Across the Dialect Across the Dialect

November 1, 2010

The employment relationship, like any relationship, is a jumble of conflicts and collaborations. Each party needs the other to earn more income, and this mutual dependence makes the relationship inherently collaborative. Conflicts arise over what lawyers call "terms and conditions." Workers want higher compensation, more amenities, greater influence in the workplace, and firmer protections against layoffs, discipline, and workplace hazards than employers willingly offer. What the two sides struggle over is the surplus income the collaboration generates, plus the returns on the investments that each side has sunk, irretrievably, into the relationship.

Congress, through the National Labor Relations Act of 1935 (the Wagner Act) and subsequent amendments, has sought to redress labor's (generally) inferior strength in conflicts with management and inject a measure of democracy into workplace governance. It thus gives workers the right to form unions, elect representatives, and bargain collectively. Section 8(a)(2) of the Act prohibits any form of management influence in the representation process, a prohibition that makes independent, employee-organized labor unions the sole legal means of collective expression in the American workplace.

The great bulk of Americans today, however, work in the nonunion sector. Unions represent barely one in ten private workers, down from one in three in the 1950s. Although a 1988 Gallup poll found overwhelming (90 percent) support for "an organization of co-workers to discuss and resolve legitimate concerns with their employers," interest in traditional unions runs thin. Most workers view them as too confrontational, as impediments to the success of the enterprise, and as obstacles to their own individual advancement.

Unions are trying to respond. To stem their decline and better represent labor, they are moving toward a more collaborative, less confrontational relationship with employers. Nonunion firms meanwhile have brought shop-floor workers into a host of decision-making roles using self-directed work teams, total quality management, and similar participatory initiatives. They claim enhanced efficiency and a more resilient enterprise, and now want teams to address pay plans, grievance procedures, and workplace safety. But they risk running afoul of Section 8(a)(2) of the Wagner Act.

A growing consensus thus favors more employee representation on personnel policy issues and a more collaborative approach than taken by traditional unions. The result is a variety of promising initiatives in both union and nonunion sectors. Each approach has advocates and detractors. Some require a change in the law. All involve difficult shifts in power and cultural expectations.

Reviving Organized Labor

American unions have lived primarily on the conflict side of labor's relationship with management. While this seems totally natural, it's especially characteristic of the American scene. In other industrial nations, observes Harvard economist Richard Freeman, the key contentious issues -- pay, benefits, job and income security -- rarely dominate negotiations at the enterprise level. Government provides generous health care, pension, job security, and unemployment benefits, and negotiations between national unions and employers' associations largely determine wages. So collective bargaining at the enterprise level focuses on areas of mutual benefit -- staffing, training, and work-flow design, -- local policies that expand the value of the jointly produced output.

In the United States, pay and security are basically set at the enterprise level, and thus loom large in the collective bargaining process. Unions generally try to "take wages out of competition" -- to set a common wage rate for all firms in an industry -- and then push for better terms and conditions. Where successful, argues William Cooke, of Wayne State University, labor will usually gain more from the enterprise by expanding its share of the pie than by expanding the size of the pie; labor thus gains more from an adversarial than from a collaborative stance.

Unions take wages "out of competition" most easily where competition among employers is limited or nonexistent -- in the public sector and in regulated and oligopolistic industries. But over the past two decades, overseas and nonunion competitors have appeared in most private-sector industries. Union employers face intense pressure in product and investment markets, and union wages, benefits, and security gains have emerged as critical competitive factors.

Strategists Barry and Irving Bluestone, economist at U-Mass Boston and retired vice president of the United Auto Workers, say labor's adversarial stance toward management is now counterproductive. Unions generally will serve their members best if they collaborate with management to raise productivity, they write in Negotiating the Future. In a competitive environment, success depends on productive advantage and this, they contend, increasingly depends on employee participation. As unions protect employees against a common byproduct of productivity gains -- the need for fewer workers -- the Bluestones say unions can induce more participation and outcompete nonunion shops.

Teamworks

New England's most ambitious attempt to fashion such a collaborative union-management relationship is, perhaps, the 1993 "teaming" agreement between the International Association of Machinists and Bath Iron Works, Maine's largest private employer. BIW is in trouble. The U.S. Navy, its only customer, is purchasing fewer ships than it did in the Cold War era and the shipyard should complete its last Aegis destroyer, its main piece of business, in ten years or so. The teaming agreement aims at making the enterprise more competitive for the dwindling number of Navy contracts, and perhaps for commercial work as well.

