LIR 858 Alsadeg 1

Hussain Alsadeg

Labor Relations Practice in Business and Employee Involvement

The Industrial Relations approach to managing the employee/employer

relationship has been losing the battle against the Personnel Management

school practices. Most integral to the recent personnel management approaches

is Employee Involvement. “Fifty-two percent of employees in the Workplace

Representation and Participation Survey reported that some form of employee

participation program operates in their workplace and 31 percent indicate

that they participate in an employee involvement program” (Commission on the

Future of Worker-Management Relations). Employee Involvement and empowerment

practices are thought to weaken labor unions; as the approach to rewards and

empowerment is distributed to individuals instead of being collectively

bargained. While employee involvement has demonstrated to bring enhanced

productivity and effectiveness, there is concern that employee involvement

programs violate Section 8(a)(2) of the NLRA; this section of the law states:

“Sec. 8. [§ 158.] (a) [Unfair labor practices by employer] It shall be an

unfair labor practice for an employer--(2) to dominate or interfere with the

formation or administration of any labor organization or contribute financial

or other support to it: Provided, That subject to rules and regulations made

and published by the Board pursuant to section 6 [section 156 of this title],

an employer shall not be prohibited from permitting employees to confer with

him during working hours without loss of time or pay” (National Labor

Relations Act). While employee involvement programs increase productivity and

improve the employees’ working lives, there is fear that this practice will

replace traditional labor unions with company unions that dominate the

relationship between employees and the employer. The rise of the cooperative

ethic and team-based work structures influenced the rise of employee

involvement. The majority of private organizations today adopt Human Resource

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Management approaches to the labor relationship; while collective bargaining

public support has dropped. A 2013 Pew opinion poll revealed that 51% of

Americans have a favorable view of labor unions, an increase from 41% in 2011

(Drake, 2013). The opinion on unions has been tied to their large and

influential power, and economic impact on business.

Labor unions have come a long way since the indictment cases against

collective bargaining and the new deal of 1935. These were days of struggle

for the common working man; days that the Knights of Labor emerged from; days

of large capital banks, heavy investment & wealth, and the social & economic

struggle of the industrial revolution. As masters of capital had a large pool

of migrant workers to utilize in labor-intensive enterprise, traditional

craft producers were facing competition that would force them into

substantial losses and downward mobility. This disparity in economic

conditions and unequal labor voice sparked the labor movement. The aim of the

labor movement was to bring power and equality between capitalists and

workers, as there was great disparity in the distribution of wealth.

Organized labor took many forms, as different organizations and coalitions

were formed around different industries. The establishment of the National

Labor Relations Act of 1935 paved the way for modern labor relations. Labor

union membership was most popular during the period between 1935 until it

peaked at 36% (percentage of workers in Unions) in 1953. The most notable

labor organization today is the American Federation of Labor–Congress of

Industrial Organizations (AFL-CIO), which came in existence after the merger

of AFL and CIO in 1955. Today labor union membership is at 11.3%.

Reasons for this decline in labor unions have been attributed to many

factors. The passage of the Taft-Hartley Act of 1947 is attributed by some to

be the principal cause of the decline of the labor movement, as it outlawed

mass picketing, secondary strikes of neutral employers, sit downs; all of

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which were core sources of power for unions. Another aspect of the Taft-

Hartley Act is diminished labor movement power, as it changed how unions can

be formed; this slowed the process for labor to organize and eventually

enabled “union-busting” activities (Noah, 2010).

(U.S. Bureau of Labor Statistics, 2013)

Employee Involvement has proven to produce positive results in organizations

which utilize it. Employee involvement is a very important component to

modern Human Resources Management, as the findings for cooperative

relationships between employers and employees establishes increased business

performance. The relationship between employers and unions has traditionally

been adversarial. Organizations that maintain these adversarial relationships

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undermine the effects of employee involvement programs. The following is a

list of outcomes from Employee Involvement programs:

(Allen & Norman, 1996)

The list above details many favorable business outcomes to employee

involvement. The research and writings of Edward Lawler have proved the large

beneficial impact of employee involvement. Lawler points to five (5)

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performance measures that employee involvement impacts in the following

table:

(Lawler, 1999)

The State of the American Workplace Report of 2013 performed by Gallup

showcases employee involvement’s impact on several key performance indicators

in the following graph:

(Gallup)

Employee involvement has many definitions across different organizations.

