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Chapter 5 Management Strategies and Structures for Collective Bargaining McGraw-Hill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserv 5 -3 1 - 3 Management's Strategic Choices – Theoretical Considerations • Management considers the linkages between human resource issues and business strategies - If labor becomes organized, management will attempt to shape the bargaining process within the context of its bilateral relationship with the union - Management may alter the product mix or operate nonunion plants 5 -4 1 - 4 Alternative Industrial Relations Systems • Nonunion Industrial Relations Patterns - Nonunion industrial relations systems exhibit three basic patterns • The common element across the three nonunion patterns is that management policy is influenced by a desire to stay nonunion • Policies are also guided by the firm’s desire to pursue objectives that have little to do with union status • Many firms’ policies contain elements of one of more of these patterns 5 -5 1 - 5 The Paternalistic Pattern • Personnel policies tend to be informally administered and involve substantial discretion by operating managers - For example, they may not have a formal leave policy, but grant leaves on a case-by-case basis - Mangers would exercise a high degree of discretion over discipline and pay policies - This pattern is common among small retail stores and small manufacturing plants - The firms are often family-owned, and do not want to lose control and union avoidance is a key reason for paternalism 5 -6 1 - 6 The Bureaucratic Pattern • Larger firms may find the diversity in personnel practices of paternalistic firms too unsettling and costly - They find it necessary to standardize and bureaucratize policies - They realize that variation of policy can cause unionization if some employees feel disadvantaged - The bureaucratic pattern is characterized by highly formalized procedures on policies such as pay, leaves, promotion, and discipline - It uses detailed job classification and evaluation 5 -7 1 - 7 The Human Resource Management Pattern - The human resource pattern is an outgrowth of efforts to increase flexibility and cost competitiveness while maintaining nonunion status - Companies began to adopt this new pattern in the 1970s - Relies on formal policies, but policies that are different from the bureaucratic pattern - Policies such as team forms of work, skill or knowledge based pay, elaborate communications and complaint procedures - Until the late 1980s, firms practiced employment stabilization; downsizing ended this practice 5 -8 1 - 8 The Role of Business Strategy in Shaping Nonunion Patterns • Many firms in high technology follow the HRM pattern for flexibility - Steel mills show how practices are linked to strategies - Nonunion minimills producing a variety of products tend to follow the HRM model, while low-cost and high-volume mills tend to follow the bureaucratic pattern - Companies with sophisticated personnel systems are likely in high growth areas with skilled employees 5 -9 1 - 9 Union Pattern of Industrial Relations • The New Deal Pattern - Dominated until the 1980s - Characterized by highly detailed and formal contracts - Includes grievance arbitration, seniority-based layoff procedures, detailed job classifications, and standardization of pay - The advantage of this pattern is stable labor relations 5 -101 - 10 The Conflict Pattern - Labor and management engage in a struggle over basic rights - Often the dispute is over union representation - Typically involved in long strikes - Imposes high cost through low productivity - Caterpillar Corporation is an example - Major league baseball also followed the conflict pattern • A strike or lockout occurred in each of the eight contract negotiations between the 1970s and 2002 5 -111 - 11 The Participatory Pattern • Characterized by contingent compensation linking work group pay to economic performance • Also may include team forms of organization, employment security programs, and more direct involvement by workers and unions in business decision making - Creates mechanisms for workers to directly solve production and personnel problems - Quality circle or team meetings may be used - Not all firms succeed, due to employee or supervisory resistance to change 5 -121 - 12 Management Attitudes Toward Unionization • The Historical Evolution of Two Union Avoidance Strategies - As early as the 1920s, two strategies were used to avoid unions: • Direct union suppression (actively resisting organizing drives) • Indirect union substitution (removing the incentives for unions) - In recent years, some firms have instituted peer review complaint procedures as part of a union substitution strategy 5 -131 - 13 Increased Union Suppression • There is evidence that union suppression tactics have increased in the past 30 years - Employees illegally discharged by employers during organizing campaigns increased tenfold from 1960 to 1975 and remained high during the 1980s and 1990s - Management’s use of suppressive tactics against union activists is not merely an artifact of the pre-New Deal labor history, but a significant feature of contemporary industrial relations 5 -141 - 14 The Influence of Union Structure on Management's Unionization Policies - The degree of centralization of bargaining is a factor in whether a union avoidance strategy will be used by management - A firm with a single union across the whole company is less likely to resist unions in newly opened facilities • In such cases, the dominant union has the leverage to engage top management decision makers at the strategic level of the firm 5 -151 - 15 General Motors Tries and Then Abandons a Southern Strategy The GM/UAW relationship is an example of top level management access and engagement - GM abandoned its strategy of opening nonunion plants in the south and resisting union organizing attempts - In return for GM neutrality, the UAW agreed to continue union commitment to quality of working life and other workplace innovations in the existing union facilities - The UAW had the strength to induce GM to make this change 5 -161 - 16 The Expansion of Double Breasting • Where unions lacked the strength to engage top management, double breasting could take place • After becoming dissatisfied with the current union, managements would build new, nonunion plants or work with different unions in a new plant - In a typical double-breasted construction company, the commercial end would be unionized while the residential side would be nonunion 5 -171 - 17 The Influence of Attitudes Held by Top Executives • The personal views and philosophy of top executives influences a company’s union avoidance propensities - Although their decisions are based upon costs and competitiveness, deeply held personal philosophy may be a powerful influence on corporate behavior regarding unions - The attitudes of European mangers may be different from their U.S. counterparts – as work councils, codetermination, and the extension of employment laws to eastern Germany seem to demonstrate 5 -181 - 18 Overview of Trends in Management Policies toward Unionization • In the majority of nonunion or weakly unionized firms, avoiding unions is a top priority - Highly organized firms tend to be less strongly opposed to unionization of new plants, provided their economic and labor relations experience with their present unions have been relatively favorable - Firms are strongly opposed to organization of white collar employees, regardless of their experience with blue-collar workers 5 -191 - 19 Management Structures for Collective Bargaining • There are three basic characteristics of management’s collective bargaining structure: - The size of the labor relations staff (those with responsibility for handling union organizing attempts, negotiations, contract administration, and litigation with unions) in relation to the number of employees in the organization - The degree of centralization in decision making on labor relations issues - The degree of specialization in decision making on labor relations 5 -201 - 20 Centralization in Decision Making • In general, there is a high degree of centralization of responsibility for labor relations policy inside firms - Most firms place primary responsibility for overall union policy at the corporate level - In most firms, the corporate labor relations executive has primary responsibility for developing union avoidance activities, responding to union organizing campaigns, conducting contract negotiations, advising negotiators, and costing contracts 5 -211 - 21 Specialization of the Labor Relations Function • In recent years, labor relations specialists have been losing power to line managers and, to a lesser degree, human resource specialists - Some firms seem to feel that they have less need for traditional labor relations specialists and greater need for union avoidance and cost controls 5 -221 - 22 Summary - Historically, management has generally accepted the value that unions provide to American society, yet have aggressively avoided the expansion of unionism - Management remains pragmatic; if the costs of union avoidance are too high, management will work with union leaders - Firms either follow paternalistic, bureaucratic, human resource, conflict, New Deal, or the participatory industrial relations pattern