Labor-Management Programs: Fostering Bilateral Cooperation

By Abbey, Augustus | Industrial Management, September/October 1996 | Go to article overview

Labor-Management Programs: Fostering Bilateral Cooperation

Abbey, Augustus, Industrial Management

One of the features of the U.S. Industrial Relations System is the win-lose, adversarial relationship at the collective bargaining table. This traditional adversarial relationship started with the advent of organized labor and became institutionalized with the passage of the National Labor Relations Act in 1935. Labor and management have traditionally approached collective bargaining with completely different objectives. For management, the primary goal has been to control the cost of labor while attempting to achieve the objectives of the company. In the case of the union, the primary objective has been to improve and enhance the standard of living of the rank and file union member. This approach to collective bargaining is distinguished from the Japanese industrial relations system where labor and management traditionally have approached collective bargaining with the goal of working toward the common good.

The economic realities ot the early 1980s forced a change in the adversarial relationship. With the unemployment rate at 10.8 percent, and the nation's factories operating at an average of 69.8 percent of plant capacity, labor and management approached the bargaining tale with a willingness to accommodate each other. Through concessionary bargaining, management was able to demand wage concessions and work rule changes. In the same breath, organized labor exhibited a high degree of flexibility and rationality in an attempt to protect the jobs of unionized workers. This cooperative effort was in response to the economic recession of the early 1980s.

While the traditional adversarial relationship remains the same, there are encouraging signs. With the trend toward a global economy and increased global competition, increased use of automation, and increased concern for worker productivity, the 1990s have witnessed the formation of several labor-management cooperative programs by U.S. organizations. Currently, over 30,000 employee participation programs are in operation.

For U.S. companies to compete effectively in the global marketplace, the traditional adversarial relationship must give way to a more cooperative labor-management relationship. This article examines labor-management cooperation programs in the United States within the context of the current labor law-the Labor Management Relations Act-to determine what changes, if any, should be made in the labor law to facilitate labor-management cooperation.

Labor-management programs and organizational performance

Labor-management cooperation programs provide a means for finding solutions to an increasingly technological and highly competitive environment by involving employees in the decision making process as equal partners. Chamberlain and Kuhn define labor-management cooperation as a mode of bargaining or joint discussions in which the objective is to improve the wellbeing of both labor and management.

It is generally assumed that increased cooperation between labor and management leads to better organizational performance. Schuster developed a model to show the potential outcomes from labormanagement cooperation programs. Figure 1 illustrates the benefits and opportunities that accrue to the parties as a result of successful labor-management programs.

In a study to empirically test the assumption of the positive relationship between organizational productivity and labor-management cooperation programs, Peterson and Tracy found evidence of a strong positive impact of cooperation programs on productivity. Results indicated steady improvement in productivity, profitability, customer satisfaction with service, and employee satisfaction with working conditions. Cooke established in a study of union-management programs that:

Product quality improvement was more likely when the program was jointly administered by both parties; and

The product quality gains associated with union-management cooperative programs were at least equal to that found in nonunion firms. …

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