Chapter Management Strategies and Structures for Collective Bargaining Chapters $ and 6 start the movement downward in our framework by considering how the strategies of both management and unions shape the course of industrial relations. Management is considered first because in recent years management has been the main initistor of change in industrial relations. It is management, for example, that has increased the growth of nonunion practices and pressured unionized workplaces for contractual changes that improve efficiency, quality, or customer service. This chapter examines the strategic choices exercised by management and the structures management commonly engage in collective bargaining. The text examines why and how management has uses t pursued various industrial relations options. Some of our attention will again focus on the role of the environment, For instance, heightened interustional competition is one environmental pressure that has played a sping management's strategic ations, At the same time, management ree of choice in deciding industrial relations policies. Tracing managerial ipter requires consideration of both the union and nonunion industrial relations systems that stand as alternatives before management. Where unions exist, one of managements Key tasks is to bargain and to administer contracts with those unions. So, although itis necessary to assess mana ement’ broad seilustrial relations strategies. this chapter also reviews how management prac ically pre~ pares and structures itself to participate in the collective bargaining proce: critical role in s! retains a high deg: strategies in this cl Choices—Theoretical Considerations Management's Strategic Scanned with CamScanner‘allective Hargaining, 108. Part Two The Strutegle Level of Indusirial Relations and Structures fe vi s n. Although an employer's need 10 negotiate with union representatives will add various constraints to itsistrategic“options:in-unioniza : ; ! by business strategies. Managers may have to make decisions regarding, for examp) sable to pice. given produ . or whether to supply a product by r more heavily on the outsourcing of parts of its value chain to another plant or firmPhexe In the contemporary scene, management is constrained to choose among a handful of alte. “mative industrial relations system types, onpatterns. Each of tHGS@isixipattenig) described in Exhibit 5-1, has key personnel policies. Although itis clearly an oversimplification to try to fit every firm into one of these six patterns, this categorization scheme can help clarify the choices commonly made by management. Nonunion Industrial Relations Patterns Within the QOHUROHSCCOPECPETENTIE UVR VT Me Ue HOPPERTONS PRACHERS, In broad terms i ‘Managementisdesiretorstaynonunion. At the same time, (Glals. Personne! /RTCHCESTRENATEHERY, for example, (PANT prORTSHVEVANG ROR ‘qualityygoals. Note that these patterns are only ideal types, so some firms may contain cle- ments of one or more patterns. ¢ In the paternalistic pattern ral rela ici mally administered, and | a ‘managers. A r example, off ess -by- s. Supervisors and other managers in these firms similarly exercise a high degree of discretion over other discipline and pay policies. ? Managers in firms following this pattern like the discretion they gain through informal policies. Often these firms are family owned or operated with family members personally directing personnel policies. Family owners dislike losing control over decisions and particularly fear the reduction of control that would occur if unions represented employees. Union avoidance is often a prime policy objective in the firms that follow the paternalistic pattern. Scanned with CamScannerrr sa Tenn thin aman Resource Policy ateraistic Bureaucratic Management Conflct New Deal Participatory ules Ilona! Formal Fleble lexble Formal Flexible valle Management Managerial Rulebound Song corprte Aggressive «Aversa! ——_—rvohement se ‘creton ‘siure Complaint. None Writes Ombudsman ——_—Excenive Grievance Coninuous precede polices eos Spite problem ing Work Lowskil Detaled Teams Det Detied Teams ceganization Clseatons Clsifeaons_aaestions fay procedure Piecerates—fabevalation Payor Standard rates Standard rates Payfor Knowledge and nowiedge and coningent pay Contingent py Ipbsecurty Temporary cyceal Career Unsabe Seriry.based Employment ewe iecirty development iyo secu Workermanager Hierarchical Hiecrchicsl India! Comte Amstength——Oveapping relatos aed peooral ros Scanned with CamScanner10 Part Two The Siutewic Level of Industrial Relations and Structures for Collective Bargaining the Bureaucratic Pattern Larger firms find the diversity in personnel practices common to paternalistic firms 1, unsettling and costly, In theiré@horisataachievereconomicssofsscalemlarsersfinnseia) “it advantageous to standardize and bureaucratize personnel policies, thereby creating , (sureaucratielpatterndf personnel administration. These firms have also come to rea that variation in policies can spur unionization if some employees believe other emplo; ewhere in the firm are benefiting from more favorable policies. (and typically written) policiesomp2y, leavesspromotionsandidiseipline , that follow this pattern include most of the large, nonunion corporations that expanded in the post-World War II period. The Human Resource Management Pattern” an outgrowth of their efforts to increase flexibility and cost competitiveness while main- taining their nonunion status, a number of firms began to adopt a new pattern of personnel policies in the 19708.