unions to the employee and the company.

12.2 Collective Bargaining

LEARNING OBJECTIVES

1. Be able to describe the process of collective bargaining.

2. Understand the types of bargaining issues and the rights of management.

3. Discuss some strategies when working with unions.

When employees of an organization vote to unionize, the process for collective bargaining begins. Collective bargaining is the process of negotiations between the company and representatives of the union. The goal is for management and the union to reach a contract agreement, which is put into place for a specified period of time. Once this time is up, a new contract is negotiated. In this section, we will discuss the components of the collective bargaining agreement.

The Process of Collective Bargaining

In any bargaining agreement, certain management rights are not negotiable, including the right to manage and operate the business, hire, promote, or discharge employees. However, in the negotiated agreement there may be a process outlined by the union for how these processes should work. Management rights also include the ability of the organization to direct the work of the employees and to establish operational policies. As an HR professional sits at the bargaining table, it is important to be strategic in the process and tie the strategic plan with the concessions the organization is willing to make and the concessions the organization will not make.

Another important point in the collective bargaining process is the aspect of union security. Obviously, it is in the union’s best interest to collect dues from members and recruit as many new members as possible. In the contract, a checkoff provision may be negotiated. This provision occurs when the employer, on behalf of the union, automatically deducts dues from union members’ paychecks. This ensures that a steady stream of dues is paid to the union.

To recruit new members, the union may require something called a union shop. A union shop requires a person to join the union within a certain time period of joining the organization. In right-to-work states a union shop may be illegal. Twenty-two states have passed right-to-work laws, as you can see in Figure 12.6 "Map of Right-to-Work States". These laws prohibit a requirement to join a union or pay dues and fees to a union. To get around these laws, agency shops were created. An agency shop is similar to a union shop in that workers do not have to join the union but still must pay union dues. Agency shop union fees are known as agency fees and may be illegal in right-to-work states. A closed shop used to be a mechanism for a steady flow of membership. In this arrangement, a person must be a union member to be hired. This, however, was made illegal under the Taft-Hartley Act. According to a study by CNBC, all twenty-two right-to-work states are in the top twenty-five states for having the best workforces.“Best Workforces Are in Right to Work States,” Redstate, June 30, 2011, accessed August 14, 2011, http://www.redstate.com/laborunionreport/2011/06/30/best-workforces-are-in-right-to-work-states-survey-finds/. However, according to the AFL-CIO, the average worker in a right-to-work state makes $5,333 less per year than other workers.“Right to Work for Less,” AFL-CIO, accessed August 14, 2011, http://www.aflcio.org/issues/legislativealert/stateissues/work/.

Figure 12.6 Map of Right-to-Work States

In a collective bargaining process, both parties are legally bound to bargain in good faith. This means they have a mutual obligation to participate actively in the deliberations and indicate a desire to find a basis for agreement. There are three main classification of bargaining topics: mandatory, permissive, and illegal. Wages, health and safety, management rights, work conditions, and benefits fall into the mandatory category. Permissive topics are those that are not required but may be brought up during the process. An example might include the requirement of drug testing for candidates or the required tools that must be provided to the employee to perform the job, such as a cellular phone or computer. It is important to note that while management is not required by labor laws to bargain on these issues, refusing to do so could affect employee morale. We can also classify bargaining issues as illegal topics, which obviously cannot be discussed. These types of illegal issues may be of a discriminatory nature or anything that would be considered illegal outside the agreement.

Examples of Bargaining Topics

· Pay rate and structure

· Health benefits

· Incentive programs

· Job classification

· Performance assessment procedure

· Vacation time and sick leave

· Health plans

· Layoff procedures

· Seniority

· Training process

· Severance pay

· Tools provided to employees

· Process for new applicants

The collective bargaining process has five main steps; we will discuss each of these steps next. The first step is the preparation of both parties. The negotiation team should consist of individuals with knowledge of the organization and the skills to be an effective negotiator. An understanding of the working conditions and dissatisfaction with working conditions is an important part of this preparation step. Establishing objectives for the negotiation and reviewing the old contract are key components to this step. The management team should also prepare and anticipate union demands, to better prepare for compromises.

