As the uncertainty of the current economic crisis looms, union representation may look more attractive than ever to workers who are concerned about job security, wages and benefits. The truth of the matter is that unions target companies that are profitable. While many of these companies have had to make changes to remain competitive, they are still in the crosshairs of the unions. Yet when they can’t seem to make headway in well-run companies, unions will vilify a company working to maintain profitability by engaging in orchestrated corporate campaigns.
Most employees don’t realize how the presence of a union and even its outside activities can negatively impact the business and their job security, especially in today’s competitive and recovering marketplace. Now is the time for companies to proactively take steps to protect their business and their employees by staying union-free. The cost of doing nothing is too great a risk.
Some research, such as the work done by John E. Dinardo and David Lee at the National Bureau of Economic Research, has led many to believe that increased wages and benefits have a negligible impact on an organization’s market value. If this is the case, why did unionization play a significant role in the auto industry crisis? The United Auto Workers (UAW) still preaches to all who will listen about “The Union Advantage in Wages and Benefits”: that union workers receive higher wages and more benefits than non-union workers.
A March 2009 study released by the Bureau of Labor Statistics supports these claims. The study found that nonunion employers paid an average of $19.06 per hour (wages and wages), while unionized employers in the same sector were required to pay $22.76 per hour. Additionally, unionized workers received $13.82 per hour in benefits, while non-union workers received $7.33 per hour in benefits. Of course, one could argue that union dues are not taken into account in this study, but does any of that matter if the company, or the entire industry, collapses under the pressure?
Why do so many organizations, like Wal-Mart, FedEx, Citigroup, Associated Builders and Contractors, even the US Chamber of Commerce, take such a strong stance against unionization? In his landmark text, “Unions are not inevitable!” explained author Lloyd M. Field, referencing multiple studies conducted in the 5-year post-union period. The findings, according to Field, were that the newly organized company’s operating costs increased by more than 25 percent from its gross payroll and benefits costs. In his book, Field provides an example of a company with a gross payroll of $18 million, for which unionization would result in $4.5 million in additional annual operating costs.
Jim Gray, president of Jim Gray Consultants, a firm that specializes in helping business leaders with business transition and human resource issues, found that companies could expect to spend between $400,000 and more than $2,000,000 on a single unionization drive. . These costs include items such as attorney fees, travel expenses, employee meetings, video presentations, lost productivity, and other items that are often difficult to quantify but can add up to thousands, even millions, lost.
Looking at the annual expenses of an organization with a union presence, Gray estimates that the total additional operating costs (over a non-union business) range from $900,000 for a business with 100 employees to more than $4,000,000 for a business with up to 2,000 employees. These amounts do not include wages and benefits, but do include items such as additional manager training, additional Human Resources support, attorney fees, arbitration and complaint handling costs, as well as negotiations, lost productivity, strike planning, security and Loss of sales. margin, as well as a number of other elements.
Extending the research to 10 years after unionisation, the Employment Policy Foundation (EPF) stated that a unionized company’s output per employee would be 2.4% lower than that of a non-union competitor. union, if that unionized company experienced only a 0.25% reduction in productivity. Their conclusion was that unless the unionized company could sell its product at a higher price or other cost savings, the unionized company is likely to make 14 percent less profit per hour of work than its non-union competitor.
Research by David Lee and Alexandre Mas, which used similar methodology to Lee’s earlier study with DiNardo, found that unionization reduced an organization’s market value by approximately $40,500 per worker eligible to vote in a unionization drive.
In his book, “The Union Test: Creating a Successful Union-Free Strategy,” author Peter J. Bergeron notes that the cost of operating a unionized organization is estimated to be 25 to 35 percent higher than that of running a union. a non-union organization. This is because unionized organizations generate more human resources staff, more legal counsel, more involvement with regulatory agencies, loss of flexibility, and higher labor costs due to overtime rules, grievance and arbitration processing, and many other requirements.
With extensive operating costs and potential loss of market value, organizations must be diligent in their strategies to avoid unionization. An integral part of any successful union prevention strategy is communication with employees. As Bergeron noted, “Companies that are afraid of the ‘U word’ are the easiest targets for unions. If your employees don’t know about unions, make sure you’re the one providing that information, otherwise the union will.” by you, and not in a good way. Employers need to provide useful information. In short, employees need to see current and relevant factual information. They need to know about the things that may affect them, and they need to know that top management really is aware of the challenges they face on a daily basis.
The bottom line is that unionization can have a serious impact on the agility and profitability of any business. It is vital that all non-union employers take proactive steps now, building relationships with employees so they know how much they are valued, not only for their performance, but also for their skills and contributions. Employers should consider it their responsibility to educate and inform employees about the reality of union representation. Times are tough; stay free of unions to avoid making them more difficult.