Human Resource Managment

Unit 8 Assignment: Case Study Analysis

Read the “Business Week CASE: A Comeback for the UAW” at the end of Chapter 14. Answer the three questions at the end of the case in a 2-page paper. Follow the project guidelines below.

Requirements:

Click on the Resources icon below to use the Case Study Template (also available in Doc Sharing).
Complete a 2 page paper (not including the title page and reference page).
Answer each question thoroughly.
Demonstrate your understanding of the information presented in the weekly reading assignments by defining terms, explaining concepts, and providing detailed examples to illustrate your points.
Include at least two references from your reading assignments, or other academic sources, to reinforce and support your own thoughts, ideas, and statements.

PA
R

T
F

IV
E

Meeting Other HR Goals

Chapter

Collective Bargaining and Labor Relations

Chapter

Managing Human Resources Globally

Chapter

Creating and Maintaining High-Performance Organizations

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chapter fourteen

Collective Bargaining and
Labor Relations

What Do I Need to Know?
After reading this chapter, you
should be able to:

LO1 Define unions and labor relations and
their role in organizations.

LO2 Identify the labor relations goals of
management, labor unions, and
society.

LO3 Summarize laws and regulations that
affect labor relations.

LO4 Describe the union organizing
process.

LO5 Explain how management and unions
negotiate contracts.

LO6 Summarize the practice of contract
administration.

LO7 Describe more cooperative
approaches to labor-management
relations.

Introduction
The costs of health care are skyrocketing. As we dis-
cussed in the previous chapter, individuals, insur-
ance companies, and government agencies that pick
up the tab are crying out that mounting increases
must be slowed. So health care providers are look-
ing for ways to improve efficiency. At many hospi-
tals, cost control involves asking fewer workers to
do more. Nurses and other workers are expected to
handle more patients, perform more tasks, and work
more hours. Often, health professionals are troubled
by these changes. They worry that they will burn
out and that patient care will suffer. Or they worry
that their employer will control costs by laying them
off or refusing pay increases. These changes and
pressures have led some health care workers to join
labor unions. Recently, union membership among
professional and technical health care workers, such
as registered nurses and laboratory technologists, in-
creased by more than 10 percent. 1
The presence of unions at a hospital changes
some aspects of human resource management by di-
recting more attention to the interests of employees
as a group. In general, employees and employers
share the same interests. They both benefit when
the organization is strong and growing, providing
employees with jobs and employers with profits. But
although the interests of employers and employees
overlap, they obviously are not identical. In the case
of pay, workers benefit from higher pay, but high pay
cuts into the organization’s profits, unless pay in-
creases are associated with higher productivity or
better customer service. Workers may negotiate dif-
ferences with their employers individually, or they
may form unions to negotiate on their behalf. This
chapter explores human resource activities in orga-
nizations where employees belong to unions or
where employees are seeking to organize unions.
We begin by formally defining unions and labor
relations, and then describe the scope and impact
of union activity. We next summarize government
laws and regulations affecting unions and labor re-
lations. The following three sections detail types

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CHAPTER 14 Collective Bargaining and Labor Relations 401

of activities involving unions: union organizing, contract negotiation, and contract
administration. Finally, we identify ways in which unions and management are
working together in arrangements that are more cooperative than the traditional
labor-management relationship.

Role of Unions and Labor Relations
In the United States today, most workers act as individuals to select jobs that are ac-
ceptable to them and to negotiate pay, benefits, flexible hours, and other work condi-
tions. Especially when there is stiff competition for labor and employees have
hard-to-replace skills, this arrangement produces satisfactory results for most employ-
ees. At times, however, workers have believed their needs and interests do not receive
enough consideration from management. One response by workers is to act collec-
tively by forming and joining labor unions , organizations formed for the purpose of
representing their members’ interests and resolving conflicts with employers.
Unions have a role because some degree of conflict is inevitable between workers
and management. 2 As we commented earlier, for example, managers can increase
profits by lowering workers’ pay, but workers benefit in the short term if lower profits
result because their pay is higher. Still, this type of conflict is more complex than a
simple trade-off, such as wages versus profits. Rising profits can help employees by
driving up profit sharing or other benefits, and falling profits can result in layoffs and
a lack of investment. Although employers can use programs like profit sharing to help
align employee interests with their own, some remaining divergence of interests is in-
evitable. Labor unions represent worker interests and the collective bargaining pro-
cess provides a way to manage the conflict. In other words, through systems for hearing
complaints and negotiating labor contracts, unions and managers resolve conflicts be-
tween employers and employees.
As unionization of workers became more common, universities developed training
in how to manage union-management interactions. 3 This specialty, called labor rela-
tions , emphasizes skills that managers and union leaders can use to foster effective
labor-management cooperation, minimize costly forms of conflict (such as strikes),
and seek win-win solutions to disagreements. Labor relations involves three levels of
decisions: 4

1. Labor relations strategy —For management, the decision involves whether the orga-
nization will work with unions or develop (or maintain) nonunion operations. This
decision is influenced by outside forces such as public opinion and competition. For
unions, the decision involves whether to fight changes in how unions relate to the
organization or accept new kinds of labor-management relationships.

2. Negotiating contracts —As we will describe later in the chapter, contract negotia-
tions in a union setting involve decisions about pay structure, job security, work
rules, workplace safety, and many other issues. These decisions affect workers’ and
the employer’s situation for the term of the contract.

3. Administering contracts —These decisions involve day-to-day activities in which union
members and the organization’s managers may have disagreements. Issues include
complaints of work rules being violated or workers being treated unfairly in particular
situations. A formal grievance procedure is typically used to resolve these issues.

Later sections in this chapter describe how managers and unions carry out the ac-
tivities connected with these levels of decisions, as well as the goals and legal con-
straints affecting these activities.

LO1 Define unions
and labor relations
and their role in
organizations.

unions
Organizations formed
for the purpose of
representing their
members’ interests
in dealing with
employers.

labor relations
Field that emphasizes
skills managers and
union leaders can use
to minimize costly
forms of conflict (such
as strikes) and seek
win-win solutions to
disagreements.

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402 PART 5 Meeting Other HR Goals

National and International Unions

Most union members belong to a national or international union. Figure 14.1 shows
the membership of the 10 largest national unions in the United States. Half of these
have memberships of over a million workers.

These unions may be either craft or industrial unions. The members of a craft
union all have a particular skill or occupation. Examples include the International
Brotherhood of Electrical Workers for electricians and the United Brotherhood of
Carpenters and Joiners of America for carpenters. Craft unions are often responsible
for training their members through apprenticeships and for supplying craft workers
to employers. For example, an employer would send requests for carpenters to the
union hiring hall, which would decide which carpenters to send out. In this way,
craft workers may work for many employers over time but have a constant link to the
union. A craft union’s bargaining power depends greatly on its control over the
supply of its workers.

In contrast, industrial unions consist of members who are linked by their work in a
particular industry. Examples include the United Steelworkers of America and the
Communication Workers of America. Typically, an industrial union represents many
different occupations. Membership in the union is the result of working for a particular
employer in the industry. Changing employers is less common than it is among craft
workers, and employees who change employers remain members of the same union only
if they happen to move to other employers covered by that union. Another difference is

craft union
Labor union whose
members all have a
particular skill or
occupation.

industrial union
Labor union whose
members are linked
by their work in a
particular industry.

Figure 14.1

10 Largest Unions in the
United States

0.0

Service Employees International
Union

National Education Association

United Food and Commercial
Workers International Union

International Brotherhood of
Teamsters

International Brotherhood of Electrical
Workers

American Federation of State, County
and Municipal Employees

Laborers’ International Union of
North America

United Automobile, Aerospace
and Agricultural Implement

Workers of America
International Association of Machinists

and Aerospace Workers

American Federation of Teachers

0.5 1.0 1.5 2.0 2.5 3.0
Number of Members (Millions)

SOURCE: C. D. Gifford, Directory of U.S. Labor Organizations (Washington, DC: Bureau of National Affairs, 2006).

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CHAPTER 14 Collective Bargaining and Labor Relations 403

that whereas a craft union may restrict the number of skilled
craftsmen—say, carpenters—to maintain higher wages, industrial
unions try to organize as many employees in as wide a range of
skills as possible.
Most national unions are affiliated with the American
Federation of Labor and Congress of Industrial Organizations
(AFL-CIO) . The AFL-CIO is not a labor union but an asso-
ciation that seeks to advance the shared interests of its member
unions at the national level, much as the Chamber of
Commerce and the National Association of Manufacturers do
for their member employers. Approximately 55 national and
international unions are affiliated with the AFL-CIO. An im-
portant responsibility of the AFL-CIO is to represent labor’s
interests in public policy issues such as labor law, economic
policy, and occupational safety and health. The organization
also provides information and analysis that member unions
can use in their activities. In 2005, several unions broke away
from the AFL-CIO to form an alliance called Change to Win.
This group includes seven unions representing a membership of 5 to 6 million
workers. Since the split, both groups have increased national unions’ focus on
strategy and organizing. 5

Local Unions

Most national unions consist of multiple local units. Even when a national union
plays the most critical role in negotiating the terms of a collective bargaining con-
tract, negotiation occurs at the local level for work rules and other issues that are lo-
cally determined. In addition, administration of the contract largely takes place at the
local union level. As a result, most day-to-day interaction between labor and manage-
ment involves the local union.
Membership in the local union depends on the type of union. For an industrial
union, the local may correspond to a single large facility or to a number of small facili-
ties. In a craft union, the local may cover a city or a region.
Typically, the local union elects officers, such as president, vice president, and
treasurer. The officers may be responsible for contract negotiation, or the local
may form a bargaining committee for that purpose. When the union is engaged in
bargaining, the national union provides help, including background data about
other settlements, technical advice, and the leadership of a representative from the
national office.
Individual members participate in local unions in various ways. At meetings of
the local union, they elect officials and vote on resolutions to strike. Most of work-
ers’ contact is with the union steward , an employee elected by union members to
represent them in ensuring that the terms of the contract are enforced. The union
steward helps to investigate complaints and represents employees to supervisors
and other managers when employees file grievances alleging contract violations. 6
When the union deals with several employers, as in the case of a craft union, a
business representative performs some of the same functions as a union steward.
Because of union stewards’ and business representatives’ close involvement with
employees, it is to management’s advantage to cultivate positive working relation-
ships with them.

American Federation
of Labor and Congress
of Industrial
Organizations
(AFL-CIO)
An association that
seeks to advance the
shared interests of its
member unions at the
national level.

union steward
An employee elected
by union members
to represent them in
ensuring that the terms
of the labor contract
are enforced.

Andrew Stern is president of the Service Employees
International Union, the fastest-growing union in
North America. He led the SEIU and six other unions
in breaking away from the AFL-CIO to form Change
to Win, a federation that emphasizes representation
of the many workers in the high-growth service
sector of the economy.