Figure 12.7 Steps in Collective Bargaining

The second step of the process involves both parties agreeing on how the time lines will be set for the negotiations. In addition, setting ground rules for how the negotiation will occur is an important step, as it lays the foundation for the work to come.

In the third step, each party comes to the table with proposals. It will likely involve initial opening statements and options that exist to resolve any situations that exist. The key to a successful proposal is to come to the table with a “let’s make this work” attitude. An initial discussion is had and then each party generally goes back to determine which requests it can honor and which it can’t. At this point, another meeting is generally set up to continue further discussion.

Once the group comes to an agreement or settlement (which may take many months and proposals), a new contract is written and the union members vote on whether to accept the agreement. If the union doesn’t agree, then the process begins all over again.

Ramifications of a Bargaining Impasse

When the two parties are unable to reach consensus on the collective bargaining agreement, this is called a bargaining impasse. Various kinds of strikes are used to show the displeasure of workers regarding a bargaining impasse. An economic strike is a strike stemming from unhappiness about the economic conditions during contract negotiations. For example, 45,000 Verizon workers rallied in the summer of 2011 when contract negotiations failed.Dan Goldberg, “Verizon Strike Could Last Months,” New Jersey News, August 7, 2011, accessed August 15, 2011, http://www.nj.com/news/index.ssf/2011/08/verizon_workers_outline_differ.html. The two unions, Communications Workers of America and the International Brotherhood of Electric Workers, claim that the new contract is unfair, as it asks Verizon workers to contribute more to health plans, and the company is also looking to freeze pensions at the end of the year and reduce sick time.Dan Goldberg, “Verizon Strike Could Last Months,” New Jersey News, August 7, 2011, accessed August 15, 2011, http://www.nj.com/news/index.ssf/2011/08/verizon_workers_outline_differ.html. Verizon says the telecommunications business is changing, and it cannot afford these expenses. An unfair labor practices strike can happen during negotiations. The goal of an unfair labor practices strike is to get the organization to cease committing what the union believes to be an unfair labor practice. A bargaining impasse could mean the union goes on strike or a lockout occurs. The goal of a lockout, which prevents workers from working, is to put pressure on the union to accept the contract. A lockout can only be legally conducted when the existing collective bargaining agreement has expired and there is truly an impasse in contract negotiations. In summer 2011, the National Basketball Association locked out players when the collective bargaining agreement expired, jeopardizing the 2011–12 seasonSteve Kyler, “Division among Owners?” HoopsWorld, August 8, 2011, accessed August 15, 2011, http://www.hoopsworld.com/Story.asp?story_id=20549. while putting pressure on the players to accept the agreement. Similarly, the goal of a strike is to put pressure on the organization to accept the proposed contract. Some organizations will impose a lockout if workers engage in slowdowns, an intentional reduction in productivity. Some unions will engage in a slowdown instead of a strike, because the workers still earn pay, while in a strike they do not. A sick-out is when members of a union call in sick, which may be illegal since they are using allotted time, while a walk-out is an unannounced refusal to perform work. However, this type of tactic may be illegal if the conduct is irresponsible or indefensible, according to a judge. Jurisdictional strikes are used to put pressure on an employer to assign work to members of one union versus another (if there are two unions within the same organization) or to put pressure on management to recognize one union representation when it currently recognizes another. The goal of a sick-out strike is to show the organization how unproductive the company would be if the workers did go on strike. As mentioned under the Taft-Hartley Act, wildcat strikes are illegal, as they are not authorized by the union and usually violate a collective bargaining agreement. Sympathy strikes are work stoppages by other unions designed to show support for the union on strike. While they are not illegal, they may violate the terms of the collective bargaining agreement.

Human Resource Recall

How would you feel about going on strike? What kinds of situations may cause you to do so?

Working with Labor Unions

First and foremost, when working witih labor unions, a clear understanding of the contract is imperative for all HR professionals and managers. The contract (also called the collective bargaining agreement) is the guiding document for all decisions relating to employees. All HR professionals and managers should have intimate knowledge of the document and be aware of the components of the contract that can affect dealings with employees. The agreement outlines all requirements of managers and usually outlines how discipline, promotion, and transfers will work.

