There is a greater emphasis on written decrees or by-laws in union governance. Such rules help to enforce the structure of the union and create a system of governance (Housden, 2010). However, these rules lack consistency and at times lack transparency. For employers, such rules are generally limited and the managers are given significant leeway with respect to achieving their singular goal.
Lastly, the nature of the publicly-traded corporation means that there is more consistency and transparency in governance of employers. The governance principles and structures do not vary significantly from one employer to the next, even if the overall effectiveness of the governance mechanisms does. In unions, governance can vary dramatically. There is far less transparency, and there is often little direct contact between union leadership and the rank-and-file. Union leadership serves the needs of multiple locals, in addition to union head office. The possibility of conflicting objectives between these groups means that governance is less consistent. The lack of securities regulators in union affairs means that there is less transparency in union governance as a whole. Overall, this makes union governance weaker than that of public corporations, and increases the likelihood of fraud or financial malfeasance. That said, these problems still exist among employers as well, a result of shareholder disinterest in the governance process and a myopic pursuit of profit that causes shareholders to ignore malfeasance when profits are high.
In recent years, unions have begun to participate in the governance process of corporations (Banks & Metzgar, 1989). This has allowed unions to have some oversight of...
This situation reflects the fact that unions are active stakeholders in companies that employ their workers. Unions typically agree with the objective of increasing profit, but believe that their added voice to governance helps with their objectives with respect to distributing that profit.
Governance of employers is typically a transparent process, and the objectives of this governance are simple and easy to define. This contributes to a generally strong governance process. However, the weakness in the system lies in the pursuit of only one goal, such that governance of issues that do not directly and immediately affect profit can be weak. Union governance is considerably less transparent due to lack of regulation, and can suffer from layers of bureaucracy between workers and union leaders. There is greater risk of goal conflict in union activities, further weakening the governance process. The softness of union governance can be exploited by management, particularly as union members are often less organized than their leadership is.
Works Cited:
Banks, a. & Metzgar, J. (1989). Participating in management: Union organizing on a new terrain. Labor Research Review. Vol. 1 (14) 1-55.
Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine. Retrieved February 5, 2011 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Housden, C. (2010). Union governance finally cleaned up with passing of bylaws. Scan Online. Retrieved February 5, 2011 from http://scan.lusu.co.uk/news/2010/11/17/union-governance-fi-nally-cleaned-up-with-passing-of-bylaws/
