Labor Relations Outcomes:
Individuals and the Environment
Labor relations outcomes are the result of labor and management strategies interacting in
a multidimensional environment in which choices are also shaped by individual decisionmaking behaviors. This chapter explores the major factors that determine labor relations
outcomes, including ethics.
The framework of the environment, including laws, economic trends, and technology is
built, then filled in by a discussion of the five major influences on human-decision
making with particular focus on ethics.
Comparing ethical theories is a valuable way of considering different perspectives on
labor relations. But for ethics to be useful a firm understanding of alternative theories is
required, therefore six ethical theories are presented in detail. The use of business ethics
can help develop a better understanding of labor relations, as well as help individuals
evaluate labor relations practices, systems, and outcome. Objections to the use of
evaluating behavior using ethics are also discussed.
There are four different tiers of decision-making in labor relations. Interactions occur
between union and management on all four levels making it vital that everyone within an
organization have a thorough understanding of the influences on this decision making.
Many of the central questions of labor relations revolve around employee reactions to
workplace injustice and employer reactions to competitive pressures. The chapter
therefore concludes by using these two issues as examples of how the environment and
individual decision-making affect labor relations outcomes.
By providing a framework for understanding the determinants of labor relations
outcomes, this chapter helps lay the foundation for understanding the present U.S. labor
relations system.
Learning Objectives
By the end of the chapter, students should be able to:
1. Identify alternative methods for making workplace rules, that is, the question of
workplace governance.
2. Compare employee representation through labor unions to other methods of
workplace governance.
3. List the four distinct schools of thought on the employment relationship—
neoclassical economics, human resource management, industrial relations, and
critical or Marxist industrial relations.
4. Understand how different views of labor unions are fundamentally rooted in the
basic assumptions of these four schools of thought.
5. Discuss various roles of labor unions in the employment relationship and in society.
Lecture Outline
I. Introduction
A. Many important factors shape employment outcomes, including the
environment, behavior, ethics, and the conditions under which employees want
to unionize.
B. Two major issues for labor relations are employee reactions to perceived
workplace injustices and employer reactions to competitive pressures.
II. The Labor Relations Environment
A. There are seven categories regarding the labor relations environment. See Key
Terms for their definitions.
1. Legal
2. Economic
3. Technical
4. Political
5. Social
6. Business
7. Institutional
III. Individual Decision Making
A. Within the labor relations environment, influences on individual decisionmaking behavior determine the actions of employees, managers, shareholders
and union leaders.
1. Cognition – the processing of information and knowledge.
2. Motivation – the drive to do something.
3. Personality – enduring dispositional quality or stable mental state.
4. Feelings – attitude, moods, and emotions that vary over time and with
experience.
5. Ethics – moral standards.
IV. Introduction to Business Ethics
A. Business ethics studies moral standards as they apply to the business context.
1. The use of business ethics helps to evaluate labor relations practices,
systems, and outcomes.
2. An understanding of business ethics can help managers and labor officials in
decision-making.
B. There are two potential objectives to evaluating behavior using ethics.
1. Ethical subjectivism – “Morality is a private matter.”
2. Ethical relativism – “Respect the diversity of cultures.”
C. Six ethical theories are useful to consider. See Key Terms for their definitions.
1. Ethics of utility
2. Ethics of duty
3. Ethics of liberty
4. Ethics of fairness
5. Ethics of virtue
6. Ethics of care
V. Business Ethics in Labor Relations
A. The use of business ethics in labor relations is important in providing a basis for
evaluating behavior and outcomes.
VI. Levels of Decision-Making
A. In labor relations, individuals and organizations make choices within four tiers.
1. Socio-political – encompasses the broad social and political arenas.
2. Strategic – where decisions are made regarding business and human resource
strategies.
3. Functional – where collective bargaining occurs.
4. Workplace – where managers and unions interact through steps of grievance
procedures and in joint committees.
VII. Employee Reactions to Workplace Injustice
A. There are five basic reactions to workplace injustice.
1. Exit – quitting.
2. Individual voice – discussing an injustice with a manager.
3. Collective voice – exercised through bargaining over the terms of
employment and by filing grievances.
4. Resistance – can include “work withdrawal,” such as absenteeism, reduced
work effort, work avoidance or more aggressive forms including sabotage,
theft, or workplace violence.