Because as managers and HR professionals we will be working with members of the union on a daily basis, a positive relationship can not only assist the day-to-day operations but also create an easier bargaining process. Solicitation of input from the union before decisions are made can be one step to creating this positive relationship. Transparent communication is another way to achieve this goal.

In HR, one of the major aspects of working with labor unions is management of the union contract. We discuss the grievance process in Section 12.3 "Administration of the Collective Bargaining Agreement".

How Would You Handle This?

Union Busting

The employees in your organization are unhappy with several aspects of their job, including pay. You have tried to solve this issue by creating new compensation plans, but with no avail. You hear talk of unionizing. When you bring this issue to your CEO, she vehemently opposes unions and tells you to let the employees know that if they choose to unionize, they will all lose their jobs. Knowing the CEO’s threat is illegal, and knowing you may lose your job if the workers decide to unionize, how would you handle this?

How Would You Handle This?

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The author discusses the How Would You Handle This situation in this chapter at:  https://api.wistia.com/v1/medias/1360905/embed .

KEY TAKEAWAYS

· A union has two goals: to add new members and to collect dues. A check-off provision of a contract compels the organization to take union dues out of the paycheck of union members.

· In a union shop, people must join the union within a specified time period after joining the organization. This is illegal in right-to-work states. An agency shop is one where union membership is not required but union dues are still required to be paid. This may also be illegal in right-to-work states.

· Made illegal by the Taft-Hartley Act, a closed shop allows only union members to apply and be hired for a job.

· Collective bargaining is the process of negotiating the contact with union representatives. Collective bargaining, to be legal, must always be done in good faith.

· There are three categories of collective bargaining issues. Mandatory issues might include pay and benefits. Permissive bargaining items may include things such as drug testing or the required equipment the organization must supply to employees. Illegal issues are those things that cannot be discussed, which can include issues that could be considered discriminatory.

· The collective bargaining process can take time. Both parties prepare for the process by gathering information and reviewing the old contract. They then set time lines for the bargaining and reveal their wants and negotiate those wants. A bargaining impasse occurs when members cannot come to an agreement.

· When a bargaining impasse occurs, a strike or lockout of workers can occur. An economic strike occurs during negotiations, while an unfair labor practices strike can occur anytime, and during negotiations. A sick-out can also be used, when workers call in sick for the day. These strategies can be used to encourage the other side to agree to collective bargaining terms.

· Some tips for working with unions include knowing and following the contract, involving unions in company decisions, and communicating with transparency.

EXERCISES

1. Research negotiation techniques, then list and describe the options. Which do you think would work best when negotiating with unions?

2. Of the list of bargaining issues, which would be most important to you and why?

12.3 Administration of the Collective Bargaining Agreement

LEARNING OBJECTIVE

1. Be able to explain how to manage the grievance process.

A grievance procedure or process is normally created within the collective bargaining agreement. The grievance procedure outlines the process by which grievances over contract violations will be handled. This will be the focus of our next section.

Procedures for Grievances

A violation of the contract terms or perception of violation normally results in a grievance. The process is specific to each contract, so we will discuss the process in generalities. A grievance is normally initiated by an employee and then handled by union representatives. Most contracts specify how the grievance is to be initiated, the steps to complete the procedure, and identification of representatives from both sides who will hear the grievance. Normally, the HR department is involved in most steps of this process. Since HRM has intimate knowledge of the contract, it makes sense for them to be involved. The basic process is shown in Figure 12.8 "A Sample Grievance Process".

Figure 12.8 A Sample Grievance Process

The first step is normally an informal conversation with the manager, employee, and possibly a union representative. Many grievances never go further than this step, because often the complaint is a result of a misunderstanding.

If the complaint is unresolved at this point, the union will normally initiate the grievance process by formally expressing it in writing. At this time, HR and management may discuss the grievance with a union representative. If the result is unsatisfactory to both parties, the complaint may be brought to the company’s union grievance committee. This can be in the form of an informal meeting or a more formal hearing.

After discussion, management will then submit a formalized response to the grievance. It may decide to remedy the grievance or may outline why the complaint does not violate the contract. At this point, the process is escalated.

