LABOR RELATIONS & INDUSTRIAL DEMOCRACY Mgt 470 CHAPTER 17 LABOR RELATIONS & INDUSTRIAL DEMOCRACY

The U.S. Approach to Labor Relations Collective bargaining by unions To negotiate wages, hours, and working conditions NLRB strikes Grievance procedure Mediation and arbitration Importance of positive labor relations

Labor Relations in the International Arena Process through which management and workers identify and determine the job relations that will be in effect at the workplace Specific approaches to labor relations varies from one country to another U.S. Approaches to Labor Relations Collective bargaining Process whereby formal labor agreements are reached by union and management representatives Involves negotiation of wages, hours, and conditions of employment and the administration of the labor contract

Labor Relations in the International Arena (cont.) U.S. Approaches to Labor Relations (cont.) Union Organization represents workers in collective bargaining Has the legal authority to negotiate with the employer and administrator the labor contract Unions gain representation rights only after certification Unions can decertify a union with which the members are dissatisfied Workers may strike to support union’s demands Grievance Complaint brought by an employee who feels that s/he has been treated improperly under the terms of the labor agreement Settlement of grievance attempted at various hierarchical steps

Labor Relations in the International Arena (cont.) U.S. Approaches to Labor Relations (cont.) Mediator Person who brings both sides together and helps them reach a settlement that is mutually acceptable Arbitrator Individual who provides a solution to a grievance that both sides have been unable to resolve themselves and that both sides agree to accept Labor relations are important because they determine labor costs

Labor Relations in the International Arena (cont.) Labor Relations in Other Countries MNCs have to adjust labor relations strategies because host countries differ in terms of: Economic development Political environments Strike activity Regional differences Great Britain Labor agreement is not a legally binding contract Violations of the agreement carry no legal penalties Labor agreements are less extensive than in the U.S.

Labor Relations in the International Arena (cont.) Labor Relations in Other Countries (cont.) Germany Unions and management have been cooperative in the past Labor harmony not adversely affected by unification of East and West Union power is still quite strong Rights of workers addressed more carefully by management Japan Unions and management have cooperative relationships Contracts tend to be general and vague Disputes regarding the labor contract usually settled amicably Unions most active during the spring and end of the year

Labor Relations in the International Arena (cont.) How Industrial Conflict Is Handled Around the World Strike Collective refusal to work to pressure management to grant union demands Lockout Company’s refusal to allow workers to enter the facility during a labor dispute United States Most contracts outlaw strikes Rely on grievance procedure to resolve disputes

Labor Relations in the International Arena (cont.) How Industrial Conflict Is Handled Around the World (cont.) Great Britain Strikes more prevalent than in the U.S. System is not geared toward efficient resolution of conflicts Grievance handling is informal, cumbersome, and costly Germany Strikes and lockouts are prohibited while the contract is in force Contracts have different expiration dates Cooperation between union and management is not unusual

Labor Relations in the International Arena (cont.) How Industrial Conflict Is Handled Around the World (cont.) Japan Strikes and lockouts are very rare Few areas of disagreement between unions and management

Annual Average Days Lost Due to Labor Disputes in Economically Advanced Nations: 1990-1999 50 100 150 200 250 300 350 400 Canada Iceland Spain Denmark Finland Turkey Italy Norway Australia Ireland France New Zealand Sweden Portugal United States Belgium Netherlands Britain Germany Austria Japan Switzerland Luxembourg

Labor Relations in Europe European firms typically negotiate agreements on a national level European unions have more political power than those in the U.S. Salaried employees in Europe are often unionized European unions have existed longer

Labor Relations Around the World Great Britain labor agreements are not legally binding labor agreements are not extensive Germany Unions and management have a cooperative relationship Union power is strong Unions set the pay scale for 90% of workers Japan Social customs dictate union behavior Disputes settled amicably Unions most active twice a year

Resolving Industrial Conflict In the U.S. Strikes and lockouts are prohibited while an agreement is in effect In Great Britain, strikes are prevalent In Germany conflict is resolved similarly to the U.S. Strikes in Japan have largely a symbolic meaning

Industrial Democracy INDUSTRIAL DEMOCRACY involves the rights of employees to participate in significant management decisions wages vacation work rules plant closings and expansions

Common Forms of Industrial Democracy Codetermination Workers on Boards of Directors Work councils Workers elected to serve (common in Europe) Shop floor participation E.g. Quality Circles Financial participation E.g. Profit sharing (predominantly U.S.) Collective bargaining

Industrial Democracy in the U.S. Problem solving teams Special purpose teams Self-managing teams

Labor Costs Around the World Country Hourly Hours Compensation worked/ Week Germany $31.87 29.0 France $19.34 31.7 Italy $18.08 35.0 U.S. $17.74 37.9 UK $14.19 35.6

Real Wages of Low-Paid Workers -1.5 -1 -0.5 0.5 1 1.5 2 2.5 3 Germany 1983-90 Italy 1980-87 Sweden 1981-91 Norway 1980-90 Australia 1980-91 Canada 1981-90 Denmark 1980-90 U.S. 1980-89 Britain 1980-92 Austria 1980-91 France 1980-87

Manufacturing Labor Costs (per unit of output, annual average percentage change: 1990-1997) -5 -4 -3 -2 -1 1 2 3 4 Norway Japan Italy South Korea Britain Germany Denmark Canada Taiwan Belgium Sweden France United States Local currencies Dollar terms

New Labor Force Trends Flexible working arrangements Joint partnering part-time workers shift work temporary contracts subcontracting Joint partnering virtual corporations

Closing thoughts International management will be one of joint partnerships and agreements Virtual corporation Network of companies that exploits fast-changing opportunities and shares costs, skills, and access to global markets Theories of international management must be continually subjected to review An important question: “Why some MNCs do better than others?” Strategic fit - aligning resources to match the environment Strategic stretch - use of resources to achieve more challenging goals