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Human Resource Management

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Human Resource Management (MGT501)
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Lesson 35
TRADE UNIONS
After studying this chapter, students should be able to understand the following:
A.
Unions
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
procedures.
A. Unions
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.
f.
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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B. Collective Bargaining
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.
I.
Labor Management Relations and Collective Bargaining
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.
.
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.
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.
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.
D. Phases of Labor Relations
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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KEY TERMS
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.
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Table of Contents:
  1. INTRODUCTION TO HRM:Growing Importance of HRM, Road Map of the Course
  2. ESSENTIALS OF MANAGEMENT:Concepts and Essential of Management, Managerís Roles
  3. ORGANIZATION AND COMPONENTS OF ORGANIZATION:Open versus Closed Systems, The Hawthorne Studies
  4. PEOPLE AND THEIR BEHAVIOR:Why to work in organizations?, The Goals of Organizational Behavior
  5. INDIVIDUAL VS. GROUP BEHAVIOR:What Are Roles?, Problem solving Team
  6. PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT:Records and Administration, Competitive Advantage
  7. HRM IN A CHANGING ENVIRONMENT:Productivity, New Trends at Work Place
  8. How organization Cultivate a Diverse Workforce, STEPS TOWARD MANAGEMENT OF DIVERSITY
  9. FUNCTIONS AND ENVIRONMENT OF HRM:Compensation and Benefits, Safety And Health, Interrelationships of HRM Functions
  10. LINE AND STAFF ASPECTS OF HRM:Authority, Line versus Staff Authority, Staff Manager
  11. LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences
  12. HUMAN RESOURCE PLANNING (HRP):Benefits of HR Planning, Forecasting Human Resource Availability
  13. STRATEGIC PLANNING AND HRIS:HRís Strategic Role, Human Resource Information System, Common HRIS Functions
  14. JOB ANALYSIS:Purposes of the job Analysis, Questions Job Analysis Should Answer
  15. JOB ANALYSIS:Methods of Collecting Job Analysis Information, Observation, Source of Data
  16. JOB ANALYSIS (CONTD.):SURPLUS OF EMPLOYEES FORECASTED, Diversity through Recruiting Efforts
  17. SOURCES OF RECRUITMENT:ALTERNATIVES TO RECRUITMENT, Quantity of the Applicants, Quality of the Applicants
  18. SELECTION:Initial Screening, Advantages of Successful Screening
  19. SELECTION TESTS:Characteristics of Properly Designed Selection Tests, Guidelines for Conducting an Interview
  20. SELECTION PROCESSÖ CONTD:Background Investigations, Physical Exam, Selecting Managers
  21. SOCIALIZATION:Compensation and Benefits, Team Membership, Stages in socialization Process, Training and Development Trends
  22. TRAINING AND DEVELOPMENT:Learning, Phases of Training, Why Transfer of Training Fails
  23. MAXIMIZING LEARNING:Following up on Training, Repetition, Feedback, Purposes of T & D
  24. CAREER MANAGEMENT:Individual career planning, Career Planning and Development Methods
  25. PERFORMANCE:Determinants of Job Performance, Why is performance measured?, Performance Management
  26. PERFORMANCE APPRAISAL:What to Evaluate, The Appraisal Interview, PROBLEMS IN PERFORMANCE APPRAISAL
  27. JOB EVALUATION AND PRICING:THE APPRAISAL PERIOD, Ranking method,
  28. COMPENSATION SYSTEM:Pay, Job Pricing, Compensation: An Overview, Compensation Surveys
  29. BENEFITS:Total Compensation, Discretionary Benefits (Voluntary), Workplace Flexibility
  30. ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES:Types of Pay-for-Performance Plans, Empower Employees
  31. MOTIVATION:The Motivation Process, Motivational Theories, Challenges of motivating employees
  32. OCCUPATION, HEALTH & SAFETY:Physical Conditions, Accident Investigation, Smoking in The work place
  33. STRESS MANAGEMENT:Symptoms of Stress, Managing Stress,
  34. COMMUNICATION IN ORGANIZATION:Burnout, Social Support at Work & Home, Communication in organization, Meetings
  35. TRADE UNIONS:Collective Bargaining, The HRM Department in a Nonunion Setting, Phases of Labor Relations
  36. CONFLICT AND NEGOTIATION:Transitions in Conflict Thought, Individual Conflict Management Styles
  37. POWER AND POLITICS:Sources of Power, Advantages and Disadvantages of PowerPower and Politics in Context
  38. EMPLOYEE RIGHTS AND DISCIPLINE:Contractual Rights, Management Rights, Disciplining Employees,
  39. DISCIPLINE (CONT...):Factors to Consider when Disciplining, Disciplinary Guidelines, Employee Separations
  40. LEADERSHIP:The Leaderís Behavior, Situational Theories of Leadership, Becoming a Leader
  41. REVISION (LESSON 12-21):Plans, Job Specification, Human resource planning, Selection Process, Corporate Culture
  42. REVISION (LESSON 22-26):Training, Case Study Method, Training, Performance
  43. REVISION (LESSON 27-35):Classification Method, Compensation, Empowerment, Mediation
  44. INTERNATIONAL DIMENSIONS OF HRM:Global Corporation, Type of staff members, Approaches to Global Staffing
  45. CONCLUSION & REVIEW:Strategies for Gaining Competitive Advantage, High-performance Work System