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404 PART 5 Meeting Other HR Goals

Trends in Union Membership
Union membership in the United States peaked in the 1950s, reaching over one-
third of employees. Since then, the share of employees who belong to unions has
fallen. It now stands at 12.1 percent overall and 7.5 percent of private-sector employ-
ment. 7 As Figure 14.2 indicates, union membership has fallen steadily since the 1980s.
Until a few years ago, the decline mostly affected the private sector, but in 2007, a
slight uptick in union membership for health care, construction, and education held
overall union membership steady.
The decline in union membership has been attributed to several factors: 8

• Change in the structure of the economy —Much recent job growth has occurred among
women and youth in the service sector of the economy, while union strength has
traditionally been among urban blue-collar workers, especially middle-aged work-
ers. Women are less likely than men to belong to unions, and services industries
such as finance, insurance, and real estate have lower union representation than
manufacturing. Also, much business growth has been in the South, where workers
are less likely to join unions. 9

• Management efforts to control costs —On average, unionized workers receive higher
pay than their nonunionized counterparts, and the pressure is greater because of in-
ternational competition. In the past, union membership across an industry such as

Figure 14.2

Union Membership Density among U.S. Wage and Salary Workers, 1973–2007

40%

0
73 74 75 76

Year

77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

P
e
rc

e
n
ta

g
e
U

n
io

n
M

e
m

b
e
rs

h
ip

Public

Total

Private

Private Public Total
a Percentage of total, private-sector, and public-sector wage and salary workers who are union members. Beginning in 1977, workers belonging to “an
employee association similar to a union” are included as members.

SOURCE: Data for 1973–2001 from B. T. Hirsch and D. A. MacPherson, Union Membership and Earnings Data Book 2001 (Washington, DC: Bureau
of National Affairs, 2002), using data from U.S. Current Population Surveys. Data for 2002 through 2007 from Bureau of Labor Statistics, “Union
Affiliation Data from the Current Population Survey,” http://data.bls.gov, accessed March 10, 2008.

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CHAPTER 14 Collective Bargaining and Labor Relations 405

automobiles or steel resulted in similar wages and work requirements for all com-
petitors. Today, U.S. producers must compete with companies that have entirely
different pay scales and work rules, often placing the U.S. companies at a
disadvantage.

• Human resource practices —Competition for scarce human resources can lead em-
ployers to offer much of what employees traditionally sought through union
membership.

• Government regulation —Stricter regulation in such areas as workplace safety and
equal employment opportunity leaves fewer areas in which unions can show an ad-
vantage over what employers must already offer.

As Figure 14.3 indicates, the percentage of U.S. workers who belong to unions is
lower than in many other countries. More dramatic is the difference in “coverage”—
the percentage of employees whose terms and conditions of employment are governed
by a union contract, whether or not the employees are technically union members. In
Western Europe, it is common to have coverage rates of 80 to 90 percent, so the influ-
ence of labor unions far outstrips what membership levels would imply. 10 Also, em-
ployees in Western Europe tend to have a larger formal role in decision making than
in the United States. This role, including worker representatives on boards of direc-
tors, is often mandated by the government. But as markets become more and more
global, pressure to cut labor costs and increase productivity is likely to be stronger in
every country. Unless unions can help companies improve productivity or organize
new production facilities opened in lower-wage countries, union influence may de-
cline in countries where it is now strong.

0% 10% 20% 30% 50% 70% 90%40% 60% 80% 100%

United States
Membership
Coverage

Canada

Japan

Korea

France

United Kingdom

SOURCE: J. Visser, “Union Membership Statistics in 24 Countries,” Monthly Labor Review, January 2006, pp. 38–49.

Figure 14.3

Union Membership Rates
and Coverage in Selected
Countries

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Although union members are a smaller share of the U.S. workforce, they are a sig-
nificant part of many industries’ labor markets. Along with strength in numbers, large
unions have strength in dollars. Union retirement funds, taken together, are huge.
Unions try to use their investment decisions in ways that influence businesses. The
“ Did You Know? ” box presents some statistics on union members.

Unions in Government

Unlike union membership for workers in businesses, union membership among gov-
ernment workers has remained strong. Union membership in the public sector grew
during the 1960s and 1970s and has remained steady ever since. Over one-third of
government employees are union members, and a larger share are covered by collec-
tive bargaining agreements. One reason for this strength is that government regula-
tions and laws support the right of government workers to organize. In 1962 Executive
Order 10988 established collective bargaining rights for federal employees. By the end
of the 1960s, most states had passed similar laws.
An interesting aspect of union growth among government workers is that much of
it has occurred in the service industry and among white-collar employees—groups
that have been viewed as difficult to organize. The American Federation of State,
County and Municipal Employees (AFSCME) has about 1.4 million members. Among

406

Did You Know?
Many Union Workers Hold Government

Jobs

Compared with the overall U.S.
workforce, union workers are
more likely to have a government
job, to be 35 or older, and to work

full-time. Union workers also earn
more on average than nonunion
workers.

Source: “Profile of Union Workers,” Business-
Week, Images, December 3, 2007, http://images.
businessweek.com, citing data from Bureau of
Labor Statistics.

Total Workforce
Union Members

20 30 40 500 10

In
Government

Jobs

48.0%

16.1%

24.5%

35.1%

7.1%

14.0%

$16.99

$11.76

Workers
Under 35

Average
Hourly
Wage

In Part-Time
Jobs*

*Hourly Wage Workers

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CHAPTER 14 Collective Bargaining and Labor Relations 407

them are nurses, park rangers, school librarians, corrections officers, and many work-
ers in clerical and other white-collar occupations. 11
Labor relations with government workers is different in some respects, such as re-
garding the right to strike. Strikes are illegal for federal workers and for state workers
in most states. At the local level, all states prohibit strikes by police (Hawaii being a
partial exception) and firefighters (Idaho being the exception). Teachers and state
employees are somewhat more likely to have the right to strike, depending on the
state. Legal or not, strikes by government workers do occur. Of the 39 strikes involv-
ing 1,000 or more workers in 2000, eight involved workers in state and local
government.

Impact of Unions on Company Performance

Organizations are concerned about whether union organizing and bargaining will hurt
their performance, in particular, unions’ impact on productivity, profits, and stock
performance. Researchers have studied the general relationship between unionization
and these performance measures. Through skillful labor relations, organizations can
positively influence outcomes.
There has been much debate regarding the effects of unions on productivity. 12 One
view is that unions decrease productivity because of work rules and limits on work-
loads set by union contracts and production lost to such union actions as strikes and
work slowdowns. At the same time, unions can have positive effects on productivity. 13
They can reduce turnover by giving employees a route for resolving problems. 14
Unions emphasize pay systems based on seniority, which remove incentives for em-
ployees to compete rather than cooperate. The introduction of a union also may force
an employer to improve its management practices and pay greater attention to em-
ployee ideas.
Although there is evidence that unions have both positive and negative effects on
productivity, most studies have found that union workers are more productive than
nonunion workers. Still, questions remain. Are highly productive workers more likely
to form unions, or does a union make workers more productive? The answer is un-
clear. In theory, if unions caused greater productivity, we would expect union mem-
bership to be rising, not falling as it has been. 15
Even if unions do raise productivity, a company’s profits and
stock performance may still suffer if unions raise wage and
benefits costs by more than the productivity gain. On average,
union members receive higher wages and more generous benefits
than nonunion workers, and evidence shows that unions have a
large negative effect on profits. Also, union coverage tends to
decline faster in companies with a lower return to shareholders. 16
In summary, companies wishing to become more competitive
must continually monitor their labor relations strategy.
The studies tend to look at the average effects of unions, not at
individual companies or innovative labor relations. Some organi-
zations excel at labor relations, and some have worked with unions
to meet business needs. For example, even though U.S. manufac-
turers have outsourced or automated many jobs, a study by the
National Association of Manufacturers found that 8 out of 10 had
at least a moderate shortage of production workers, machinists,
and craft workers. Many of these companies traditionally

Harley-Davidson and the International Association
of Machinists and Aerospace Workers have
cooperated to produce good results. In general,
though, companies wishing to become more
competitive need to continually monitor their labor
relations strategies.

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408 PART 5 Meeting Other HR Goals

depended on unions to recruit and train new workers through apprenticeship programs.
Some still do. At U.S. Steel, the United Steelworkers of America trains apprentices in
trades including metalworking. 17

Goals of Management, Labor Unions, and Society
Resolving conflicts in a positive way is usually easiest when the parties involved un-
derstand each other’s goals. Although individual cases vary, we can draw some general
conclusions about the goals of labor unions and management. Society, too, has goals
for labor and business, given form in the laws regulating labor relations.

Management Goals

Management goals are to increase the organization’s profits. Managers tend to prefer
options that lower costs and raise output. When deciding whether to discourage em-
ployees from forming a union, a concern is that a union will create higher costs in
wages and benefits, as well as raise the risk of work stoppages. Managers may also fear
that a union will make managers and workers into adversaries or limit management’s
discretion in making business and employment decisions.
When an employer has recognized a union, management’s goals continue to em-
phasize restraining costs and improving output. Managers continue to prefer to keep
the organization’s operations flexible, so they can adjust activities to meet competi-
tive challenges and customer demands. Therefore, in their labor relations managers
prefer to limit increases in wages and benefits and to retain as much control as they
can over work rules and schedules.

Labor Union Goals

In general, labor unions have the goals of obtaining pay and working conditions that
satisfy their members and of giving members a voice in decisions that affect them.
Traditionally, they obtain these goals by gaining power in numbers. The more workers
who belong to a union, the greater the union’s power. More members translates into
greater ability to halt or disrupt production. Larger unions also have greater financial
resources for continuing a strike; the union can help to make up for the wages the
workers lose during a strike. The threat of a long strike—stated or implied—can make
an employer more willing to meet the union’s demands.
As we noted earlier, union membership is indeed linked to better compensation. In
2007, private-sector unionized workers received, on average, wages 30 percent higher
than nonunion workers. 18 Union membership has an even greater effect on benefits
packages. Total compensation (pay plus benefits) was 43 percent higher for union
members in 2007. Taking into account other influences, such as the greater ease with
which unions are able to organize relatively highly paid, productive workers, research-
ers estimate that the total “union effect” on wages is about 10 to 15 percent. 19 In other
words a union worker would earn $1.10 to $1.15 for every dollar earned by a non-
union worker.
Unions typically want to influence the way pay and promotions are determined.
Unlike management, which tries to consider employees as individuals so that pay and
promotion decisions relate to performance differences, unions try to build group soli-
darity and avoid possible arbitrary treatment of employees. To do so, unions focus on
equal pay for equal work. They try to have any pay differences based on seniority, on

LO2 Identify the labor
relations goals of
management, labor
unions, and society.

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CHAPTER 14 Collective Bargaining and Labor Relations 409

the grounds that this measure is more objective than performance evaluations. As a
result, where workers are represented by a union, it is common for all employees in a
particular job classification to be paid at the same rate.
The survival and security of a union depend on its ability to ensure a regular flow
of new members and member dues to support the services it provides. Therefore,
unions typically place high priority on negotiating two types of contract provisions
with an employer that are critical to a union’s security and viability: checkoff provi-
sions and provisions relating to union membership or contribution.
Under a checkoff provision , the employer, on behalf of the union, automatically
deducts union dues from employees’ paychecks. Security provisions related to union
membership are closed shop, union shop, agency shop, and maintenance of membership.
The strongest union security arrangement is a closed shop , under which a person
must be a union member before being hired. Under the National Labor Relations
Act, discussed later in this chapter, closed shops are illegal. A legal membership ar-
rangement that supports the goals of labor unions is the union shop , an arrangement
that requires an employee to join the union within a certain time (30 days) after be-
ginning employment. A similar alternative is the agency shop , which requires the
payment of union dues but not union membership. Maintenance of membership rules
do not require union membership but do require that employees who join the union
remain members for a certain period of time, such as the length of the contract. As we
will discuss later in the chapter, some states forbid union shops, agency shops, and
maintenance of membership.
All these provisions are ways to address unions’ concern about “free riders”—em-
ployees who benefit from union activities without belonging to a union. By law, all
members of a bargaining unit, whether union members or not, must be represented by
the union. If the union must offer services to all bargaining unit members but some of
them are not dues-paying union members, the union may not have enough financial
resources to operate successfully.

