Conflict and Management: Unions

BOH4M

Unions

Canadian labor laws guarantee the right of all workers to form a union and to conduct a union strike

Unions organize to represent the working people as a whole in contract and employment negotiations with their employers

Why unionize?

Higher Wages US Bureau of Labor Statistics

reports that mean weekly for a full-time union member in the United States in 2007 was $863, compared to $663 for regular workers.

Why unionize?

Better Benefits Unionized workers are much more

likely to receive health insurance, pay lower premiums, have more paid sick and vacation leave

Also more likely to get retirement benefits, long-term care insurance, etc.

Why unionize?

Better Working Conditions Safer conditions. Benefits such as more breaks,

employee break rooms, training, and employee discounts.

Why unionize?

Increased Job Security Most union contracts provide that a

member can only be fired or laid off for just cause.

Union grievance procedures give workers the opportunity to appeal if their employer does fire them.

Why unionize?

Protected Strikes Strikers participating in a union-

authorized strike also often get “strike pay” to help offset the hardship of not earning a paycheck during the strike.

Why unionize?

A Voice in How Work is Done The voice workers gain through

collective bargaining allows them to take part in decisions that will affect their work environment – from when breaks may be taken to the procedures for performing a particular task.

The Case Against Unions?

Higher wages + more benefits = higher cost to employer A unionized business faced a

competitive disadvantage

The Case Against Unions?

Hard to get rid of employees who are unproductive or problematic Termination process can take years

The Case Against Unions?

Can be harder to implement change Collective bargaining agreement

usually stands for a few years, changes can’t be made until the current agreement expires

The Case Against Unions?

Employees have to pay union dues All employees have to be union

members Can’t opt out

The Case Against Unions?

Lower Productivity Incentive to “do the bare minimum”

since promotions are usually based only on seniority, not performance

Other considerations…

In 1980, CEOs at Fortune 500 firms were paid 42 times the average worker’s salary

By 2007, they were being paid on average 364 times as much

Case Study

Detroit’s “Big Three” Ford GM Chrysler

All are unionized (UAW) All have faced serious market share

erosion from Japanese competition (Toyota, Honda, Nissan), none of which are unionized

All have come close to bankruptcy in recent years (GM did go bankrupt)

The Cost Disadvantage

Labour burden (wages, benefits, pensions) estimated to be more than $2,000 per car Ford, for example, needs to cut $2,000

worth of features and quality out of its Taurus to compete with Toyota’s Avalon.

They cost the same to consumers, but the Avalon feels like a better product — it has $2,000 more put into it.

Management

Ford lost a record $13 billion in 2006 and hired Alan Mulally (from Boeing) as CEO He received $28 million for 4 months in

2006, despite Ford stock hitting a 40 year low

Ford executives' use of corporate jets for personal travel cost shareholders almost $1 million in 2006

Management

Former General Motors Corp. Chairman and Chief Executive Rick Wagoner gets a pension and other benefits worth an estimated $23 million GM went bankrupt under his watch

Management

In 2007 Top Japanese CEOs received on average $1.5 million or about 90% less than American CEOs.

Who’s at fault?

Union costs mean Big 3 can’t compete?

How do you justify cutting workers wages when upper management gets such ridiculous compensation?

Other poor management decisions? Making cars people don’t want Poor quality