Conflict and Management: Unions

1. Conflict and Management: Unions BOH4M

2. 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

3. 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.

4. 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.

5. Why unionize? • Better Working Conditions • Safer conditions. • Benefits such as more breaks, employee break rooms, training, and employee discounts.

6. 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.

7. 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.

8. 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.

9. The Case Against Unions? • Higher wages + more benefits = higher cost to employer • A unionized business faced a competitive disadvantage

10. The Case Against Unions? • Hard to get rid of employees who are unproductive or problematic • Termination process can take years

11. 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

12. The Case Against Unions? • Employees have to pay union dues • All employees have to be union members • Can’t opt out

13. The Case Against Unions? • Lower Productivity • Incentive to “do the bare minimum” since promotions are usually based only on seniority, not performance

14. 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

15. 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)

16. 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.

17. 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

18. 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

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

20. 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