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Chapter 01

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Contemporary Labor Relations

Contemporary Labor Relations

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  • 1.  
  • 2. Foundations
    • Labor relations is more than negotiating employment contracts
      • The labor relationship
      • Key models of the employment relationship
      • Determinants of labor relations outcomes
  • 3. Foundations
    • Topics by Chapter
      • Contemporary Labor Relations Objectives, Practices, and Challenges
      • Labor Unions: Good or Bad?
      • Labor Relations Outcomes: Individuals and the Environment
  • 4. Learning Objectives
    • By the end of this chapter…
      • Understand why studying labor relations is important, and how it can be fascinating
      • Define the objectives of the employment relationship (efficiency, equity, and voice) and of labor relations (striking a balance)
      • Describe the basic features of the contemporary U.S. labor relations system exclusive representation, collective bargaining, detailed contracts, and private sector union density decline
  • 5. Learning Objectives
      • Discuss the current pressures on the U.S. labor relations system
        • On the corporate side, workplace flexibility and employment involvement
        • On the labor side, low union density, a representation gap, and difficulties organizing new workers
      • Determine that there are many different options for structuring labor relations systems, as illustrated by examples from around the world
  • 6. Objectives of Employment Relationships
    • What do you want to get out of working?
      • Money?
      • Health insurance?
      • A feeling of accomplishment?
      • A sense of self-worth?
      • Something else?
  • 7. Objectives of Employment Relationships
    • How do you want to be treated?
      • Like a machine, or fairly and with respect?
      • Do you want to be told what to do?
      • Would you rather have input into the job?
    • What do employers want?
      • High-quality work
      • Productivity
      • Team players
  • 8. Objectives of Employment Relationships
    • Efficiency
      • Productive use of scarce resources for economic prosperity
    • Equity
      • The provision of fair labor standards for both material outcomes and personal treatment
    • Voice
      • The ability of employees to have meaningful input into workplace decisions
  • 9. Objectives of Employment Relationships
    • Efficiency, equity, and voice often clash
      • Equitable treatment might reduce flexibility and efficiency
      • Employee voice might make decision making more cumbersome and therefore less efficient
      • Unions centralize power to better achieve equity, but become less responsive to individuals
    • Labor relations must strike a balance between these conflicting goals
  • 10. Regulation of Employment Relationships
    • The U.S. not only tolerates collective bargaining, but encourages it
      • Everyone has the right to form and join trade unions for the protection of his/her interests
    • Bargaining Objectives
      • Negotiate the terms and conditions of employment
      • Mutual aid
      • Protection
  • 11. The Role of Labor Unions
    • Although stereotyped with inflated wages and restrictive work rules, unions typically
      • Secure better wages to provide decent living standards for their members
      • Negotiate extensive work rules to protect members against unfair treatment by management
      • Provide voice and representation to individual workers
  • 12. Plan of the Book
    • Part 1
      • Presents the major themes of labor relations
    • Part 2
      • Focuses on New Deal industrial relations system
      • History of the system and labor law
      • Strategies, structures, and conflicting rights
      • How unions are formed
      • How contracts are negotiated
      • Resolution of bargaining disputes
      • How grievances are solved
  • 13. Plan of the Book
    • Part 3
      • Focuses on issues straining the New Deal industrial relations system in the 21 st century
        • Employee involvement
        • Workplace flexibility
        • Globalization
    • Part 4
      • The current state of employment affairs and future options for reform
  • 14. Major Components of the Book
  • 15. Efficiency
    • Efficiency is important to the employment relationship because of its effect on
      • Competitiveness
      • Economic development
      • Economic prosperity
    • Efficiency equals Pareto optimality
      • No one can be made better off without making someone else worse off
  • 16. Efficiency
    • The efficiency of self-interested individuals exchanging in free markets is fostered by
      • Well-defined property-rights
      • The freedom to enter into contracts
      • Protections against property damage
    • These economic and legal theories are mutually reinforcing
  • 17. Market Failure
    • An inefficient outcome is a market failure
      • Trying to correct this failure through government regulation or subsidies can make things worse
    • Labor market “perfect competition”
      • Employers and employees are economic and legal equals
      • Real-world market imperfections can favor the employer
  • 18. Labor Market Failure
    • The realities of labor markets
      • Employees have incomplete information about dismissal policies, accident risks, or pensions
      • Individuals without financial resources aren’t the legal equal of corporations
    • Employees are made less mobile by
      • Labor markets
      • Unvested pension benefits
      • Health insurance
      • Lack of savings or other resources
  • 19. Labor Market Failure
    • Superior employer bargaining power can produce
      • Low wages and long hours
      • Dangerous conditions
