labor relations and industrial democracy
TRANSCRIPT
17-1
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International Business
_____________s4hil____
Human Resource Management
strategy
Labor Relations and Industrial Democracy
17-2
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Labor Relations in the International Arena
Labor relations Process through which management and workers
identify and determine the job relations that will be in effect at the workplace
Specific approaches to labor relations varies from one country to another
U.S. Approaches to Labor Relations Collective bargaining
Process whereby formal labor agreements are reached by union and management representatives
Involves negotiation of wages, hours, and conditions of employment and the administration of the labor contract
17-3
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Labor Relations in the International Arena (cont.)
U.S. Approaches to Labor Relations (cont.) Union
Organization represents workers in collective bargaining Has the legal authority to negotiate with the employer and
administrator the labor contract Unions gain representation rights only after certification Unions can decertify a union with which the members are
dissatisfied Workers may strike to support union’s demands
Grievance Complaint brought by an employee who feels that he/she has
been treated improperly under the terms of the labor agreement Settlement of grievance attempted at various hierarchical steps
17-4
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Labor Relations in the International Arena (cont.)
U.S. Approaches to Labor Relations (cont.) Mediator
Person who brings both sides together and helps them reach a settlement that is mutually acceptable
Arbitrator Individual who provides a solution to a grievance
that both sides have been unable to resolve themselves and that both sides agree to accept
Labor relations are important because they determine labor costs
17-5
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Labor Relations in the International Arena (cont.)
Labor Relations in Other Countries MNEs have to adjust labor relations strategies
because host countries differ in terms of: Economic development Political environments Strike activity Regional differences
Great Britain Labor agreement is not a legally binding contract
Violations of the agreement carry no legal penalties Labor agreements are less extensive than in the U.S.
17-6
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Labor Relations in the International Arena (cont.)
Labor Relations in Other Countries (cont.) Germany
Unions and management have been cooperative in the past Labor harmony not adversely affected by unification of East
and West Union power is still quite strong Rights of workers addressed more carefully by management
Japan Unions and management have cooperative relationships Contracts tend to be general and vague Disputes regarding the labor contract usually settled amicably Unions most active during the spring and end of the year
17-7
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Labor Relations in the International Arena (cont.)
How Industrial Conflict Is Handled Around the World Strike
Collective refusal to work to pressure management to grant union demands
Lockout Company’s refusal to allow workers to enter the
facility during a labor dispute
United States Most contracts outlaw strikes Rely on grievance procedure to resolve disputes
17-8
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Labor Relations in the International Arena (cont.)
How Industrial Conflict Is Handled Around the World (cont.) Great Britain
Strikes more prevalent than in the U.S. System is not geared toward efficient resolution of conflicts Grievance handling is informal, cumbersome, and costly
Germany Strikes and lockouts are prohibited while the contract is in force Contracts have different expiration dates Cooperation between union and management is not unusual
17-9
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Labor Relations in the International Arena (cont.)
How Industrial Conflict Is Handled Around the World (cont.) Japan
Strikes and lockouts are very rare Few areas of disagreement between unions and
management
17-10
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Figure 17-1 Annual Average Days Lost Due to Labor Disputes in
Economically Advanced Nations: 1990-1999
Belgiu
m
Nether
lands
Britai
n
Sweden
Portugal
United S
tate
s
Germ
any
Austria
Japan
Switzer
land
Luxem
bourg0
50
100
150
200
250
300
350
400
Canad
a
Icel
and
Spain
Denm
ark
Finla
nd
Turkey
Italy
Norway
Austra
lia
Irela
nd
France
New Z
eala
nd
17-11
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International Structure of Unions
Intergovernmental Organizations International Labour Office (ILO)
U.N. affiliate, consisting of government, industry, and union representatives, that works to promote fair labor standards
Organization for Economic Cooperation and Development (OECD) Government, industry, and union group founded in 1976 that
has established a voluntary set of guidelines for MNEs
Transnational Union Affiliations International Confederation of Free Trade Unions
(ICFTU) International Trade Secretaries (ITS)
Focus on a particular industry
17-12
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Industrial Democracy
Rights that employees have to participate in significant management decisions
Common Forms of Industrial Democracy Codetermination
Participation of workers on boards of directors EU directive requires all companies with more than 50
employees by 2008 to “inform and consult” workers’ representatives about company strategy
Works Councils Result of either national legislation or collective bargaining Function to improve company performance, working
conditions, and job security
17-13
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Industrial Democracy (cont.)
