Labor Unions Vs Management: Their Roles and Relationship Essay
Labor relations are a specific part of industrial relations, evolving between employees and employers in terms of hiring, payment, working conditions and safety, on issues of employment, social guarantees, etc. As a rule, the interests of employees are represented by labor unions and the interests of employers – by the associations of entrepreneurs. The literature in management often defines the cooperation of employees and employers in the sphere of social and labor relations as a form of social partnership (Kochan, 2009). In this paper, social partnership is considered as a special type of relationship between employers and unions under the regulatory role of the state, providing balance and implementation of the important social and labor interests of the major social groups in the frameworks of social peace.
By signing a contract with a labor union, a company factually agrees with the suppliers of labor resources. Several decades ago, there were only several unions, and they were weak. Today, unions represent nearly 17% of the workforce (Sullivan, 2010). As a result, large organizations often have to negotiate with multiple unions, and, consequently, human resources are becoming more complex variable. The contemporary growth of labor unions is yet another example proving that when solving internal problems, organization’s management should take external factors into account. Further in this paper, we’ll cover the role of management and unions in establishing labor relations in organizations, as well as discuss the strategies for making these relations effective.
The role of management in an organization and labor relations
Management means the development (modelling), creation and maximally efficient use of socio-economic systems. The main goal of management is to achieve high efficiency of production and better use of the resource potential of an enterprise, firm, or company. The key functions of management are planning, organization, motivation, control, communications, the processes of development and making decisions.
Production management at any level is a complex integrated system. The three main functions of management – managing the business to improve its efficiency, managing the managers and managing workers and work, – are preconditioned by the complex nature of the business; the specificity of the profession of manager is to perform all the three functions simultaneously. In accordance with the main aims and objectives of the company, business management function is central, unifying all the functions; running a business means finding the optimal balance between diverse needs and goals (Brimeyer, 2004).
Thus, outside of the firm the manager must constantly fight for market share, anticipate customer requirements, provide accurate delivery times, produce the goods and services of higher quality, set prices according to the conditions of the competition, and taking every possible effort to maintain the good reputation of the company among consumers. Inside the firm, the manager must strive for the growth of labor productivity through better planning, more effective organization and automation of manufacturing processes. At the same time one should take into account the requirements of labor unions, to keep the company’s competitive position in the market, provide dividends to shareholders at a level sufficient not to lose their trust, and put away a sufficient amount of retained earnings for the company to grow.
Personnel management is an integral part of quality management systems in controlling concept. The optimal use of staff from the viewpoint of “personnel management” is achieved by identifying positive and negative motivations of individuals and groups in the organization, and corresponding promotion of positive and elimination of negative motivations, as well as by the analysis of such impacts (Kochan, 2009). An important task of management is the unification, integration of all sides and aspects of the organization’s activities and its participants, their private purposes in order to achieve the common objective of the system.
The role of a labor union in an organization
Labor unions play an important role in the labor market. A labor union is the union of workers having the right to negotiate with the employer for and on behalf of its members. The purpose of labor unions is the maximization of salaries of their members, improvement of their work conditions, and appointment of bonus supplements and privileges. In a competitive market, labor unions act in two ways: they tend either to increase the demand for labor, or restrict the supply. The increased demand for labor is achieved by increasing the demand for the product (advertising, lobbying). The growth of the efficiency and quality of work also contribute to the increased demand for labor (Sullivan, 2010).
The unions are the one of the guarantors of social peace. They consistently seek for the implementation of economic growth basing on their strong commitment to the ideals of social justice. In particular, the labor unions achieve the fulfillment of the following principles (Weiss, 1996; Kochan, 2009):
– Equal rights and powers of the parties in the formulation and discussion of issues in the negotiations and consultations, in making decisions and control over their implementation;
– Compliance with the laws and penalties for their violation for all the contracting parties;
– Volunteerism in taking the commitments;
– Parity in reaching agreements, unacceptability of infringement of any party.