* This humansresourcesmanagement(HRM)ypattern, NKR wuireRGratiCNpaERH, reliesonsformalpolieies, but the nature of those policies is differ ent from that traditionally found in nonunion firms. The @IRMMpatternuimclidestpolicies ‘such as team forms of work organization, skill- or knowledge-based pay, and CADORAEICOMMTUnIcAtiON ANd coMplaineprocedares) Up until the late @9SOsunanHRM alternifinmstalso/pRCiceeMployMENtStabiliZAtION, and rarely made use of layotls This changed dramatically when downsizing became commonplace and both the white and blue collar employees were subjected to involuntary termination or voluntary sever ance programs were used to reduce employment levels. HRMGTRSCONTCELOSISSCD employee training and career development but warned employees that their individual GiFMPIn effect, employers were forcing employees to take on more of the risk and instability associated with the modern economy. Like the firms that follow the other nonunion patterns, the HRM firms vigilantly tty {@RNGIUAOAARION. Where they differ from the other nonunion firms is in the extent to which they consider union avoidance questions in decisions such as where to locate @ hew plant or store. CAiGHtaVSTGaNee sss calsonin fl ueHCeNTOWANESE Mi rnSaeS MOT ersonnekpolicies, suchasicomplaintandicoMmmunication|paliGie’. In their efforts at union avoidance, as in so many of their personnel policies, the HRM firms try to coordinate their various polices, The HRRNURRESIEOare nOTSNGA HEE CRERST HSER ofthe ten ‘Those measures include publishing company newsletters, offering salaries !0 AULeRpIOVEESn d martin SHOAWCOTPORAEUNUFEs. To enhance work practice flexibil- ity and communication with employees, some companies use employee committees. The NLRA forbids company-dominated unions, and as a result, companies need to avoid usin employee committees for this purpose (see Box 12~7). Among the best-known examples of mature companies that continue to apply some oF all of these practi helin Tire.” Two . odak, Intel, Motorola, DuPont, and Scanned with CamScannerChapter 'Pler'S Management Strategies and Structures for Collective Bargaining 111 companies that have bi : See ae relatively successful using these strategies in more competitive . s-skilled workforces are Marriott Hotels and Sears Roebuck > A number of fact . “ ‘ors influence which of these patterns are followed by «ionunionsfirms: nagement ¥ ; i alues and srateies play an important role. For instance, mano who helped initiate strong corporate cultures. 1e HRM pattern seems to provide the advan- ‘ndUSTTES FOHOW the HRM pacer, vo oe minimills illustrate how business strategy is linked to personnel practices. Among comm a] minimills those producing a wide variety of products (“market” mills) and those ntrating on high-quality products tend to follow the sophisticated HRM pattern, while those pursuing a low-cost and high-volume product strategy tend to follow a variant of the bureaucratic pattern. In sum, companies with sophisticated personnel systems are most likely to be those that Union Patterns of Industrial Relations In firms where at least some of the employees are unionized industrial relations policies also follow distinct patterns. There are currently three dominant union patterns. The New Deal Pattern The form of collective bargaining in the United States that dominated until the 1980s (and continues in a number of ‘unionized firms) is the New!Dealpatternycharacterized by highly detailed and formal-contracts. This'patterm includes: grievance arbitration, seniority- based layoff procedures, numerous and detailed job classifications, and the ‘standardiza- The ean to this pattern are thatit is very’good at providing stable labor relations, Some of that stability derives from the formalichanniels (such as the grievance procedure) through which problems can be addressed: These procedures are attractive to employees because they provide due process (see Chapters 5 and 11). ; ‘bsequent section of this ‘chapter examines the diversity that can exist even across aot stall follow this New Deal pattern. Nevertheless, firms that follow the New Deal plants that 2 ly distinguished from the unionized firms that follow the other two patterns Eee arpeining: the conflict pattern and the participatory pattern. of col The Conflict Pattern Under the cont tern labor and management are engaged ina struggle over ights. the issue in dispute is. whether there will be union’ representation. their basic rights. ; ikes. In some cases employees resort 10 typically nol prolongs es : es 30 et mn aoa their anger against employers in such a rlationshp. sabotage or absent Scanned with CamScanner112 Part Two. The Strategic Level of Industria Relations and Structures for Collective Bargaining Conflict imposes high costs on the firm through lost output or low productivity gy, costs on employees in the form of lost earnings. Because of the high costs to both pari... of engaging in intense conflict, the conflict pattern