Mgt 470 CHAPTER 17

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Mgt 470CHAPTER 17

• LABOR RELATIONS
• INDUSTRIAL DEMOCRACY

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The U.S. Approach to Labor Relations

• Collective bargaining by unions
• To negotiate wages, hours, and working conditions
• NLRB
• strikes
• Grievance procedure
• Mediation and arbitration
• Importance of positive labor relations

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Labor Relations in the International Arena

• Labor relations
• Process through which management and workers
  identify and determine the job relations that
  will be in effect at the workplace
• Specific approaches to labor relations varies
  from one country to another
• U.S. Approaches to Labor Relations
• Collective bargaining
• Process whereby formal labor agreements are
  reached by union and management representatives
• Involves negotiation of wages, hours, and
  conditions of employment and the administration
  of the labor contract

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Labor Relations in the International Arena
(cont.)

• U.S. Approaches to Labor Relations (cont.)
• Union
• Organization represents workers in collective
  bargaining
• Has the legal authority to negotiate with the
  employer and administrator the labor contract
• Unions gain representation rights only after
  certification
• Unions can decertify a union with which the
  members are dissatisfied
• Workers may strike to support unions demands
• Grievance
• Complaint brought by an employee who feels that
  s/he has been treated improperly under the terms
  of the labor agreement
• Settlement of grievance attempted at various
  hierarchical steps

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Labor Relations in the International Arena
(cont.)

• U.S. Approaches to Labor Relations (cont.)
• Mediator
• Person who brings both sides together and helps
  them reach a settlement that is mutually
  acceptable
• Arbitrator
• Individual who provides a solution to a grievance
  that both sides have been unable to resolve
  themselves and that both sides agree to accept
• Labor relations are important because they
  determine labor costs

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Labor Relations in the International Arena
(cont.)

• Labor Relations in Other Countries
• MNCs have to adjust labor relations strategies
  because host countries differ in terms of
• Economic development
• Political environments
• Strike activity
• Regional differences
• Great Britain
• Labor agreement is not a legally binding contract
• Violations of the agreement carry no legal
  penalties
• Labor agreements are less extensive than in the
  U.S.

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Labor Relations in the International Arena
(cont.)

• Labor Relations in Other Countries (cont.)
• Germany
• Unions and management have been cooperative in
  the past
• Labor harmony not adversely affected by
  unification of East and West
• Union power is still quite strong
• Rights of workers addressed more carefully by
  management
• Japan
• Unions and management have cooperative
  relationships
• Contracts tend to be general and vague
• Disputes regarding the labor contract usually
  settled amicably
• Unions most active during the spring and end of
  the year

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Labor Relations in the International Arena
(cont.)

• How Industrial Conflict Is Handled Around the
  World
• Strike
• Collective refusal to work to pressure management
  to grant union demands
• Lockout
• Companys refusal to allow workers to enter the
  facility during a labor dispute
• United States
• Most contracts outlaw strikes
• Rely on grievance procedure to resolve disputes

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Labor Relations in the International Arena
(cont.)

• How Industrial Conflict Is Handled Around the
  World (cont.)
• Great Britain
• Strikes more prevalent than in the U.S.
• System is not geared toward efficient resolution
  of conflicts
• Grievance handling is informal, cumbersome, and
  costly
• Germany
• Strikes and lockouts are prohibited while the
  contract is in force
• Contracts have different expiration dates
• Cooperation between union and management is not
  unusual

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Labor Relations in the International Arena
(cont.)

• How Industrial Conflict Is Handled Around the
  World (cont.)
• Japan
• Strikes and lockouts are very rare
• Few areas of disagreement between unions and
  management

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Annual Average Days Lost Due to Labor Disputes in
Economically Advanced Nations 1990-1999
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Labor Relations in Europe

• European firms typically negotiate agreements on
  a national level
• European unions have more political power than
  those in the U.S.
• Salaried employees in Europe are often unionized
• European unions have existed longer

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Labor Relations Around the World

• Great Britain
• labor agreements are not legally binding
• labor agreements are not extensive
• Germany
• Unions and management have a cooperative
  relationship
• Union power is strong
• Unions set the pay scale for 90 of workers
• Japan
• Social customs dictate union behavior
• Disputes settled amicably
• Unions most active twice a year

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Resolving Industrial Conflict

• In the U.S. Strikes and lockouts are prohibited
  while an agreement is in effect
• In Great Britain, strikes are prevalent
• In Germany conflict is resolved similarly to the
  U.S.
• Strikes in Japan have largely a symbolic meaning

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Industrial Democracy

• INDUSTRIAL DEMOCRACY involves the rights of
  employees to participate in significant
  management decisions
• wages
• vacation
• work rules
• plant closings and expansions

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Common Forms of Industrial Democracy

• Codetermination
• Workers on Boards of Directors
• Work councils
• Workers elected to serve (common in Europe)
• Shop floor participation
• E.g. Quality Circles
• Financial participation
• E.g. Profit sharing (predominantly U.S.)
• Collective bargaining

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Industrial Democracy in the U.S.

• Problem solving teams
• Special purpose teams
• Self-managing teams

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Labor Costs Around the World

• Country Hourly Hours
• Compensation
  worked/ Week
• Germany 31.87 29.0
• France 19.34 31.7
• Italy 18.08 35.0
• U.S. 17.74 37.9
• UK 14.19 35.6

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Real Wages of Low-Paid Workers
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Manufacturing Labor Costs (per unit of output,
annual average percentage change 1990-1997)
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New Labor Force Trends

• Flexible working arrangements
• part-time workers
• shift work
• temporary contracts
• subcontracting
• Joint partnering
• virtual corporations

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Closing thoughts

• International management will be one of joint
  partnerships and agreements
• Virtual corporation
• Network of companies that exploits fast-changing
  opportunities and shares costs, skills, and
  access to global markets
• Theories of international management must be
  continually subjected to review
• An important question Why some MNCs do better
  than others?
• Strategic fit - aligning resources to match the
  environment
• Strategic stretch - use of resources to achieve
  more challenging goals