Societal Goals

The activities of unions and management take place within the context of society,
with society’s values driving the laws and regulations that affect labor relations. As
long ago as the late 1800s and early 1900s, industrial relations scholars saw unions as
a way to make up for individual employees’ limited bargaining power. 20 At that time,
clashes between workers and management could be violent, and many people hoped
that unions would replace the violence with negotiation. Since then, observers have
expressed concern that unions in certain industries have become too strong, achiev-
ing their goals at the expense of employers’ ability to compete or meet other objec-
tives. But even Senator Orrin Hatch, described by BusinessWeek as “labor’s archrival
on Capitol Hill,” has spoken of a need for unions:

There are always going to be people who take advantage of workers. Unions even that out, to
their credit. We need them to level the field between labor and management. If you didn’t have
unions, it would be very difficult for even enlightened employers not to take advantage of work-
ers on wages and working conditions, because of [competition from less-enlightened] rivals. I’m
among the first to say I believe in unions. 21

Senator Hatch’s statement implies that society’s goal for unions is to ensure that
workers have a voice in how they are treated by their employers. As we will see in the
next section, this view has produced a set of laws and regulations intended to give
workers the right to join unions if they so wish.

checkoff provision
Contract provision un-
der which the employer,
on behalf of the union,
automatically deducts
union dues from em-
ployees’ paychecks.

closed shop
Union security arrange-
ment under which a
person must be a union
member before being
hired; illegal for those
covered by the National
Labor Relations Act.

union shop
Union security
arrangement that
requires employees to
join the union within a
certain amount of time
(30 days) after begin-
ning employment.

agency shop
Union security
arrangement that
requires the payment
of union dues but not
union membership.

maintenance of
membership
Union security rules
not requiring union
membership but
requiring that employ-
ees who join the union
remain members for a
certain period of time.

checkoff provision
Contract provision un-
der which the employer,
on behalf of the union,
automatically deducts
union dues from em-
ployees’ paychecks.
closed shop
Union security arrange-
ment under which a
person must be a union
member before being
hired; illegal for those
covered by the National
Labor Relations Act.
union shop
Union security
arrangement that
requires employees to
join the union within a
certain amount of time
(30 days) after begin-
ning employment.
agency shop
Union security
arrangement that
requires the payment
of union dues but not
union membership.
maintenance of
membership
Union security rules
not requiring union
membership but
requiring that employ-
ees who join the union
remain members for a
certain period of time.

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410 PART 5 Meeting Other HR Goals

Laws and Regulations Affecting

Labor Relations
The laws and regulations pertaining to labor relations affect unions’ size and bargain-
ing power, so they significantly affect the degree to which unions, management, and
society achieve their varied goals. These laws and regulations set limits on union
structure and administration and the ways in which unions and management
interact.

National Labor Relations Act (NLRA)

Perhaps the most dramatic example of labor laws’ influence is the 1935 passage of the
Wagner Act (also known as the National Labor Relations Act , or NLRA), which
actively supported collective bargaining. After Congress passed the NLRA, union
membership in the United States nearly tripled, from 3 million in 1933 to 8.8 million
(19.2 percent of employment) in 1939. 22
Before the 1930s, the U.S. legal system was generally hostile to unions. The courts
tended to view unions as coercive organizations that hindered free trade. Unions’
focus on collective voice and collective action (such as strikes and boycotts) did not
fit well with the U.S. emphasis on capitalism, individualism, freedom of contract,
and property rights. 23 Then the Great Depression of the 1930s shifted public atti-
tudes toward business and the free-enterprise system. Unemployment rates as high as
25 percent and a steep fall in production between 1929 and 1933 focused attention
on employee rights and the shortcomings of the economic system of the time. The
nation was in crisis, and President Franklin Roosevelt responded dramatically with
the New Deal. On the labor front, the 1935 NLRA ushered in an era of public policy
for labor unions, enshrining collective bargaining as the preferred way to settle labor-
management disputes.
Section 7 of the NLRA sets out the rights of employees, including the “right to
self-organization, to form, join, or assist labor organizations, to bargain collectively
through representatives of their own choosing, and to engage in other concerted ac-
tivities for the purpose of collective bargaining.” 24 Employees also have the right to
refrain from these activities, unless union membership is a condition of employment.
The following activities are among those protected under the NLRA:

• Union organizing.
• Joining a union, whether recognized by the employer or not.
• Going out on strike to secure better working conditions.
• Refraining from activity on behalf of the union.

Most employees in the private sector are covered by the NLRA. However, workers
employed under the following conditions are not covered: 25

• Employed as a supervisor.
• Employed by a parent or spouse.
• Employed as an independent contractor.
• Employed in the domestic service of any person or family in a home.
• Employed as agricultural laborers.
• Employed by an employer subject to the Railway Labor Act.
• Employed by a federal, state, or local government.
• Employed by any other person who is not an employer as defined in the NLRA.

LO3 Summarize laws
and regulations that
affect labor relations.

National Labor
Relations Act (NLRA)
Federal law that
supports collective
bargaining and sets
out the rights of
employees to form
unions.

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State or local laws may provide additional coverage. For example, California’s 1975
Agricultural Labor Relations Act covers agricultural workers in that state.
In Section 8(a), the NLRA prohibits certain activities by employers as unfair labor
practices. In general, employers may not interfere with, restrain, or coerce employees
in exercising their rights to join or assist a labor organization or to refrain from such
activities. Employers may not dominate or interfere with the formation or activities of
a labor union. They may not discriminate in any aspect of employment that attempts
to encourage or discourage union activity, nor may they discriminate against employ-
ees for providing testimony related to enforcement of the NLRA. Finally, employers
may not refuse to bargain collectively with a labor organization that has standing un-
der the act. For more guidance in complying with the NLRA, see the examples in the
“ HR How To ” box.
When employers or unions violate the NLRA, remedies typically include ordering
that unfair labor practices stop. Employers may be required to rehire workers, with or
without back pay. The NLRA is not a criminal law, and violators may not be assigned
punitive damages (fines to punish rather than merely make up for the harm done).

411

AVOIDING UNFAIR LABOR PRACTICES

HR How To

The National Labor Relations Act
prohibits employers and unions
from engaging in unfair labor
practices. For employers, this
means they must not interfere
with employees’ decisions about
whether to join a union and en-
gage in union-related activities.
Employers may not discriminate
against employees for being in-
volved in union activities or testi-
fying in court about actions under
the NLRA. Here are some specific
examples of unfair labor practices
that employers must avoid:

• Threatening employees with
loss of their jobs or benefits if
they join or vote for a union.

• Threatening to close down a
plant if it is organized by a
union.

• Questioning employees about
their union membership or ac-
tivities in a way that restrains
or coerces them.

• Spying or pretending to spy
on union meetings.

• Granting wage increases timed
to discourage employees from
forming or joining a union.

• Taking an active part in orga-
nizing a union or committee to
represent employees.

• Providing preferential treat-
ment or aid to one of several
unions trying to organize
employees.

• Discharging employees for
urging other employees to join
a union.

• Refusing to hire applicants
because they are union
members.

• Refusing to reinstate workers
when job openings occur, on
the grounds that the workers
participated in a lawful strike.

• Ending operations at one
facility and opening the same
operations at another facility
with new employees because
employees at the first joined a
union.

• Demoting or firing employees
for filing an unfair labor prac-
tice complaint or testifying at
an NLRB meeting.

• Refusing to meet with employ-
ees’ representatives because
the employees are on strike.

• Refusing to supply the em-
ployees’ representative with
cost and other data concerning
a group insurance plan cover-
ing employees.

• Announcing a wage increase
without consulting the em-
ployees’ representative.

• Failing to bargain about the
effects of a decision to close
one of the employer’s
facilities.

Source: National Labor Relations Board, Basic
Guide to the Law and Procedures under the Na-
tional Labor Relations Act (Washington, DC: U.S.
Government Printing Office, 1997); and National
Labor Relations Board, “The National Labor
Relations Board and You: Unfair Labor Practices,”
www.nlrb.gov, accessed March 17, 2008.

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412 PART 5 Meeting Other HR Goals

Laws Amending the NLRA

Originally, the NLRA did not list any unfair labor practices by unions. In later amend-
ments to the NLRA—the Taft-Hartley Act of 1947 and the Landrum-Griffin Act of
1959—Congress established some restrictions on union practices deemed unfair to
employers and union members.
Under the Taft-Hartley Act, unions may not restrain employers through actions
such as the following: 26

• Mass picketing in such numbers that nonstriking employees physically cannot
enter the workplace.

• Engaging in violent acts in connection with a strike.
• Threatening employees with physical injury or job loss if they do not support union

activities.
• During contract negotiations, insisting on illegal provisions, provisions that the

employer may hire only workers who are union members or “satisfactory” to the
union, or working conditions to be determined by a group to which the employer
does not belong.

• Terminating an existing contract and striking for a new one without notifying the
employer, the Federal Mediation and Conciliation Service, and the state media-
tion service (where one exists).

The Taft-Hartley Act also allows the states to pass so-called right-to-work laws ,
which make union shops, maintenance of membership, and agency shops illegal. The
idea behind such laws is that requiring union membership or the payment of union
dues restricts the employees’ right to freedom of association. In other words, employ-
ees should be free to choose whether they join a union or other group. Of course,
unions have a different point of view. The union perspective is that unions provide
services to all members of a bargaining unit (such as all of a company’s workers), and
all members who receive the benefits of a union should pay union dues. Figure 14.4
indicates which states currently have right-to-work laws.
The Landrum-Griffin Act regulates unions’ actions with regard to their members,
including financial disclosure and the conduct of elections. This law establishes and

right-to-work laws
State laws that make
union shops, mainte-
nance of membership,
and agency shops
illegal.

SOURCE: National Right to Work Legal Defense Foundation, “Right to Work States,”
www.nrtw.org, accessed March 17, 2008.

Figure 14.4

States with Right-to-
Work Laws

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protects rights of union members. These include the right to nominate candidates for
union office, participate in union meetings and secret-ballot elections, and examine
unions’ financial records.

National Labor Relations Board (NLRB)

Enforcement of the NLRA rests with the National Labor Relations Board (NLRB) .
This federal government agency consists of a five-member board, the general counsel,
and 52 regional and other field offices. Because the NLRB is a federal agency, its en-
forcement actions are limited to companies that have an impact on interstate com-
merce, but as a practical matter, this extends to all but purely local businesses. For
federal government workers under the Civil Service Reform Act of 1978, Title VII,
the Federal Labor Relations Authority has a role similar to that of the NLRB. Many
states have similar agencies to administer their laws governing state and local govern-
ment workers.
The NLRB has two major functions: to conduct and certify representation elec-
tions and to prevent unfair labor practices. It does not initiate either of these actions
but responds to requests for action.
The HR Oops! box shows how managers’ comments and actions can considered by
the NLRB as illegally interfering with union organizing.