tends not to be stable. The conflict pa. tern arises most often when a firm is trying to move from a union to a nonunion pattern o, sometimes, when a union tries to unionize a nonunion firm. Caterpillar Corporation and the union (UAW) i 7 woycieoficonilictsithroughoutthes:990s. Box 5~I describes these vers ASSIST PERE ‘emerged at Caterpillar even though the company and the UAW had maintained relatives, amicable and stable relations for many years prior to the 1990s, ai ind the UAW in the 1999. ‘had good relations with many of the other employers it negotiated with including. Jon; Deere, Caterpillars most direct domestic competitor. Major league baseball also has followed the conflict pattern. Negotiation of a new contract between baseball owners and the Major League Players Association have either nearly or actually involved a strike or lockout in each of the eight contract negotiations that occurred between the 1970s and 2002 (see Box 8-5). A number of contemporary firms and unions have developed a participatory pattern o: industrialielations, characterized by:contingenticompensationisystems (linking firm or work group pay to economic performance), (eamiformstofworkvorganizationsemploymentsecurty ‘programs, and more direct involvement by workers and unions in business decision making. ‘The participatory pattern tries to create mechanisms through which workers can direct! solvemproductionsandspersonnelyproblems. Quality circle or team meetings are used to facilitate direct discussions between supervisors and workers in many firms. HH@SCIEiEm> workers also are called on to become involved in business decisions such as scrap control or issues concerning how best to implement new technology. Not all organizations that set ou: (Quoreatergrenterparticipation byremployeesshoweversend up with more employee partic pation, There are a number of reasons for these failures, including supervisor or employe resistance to change. This pattern is discussed more fully in Chapter 12. Southwest Airlines stands out in the U.S. airline industry for being successful in following this pattern from its founding in the 1970s to today.” Management Attitudes toward Unionization | What influences whether management follows a union or a nonunion pattern’? In part, the decision is a function of management's attitudes toward unionization, Much of US. labor | history is a documentation of bloody organizing struggles and attempts by management to reduce the incentive for employees to join unions. Although the level of bloodshed has declined and the strategies used to oppose unionization have become more subtle over the years, management's vigorous opposition to unions continues to be very strong. Douglas Brown and Charles Myers aptly described the sentiments of perhaps the majority of U.S. management executives in an article written in the mid-1950s: It may well be true that if American management, upon retiring for the night, were assured that by the next morning the unions with which they dealt would have disappeared, more ‘management people than not would experience the happiest sleep of their lives." Scanned with CamScannerTUMULTUOUS HISTORY BETWEEN CATERPILLAR AND UAW re first major strike involving the two sid er 1991, after the re & Co. and prop: «pillar. The company refused to agree to a pattern bargaining model, which prompted a host of wildcat strikes, Caterpillar in tum, instituted a lockout, contending that it was in a strong position to operate with temporary, white-collar, and retired workers. Misperceiving the company’s ability to operate, all 14,000 members walked out in ES aT TEST, ind 1992 all short, with minor repercussions. backdrop, 2 walkout would be settled quickly. This time'the’company countered with threats of permanent replacement. ‘the mid-1980s-Following this trend, Not wi eae aa ee (0 lose their jol workers returned in the spring of 1992. Without a contract and unhappy with the course of events, the UAW then launched an “in-plant campaign,” relying on “slowdown” tactics. The company imposed Strict disciplinary actions in response, which led to a second strike in June 1994. During this strike Caterpillar could not threaten permanent replacement because the UAW called this strike over the 101 unfair labor practice charges pending against the company with the NLRB. Caterpillar, however, continued to operate successfully. Factors such as “doublesourcing,” continuing to produce in other countries for exporting, @ widening gap between high paying and low paying jobs, a technological advancement inside the plant calling for fewer workers, allowed Caterpillar to turn scar breaking profits. By December 1995, the wots fee rejected the company’s counteroffer, but the © urged them to return to work. With worke's 20a" confused, and still without a contract, the ste en in December 1995. Conflictual Relations at Caterpillar __ Employees then worked under the unilaterally imposed terms instituted after the 1992 strike. Press Feports suggested that they were not satisfied and felt as if they were in a “prison labor camp." Caterpillar implemented rules prohibiting the “display of unbusiness-like decorations and language,” including posters, banners and picket signs. Many felt that the company’s rules were too broad and