Further discussion will likely occur, and if management and the union cannot come to an agreement, the dispute will normally be brought to a national union officer, who will work with management to try and resolve the issue. A mediator may be called in, who acts as an impartial third party and tries to resolve the issue. Any recommendation made by the mediator is not binding for either of the parties involved. Mediators can work both on grievance processes and collective bargaining issues. For example, when the National Football League (NFL) and its players failed to reach a collective bargaining agreement, they agreed to try mediation.Associated Press, “NFL, Union Agree to Mediation,” February 17, 2011, accessed August 15, 2011, http://msn.foxsports.com/nfl/story/NFL-players-union-agree-to-mediation-federal-for-labor-talks-CBA-021711. In this case, the agreement to go to mediation was a positive sign after several months of failed negotiations. In the end, the mediation worked, and the NFL players started the 2011–12 season on time. In Washington State (as well as most other states), a nonprofit organization is available to assist in mediations (either grievance or collective bargaining related) and arbitrations. The goal of such an organization is to avoid disruptions to public services and to facilitate the dispute resolution process. In Washington, the organization is called the Public Employment Relations Commission (PERC). Figure 12.9 "The Mediation Process for the Public Employment Relations Commission in Washington State" shows the typical grievance handling process utilizing the free PERC services.

Figure 12.9 The Mediation Process for the Public Employment Relations Commission in Washington State

If no resolution develops, an arbitrator might be asked to review the evidence and make a decision. An arbitrator is an impartial third party who is selected by both parties and who ultimately makes a binding decision in the situation. Thus arbitration is the final aspect of a grievance.

Some examples of grievances might include the following:

1. One employee was promoted over another, even though he had seniority.

2. An employee doesn’t have the tools needed to perform his or her job, as outlined in the contract.

3. An employee was terminated, although the termination violated the rules of the contract.

4. An employee was improperly trained on chemical handling in a department.

Most grievances fall within one of four categories. There are individual/personal grievances, in which one member of the union feels he or she has been mistreated. A group grievance occurs if several union members have been mistreated in the same way. A principle grievance deals with basic contract issues surrounding seniority or pay, for example. If an employee or group is not willing to formally file a grievance, the union may file a union or policy grievance on behalf of that individual or group.

The important things to remember about a grievance are that it should not be taken personally and, if used correctly can be a fair, clear process to solving problems within the organization.

Grievance Process for Flight Attendants

(click to see video)

This video shows a philosophical perspective of the grievance process for the Association of Flight Attendants union.

KEY TAKEAWAYS

· The grievance process is a formal process to address any complaints about contract violations.

· The grievance process varies from contract to contract. It is an important part of the contract that ensures a fair process for both union members and management.

· HR is normally involved in this process, since it has intimate knowledge of the contract and laws that guide the contract.

· The grievance process can consist of any number of steps. First, the complaint is discussed with the manager, employee, and union representative. If no solution occurs, the grievance is put into writing by the union. Then HR, management, and the union discuss the process, sometimes in the form of a hearing in which both sides are able to express their opinion.

· Management then expresses its decision in writing to the union.

· If the union decides to escalate the grievance, the grievance may be brought to the national union for a decision. At this point, an arbitrator may be brought in, suitable to both parties, to make the final binding decision.

· There are four main types of grievances. First, the individual grievance is filed when one member of the union feels mistreated. A group grievance occurs when several members of the union feel they have been mistreated and file a grievance as a group. A principle grievance may be filed on behalf of the union and is usually based on a larger issue, such as a policy or contract issue. A union or policy grievance may be filed if the employee does not wish to file individually.

· Grievances should not be taken personally and should be considered a fair way in which to solve problems that can come up between the union and management.

EXERCISE

1. What are the advantages of a grievance process? What disadvantages do you see with a formalized grievance process?

12.4 Cases and Problems

Chapter Summary

· Union membership in the United States has been slowly declining. Today, union membership consists of about 11.9 percent of the workforce, while in 1983 it consisted of 20 percent of the workforce.

· The reasons for decline are varied, depending on who you ask. Some say the moving of jobs overseas is the reason for the decline, while others say unions’ hard-line tactics put them out of favor.

· The United States began its first labor movement in the 1800s. This was a result of low wages, no vacation time, safety issues, and other issues.

· Many labor organizations have disappeared, but the American Federation of Labor (AFL) still exists today, although it merged with the Congress of Industrial Organizations (CIO) and is now known as the AFL-CIO. It is the largest labor union and represents local labor unions in a variety of industries.

