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
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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-
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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.
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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.
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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
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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)
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