Representation Elections
The NLRB is responsible for ensuring that the organizing process follows certain steps,
described in the next section. Depending on the response to organizing efforts, the
NLRB conducts elections. When a majority of workers vote in favor of a union, the

National Labor
Relations Board
(NLRB)
Federal government
agency that enforces
the NLRA by conduct-
ing and certifying
representation
elections and
investigating unfair
labor practices.

413

HR Oops!
Thou Shalt Not Threaten

A meatpacking company and a
steel fabrication company re-
cently ran afoul of the NLRB’s
requirement that employers may
not interfere with union organiz-
ing by threatening or coercing
employees. According to court
documents, the problem at the
meatpacker started when a man-
ager saw a newspaper photo of
the employee at a union rally. The
manager commented to him that
his presence at the rally meant he
would not get a promotion. Al-
though the manager later ex-
plained that he had intended his
remark as a joke, the federal
court failed to see the humor and
required the company to post a

notice saying it would not inter-
fere with or coerce employees
who are exercising their rights to
organize.
At the steel company, the only
two members of a facility’s main-
tenance department got involved
in a unionization effort. The shop
foreman asked one of the mainte-
nance workers if he thought the
employees were trying to orga-
nize. When the employee said
yes, the foreman said he would
make the employee a manager so
he couldn’t be involved. He re-
quired the employee to write up
disciplinary reports on two of his
co-workers—a supervisory task.
Later that day, the maintenance

worker was fired. Again, the fed-
eral court held that these actions
amounted to unlawful coercion.

Sources: Venita Jenkins, “Ruling Forbids Use of
Threats,” Fayetteville (N.C.) Observer, March 5,
2008, downloaded from General Reference Center
Gold, http://find.galegroup.com; and Mary Kathryn
Zachary, “Labor Law: Union Organizing Efforts
Fraught with Legal Pitfalls,” Supervision, April 2007,
http://find.galegroup.com.

Questions
1. Do you agree that a comment

meant as a joke can feel intim-
idating to an employee?

2. How can HRM professionals
help supervisors avoid
missteps such as the ones
described here?

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414 PART 5 Meeting Other HR Goals

NLRB certifies it as the exclusive representative of a group of employees. The NLRB
also conducts elections to decertify unions, following the same process as for represen-
tation elections.
The NLRB is also responsible for determining the appropriate bargaining unit and
the employees who are eligible to participate in organizing activities. As we stated
earlier, bargaining units may not include certain types of employees, such as agricul-
tural laborers, independent contractors, supervisors, and managers. Beyond this, the
NLRB attempts to group together employees who have a community of interest in
their wages, hours, and working conditions. A unit may cover employees in one facil-
ity or multiple facilities within a single employer, or the unit may cover multiple em-
ployers. In general, employees on the payroll just before the ordering of an election
are eligible to vote, although this rule is modified in some cases, for example, when
employment in the industry is irregular. Most employees who are on strike and who
have been replaced by other employees are eligible to vote in an election (such as a
decertification election) that occurs within 12 months of the onset of the strike.

Prevention of Unfair Labor Practices
The handling of complaints regarding unfair labor practices begins when someone
files a charge. The deadline for filing a charge is six months after the alleged unfair
practice. All parties must be served with a copy of the charge. (Registered mail is rec-
ommended.) The charge is investigated by a regional office. If, after investigating,
the NLRB finds the charge has merit and issues a complaint, two actions are possible.
The NLRB may defer to a grievance procedure agreed on by the employer and the
union; grievances are discussed later in this chapter. Or a hearing may be held before
an administrative law judge. The judge makes a recommendation, which either party
may appeal.
The NLRB has the authority to issue cease-and-desist orders to halt unfair labor
practices. It also can order the employer to reinstate workers, with or without back
pay. The NLRB can set aside the results of an election if it believes either the union
or the employer has created “an atmosphere of confusion or fear of reprisals.” 27 If an
employer or union refuses to comply with an NLRB order, the board has the authority
to petition the U.S. Court of Appeals. The court may enforce the order, recommend
it to the NLRB for modification, change the order itself, or set it aside altogether.

Union Organizing
Unions begin their involvement with an organization’s employees by conducting an
organizing campaign. To meet its objectives, a union needs to convince a majority of
workers that they should receive better pay or other employment conditions and that
the union will help them do so. The employer’s objectives will depend on its strategy—
whether it seeks to work with a union or convince employees that they are better off
without union representation.

The Process of Organizing

The organizing process begins with authorization cards, such as the example shown in
Figure 14.5 . Union representatives make contact with employees, present their mes-
sage about the union, and invite them to sign an authorization card. For the organiza-
tion process to continue, at least 30 percent of the employees must sign an
authorization card.

LO4 Describe the
union organizing
process.

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CHAPTER 14 Collective Bargaining and Labor Relations 415

If over half the employees sign an authorization card, the union may request that
the employer voluntarily recognize the union. If the employer agrees, the NLRB certi-
fies the union as the exclusive representative of employees. If the employer refuses, or
if only 30 to 50 percent of employees signed cards, the NLRB conducts a secret-ballot
election. The arrangements are made in one of two ways:

1. For a consent election, the employer and the union seeking representation arrive at
an agreement stating the time and place of the election, the choices included on
the ballot, and a way to determine who is eligible to vote.

2. For a stipulation election, the parties cannot agree on all of these terms, so the NLRB
dictates the time and place, ballot choices, and method of determining eligibility.

On the ballot, workers vote for or against union representation, and they may also
have a choice from among more than one union. If the union (or one of the unions
on the ballot) wins a majority of votes, the NLRB certifies the union. If the ballot in-
cludes more than one union and neither gains a simple majority, the NLRB holds a
runoff election.
As noted earlier, if the NLRB finds the election was not conducted fairly, it may set
aside the results and call for a new election. Conduct that may lead to an election
result’s being set aside includes the following examples: 28

• Threats of loss of jobs or benefits by an employer or union to influence votes or or-
ganizing activities.

• A grant of benefits or a promise of benefits as a means of influencing votes or orga-
nizing activities.

• Campaign speeches by management or union representatives to assembled groups
of employees on company time less than 24 hours before an election.

• The actual use or threat of physical force or violence to influence votes or organiz-
ing activities.

I, the undersigned employee of

Name (print) Date
Home Address Phone

City State Zip
Job Title
Sign Here

Dept. Shift

(Company)

Note: This authorization to be SIGNED and DATED in employee’s own handwriting.
YOUR RIGHT TO SIGN THIS CARD IS PROTECTED BY FEDERAL LAW.

RECEIVED BY (Initial)

YES, I WANT THE IAM

authorize the International Association of Machinists and Aerospace
Workers (IAM) to act as my collective bargaining agent for wages, hours
and working conditions. I agree that this card may be used either to
support a demand for recognition or an NLRB election, at the discretion
of the union.

SOURCE: From J. A. Fossum, Labor Relations: Development, Structure and Process, 2002.
Copyright © 2002 The McGraw-Hill Companies, Inc. Reprinted with permission.

Figure 14.5

Authorization Card

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416 PART 5 Meeting Other HR Goals

After certification, there are limits on future elections. Once the NLRB has certi-
fied a union as the exclusive representative of a group of employees, it will not permit
additional elections for one year. Also, after the union and employer have finished
negotiating a contract, an election cannot be held for the time of the contract period
or for three years, whichever comes first. The parties to the contract may agree not to
hold an election for longer than three years, but an outside party (another union)
cannot be barred for more than three years.

Management Strategies

Sometimes an employer will recognize a union after a majority of employees have
signed authorization cards. More often, there is a hotly contested election campaign.
During the campaign, unions try to persuade employees that their wages, benefits,
treatment by employers, and chances to influence workplace decisions are too poor or
small and that the union will be able to obtain improvements in these areas. Manage-
ment typically responds with its own messages providing an opposite point of view.
Management messages say the organization has provided a valuable package of wages
and benefits and has treated employees well. Management also argues that the union
will not be able to keep its promises but will instead create costs for employees, such
as union dues and lost income during strikes.
Employers use a variety of methods to oppose unions in organizing campaigns. 29
Their efforts range from hiring consultants to distributing leaflets and letters to pre-
senting the company’s viewpoint at meetings of employees. Some management ef-
forts go beyond what the law permits, especially in the eyes of union organizers.
Why would employers break the law? One explanation is that the consequences,
such as reinstating workers with back pay, are small compared to the benefits. 30 If
coercing workers away from joining a union saves the company the higher wages,
benefits, and other costs of a unionized workforce, management may feel an incen-
tive to accept costs like back pay.
Supervisors have the most direct contact with employees. Thus, as Table 14.1 indi-
cates, it is critical that they establish good relationships with employees even before
there is any attempt at union organizing. Supervisors also must know what not to do if
a union drive takes place. They should be trained in the legal principles discussed ear-
lier in this chapter.

Union Strategies

The traditional union organizing strategy has been for organizers to call or visit
employees at home, when possible, to talk about issues like pay and job security.
Local unions of the Teamsters have contacted dock workers at UPS Freight termi-
nals in 11 states and invited them to sign authorization cards. When a majority of
the workers at a terminal sign cards, UPS agrees to bargain with the Teamsters at
that location. 31
Beyond encouraging workers to sign authorization cards and vote for the union, or-
ganizers use some creative alternatives to traditional organizing activities. They some-
times offer workers associate union membership , which is not linked to an employee’s
workplace and does not provide representation in collective bargaining. Rather, an
associate member receives other services, such as discounts on health and life insur-
ance or credit cards. 32 In return for these benefits, the union receives membership

associate union
membership
Alternative form of
union membership
in which members
receive discounts
on insurance and
credit cards rather
than representation in
collective bargaining.

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CHAPTER 14 Collective Bargaining and Labor Relations 417

dues and a broader base of support for its activities. Associate membership may be
attractive to employees who wish to join a union but cannot because their workplace
is not organized by a union.
Another alternative to traditional organizing is to conduct corporate campaigns —
bringing public, financial, or political pressure on employers during union organiza-
tion and contract negotiation. 33 The Amalgamated Clothing and Textile Workers
Union (ACTWU) corporate campaign against textile maker J. P. Stevens during the
late 1970s was one of the first successful corporate campaigns and served as a model
for those that followed. The ACTWU organized a boycott of J. P. Stevens products
and threatened to withdraw its pension funds from financial institutions where J. P.
Stevens officers acted as directors. The company eventually agreed to a contract with
ACTWU. 34
Another winning union organizing strategy is to negotiate employer neutrality and
card-check provisions into a contract. Under a neutrality provision, the employer
pledges not to oppose organizing attempts elsewhere in the company. A card-check
provision is an agreement that if a certain percentage—by law, at least a majority—of
employees sign an authorization card, the employer will recognize their union repre-
sentation. An impartial outside agency, such as the American Arbitration Associa-
tion, counts the cards. Evidence suggests that this strategy can be very effective for
unions. 35

corporate campaigns
Bringing public,
financial, or political
pressure on employers
during union organiza-
tion and contract
negotiation.