There is current discussion trying to contrast between employee involvement

and employee engagement; while both terms seem synonymous, involvement is

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defined as: “to have or include (someone or something) as a part of

something” (Involvement - Definition), whereas engagement has many meanings

to its definition as: “1- an arrangement to meet or be present at a specified

time and place, 2- a job or period of employment especially as a performer,

3- emotional involvement or commitment, 4- the state of being in gear, 5- a

hostile encounter between military forces” (Engagement - definition).

Contrasting between the two the word involvement is clear in its purpose;

whereas the purpose of the word engagement depends on the context it is in,

as such is more ambiguous to understand. Also, employee engagement in

business in commonly used to refer to employee motivation, or the level of

organizational commitment.

As such I would prefer to use the term employee involvement when referring to

the business management approach. Employee involvement is defined as: “a wide

variety of practices that move information, knowledge, power, and rewards

downward in organizations” (Mohrman, Lawler, & Ledford, 1996). Employee

involvement is employee empowerment or employee voice, other definitions

include: “Regular participation of employees in (1) deciding how their work

is done, (2) making suggestions for improvement, (3) goal setting, (4)

planning, and (5) monitoring of their performance” (What is employee

involvement), and “The direct participation of staff to help an organization

fulfill its mission and meet its objectives by applying their own ideas,

expertise, and efforts towards solving problems and making decisions”

(Bullok).

The drivers of employee involvement are the approaches and philosophy

management uphold towards the elements of employee involvement, which are:

- Power: is the empowerment of employees to make decisions affecting the

organization as a whole. Empowerment occurs on two levels, they are:

strategic decision making and operational decision making. To

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accomplish the principles of employee involvement the organization must

empower employees to address both the strategic issues that drive the

organization and the operational tasks and processes they work on. Most

organization only empower employees to resolve operational issues, this

is only a partial method to involvement. When employees are empowered

to address both strategic and operational issues, the organization is

able to reduce the many layers of bureaucracy that slow down decision

making. Also, organizations are able to stand at a competitive

advantage when employees and management cooperatively address problems

and drive solutions.

- Information: is a key driver to employee involvement. Organizations

need to provide information on all aspects of the business to all

levels of employees. This open information sharing environment is

needed to successfully implement employee involvement. Many

organizations only share partial non-strategic performance information;

this removes employees from effectively understanding the organization

and from taking part in the strategic decision making process. Also,

while information is available throughout all levels of the

organization, if the culture is not aligned with cooperative

improvement and feedback, the organization will lose on performance

improvements and other benefits.

- Rewards: while pushing rewards down the organization are not believed

to increase firm performance, bundling the employee involvement

elements does (Guerrero & Barraud-Didier, 2004). Compensation based on

organizational performance is a best practice and has proven to

increase the success of both employees and the organization.

- Knowledge: is having the employee skilled and able to resolve problems

and improve the organization. This is a very critical driver of

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employee involvement. Training and development of the organization will

ensure long-term success, as employees are better able to address and

successfully resolve problem issues and drive improvement efforts.

The majority of labor relations contracts revolve around a number specific

terms and conditions. A typical contract will have the following:

- Scope of work: Defines the work activities the union must deliver on.

- Management/Union rights: States the legal rights of management and the

union; generally the terms state the conduct available or required from

each party.

- Wages: usually a table or a listing of wages for the different jobs and

shifts available.

- Hours of work: states working hours, the start time for working days,

working days, and breaks.

- Overtime: states how overtime will be allocated, the overtime

scheduling distribution, and the overtime rate of pay.

- Shifts: specifies the number of shifts available, the shift times, pay

during each shift, and how work is allocated for shifts.

- Holidays: specifies the holidays, holiday pay, vacations availability,

and personal days

- Training: each contract will have different specifics on how training

is administered, some contracts will have very detailed training

requirements, some others will specify an apprenticeship program

- Discipline: specifies how the employer and the union handle cases of

work rules violations

- Grievance procedure: States how grievances will be handled. Usually

this section will have details on the responsibilities union and

management have on administering grievances.

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The relationship between Labor relations and employee involvement is complex.

A common contract has elements that specify the different working conditions.

Examining the differences between the impact of very specific contract

language and less specific contracts shows the flexibility different

organizations have. As contracts that are very specific hinder change and

cause organizations to stagnate during struggles until the collective

bargaining of labor and management agree on new terms and conditions.

Language that is less specific and that details the relationship between the

two parties is more suitable for implementing an employee involvement

practice. Organizations that are not organized with a labor union have a

better opportunity to realize the benefits of employee involvement efforts.

Nevertheless, unions are advised to support employee involvement efforts and

create favorable attitudes among their workforce towards it (Reshef, Kizilos,

Ledford, & Cohen, 1999).

