SUMMERIZE THE FOLLOWING CHAPTER Chapter 4

Employers: Objectives, Processes and Strategy

After World War II, there was a period of economic growth in Canada with low unemployment, which strengthened the position of unions. Unions held the initiative in negotiations with employers, and they were able to negotiate collective agreements that provided for increased wages, breakthroughs in benefits including pensions, reduced work hours, and seniority provisions. Non-union employers adopted some of the developments provided in collective agreements. Most employers initially resisted union certification; however, after the union was certified the employer concentrated on negotiating the best possible collective agreement. The environment changed in the 1980s. Employers had to deal with the competitive pressures caused by environmental factors referred to in Chapter 2. A recession in the early 1980s marked the start of a shift in power from unions to employers. Prior to the1980s, some employers had been able to buy labour peace by granting concessions to unions.

In the new environment, particularly since the 2008 recession, employers have turned increasingly to new technologies, exited some lines of business, downsized their workforces and, where possible, entered global markets.

Management Objectives and Processes

To understand the policies and practices that employers adopt, it is necessary to consider the objectives those policies and practices are trying to achieve. Figure 4-1 summarizes employer objectives and processes or methods. We will review employer objectives here and consider processes below. In the private sector, the conventional wisdom is that management has two core objectives: the maximization of profit and maintaining control over the business. In the public and nonprofit sectors, employers seek to balance operating budgets, comply with government policy initiatives and meet demands for public services at reasonable costs.

Efficiency or Productivity

To maximize profits, private sector employers will seek to increase efficiency or productivity. Efficiency means that

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C h a p t e r 4

of capital, labour, energy, and material resources. Productivity is a measure of how effi-

ciently goods and services are produced. Productivity growth and productivity levels are

both important. While the focus in the media is most often on productivity growth rates,

the actual level of productivity (i.e., the dollar value of output per hour worked) is equally

of interest. Low productivity levels present an enormous challenge for Canadas future eco-

nomic prosperity. In 2012, Canadas level of labour productivity was US$42, much lower

than that of the United States, at US$52. This earned Canada a disappointing 13th place

among its 16 peer countries on the level of labour productivity. Worse still, Canadas labour

productivity level has fallen to 80 percent of the U.S. level from a high of 91 percent in the

mid-1980s. Despite a broad and growing consensus that Canadian productivity needs to be

improved, the gap with the United States is widening, not narrowing.

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There is disagreement over the measures that should be adopted to improve productiv-

ity. Some observers have cited the following as possible reasons for the decline in Canadian

labour productivity: insufficient investment in higher education, inadequate quality of

math and science education in secondary schools, insufficient employer training, excessive

business regulation, and inadequate investment in capital goods.

3

Employers tend to favour

measures such as tax cuts and deregulation. Unions prescribe measures such as additional

investment in infrastructure and training and development of employees.

Productivity is an important issue facing private sector employers that could affect

employees desire to unionize and unionmanagement relations. Although in the public

sector the provision of services is the primary objective rather than the pursuit of profit,

there should be the same concern for efficiency or productivity. Governments are facing increased demands for services such as health care, and there is the need to do more with less. Some observers are using the language of the private sector to describe objectives and processes in the public sector. There are references to improving the business of government, and viewing the public as customers. The nonprofit sector, which may be referred to as the third sector, provides services in sports and recreation, housing, education, the arts, and social services. Examples include the Canadian Cancer Society, the Vancouver Art Gallery, and Nova Scotia Community Services. The size and importance of the nonprofit sector has been increasing. One of the reasons for this is that some nonprofits are now providing services previously provided by government. There may be some confusion over the size of the nonprofit sector. Some references to the sector include hospitals, colleges, and universities that are also sometimes included in the public sector. In the pursuit of efficiency, employers in all sectors will pursue measures such as outsourcing, making use of temporary workers, and adopting changes in technology, which will have implications for union contract negotiation and administration. The competitive pressures that employers face were referred to in Chapter 2. In some situations where employers have suffered financial reversals, they have made demands for unions to agree to demands for reductions in wages and benefits, referred to as concession bargaining. Employer demands may include wage cuts or freezes, lump-sum payments instead of wage increases, loss of holidays, the suspension of cost-of-living wage increases, or the creation of two-tiered wage and benefits systems providing that newly hired workers receive lower compensation than current workers. Concession bargaining may take place under the threat of business closure. But even where there is no such threat, employers are always concerned with keeping wage increases in line and increasing productivity. Many of the alternatives in this area will lead to confrontations with unions. Union inflexibility is a sore point in employers eyes. Employers may pursue changes in such rules in the future so that they can increase flexibility and lower costs. They may also press for ability to be given more weight than seniority when filling job vacancies. When pushing for concessions, employers must be careful that wages stay at a level sufficient to recruit and retain the quality of workers needed to carry out the firms strategy. goods and services are produced with the lowest possible amount

If unskilled labour is all that is needed, employers may be able to limit wage increases or

even press for reductions. But if they need a more skilled workforce, firms cannot press for

the lowest possible wages without considering the consequences for employee recruiting

and retention. Negotiating wage reductions or freezes could backfire and lead to excessive

turnover. For the same reason, employers must ensure that benefits such as vacations,

health services and pensions are adequate.