aimed specifically at referrals to the labor dispute. Many employees chose to retire rather than risk the chance of suspension or dismissal. In May of 1997, the UAW and Caterpillar agreed to meet with a federal mediator and a tentative agreement was reached in February of 1998. However, 58 percent of the membership voted against ratification. The two sides returned to the bargaining table and negotiated an identical contract with one major difference; in the new contract, all workers terminated for union activities would be reinstated whereas the previous proposal allowed for reinstatement of only 110 of the 160 discharged workers. The terminations pertaining to the other 50 individuals would have been arbitrated. (On March 22, 1998, Caterpillar employees ratified a six- vyear contract effective from March 23, 1998, to April 1, 2004. The new contract was supported by 54 percent of members who voted. Negotiations began again in December of 2003. Right at the start it was obvious that difficulties were going to ensue. With an inability to come to an agreement, the two sides agreed to extend the old contract through April 25, 2004. The UAW announced that it had authorized a strike should it be needed. As a result, Caterpillar proposed another offer, but on April 25, it was rejected by the membership at the suggestion of union leaders. In response, rather than reverting to the tactics that led to the six-and-a-half-year battle in the previous decade, the UAW urged its membership not to strike but rather to remain on the job until a contract was settled. ‘Over the next eight months, Caterpillar employees would go on to reject two more offers by management and remain at work under the old contract terms without a strike, Finally, on December 16, 2004, over a year after negotiations for the new contract began, Caterpillar and the UAW announced they had reaches (continued) Scanned with CamScannerConflictual Relations at Caterpillar TUMULTUOUS HISTORY BETWEEN CATERPILLAR AND UAW (continued) an agreement that the UAW was willing to recommend to its membership for ratification. Nearly a month later, membership voted to approve the new contract, The six-year contract, which will expire on March 1, 2011, seemed to be a compromise that accomplished many of the goals of both Caterpillar and the UAW. The UAW was able to secure most benefits for current workers, while Caterpillar succeeded in gaining health care reductions and other compensation cost reductions. Most of the gains Caterpillar will make will come at the expense of new hires, who, instead of the old starting salary of $22.59 an hour, will receive $15.75 per hour. However, as opposed to current employees, who will not see a raise in base pay over the course of the contract, new hires will be granted a 2 percent increase in 2008. Moreover, consistent with the trend of many companies today, employ. will begin paying 10 percent of their health insuray, premiums, and that will rise to 20 percent during life of the contract. The most recent contract negotiations at Caterpily, include issues that are at the forefront of man, collective negotiations, including health care co, containment. While things appear to be settled for » while at Caterpillar, only time will tell if this signals a nev working relationship between management and labor at Caterpillar or whether hostilities resurface on the shop floor or in the 2011 contract renegotiation. Sources: Various articles taken from Daily Labor Report, Chicago Tribune, New York Times, and The Wall Street Journal, 1991-2006. Yet, even given the tenacious hold of this sentiment, some firms place a lower priority on remaining nonunion than others. Some employers have been pragmatic enough to recognize that in their situation either itis impossible to avoid unionization or the costs of attempting to avoid unions outweigh the potential benefits, These em in resisting unions. Thus, the intensity of employers’ resis the strategies they use to remain nonunion, avoidance strategies stand out. iployers tend to be less aggressive stance to unionization, as well as has varied across firms and over time. Two union The Historical Evolution of Two Union Avoidance Strategies Asteatlyeasith@l 9203 tWo"difTerent trate ies Were Ise BY EMpIOVERITS aVOIA URI Gireetuniow Stippression approach (actively resisting any organizing drives); andthesind ‘eet'union substitution approach (removing the incentives for unionization). Why do some firms use the first strategy while others try the second? The strategies used to avoid unionization are to some extent a function of the firm's financial resources. Ifa firm can afford the specialized personnel and employee relations Staffstniseessary to"implement the strategy, itawilleuselthenuniGHlSaBeuitition approach. ‘ThoSelfiFiis Unable absorb the Ckpenses associated withithelsubstititiGn! approach tend foloppese Unions by Wing the’ direct suppression StRateBies, Environmental factors also influence whether and how management responds to tt threat of being unionized. Factors that tend to lead Management to a suppression stratezY include the presence of a hostile political environment toward unions; employment of 10” wage workers who have few labor market alternatives; an abundant supply of alternati” workers; low recruitment costs; and a low-profit, highly competitive industry. Scanned with CamScannerChapter $ Management Sirategies and Structures for Collective bargaining, V5 Peer Review Complaii . plaint Procedui Substitution Device eet As dis , ‘cussed more fully in Chapter 11, in recent years a number of firms have instituted Peer review com ToC: ion strategy.'