Common Forms of Industrial Democracy (cont.) Shop Floor Participation
Variety of approaches available (e.g., quality of work life) Financial Participation
Profit and productivity sharing Collective Bargaining
Can be a mechanism to obtain industrial democracy
Industrial Democracy in Selected Countries United States
Collective bargaining is the most common form Problem-solving teams
Employee groups that discuss ways of improving quality, efficiency, and the overall work environment
17-14
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Industrial Democracy (cont.)
Industrial Democracy in Selected Countries (cont.) United States (cont.)
Special purpose teams Employee groups that design and introduce work reforms and new
technology
Self-managing teams Employee groups that take over supervisory duties and manage
themselves
Great Britain Collective bargaining and reliance on teams
Germany Industrial democracy and codetermination are very strong Work councils perform a number of important functions
17-15
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Employee Participation in All Levels of Danish Firms
Board
Director(s)
Upper/middle management
Employees
PartlyAutonomous
Groups
Trade union club
Shopsteward
Safetycommittee
Cooperationcommittees
Safetygroup
17-16
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Industrial Democracy (cont.)
Industrial Democracy in Selected Countries (cont.) Sweden
Industrial democracy geared toward ensuring the quality of work life
Workers sit on some boards of directors China
Little known about industrial democracy in China Two policy-making committees within Chinese enterprises
Japan Industrial democracy used to enhance workers’ performance Quality circle Enterprise unions
Represent both the hourly and salaried employees of a particular firm
17-17
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Strategic Management of International Labor Relations
Philosophical Backdrop MNEs can use a number of starting points for their
approach to labor relations Ethnocentric Polycentric Geocentric
Labor Costs Wages differ greatly from country to country Sweatshops are common throughout the world Hours worked are inversely related to hourly
compensation High paying jobs are transferred to low paying regions
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Real Wages of Low-Paid Workers
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3U
.S. 1
980-
89C
anad
a 19
81-9
0A
ustr
alia
198
0-91
Fran
ce 1
980-
87A
ustr
ia 1
980-
91B
rita
in 1
980-
92D
enm
ark
1980
-90
Nor
way
198
0-90
Italy
198
0-87
Ger
man
y 19
83-9
0
Sw
eden
198
1-91
17-19
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Strategic Management of International Labor Relations (cont.)
New Labor Force Trends Companies are trying to regain lost competitiveness
due to high labor costs When national values collide with the realities of global
competition, the latter is likely to win Major industrial countries will have to increase
immigration to have the workforce to maintain economic momentum
Increased reliance on flexible working arrangements that contain costs and link work demands with employees Part-Time Work
Most widely used form of flexibility in Europe
17-20
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Manufacturing Labor Costs (per unit of output, annual average percentage change: 1990-1997)
Dollar terms
Local currencies-5
-4
-3
-2
-1
0
1
2
3
4
Sw
eden
Ital
y
Sou
th K
orea
Can
ada
Fra
nce
Uni
ted
Sta
tes
Tai
wan
Bel
gium
Den
mar
k
Ger
man
y
Brit
ain
Nor
way
Japa
n
17-21
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Strategic Management of International Labor Relations (cont.)
New Labor Force Trends (cont.) Flexible working arrangements (cont.)
Shiftwork Popular in Europe
Nonpermanent Employment Temporary employees Fixed-term contractual agreements
Subcontracting Replace employment contracts with commercial contracts Many creative subcontracting approaches
Organizing International Industrial Relations Degree of centralization-decentralization control Degree of employment flexibility
17-22
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A Final Word
International management will be one of joint partnerships and agreements Virtual corporation
Network of companies that exploits fast-changing opportunities and shares costs, skills, and access to global markets
Theories of international management must be continually subjected to review
An important question: “Why some MNCs do better than others?” Strategic fit - aligning resources to match the environment Strategic stretch - use of resources to achieve more
challenging goals