After studying this chapter, students should be able to understand the following:

This chapter talks about why workers organize, outlines the basics of labor law, and reviews the procedures

of labor elections, collective bargaining, and contract administration. We will also go through the grievance

procedures.

Organization of workers, acting collectively, seeking to protect and promote their mutual interests through

collective bargaining is termed as union. The most significant impact of a union on the management of

human resources is its influence in shaping HRM policies. In the absence of a union, the company may

develop all HRM policies based on efficiency. But, when a union enters the picture, management must

develop HRM policies that reflect consideration for the preferences of workers who are represented by a

union. A union's strong preferences for high wages, job security, the ability to express dissatisfaction with

administrative actions, and having a voice in the development of work rules that affect their jobs get

injected into the equation along with the employer's preferences.

I. Union Objectives

Several broad objectives characterize the labor movement as a whole. These include:

(1) To secure and, if possible, improve the living standards and economic status of its members.

(2) To enhance and, if possible, guarantee individual security against threats and contingencies that might

result from market fluctuations, technological change, or management decisions. (3) To influence power

relations in the social system in ways that favor and do not threaten union gains and goals. (4) To advance

the welfare of all who work for a living, whether union members or not. (5) To create mechanisms to guard

against the use of arbitrary and capricious policies and practices in the workplace. In order to accomplish

these objectives, most unions recognize that they must strive for continued growth and power.

• Growth—To maximize effectiveness, a union must strive for continual growth, but the percentage

of union members in the workforce is declining. Union leaders are concerned because much of a

union’s ability to accomplish objectives comes from strength in numbers. Unions must continue to

explore new sources of potential members.

• Power—We define power here as the amount of external control that an organization is able to

exert. A union’s power is influenced to a large extent by the size of its membership and the

possibility of future growth. By achieving power, a union is capable of exerting its force in the

political arena.

II. Factors Leading to Employee Unionization

Three types of factors play role in origin of employee unions they are:

a. Working Environment: Inadequate staffing, Mandatory overtime, Poor working conditions

b. Compensation: Non-competitive Pay, Inadequate benefits inequitable pay raises

c. Management Style: Arbitrary Management Decision Making, Use of fear, Lack of recognition

d. Organization Treatment: Job insecurity, unfair discipline and policies, Harassment and abusive

treatments, Not responsive to complaints

III. Why Employees Join Unions

Individuals join unions for many different reasons, and these reasons tend to change over time. They may

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involve dissatisfaction with management, need for a social outlet, opportunity for leadership, forced

unionization, and peer pressure.

A union is an organization that represents employees' interests to management on issues such as wages,

hours, and working conditions. Generally, employees seek to join a union when they (1) are dissatisfied

with aspects of their job,

(2) feel a lack of power or influence with management in terms of making changes, and

(3) see unionization as a solution to their problems.

a. Dissatisfaction With Management—Unions look for problems in organizations and then

emphasize the advantages of union membership as a means of solving them. Management must

exercise restraint and use its power to foster management and labor cooperation for the benefit of all

concerned. Some reasons for employee dissatisfaction are described:

1. Compensation: If employees are dissatisfied with their wages, they may look to a union

for assistance in improving their standard of living.

2. Job Security: If the firm doesn’t provide its employees with a sense of job security,

workers may turn to a union. Employees are more concerned than ever about job security

due to a decline in employment in such key industries as automobiles, rubber, and steel.

3. Management Attitude: Employees do not like to be subjected to arbitrary and capricious

actions by management. In some firms, management is insensitive to the needs of its

employees. When this situation occurs, employees may perceive that they have little or no

influence in job-related matters, thus becoming prime targets for unionization.

b. A Social Outlet—Many people have strong social needs. Union-sponsored recreational and social

activities, day care centers, and other services can increase the sense of solidarity.

c. Opportunity For Leadership—Employers often promote union leaders into managerial ranks as

supervisors.

d. Forced Unionization—It is generally illegal for management to require that an individual join a

union prior to employment. However, in the 29 states without right-to-work laws, it is legal for an

employer to agree with the union that a new employee must join the union after a certain period of

time (generally 30 days) or be terminated.

e. Peer Pressure—Many individuals will join a union simply because they are urged to do so by other

members of the work group.

