CHAPTER 12
Dealing with
Union and
EmployeeManagement
Issues
McGraw-Hill/Irwin
Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OBJECTIVES
1. Trace the history of organized labor in the United
States
2. Discuss the major legislation affecting labor unions
3. Outline the objectives of labor unions
12-2
LEARNING OBJECTIVES
4. Describe the tactics used by labor and management
during conflicts, and discuss the role of unions in the
future
5. Assess some of today’s controversial employee–
management issues, such as executive
compensation, pay equity, child care and elder care,
drug testing, and violence in the workplace
12-3
DEMAURICE SMITH
NFL Players Association
• Earned his law degree in 1989
and gained a reputation as a
dedicated trial lawyer.
• He was elected director of the
NFL Players Association in 2009.
• Shortly after starting the job he
was thrown right into the middle
of the recent NFL lockout.
12-4
NAME that COMPANY
The late management consultant Peter Drucker
suggested that CEOs should not earn more than
20 times the salary of the company’s lowest-paid
employee. Most firms ignore his suggestion but
at our company, executive pay is capped at 19
times the average employee’s salary. Still, we
are one of the fastest growing companies in the
United States.
Name that company!
12-5
ORGANIZED LABOR
LO 12-1
• Unions -- Employee organizations whose main goal
is to represent members in employee-management
negotiations of job-related issues.
• Labor unions were responsible for:
- Minimum wage laws
- Overtime rules
- Workers’ compensation
- Severance pay
- Child-labor laws
- Job-safety regulations
12-6
PUBLIC SECTOR
LABOR UNIONS
LO 12-1
• Public sector union members work for
governments as teachers, firefighters, police
officers, etc.
• Many states face serious debt problems and want
to cut labor costs. But states with public sector
unions have limited ability to cut those costs.
• The Governor of Wisconsin challenged public
sector labor unions by eliminating union
bargaining rights for state and public employees.
12-7
GOALS of ORGANIZED LABOR
LO 12-1
• To work with fair and
competent
management.
• To be treated with
human dignity.
• To receive a reasonable
share of wealth in the
work it generates.
12-8
HISTORY of
ORGANIZED LABOR
LO 12-1
• Craft Union -- An organization of skilled specialists
in a particular craft or trade.
• As early as 1792, shoemakers in a Philadelphia
craft union met to discuss fundamental work
issues.
• Work weeks were 60+
hours, wages were low and
child labor was rampant.
12-9
The FACTORY BLAZE that
FIRED UP a MOVEMENT
• On March 25, 1911, 146 women
were killed in a fire at the Triangle
Shirtwaist Company in New York
City.
• The women were trapped by a
door that was kept locked to
prevent theft.
• Today labor leaders say that the
Triangle fire is proof of why labor
unions are crucial to maintaining
workplace balance in the U.S.
12-10
EMERGENCE of LABOR
ORGANIZATIONS
LO 12-1
• Knights of Labor -- First national labor union
(formed in 1869).
• Knights attracted 700,000 members, but fell
from prominence after a riot in Chicago.
• American Federation of Labor (AFL) -- An
organization of craft unions that championed
fundamental labor issues (formed in 1886).
12-11
INDUSTRIAL UNIONS
LO 12-1
• Industrial Unions -- Labor unions of unskilled or
semiskilled workers in mass production industries.
• Congress of Industrial Organizations (CIO) -Union organization of unskilled workers; broke away
from the AFL in 1935 and rejoined in 1955.
• The AFL-CIO today has affiliations with 56 unions
and has about 12.5 million members.
12-12
PUBLIC UNIONS
LO 12-1
• For the first time in U.S. history, 7.2 million of the
14.5 union members work in government.
• Taxpayers, not stockholders, are paying the cost
of union workers wages and benefits.
• The huge state and local government revenue
losses caused by the economic crisis put
pressure to reduce wage and benefit costs.
12-13
EFFECTS of LAWS on
LABOR UNIONS
LO 12-2
• Labor unions’ growth and influence has been
very dependent on public opinion and law.
• The Norris-LaGuardia Act helped unions by
prohibiting the use of Yellow-Dog Contracts -- A
type of contract that required employees to agree to
NOT join a union.
• Collective Bargaining -- The process whereby
union and management representatives form an
agreement, or contract, for employees.
12-14
COLLECTIVE BARGAINING
and the PUBLIC SECTOR
LO 12-2
• Collective bargaining among public union workers
has become a key issue today.
• One of the issues is the fact that public
employees are paid by the taxpayers.
• When it is perceived that public employees are
winning more or better health care, more or better
hours of work, and so on, some have questioned
whether or not such negotiations should be
allowed to continue.
12-15
FORMING a UNION in the
WORKPLACE
LO 12-2
• The National Labor Relations Board (NLRB) was
created to oversee labor-management issues and
provide guidelines for unionization.
• Certification -- The formal process by which a
union is recognized by the NLRB as the bargaining
agent for a group of employees.
• Decertification -- The process whereby employees
take away a union’s right to represent them.