5. Silence – workers can simply remain silent.
VIII. Employer Reactions to Competitive Pressures
A. There are several factors that shape employer’s reactions to unions and
competitive pressures.
1. The economic environment because it determines a firm’s competitive
position. In the past has resulted in significant investments in nonunion
rather than union facilities.
2. Business pressures for flexibility and competitiveness in the global economy
resulting in employers’ drive to reshape their union contracts and improve
adversarial relationships.
3. Managerial values shaping employer reactions to unions.
Lecture Tips
There are two primary goals for teaching this chapter. One, to get students to think about
the twin determinants of labor relations outcomes—the environment and the human
agent. Two, to introduce business ethics into labor relations in more than a superficial
way.
The first objective doesn’t require an extensive amount of lecture time. It’s important for
students to appreciate the diverse dimensions of the environment and the human agent—
outcomes are determined by more than just markets and laws—but an exhaustive list of
examples within each dimension is not needed. Besides, this basic issue of the
determinants of labor relations outcomes comes up repeatedly throughout the remainder
of the book so there is ample opportunities for reinforcing this important concept later on
(e.g., what did depressions and laws do to unionization throughout labor history (chapters
4 and 5), what effects how people vote in representation elections (chapter 7), elements of
the bargaining environment (chapter 8), the determinants of strike activity (chapter 9),
and the like).
An important component of a lecture on the determinants of labor relations outcomes is
helping students understand the construction of Box 3.1. If you just present Box 3.1 in its
entirety, it is probably overwhelming to many students. I prefer to use five steps: 1) start
with employer and employee objectives, 2) parties create strategies to pursue objectives,
3) the parties interact on four levels (socio-political, strategic, functional, and workplace),
4) goals, strategies, interactions, and therefore outcomes are influenced by the
environment and individual-decision-making (the “human agent”), and 5) the
environment and the human agent have multiple dimensions. The textbook’s
accompanying PowerPoint slides include these five steps.
If you want students to start thinking about various influences on labor relations
outcomes, one exercise I use before showing the model in Box 3.1 is to divide students
into pairs and assign each pair a specific occupation (a grocery story checkout clerk, a
construction site carpenter, an airline pilot, etc.). I tell them that this worker is dissatisfied
and ask them to determine under what scenarios this dissatisfied worker is or is not likely
to form a union. I then put responses on the board and look for diverse elements of the
environment.
With respect to the second objective—introducing business ethics to labor relations—I
start off with the plant closing example in the text and show how these common
responses each imply a different ethical framework. I try to make this interactive by
having them think of possible reactions to a plant closing and then fitting their responses
into the six theories. I also emphasize that ethics is not just about making normative
judgments (though this is important), but that it can also be used to understand behavior
without judging it. I also try to cement the usefulness of ethics by discussing the
problems with ethical subjectivism and ethical relativism. These discussions lay the
foundation for an overview of each of the six theories followed by applications of each to
labor relations. I then have a class discussion of the SHRM code of ethics using the
reflection questions in Box 3.11.
The two concluding sections at the end of the chapter (employee reactions to workplace
injustice and employer reactions to competitive pressures) can be used to bring the
material together to show how the environment and individual decision-making affect
labor relations outcomes. The class should be informed that this will be a recurring theme
throughout the course (I noted some examples from other chapters above).
Active Learning Ideas
1. Using Box 3.10, ask students to form small groups and analyze either a hypothetical
situation, or perhaps a situation volunteered by a student to determine whether they
think it is morally right. Example situation: The owner of a small company announces
that at the beginning of the next month the company will no longer be providing
medical insurance.
2. Have students form small groups and complete the reflection questions from Box
3.11: Ethics in Action. Discuss the outcomes in class.
3. Assign pairs of students a specific occupation. Ask students to determine under what
conditions dissatisfied workers in this occupation are likely to form a union and
unlikely to form a union. Discuss the answers and explore how they fit into the
framework of Box 3.1.
Key Terms
Students will be introduced to the following key terms:
Legal environment
This environment consists of common law, the set of laws
explicitly pertaining to labor relations, and employment laws
such as the Fair Labor Standards Act, Civil Rights Act,
Occupational Health and Safety Act, and the Family Medical
Leave Act
Economic
environment
This environment includes the labor market, the market for the
employer’s products or services, markets for other factors of
production, and the state of the overall economy.