The different stakeholder groups shape the dynamic relationship between the

two practices. The stakeholder groups are:

- Management: employee involvement requires a different leadership style

than that of traditional organizations. Management is required to

utilize theory Y style of motivation versus theory X

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(Dudovskiy, 2013). Also, management need to be well informed and able

to implement the new Human Resources and business concepts that support

an open, friendly, cooperative, and sharing environment. This

stakeholder group is very difficult to change, as the majority have

been accustomed to theory X style of management and drive business in

an authoritarian style. This is evident in organizations that focus on

seniority as the key factor for rewards and upward movement in

organizations. These organizations that lack the leadership required

will struggle behind and face challenges in following business best

practices.

- Employees: the organizational strategy and structure need to be aligned

with the principles that drive employee involvement. The principles are

the movement of power, information, knowledge, and rewards downwards in

organizations. Implementing these principles requires an organizational

strategy that operates on differentiation; which is to produce a

competitive advantage by differentiating the product or service and

establishing a unique brand. The other approaches to organizational

strategy are a low-cost strategy and a focused strategy. The

organization should operate with the use of self-managed team in a

decentralized structure with few levels of management. The alignment of

strategy and practice is also very important. Employees need to have

the skills to perform improvement efforts and have the support to

implement improvement suggestions. Employee involvement operates on the

principle that employees are the organization’s most valuable asset. As

such, organizations ought to invest in employees and reward employees

on their work. The current best practices in Human Resources management

are Jeffery Pfeffer’s Seven Human resources practices:

o Employment Security

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o Selective Hiring

o Decentralization of decision making & self managed teams

o Compensation contingent on organizational performance

o Extensive Training

o Reduced status distinctions and barriers

o Sharing of financial and performance information throughout

organization

Implementing these practices go hand in hand with employee involvement

practices.

- Government: the laws that govern business and labor relations determine

the legitimacy of business practices. Laws such as the National Labor

Relations Act sought to strike a balance between wealthy capitalists

and the common worker. Government has a large role in the success of

business, as its laws affect and permeate throughout all organizations.

Government is often seen as a guiding hand, as its departments and

functions provide reports and studies that shape pubic thought.

- Community: public opinion is that of the community. When communities

are faced with economic struggle they perceive and act differently than

during economic success. Labor relations seek to balance the disparity

in economic division between the wealthy and the poor. Employee

involvement also seeks to empower employees and provide them with

rewards commensurate with their performance. Community’s role is to

provide support to labor unions and business best practices that aim to

enhance the overall well-being of the community.

A commission on the future of worker-management relations developed a report

that addresses employee involvement within it (Commission on the Future of

Worker-Management Relations). It provides the following recommendations for

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Labor relations practice in business and Employee Involvement relevant to

section 8(a)(2) of the NLRA:

1- Facilitate growth of employee involvement: although employee

involvement programs entail the discussion of terms and conditions of

work, these are simply a part of the overall purpose of the program. As

such, employee involvement programs should not be unlawful. This is due

to the fact that the aim of the program is to increase organizational

profitability and performance and not independent representation of

employees.

2- Continue to ban company unions: the commission believes that the law

should continue to prohibit companies from setting up labor

organizations, as it is an unfair labor practice under NLRA.

3- Reduce the scope of supervisory and managerial exclusions: this should

in effect ensure that these positions maintain their ability to

practice their decision-making abilities and be a part of the

collective bargaining process. The two groups are excluded on two core

principles, as they are operating the company’s labor relations policy

and are near the top of the managerial structure and have strong

individual power. While these two are to remain excluded, the practice

must lessen its rigid distinctions between employees and those in

supervisory and managerial roles.

4- Authorize pre-hire agreements: companies with upcoming plans should be

allowed to negotiate with unions that are interested in representing

the work of the new plans. The unions shall demonstrate employee

support by the end of the year through card checking or other means.

This aims to improve the labor-management relations.

This section concluded with statements on the importance of employee

involvement programs for the success of the American economy. Also, the

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conclusion mentioned impact these recommendations will have on employees and

the application of the law.

While these recommendations tackle the law aspect of the relationship of

employee involvement practice and labor relations, they do not effectively

change the law. It is up to organizations to create the changes themselves.

Labor relations are a fundamentally important part of business. Its’ current

level of membership and support have been in decline. While the reasons for

the decline are many, there must be reasons for its rise and popularity.

Collective bargaining must partner with modern human resources practices such

as employee involvement for it to succeed and thrive again as a

representative for labor relations.

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Noninvolvement of Unions Revisited. Journal of Labor Research , 479-

496.

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Scontrino-Powell:

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