12-16
WHY JOIN a UNION?
LO 12-2
• Pro-union attitudes
• Poor management/employee
relations
• Negative organizational
climate
• Poor work conditions
• Union’s reputation
• Job security
12-17
LABOR/MANAGEMENT
AGREEMENTS
LO 12-3
• Negotiated Labor-Management Agreement
(Labor Contract) -- Sets the terms under which
labor and management will function over a period of
time.
• Union Security Clause -- Stipulates workers who
reap union benefits must either join the union or pay
dues to the union.
12-18
UNION SECURITY AGREEMENTS
LO 12-3
• Closed Shop Agreement -- Specified workers had
to be members of a union before being hired for a job.
• Union Shop Agreement -- Declares workers don’t
have to be members of a union to be hired, but must
agree to join the union within a specific time period.
• Agency Shop Agreement -- Allows employers to
hire nonunion workers who don’t have to join the
union, but must pay fees.
12-19
UNION SECURITY AGREEMENTS
LO 12-3
12-20
RIGHT-to-WORK LAWS
LO 12-3
• Right-to-Work Laws -- Legislation that gives
workers the right, under an open shop, to join or not to
join a union.
• The Taft-Hartley Act of 1947 granted states the
power to outlaw union shop agreements.
• Open Shop Agreement -- Agreement in right-towork states that gives workers the right to join or not
join a union, if one exists in their workplace.
12-21
RIGHT-to-WORK STATES
LO 12-3
12-22
RESOLVING DISAGREEMENTS
LO 12-3
• Labor contracts outline labor and management’s
rights, and serves as a guide to workplace
relations.
• Grievances -- A charge by employees that
management isn’t abiding by the terms of the
negotiated agreement.
• Shop Stewards -- Union officials who work
permanently in an organization and represent
employee interests on a daily basis.
12-23
USING MEDIATION and
ARBITRATION
LO 12-3
• Bargaining Zone -- The range of options between
initial and final offers that each side will consider
before negotiations dissolve or reach an impasse.
• Mediation -- The use of a third party (mediator) to
encourage both sides to keep negotiating to resolve
key contract issues.
• Arbitration -- An agreement to bring in a third party
to render a binding agreement.
12-24
The GRIEVANCE RESOLUTION
PROCESS
LO 12-3
12-25
TACTICS USED in CONFLICTS
LO 12-4
• Tactics used by labor unions
include:
- Strikes
- Boycotts
- Work Slowdowns
- Pickets
12-26
STRIKES and BOYCOTTS
LO 12-4
• Strikes -- A strategy in which workers refuse to go to
work.
• Primary Boycott -- When a union encourages both its
members and the general public not to buy the products
of a firm in a labor dispute.
• Secondary Boycott -- An
attempt by labor to convince
others to stop doing business
with a firm that is the subject of
a primary boycott.
12-27
TACTICS USED in CONFLICTS
LO 12-4
• Tactics used by management include:
- Lockouts
- Injunctions
- Strikebreakers
12-28
LOCKOUTS, INJUNCTIONS and
STRIKEBREAKERS
LO 12-4
• Lockout -- An attempt by management to put
pressure on workers by closing the business, thus
cutting off workers’ pay.
• Injunction -- A court order directing someone to do
something or refrain from doing something.
• Strikebreakers -- Workers hired to do the work of
striking workers until the labor dispute is resolved;
called scabs by unions.
12-29
To CROSS or NOT to CROSS?
• Shop-Til-You-Drop is seeking workers to fill the
jobs of striking workers.
• Many students at your college are employees
and others are supporting the strike.
• You need money and legally it is permissible for
you to replace striking workers.
• What will you do? What are the consequences?
12-30
CHALLENGES FACING LABOR
UNIONS
LO 12-4
• The number of union workers is falling.
• Many workers (like airline employees) have
agreed to Givebacks -- Gains from labor
negotiations are given back to management to help
save jobs.
12-31
LABOR UNIONS in the FUTURE
LO 12-4
• Union membership will include more white-collar,
female and foreign-born workers than in the past.
• Unions will take on a greater
role in training workers,
redesigning jobs and
assimilating the changing
workforce.
• Unions will seek more job
security, profit sharing and
increased wages.
12-32
UNION MEMBERSHIP by STATE
LO 12-4
12-33
TEST PREP
• What are the major laws that affected union
growth, and what does each one cover?
• How do changes in the economy affect the
objectives of unions?
• What are the major tactics used by unions and by
management to assert their power in contract
negotiations?
• What types of workers do unions need to organize
in the future?
12-34
COMPENSATING EXECUTIVES
LO 12-5
• CEO compensation used to
be determined by a firm’s
profitability or increase in
stock price.
• Now, executives receive
stock options and restricted
stock that’s awarded even if
the company performs
poorly.
12-35
COLLEGE ATHLETES:
WHAT are THEY WORTH?
• Regional economies in college
towns reap huge revenues on
sports weekends.
• The players, however, cannot
draw a salary.
• Northwestern University’s football
players won a ruling that gave
them the right to unionize.