      • Arbitrary or abusive supervisory practices
    • These conditions undermine
      • Trust
      • Cooperation
      • Motivation
  • 20. Labor Market Failure
    • Industrial Parasitism
      • A company profits from paying low wages with no health insurance
      • Society pays for food and medical care for the workers’ families
  • 21. Efficiency in Employment Relationships
  • 22. Equity Standards
    • The push for equitable employment focuses largely on minimum standards
      • Minimum wages
      • Maximum hours
      • Minimum safety standards
      • Protections against arbitrary discharge and favoritism
      • Restrictions on child labor
  • 23. Equity
    • Equity theory defines fairness in terms of inputs and outputs or effort and reward
      • A fair day’s pay for a fair day’s work
      • Distributive justice
    • Other equity factors
      • Political equality
      • Social stability
      • Workplace fairness
  • 24. Equity Factors
    • Workplace equity can also be based on
      • Political theories of liberty and democracy
      • Moral views of human dignity
      • Humanistic psychology theories of human nature
      • Religious beliefs about the sanctity of human life
  • 25. Sources of Support for Equity
    • Democratic Ideals
      • Discriminatory treatment and a lack of minimum standards is counter to the ideals of democracy
      • Citizens should be free and equal
      • Citizens must have a basic level of material well-bring to function as political equals
      • Equal protection
      • Due process
  • 26. Sources of Support for Equity
    • Principles of Human Dignity
      • Paying unfair wages violates Kant’s philosophy that actions must treat humanity as an end, not as a means
      • According to Maslow, the workplace should provide the basics needed for self-development and actualization
  • 27. Sources of Support for Equity
    • Many religions emphasize sanctity of human life and respect for human dignity
      • Standards for wages and hours of work
      • Sick and disability pay
      • Justice, fairness, and equitable distribution of wealth
      • Lack of discrimination or favoritism
      • Restrictions on child labor
  • 28. Voice
    • Having meaningful input into decisions
      • Workers should be able to express unpopular views without fear of arbitrary treatment
      • Disagreements should be resolved through fair dispute resolution procedures
      • Workers should be able to participate in decision making, either directly or through representatives
  • 29. Voice
    • Key Distinctions
      • Management establishes/controls the collective voice mechanism for nonunion employees
      • Unions that represent individual employees are largely free of managerial authority
    • Employee voice is an important part of
      • Improving competitiveness and quality via employee involvement programs
      • Creating high-performance work systems
  • 30. Voice
    • Benefits of Employee Voice
      • Formal mechanism for employees to contribute to productivity-improving ideas
      • Fulfills need for personal growth and development
      • Enhances performance through increased job satisfaction and motivation
      • Improves two-way communication between employees and management
      • Increases cooperation and reduces turnover by facilitating trust and sense of fairness
  • 31. Voice
    • Industrial Democracy
      • Premised on belief that workers are entitled to democratic participation in the workplace
    • Theory versus Reality
      • The workplace as a school or training ground for democracy
      • Work is often undemocratic
  • 32. Voice
    • Stakeholder Theory
      • All stakeholders, not just shareholders or owners, deserve the right to participate in decision making
      • Not arguing in favor of labor unions
    • Voice Perspectives
      • Moral
      • Religious
      • Psychological
      • Political
      • Economic
  • 33. Isn’t Efficiency Enough?
    • Efficiency, measured by profits, is often the only consideration
      • Mainstream media has elevated the rights of consumers over the rights of workers
      • General belief is “what’s good for a company is good for the world”
      • Businesses are not designed to be democratic training grounds
      • A company has no obligation to provide personal and moral development
  • 34. Social and Human Boundaries
    • Equity and voice are social boundaries on efficiency
      • Often quite weak, as with employment-at-will
      • Lack of just cause discharge protections
    • In agrarian and crafts-based societies, quality of life is linked to property
      • Modern workers are dependant on jobs, not property
  • 35. Social and Human Boundaries
    • Jobs and the Workplace
      • The most important site of cooperative interactivity and sociability with adults, outside of the family
      • Economic inequality exacerbates social inequalities in
        • Schooling
        • Health
        • Housing
        • Political participation
  • 36. Social and Human Boundaries
    • Most workers want more influence over decisions that affect their job or work life
      • They would enjoy their jobs more
      • Their businesses would be more competitive
    • Managers like to deal with workers 1-on-1
      • Half of workers prefer dealing with management as a group
    • The Internet and email help workers exercise their voice
  • 37. Unions and Voice
    • Unions underscore voice in union literature and campaigns
      • Unions overseas also emphasize voice
    • Social commentators, labor leaders, and workers want
      • Fairly distributed outcomes (equity)
      • Participation in decision making (voice)
      • Profitable and effective production of goods and services (efficiency)
  • 38. Contemporary U.S. Labor Relations
    • Why might society and workers support unionization?