IV. The Impact of Unions on Human Resource Management

Managers are more likely to develop HRM policies based on efficiency. But, when a union is in the picture,

policies must reflect employees' preferences as well. Employees have preferences related to staffing,

employee development, compensation, and employee relations.

a. Staffing: The contract can dictate how jobs are filled and on what basis they are filled.

b. Employee Development: Performance evaluations are rarely used in unionized

organizations. However, there is often a greater amount of worker training.

c. Compensation: On average, union employees earn 10% to 20% higher wages than

comparable non-union employees. Unionized firms avoid using merit pay plans and are

likely to give across-the-board pay raises to employees based on market considerations.

d. Employee Relations: The labor contract gives employees specific rights. The employees,

through the collective bargaining process, have a voice in the development of work rules

that affect their jobs.

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Under a collective bargaining system, union and management negotiate with each other to develop the work

rules.

The performance of the mutual obligation of the employer and the representative of the employees to meet

at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions

of employment, or the negotiation of an agreement, or any question arising there under, and the execution

of a written contract incorporating any agreement reached if requested by either party; such obligation does

not compel either party to agree to a proposal or require the making of a concession.

• Forms of Bargaining Structures AND Union/ Management Relationships—The bargaining

structure can affect the conduct of collective bargaining. The four major structures are one

company dealing with a single union, several companies dealing with a single union, several unions

dealing with a single company, and several companies dealing with several unions. Types of

union/management relations that may exist in an organization are conflict, armed truce, power

bargaining, accommodation, cooperation, and collusion.

• The Collective Bargaining Process—Both external and internal environmental factors can

influence the process. The first step in the collective bargaining process is preparing for

negotiations. This step is often extensive and ongoing for both union and management. After the

issues to be negotiated have been determined, the two sides confer to reach a mutually acceptable

contract. Although breakdowns in negotiations can occur, both labor and management have at

their disposal tools and arguments that can be used to convince the other side to accept their views.

Eventually, however, management and the union usually reach an agreement that defines the rules

of the game for the duration of the contract. The next step is for the union membership to ratify

the agreement. There is a feedback loop from “Administration of the Agreement” to “Preparing

for Negotiation.” Collective bargaining is a continuous and dynamic process, and preparing for the

next round of negotiations often begins the moment a contract is ratified.

• The Psychological Aspects Of Collective Bargaining

Prior to collective bargaining, both the management team and the union team have to prepare positions and

accomplish certain tasks. Vitally important for those involved are the psychological aspects of collective

bargaining. Psychologically, the collective bargaining process is often difficult because it is an adversarial

situation and must be approached as such. It is a situation that is fundamental to law, politics, business, and

government, because out of the clash of ideas, points of view, and interests come agreement, consensus,

and justice.

a. Preparing For Negotiations

Bargaining issues can be divided into three categories: mandatory, permissive, and prohibited.

• Mandatory Bargaining Issues—Fall within the definition of wages, hours, and

other terms and conditions of employment.

• Permissive Bargaining Issues—May be raised, but neither side may insist that

they be bargained over.

• Prohibited Bargaining Issues—Are statutorily outlawed.

b. Bargaining Issues

The document that results from the collective bargaining process is known as a labor agreement or contract.

Certain topics are included in virtually all labor agreements.

• Recognition—Its purpose is to identify the union that is recognized as the bargaining

representative and to describe the bargaining unit.

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• Management Rights—A section that is often, but not always, written into the labor agreement

and that spells out the rights of management. If no such section is included, management may

reason that it retains control of all topics not described as bargainable in the contract.

• Union Security— The objective of union security provisions is to ensure that the union continues

to exist and to perform its function.

1. Closed Shop: An arrangement whereby union membership is a prerequisite to

employment.

2. Union Shop: An arrangement that requires that all employees become members of the

union after a specified period of employment (the legal minimum is 30 days) or after a

union shop provision has been negotiated.

3. Maintenance of Membership: Employees who are members of the union at the time the

labor agreement is signed or who later voluntarily joins must continue their memberships

until the termination of the agreement, as a condition of employment. This form of

recognition is also prohibited in most states that have right-to-work laws.

4. Agency Shop: Does not require employees to join the union; however, the labor

agreement requires, as a condition of employment, that each nonunion member of the

bargaining unit “pay the union the equivalent of membership dues as a kind of tax, or

service charge, in return for the union acting as the bargaining agent.” The agency shop is

outlawed in most states that have right-to-work laws.

5. Exclusive Bargaining Shop: The company is bound legally to deal with the union that

has achieved recognition, but employees are not obligated to join or maintain membership

in the union or to financially contribute to it.

6. Open Shop: Employment that has equal terms for union members and nonmembers alike.

7. Dues Checkoff: The Company agrees to withhold union dues from members’ checks and

to forward the money directly to the union.

