Conflict and Management: Unions BOH4M

Unions  Canadian labor laws guarantee the right of all workers to form a union and to conduct a union strike  Unions organize to represent the working people as a whole in contract and employment negotiations with their employers

Why unionize?  Higher Wages  US Bureau of Labor Statistics reports that mean weekly for a full- time union member in the United States in 2007 was $863, compared to $663 for regular workers.

Why unionize?  Better Benefits  Unionized workers are much more likely to receive health insurance, pay lower premiums, have more paid sick and vacation leave  Also more likely to get retirement benefits, long-term care insurance, etc.

Why unionize?  Better Working Conditions  Safer conditions.  Benefits such as more breaks, employee break rooms, training, and employee discounts.

Why unionize?  Increased Job Security  Most union contracts provide that a member can only be fired or laid off for just cause.  Union grievance procedures give workers the opportunity to appeal if their employer does fire them.

Why unionize?  Protected Strikes  Strikers participating in a union- authorized strike also often get “strike pay” to help offset the hardship of not earning a paycheck during the strike.

Why unionize?  A Voice in How Work is Done  The voice workers gain through collective bargaining allows them to take part in decisions that will affect their work environment – from when breaks may be taken to the procedures for performing a particular task.

The Case Against Unions?  Higher wages + more benefits = higher cost to employer A unionized business faced a competitive disadvantage

The Case Against Unions?  Hard to get rid of employees who are unproductive or problematic Termination process can take years

The Case Against Unions?  Can be harder to implement change Collective bargaining agreement usually stands for a few years, changes can’t be made until the current agreement expires

The Case Against Unions?  Employees have to pay union dues All employees have to be union members Can’t opt out

The Case Against Unions?  Lower Productivity Incentive to “do the bare minimum” since promotions are usually based only on seniority, not performance

Other considerations…  In 1980, CEOs at Fortune 500 firms were paid 42 times the average worker’s salary  By 2007, they were being paid on average 364 times as much

Case Study  Detroit’s “Big Three” Ford GM Chrysler  All are unionized (UAW)  All have faced serious market share erosion from Japanese competition (Toyota, Honda, Nissan), none of which are unionized  All have come close to bankruptcy in recent years (GM did go bankrupt)

The Cost Disadvantage  Labour burden (wages, benefits, pensions) estimated to be more than $2,000 per car Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. They cost the same to consumers, but the Avalon feels like a better product — it has $2,000 more put into it.

Management  Ford lost a record $13 billion in 2006 and hired Alan Mulally (from Boeing) as CEO He received $28 million for 4 months in 2006, despite Ford stock hitting a 40 year low  Ford executives' use of corporate jets for personal travel cost shareholders almost $1 million in 2006

Management  Former General Motors Corp. Chairman and Chief Executive Rick Wagoner gets a pension and other benefits worth an estimated $23 million GM went bankrupt under his watch

Management  In 2007 Top Japanese CEOs received on average $1.5 million or about 90% less than American CEOs.

Who’s at fault?  Union costs mean Big 3 can’t compete?  How do you justify cutting workers wages when upper management gets such ridiculous compensation?  Other poor management decisions? Making cars people don’t want Poor quality