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15.660 Strategic Human Resource ManagementHow much say should workers be given concerning their work lives?What is a Union?Why should we care?Reasons to careWhat do unions do?What do unions do?What would a manager want a union?Potential Benefits of UnionizationAmerican Labor RelationsExemplarsEastern AirlinesFreeman and RogersWhat Workers WantEMPLOYEE/MANAGEMENT RELATIONSFEEL LOYALITY TO FIRMSATISFIED WITH AMOUNT OF INFLUENCEWANT MORE INFLUENCEPREFERED TYPE OF EMPLOYEE ORGANIZATIONREPORT CARD FOR MANAGERSVOTE FOR UNIONMANAGERIAL ATTITUDES IN NON-UNION FI RMSMANAGERIAL ATTITUDES IN UNIONIZED FIRMS15.660 Strategic Human Resource ManagementProfessor M. Diane BurtonMIT Sloan School of ManagementHow much say should workers be given concerning their work lives?? Should they be consulted about work practices?? Should they be allowed to determinework practices?? What about compensation practices?? Should they be given a veto over large-scale layoffs or decisions to send work outside of the firm or overseas?? Should they have a voice in major strategic decisions made by management?What is a Union?An organization recognized by the National Labor Relations Board (NLRB), that has legal authority to negotiate with the employer on behalf of employees -- to improve wages, hours, and the condition of employment – and to administer the ensuing agreement.Why should we care?3733U.K.7339Argentina909France9029Germany2424Japan1214United StatesContractCoverage(% of total employment)UnionMembership(% of total employment)CountrySource: International Labour Office, World Labour Report (Geneva, Switzerland)Reasons to care? Unionization rates in manufacturing industries are substantially higher? Firms face the “threat” of unionization? Unionization rates shift over time? U.S. is an outlier? Collective bargaining agreements extend to non-union membersWhat do unions do?? Increase wages and benefits? Decrease turnover? Preserve existing employee rights? Implement formalized work rules? Institute grievance procedures ? Enhance productivity and efficiency? Lower profitabilityWhat do unions do?On average, unions create a bigger pie to be split between workers and owners.But, on average, the slice of the pie taken by unionized workers is so much bigger than the slice taken by non-unionized workers, that the owners in a union setting are left with a smaller absolute slice.What would a manager want a union?Jim Casey, founder of United Parcel Service, invited the Teamsters to organize his firm.Why?Potential Benefits of Unionization? Enhanced communication and coordination? Depersonalized interactions between constituencies? Increased trustworthiness on both sides based on reputation concerns? Potential for cooperative relationships with most senior and stable employees“Cooperative agreements are particularly fragile. A lot of times when they break down it’s not because of new economic circumstances. An individual can make a difference – a new plant manager, a new local president.”Douglas FraserPast PresidentUnited Auto WorkersAmerican Labor RelationsNew Deal (1930s-1970s)?Workplace: narrow job definitions, grievance procedures?Collective Bargaining: “bread and butter issues” ?Strategy: Left entirely to management--outside the influence of workers and unionsTransformation (1980s)?Workplace: participation, teams, quality, flexibility?Collective Bargaining: work rule flexibility, job security; new pay systems?Strategy: Info sharing, consultation, joint governance, employee ownershipExemplars? Saturn? NUMMI? Southwest AirlinesEastern Airlines? Founded in 1938? Long history of antagonistic labor relations? Uses debt to fund expansion? 1978 – Deregulation – “The War Years”? Early 80s -- labor and management cooperation? Acquired by Texas Air in 1986 for $660 million? Mechanics strike, March 1989? Liquidated in 1990Freeman and RogersWhat Workers Want? Nationally representative survey of employees ? Conducted in 1994? N=2308? 18+, PRIVATE SECTOR, FIRMS OVER 25 EMPLOYEES, ALL BUT TOP MANAGEMENT? REPRESENTS 75% OF PRIVATE SECTOR WORKERSEMPLOYEE/MANAGEMENT RELATIONS05101520253035404550EXCELLENT GOOD FAIR POORSource: Freeman and RogerspercentFEEL LOYALITY TO FIRM0102030405060LOT SOME LITTLE NONEpercentSource: Freeman and RogersSATISFIED WITH AMOUNT OF INFLUENCE0102030405060VERY SOMEWHAT NOT TOO NOT AT ALLpercentSource: Freeman and RogersWANT MORE INFLUENCE010203040506070%MORE AS NOW LESSSource: Freeman and RogersDK 8 7 MORE POWER, MANAGEMENT OPPOSES 22 23SOURCE: FREEMAN AND ROGERS PREFERED TYPE OF EMPLOYEE ORGANIZATIONALL UNION MEMBERS NO POWER, MANAGEMENT COOPERATES 63% 65%NONE 7 5REPORT CARD FOR MANAGERS05101520253035404550ABCDFknowledge of businessleadershipconcern for employeesfair paypower sharingSource: Freeman and RogersVOTE FOR UNIONUNION MEMBERSYES 90%NO 8DK 2NON-UNIONYES 32%NO 55DK 13TOTAL UNION VOTE 44%SOURCE: Freeman and RogersMANAGERIAL ATTITUDES IN NON-UNION FI RMSWOULD OPPOSE UNIONS 53% WOULDN’T CARE 27 WOULD SUPPORT UNIONIZATION 15SOURCE: Freeman and RogersMANAGERIAL ATTITUDES IN UNIONIZED FIRMSUNIONS IMPROVE EMPLOYEES’ LIVES 64%UNIONS HURT PREFORMANCE A LOT 8%UNIONS HURT PERFORMANCE A LITTLE 25UNIONS HELP PERFORMANCE A LITTLE 8UNIONS HELP PERFORMANCE A LOT 19NO EFFECT 40 SOURCE: Freeman and


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MIT 15 660 - Strategic Human Resource Management

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