Labor-Management Relations Understanding Labor-Management Relations Chapter 11 THE FUTURE OF BUSINESS Gitman & McDaniel 5th Edition Prepared by Deborah Baker Texas Christian University

Learning Goals What is the historical development of American labor unions? What role did federal law play in the development of the union-management relationship? What is the union organizing process? What is the collective bargaining process, and what key issues are included in the union contract? How do employees file a grievance? What economic tactics do unions and employers use in labor-management conflicts? What trends will affect American workers and labor-management relations? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Principles of Labor-Management Relations Chapter 1 Chapter 11 Principles of Labor-Management Relations Labor Union An organization that represents workers in dealing with management over disputes involving wages, hours, and working conditions Collective Bargaining The process of negotiating labor agreements that provide for compensation and working arrangements mutually acceptable to the union and to management Tens of thousands of American firms are unionized and millions of American workers belong to unions. If you work in the mining, manufacturing, construction, or transportation industries, you will probably deal with or be affected by labor unions. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Labor Relations Process Chapter 1 Chapter 11 The Labor Relations Process 3. Day-to-Day administration of agreement 2. Negotiating a labor agreement The labor relations process that produces a union-management relationship consists of three phases: union organizing negotiating a labor agreement daily administering of the labor agreement 1. Union organizing Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

What is the historical development of American labor unions? Learning Goal 1 1 What is the historical development of American labor unions? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Emergence of Unions and Collective Bargaining Chapter 1 Chapter 11 Emergence of Unions and Collective Bargaining 1 Congress of Industrial Organizations 1935 AFL-CIO 1955 American Federation of Labor 1881 Industrial unions Merger of AFL and CIO Craft unions Early labor organizations began to develop toward the end of the 1700s, as the U.S. started to shift from an agricultural to an industrial economy. Craft guilds were made of skilled artisans who pushed for better working conditions. The Knights of Labor, formed in 1869, was the first major national labor organization. Its concern was with broad social and economic issues such as child labor, public education, and business monopolies. The American Federation of Labor was formed in 1881, and pressed for better recognition and more power for union members, collective bargaining, and the right to strike to improve wages, hours, and working conditions. The CIO was formed as a collection of industrial unions, and succeeded in organizing unions in mass-production industries. The AFL and CIO merged in 1955, and is an umbrella organization for most American labor unions. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Labor Movement Today Chapter 1 Chapter 11 The Labor Movement Today 1 Collective bargaining Local Unions Worker relations / member services Community / Political activities National and International Unions The basic structure of the modern labor movement consists of local unions, national and international unions, and the AFL-CIO. A local union is a branch of a national union that represents workers at a specific plant or geographic area. Its three main functions are collective bargaining, worker relations and membership services, and community and political activities. AFL-CIO Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Union Membership Trends, 1955-2003 Chapter 1 Chapter 11 Union Membership Trends, 1955-2003 1 There are approximately 60,000 local unions and 80 national and international unions. Unions, in general, have experienced a steady decline in membership. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Learning Goal 2 2 What role did federal law play in the development of the union-management relationship? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Legal Environment of Unions Chapter 1 Chapter 11 The Legal Environment of Unions 2 Norris-LaGuardia Act of 1932 The Anti-Injunction Act Banned the use of injunctions to prevent strikes Made yellow-dog contracts unenforceable Union-management relations have not always been peaceful and businesslike. The respectful relationship that now exists has resulted, in part, from laws passed from the 1930s to the late 1950s. Before 1932, a company faced with striking workers could get the court to order them back to work. Employers also used the courts to enforce yellow-dog contracts, in which employees agree not to join a labor union as a condition of being hired. The Norris-LaGuardia Act of 1932 largely ended the use of injunctions, and made yellow-dog contracts unenforceable. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Legal Environment of Unions Chapter 1 Chapter 11 The Legal Environment of Unions 2 Wagner Act of 1935 National Labor Relations Act Encouraged the formation of unions and the use of collective bargaining Provided a means for resolving disputes over union representation Protected workers from unfair labor practices Employers were still not obliged to bargain with unions. The unions urged Congress to pass a law that would require employers to deal with them, and Congress responded with the National Labor Relations act, commonly known as the Wagner Act. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Legal Environment of Unions Chapter 1 Chapter 11 The Legal Environment of Unions 2 Taft-Hartley Act of 1947 Labor-Management Relations Act Defined unfair union practices Outlined the rules for dealing with strikes of major economic impact Broadened employer options for dealing with unions Further defined the rights of employees as individuals In 1947, Congress amended the Wagner Act with the Taft-Hartley Act because many employers saw the Wagner Act as too pro-labor. The act also banned excessive or discriminatory dues and fees and made it unlawful for picketing union members to block nonstriking employees from entering the business to go to work. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Legal Environment of Unions Chapter 1 Chapter 11 The Legal Environment of Unions 2 A method of attempting to settle labor disputes using a specialist as a “go-between.” Mediation A method of attempting to settle labor disputes using a specialist as a mediator. Conciliation Congress also created the Federal Mediation and Conciliation Service as part of the Taft-Hartley act. This service helps unions and employers negotiate labor agreements, through use of conciliation and mediation. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Legal Environment of Unions Chapter 1 Chapter 11 The Legal Environment of Unions 2 Landrum-Griffin Act of 1959 Labor-Management Reporting and Disclosure Act Deals with the internal affairs of labor unions Bill of rights for members Rules for electing union officials Safeguards to help make unions financially sound Requires that unions file annual financial reports The Landrum-Griffin Act deals mostly with the internal affairs of labor unions. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