Table 14.1

What Supervisors Should
and Should Not Do to
Discourage Unions

WHAT TO DO:

Report any direct or indirect signs of union activity to a core management group.
Deal with employees by carefully stating the company’s response to pro-union arguments.
These responses should be coordinated by the company to maintain consistency and to
avoid threats or promises. Take away union issues by following effective management
practices all the time:
Deliver recognition and appreciation.
Solve employee problems.
Protect employees from harassment or humiliation.
Provide business-related information.
Be consistent in treatment of different employees.
Accommodate special circumstances where appropriate.
Ensure due process in performance management.
Treat all employees with dignity and respect.

WHAT TO AVOID:

Threatening employees with harsher terms and conditions of employment or employment
loss if they engage in union activity.
Interrogating employees about pro-union or anti-union sentiments that they or others may
have or reviewing union authorization cards or pro-union petitions.
Promising employees that they will receive favorable terms or conditions of employment if
they forgo union activity.
Spying on employees known to be, or suspected of being, engaged in pro-union activities.

Source: From J. A. Segal, “Unshackle Your Supervisors to Stay Union Free,” HR Magazine, June 1998. Copyright © 1998 by
Society for Human Resource Management. Reproduced with permission of Society for Human Resource Management via
Copyright Clearance Center.

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418 PART 5 Meeting Other HR Goals

Decertifying a Union

The Taft-Hartley Act expanded union members’ right to be represented by leaders of their
own choosing to include the right to vote out an existing union. This action is called
decertifying the union. Decertification follows the same process as a representation elec-
tion. An election to decertify a union may not take place when a contract is in effect.
Research indicates that when decertification elections are held, unions typically do not
fare well. 36 During the mid-1990s, unions lost about 7 out of 10 decertification elections.
In another blow to unions, the number of decertification elections has increased from
about 5 percent of all elections in the 1950s and 1960s to about 14 percent in recent years.

Collective Bargaining
When the NLRB has certified a union, that union represents employees during con-
tract negotiations. In collective bargaining , a union negotiates on behalf of its mem-
bers with management representatives to arrive at a contract defining conditions of
employment for the term of the contract and to resolve differences in the way they in-
terpret the contract. Typical contracts include provisions for pay, benefits, work rules,
and resolution of workers’ grievances. Table 14.2 shows typical provisions negotiated
in collective bargaining contracts.
Collective bargaining differs from one situation to another in terms of bargaining struc-
ture —that is, the range of employees and employers covered by the contract. A contract
may involve a narrow group of employees in a craft union or a broad group in an indus-
trial union. Contracts may cover one or several facilities of the same employer, or the bar-
gaining structure may involve several employers. Many more interests must be considered
in collective bargaining for an industrial union with a bargaining structure that includes
several employers than in collective bargaining for a craft union in a single facility.
The majority of contract negotiations take place between unions and employers that
have been through the process before. In the typical situation, management has come to
accept the union as an organization it must work with. The situation can be very differ-
ent when a union has just been certified and is negotiating its first contract. In over one-
fourth of negotiations for a first contract, the parties are unable to reach an agreement. 37

LO5 Explain how man-
agement and unions
negotiate contracts.

collective bargaining
Negotiation between
union representatives
and management rep-
resentatives to arrive
at a contract defining
conditions of employ-
ment for the term of
the contract and to ad-
minister that contract.

Table 14.2

Typical Provisions in
Collective Bargaining
Contracts

Establishment
and
administration
of the
agreement

Bargaining unit and plant supplements
Contract duration and reopening and renegotiation provisions
Union security and the checkoff
Special bargaining committees
Grievance procedures
Arbitration and mediation
Strikes and lockouts
Contract enforcement

Functions,
rights, and
responsibilities

Management rights clauses
Plant removal
Subcontracting
Union activities on company time and premises
Union–management cooperation
Regulation of technological change
Advance notice and consultation

(Continued)

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CHAPTER 14 Collective Bargaining and Labor Relations 419

Source: T. A. Kochan, Collective Bargaining and Industrial Relations (Homewood, IL: Richard D. Irwin, 1980), p. 29. Original data
from J. W. Bloch, “Union Contracts—A New Series of Studies,” Monthly Labor Review 87 (October 1964), pp. 1184–85.

Job or income
security

Hiring and transfer arrangements
Employment and income guarantees
Reporting and call-in pay
Supplemental unemployment benefit plans
Regulation of overtime, shift work, etc.
Reduction of hours to forestall layoffs
Layoff procedures; seniority; recall
Worksharing in lieu of layoff
Attrition arrangements
Promotion practices
Training and retraining
Relocation allowances
Severance pay and layoff benefit plans
Special funds and study committees

Plant operations Work and shop rules
Rest periods and other in-plant time allowances
Safety and health
Plant committees
Hours of work and premium pay practices
Shift operations
Hazardous work
Discipline and discharge

Paid and unpaid
leave

Vacations and holidays
Sick leave
Funeral and personal leave
Military leave and jury duty

Employee
benefit plans

Health and insurance plans
Pension plans
Profit-sharing, stock purchase, and thrift plans
Bonus plans

Special groups Apprentices and learners
Workers with disabilities and older workers
Women
Veterans
Union representatives
Nondiscrimination clauses

Table 14.2

Concluded
Wage
determination
and
administration

General provisions
Rate structure and wage differentials
Allowances
Incentive systems and production bonus plans
Production standards and time studies
Job classification and job evaluation
Individual wage adjustments
General wage adjustments during the contract period

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420 PART 5 Meeting Other HR Goals

Bargaining over New Contracts

Clearly, the outcome of contract negotiations can have important consequences for la-
bor costs, productivity, and the organization’s ability to compete. Therefore, unions
and management need to prepare carefully for collective bargaining. Preparation in-
cludes establishing objectives for the contract, reviewing the old contract, gathering
data (such as compensation paid by competitors and the company’s ability to survive a
strike), predicting the likely demands to be made, and establishing the cost of meeting
the demands. 38 This preparation can help negotiators develop a plan for how to negoti-
ate. Different situations and goals call for different approaches to bargaining, such as
the following alternatives proposed by Richard Walton and Robert McKersie: 39

• Distributive bargaining divides an economic “pie” between two sides—for example,
a wage increase means giving the union a larger share of the pie.

• Integrative bargaining looks for win-win solutions, or outcomes in which both sides
benefit. If the organization’s labor costs hurt its performance, integrative bargaining
might seek to avoid layoffs in exchange for work rules that improve productivity.

• Attitudinal structuring focuses on establishing a relationship of trust. The parties are
concerned about ensuring that the other side will keep its part of any bargain.

• Intraorganizational bargaining addresses conflicts within union or management
groups or objectives, such as between new employees and workers with high senior-
ity or between cost control and reduction of turnover.

The collective bargaining process may involve any combination of these alternatives.
Negotiations go through various stages. 40 In the earliest stages, many more people
are often present than in later stages. On the union side, this may give all the various
internal interest groups a chance to participate and voice their goals. Their input helps

Patrick Dempsey and
many other actors and
actresses demonstrated in
the Writer’s Guild strike
which suspended
television and film
production for months.

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CHAPTER 14 Collective Bargaining and Labor Relations 421

communicate to management what will satisfy union members and may help the union
achieve greater solidarity. At this stage, union negotiators often present a long list of
proposals, partly to satisfy members and partly to introduce enough issues that they will
have flexibility later in the process. Management may or may not present proposals of
its own. Sometimes management prefers to react to the union’s proposals.
During the middle stages of the process, each side must make a series of decisions,
even though the outcome is uncertain. How important is each issue to the other side?
How likely is it that disagreement on particular issues will result in a strike? When
and to what extent should one side signal its willingness to compromise?
In the final stage of negotiations, pressure for an agreement increases. Public negotia-
tions may be only part of the process. Negotiators from each side may hold one-on-one
meetings or small-group meetings where they escape some public relations pressures. A
neutral third party may act as a go-between or facilitator. In some cases, bargaining breaks
down as the two sides find they cannot reach a mutually acceptable agreement. The out-
come depends partly on the relative bargaining power of each party. That power, in turn,
depends on each party’s ability to withstand a strike, which costs the workers their pay
during the strike and costs the employer lost production and possibly lost customers.

When Bargaining Breaks Down

The intended outcome of collective bargaining is a contract with terms acceptable to
both parties. If one or both sides determine that negotiation alone will not produce
such an agreement, bargaining breaks down. To bring this impasse to an end, the union
may strike, or the parties may bring in outside help to resolve their differences.

Strikes
A strike is a collective decision of the union members not to work until certain demands
or conditions are met. The union members vote, and if the majority favors a strike, they
all go on strike at that time or when union leaders believe the time is right. Strikes are
typically accompanied by picketing —the union stations members near the worksite with
signs indicating the union is on strike. During the strike, the union members do not re-
ceive pay from their employer, but the union may be able to make up for some of the lost
pay. The employer loses production unless it can hire replacement workers, and even
then, productivity may be reduced. Often, other unions support striking workers by refus-
ing to cross their picket line—for example, refusing to make deliveries to a company dur-
ing a strike. When the Writers Guild of America went on strike, production of television
shows came to a standstill. The strike also affected the Golden Globe Awards, as actors
and other union employees in the media industry refused to cross their picket lines.
The vast majority of labor-management negotiations do not result in a strike, and
the number of strikes has plunged since the 1950s, as shown in Figure 14.6 . The per-
centage of total working time lost to strikes in 2004 was a mere 0.01 percent—that is,
one-hundredth of 1 percent of working time. A primary reason strikes are rare is that a
strike is seldom in the best interests of either party. Not only do workers lose wages and
employers lose production, but the negative experience of a strike can make future in-
teractions more difficult. During the Writers Guild of America strike, screenwriters
won some compensation for their work that is distributed over the Internet. But while
television shows switched to reruns, viewers were finding new, often free content on-
line. That could ultimately damage network TV’s future. 41 When strikes do occur, the
conduct of each party during the strike can do lasting harm to labor-management
relations. Violence by either side or threats of job loss or actual job loss because jobs
went to replacement workers can make future relations difficult. Finally, many

strike
A collective decision
by union members not
to work until certain
demands or conditions
are met.

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422 PART 5 Meeting Other HR Goals

government employees do not have a right to strike, and their percentage among
unionized employees overall has risen in recent decades, as we discussed earlier.

Alternatives to Strikes
Because strikes are so costly and risky, unions and employers generally prefer other
methods for resolving conflicts. Three common alternatives rely on a neutral third
party, usually provided by the Federal Mediation and Conciliation Service (FMCS):

• Mediation is the least formal and most widely used of these procedures. A mediator
hears the views of both sides and facilitates the negotiation process. The mediator
has no formal authority to dictate a resolution, so a strike remains a possibility. In
a survey studying negotiations between unions and large businesses, mediation was
used in almost 4 out of 10 negotiation efforts. 42

• A fact finder , most often used for negotiations with governmental bodies, typically
reports on the reasons for the dispute, the views and arguments of both sides, and
(sometimes) a recommended settlement, which the parties may decline. The pub-
lic nature of these recommendations may pressure the parties to settle. Even if they
do not accept the fact finder’s recommended settlement, the fact finder may iden-
tify or frame issues in a way that makes agreement easier. Sometimes merely devot-
ing time to this process gives the parties a chance to reach an agreement. However,
there is no guarantee that a strike will be avoided.