      • Unions help strike a balance between efficiency, equity, and voice
    • U.S. labor law assumes that corporations have greater power than individual workers
      • This can result in substandard wages and benefits, discriminatory treatment, autocratic supervision, long hours, dangerous working conditions
  • 39. Contemporary U.S. Labor Relations
    • U.S. labor law protects union activity in order to promote
      • Efficiency : increasing the purchasing power of workers and reducing disruptive strike activity
      • Equity : achieving fair standards and protections against exploitation
      • Voice : providing democracy in the workplace
  • 40. Contemporary U.S. Labor Relations
    • If a majority of workers want union representation
      • The employer must bargain with the union over wages, hours, other terms/conditions
      • Workers cannot be fired or discriminated against for their union support
      • Employers cannot threaten employees or take action to prevent unionization
  • 41. Collective Bargaining
    • Representatives of the employer and employees negotiate employment terms and conditions
      • Compensation (economic items)
      • Personnel policies/procedures (language issues)
      • Employee and employer rights and responsibilities
      • Union rights and responsibilities
      • Dispute resolution and ongoing decision making
  • 42. Collective Bargaining
    • The crucial feature of collective bargaining
      • Management’s authority to unilaterally establish the terms and conditions of employment is replaced by bilateral negotiations
      • Workers have a collective voice
    • The result of bargaining is a contract
      • One page in 1937
      • Hundreds of pages and multiple volumes today
  • 43. Collective Bargaining
    • Pressures for competitiveness and quality add pressure to collective bargaining
      • The need for flexibility (efficiency) clashes with lengthy contracts with detailed work rules (equity)
      • The need for cooperation and employee involvement clashes with the adversarial bargaining process
      • The need for flexibility and involvement is not well served by long-term contracts
  • 44. Pressure for Reform
    • Management’s Perspective
      • Adversarial negotiations do not promote trust and cooperation
      • Need to supplement high-level, periodic negotiations with ongoing low-level communication and problem-solving mechanism
      • Lengthy, detailed contracts inhibit flexibility and involvement
      • Labor laws are outdated
  • 45. Pressure for Reform
    • Labor’s Perspective
      • Labor law is weak
        • Penalties are minimal
        • Delays are frequent
        • Employers can use captive audience speeches and permanent strike replacements
        • Secondary boycotts are prohibited
      • Private sector union density is less than 10 percent
      • Workers in the global economy need protection more than ever
  • 46. Declining Union Membership
    • Private sector U.S. union density has been declining for at least 50 years
      • Decline in traditionally unionized industries
      • Regional and demographic shifts
      • Increased numbers of women in the workforce
      • Increased education and skill levels
  • 47. Declining Union Membership
  • 48. Declining Union Membership
    • Demand for union services has declined
      • Unions not doing a good job of responding to the needs of a changing workforce
      • Employers have improved their responsiveness to employees’ needs
      • Increased protective legislation has provided a substitute for unions
        • Civil Rights Act and Equal Pay Act
        • Occupational Safety and Health Act
        • Family Medical Leave Act
  • 49. Declining Union Membership
    • Employer Resistance or Opposition
      • American managers are exceptionally hostile toward unions
      • Strong tradition of using union avoidance tactics
      • Failure to invest in unionized plants
      • Actively fighting organization drives
  • 50. Representation Gap
    • Employees want more representation in the workplace than they have
      • One-third of nonunion workers would like a union in their workplace
      • Union density is only 10 percent
    • Is this related to private section employer opposition to unionization?
      • Also declining in Great Britain
  • 51. Global Snapshot of Labor Relations
  • 52. Continued Relevance of Labor Relations
    • Labor relations continues to be a relevant and dynamic area of study and practice
      • All managers should understand labor relations
      • U.S. labor laws affect both union and non-union workplaces
      • Reveals consequences of poorly managed workforces
      • Explains historical, social, and political influences on business
      • Helps everyone understand and resolve conflict
      • Reveals how work and business are embedded in a complex environment
  • 53. Continued Relevance of Labor Relations
    • Labor relations involves diverse factors
      • Market forces
      • Managerial strategies
      • Forms of work organization
      • Constitutional and legal issues
      • History
      • Questions of human rights
      • Negotiation and conflict resolution strategies
      • Debates over globalization
      • Ethical challenges
  • 54. Continued Relevance of Labor Relations
    • Underlying labor relations issues
      • Goals of the employment relationship
      • How labor markets operate
      • Major environmental pressures
      • Union strategies
      • Public policy

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