Communicating With the C-Suite About Unions

Have you communicated with the c-suite about unions? Does your CEO know the AFL-CIO tracks executive pay at S&P 500 companies? There are several reasons it does. One is to leverage the information to demonstrate that CEO-to-worker pay ratios are unfair. From the union perspective, the top executives are overpaid and are not investing enough in their employees who do the real work. The second reason is that knowledge is power. For example, the AFL-CIO website reviewing the results of pay disparities between CEOs and employees point out that investors can use the information to keep CEO pay in a more reasonable range and to guide investment decisions.

Reading between the lines, unions want a say in the executive pay allowed, how board of directors vote on pay issues, decisions by investors and the way companies spend money, especially concerning wages. It’s easy for the CEO and other executives to sit in the C-suite office of a union-free company and tell themselves that unions are having no impact on operations. The reality is much different. Even companies that aren’t unionized experience the consequences of union activities, like unions lobbying Congress for changes in tax laws or convincing local governments to hike the minimum wage.

Are you ready to communicate with the C-suite about unions? Whether you are a labor consultant or an internal Human Resources professional, the following ideas will get the attention of executives as to the importance of remaining a UnionProof organization by investing in effective resources.

Explain How Unions Strategize

CEOs of any size company need to understand how unions think and strategize in order to keep the company union-free. For example, the unions are aggressively lobbying state legislatures for minimum wage increases. When successful, every company is impacted, whether or not it’s unionized. The consequences of being forced to pay a higher hourly rates usually include events like fewer students hired in the summer, reduced staffing levels and layoffs.

There are numerous studies that offer arguments for and against raising the minimum wage. Many of the studies are skewed to produce the desired results. Unions frequently use this strategy of one-sided evidence when communicating with employees.

The truth is that increases in minimum wage rates are forcing large employers to lay off people and small businesses to either cut employee hours, lay off employees or close up shop. In New York City, restaurants and fast food businesses are required to pay $15 an hour effective January 1, 2019 and are cutting hours, providing less customer service and raising menu prices.

The owner of Heartland Brewery and Houston Hall, Jon Bloostein, told CBS News the minimum wage increase is not great for labor, investors or business owners. He also makes the critical point that he lost control of his largest controllable expense. These are words of a business owner who has suffered the real consequences of changes in labor laws and union lobbying.

Unions are striving to change the numbers in 2019.

Explain the Hard Costs of Unionization

When employees vote in a union, the hard costs of unionization flow right to the bottom line in a direct way. This is why communicating with the c-suite is so important. Explaining this is an easy way to get the CEO’s attention. Expert research found that a newly organized business experiences a 25 percent increase in payroll and benefit expenses. Your company will inevitably pay higher wages and have to offer more benefits because unions promise your employees they will fight for these things to the bitter end during contract negotiations.

Other costs also include higher total operating costs for items like manager and supervisor training, attorney fees, rewriting policies and procedures, handling the inevitable increase in the number of grievances and the additional expense of developing regular union-related materials. You will need to provide ongoing intensive training opportunities for Human Resources personnel or add additional staff.

Costs will also increase due to periodic contract negotiations, the need for additional security at operating facilities and lost management time due to handling day-to-day employee issues related to unions. It is estimated that additional operating costs will range from $900,000 to $4 million, depending on the number of employees. Once unionized, employees can strike or gain the support of community picketers, costing the company in terms of lost business, additional legal fees, and/or employee replacements. There is also the indirect cost of the reputational damage from accusations the company doesn’t care about its employees.

Before your company ever gets to the contract negotiation stage, it will incur significant costs during the unionization campaign. The costs can range from $400,000 to $2 million on a single union campaign.

Explain the Loss of Productivity

Unions negatively affect productivity. It’s not that union workers are lazy, an argument some people make. It’s due to the more restrictive work rules that are built into negotiated union contracts. Managers have less ability to organize work activities, assign people to different jobs and promote the most qualified employees. The union controls the ability to fire low performing employees. Keeping poor performers in their jobs harms workforce moral and damages the organization’s culture.