The 1993 contract calls for a dramatic change in labor's role. Union officials now participate in managerial decisions on issues ranging from work assignments and overtime policies to the "strategic business and marketing plan." Decisions are made by consensus, with both sides contractually banned from rejecting the other's proposals; they must concur or counterpropose. The agreement also calls for the creation of a "high-performance work organization," defined primarily as cross-training shipyard workers so jobs can be staffed and completed with greater efficiency. It also calls for employees to "develop ideas, plan the work, and make decisions on how the work is to be carried out." So ambitious and promising was the contract, President Clinton celebrated Labor Day at the shipyard in 1994.

The teaming initiative has achieved some striking successes. A large number of BIW's workers have taken up the opportunity for cross-training (which was offered on a seniority basis), and the company reports sharp productivity gains in many shops. As workers with additional skills get higher pay -- up to an extra $1 an hour -- they share in the benefits. And employee suggestions have boosted productivity. In the sandblasting shop, a chronic production bottleneck and notoriously unpleasant workplace, workers introduced a series of technical improvements that all but eliminated backlogs.

But teaming is now under stress, as a union election on June 7 brought a hard-line "clean sweep" slate into power; Brian Bryant, the new union president, won about half the votes cast in a four-way race, with about half the membership voting. While not opposed to teaming, Bryant is far more suspicious of management's intentions. He cites a long history of conflict and worries that the sale of the shipyard to General Dynamics, in 1995, might lead to a more adversarial relationship.

Teaming is a risky gambit. Productivity gains will benefit workers only if General Dynamics honors the teaming concept and if greater efficiency indeed brings new work to the shipyard. In Bryant's view, the old union leadership had become intoxicated by the collaboration process and had lost its sense of the potential hazards. The June 7 union election was about "'who is looking out for me,'" says Bryant, and the membership chose more cautious representation.

The teaming agreement gives union officials a central role in shipyard governance. In exchange, the union commits itself to raise productivity and to accept responsibility for decisions once made. The commitment to efficiency resolves the classic dilemma faced by all union (and political) leaders -- whether to represent the membership as a group or members individually -- in favor of the collective; this means the interests of some workers will inevitably be compromised by decisions made by union officials. Involvement in managerial decision making, moreover, dramatically changes the union's day-to-day role -- from representation against to representation in authority at the shipyard. As L. Mercedes Wesel wrote in the Portland Press Herald, the "cooperative efforts between the company and the union made many employees nervous, because they felt the union was no longer acting as their advocate." The shift in the union's role disquieted workers, who suddenly feel alone and exposed.

The Unorganized

The vast majority of Americans who work in nonunion settings face pressures and opportunities quite similar to those at BIW. They fear layoffs and downsizings even more acutely than analogous unionized workers. They also see opportunities for gains in productivity, compensation, and employment security from better representation and collaboration with management. Despite the insecurity in nonunion settings, which the Bluestones cite as a major impediment to collaboration, participatory teams now successfully address production problems like packaging, tooling, and work-flow design. They have succeeded, perhaps, because productivity is the primary source of job security and compensation gains in today's competitive environment.

Managers in nonunion firms now see benefits from having participatory teams address personnel policy issues. Harry Newman, IBM human resources manager in Mt. Pleasant, NY, says the employees are able and willing. "Ad hoc employee groups have expressed their willingness to take on ownership of issues such as safety and health, recognition, training, morale, and diversity. They want to gather input from others, formulate proposals, and discuss them with management. This is a natural extension of the larger employee involvement initiative. Who better to help design solutions," asks Newman, "than the employees themselves?"

The National Labor Relations Board and the courts, however, see things differently. Management generally chooses team participants to represent different constituencies, to bring input and "buy-in" to the team's decisions. The NLRB thus holds that workers who sit on personnel-policy teams act as employee representatives. In its most forceful ruling to date, the 1992 Electromation case (upheld by a federal appellate court in 1994), the company's president and personnel manager had met with workers, whom they had selected, to discuss pay and attendance policies that affected the "terms and conditions" for everyone in the firm. The Wagner Act, ever conscious of the conflict between labor and management, forbids any management influence in the representational function; the Landrum-Griffin Act requires a democratic process for selecting employee representatives. By finding Electromation in violation of the law, the NLRB has cast a pall over other attempts to extend the team model to issues of personnel policy.

The issue grows more complex in matters of workplace safety and health, for here the Occupational Safety and Health Administration, a government agency, is actively promoting the use of participatory teams in nonunion settings. Congress created OSHA in 1970 as part of a larger legislative campaign to protect American workers. (Other laws attacked employment discrimination and risks to employee pensions.) Whereas Congress in the 1930s had relied on unions to defend worker interests, in the 1970s it assigned this task to government agencies. But two decades' experience has shown the limits of this approach in workplace safety and health. The United States has about 10,000 workplace deaths per annum, four times the Japanese and six times the Swedish mortality rates, and improvements have been slow. Searching for a fresh approach, OSHA is now promoting the use of participatory safety and health committees, as generally found abroad.