An important part of the policy of labor unions is the requirement for the Trilateral Commission to perform the following functions: negotiations on the definition of the minimum wage; establishing the criteria for raising the wages at an industry or enterprise level within the national policy of income and employment; consultations and negotiations on labor law and other matters of labor relations; conciliation and mediation at national or large-scale strikes and conflicts; council role in discussions of common issues of economic and social policy (Kochan, 2009). Thus, labor unions play an important role in regulating social and labor relations in the company.
Effective strategies for management-union relations
Labor unions have different methods and tools for the realization of economic and social interests of employees and their protection, which can include: a) meetings, rallies, demonstrations, marches, picketing, as an expression of collective actions of protest; b) applications, appeals, petitions, expressing dissatisfaction of the labor unions on specific issues; c) strikes as an effective means of strong pressure on employers (Brimeyer, 2004). However, we see 1) collective bargaining and agreements as well as 2) collective labor disputes (applying mechanisms specific to these procedures) occupying a special place among these and other strategies of protecting the interests of employees.
Experience shows that the most effective mechanism of interaction between unions and employers is a system of collective agreements (Aidt & Tzannatos, 2003). First, the strategy and tactics of their conclusion, the structure and content must obviously consider the regional dimension and reflect the characteristics of each particular company. Second, we recommend that the companies should develop of the concept of social partnership for different periods – the recession, stabilization, and recovery in the economy.
Among the unresolved issues is the appropriate sequence in the elaboration and conclusion of treaties and agreements. Thus, through labor unions, employers and employees must agree on many issues related to all the employees, and make a mutual commitment to a collective agreement. These issues include: a) the form and the system of wages, compensations, benefits, and bonuses; b) the mechanism of wages regulation based on rising prices and the inflation rate; c) employment of workers; d) working time, rest time, and holidays; e) measures to improve working conditions and safety of employees; f) health and social insurance; g) employees’ interests during the privatization of enterprises; h) occupational safety and health of the employees at their workplace (Aidt & Tzannatos, 2003; Brimeyer, 2004).
In the course of collective bargaining, social partners must also agree on the possibility of granting benefits to the employees who combine work with study, additional benefits and compensations by the enterprise, including additional vacation, bonuses to pensions, early retirement, compensation for transportation and travel expenses, free or partly paid feeding, etc. (Weiss, 1996; Brimeyer, 2004).
Generally, in a market economy, free and independent labor unions are the guarantors of social justice and security. Usage of the market mechanism by the population mainly depends on whether the market can be regulated by law and policy (Aidt & Tzannatos, 2003). Thus, for example, the significant improvement of the position of employees in relation to employers in the labor market is clearly observed only in case with strong labor unions, which are a counterweight to the power of entrepreneurs.
Conclusion
Thus, the labor unions are collective organizations whose primary goal is to improve the financial and nonfinancial conditions of employment of their members. They can unite both the employees of one industry regardless of their profession (for example, everyone who works in the automotive industry – from secretaries to chief designer), and the employees of one profession regardless of their place of work (for example, lawyers).
Labor unions can have a positive impact on productivity. The positive role of unions is defined by the fact that they act as the “vox populi” able to express the preferences and claims of workers towards the employers directly to senior management personnel, as well as giving the employees the opportunity to participate in the development of norms and rules of labor in the domestic market.
Productivity growth is achieved primarily because instead of quitting employees are now able to express their dissatisfaction with the level of wages and working conditions directly to the employer. Accordingly, the labor force turnover is reduced (for employees quitting is unprofitable, if the labor union can achieve better conditions). Moreover, in this situation it is profitable for an employer to invest in worker training, which also contributes to productivity growth.
Apart from that, labor union as “vox populi” can transmit the information to managers about the new methods of work or use of technology offered by employees, which is beneficial to both parties. Finally, it has been proved that unionized workers are characterized by a higher level of work ethics, motivation and effort. As T.A. Kochan et al. (2009) writes in his book “Healing Together”, the only unequivocal conclusion is that labor unions have significance in the economy and management can’t help taking this into consideration.