Recent environmental developments, including globalization, international trade

agreements, and changing workforce demographics, appear to have reduced the power of

some unions. It is also possible that a more hostile environment has influenced the attitude

of some employers. Employers who once accepted unions, now faced with a competitive

environment that threatens their ability to stay in business, might reconsider this position.

CONTROL:

Control of the workplace has been cited as a management objective that is as important as

efficiency.

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Managers need control to reduce uncertainty or risk. Additionally, for some

managers maintaining control or the right to manage may be based upon personal belief or

ideology. They may think that if they are not in control the organization will suffer. For

example, if the employer decides to terminate an employee or install video monitoring

equipment, there will be an issue with the union. Employers could use all of the measures or

processes referred to in Figure 4-1 to achieve the objectives of efficiency and maintaining

control. Subsequent chapters will elaborate on most of these processes; an overview is pre-

sented here.

Many employers perceive that a union will prevent them from achieving either or both

of their objectives of productivity and maintaining control. Accordingly, some employers

will take steps, frequently referred to as a

union substitution strategy

, to prevent a union

organizing their employees. These measures will include practices such as paying higher

wages and providing forms of employee representation. If employees pursue a union, some

employers will actively oppose the unionization of their employees by campaigning against

the union, or in some cases resorting to legal action to oppose the union. Walmart is one

employer that has used various methods, including the courts, to oppose the unionization of

its stores. If employers are not successful in avoiding unionization, they can attempt to

achieve their objectives when they negotiate a collective agreement with the union. In

some cases, employers will be able to avoid a collective agreement entirely, although this is

subject to the employers duty to

bargain in good faith

, a topic discussed in Chapter 8. Alter-

natively, the employer can pursue terms in the contract that protect its interests, such as

avoiding restrictions on outsourcing and technological change. If the employer has diffi-

culty negotiating an agreement with acceptable terms, it may be able to lock out employees

to force the union to change its position. An illustration of this was the 200405 NHL

lockout. When the players union refused to agree to a salary cap, the league imposed a

lockout, and eventually the union backed down, agreeing to the salary cap and salary roll-

backs. The employer can use the grievance and arbitration process, which is elaborated

upon in Chapter 9, to achieve its objectives. Although unions file most grievances, employ-

ers can also use the process to protect their interests. For example, in one case where a

union had instructed employees not to participate in an employee suggestion program, an

employer filed a grievance and an arbitrator found in favour of the employer. Although

very few arbitration decisions are overturned in the courts through the process of judicial

review, employers have this available as an option.

In the previous chapter, it was noted that unions engage in political activity. Employ

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ers also support political parties and lobby governments for changes in policy, and might

also pursue public relations efforts to convince the public to support their cause. An inci-

dent in 2004 in Saskatchewan illustrates how employers can use political and public

elations activity to achieve their objectives. The Saskatchewan government announced it

was going to amend the provinces employment standards legislation to require employers

with more than 50 workers to allocate additional hours to part-time employees on the basis

of their length of service. Employers strongly opposed the proposed legislation, and they

organized a campaign to oppose it. Employers formed an association, the Saskatchewan

Business Council, which campaigned against the proposal. The council organized a rally,

provided a message that employers could transmit to employees, and provided a draft letter

opposing the legislation that could be sent to members of the provincial legislature. The

message to employees indicated that the legislation would lead to job losses. Letters to

newspapers denounced the legislation, calling it a job killer. The employers campaign

was a successthe government dropped the legislation. Employers can also achieve their

objectives by working collaboratively with a union to improve quality and reduce work-

place accidents.

Finally, even though a union represents employees, it is still possible for the employer

to take unilateral action in areas not covered by the collective agreement. Although such

action is subject to constraints, which are referred to when management rights are discussed

in Chapter 7, it should be noted that the presence of a union does not eliminate manage-

ments residual right to manage. For example, an employer could change the timekeeping

system to make it more efficient without consulting the union.

The methods an employer uses to achieve its objectives will be heavily influenced by

its labour relations strategy, which we will consider next.

EMPLOYEE LABOUR RELATION STRATEGY:

An organizations

labour relations strategy

refers to how the employer chooses to deal with the

unionization of its employees. There are several possible broad choices or strategies employers

can adopt, ranging from acceptance to extreme opposition. Walmart is known as an employer

that vigorously opposes unions and has used various methods to prevent its employees from

unionizing. When the United Food and Commercial Workers union filed an application to

represent employees at the store in Weyburn, Saskatchewan, in 2004, Walmart launched a

legal challenge that continued for several years. The union was certified in

December 2008,

but since then the case has been back before the Saskatchewan Labour Relations Board and

the courts numerous times. The provincial labour laws changed during this period and a decer-

tification drive was launched at the store. In December 2012, the Saskatchewan Court of

Appeal issued a new ruling that sided with Walmart. The union sought to take that decision to

the Supreme Court, but its application to appeal was dismissed in August, 2013.

We will first consider the factors that may affect the employers approach to unions and

then consider alternative strategies.