• Compensation and Benefits—This section typically constitutes a large portion of most labor

agreements. Virtually any item that can affect compensation and benefits may be included.

1. Wage Rate Schedule: The base rates to be paid each year of the contract for each job are

included in this section. At times, unions are able to obtain a cost-of-living allowance (COLA) or

escalator clause in the contract in order to protect the purchasing power of employees’ earnings.

2. Overtime and Premium Pay: Provisions covering hours of work, overtime pay, and

premium pay, such as shift differentials, are included in this section.

3. Jury Pay: Some firms pay an employee’s entire salary when he or she is serving jury duty.

Others pay the difference between jury pay and the compensation that would have been

earned. The procedure covering jury pay is typically stated in the contract.

4. Layoff or Severance Pay: The amount that employees in various jobs and/or seniority

levels will be paid if they are laid off or terminated is presented in this section.

5. Holidays: The holidays to be recognized and the amount of pay that a worker will receive

if he or she has to work on a holiday are specified. In addition, the pay procedure for times

when a holiday falls on a worker’s nominal day off is provided.

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6. Vacation: This section spells out the amount of vacation that a person may take, based on

seniority. Any restrictions as to when the vacation may be taken are also stated.

7. Family Care: This is a benefit that has been included in recent collective bargaining

agreements, with child care expected to be a hot bargaining issue in the near future.

• Grievance Procedure—It contains the means by which employees can voice dissatisfaction with

specific management actions. Also included in this section are the procedures for disciplinary action

by management and the termination procedure that must be followed.

• Employee Security—This section of the labor agreement establishes the procedures that cover

job security for individual employees. Seniority and grievance handling procedures are the key

topics related to employee security.

a. Negotiating The Agreement

The negotiating phase of collective bargaining begins with each side presenting its initial demands. The term

negotiating suggests a certain amount of give and take, the purpose of which is to lower the other side’s

expectations. Each side does not expect to obtain all the demands presented in its first proposal. Demands

that the union does not expect to receive when they are first made are known as beachhead demands.

b. Breakdowns In Negotiations

At times negotiations break down, even though both labor and management may sincerely want to arrive at

an equitable contract settlement. Several means of removing roadblocks may be used in order to get

negotiations moving again.

• Third-Party Intervention—Often a person from outside both the union and the organization can

intervene to provide assistance when an agreement cannot be reached and a breakdown occurs. At

this point there is an impasse.

1. Mediation: A process whereby a neutral third party enters a labor dispute when a

bargaining impasse has occurred.

2. Arbitration: A process in which a dispute is submitted to an impartial third party to make

a binding decision.

3. Sources of Mediators and Arbitrators: The principle organization involved in mediation

efforts, other than the available state and local agencies, is the Federal Mediation and

Conciliation Service (FMCS). Either or both parties involved in negotiations can seek the

assistance of the FMCS, or the agency can offer help if it feels that the situation warrants

this.

• Union Strategies for Overcoming Negotiations Breakdowns—There are times when a union

believes that it must exert extreme pressure on management to agree to its bargaining demands.

Strikes and boycotts are the primary means that the union may use to overcome breakdowns in

negotiations.

1. Strikes: When union members refuse to work in order to exert pressure on management

in negotiations.

2. Boycotts: An agreement by union members to refuse to use or buy the firm’s products.

The practice of a union attempting to encourage third parties (suppliers and customers) to

stop doing business with the firm is a secondary boycott.

• Management’s Strategies For Overcoming Negotiation Breakdowns—One form of action

that is somewhat analogous to a strike is called a lockout. Management keeps employees out of the

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workplace and may run the operation with management personnel and/or temporary replacements.

The employees are unable to work and do not get paid.

a. Ratifying The Agreement

In the vast majority of collective bargaining encounters, the parties reach agreement without experiencing

severe breakdowns in negotiations or resorting to disruptive actions. Typically, this is accomplished before

the current agreement expires. After the negotiators have reached a tentative agreement on all topics

negotiated, they will prepare a written agreement complete with the effective and termination dates.

However, the approval process can be more difficult for the union. Until it has received approval by a

majority of members voting in a ratification election, the proposed agreement is not final. Union members

may reject the proposed agreement, and new negotiations must begin.

b. Administration Of The Agreement

The larger and perhaps more important part of collective bargaining is the administration of the agreement,

which is seldom viewed by the public. The agreement establishes the union-management relationship for

the duration of the contract.

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II. Grievance Handling Under a Collective Bargaining Agreement

If employees in an organization are represented by a union, workers who believe that they have been

disciplined or dealt with unjustly can appeal through the grievance and arbitration procedures of the

collective bargaining agreement.

a. Grievance Procedure—A grievance can be broadly defined as an employee’s

dissatisfaction or feeling of personal injustice relating to his or her

employment relationship.

b. Arbitration—The process that allows the parties to submit their dispute to an

impartial third party for resolution.

c. Proof that Disciplinary Action was Needed—Any disciplinary action

administered may ultimately be taken to arbitration, when such a remedy is

specified in the labor agreement.

d. Weaknesses Of Arbitration—The reason for the initial filing of the

grievance may actually be forgotten before it is finally settled. Another

problem is the cost of arbitration, which has been rising at an alarming rate.

Although the step-by-step procedure for handling union grievances is common practice, the means of

resolving complaints in union-free firms varies. A well-designed union-free grievance procedure ensures

that the worker has ample opportunity to make complaints without fear of reprisal.

Employers who adhere to certain union-free strategies and tactics can remain or become union free.

• Effective first-line supervision: Extremely important to an organization’s ability to remain union

free is the overall effectiveness of its management, particularly its first-line supervisors. These

supervisors represent the first line of defense against unionization.

• Union-free policy: The fact that the organization’s goal is to remain union free should be clearly

and forcefully communicated to all its members.

• Effective communication: One of the most important actions an organization that wants to

remain union free can take is to establish credible and effective communication. One approach

taken to encourage open communication is the open-door policy. The open-door policy gives

employees the right to take any grievance to the person next in the chain of command if the

immediate supervisor cannot resolve the problem.

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• Trust and openness: Openness and trust on the part of managers and employees alike are

important in order to remain union free. The old expression actions speak louder than words is certainly

valid for an organization that desires to remain union free.

• Effective compensation programs: The financial compensation that employees receive is the

most tangible measure they have of their worth to the organization. If an individual’s pay is

substantially below that provided for similar work in the area, the employee will soon become

dissatisfied.

• Healthy and safe work environment: An organization that gains a reputation for failing to

maintain a safe and healthy work environment leaves itself wide open for unionization.

• Effective employee and labor relations: No organization is free from employee disagreements

and dissatisfaction. Therefore, a means of resolving employee complaints, whether actual or

perceived, should be available. The grievance procedure is a formal process that permits employees to

complain about matters affecting them. Most labor-management agreements contain formal

grievance procedures, and union members regard handling grievances as one of the most important

functions of a labor union.

Labor relations consist of the human resource management activities associated with the movement of

employees within the firm after they have become organizational members and include the actions of

promotion, transfer, demotion, resignation, discharge, layoff, and retirement. Labor relations can be divided

into following three phases:

a. Union organizing: Organization of workers, acting collectively, seeking to protect and promote

their mutual interests through collective bargaining is termed as union. The most significant impact

of a union on the management of human resources is its influence in shaping HRM policies. In the

absence of a union, the company may develop all HRM policies based on efficiency. But, when a

union enters the picture, management must develop HRM policies that reflect consideration for the

preferences of workers who are represented by a union. A union's strong preferences for high

wages, job security, the ability to express dissatisfaction with administrative actions, and having a

voice in the development of work rules that affect their jobs get injected into the equation along

with the employer's preferences.

b. Collective bargaining: The performance of the mutual obligation of the employer and the

representative of the employees to meet at reasonable times and confer in good faith with respect

to wages, hours, and other terms and conditions of employment, or the negotiation of an

agreement, or any question arising there under, and the execution of a written contract

incorporating any agreement reached if requested by either party; such obligation does not compel

either party to agree to a proposal or require the making of a concession.

c. Contract administration: The larger and perhaps more important part of collective bargaining is

the administration of the agreement, which is seldom viewed by the public. The agreement

establishes the union-management relationship for the duration of the contract. The agreement

established the union-management relationship for its effective length. Usually no changes in

contract language can be made until the expiration date except by mutual consent. Administering

the contract is a day-to-day activity. Ideally, the aim of both management and the union is to make

the agreement work to the mutual benefit of all concerned. This is not easy. In the daily stress of

the work environment, terms of the contract are not always uniformly interpreted and applied.

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Grievance procedure A formal, systematic process that permits employees to complain about

matters affecting them and their work.

Collective bargaining The process through which representatives of management and the union

meet to negotiate a labor agreement

Mediation A process whereby a neutral third party enters a labor dispute when a

bargaining impasse has occurred.

Boycotts An agreement by union members to refuse to use or buy the firm’s

products.

Arbitration The process that allows the parties to submit their dispute to an impartial

third party for resolution.