The award-winning "Maine 200" program is among OSHA's most promising experiments. OSHA identified the two hundred firms in Maine with the highest workers' compensation claims and offered them a new relationship. If they adopt various practices, including employee involvement in workplace safety and health, the agency would rely more on general oversight of programs and results and less on formal inspections. With employees involved in the process, OSHA has greater assurance that their safety and health are protected. So far, says Roger Banaitis, OSHA program manager, nearly all firms have accepted the offer and compensable claims are down nearly 50 percent.

But labor law again intrudes. Safety and health are "bargainable" terms and conditions. So the NLRB, in the 1993 DuPont case, upheld the union's position that a participatory safety and health committee must be established jointly with the union, its agenda jointly determined, and its employee representatives selected by the union. Lawyers say participatory safety and health committees could thus be illegal in nonunion settings, as management typically creates them, controls the agenda, and selects participants from among shop-floor volunteers.

Safety and heath committees are so valuable to workers that Senators Edward Kennedy and Howard Metzenbaum introduced legislation in 1991 not just to exempt them from the Wagner Act prohibition, but to mandate their presence, with specified powers and elected representatives, in firms with more than ten workers. After the tragic 1991 fire that killed twenty-five workers at a North Carolina poultry plant, the AFL-CIO also endorsed the formation of mandatory safety and health committees in nonunion settings, beyond the Wagner framework.

The Nemesis

Senator Nancy Kassenbaum and Representative Steven Gunderson introduced legislation in 1993 with much broader implications. Their "Team Bill" would effectively eliminate the prohibition on management-established representation schemes. If enacted, the legislation would mark a clear departure from the Wagner Act regime.

What lies on the other side of Section 8(a)(2) of the Wagner Act is a matter of conjecture. The provision aimed at banning company unions -- full-fledged representation schemes created, financed, and often controlled by management. Many firms in the 1930s used company unions to preempt the formation of independent unions -- to avoid a relationship with labor. But this use seems less likely today, with the threat of unionization low. A firm wishing to defeat an organizing drive also has far more cost-effective, albeit hard-knuckle tools. "An employer prepared to make the necessary expenditures in lawyers' fees," writes Paul Weiler, professor of law at Harvard, "can easily postpone for a thousand days or more the first enforceable order of reinstatement of an illegally discharged union supporter, and the monetary awards issued by the Board in such cases now average a mere $2,000 apiece."

But firms in the past also established company unions to enhance their relationship with labor. Filene's of Boston and Dennison Manufacturing of Framingham, Massachusetts, gave workers a voice in the enterprise as part of a progressive management strategy. While the Wagner Act shut down most of these initiatives, the Polaroid Corporation of Cambridge, Massachusetts, operated such a company union illegally from the late 1940s to 1992. While few "progressive" firms today say they want to set up a company union, momentum and employee pressures can be expected to expand the current team framework toward a more permanent, general-purpose representational program. Polaroid's experience thus provides an example of what such an organization might look like in modern times.

Edwin Land, Polaroid's founder, claimed the company Employees' Committee as "my invention. It was a very natural outgrowth of my relationship with Polaroid employees at the time. It meant that the employees' elected officials could meet with me and pass on employees' concerns to me" (quoted by David Ewing, in Justice on the Job).

The Employees' Committee clearly helped Polaroid avoid unionization. The company had no strikes, no collectively bargained labor contract, and, what seemed most advantageous to Ann Leibowitz, former senior attorney with the firm, no rigid union work rules. The EC also helped management fashion personnel policies and handle grievances. When considering a modification in the merit pay plan, recalls Harvey Greenberg, director of employee relations, it convinced the firm to drop the pay scheme entirely. Greenberg especially valued the EC's contribution in handling grievances, for management and EC members could often find an accommodation that satisfied all concerned.

The EC was hardly an unmixed blessing from management's perspective. It was expensive; Polaroid at one point paid the salaries of thirty-two representatives, and this was their full-time job. Dealings were often "difficult and painful," says Greenberg. He rarely got a "thank you," as a line manager, for anything done on labor's behalf. And each year, the Committee laid down wage demands in meetings that had the look and feel of a collective bargaining session. Leibowitz also wonders whether the EC was truly representative. Like any political system, it tended toward a self-perpetuating leadership that paid special attention to the well connected and to vulnerable constituents who grew dependent on the Committee's protection.

Employees also had complaints. There was suspicion that EC members were indolent and in management's pocket. There were public accusations that members regularly got overtime pay without putting in a full day's work, and that management knew this. And members were dependent on management's favor for their ability to influence grievances. The chairman and vice-chairman were also elected by the EC (not by the employees at large) while they controlled the EC members' pay. One insurgent, Charla Scivally, won election to the Committee in 1992 and objected to this arrangement. When she failed to force a change, she brought in the U.S. Department of Labor, which declared the organization illegal.

