Pride/Hughes/Kapoor Business, 10th Edition

Audio Review Transcript
Chapter 11 Enhancing Union-Management Relations

1. Explain how and why labor unions came into being

The animosity that once characterized most union-management relations is giving way to more cooperative relationships. A labor union is an organization of workers acting together to negotiate their wages and working conditions with employers. The result of the bargaining process is a labor contract, a written contract that remains in effect for a set period of time. The dealings between labor unions and business management, both in the bargaining process and beyond it, are called union-management relations, or more simply, labor relations. (LO 1 ends)

2. Discuss the sources of unions’ negotiating ower and trends in union membership

Before the middle of the 19th century, there was little organization of labor, except for the occasional craft union, an organization of skilled workers in a single craft or trade. The last half of the 19th century, however, saw the birth of three important labor organizations. The first was the Knights of Labor, whose goals were to eliminate the depersonalization of the worker and to improve the moral standards of employees and society. The second was the American Federation of Labor (AFL), founded in 1886. The AFL’s goal was to improve its members’ living standards. The AFL also believed that a strike, a temporary work stoppage by employees calculated to add force to their demands, was an effective labor weapon. The third group was the Industrial Workers of the World, created in 1905 as a radical alternative to the AFL. Its goal was the overthrow of capitalism.
The AFL was composed of groups of skilled workers. It was not set up to recognize unskilled and semiskilled workers. The automotive and steel industries formed a special group called an industrial union, an organization of both skilled and unskilled workers in a single industry. In the late 1930s, these unions left the AFL and formed the Congress of Industrial Organizations (the CIO). By 1940, the CIO began to rival the AFL in size and there were bitter feuds over the right to represent different groups. In 1955, the two groups merged.

The power of unions to negotiate with management comes from two sources. The first is the size of their membership. The second is the groups of laws that guarantee unions the right to negotiate and that regulate the negotiation process.

Although unions wield considerable power in certain industries, the proportion of workers that are union members as part of the total work force has been declining in the last few decades. This is partly due to 5 business trends: (1) the slow growth in traditionally unionized industries; (2) a movement of organizations from the North to the Sunbelt area, where union membership is far lower; (3) a growth in service industries, which are traditionally less unionized; (4) the movement of manufacturing operations to other countries; and, (5) improved benefits that reduce employees’ need to wield union clout.
Today, many unions are becoming partners with management to promote the best for all concerned. Unions and management cooperate to increase production, improve quality, lower costs, empower workers, and enhance the workplace.  These partnerships usually begin as limited partnerships to accomplish one specific objective. As time goes on and collaboration produces better trust, the partnership may evolve into a long-range strategic partnership that focuses on sharing decision-making power for a range of workplace and business issues. Good labor-management relations can help everyone deal with new and difficult issues as they develop, such as containing healthcare costs. (LO 2 ends)

3. Identify the main focus of several major pieces of labor-management legislation

Although the government initially supported anti-union efforts, several important pieces of legislation have been passed to guarantee union rights. The first was the Norris-LaGuardia Act, passed in 1932, which made it difficult for businesses to obtain court orders that banned strikes, picketing, and union membership drives. Three years later came the National Labor Relations Act, also called the Wagner Act. This act established the procedures for setting up a union, prohibited certain unfair labor practices, and provided for the National Labor Relations Board, the federal agency that enforces the provisions of the Wagner Act. The NLRB oversees the elections in which employees decide whether they want to be represented by a union and investigates any complaints lodged by unions or employees. In 1938, Congress enacted the Fair Labor Standards Act, which permits the government to set a minimum wage, requires payments for overtime work, and prohibits child labor.
In the 1940s, it appeared that unions needed restraint. This led to passage of the Labor-Management Relations Act in 1947. Also known as the Taft-Hartley Act, it provides for a balance between union power and management authority. It lists unfair labor practices, and allows management to present (fairly) the advantages and disadvantages of union membership. The act also gives the president of the United States the right to issue a court order, called an injunction, requiring a person or group either to perform some act or to refrain from performing some act. The last important piece of legislation is the Landrum-Griffin Act, which was designed to regulate the internal functioning of unions after a series of hearings exposed cases of racketeering, bribery, and extortion. (LO 3 ends)

4. Enumerate the steps involved in forming a union and show how the National Labor Relations Board is involved in the process

Not only are the activities of management and unions regulated, so is the process of forming a union. The first of the four steps is an organizing campaign, the effort to develop employee interest in having a union. The second step is signing authorization cards, showing support for the union. If at least 30% of the employees sign the cards, the third step, a formal election, is held using secret ballots. The election is overseen by the NLRB. The outcome is determined by a simple majority. If the union obtains a majority, it moves to the fourth step, NLRB certification.
Several factors may need to be resolved before the process is complete. The first is defining the bargaining unit, the specific group of employees represented by the union. The second issue is jurisdiction, which is the right of a particular union to organize particular groups of workers. After all issues have been decided, again under the guidance of the NLRB, and after the NLRB has certified the union, union and management begin contract negotiations. (LO 4 ends)

