Management and Union Relations: Strategies for Collaboration

Introduction

Management and unions are two important entities within any organization. For decades, these two entities have assumed an adversarial role toward one another. In some cases, unions believe that organizations do not compensate employees fairly or that working conditions are not favorable and secure. On the other hand, management sometimes feels that unions interfere with managerial decisions and impede positive relationships between employees and managers. Such an adversarial relationship has given rise to internal competition that undermines the competitive advantage of the organization.

For an organization to retain its competitiveness in the current business environment, union and company management must establish a spirit of cooperation. This paper identifies strategies for creating a good working relationship between management and the union (Kyo-kai, 2008).

The Role of Management in an Organization

Management assumes an integral role in an organization, aligning resources and providing direction to achieve organizational goals. It operates through functions typically classified as organizing, directing, controlling, planning, motivating, staffing, and leading.

Management is responsible for identifying gaps within the company and utilizing appropriate strategies — such as recruitment, promotion, and training — to fill those gaps. Directing involves supervising organizational members and ensuring they work toward shared objectives. In the contemporary managerial context, this function is closely associated with leadership, given the emphasis on transformative approaches to giving direction, which include effective communication, motivation, and coordination. Controlling is the process of ensuring that the objectives established by management are implemented as planned, and includes activities such as program evaluation, program assessment, and employee performance appraisal (Kyo-kai, 2008).

Management also bears responsibility for ensuring that organizational resources are used in a productive and efficient manner. To remain competitive in the current business environment, an organization must ensure that its resources — including financial assets, physical space, facilities, supplies, and human resources — are put to optimal use. When unions demand wages inconsistent with the value generated by employees, they can interfere with this critical management function (Blackard, 2010).

Management also acts as custodian for the organization's shareholders. The custodian's role is to manage assets on behalf of the principal with the principal's best interests in mind. In an organizational setting, the shareholder is the principal, and management serves as the custodian. This means that management decisions should be guided by the best interests of both shareholders and employees (Fernando, 2011). For instance, when unions push for higher wages, organizational costs rise and profitability falls — reducing returns for shareholders and undermining the custodial responsibility of management. Management is likewise responsible for ensuring that the interests of all organizational stakeholders are met, an ethical obligation that extends especially to employees, who are among the most fundamental stakeholders in any organization (Debroy & Kaushik, 2010).

While management is often seen as the primary driver of organizational performance, the function of unions is equally important. If management is the engine that drives the organizational machine, unions can be understood as its energy supply. It is the union that channels the collective deliberations of labor in the direction guided by management. Labor unions organize workers, identify the terms and conditions of employment, and seek the best solutions for issues employees face in the workplace (Sloane & Witney, 2010).

The Role of a Union in an Organization

Unions serve constituencies that span political, economic, and democratic spheres. They are obligated to give primary regard to the interests of the labor force while remaining mindful of broader national interests. Through their collective strength and leadership, unions have the ability to influence — and sometimes check — management decisions. Unions are also expected to ensure adequate and regular support for workforce development and infrastructure renewal (Kyo-kai, 2008).

Unions carry a deep responsibility toward their members. They negotiate compensation packages, selecting appropriate amounts based on working hours and job responsibilities. They focus on improving the quality of work and establish training programs and educational provisions to develop the value of their members (Blackard, 2010). Unions serve as the connection between management and the workforce, filling communication gaps between the two parties, championing workplace democracy, and working to ensure that no labor is exploited. They also promote solidarity among their members. Through these efforts, unions play a vital role in safeguarding the welfare of working people.

Given that both management and unions play crucial roles in organizational performance, it is essential for both parties to build a favorable working relationship. A communication breakdown between the two can be harmful to organizational development. When a healthy relationship exists, employers come to understand the importance of employee job satisfaction and are encouraged to give voice to workers' ideas — fostering productivity and reducing talent loss caused by employee dissatisfaction (Debroy & Kaushik, 2010).

Research focusing on employees in Indonesia and Malaysia highlights the significance of employee involvement and joint working councils in organizational decision-making. Worker participation within an organization can take two forms: direct and indirect. Both forms need to be combined to achieve effective implementation of management strategies. Indirect participation is legally required in certain countries — such as the Netherlands — and is typically exercised through works councils (Sloane & Witney, 2010).

Conclusion

For a long time, company management and unions have often assumed an adversarial role within organizations. While unions feel that organizations are out to oppress employees, management believes that unions interfere with company decisions. Such an adversarial dynamic reduces the competitive advantage of companies across industries.