Labor-Management Cooperation

Labor-Management CooperationIn many countries, labor-management relations are militant and adversarial.

Both parties hold a negative attitude toward each other. This pervasive negative attitude creates a workplace climate of mutual distrust and hostility.

Management perceives the union as interfering with the smooth operation of the organization. The union’s role is to get the best possible deal for its members while preventing inequities and other managerial abuses.

Both sides are drawn to the protection and advancement of what each perceives as its natural interest. This traditional adversarial unionism produces economic inefficiency – hostility and animosity between employer and employee and thus leads to a decrease in productivity. Lower productivity is translated into lower employee wages and benefits.

Adversarial unionism has also been criticized because it tends to put too much emphasis on the advancement of material needs such as pay, benefits, job security, and working conditions to the detriment of more fundamental issues such as fairness and equity. Is conflict in the employment relationship inevitable?

Godard argues that there are “underlying sources of conflict” that are present as a result of labor-management relationships in many countries. Conflict may arise when workers have little control over the means and processes of doing their work.

In a number of employment relationships, there are conflicts of interest between the goals of employers and employees – while employers often want productivity and efficiency, employees may seek to maximize compensation while reducing their work effort.

Currently, many workplaces are adopting more cooperative labor-management relations, stimulated in part by sweeping changes in the economic environment that have occurred over the last decade.

Many forces like globalization, organizational downsizing and restructuring, job and workplace restructuring, labor force outsourcing, new technology introduction, bargaining unit consolidations, and system reorganization have also contributed to a growing need to adopt more cooperative arrangements between labor unions and management.

Moving beyond adversarial unionism requires a restructuring of the attitudes by both managers and union officials and members.

Improving Productivity Through Cooperative Labor-Management Relations

Under this circumstance, fostering union-management cooperation to solve the problem of organization ineffectiveness cannot be ignored.

Now it is more important than ever before because organizational competitiveness is at stake. Productivity improvement is the only way of addressing the challenge of globalization, which is characterized by international competition, deregulation, and automation.

Productivity is a primary determinant of an organization’s level of profitability and ultimately, its ability to survive. It also determines people’s standards of living within a particular country.

Thus the citizens of a country with a highly productive country are likely to have notably higher standards of living than the citizens of a country with low productivity.

Both the labor and managers are benefiting by increased productivity. Improved productivity mitigates the workers’ demand for higher wages and employer’s demand for a higher return on investment.

How does a business or industry improve its productivity? Numerous specific suggestions made by the experts for improving productivity generally fall into two broad categories: improving research and development (R&D) operation and increasing employee cooperation through participation.

R&D activities are expensive and risky. This does not mean that research and development is less important.

The reality is that the poor developing countries like India cannot easily increase research and development activities due to resource constraints.

But these countries can easily modify and change the existing management practices, particularly human resources management to enhance quality and productivity.

These countries should focus more on building sound labor-management relations, which, in turn, results in cooperation. It is widely believed and proven that productivity can be improved by fostering sound labor-management cooperation.

Drucker, the great management guru, rightly says, “Japanese firms succeed in the competitive business world by establishing a cooperative relationship between management and labor”. Now it is important to explain the concept of labor-management cooperation.

Concept of Labor-Management Cooperation

Labor-management cooperation (LMC) is a state of relations where labor and management work together to accomplish certain goals using mutually acceptable means.

It is the outcome of a continuous process of enhancing mutual trust and respect through sharing information, discussion, consultation, and negotiation. It is a scheme of workers’ participation process on matters not covered by collective bargaining agreements.

LMC is a long term effort to improve organizational effectiveness. It is more than just problem-solving. It should be fully integrated into the organizational culture. People are the greatest asset of an organization and each individual has the potential to strengthen and change the organization.

Good ideas are not reserved for management only a wide range of topics exist when labor and managers are recognized and addressed by all the parties, the potential for a better solution exists.

The concept of labor-management cooperation is found to be effective in Japanese and Western organizations. Labor-management cooperation is often confused with collective bargaining, although these two are not the same or identical. “Labor-management Cooperation” refers to the joint effort of labor and capital to find out solutions and remedies of problems, common to both.

Labor-management cooperation, as viewed by Batt and Weinberg, is not an alternative to free collective bargaining, rather it extends collective bargaining beyond its traditional limits, that is, to deal with issues of mutual interest without impairing either party’s bargaining strength.

Collective bargaining deals with matters of the divergence of interests, while labor-management cooperation deals with matters of common interest.

The underlying principle is that there are many matters of common concerns to managers and workers, which can best be handled by cooperating. Labor-management cooperation is not a replacement for collective bargaining. Instead, it should be viewed as a supplement to collective bargaining.

It can be used as an active mechanism to address ongoing problems. Labor-management cooperation can be understood as any mode of bargaining or joint discussion in which the objective is to improve the well-being of both parties.