Concession
bargaining
Concession bargaining is when unions agree to wage, benefit,
and work rule concessions (or give backs) to try to save jobs.
Technical
environment
This environment includes the nature of production, work
organization, and technology. The technical context defines the
issues of importance for employees and employers.
Occurs when skill requirements of technical jobs are upgraded
Skill-biased
technological change resulting in greater demand for high skills. This phenomenon is
often associated with information technology.
Deskilling
Technological change that reduces the skills required for a
specific job.
Political
This environment explicitly captures political influences beyond
environment
laws and the legal environment, such as political lobbying.
Social environment
This environment is highlighted in sociology, social psychology,
and organizational behavior and includes broad social and
demographic trends. Social norms, workplace-level employee
solidarity, and social identification also help to shape this
environment.
Business
environment
The business environment is made up of corporate governance
and business strategy. The model of corporate governance yields
different labor relations climates. Business strategies can affect
individual behavior and determine labor relations strategies.
Institutional
environment
This environment includes the varied influences on the
employment relationship that stem from the presence of nonmarket institutions and organizations. The state of the labor
movement is one example.
Ethics of utility
The ethics of utility, also called utilitarianism, focuses on the
greatest good for the greatest number of people. Actions are
simply judged by their consequences.
Ethics of duty
The ethics of duty focuses on respect for human dignity using
the categorical imperative. Actions are judged based on the
action itself.
Categorical
imperative
The foundation of Kantian ethics (the ethics of duty): Act only
that maxim by which you can at the same time will that is should
become a universal law.
Ethics of liberty
The ethics of liberty, or libertarianism, focuses on freedom as the
negative right to be left alone. Restrictions on anyone’s behavior
are only justified if they are needed to prevent harm to others.
Ethics of fairness
The ethics of fairness focuses on justice through liberty, equal
opportunity, and concern for the least well off.
Ethics of virtue
The ethics of virtue focuses on moral character to achieve
happiness (flourishing), that is, the type of person each
individual ought to be.
Ethics of care
The ethics of care focuses on nurturing personal relationships by
caring for people. It highlights the importance of special,
interpersonal relationships such as with parents, children,
neighbors, co-workers, or friends.
Ethical subjectivism
This is an objection to evaluating behavior using ethics, based on
the thought that moral judgments are feelings, not facts so each
person is entitled to their own ethical standards.
Ethical relativism
This is an objection to evaluating behavior using ethics, based on
the thought that no ethical theory is universal either because of
specific historical or cultural factors or because people’s reasons
for differing ethical beliefs are equally valid.
Reflection Questions
1. Suppose you are dissatisfied with your pay. What are you likely to do in
response? What elements of the environment and individual decision-making
will influence your reaction? Does your answer change if you feel abused or
harassed rather than dissatisfied with your pay?
Student answers will vary. Some responses to being dissatisfied with pay may include
quitting, asking for a raise, remaining silent, or trying to form a union. The elements
of the environment most likely to influence the reaction are legal, economic,
technical, and social. The elements of individual decision making most likely to
influence the reaction are cognition, motivation, and feelings.
2. Should soldiers be allowed to join unions? (Hint: consider both the environment
and ethics.)
Military unions in the United States are illegal, but this question asks whether this
should be the case. Student answers will vary. Most answers will likely be no,
soldiers should not be allowed to join unions due to the technical context – in the
military organizational effectiveness and survival are dependent on following orders
with no questions asked, i.e., no “bargaining,” going on strike, or filing grievances
when ordered to do something On the other hand, preventing unionization does not
prevent discontent and perhaps unionization is a more productive channel for
handling discontent than insubordination or going AWOL. With respect to ethics, a
utilitarian perspective implies that outlawing military unions is fine is the benefits are
greater than the costs; the ethics of liberty implies that outlawing military unions is
acceptable as long as soldiers know this when they voluntarily sign up for military
duty. The ethics of duty, fairness, virtue, and care place greater emphasis on how
individuals are treated and are therefore less consistent with outlawing unions, even
for the military. Allowing soldiers to join unions, however, might have to be balanced
with operational requirements—such as outlawing the right to strike. In fact, police
and fire unions have operated successfully in many cities for many years with similar
restrictions, and you don’t hear reports of firefighters refusing to fight a fire and filing
a grievance instead.