• Under arbitration , the most formal type of outside intervention, an arbitrator or ar-
bitration board determines a settlement that is binding, meaning the parties have to

mediation
Conflict resolution
procedure in which a
mediator hears the
views of both sides
and facilitates the
negotiation process
but has no formal
authority to dictate
a resolution.

fact finder
Third party to collec-
tive bargaining who
reports the reasons for
a dispute, the views
and arguments of both
sides, and possibly a
recommended settle-
ment, which the
parties may decline.

500

400

300

200

100

0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007

Year

N
u
m

b
e
r

o
f

S
tr

ik
e
s

Figure 14.6

Strikes Involving 1,000 or More Workers

Note: Because strikes are most likely in large bargaining units, these numbers represent most lost working time in the United States.

SOURCE: Bureau of Labor Statistics, “Work Stoppage Data,” http://data.bls.gov.

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CHAPTER 14 Collective Bargaining and Labor Relations 423

accept it. In conventional arbitration, the arbitrator fashions the solution. In “final-
offer arbitration,” the arbitrator must choose either management’s or the union’s final
offer for each issue or for the contract as a whole. “Rights arbitration” focuses on en-
forcing or interpreting contract terms. Arbitration in the writing of contracts or set-
ting of contract terms has traditionally been reserved for special circumstances such
as negotiations between unions and government agencies, where strikes may be ille-
gal or especially costly. Occasionally, arbitration has been used with businesses in sit-
uations where strikes have been extremely damaging. However, the general opinion
is that union and management representatives are in the best position to resolve con-
flicts themselves, because they are closer to the situation than an arbitrator can be.

Contract Administration
Although the process of negotiating a labor agreement (including the occasional
strike) receives the most publicity, other union-management activities occur far more
often. Bargaining over a new contract typically occurs only about every three years,
but administering labor contracts goes on day after day, year after year. The two activ-
ities are linked, of course. Vague or inconsistent language in the contract can make
administering the contract more difficult. The difficulties can create conflict that
spills over into the next round of negotiations. 43 Events during negotiations—strikes,
the use of replacement workers, or violence by either side—also can lead to difficul-
ties in working successfully under a conflict.
Contract administration includes carrying out the terms of the agreement and re-
solving conflicts over interpretation or violation of the agreement. Under a labor
contract, the process for resolving these conflicts is called a grievance procedure .

LO6 Summarize the
practice of contract
administration.

grievance procedure
The process for resolv-
ing union-management
conflicts over interpre-
tation or violation of a
collective bargaining
agreement.

Strikes such as this one
between security officers
and management of
several office buildings in
San Francisco are costly.
Both unions and
employees generally
prefer to resolve contract
conflicts in other ways.

arbitration
Conflict resolution pro-
cedure in which an
arbitrator or arbitration
board determines a
binding settlement.

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424 PART 5 Meeting Other HR Goals

This procedure has a key influence on success in contract administration. A grievance
procedure may be started by an employee or discharged employee who believes the
employer violated the contract or by a union representative on behalf of a group of
workers or union representatives.
For grievances launched by an employee, a typical grievance procedure follows the
steps shown in Figure 14.7 . The grievance may be settled during any of the four steps.
In the first step, the employee talks to his or her supervisor about the problem. If this
conversation is unsatisfactory, the employee may involve the union steward in further
discussion. The union steward and employee decide whether the problem has been
resolved and, if not, whether it is a contract violation. If the problem was not resolved
and does seem to be a contract violation, the union moves to step 2, putting the griev-
ance in writing and submitting it to a line manager. The union steward meets with a
management representative to try to resolve the problem. Management consults with
the industrial relations staff and puts its response in writing too at this second stage. If
step 2 fails to resolve the problem, the union appeals the grievance to top line man-
agement and representatives of the industrial relations staff. The union may involve
more local or international officers in discussions at this stage (see step 3 in Fig-
ure 14.7 ). The decision resulting from the appeal is put into writing. If the grievance

Figure 14.7

Steps in an Employee-
Initiated Grievance
Procedure

SOURCE: Adapted from T. A. Kochan, Collective Bargaining and Industrial Relations (Homewood,
IL: Richard D. Irwin, 1980), p. 395; J. A. Fossum, Labor Relations (Boston: McGraw-Hill/Irwin,
2002), pp. 448–52.

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CHAPTER 14 Collective Bargaining and Labor Relations 425

is still not resolved, the union may decide (step 4) to appeal the grievance to an arbi-
trator. If the grievance involves a discharged employee, the process may begin at step
2 or 3, however, and the time limits between steps may be shorter. Grievances filed by
the union on behalf of a group may begin at step 1 or step 2.
The majority of grievances are settled during the earlier steps of the process. This re-
duces delays and avoids the costs of arbitration. If a grievance does reach arbitration, the
arbitrator makes the final ruling in the matter. Based on a series of Supreme Court deci-
sions, courts generally avoid reviewing arbitrators’ decisions and focus only on whether
the grievance involved an issue that is subject to arbitration under the contract. 44
From the point of view of employees, the grievance procedure is an important
means of getting fair treatment in the workplace. Its success depends on whether it
provides for all the kinds of problems that are likely to arise (such as how to handle a
business slowdown), whether employees feel they can file a grievance without being
punished for it, and whether employees believe their union representatives will follow
through. Under the National Labor Relations Act, the union has a duty of fair repre-
sentation, which means the union must give equal representation to all members of
the bargaining unit, whether or not they actually belong to the union. Too many
grievances may indicate a problem—for example, the union members or line supervi-
sors do not understand how to uphold the contract or have no desire to do so. At the
same time, a very small number of grievances may also signal a problem. A very low
grievance rate may suggest a fear of filing a grievance, a belief that the system does not
work, or a belief that employees are poorly represented by their union.
What types of issues most commonly reach arbitration? According to data from the
Federal Mediation and Conciliation Service, the largest share of arbitration cases in-
volved discharge or other disciplinary actions. 45 Other issues that often reach arbitra-
tion involve wages, benefits, and the use of seniority in promotions, layoffs, work
schedules, and other decisions. In reaching decisions about these and other issues,
arbitrators consider a number of criteria, such as employees’ understanding of the
rules, the employer’s consistency and fairness, and the employees’ chance to present a
defense and appeal a decision. 46

Labor-Management Cooperation
The traditional understanding of union-management relations is that the two parties
are adversaries, meaning each side is competing to win at the expense of the other.
There have always been exceptions to this approach. And since at least the 1980s,
there seems to be wider acceptance of the view that greater cooperation can increase
employee commitment and motivation while making the workplace more flexible. 47
Also, evidence suggests that employees who worked under traditional labor relations
systems and then under the new, more cooperative systems prefer the cooperative
approach. 48
Cooperation between labor and management may feature employee involvement
in decision making, self-managing employee teams, labor-management problem-
solving teams, broadly defined jobs, and sharing of financial gains and business infor-
mation with employees. 49 The search for a win-win solution requires that unions and
their members understand the limits on what an employer can afford in a competitive
marketplace. The nearby “ Best Practices ” box describes how Onex Corporation has
met this challenge in operating Spirit AeroSystems.
Without the union’s support, efforts at employee empowerment are less likely to
survive and less likely to be effective if they do survive. 50 Unions have often resisted

LO7 Describe more
cooperative
approaches to
labor-management
relations.

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employee empowerment programs, precisely because the programs try to change work-
place relations and the role that unions play. Union leaders have feared that such pro-
grams will weaken unions’ role as independent representatives of employee interests.
Indeed, the National Labor Relations Act makes it an unfair labor practice for an em-
ployer to “dominate or interfere with the formation or administration of any labor or-
ganization or contribute financial or other support to it.”
This legal requirement gave rise to concern that self-managing work teams set up
by an employer could violate the NLRA. Several widely publicized rulings by the Na-
tional Labor Relations Board in the mid-1990s found that worker-management com-
mittees were illegal when they were dominated by management and dealt with issues
such as wages, grievances, and working conditions. 51 A team might violate national
labor law when the following conditions exist: 52

• The team addresses issues affecting nonteam employees.
• The team’s issues involve matters such as wages, grievances, hours of work, and

working conditions.
• The team deals with supervisors, managers, or executives on some issues.
• The company created the team or decided what it would do and how it would

function.

Although employers must be careful to meet legal requirements, the NLRB has
clearly supported employee involvement in decision making. For example, in a 2001

426

A few years ago, Boeing was ea-
ger to sell off its Wichita factory,
where workers made fuselages
and nose cones for commercial
aircraft. High wages and inflexible
work rules made it difficult for the
company to earn a profit, so Boe-
ing sold to a Canadian investment
firm called Onex Corporation.
The workers, represented by
the International Association of
Machinist & Aerospace Workers,
were nervous. Often, this type of
sale is followed by drastic mea-
sures to rid the workplace of the
union and its higher-paid workers.
In fact, Onex did lay off 800 of the
plant’s 4,000 employees, but it
worked hard to build good rela-
tions with those who remained as
it began to build a new company,
called Spirit AeroSystems.
Management built up Spirit’s
bottom line by slashing overhead

Union Cooperation Helps Spirit AeroSystems Soar

Best Practices

expenses and negotiating price
reductions from suppliers. As
managers made changes, they
were open with the union and ex-
plained that they needed to make
a wage cut and eliminate 15 per-
cent of the jobs. Spirit’s managers
interviewed all the employees and
hired the ones it thought would
be most supportive of its new en-
terprising culture. The union
worked with management to re-
vise work rules and streamline job
classifications. Still, workers were
frightened and angry, as well as
determined to keep their union
representation.
So executives went to the
union’s leaders and asked what
the company would need to do to
win the workers’ support. The
union’s international president,
Thomas Buffenberger, replied, “If
you want to share some of the

pain, then give us a stake in the
enterprise.” And that’s what Spirit
did. The union members would
become owners, receiving 10 per-
cent of the ownership when the
company made its initial public
offering. Employee involvement
teams got to work improving effi-
ciency in every area. A year and a
half later, Spirit went public, and
each union member received
$61,440 in cash and stock. Today,
lower costs, more flexible opera-
tions, and committed employees
are helping Spirit take off.

Sources: Stanley Holmes, “Soaring Where Boeing
Struggled,” BusinessWeek, February 19, 2007,
downloaded from General Reference Center Gold,
http://find.galegroup.com; Sidney Hill Jr., “How to
Survive the ‘Interesting’ Times,” Manufacturing
Business Technology, April 2006, p. 56; and Molly
McMillin, “Two Years after Split, Boeing Wichita
Bounces Back,” Wichita (Kan.) Eagle, September 9,
2007, http://find.galegroup.com.