What is the union organizing process? Learning Goal 3 3 What is the union organizing process? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Benefits Stressed by Unions Chapter 1 Chapter 11 Benefits Stressed by Unions 3 Almost Always Stressed Often Stressed Seldom Stressed Grievance procedures Job security Improved benefits Higher pay More influence in decision making Better working conditions Lobbying opportunities Higher-quality products Technical training More job satisfaction Increased production During the union organizing phase, the union and the employer engage in a preelection campaign to try to convince workers to vote in their favor. Exhibit 11.2, as summarized here and on the next slide, lists benefits usually stressed by the union and common arguments employers make to convince employees a union is unnecessary. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Employer Arguments Against Unionization 3 An employee can come directly to management You will pay monthly dues of $15 to $30 Merit-based decisions are better than seniority-based Pay and benefits are similar to the industry’s leading firms We meet all health and safety standards of OSHA Performance and productivity are more important than union representation in determining pay raises Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Union Organizing Process Chapter 1 Chapter 11 Union Organizing Process 3 A nonunion employer becomes unionized through an organizing campaign. Once the union gets signed authorization cards from at least 30 percent of the employers, it can ask the National Labor Relations Board for a union certification election. This election, by secret ballot, determines whether the workers want to be represented by the union. The election is conducted by the NLRB. If a majority vote in favor, the employer has to bargain with the union over wages, hours, and other terms of employment. The complete organizing process is summarized in Exhibit 11.3 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Learning Goal 4 4 What is the collective bargaining process, and what key issues are included in the union contract? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Process of Negotiating Labor Agreements Chapter 1 Chapter 11 Process of Negotiating Labor Agreements 4 A union contract is created through collective bargaining. Bargaining begins with union and management negotiators setting a bargaining agenda, a list of contract issues that will be discussed. The bargaining takes place through face-to-face meetings and the exchange of written proposals during several rounds of bargaining. The resulting contract must then be approved by top management and by union members. The collective bargaining process is shown here. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Issues covered in the Union Contract Chapter 1 Chapter 11 The Union Contract 4 Union Security Management Rights Wages Job Benefits Job Security Issues covered in the Union Contract The union contract is a legally binding agreement that covers such issues as are shown on this slide, and discussed on the following slides. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Union Security 4 Closed Shop Union Shop Agency Shop Open Shop Chapter 1 Chapter 11 Union Security 4 Closed Shop Only union members can be hired Union Shop Nonunion workers can be hired, but they must join the union Agency Shop Does not require workers to join the union From the union’s perspective, the most secure arrangement is the closed shop, a company where only union members can be hired. Today, the most common form of union security is the union shop, where nonunion workers must join the union within 30 or 60 days. An agency shop does not require union membership, but must pay the union a fee to cover its expenses in representing them. Under the Taft-Hartley act, any state can make all forms of union security illegal by enacting right-to-work laws. In this arrangement, common known as an open shop, workers don’t have to join the union or pay dues or fees. Open Shop Workers can work at a unionized company without having to join the union Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Chapter 1 Chapter 11 Benefits 4 Higher wages for overtime, holiday work, and less desirable shifts Insurance programs Payment for certain nontime work Pensions Income-maintenance plans In addition to requests for wage increases, unions usually want better fringe benefits. In some industries, such as steel and auto manufacturing, fringe benefits are 40 percent of the total cost of compensation. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