3. Suppose you face a moral dilemma in the workplace. What standards would you
use when deciding what to do? How do these standards fit into the six ethical
frameworks described here?
Student answers will vary. Many responses can probably be fit into one of the six
ethical frameworks. For example, a response that emphasizes costs and benefits is the
ethics of utility. A response rooted in individual freedom is the ethics of liberty. A
response that is concerned with “doing the right thing” is consistent with the ethics of
virtue.
4. Consider a company whose employees are trying to form a union. Use the
template in Box 3.10 to outline how the company’s response to this organizing
drive might be shaped by each of the six ethical frameworks. Does ethical
behavior equal legal behavior?
Ethics of utility—a company would look at the overall costs and benefits of
unionization and decide to oppose a union organizing drive unless the costs
outweighed the benefits.
Ethics of duty—the organizing drive response that is arguably most consistent with
the ethics of duty is employer neutrality because this respects the autonomy and
dignity of workers and their ability to make their own decisions about unionization
Ethics of liberty—a libertarian response is to use the freedom of private property to
ban union organizers from the workplace and to use the freedom of speech to speak
against unionization
Ethics of fairness—using the veil of ignorance, managers might be reluctant to
strenuously oppose unionization, because it might be the case that when the veil is
lifted, they are workers rather than managers. Moreover, the ethics of fairness values
the least well-off which should reduce opposition to unionism.
Ethics of virtue—in this framework, the appropriate response is whatever is deemed
virtuous. Aggressive anti-union campaigns are likely not viewed as virtuous by most
people.
Ethics of care—any response to a union organizing drive that is consistent with the
ethics of care must respect the special relationships between managers and workers as
well as between workers. Aggressive anti-union campaigns are likely inconsistent
with these standards.
While it is generally believed that breaking the law is unethical, ethical standards
might be stricter than legal standards. For example, it might be legal to lie, but this
does not make it ethical. Many unionists believe that it is unethical to hire permanent
strike replacements, but this is legal behavior in the United States.
Suggested Class Discussion or Short Essay Topics
1. Kant’s emphasis on universal, unwavering rules has been criticized for many reasons.
List those reasons, and the specific categorical imperative formulation that causes the
criticism.
2. With respect to employer behavior, it is commonly believed that the firing of the
public-sector air traffic controllers by President Ronald Reagan during the illegal
PATCO strike in 1981 created a climate in which it was acceptable for private-sector
employers to actively fight unions and resist their legal strikes. What arguments
might someone give to support this acceptance? What arguments might someone give
to dispel the logic of this acceptance? Do you think the President made the right
decision in firing the air traffic controllers? Why or why not?
Internet Exploration
1. Identify a local company or some other business organization that is of interest.
Search the Internet to find information on the economic environment for that
company. Try to find labor market information as well as company-level, industrylevel, and economy-wide information regarding consumer demand and ability-to-pay.
Are there trends in other dimensions of the labor relations environment that are
relevant for this company?
2. Find examples of corporate codes of ethics. Alternatively, find codes of ethics for
professional associations in your areas of interest (for example, accounting or
marketing). Do they reflect a specific ethical theory? What would you add to the
codes? As a human resources manager, should you make sure they are followed? If
so, how would you do this?
Other Links
U.S. Department of Labor: http://www.dol.gov
Bureau of Labor Statistics: http://www.bls.gov
White House Employment and Social Statistics Briefing Rooms:
http://www.whitehouse.gov/news/fsbr.html
Business Ethics Magazine: http://www.business-ethics.com
Society for Business Ethics: http://www.societyforbusinessethics.org
Suggested BusinessWeek Articles
1. “The Worst of Times for UAW Bargaining” (September 3, 1979, pp. 86-87)
2. “A Game of Chicken Between the Teamsters and UPS” (August 6, 1990, p. 32)
3. “Sharing Prosperity” (September 1, 1997, pp. 64-69)
4. “Big Labor: So Out it’s ‘Off the Radar Screen’” (March 26, 2001, p. 55)
5. “Rethinking the Rat Race” (August 26, 2002, pp. 142-143)