! This\formof for management as a union In its decision in Keeler Brass, 317 N.L.R.B. 1110 (1995), the National Labor Relations Board held that peer review type panels did not violate section 8(a)(2) so Jong as the panels simply issued final decisions on employee grievances and did not attempt to “deal with” management by negotiating how grievances were to be resolved. The ability of peer review panels to function legally within the confines of the general legislative prohibition on non- union employee representation plans creates a strong institutional incentive for employers to adopt this form of employee involvement in dispute resolution to help forestall threats of unionization. Increased Union Suppression There is some evidence suggesting that the use of union suppression tactics has increased in the past 40 years. For instance, the number of employees illegally discharged by employers during organizing campaigns, as determined by the NLRB, increased tenfold from 1960 to 1975 and remained at a relatively high level in recent years.” NLRB case records show that in recent years about one in twenty workers who vote to unionize are illegally fired for trying to organize. Thus, management's use of suppressive tactics against union activists is not merely an artifact of pre-New Deal labor history buta significant feature of contempo- rary industrial relati “at the same time, some firms continue to reduce employee incentives to unionize through the substitution strategy. Many workers reluctantly turn to unionization only after they have exhausted all other means to influence employer policies. Many firms try to use human resource policies to meet employee needs before workers become frustrated enough to turn to a union. Although many firms that institute sophisticated human resource policies do so for business reasons and not solely to avoid unions, the effect of these policies is to essen the incentive to unionize. a ; ; ‘Many firms now have some parts oftheir business unionized while other parts operate ona nonunion basis, Since the esely 1970s there has boea-substantial growth i the fection ofthe establishments operating nonunion in those firms that have both union and nonunion operations and a substantial increase in the desire of management to remain as nonunion as possible.'* The Influence of Union Structure on Management's ionization Policies eee influences whether a union avoidance strategy will be used by a firm is nthe a on in how bargaining occurs in a firm, Those firms that deal with the degree of contra aan e company are less likely than others to resist unions vigor- : ane sai opened facilities, In these bargaining relationships the dominant union ously in Scanned with CamScannerins for Collective Bargaining, 116 Part Two The Sintegie Level of Industrial Refations and Structures fir Calle agement decision makers atthe strategic level le on whether to resist orto recognize rial decision making, the Firm can mor. has the leverage needed to engage top the level where the basic decision is m union cannot reach this level of mana nce strategy. the f union, If easily adopt a on avoid General Motors Tries and Then Abandons a Southern Strategy ; The history of the United Auto Workers (UAW) and General Motors fo ales this point, In the kate 1970s, GM agreed to UAW demands and ended ieeou com strategy (opening nonunion plants in the south and resisting union-organizing a temp ) et GM neutrality the UAW agreed (0 continue union commitment to quality-of-working-tife and other workplace innovations in the existing union facilities. Since it represented production work: GM plants, the UAW had the foresight and the strength to induce GM to accept this bargain, acros The Expansion of Double-Breasting On the other hand, in some industries where unions lacked this strength, after becoming dissatisfied with their union contracts the companies were able to open either new, non- union operations or operations organized by different unions. The construction industry is an example of the former strategy. ‘A number of lage; traditionally union contractors rv developed what has been described as a double-breasted strategy — that is the running of Separate-union and nonunion divisions. imantypical double-breasted construction firm, Firms in the bituminous coal industry are examples of the latter strategy. A number of Operators that have opened new mines in recent years have strongly resisted organizing drives by the United Mine Workers (UMW) even though they have contracts with the union in their other mines, In addition, some firms that have opened surface (strip) mines in the west have Strongly opposed organizing efforts by the UMW and have managed either to remain non- union or to be organized by the Union of Operating Engincers (UOE) instead of the UMW. Because of this opposition, the UMW bargained for and won a Provision in its collective