How do employees file a grievance? Learning Goal 5 5 How do employees file a grievance? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Grievance and Arbitration Chapter 1 Chapter 11 Grievance and Arbitration 5 Grievance A formal complaint, filed by the employee or by the union, charging that management has violated the contract Arbitration The process of settling a labor-management dispute by having a third party make a decision, which is binding on both the union and the employer The union’s main way of policing the contract is the grievance procedure. The typical grievance procedure is illustrated in Exhibit 11.7. If top management and the union president can’t resolve the grievance, it goes to arbitration. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

The Grievance Procedure Chapter 1 Chapter 11 The Grievance Procedure 5 Step 1: oral presentation Step 3: higher-level grievance meeting Step 4: arbitration Step 2: grievance in writing Employee with grievance Summarized from Exhibit 11.7 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Learning Goal 6 6 What economic tactics do unions and employers use in labor-management conflicts? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Managing Labor-Management Conflict Chapter 1 Chapter 11 Managing Labor-Management Conflict 6 Union Strategies Employer Strategies Strike Boycott Picketing Corporate campaign Lockout Strike replacements Mutual-aid pact Shift production Both sides to labor-management conflicts have powerful tools for exerting economic pressure. Unions can fight with strikes, product boycotts, picketing, and corporate campaigns. Employers can fight with lockouts, strike replacements, and mutual-aid pacts. Furthermore, they can shift production to nonunion plants or out of the country. A wildcat strike is a strike by a group of union members without the approval of the national union while the contract is still in effect. This action is often illegal because it violates the contract. A selective strike strategy is a union strategy of conducting a strike at a critical plant that supplies parts to other plants. A sickout occurs when a group of employees claim they can’t work because of illness. The corporate campaign is a fairly new union strategy, in which a union disrupts a corporation’s relations with its shareholders or investors as a means of attacking the company. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Learning Goal 7 7 What trends will affect American workers and labor-management relations? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Trends in Labor-Management Relations Chapter 1 Chapter 11 Trends in Labor-Management Relations 7 Effort to reverse the decline in union memberships Shortages of skilled labor in the unionized crafts Layoffs in several highly-unionized industry sectors Corporate restructures, technological changes, and the shifting of manufacturing offshore reduced manufacturing employment, and therefore, union membership dropped. However, service-sector workers increased their memberships in the last decade. A trend we may see in the 21st century is the developing shortage of skilled workers in all of the construction crafts. Concession bargaining involves the union giving contract gains for the workers back to management. A firm in severe financial difficulty, like United Airlines was in 2003, proposes to its unions that contract-scheduled wage increases must be eliminated to generate cost savings necessary for ongoing operation. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved