After studying this chapter, students should be able to
understand the following:
B. Collective Bargaining
C. The HRM Department in a Nonunion Setting
D. Phases of Labor Relations
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
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
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.
maximize effectiveness, a union must strive for continual growth, but the
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.
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
Leading to Employee Unionization
Three types of factors play role in origin of employee unions
Environment: Inadequate staffing,
Mandatory overtime, Poor working conditions
Non-competitive Pay, Inadequate
benefits inequitable pay raises
Style: Arbitrary Management Decision
Making, Use of fear, Lack of recognition
Treatment: Job insecurity, unfair
discipline and policies, Harassment and abusive
treatments, Not responsive to complaints
III. Why Employees
Individuals join unions for many different reasons, and these
reasons tend to change over time. They may
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
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.
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
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
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
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
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.
B. Collective Bargaining
Under a collective bargaining system, union and management
negotiate with each other to develop the work
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.
I. Labor Management Relations and Collective Bargaining
• Forms of
Bargaining Structures AND Union/ Management Relationships—The
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
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,
a. Preparing For
Bargaining issues can be divided into three categories:
mandatory, permissive, and prohibited.
Bargaining Issues—Fall within the
definition of wages, hours, and
other terms and conditions of employment.
Bargaining Issues—May be raised, but
neither side may insist that
they be bargained over.
Bargaining Issues—Are statutorily
The document that results from the collective bargaining process
is known as a labor agreement
Certain topics are included in virtually all labor agreements.
purpose is to identify the union that is recognized as the bargaining
representative and to describe the bargaining unit.
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
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
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.
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.
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
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
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.
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.
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.
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
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
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
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
b. Breakdowns In
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.
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.
A process whereby a neutral third party enters a labor dispute when a
bargaining impasse has occurred.
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
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
When union members refuse to work in order to exert pressure on management
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
Strategies For Overcoming Negotiation Breakdowns—One
form of action
that is somewhat analogous to a strike is called a
Management keeps employees out of the
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
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
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.
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.
can be broadly defined as an employee’s
dissatisfaction or feeling of personal injustice relating to his
process that allows the parties to submit their dispute to an
impartial third party for resolution.
c. Proof that
Disciplinary Action was Needed—Any
administered may ultimately be taken to arbitration, when such a
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
problem is the cost of arbitration, which has been rising at an
III. Grievance Handling In Union-Free Organizations
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.
C. The HRM Department in a Nonunion Setting
Employers who adhere to certain union-free strategies and
tactics can remain or become union free.
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
policy: The fact that the
organization’s goal is to remain union free should be clearly
and forcefully communicated to all its members.
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
employees the right to take any grievance to the person next in
the chain of command if the
immediate supervisor cannot resolve the problem.
• 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
valid for an organization that desires to remain union free.
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
• 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.
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
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.
D. Phases of Labor Relations
consist of the human resource management activities associated with the movement
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:
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.
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
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.
Grievance procedure A
formal, systematic process that permits employees to complain about
matters affecting them and their work.
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
process that allows the parties to submit their dispute to an impartial
third party for resolution.