Labor Law XYZ Senior Management

The Risks and Rewards of an Organized Workforce

The United States is one of the least unionized countries among developed nations (Brown & Warren, 2011). Germany, Canada, and Norway have workforces that range between 20 to over 50% unionized, but in the U.S. just 10% of the workforce was unionized in 2007. The American economy is considered one of the most robust in the world, so maybe there are several economic disadvantages to having a unionized workforce. This memorandum will address this issue and discuss any limitations to what management may say or do during labor organizing activities.

Risks and Rewards from an Organizational Perspective

Brown and Warren (2011) provided an overview of the historical progression of organized labor in North America, paying special attention to the U.S. labor market. Their orientation is from a human resource management perspective, so their main interest is in how a unionized workforce performs. Historically, unions were created to counter the immense power imbalance between workers and employers and the benefits realized have included increased wages, job security, due process, and political power.

In contemporary corporate America, the role of unions is not that different from the role that progressive human resource management (HRM) departments play...

HRM departments in modern corporations are tasked with meeting the staffing needs of the business, setting fair wages, evaluating an employee's performance, creating a fair grievance mechanism, and providing fringe benefits. Brown and Warren suggest that progressive HRM departments, when effective, can actually minimize labor organizing activities.
Chintrakarn & Chen (2011) took advantage of the historical decline in U.S. workforce unionization to study changes in efficiency. Their findings reveal that a unionized workforce is less likely to adopt technical innovations, but more likely to increase the efficiency of existing technology. Since technical innovation is such a dominant force in the U.S. economy, manufacturing output declined by 7.4% between 1983 and 1996 due to unionized labor. By comparison, Morikawa (2010) examined productivity and profitability of more than 4,000 Japanese firms, from large to small, including manufacturing and service sectors, and discovered that unions have improved productivity and profitability over time. Morikawa contrasts this result with the U.S. labor market, citing research showing that U.S. unions do increase productivity, but the increases in wages outweigh any benefits. Based on this data, my recommendation would be to implement a progressive HRM policy to undermine labor organizing activities at XYZ,…