• The university is appealing the
ruling.
12-36
PLAY BALL!
Salaries in Professional Sports
Player
Payment for…
League
David Ortiz
$406,250 per home run
MLB
Matt Bonner
$28,571 per three-pointer
NBA
Sebastian Janikowski
$121,212 per field goal
NFL
George Parros
$32,407 per fight
NHL
Source: Bloomberg Businessweek, www.businessweek.com, accessed November 2014.
12-37
COMPENSATING EXECUTIVES
in the FUTURE
LO 12-5
• Boards of directors are being challenged
concerning executive contracts.
• Government and shareholders are putting
pressure to overhaul executive compensation.
• The passage of the DoddFrank Act was intended to
give shareholders more say
in compensation decisions.
12-38
The QUESTION of PAY EQUITY
LO 12-5
• Women earn 77% of what
men earn.
• This disparity varies by
profession, experience and
level of education.
• Young women actually earn
8% percent more than male
counterparts due to their
higher graduation rates.
12-39
EQUAL PAY for EQUAL WORK
LO 12-5
Equal Pay Act Factors that Justify Pay Differences
• Skill
• Effort
• Responsibility
• Working Conditions
12-40
THE SALARY GENDER GAP
Age
Average Salary
15 to 24
Women - $23,357
Men - $26,100
25 to 44
Women - $41,558
Men - $55,286
45 to 64
Women - $44,808
Men - $67,040
Source: U.S. Census Bureau, www.census.gov, accessed November 2014.
LO 12-5
12-41
WHAT’S SEXUAL HARASSMENT?
LO 12-5
• Sexual Harassment -- Unwelcomed sexual
advances, requests for sexual favors or other verbal
or physical conduct that creates a hostile work
environment.
• Sexual harassment laws
cover men, women and
foreign companies doing
business in the U.S.
• Violations can be extremely
expensive for businesses.
12-42
KINDS of SEXUAL HARASSMENT
LO 12-5
• Quid pro quo sexual harassment involves threats
like “Go out with me or you’re fired.” An
employee’s job is based on submission.
• Hostile work environment sexual harassment is
conduct that interferes with a worker’s
performance or creates an intimidating or
offensive work environment.
12-43
YOU MAKE the CALL…
LO 12-5
1. Two colleagues walk by you as one delivers the
punch line to a very dirty joke. You feel the joke
is inappropriate. Is this sexual harassment under
the law?
2. An employee thinks she may have been
sexually harassed when her boss
complimented her blouse. She explains the
circumstances to you and asks, “Wouldn’t you
be upset?” What’s your response?
12-44
FACING CHILDCARE ISSUES
LO 12-5
• The number of women in the workforce with
children under three-years-old has increased.
• Childcare related absences
cost businesses billions of
dollars each year.
• Who should pay for the cost
of childcare – this is a
dividing issue among
employees and businesses.
12-45
BUSINESSES RESPONSE to
CHILD CARE
LO 12-5
• Benefits can include:
- Discounts with childcare
providers.
- Vouchers that offer payment
for childcare.
- Referral services identify
high-quality childcare
facilities.
- On-site childcare centers
- Sick-child centers.
12-46
INCREASING ELDER CARE
CHALLENGES
LO 12-5
• 31% of U.S. households are
providing some care to an
elderly person.
• Care giving obligations cause
employees to miss about 15
million days of work per year.
• Costs could rise up to $35
billion annually.
12-47
ELDER CARE in the
MODERN HOUSEHOLD
LO 12-5
• More and more boomers are taking care of their
parents while still working.
- 31% say that may delay their retirement.
- The average cost of taking care of an aging parent is
$5,534.
- 76% say they enjoy taking care of their parents.
- 54% say it made them closer.
Source: Money, www.money.com, accessed November 2014.
12-48
DRUG USE in the WORKPLACE
LO 12-5
• Alcohol is the most widely used drug - 6.5% of full
time employees are considered heavy drinkers.
• Over 8% of workers aged 18-49 use illegal drugs
and are more likely to be in workplace accidents.
• Drug abuse costs the U.S. economy $414 billion
in lost work, healthcare costs and crime.
• Over 80% of major companies drug test workers.
12-49
VIOLENCE in the WORKPLACE
LO 12-5
• OSHA reports homicides account for 16% of
workplace deaths.
• Violence is the number one cause of death for
women in the workplace.
• Companies have taken action to deal with
potential problems by using focus groups and
other interactions.
12-50
WARNING SIGNS of POSSIBLE
WORKPLACE VIOLENCE
LO 12-5
• Unprovoked outbursts of anger or rage
• Threats or verbal abuse
• Repeated suicidal comments
• Paranoid behavior
• Increased frequency of domestic problems
12-51
TEST PREP
• How does top-executive pay in the U.S. compare
with top-executive pay in other countries?
• What is the difference between pay equity and
equal pay for equal work?
• How is the term sexual harassment defined and
when does sexual behavior become illegal?
• What are some of the issues related to childcare
and elder care and how are companies
addressing those issues?
12-52