15 660 Strategic Human Resource Management Professor M Diane Burton MIT Sloan School of Management How much say should workers be given concerning their work lives Should they be consulted about work practices Should they be allowed to determine work 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 Country United States Japan U K Germany France Argentina Union Membership Contract Coverage of total employment of total employment 14 24 33 29 9 39 12 24 37 90 90 73 Source 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 members What 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 profitability What 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 Fraser Past President United Auto Workers American Labor Relations New 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 unions Transformation 1980s Workplace participation teams quality flexibility Collective Bargaining work rule flexibility job security new pay systems Strategy Info sharing consultation joint governance employee ownership Exemplars Saturn NUMMI Southwest Airlines Eastern 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 1990 Freeman and Rogers What 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 WORKERS EMPLOYEE MANAGEMENT RELATIONS 50 45 40 percent 35 30 25 20 15 10 5 0 EXCELLENT GOOD FAIR POOR Source Freeman and Rogers FEEL LOYALITY TO FIRM 60 50 40 percent 30 20 10 0 LOT SOME LITTLE NONE Source Freeman and Rogers SATISFIED WITH AMOUNT OF INFLUENCE 60 50 percent 40 30 20 10 0 VERY SOMEWHAT NOT TOO NOT AT ALL Source Freeman and Rogers WANT MORE INFLUENCE 70 60 50 40 30 20 10 0 MORE AS NOW LESS Source Freeman and Rogers PREFERED TYPE OF EMPLOYEE ORGANIZATION ALL UNION MEMBERS NO POWER MANAGEMENT COOPERATES 63 65 MORE POWER MANAGEMENT OPPOSES 22 23 NONE 7 5 DK 8 7 SOURCE FREEMAN AND ROGERS REPORT CARD FOR MANAGERS 50 45 40 35 30 25 20 15 10 5 0 knowledge of business leadership concern for employees fair pay power sharing A B C D F Source Freeman and Rogers VOTE FOR UNION NON UNION UNION MEMBERS YES NO DK YES NO DK 32 55 13 90 8 2 TOTAL UNION VOTE 44 SOURCE Freeman and Rogers MANAGERIAL ATTITUDES IN NON UNION FI RMS WOULD OPPOSE UNIONS 53 WOULDN T CARE 27 WOULD SUPPORT UNIONIZATION 15 SOURCE Freeman and Rogers MANAGERIAL ATTITUDES IN UNIONIZED FIRMS UNIONS IMPROVE EMPLOYEES LIVES 64 UNIONS HURT PREFORMANCE A LOT UNIONS HURT PERFORMANCE A LITTLE UNIONS HELP PERFORMANCE A LITTLE UNIONS HELP PERFORMANCE A LOT NO EFFECT 8 25 8 19 40 SOURCE Freeman and Rogers