bargaining agreements designed to organize new mines, The provision gives laid-off UMW members preferential hiring rights in new mines opened by UMW-organized companies. Both the construction and the mining examples suggest that the performance of the existing union-management relationship will influence highly unionized companies to the extension of organizat an industry the more aggressively management will oppose any new union onganizi The Influence of Attitudes Held by Top Executives A firm’s opposition to unionization is measure—namely, the philosophy of th so influenced by another factor that is difficult t0 ie top corporate executives. It is these individuals who make the ultimate decisions on how hard a line to pursue against unions. Although their decisions are based in part on the potential economre costs and benefits of avoiding smnZation, they are also based on the executives’ personal views of unions The contrast between US, employers and some of their European counterparts is evi- dent, and itis often argued that European em ployers are less anti-union than their American Scanned with CamScanner118 Part Two The Sinaegic Level of Industrial Relations and Structures for Collective Bargaining Data from a number of surveys reveal the following common management industrial relations structures, '> The Size of the Labor Relations Staff A majority of surveyed corporations have labor relations staff at the plant, division, and corporate headquarters levels. Nevertheless, the number of staff members employed by these corporations in relation to the number of unionized employees varies greatly. In the 601 firms that responded in one survey, there were an average of 13.4 labor relations profes. sionals employed. The most common staffing level was one labor relations professional for each 200 to 400 union members, but there was much variation in staff levels across firms. Larger industrial relations staffs exist in those firms where unions are more able to impose significant costs on the firm. Centralization in Decision Making Im general, there is a high degree of centralization of the responsibility for labor relations Policy inside firms. Most firms place primary responsibility for developing overall union Policy atthe corporate level, either in the hands of the top labor relations executive or in the hands of the chief executive officer. In the majority of firms, the corporate labor relations execut sibility for the following functions: devel union-organizing campaigns, drawing up the final contract a ground research for bargaining, shooting activities tend to be de tive also has primary respon- loping union avoidance activities, responding to conducting contract negotiations or advising negotiators, nguage, costing union proposals, and doing the general back. Only the administration of the e ‘ontract and general trouble- even has primary Tesponsibility for the crucial decisions establis for the management negotiators, determining the issues over strike, and approving the final package. In companies or industries in sever ishing the limits of discretion which the firm should take a or in negotiating concession agreements. This has been the case in the aitline industry in recent years, especially in the difficelt environment that followed the September 11, 2001, terrorist attacks. The CEOs of United Airlines and US Airways, for example, were the chi i Specialization of the Labor Relations Function There is evidence that power has shifted downward within ‘management structures in recent Years. Labor relations specialists have been losing power to line managers and, to a some What lesser degree, to human resource specialists, The main reason for this is that firms now have less need for the traditional expertise of the labor relations specialist—that of Scanned with CamScannerChapte "1 ructure is 5 Management Srateyiex and Structures for Collective Bary 2 achieving stability, labor Peace, avoidance, cost control, and fle Rather, firms want expertise in union making cha ibility in work rules, and achieving these goals req 's in workplace Practices. This does not mean, however, th Indeed, case studies reveal that low ‘mistakes some of th as they tz asthe hs ” decisions. In one large firm a career of how the new vice president of labor rela- tions who w. ; resident of labor rela. Out How the aa stetTed from another functional area had to callin the “old hands” to find Ow the contract ratification procedures worked. AS a result of their continuing needs for depend on teams of labor relations speciali Policies and agreements, But a number of m: groups for labor relations, and others have bargaining proposals, Ss at labor relations specialists are no longer necessary. ns managers secretly delight in the technical expertise, most firms continue to sts to conduct negotiations and implement jor firms have established strategic planning, used cross-functional teams to develop new ‘The careers of labor relations professionals are changing dramatically and thus pose new educational and training requirements. The industrial relations professionals of the future Will need the following Business, analytical, and planning skills -xpertise in both traditional labor relations activities and personnel or human resource management activities. 3. A thorough understanding of operating management issues. 4. An ability to work as a member of a multidisciplinary team in implementing labor tions strategies and poli ing innovative labor-management organizational change efforts. tions and service delivery. rel 5. Skills in mani 6. Expertise in Web-based communi Corporate Restructuring and Governance Throughout the pst decade corporation increasingly moved toward “coe compeeney” sines «1, Those functions deemed central to the core business processes of the firm ae *. boundaries; other functions were increasingly outsourced to other remained inside ae me strialrelatons in two Ways. First and mos importantly, many firms. This trend affected in fe operations, and this often had the effect of reducing firms outsourced their mnt ise Companies such as Lucent Technologies (formerly the be Oh pattern, When Lucent was spun off fiom AT&T in 1994 ithad part of AT&T) Hustle Tplovees of which just under 50,000 were union members. By the approximately 90.000 enh only declined in size as it lost market share andthe overall end of the decade Lucent ie edit had also sold off most of its manufacturing opera- telecommunications mit rectly on research and development of new technologies and tions in order to focus mOt- units. By 2002 less than 20 percent of Lucent's workforce on its service-oriented DUSITES. hat industrial relations professionals in firms like was unionized. At aah reaotiating te issues involved in transferring employees and Lucent therefore do s indaries. fore do i rdinaing the flow of people and work aeross fem bou contractual rights a Scanned with CamScanner120. Part Two Phe Strutt Level uf bndustrial Relations anu Structures for Collective Mangala, Summary The second eflvet of recent human resource services heretofore provided in hous s services have been outsourced by many compan payroll, and other routine employ This reduces the career advaneeni professionals now spend a mployment practices with spec inn seandi and executive compensatic ment profession, ineludin, 1 better protect inve: corporate governa porate restructuring Bi ML opport ‘Tuding those serving in the industrial relations Junction reasing, amount of their time negotiating ized (outside) human resource service providers, The crisis in corporate confidence that emerged in the wake of the visible vent year’ those in labor relations, Whether the corporate reforms desipned so extended so as to strengthen worker rights in. What is more likely is that these issues will surface mop, been to outsour ining, benefits n MY OF the nay lent, ties for human resource profession) Ast result, industrial relation and coordinatiny ‘countin ast a shadow on all of the manaye. nd voice in directly at the bargaining table and in union-management relations more generally in the yement years ahead, Thus, ma in understanding how corporate governance works in the United States other countries where workers have stronger legal rights to information, consultation, representation in corporate governance. Historically, management has accepted the general value that unions provide to American society, yet aggressively avoided the expansion of unionism, Although most managers accept in the abstract the principle that unions have a legitimate role to play in 4 democratic society, in practice managers continue to act on the belief that unions are either unnecessary or undesirable within their own organization. Yet management also continues to be as pragmatic as ever. If the costs of union avoidance are too high—that is, if unions are 100 powerful to avoid—management will work with union leaders to develop the strategies needed to be competitive. Many firms have been able to pursue two strat- egies simultaneously: They avoid further unionization in one location in the firm, while they cooperate with the existing union another, It remains to be seen if manage- ‘ment will continue to enjoy such discretion and power in the years ahead. Firms generally follow either a paternal- istic, bureaucratic, human resource, con- flict, New Deal, or participatory industrial bor relations professionals will need to be well educated 1 perhaps relations pattern. For each of these pats there is a set of basic personnel polici Which of these patterns a firm pre to follow is, in part, shaped by the firm's business strategy. Where some of its employees are unic ized, management turns to its indu relations staff to represent its interests collective bargaining. These staffs vary their size, centralization, and specification Given the changing nature of the cor- poration and that the scope of what w is performed within corporate boundari and what is outsourced to specialized firm is changing, the nature of the labor reli- tions task is changing, It is shifting one focused primarily on interactions with unions to one that requires considerable cross-firm as well as union-mans negotiations, coordination, and administ tion, Moreover, current debates over corpo- rate governance may portend future changes in the knowledge base, skills, and activities of labor relations professionals. Management makes a number of stra tegic choices in its relations with unions Scanned with CamScannerDiscussion Questions Related Web Sites Suggested Readings Chapter 5 ions regar ly to tesist the expansion of union representation and how to relate to any unions that represent employees in a firm. Management's strategic industrial relations choices appear to be influenced by the business strategy pursued by the firm. Management's strategic choices also are how - Briefly describe the nonunion industrial relations patterns found in Exhibit 5-1, 2. Describe the relations found ion patterns of industrial Exhibit 5-1. 3. Contrast the primary two union avoid- ance strategies used by management, IBM: http://www.ibm.com Delta Airlines: http://www.delta-air.com/gateway/ about/index.html Eastman Kodak: http://www.kodak.com/aboutKodak/ aboutKodak.shtml Motorola: http://www.mot.com/General/ inside.html DuPont: http://www.dupont.com/Corp/ gbl-company/index.html Michelin Tire: http://www. home.htm ichelin.com/us/eng/ Bendix, Reinhard. Work and Authority in Industry (New York: John Wiley, 1956). Chandler, Alfeed D., Jr. Strategy and Structure (New York: Anchor Books, 1966). Foulkes, Fred. Personnel Policies of Large ‘Nonunion Companies (Englewood Cliffs, NJ: Prentice Hall, 1980). Harris, Howell. The Right to Manage (Madison: University of Wisconsin Press, 1982), Management Strategies and Structures far Collective hargaining Wan strongly influenced by the str sen by unions, If the respective union that management must bargain with prefers: a confrontational approach, for example, it is unlikely that management would then choose to promote a participatory pattern of industrial relations. The next chapter con- siders union strategy and structure. leyies cho- 4, Describe the three key aspects of mana cement industrial relations staff structure 5, What tactics did the Caterpillar Corp- oration use in its dispute with the UAW What factors gave Caterpillar manage- ment bargaining leverage? Marriott Hotels: http://www.marriotthotels.com ‘Sears Roebuck: http://www.sears.com/company/pubaff/ pubaff.htm Caterpillar Corp.: http://www.cat.com/about/index.htm Union of Operating Engineers (UOE): http://www.iuoe.org/index.html John Deere & Co.: http://www.deere.com http://www.deere.com/news/ teampower98.htm American Airlines: http://www.aa.com Jacoby, Sanford. Modern Manors (Princeton: Princeton University Press, 1997). Milkovich, George T., and Jerry Newman, Compensation, 7th ed. (Boston: McGraw- Hill, 2002), Slichter, Sumner, James J. Healy, and E, Robert Livernash. The Impact of Collective Bargaining on Management (Washington, DC: Brookings Institution, 1960). Scanned with CamScanner122. Part Two. The Smutegic Level of Industrial Relations and Siructures for Caltective Marygatniins End Notes . Delta Airlines . For Topologies of industrial relations: patterns with some similarities to this. scheme are provided in Richard C, Edwards, Contested Terrain (New York: Basic Hooks, 1979) and: in Alan Fox, Beyond Contract: Wark, Power and Trust Relations (London; Faber and Faber, 1974). . See Peter Doctinger, “Internal Labor Markets and Paternalism in Ri Areas," in Internal Labor Markets, ed, Paul Ost (Cambridge, MA: MIT Press, 1984) This sophisticated human resource n ment pattern developed in a few nonunion firms in the 1950s and had roots in ear- lier corporate policies of the 1920s (ofte labeled welfare capitalism; see Chapter 2) not a pure case of this nonunion pattern because its pilots are unionized. history of the personnel policies fol- lowed by Sears, see Sanford M. Jacoby, Modern Manors (Princeton: Princeton University Press, 1997), . For evidence on the role of the founding executives, see Fred Foulkes, Personnel Policies in Large Nonunion Companies (Englewood Cliffs, NJ: Prentice Hall, 1980). . Thomas A. Kochan, Robert B. MeKersie, and, John Chalykoff, “The Effects of Corporate Strategy and Workplace Innovations on Union Representation,” Industrial and Labor Relations Review 39 (Suly 1986): 487-501, . Jeffrey B, Arthur and Suzanne Konzelmann, Smith, “The Transformation of Industrial Relations in the American Steel Industry, in Contemporary Collective Bargaining in the Private Sector, ed, Paula Vos (Ithaca; HR Press, 1994), 9, 10, Vor a history of how Southwest Ainine labor policies fit with the company’s his, hess strateyy and contributed to itn over the years, see Jo Hoffer Gittell, The Soubweut Way (New York: MeCirww-ti 2002) Douglas ¥. Brown and Charles A, Myer “The Changing Industrial Relations losophy of American Management’ Proceedings of the Ninth Annual Winter Meetings of the Industrial Relation Research Association (Madiwon, WE I 1957), p. This section draws heavily from Alexa Colvin, “Citizens and Citadely: Di Resolution Procedures in the Workplace,” Industrial Relations, fort coming. . Richard B. Freeman and James L. Medotf, What Do Unions Do? (New Y Books, 1984), p. 232. Compare the 1977 Conference Board described in Audrey Freedman, Mana Labor Relations: Organization, Objectives and Results (New York: Conference Bos! 1979) with the 1983 survey in Aude Freedman, A New Look in Wage Bary (New York: Conference Board, 1985}, Alfred D. Chandler, Jr, Strategy Structure (New York: Anchor Books, p. 5. The observations in the discussions th follow are derived trom the Conferet Board survey described in Freedman, 1983 and 1985, Hasic Scanned with CamScanner