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CHAPTER 14 Collective Bargaining and Labor Relations 427

ruling, the NLRB found that employee participation committees at Crown Cork &
Seal’s aluminum-can factory did not violate federal labor law. 53 Those committees
make and carry out decisions regarding a wide range of issues, including production,
quality, training, safety, and certain types of discipline. The NLRB determined that
the committees were not employer dominated. Instead of “dealing with” manage-
ment, where employees make proposals for management to accept or reject, the com-
mittees exercise authority within boundaries set by management, similar to the
authority of a first-line supervisor. In spite of the legal concerns, cooperative ap-
proaches to labor relations seem to contribute to an organization’s success. 54
Beyond avoiding any taint of misuse of employee empowerment, employers build
cooperative relationships by the way they treat employees—with respect and fairness,
in the knowledge that attracting talent and minimizing turnover are in the employer’s
best interests. One company that does this is General Cable’s Indianapolis Com-
pounds plant, where teams of employees, represented by the International Brother-
hood of Electrical Workers, continually seek ideas to improve quality and cut
inefficiency. Terry Jones, a team coordinator and union representative, says these
efforts reflect “a shared attitude that’s driving the push for continuous
improvement.” 55

THINKING ETHICALLY

COMPANY REPUTATIONS ON THE LINE

When union-organizing efforts succeed these days, they
often include a tactic known as corporate campaigns or
corporate social responsibility (CSR) campaigns. In these
campaigns, the organizers combine a variety of measures
to raise questions about a company’s reputation.
For example, when the Service Employees Interna-
tional Union (SEIU) set out to organize the cleaners,
servers, and food preparers of Aramark, they put to-
gether a 10-city corporate campaign called the Cam-
paign for Quality Services. One element of the strategy
involved contacting the businesses that purchase food
services from Aramark and promoting the union’s con-
cern that the workers were underpaid.
In Philadelphia, Aramark’s headquarters city, a rally
of 1,000 people gathered to voice the message that
Aramark should improve the way it treats workers and
customers. The union drew attention to the fact that
Philadelphia’s public school district had terminated its
food service contract with Aramark after its cafeterias,
managed by Aramark, had experienced a multimillion-
dollar loss.
In Houston, city council members were invited to
hear testimony from workers about how Aramark mis-
treated them with unfair pay practices and lacked
proper concern for food safety. Also in Houston, an em-
ployee complained that she was expected to report half
an hour before the start of her shift and was often not

allowed to take scheduled breaks. Aramark pointed out
that arriving at work early can be a wise way to avoid
heavy traffic, that rest breaks are not required by law,
and that employees with wage and hour complaints are
encouraged to call the company’s toll-free hotline.

SOURCES: L. M. Sixel, “Union Courting Aramark Workers
Coast to Coast,” Houston Chronicle, November 10, 2007;
L. M. Sixel, “Union Public Relations Tactic May Not Be Help-
ing Cause,” Houston Chronicle , January 31, 2008; “Analysis:
Unions’ ‘CSR’ Efforts Challenge Corporations,” PR Week (US),
June 18, 2007, all downloaded from General Reference
Center Gold, http://find.galegroup.com ; and SEIU, “1,000
Aramark Workers and Their Supporters March on Aramark’s
World Headquarters to Demand Company Do Better for
Customers, Taxpayers, and Workers across the Country,”
news release, November 14, 2007, www.seiu.org .

Questions

1. Does a union have a right to make public state-
ments about whether a company operates in a
socially responsible manner? Why or why not? If a
union engages in such a corporate campaign, what
ethical obligations does it have?

2. In this example, do you think Aramark has an eth-
ics challenge or a public relations challenge?

3. What ethical decisions can a company’s manage-
ment make in order to prepare itself for the
possibility of this type of corporate campaign?

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SUMMARY

LO1 Define unions and labor relations and their role in
organizations.

A union is an organization formed for the pur-
pose of representing its members in resolving con-
flicts with employers. Labor relations is the
management specialty emphasizing skills that man-
agers and union leaders can use to minimize costly
forms of conflict and to seek win-win solutions to
disagreements. Unions—often locals belonging to
national and international organizations—engage
in organizing, collective bargaining, and contract
administration with businesses and government or-
ganizations. In the United States, union member-
ship has been declining among businesses but has
held steady with government employees. Unioniza-
tion is associated with more generous compensation
and higher productivity but lower profits. Unions
may reduce a business’s flexibility and economic
performance.

LO2 Identify the labor relations goals of management,
labor unions, and society.

Management goals are to increase the organiza-
tion’s profits. Managers generally expect that
unions will make these goals harder to achieve. La-
bor unions have the goal of obtaining pay and
working conditions that satisfy their members.
They obtain these results by gaining power in num-
bers. Society’s values have included the hope that
the existence of unions will replace conflict or vio-
lence between workers and employers with fruitful
negotiation.

LO3 Summarize laws and regulations that affect labor
relations.

The National Labor Relations Act supports the
use of collective bargaining and sets out the rights of
employees, including the right to organize, join a
union, and go on strike. The NLRA prohibits unfair
labor practices by employers, including interference
with efforts to form a labor union and discrimina-
tion against employees who engage in union activi-
ties. The Taft-Hartley Act and Landrum-Griffin
Act establish restrictions on union practices that re-
strain workers, such as their preventing employees
from working during a strike or determining who an
employer may hire. The Taft-Hartley Act also per-
mits state right-to-work laws.

LO4 Describe the union organizing process.
Organizing begins when union representatives

contact employees and invite them to sign an au-
thorization card. If over half the employees sign a

card, the union may request that the employer vol-
untarily recognize the union. If the employer refuses
or if 30 to 50 percent of employees signed authoriza-
tion cards, the NLRB conducts a secret-ballot elec-
tion. If the union wins, the NLRB certifies the
union. If the union loses but the NLRB finds that
the election was not conducted fairly, it may set
aside the results and call a new election.

LO5 Explain how management and unions negotiate
contracts.

Negotiations take place between representatives
of the union and the management bargaining unit.
The majority of negotiations involve parties that
have been through the process before. The process
begins with preparation, including research into
the other side’s strengths and demands. In the early
stages of negotiation, many more people are present
than at later stages. The union presents its de-
mands, and management sometimes presents
demands as well. Then the sides evaluate the de-
mands and the likelihood of a strike. In the final
stages, pressure for an agreement increases, and a
neutral third party may be called on to help reach a
resolution. If bargaining breaks down, the impasse
may be broken with a strike, mediation, fact finder,
or arbitration.

LO6 Summarize the practice of contract administration.
Contract administration is a daily activity under

the labor agreement. It includes carrying out the
terms of the agreement and resolving conflicts over
interpretation or violation of the contract. Conflicts
are resolved through a grievance procedure. Typi-
cally, the grievance procedure begins with an em-
ployee talking to his or her supervisor about the
problem and possibly involving the union steward
in the discussion. If this does not resolve the con-
flict, the union files a written grievance with a line
manager, and union and management representa-
tives meet to discuss the problem. If this effort fails,
the union appeals the grievance to top line manage-
ment and the industrial relations staff. If the appeal
fails, the union may appeal the grievance to an
arbitrator.

LO7 Describe more cooperative approaches to labor-
management relations.

In contrast to the traditional view that labor
and management are adversaries, some organiza-
tions and unions work more cooperatively. Cooper-
ation may feature employee involvement in
decision making, self-managing employee teams,

428 PART 5 Meeting Other HR Goals

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labor-management problem-solving teams, broadly
defined jobs, and sharing of financial gains and
business information with employees. If such coop-
eration is tainted by attempts of the employer to
dominate or interfere with labor organizations,

however, such as by dealing with wages, grievances,
or working conditions, it may be illegal under the
NLRA. In spite of such legal concerns, cooperative
labor relations seem to contribute to an organiza-
tion’s success.

KEY TERMS

agency shop, p. 409
American Federation of Labor and

Congress of Industrial Organiza-
tions (AFL-CIO), p. 403

arbitration, p. 423
associate union membership, p. 416
checkoff provision, p. 409
closed shop, p. 409
collective bargaining, p. 418

corporate campaigns, p. 417
craft union, p. 402
fact finder, p. 422
grievance procedure, p. 423
industrial union, p. 402
labor relations, p. 401
maintenance of membership,

p. 409
mediation, p. 422

National Labor Relations Act
(NLRA), p. 410

National Labor Relations Board
(NLRB), p. 413

right-to-work laws, p. 412
strike, p. 421
union shop, p. 409
union steward, p. 403
unions, p. 401

REVIEW AND DISCUSSION QUESTIONS

1. Why do employees join labor unions? Did you ever
belong to a labor union? If you did, do you think
union membership benefited you? If you did not, do
you think a union would have benefited you? Why
or why not?

2. Why do managers at most companies prefer that
unions not represent their employees? Can unions
provide benefits to an employer? Explain.

3. How has union membership in the United States
changed over the past few decades? How does union
membership in the United States compare with
union membership in other countries? How might
these patterns in union membership affect the HR
decisions of an international company?

4. What legal responsibilities do employers have re-
garding unions? What are the legal requirements
affecting unions?

5. Suppose you are the HR manager for a chain of
clothing stores. You learn that union representatives

have been encouraging the stores’ employees to sign
authorization cards. What events can follow in this
process of organizing? Suggest some ways that you
might respond in your role as HR manager.

6. If the parties negotiating a labor contract are unable
to reach an agreement, what actions can resolve the
situation?

7. Why are strikes uncommon? Under what conditions
might management choose to accept a strike?

8. What are the usual steps in a grievance procedure?
What are the advantages of resolving a grievance in
the first step? What skills would a supervisor need so
grievances can be resolved in the first step?

9. The “Best Practices” box near the end of the chapter
gives an example of union-management cooperation
at Spirit AeroSystems. What does the company gain
from this effort? What do workers gain?

10. What are the legal restrictions on labor-management
cooperation?

BUSINESSWEEK CASE

A Comeback for the UAW?
As strikes go, Chrysler’s wasn’t all that impressive. When
Chrysler’s unionized workers nationwide left their assem-
bly line positions in early October 2007 to protest the
holdup in securing a new four-year labor contract, the me-
dia reported “the second major UAW walkout in a

month”—but it seemed more like a long lunch with pick-
eting during dessert. By nightfall the parties had come to
an agreement, and the next morning the newspapers cho-
rused such headlines as “It’s a New Day in Detroit” and
“Detroit’s 3 Finally on Track.”

CHAPTER 14 Collective Bargaining and Labor Relations 429

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430 PART 5 Meeting Other HR Goals

Really? It seems to me we’ve read those headlines a
hundred times in the past 25 years. And each time they’re
wrong.
Many observers seem to believe that the Big Three’s
woes are all tied to union wages and the benefits its blue-
collar workforce receives. But those are not their biggest
problems. While the new agreements with the UAW could
help, cutting labor costs won’t cure what ails Detroit. In
fact, just the opposite could happen.
General Motors has cried loudest about the “unfair”
wage advantage the Japanese automakers enjoy. It has be-
moaned what it sees as a $1,500 to $1,900 price disadvan-
tage (owing to active and retiree health care costs) on
every product it sells. Detroit spends approximately $78
an hour in blue-collar wages and benefits, while Toyota
Motor spends less than $50. But a plant’s productivity
may be more important than actual wages paid there.
Auto executives know real labor costs aren’t framed just
by the per-hour pay but are measured by how many vehi-
cles the fewest workers can build in one shift. And con-
sider Ford’s last minivan attempt. No matter what Ford
spent to develop or build a new minivan, it was DOA at
Ford and Lincoln-Mercury dealerships. When a new ve-
hicle comes to market and fails, the manufacturer loses
hundreds of millions—if not billions—no matter what its
labor costs are.
Much has been made of the fact that Detroit already
spent much more than Japanese automakers in the United
States for health insurance. Yet GM admitted something
important after the union contracts were signed: Fully
56,000 of its remaining 74,500 blue-collar workers will be
eligible for retirement by 2011. So the average age of GM’s
factory workers will be coming down rapidly in the near
future. Theoretically this would lower costs associated
with health care per employee.
At first glance, this looks to be a huge financial win for
General Motors, and in the near term it is. However, it
could all too easily bring the United Auto Workers roar-
ing back to life.