5. Describe the basic elements in the collective-bargaining process

After certification, the union chooses its officers and representatives and selects people to serve on the negotiating committee. This committee then begins the process of negotiating a labor contract with management. This process is called collective bargaining. The negotiating committee prepares by determining the union’s position on various contract issues. It then notifies management that it is ready to begin. Various proposals and counterproposals are submitted until, through compromise and reason, an agreement is reached. The final step is ratification, which is the approval of a labor contract by a vote of the union membership.
Before the current contract expires, the two sides begin the negotiating process again. If the process fails and the sides are unable to reach an agreement, union leaders may take a strike vote to see if members are willing to strike. Whenever a contract comes up for negotiation, certain issues, over and above employee pay, are regularly renegotiated. These include working hours, security, management rights, and grievance procedures. (LO 5 ends)

6. Identify the major issues covered in a union-management contract

Employee pay typically has three parts: the form of the pay, which includes direct compensation and benefits; the magnitude of the pay, which is the amount of direct and indirect compensation a worker receives, generally in comparison with other local, regional, or national groups, and may also include cost-of-living adjustments for the life of the contract; and the pay determinants, or how individual pay is determined. Management generally tries to tie pay determinants to productivity, whereas unions lean heavily on seniority, the length of time an employee has worked for the organization.
Overtime is time worked in excess of forty hours in one week, though under some union contracts it may be time worked in excess of eight hours in a single day. A maximum cap on overtime, additional pay for weekends and holidays, and extra pay for less desirable shifts are all negotiable.
Security issues involve both job security and union security. Job security is protection against loss of employment. Most contracts use a seniority system in case of layoffs. Union security is protection of the union’s position as the employees’ bargaining agent. The greater the ratio of union to nonunion employees, the more secure the union. So, during contract negotiations, unions try to establish membership conditions. One of these conditions was the closed shop, a workplace in which workers had to join the union before they were hired. This practice was outlawed by the Taft-Hartley Act, but unions have devised several other arrangements. One is the union shop, a workplace in which new employees must join the union after a specified probationary period. Another is the agency shop, in which employees can choose not to join the union but must pay dues to the union anyway. The third is the maintenance shop, in which an employee who joins the union must remain a union member as long as he or she is employed by the firm.
Management rights include those rights and privileges that the firm wants management to retain. These include hiring, scheduling, and discipline. The union typically wants some say in these matters as well.
A grievance procedure is a formally established course of action for resolving employee complaints against management. The process has four steps, though the issue may be resolved without going through all four. The first step is talking to the shop steward, an employee elected by union members to serve as their representative. The employee and the shop steward discuss the issue with the employee’s supervisor. Both the grievance and the supervisor’s response are put in writing. The second step is a broader discussion that includes the employee, the supervisor, and the steward, plus a representative from the union’s grievance committee and the firm’s industrial-relations representative. The third step involves a full-scale discussion involving all those who were present at the second step, plus all remaining members of the union’s grievance committee and another high-level manager. As before, all proceedings are put in writing. The last step is arbitration, in which a neutral third party hears the two sides of a dispute and renders a binding decision. The arbitrator decides whether the contract was violated and proposes a remedy. (LO 6 ends)

7. Explain the primary bargaining tools available to unions and management

Both management and unions have tools to influence each other—and public opinion—during negotiations. Advertising and publicity help each side to gain support.
If a strike is declared, employees do not report for work, but they often engage in picketing, marching back and forth in front of the place of employment with signs informing the public that a strike is in progress. A strike is expensive for both sides. Sometimes, the workers may stage a wildcat strike, which is a strike not approved by the union. This usually causes management and union leaders to work together to deal with the workers.
Two other tools used by unions in negotiating are a work slowdown, whereby workers report to their jobs but work at a slower pace than usual; and a boycott, a refusal to do business with a particular firm.
Management has its tools as well. The most powerful is the lockout, a firm’s refusal to allow employees to enter the workplace. Like a strike, this is an expensive strategy. Management may also hire strikebreakers, nonunion employees who perform the job of a striking union member. Both management and union leaders generally try to avoid such heavy-handed tactics if at all possible, since the ill will and fallout can become negative baggage that lasts for months or even years.
The more productive techniques that are being used more frequently these days include mediation, the use of a neutral third party, called a mediator, to assist management and the union during their negotiations; and arbitration, a formal hearing before a neutral third party called an arbitrator. The mediator tries to keep communication open and promote compromise. An arbitrator hears the formal arguments of both sides, analyzes the positions, and makes a decision that is binding if the parties have agreed to that in advance. (LO 7 ends)