Today, workers at Polaroid have no collective voice. Scivally tried to organize an independent union, but failed. The firm set up a watered down "Employee-Owners Influence Council" that it calls a focus group but that the government is challenging as an illegal labor organization.

Greenberg misses parts of the old EC, warts and all. Though expensive and adversarial, it gave him a sense of what employees were thinking and allowed him to address their concerns. The company has been in flux. Fuji Film competes aggressively in instant photography; Wall Street demands a rise in shareholder value; the firm has a new CEO; and Polaroid has cut its workforce about 20 percent since 1992. These changes generate fears and frustrations. With the Employees' Committee, says Greenberg, he could engage in the difficult and painful process that keeps a relationship healthy.

Bridging the Gap

Within the Wagner Act framework, unions and employers are struggling to find a new balance between conflict and collaboration. They are searching for ways to expand competitiveness, and thus the size of the collective pie, that can win the support of workers and shareholders alike. It has not been a simple process.

In the nonunion sector, representation violates Section 8(a)(2) of the Wagner Act. This, say most employers, is a relic from another time. Competition and "progress" have thrown the two sides together, they say, and they call for a new legal framework that lets them deal directly with workers over the terms and conditions of employment. But concerns over employer domination and workplace democracy stand in the way.

A growing number of academics, arbitrators, and other neutral parties are searching for a post-Wagner middle ground. Professor Joel Rogers, of the University of Wisconsin, supports a European "works council" scheme. This is a democratized version of Polaroid's Employees' Committee, one that requires independence and the election of employee representatives, but has limited bargaining power when compared to traditional unions.

Professor Thomas Kochan, of MIT, wants experimentation as well as more representation. Kochan would eliminate 8(a)(2) but at the same time change existing labor law so that workers who want a union can get one more easily. He hopes these changes open the door to new forms of "unions" that provide new bundles of representational services.

As the Polaroid case makes clear, representation is a difficult and painful process, even in nonunion settings. A modicum of democracy gives employees a modicum of power. But the alternative, a lack of representation, is hardly attractive to management. Unvoiced conflicts do not disappear. And in today's fluid workplace, stresses emerge suddenly, and in unexpected places. The shifting environment that first led firms to empower their workers creates grievances and insecurities and guts the fairness and effectiveness of old compensation arrangements.

For any relationship to be flexible and effective, the parties must address their conflicts and nurture their collaborations. The task at hand in the American workplace, as Kochan emphasizes, is institutional far more than legal. The challenge is to develop the representational arrangements that can best keep the employment relationship vibrant.

COLLABORATION PAINS

The ambitious 1993 "teaming" agreement, between the International Association of Machinists and Bath Ironworks, in Bath, Maine, brought the union into shipyard governance. Union officials now participate in joint committees that oversee most operations, with the aim of raising productivity and the competitiveness of the enterprise. The main initiative is to expand a worker's skill set so jobs can be staffed and completed more efficiently, and the shipyard can win more work.

Implementation has been difficult. For example, a union-management team decided that machinists, after a few weeks of training, could hoist mechanical subassemblies weighing several tons in the air while other machinists fit the pieces together. Such a decision could threaten the livelihood of riggers, who typically did such work, or could compromise the safety of workers in the yard. In this particular case, the riggers walked out and forced a reversal of this decision.

In the June 7 union election, the membership chose Brian Bryant, a more cautious leader, as president. Bryant does believe in teaming. And he now has the difficult job of representing workers not just against management, but in management, in a way that enhances labor's long-run interests.

COLLABORATION GAINS

Workers now commonly participate in shop-floor decision making through the use of participatory labor-management teams. In nonunion settings, managers often serve as "facilitators," not supervisors. They arrange meetings, help members reach decisions, and oversee the follow-through.

Such teams help firms qualify for the Occupational Safety and Health Administration's innovative "Maine 200" program. In return for adopting various practices, including employee involvement, OSHA agrees to be a resource more than a traditional regulator. It offers more training and consultation, and favors general oversight over close inspection of policies and procedures.

OSHA's new relationship with these firms parallels the new relationship many firms have developed with shop-floor workers. Both replace an adversarial strategy of command and control with one of empowerment and facilitation. Both rely on well-trained workers and a community of interest to accomplish their objectives.OSHA's new relationship with these firms parallels the new relationship many firms have developed with shop-floor workers. Both replace an adversarial strategy of command and control with one of empowerment and facilitation. Both rely on well-trained workers and a community of interest to accomplish their objectives.

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