Here’s how it is likely to backfire. First, retired auto-
workers don’t get to vote on new contracts. Second, up to
56,000 of GM’s 74,500 workers might be replaced either
by the time of the next union negotiations or by the 2015
negotiations at the latest. Do you think the new and
younger workers, paid less and getting fewer benefits, will
fight to keep the retirees’ benefits? A younger worker
might well feel cheated and resentful.
This time around, the UAW could sign up the Ameri-
can workforce of foreign car companies for the same rea-
son. The Detroit News reported that a secret internal Toyota
report written by Seiichi Sudo, president of Toyota Engi-
neering & Manufacturing for America, suggests that Toyota
needs to get its labor costs down to whatever the prevailing
wages are in the region where the factories are located. If
Toyota can move more quickly to cut its labor costs be-
cause its $25 hourly wage is high compared to GM’s possi-
ble $14 in some positions, then GM is putting downward
pressure on Japanese wages. So the Japanese could use
GM’s lower wages to put downward pressure on some of
their employees—and those earning Japanese wages might
start to think that union representation isn’t a bad idea.

SOURCE : Excerpted from Ed Wallace, “A Comeback for the UAW?”
BusinessWeek, November 6, 2007, downloaded from General Reference
Center Gold, http://find.galegroup.com .

Question
1. Why does this business writer believe union mem-

bership might become more attractive to workers at
auto companies in the future? Do you agree? Why or
why not?

2. Besides compensation costs, what HRM challenges
do auto companies face? Which of these challenges
involve labor relations?

3. Suppose GM or Toyota (choose one) hired you to ad-
vise the company about its strategy for working with
or fighting the UAW. What issues would you advise
the company to emphasize? What tactics would you
recommend?

CASE: UNION BARISTAS AT STARBUCKS?

Starbucks, ranked near the top of Fortune magazine’s list of
the 100 Best Companies to Work for in 2008, might not
seem like an obvious candidate for a union organizing
campaign. But for several years, the Industrial Workers of
the World (IWW) has been leading a drive to organize
Starbucks workers, and the company has fought back.
Daniel Gross, a volunteer organizer for the IWW, com-
plains that Starbucks is not as socially responsible as man-
agement would like people to think, at least not when it
comes to treatment of employees. For example, only 42
percent of Starbucks employees have company-provided

health insurance. That percentage is even lower than the
47 percent at Wal-Mart, which has been widely criticized
for poor compensation and benefits. Starbucks responds
that over 90 percent of employees have health coverage
from some source, such as a spouse or parent, and that, un-
like most companies, it makes health insurance available
to employees who work just 20 hours a week. In fact,
Starbucks is thought to be the first major U.S. company to
offer health insurance to part-timers. In New York, its typ-
ical wage for baristas—$8.75 per hour—exceeds the indus-
try median of $7.76.

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CHAPTER 14 Collective Bargaining and Labor Relations 431

The IWW typically focuses on “direct action” to build
grassroots support for unionization. Pressure on companies
comes from tactics like Internet campaigns and picketing
in front of stores. According to Gross, the IWW played a
“substantial” role in wage increases and better working
conditions at Starbucks stores. Starbucks spokesperson
Tara Darrow denies that the IWW made a difference.
Darrow says an employee survey found that workers want
to earn more, and those results were the main reason for
the pay increase that followed.
Whether or not employees need a union, Starbucks is
legally required to avoid penalizing employees for the
effort. In that regard, Starbucks has come under fire. The
IWW claimed that in New York the company fired three
employees for supporting the union, gave other union sup-
porters negative performance appraisals, and prohibited
employees from wearing union pins. The National Labor
Relations Board found enough merit to the claims to
schedule hearings. The company denies the charges.
Starbucks’s defense grew more awkward when e-mail
messages among managers became public. For example,
messages indicate that when some managers learned two
pro-union employees had graduated from a labor program
at Cornell University, they gathered the names of other
graduates and checked them against company lists to iden-

tify other employees who had been in the same program.
Although the research itself is not necessarily illegal, it
raises questions about how managers would use what they
had learned.
Company spokesperson Tara Darrow has this response:
“Starbucks respects the free choice of our partners [em-
ployees] and remains committed to complying fully with
all laws governing the right to organize collectively. We
also are confident that our progressive, pro-partner work
environment, coupled with our outstanding compensation
and benefits, make unions unnecessary at Starbucks.”

SOURCE : Moira Herbst, “A Storied Union Takes on Starbucks,” Business-
Week , August 2, 2007, General Reference Center Gold, http://find.galegroup.
com ; and Kris Maher, “Starbucks E-mails Describe Efforts to Stop
Unionization,” Wall Street Journal , January 9, 2008, http://online.wsj.com .

Questions
1. What challenges might the IWW expect to face in

organizing workers at Starbucks?
2. How well do you think Starbucks is defending itself

against the claims of the IWW? What other responses
should it consider using?

3. If the IWW were to succeed in organizing baristas at
Starbucks, what changes would you expect in the way
the company manages those workers?

IT’S A WRAP!

www.mhhe.com/noefund3e is your source for R eviewing, A pplying, and P racticing the concepts you learned about
in Chapter 14.

Practice
• Chapter quiz

Review
• Chapter learning objectives
• Narrated lecture and iPod

content

Application
• Manager’s Hot Seat segment:

“Partnership: The Unbalancing
Act”

• Video case and quiz: “Hollywood
Labor Unions”

• Self-Assessment: Labor relations
• Web exercise: Understanding

unions

NOTES

1. M. Evans, “Health Workers Saying, ‘Union, Yes,’”
Modern Healthcare , February 4, 2008, downloaded
from General Reference Center Gold, http://find.
galegroup.com .

2. J. T. Dunlop, Industrial Relations Systems (New York: Holt,
1958); C. Kerr, “Industrial Conflict and Its Mediation,”
American Journal of Sociology 60 (1954), pp. 230–45.

3. See A. M. Glassman and T. G. Cummings, Industrial
Relations: A Multidimensional View (Glenview, IL:
Scott, Foresman, 1985); and W. H. Holley Jr. and
K. M. Jennings, The Labor Relations Process (Chicago:
Dryden Press, 1984).

4. T. A. Kochan, Collective Bargaining and Industrial Rela-
tions (Homewood, IL: Richard D. Irwin, 1980), p. 25;

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and H. C. Katz and T. A. Kochan, An Introduction to
Collective Bargaining and Industrial Relations, 3rd ed.
(New York: McGraw-Hill, 2004).

5. R. J. Grossman, “Reorganized Labor,” HRMagazine ,
January 2008, downloaded from General Reference
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6. Whether the time the union steward spends on union
business is paid for by the employer, the union, or a
combination is a matter of negotiation between the
employer and the union.

7. Bureau of Labor Statistics, “Union Affiliation Data
from the Current Population Survey,” http://data.bls.
gov , accessed March 10, 2008; and J. Smerd, “Unions
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2008, downloaded from General Reference Center
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8. Katz and Kochan, An Introduction to Collective Bar-
gaining, building on J. Fiorito and C. L. Maranto,
“The Contemporary Decline of Union Strength,”
Contemporary Policy Issues 3 (1987), pp. 12–27; G. N.
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9. Bureau of Labor Statistics Web site, www.bls.gov ;
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10. C. Brewster, “Levels of Analysis in Strategic HRM:
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11. American Federation of State, County and Municipal
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12. J. T. Addison and B. T. Hirsch, “Union Effects on
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13. L. Mishel and P. Voos, Unions and Economic Competi-
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14. A. O. Hirschman, Exit, Voice, and Loyalty (Cam-
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15. R. B. Freeman and J. L. Medoff, What Do Unions Do?
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“Union Effects on Productivity”; M. Ash and J. A.

432 PART 5 Meeting Other HR Goals

Seago, “The Effect of Registered Nurses’ Unions on
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16. B. E. Becker and C. A. Olson, “Unions and Firm Prof-
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17. K. Maher, “Skills Shortage Gives Training Programs
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18. Bureau of Labor Statistics, “Employer Costs for Em-
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19. S. B. Jarrell and T. D. Stanley, “A Meta-Analysis of
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20. S. Webb and B. Webb, Industrial Democracy (London:
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21. “Why America Needs Unions, but Not the Kind It
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22. E. E. Herman, J. L. Schwatz, and A. Kuhn, Collective
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23. Kochan, Collective Bargaining and Industrial Relations,
p. 61.

24. National Labor Relations Board, Basic Guide to the
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25. National Labor Relations Board, “Employees/Employers
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26. National Labor Relations Board, Basic Guide .
27. Ibid.
28. Ibid.
29. R. B. Freeman and M. M. Kleiner, “Employer Behav-

ior in the Face of Union Organizing Drives,” Indus-
trial and Labor Relations Review 43, no. 4 (April 1990),
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30. J. A. Fossum, Labor Relations, 8th ed. (New York:
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31. J. Gallagher, “Driving to Organize,” Traffic
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33. Katz and Kochan, An Introduction to Collective Bargain-
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34. Katz and Kochan, An Introduction to Collective
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35. A. E. Eaton and J. Kriesky, “Union Organizing under
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36. National Labor Relations Board annual reports.
37. Chaison and Rose, “The Macrodeterminants of

Union Growth and Decline.”
38. Fossum, Labor Relations, p. 262.
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41. “The Show Will Resume,” Global Agenda , Febru-
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42. Kochan, Collective Bargaining and Industrial Relations,
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43. Katz and Kochan, An Introduction to Collective
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44. United Steelworkers v. American Manufacturing Com-
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45. U.S. Federal Mediation and Conciliation Service, Fifty-
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46. J. R. Redecker, Employee Discipline: Policies and
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47. T. A. Kochan, H. C. Katz, and R. B. McKersie, The
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48. L. W. Hunter, J. P. MacDuffie, and L. Doucet, “What
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49. J. B. Arthur, “The Link between Business Strategy
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50. A. E. Eaton, “Factors Contributing to the Survival of
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51. A. Bernstein, “Putting a Damper on That Old Team
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52. T. Kochan and P. Osterman, The Mutual Gains Enter-
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p. 202; and A. Bernstein, “Making Teamwork Work—
and Appeasing Uncle Sam,” BusinessWeek , Janu-
ary 25, 1993, p. 101.

53. “NLRB 4–0 Approves Crown Cork & Seal’s Use of
Seven Employee Participation Committees,” HR
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54. Kochan and Osterman, The Mutual Gains Enterprise;
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ufacturing Performance: Organizational Logic and
Flexible Production Systems in the World Auto In-
dustry,” Industrial and Labor Relations Review 48, no. 2
(1995), pp. 197–221; W. N. Cooke, “Employee Par-
ticipation Programs, Group-Based Incentives, and
Company Performance: A Union-Nonunion Com-
parison,” Industrial and Labor Relations Review 47, no.
4 (1994), pp. 594–609; and C. Doucouliagos, “Worker
Participation and Productivity in Labor-Managed and
Participatory Capitalist Firms: A Meta-Analysis,” In-
dustrial and Labor Relations Review 49, no. 1 (1995),
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55. J. Teresko, “Continuing a Winning Culture,” Industry
Week , January 2008, p. 42.

CHAPTER 14 Collective Bargaining and Labor Relations 433

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