· The United States has a low number of union members compared with other countries. Much of Europe, for example, has over 30 percent of their workforce in labor unions, while in some countries as much as 50 percent of the workforce are members of a labor union.

· Legislation has been created over time to support both labor unions and the companies who have labor unions. The Wagner Act was created to protect employees from retaliation should they join a union. The Taft-Hartley Act was developed to protect companies from unfair labor practices by unions.

· The National Labor Relations Board is the overseeing body for labor unions, and it handles disputes between companies as well as facilitates the process of certifying new labor unions. Its job is to enforce the Wagner and Taft-Hartley acts.

· The Landrum Griffin Act was created in 1959 to combat corruption in labor unions during this time period.

· To form a union, the organizer must have signatures from 30 percent of the employees. If this occurs, the National Labor Relations Board will facilitate a card check to determine whether more than 50 percent of the workforce at that company is in agreement with union representation. If the company does not accept this, then the NLRB holds secret elections to determine if the employees will be unionized.

· A union has two goals: to add new members and to collect dues. The checkoff provision of a contract compels the organization to take union dues out of the paycheck of union members.

· In a union shop, people must join the union within a specified time period of joining the organization. This is illegal in right-to-work states.

· Made illegal by the Taft-Hartley Act, a closed shop allows only union members to apply and be hired for a job.

· Collective bargaining is the process of negotiating the contact with union representatives. Collective bargaining, to be legal, must always be done in good faith.

· There are three categories of collective bargaining issues. Mandatory issues might include pay and benefits. Permissive bargaining items may include things such as drug testing or the required equipment the organization must supply to employees. Illegal issues are those things that cannot be discussed, which can include issues that could be considered discriminatory.

· The collective bargaining process can take time. Both parties prepare for the process by gathering information and reviewing the old contract. They then set time lines for the bargaining and reveal their wants and negotiate those wants. A bargaining impasse occurs when members cannot come to an agreement.

· When a bargaining impasse occurs, a strike or lockout of workers can occur. These are both strategies that can be used to encourage the other side to agree to collective bargaining terms.

· Some tips for working with unions include knowing and following the contract, involving unions in company decisions, and communicating with transparency.

· The grievance process is a formal process that addresses any complaints about contract violations.

· The grievance process varies from contract to contract. It is an important part of the contract that ensures a fair process for both unions members and management.

· HRM is normally involved in the grievance process, since it has intimate knowledge of the contract and laws guiding the contract.

· The grievance process can consist of any number of steps. First, the complaint is discussed with the manager, employee, and union representative. If no solution occurs, the grievance is put into writing by the union. Then HR, management, and the union discuss the process, sometimes in the form of a hearing in which both sides are able to express their opinion.

· Management then expresses its decision in writing to the union.

· If the union decides to escalate the grievance, the grievance may be brought to the national union for a decision. At this point, an arbitrator may be brought in, suitable to both parties, to make the final binding decision.

· There are four main types of grievances. First, the individual grievance is filed when one member of the union feels mistreated. A group grievance occurs when several members of the union feel they have been mistreated and file a grievance as a group. A principle grievance may be filed on behalf of the union and is usually based on a larger issue, such as a policy or contract issue. A union or policy grievance may be filed if the employee does not wish to file the grievance individually.

· Grievances should not be taken personally and should be considered a fair way in which to solve problems that can come up between the union and management.

Summary

(click to see video)

The author provides a video summary of the chapter.

Chapter Case

But I Didn’t Know

After a meeting with the operations manager of your organization, you close the door to your office so you can think of strategies to resolve an issue that has come up. The operations manager casually mentioned he had just finished a performance review of one of his employees and offered the employee a large raise because of all the hours the employee was putting in. The raise was equal to 11 percent of the employee’s salary. The operations manager, being new both to the company and to a union shop, wasn’t aware of the contract agreement surrounding pay increases. An employee must receive a minimum of a 2 percent pay increase per year and a maximum of 6 percent per year based on the contract. You worry that if the union gets wind of this, everyone at that employee’s pay level may file a grievance asking for the same pay raise. Of course, the challenge is that the manager already told this person he would be receiving the 11 percent raise. You know you need to act fast to remedy this situation.

