This paper examines the relationship between Human Resource Management (HRM) and trade unions, arguing that the rise of HRM practices — including team concepts, employee involvement, and quality of working life programs — fundamentally challenges the traditional role of unions in collective bargaining. Drawing on the work of Donald Wells, Robert Flanagan, and Saroj Deshpande, among others, the paper explores how HRM reforms designed to increase workplace flexibility and management initiative may erode employee bargaining power and union influence. It also considers the historical development of trade unions, their positive and negative effects on productivity and wages, and the need for a balanced approach that respects both business imperatives and employee rights in an increasingly competitive global economy.
The paper demonstrates the technique of synthesis through comparison: rather than treating HRM and trade unions as entirely separate topics, it continuously reads them against each other, using Wells's framework as a through-line to show how gains in one domain often come at the expense of the other. This comparative synthesis is what allows the paper to move beyond description toward a substantive argument about power, rights, and ethics in the workplace.
The paper opens by defining HRM and introducing its tension with unionism. It then presents Wells's detailed account of HRM reforms and their implications for union bargaining power. From there it shifts to the historical origins of trade unions and their economic rationale, followed by a discussion of labor costs and global competitiveness. The paper then surveys the empirical evidence on union effects on productivity and wages before concluding with a call for an ethically balanced approach that gives voice to both labor and management.
A significant new trend in business over the preceding two decades is Human Resource Management (HRM), an internal tool developed to help businesses streamline labor issues and potentially increase — rather than decrease — the flexibility of the labor aspect of business. According to Donald Wells, despite the consistent denials of wrongdoing by businesses and trade unions alike, the new trend in HRM is to develop better communication and flexibility between corporations and trade unions, thereby decreasing the bargaining power of the strict contractual decisions that unions have advocated for in the past. This direct communication is not, in and of itself, a challenge to unionism, but it has become the source of a loss of rights for employees, as unions have begun to see issues from the perspective of business rather than staunchly advocating for employee rights with limited concern for business interests (Wells, 1993, pp. 56–57).
Unions have served the historical role of creating a voice for employees. In doing so, they have had both positive and negative effects on business — providing collective cost reduction of programs through large-group systems and helping train and educate employees collectively at reduced costs to employers. However, as some would argue, unions have often lost sight of the actual market in which they are negotiating and overburdened employers with demands that the current market cannot meet (Flanagan & Deshpande, 1996, p. 23).
Though HRM is clearly much more than a more developed communication standard between management and unions, this aspect of HRM is clearly incompatible with unionization and the traditional standard of advocating for employee concerns against business demands. Unions have historically been in a position to research — independently, and with the assistance of trade and market data — issues that helped them develop greater knowledge of the ability of a market to absorb greater pay and/or social services for employees, without business interference in the findings. Now, the persuasive power of business representatives can have a greater influence on the outcomes of union demands and gains.
In North America, corporate responses to increasing international competitiveness appear to center less on wage concessions and technological change than on organizational change involving greater cooperation between workers and managers. HRM reforms are intended to enhance managerial initiative by replacing rigidities in contractual relations between unions and management with more flexible and cooperative arrangements that entail greater employee commitment to management goals. These reforms are often referred to as Team Concept, Employee Involvement, and, most frequently, Quality of Working Life (QWL):
HRM changes include job expansion (job rotation, enlargement, and enrichment), skill enhancement (multi-skilling), worker participation in workplace decision-making, production based on self-organized self-supervised work teams, rigorous screening of new hires, group problem solving, gain-sharing and profit-sharing, and improved communications between workers and managers… These reforms entail a loosening of previous limits on the prerogatives of management, whether such rights are codified [as they would be in union contracts] in collective agreements or established on the basis of an informal "common law" of workplace practices. (Wells, 1993, pp. 56–57)
Wells's basic argument is that HRM may serve important functions — some of which improve employee productivity, engagement, and empowerment — but that it also opens employees to the development of systems that are more favorable to management and allow management to reassert the right to alter employee conditions based not on employee needs but on business needs. To Wells, this is proof that trade unions and the new HRM paradigm are clearly incompatible. In both positive and negative senses, HRM reduces or even eliminates the rights of employees to bargain for changes conducive to their own needs rather than the needs of the employer, and it gives employers greater latitude to alter working conditions. HRM also reduces the bargaining power of unions by creating a system that is far more attuned to the persuasive needs of business than to those of employees. As with any complex situation, there are both positive and negative aspects of trade unions and HRM practices alike, and a balance must be struck in an ethical format.
The development of trade unions has occurred over time to help ensure that individual workers are not treated unfairly in the workplace. The reason for this is straightforward: labor is an area of investment within business that can, and often is, seen as an area where cuts can be made to increase profitability. Labor is one of the most flexible aspects of business, as the number of hours worked and the wages earned — not to mention benefits offered — are directly associated with management decisions. Managers under pressure, as most are, can manipulate these variables to reduce overhead and potentially create higher profits within the limits of required production.
Trade unions appeared early in the industrial revolution as a result of the fact that labor principles were often ambiguous and left employees directly at the mercy of management, with little or no reasonable protection or voice for changes. This left individual employees without the right to voice concern or elicit changes that might help improve, rather than undermine, their standards of living (Lee, 1998, p. 313).
As business has become increasingly competitive in a global market, the labor dimension of business has come under increasing scrutiny — again, as a flexible aspect of business that can be trimmed and adjusted to better meet profitability goals, which are expected to grow exponentially for a business to be considered successful (Lee, 1998, p. 313).
Labor costs are one of the largest costs of doing business in almost every sector, including but not limited to wages and social support programs. For this reason, most managers, owners, and other stakeholders often seek to trim such costs, frequently at the expense of employee standards of living (Lee, 1998, p. 313). Such decisions may represent a logical short-term business choice with long-term consequences, or they could be legitimate ways to bring the labor market back to an efficient level that is more responsive to the real market in which employees work and businesses manufacture and sell products or services.
Management of human resources has been acknowledged as an important factor in developing sustainable competitive advantage (Pfeffer, 1995; Lado & Wilson, 1994; Kydd & Oppenheim, 1990). Unlike other resources — such as plant and equipment or product design — superior human resources tend to be very difficult for competitors to duplicate (Flanagan & Deshpande, 1996, p. 23).
Flanagan, D. J., & Deshpande, S. P. (1996). Top management's perceptions of changes in HRM practices after union elections in small firms: Implications for building competitive advantage. Journal of Small Business Management, 34(4), 23.
Lee, E. (1998). Trade union rights: An economic perspective. International Labour Review, 137(3), 313.
Wells, D. (1993). Are strong unions compatible with the new model of human resources management? Relations Industrielles, 48(1), 56–85. Retrieved August 1, 2008, from http://www.erudit.org/revue/ri/1993/v48/n1/050832ar.pdf
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