Why the sudden interest in unionization?

Is it in America’s best interest?

This is one of the most controversial acts being considered today.  Why?  Two reasons. 

There is concern among business owners and leaders that the new rules, which eliminate the need for secret ballot votes by employees, could result in some employees being coerced by their colleagues into signing.  The second concern is the 120-day mandatory arbitration rules which could leave businesses with economically untenable contracts.

Before we get into these issues, let’s take a look at what’s spawned this interest in unionization.  For decades we’ve been seeing the erosion of the middle class.  When the middle ground is washed away you’re left with a chasm bordered by competing factions on each side of the chasm.  Part of the interest in unionization is the desire to stop the erosion of the middle class and avoid a much costlier “economic civil war” later.

This interest in rejuvenating the middle class has been heightened by the recent outrage over rising CEO pay and executive bonuses despite poor performance, something that Fortune magazine has been railing about since at least 2006. 

Whether or not it will achieve this goal the Free Choice Act is an attempt to reconstitute the middle class and avoid the inevitable civil war that’s developing.  If anyone doubts that a war is coming, review some of the recent news broadcasts highlighting threats of violence against the AIG executives who received bonuses.

With such a lofty goal, why would the business community fight unionization?  They fear loss of control.  Unfortunately, these leaders fail to realize that control is an illusion.  We can’t control anyone’s activity unless they grant us permission to do so.  Anyone who’s spent more than a few hours in a management role knows how readily employees ignore our requests, and even more so, our demands.  If they feel sufficiently threatened, they’ll “agree” to our demands and provide what we requested instead of what we wanted.  

What’s the solution?  It’s counter-intuitive, but whether you’re dealing with a CEO, individual workers or a union, the issue of compensation revolves around one question.  That question is “How are you going to produce results in excess of the compensation you’re requesting?”  You see it doesn’t really make any difference how much a person makes as long as the value of what they produce exceeds what they make.

For those who have grown up in the union environment the concept of providing more than what your being compensated may seem foreign, but in business we realize that we have to provide more value than the consumer is paying for if we want them to part with their dollars.  The same should be true of workers, after all the companies that employ them are their customers.

With those thoughts in mind, let’s assume you’re a business owner sitting at the table with the union representatives and they say they want their workers to get a 6% annual increase in pay and benefits each year for the next three years.  Your response should be “That’s fine, we’re happy to honor that request if you can tell us how you’re going to increase productivity by 6.5% per year.  What’s your plan?”

Let’s say that the union doesn’t come up with a plan, the 120 days elapse and you’re forced to go to arbitration.  The union states its demands as it did to you.  You, again, state that you’re willing to agree to those raises if the union could demonstrate how it was going to increase employee productivity by 6.5%.  After all, any fair exchange requires that each party receive comparable value.  What’s the likelihood that, if the union fails to present a plan, their demands will be granted?  Arbitrators are schooled in the art of creating equity between competing parties and they look at the reasonableness of each party’s position.  The party that seems to be doing the most to create equity, in this case you, typically gains the arbitrator’s favor. 

You can further enhance your position with the union if you use the same question in negotiating pay with non-union employees.  If your records show that pay increases in your company are always accompanied by the employees’ indication of how they can improve their performance to produce more than their increase, you go along way to building a strong case for the arbitrator and a stronger company as well.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 3, Suspend judgment, to demonstrate how to avoid judging unionization as being either good or bad.  Judgment leads to bias which limits the number of alternative solutions you see.

Then I used Step 2, The Persuasion Myth, to show you how to craft a negotiation that makes sense for both parties.  The Persuasion Myth is equally effective in demonstrating to an arbitrator that you’re approach is fair and equitable, thereby increasing your odds of gaining an economically feasible contract.  You can learn more about how the 7 Steps to Becoming INVALUABLE program and how it can help you deal with the business challenges you face by clicking on http://www.furtwengler.com/7steps.htm

Please share your thoughts, whether you agree or not, by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.