1. As an HR professional, what should you have done initially to prevent this issue from happening?

2. Outline a specific strategy to implement stating how you will prevent this from happening in the future.

3. What would you do about the 11 percent pay raise that was already promised to the employee?

4. If the union files a grievance, what type of grievance do you think it would be? Provide reasoning for your answer.

5. If the union does file a grievance, draft a response to the grievance to share with your upper-level managers as a starting point for discussion on how to remedy the situation.

Team Activity

1. Break into teams of four or five. Please choose the following roles for each of your team members:

· Mediator

· Manager

· HR professional

· Employee

Once roles are chosen, please determine a solution or make a recommendation for the following situation (remember, this is a role play; you may make reasonable assumptions): The employee believes the performance evaluation the manager gave was unfair and has filed a grievance about it. The employee shows proof of a good attendance record and three letters from colleagues stating the high quality of her work. The manager contends the employee does not use time wisely at work, hence the 3 out of 5 rating. The manager is able to show several examples of poor time usage.

The Bargaining Table by John T. Dunlop

As Professor Barbash has shown, the destiny of the American worker is directly related to that unique U.S. institution — collective bargaining. It is therefore appropriate that the former Secretary of Labor should provide an essay on the evolution of collective bargaining.

The American collective bargaining system embraces at least three characteristics distinctive to industrial relations in the United States. Perhaps the most significant is that our system of industrial relations is highly decentralized. The prevalence of plant and company negotiations grew out of the patterns of organizations among employers and unions scattered across the country. Union and management officials on the local level, being intimately familiar with the issues, were better able to find a position of mutual accommodation. Decentralization has proved to be a great source of strength as it has allowed for greater detail and wider scope in collective bargaining and a much lesser role for substantive governmental rulemaking —legislative or administrative.

A second characteristic is the principle of exclusive jurisdiction or representation where one union serves as the sole representative for all employees in the plant or appropriate bargaining unit. In the early days of the union movement, the concurrent existence of the Knights of Labor and the trade unions, both in the same field, resulted in conflict and divided loyalty. Thus, the AFL became devoted to the principle that in each recognized field of activity, there should be but one union, chartered by the AFL. This practice conforms to the American political tradition of electing single representatives by majority vote, and has served to facilitate the bargaining process for both management and workers by requiring employees to choose among competing organizations or no organization, to accommodate competing interests within the union at the bargaining table, and to establish a priority among competing interests in negotiations.

A third characteristic is the role the law plays in the process. Labor law is primarily concerned with the tactics and procedures of organizing, bargaining, and modes of conflict. Substantive terms and conditions of employment are left largely to private negotiation or determination. The law views this as a private responsibility from which the government should stand apart. While governmental regulation in some areas has expanded appreciably in the last two decades — as in equal employment opportunities, safety and pensions — the negotiating parties continue to have wide latitude. Labor and management have been able to determine their own needs for periodic negotiations.

Within the collective bargaining system, gradual change may be expected to continue in at least four areas: the subjects of bargaining; the structure of bargaining; the legal framework of bargaining; and the role of government in the bargaining process. It appears to me unlikely that the preoccupation with job design and work reorganization, attributed to the interests of a younger and better educated work force, will produce major changes in the organization and management of the workplace. Changes relating to flexibility in hours in some industries, greater choice for workers among fringe benefits, and employee participation in the arrangements for work are not, in my view, likely to be extensive. This is because most employees do not appear to be significantly interested, and the number of managements with special interests in these areas is limited.

An area where continuing evolution may be expected relates to the structure of bargaining, that is: the level at which different issues should be resolved; the range of jobs, territory, and employees to be governed by the agreement; and the relations among the different craft unions bargaining with a common employer. Many long and expensive strikes have grown out of disagreements not primarily related to compensation but to the structure of bargaining.

