HRM as Intermediary Between Management and Unions

Introduction: Labor Unions and Worker Power

Centuries ago, employees had little or no power when it came to negotiating wages, hours, and working conditions with their employers, and often suffered great hardship as a result (Brown and Warren, 2011, p. 97). Eventually, employees formed labor unions to take advantage of their collective power, thus forcing employers to improve compensation and working conditions — a practice that continues to play an important role in many economies globally.

The Role of Unions in the United States

The United States has experienced a greater than 50% decline in the prevalence of labor unions since the 1960s (Brown and Warren, 2011, p. 96) and, on a global scale, is one of the least unionized economies today (Organization for Economic Cooperation and Development [OECD], 2011). Yet the U.S. ranks as one of the most productive countries in the world in terms of gross domestic product per hour worked (OECD, 2011). Based on this data alone, it seems reasonable to assume that organized labor is bad for the economy — but Luxembourg and Norway are among the most unionized countries in the world, and their workers are approximately 16–19% more productive than American workers. The reason for this discrepancy has been attributed to differences in access to affordable higher education (Leonhardt, 2011b), but regardless of the actual cause, it seems safe to conclude that unions per se cannot be blamed for poor productivity.

The increasing irrelevance of unions in the U.S. may be interpreted as a sign that organized labor no longer has a place in the American economy, since worker productivity appears to be independent of whether or not the workforce is unionized. However, David Leonhardt argues that the need for unions may be just as important now as in the past (2011a). For example, U.S. corporations recorded record profits in 2010 (Salazar, 2011) and profits rose close to 12% between late 2007 and 2010 (Leonhardt, 2011a), yet the unemployment rate skyrocketed during this period and remained persistently high. This suggests that the high productivity of American workers today is due in part to fewer workers working harder, which in turn lowers costs associated with a larger workforce. Under these conditions, there is little incentive for corporations to hire more workers as long as profits continue to rise.

The status quo — record profits alongside high unemployment — is unsustainable. The increasing discontent among non-wealthy Americans concerning corporate malfeasance and unemployment has caught the attention of labor unions (Wallsten, 2011) and may represent the beginning of a movement that will harness its collective power and demand change. To see a reduction in unemployment rates, this may be exactly what is required, which suggests unions still have an important, and possibly critical, role to play. Under these conditions, it is difficult not to imagine the U.S. economy benefiting in the long run if the strength and prevalence of labor unions were to increase.

The Role of HRM Today

The 1990s witnessed collective agreements between unions and employers that began to shape human resource management (HRM) practices into what has been called progressive or high-performance HRM (Brown and Warren, 2011, p. 97). Progressive HRM attempts to address employer concerns about the negative effect unions are suspected of having on worker productivity by focusing on performance motivation, skills training, retention, product and/or service quality, and the removal of poor performers. HRM personnel therefore find themselves positioned at the fulcrum between corporate forces seeking increased productivity and product/service quality, and workers' needs for a living wage, reasonable hours, job security, non-discriminatory practices, health and retirement benefits, and safe working conditions.

Unions have traditionally relied on a seniority system for promotion, salary, and layoff decisions; the more senior the employee, the better paid and more secure their job (Brown and Warren, 2011, p. 97). To improve worker productivity, corporations tend to favor the implementation of performance evaluation systems. From the union's perspective, a seniority system tends to be less subjective and more consistently fair, on average, than a performance appraisal system imposed on the workforce by management.

This does not mean performance appraisal cannot be implemented in a unionized workplace. In fact, such systems can be quite successful when unions are involved in their design (Brown and Warren, 2011, p. 99). Establishing harmony between workers and management is much harder when a performance appraisal system is imposed unilaterally by management, because workers tend to view such systems as primarily disciplinary. HRM involvement is therefore critical for developing a performance appraisal system that both management and labor can agree on, including the collaborative setting of goals for both workers and management.

References

Abramson, Larry. (2011, Nov. 12). Teachers unions mobilize in a fight for their lives. National Public Radio.

Brown, Travor C. and Warren, Amy A. (2011). Performance management in unionized settings. Human Resource Management Review, 21, 96–106.

Leonhardt, David. (2011a, Jan. 19). In wreckage of lost jobs, lost power. New York Times.

Leonhardt, David. (2011b, Jan. 26). Even more productive than Americans. New York Times.

Organization for Economic Co-Operation and Development. (2011). Trade union density. OECD.org.

Pendleton, Andrew and Robinson, Andrew. (2010). Employee stock ownership, involvement, and productivity: An interaction-based approach. Industrial and Labor Relations Review, 64, 3–29.

Salazar, Mario. (2011, Feb. 16). 2010 realizes record profits for U.S. corporations. Washington Times.

Terkel, Amanda and Celock, John. (2011, Nov. 8). Ohio issue 2: Controversial anti-union law defeated by voters. Huffington Post.

Wallsten, Peter. (2011, Oct. 20). Occupy Wall Street, unions get their activism together. Washington Post.