Though many discussions stop there, the reality is your high performing employees lose their flexibility too. It’s an important when you are communicating with the C-suite about unions. Even if an employee wanted to do different work or try something new for future career advancement, he or she would be prohibited from doing so by the union contract rules. How much creativity and innovation, critical to competitive success, is lost due to unionization? How much agility is never developed? Agility enables companies to thrive in uncertainty, which defines today’s competitive environment.

Explain the Loss of Competitiveness

Unions, according to labor relations experts, harm the ability of companies to adapt to changes in market conditions. Companies that cannot quickly adapt are not likely to stay in business in the dynamic business environment that exists today.

Explain the Loss of Employer Control and Impact on Employee Engagement

The loss of management flexibility is a loss of control. The word “control” tends to imply something negative, but think in terms of the modern workforce. The ability to support employee job autonomy, flexibility, and career advancement are key to employee engagement and retention.

The C-suite needs to understand that its executives, and all other organizational leaders, lose a direct relationship with employees when employees unionize. The union contract restricts the ability to provide promotions, give raises based on merit and reward longevity. Promotions must follow strict contract rules usually based on seniority, meaning limits are placed on who can get promoted. In a unionized organization, the employer cannot have a true “open door” policy. Dissatisfied union employees are expected to go through a formal grievance process.

Managers in union companies are restricted in doing the very things that strengthen employee engagement. The impact of unions on employee engagement is a serious concern. Gallup research is frequently quoted to explain the direct connection between employee engagement and turnover and productivity. Employers are urged to strengthen engagement levels which in turn develops more satisfied and productive employees. When you cannot do the things to meet the needs of employees, employee satisfaction declines.

Related: The Employee Experience: The Path to High Engagement

Explain the Impact on Job Satisfaction

A meta-study discussed in the article, Research Shows Unionized Workers are Less Happy, but Why?, came to an interesting conclusion. Being a union member per se does not decrease satisfaction. Instead, dissatisfied workers are more likely to join unions. Unions leverage dissatisfied employees by giving them a voice. Once the union succeeds in convincing employees to vote for the union, unionization is negatively related to job satisfaction, and the loop goes round and round.

Dissatisfied employees are less productive, require more management time and are more likely to leave. The researcher advises employers to address employee expectations, including their need to express dissatisfaction, if they want to remain union-free.

Explain the Importance of Utilizing Resources

Some labor relations experts believe that employers are doing a better job of being more responsive to employee concerns, and that is why union membership continues to decline. Remaining union-free is important to business success, but it also gets more difficult each year due to changing union strategies and technology making it easier for union representatives and employees to communicate.

Unions are developing more sophisticated strategies, like approaching employee groups that historically are non-union and getting more aggressive with their actions. For example, they have refused in some instances to honor the Supreme Court decision to end forced agency fees, leading to the lawsuit of Belgau v Inslee.

Communicating with the C-suite about unions should include a discussion on the importance of not following a “do-it-yourself” strategy. Keeping up with laws, adapting communications to changing workforce needs and maintaining current knowledge of union strategies is critical to staying union-free. Even the biggest companies need help safely maneuvering through the maze of legal requirements.

Amazon recently fired an employee for a safety violation, and this person was trying to organize. Now the ex-employee is suing the company. Complicating Amazon’s efforts to stay union-free is the global influence of striking Amazon workers in more union-friendly countries, like Spain, France and Germany. That is how complicated it can get to keep unions out.

There are specific strategies, powerful tools and cost-saving measures that labor attorneys, labor consultants, and communication and training experts can bring to the discussion when communicating with the C-suite about unions. Once executives are convinced, the next step is to invest in additional appropriate resources, like eLearning programs, web-based solutions, and modules and videos that train supervisors and educate employees on unions. Your organization also needs tools that guide your response to signs of union activity or an organizing campaign.

The investment in tools, consultants and labor experts may seem expensive, but the cost of unionization in terms of increased expenses, reduced employee engagement and competitive standing are much higher. That really is the bottom line.

About the Author

Walter Orechwa

Walter is Projections’ CEO and the founder of UnionProof & A Better Leader. As the creator of Union Proof Certification, Walter provides expert advice, highly effective employee communication resources and ongoing learning opportunities for Human Resources and Labor Relations professionals.