Another area of central issues within the American industrial relations system is whether significant changes in its legal framework can be made through consensus within the system, rather than only through political and legislative conflict as in the past. The legal framework of collective bargaining and many features of the formal operation of collective bargaining reflect artificial and unrealistic legislation. Many of these provisions have been ignored for practical purposes. Some of these issues, such as the structure of collective bargaining itself, the nature of the obligation to bargain, and the status of work rules (so-called featherbedding), are themselves increasingly subjects of collective bargaining. But there exists the possibility that leaders of labor and management may come to develop the means to meet new needs for dispute settlement procedures, changes in the structure of bargaining, and methods to deal even more effectively with the introduction of technological change and with foreign competition. No issue is more important for the future than the procedures through which the legal framework of collective bargaining evolves.

In the past the government's interest in high employment and price stability has resulted in policies that have directly impinged on bargaining. Lloyd Ulman is probably correct in asserting the catnip effect, which suggests "that incomes policy is well-nigh irresistible to politicians in office." Apart from the government's concern with inflation, it is becoming increasingly involved in areas that affect bargaining. The Department of Labor and the states, for example, administer a variety of programs that directly impinge on the relations between bargaining parties. Occupational health and safety, worker's compensation, and equal employment opportunity are obvious examples.

These programs serve constructive ends and will make major contributions to future improvements in the quality of workers' lives. However, there are limits to which we can seek solutions to social and economic problems in terms of legislation and litigation. The challenge for the Department of Labor in the coming years will be to find ways to supplement the law and regulations through consensus and cooperation, and through greater recognition of the interaction between new initiatives and traditional processes such as collective bargaining.

Since 1965 the volume of American imports and exports has more than doubled. This unparalleled growth is likely to have an increasing effect on collective bargaining and industrial relations in general. The greater the interdependence between America and its trading partners, the greater the influence of international factors on domestic bargaining. Among the pressures on the bargaining system will be: the vulnerability of the American economy to political acts abroad and to change in world aggregate demand; the effect of foreign wage rates and labor market policies on domestic employment relations; and the concern that foreign imports are taking American jobs. The move toward freer trade will ultimately benefit the American economy, although some of these transitional pressures will require adaptation by labor and management.

In recent years, there have been frequent attempts to adapt collective bargaining to new areas such as local and state governmental agencies, and health and education institutions. Questions of exclusive jurisdiction, the appropriate subjects for bargaining, and the role of the strike and arbitration have different implications in the public sector than in the private, and will require considerable innovation. It is too early to predict what the end result will be, but it is clear that labor organizations will have a significant impact upon the management and performance of agencies in the public sector and upon nonprofit institutions.

The proliferation of "near-unions" adds a new dimension to collective bargaining. As the American economy and society evolve, it becomes more organized with various groups banding together to advance their interests as they perceive them. Sometimes these groups resemble and act like unions, and at other times they are quite different. Such diverse groups may be cited as women employees, racial minority groups, beef farmers, gasoline dealers, dentists, tenants, and so on. In Southern California an erstwhile man of the cloth has even tried to organize the clergy. The near-unions tend to include supervisory employees as members, who are more dependent, in higher income categories, and in some cases more responsive to professional concerns than are members of conventional unions. Although the total size of near-unions is uncertain, their combined memberships is certainly greater than two million persons. The point is that parties to traditional collective bargaining often have to deal with such groups in the economic and political arenas; sometimes they will directly compete with the bargaining process.

A final area of concern — related tangentially to bargaining — is the interaction between labor organizations and the intellectual community. Particularly in recent years, the relationship between unions and the universities has been strained. Criticisms by liberal intellectuals of labor leaders and labor organizations have widened the gap considerably. The simple fact is that the labor organizations' view of the workers does not comport well with the romanticized view of the intellectual left. Few intellectuals have an accurate sense of how unions work and consequently have based many of their criticisms on a simplistic understanding of the ability of labor leaders to shape or reflect the sentiments of the rank and file, and this has been a source of friction. The gap is mutually detrimental.

The academic community can offer to unions the same useful interchange that has benefited business, government, and charitable institutions in the United States. Particularly as the issues at the bargaining table become more technical and the relationship between union, management, and government more complex, the intellectual community is in a position to make a constructive contribution towards improving the quality of bargaining.

However, for a rapprochement to occur, intellectuals must acquire a less naive view of the way unions work; it is essential, too, that organized labor take the initiative in searching within higher education for methods of cooperation and points of contact. The American collective bargaining system will continue to live with some tensions. But the system does accommodate and adjust to these conflicts and tensions.