Labor-management cooperation can occur by setting up a Labor-Management Council (LMC). LMC is a voluntary association of representatives of workers and management who meet to identify and resolve issues of common interest.

These issues are normally separate from, and outside of, the scope of a contract or collective bargaining agreement if there is a union.

Before setting up a WPC program, it is important to understand that it requires both: structure, a body, a body composed of management and labor representatives for jointly identifying, resolving, and implementing decisions on problems and issues of mutual concern to both partners, and a process of dialogue and exchange of information, leading to joint action and teamwork to address and resolve issues and problems that affect work and work relations.

Obstacles to LMC

A number of obstacles can be identified which prevent joint cooperative efforts between management and labor (Pfeffer, J. 1998). The main barriers are as follows:

  1. Managers may not like to accept the legitimacy of the union,
  2. Union officials are ideologically found to oppose, not to cooperate, management,
  3. Internal union politics may hinder forming cooperative ventures with management,
  4. The fear among union members that cooperation with management may lead to the erosion of the benefits that they have worked so hard to attain.
  5. Critics also argue that innovative workplace practices undermine union power by co­operating employees by forcing the alignment of employee interests with those of management.
  6. Labor-management cooperation, even under conditions of trust, may not always flow freely. In some instances, labor-management committees or employee involvement forums may be considered unlawful if they are deemed to have been “set-up” by management as a means of usurping union prerogative.

Essential Conditions for Effective LMC

Crane (1992), Cooke (1990) and others have identified a number of basic approaches or “best practices” that lead to effective labor-management cooperation. These include:

  1. mutual trust by both parties,
  2. a problem-solving approach to bargaining,
  3. a willingness to innovate and experiment, the widespread implementation of forums such as joint committees and activities that improve the bargaining relationship and constant communication between both parties,
  4. benefits derived from the cooperation are equitably distributed;
  5. making sure that the cooperative effort is separate from and protected from the use of bargaining tactics,
  6. ensuring self-reliance on behalf of the parties on settling differences rather than resorting to legal counsel and
  7. cooperative labor-management forums and cooperative efforts must be clearly specified beforehand and should not intrude in areas that are normally circumscribed within the collective bargaining process.

Importance of Labor-Management Cooperation

The goals of labor-management cooperation are to increase productivity, promote industrial democracy, and avoid conflict and frictions. The objective of the cooperative process is to obtain benefits for both parties, not to bargain over the division or distribution of gains.

Each party has to serve its own interest by cooperating with others. Through cooperation, both parties can replace reactive measures with proactive approaches. Proactive efforts benefit the union and management by saving time and expenses.

By working together, management and workers can find ways to lower cost add provide superior value to customers. These savings can mean higher profits for the company and better contract for the union.

Human relations and behavioral experts strongly feel that productivity or industrial progress depends on a cordial and sound union-management relationship.

Both management and workers are equal partners of industrial progress and prosperity. It is of vital importance to effectively manage the human resources of the organization – the most valued asset of the organization.

Dr. Jose C. Gatchalia argues that the term “Workplace cooperation is now understood as a broad concept connoting mutual commitment between labor and management to “working together and working smarter.”

Specifically, its goal is to develop an ideal situation where management and workers are full partners in identifying problems at the workplace, crafting solutions to those problems and implementing agreed-upon solutions. The idea is that greater cooperation between labor and management on matters of mutual concern can create a more satisfying and productive workplace.

The process involves employee participation in day-to-day decision-making that affects their jobs. The structures and procedures enable the partners to redesign work to encourage group problem solving, open information sharing, teamwork, and skill development.

Many experts believe that people are the key to productivity. The excellent firms in the USA, according to Peters and Waterman, also encourage productivity via people. Productivity through people does not involve too much cost.

Akio Morita, the pioneer of the big Sony Corporation, rightly says that: “Assets make things possible, but people make things happen”. It is people that make the difference between success and failure.

Drucker (1994) argues that union leaders have a tendency to resist changes. In his opinion, only voluntary and cordial cooperation can reduce workers’ resistance to change.

They accept decisions gladly and work harder if they share in a decision affecting them. They do not resist change if they know that changes will not cause any inconvenience to them.

Both labor unions and management are concerned about organization and workplace productivity because without it management will not be able to provide unionized workers with high wages, benefits and job security.

To address these economic aid productivity issues, union and management have entered into a number of joint cooperative programs.

Cooperative programs most common in health care organizations include quality circles and quality improvement teams, formal labor-management forums which include joint committees, QWL activities, shared governance (co-determination councils), and employee involvement initiatives including self-managed teams.

Labor-management forums are formal vehicles for bringing labor and management together under a spirit of cooperation and partnership. The benefits to workers and management to form joint committees are significant.

Darby surveyed 55 employers and 66 unions in Canada regarding labor-management committees. She concluded that joint committees have the potential to improve communication, result in fewer grievances, and enhance labor-management relations.

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