Disadvantages of Unions on Company Culture

The question is: What are the disadvantages of unions on company culture? “The entire dynamics of the company culture change,” says Jennifer Orechwa, Chief Operating Officer at Projections, Inc., “and the harsh reality is that it is often not for the better without a clear strategy to protect and maintain a positive culture and positive employee relationships.”

Company culture is frequently thought of as an intangible asset in many cases. But take a deeper dive into what makes up the culture, and it’s a tangible asset. It’s not some vague concept. The type of organizational culture is a tangible component of the organization that encompasses values, ethics, attitudes, working styles, stakeholder interactions, and innovation. It also includes employee engagement level, morale, and performance. The tangible aspect of culture makes it something effective leadership doesn’t leave to develop on its own. Effective leaders deliberately design and develop a culture and then leverage it to improve employee engagement and organizational performance.

Let’s Talk About Organizational Culture First

Company culture is essential for many reasons. One is that it differentiates your company from other companies, contributing to making you an employer of choice. It seems intangible because it’s anchored in mindsets, unspoken behaviors, social patterns, and the employee experience

In a Harvard Business Review Spotlight Series, researchers discuss organizational culture, making the point that “culture and leadership are inextricably linked,” and influential leaders can “shape the culture, through conscious and unconscious actions.” The authors define culture as: 

“The tacit social order of an organization: It shapes attitudes and behaviors in wide-ranging and durable ways. Cultural norms define what is encouraged, discouraged, accepted, or rejected within a group. When properly aligned with personal values, drives, and needs, culture can unleash tremendous amounts of energy toward a shared purpose and foster an organization’s capacity to thrive. Culture can also evolve flexibly and autonomously in response to changing opportunities and demands. Whereas the C-suite typically determines strategy, culture can fluidly blend the intentions of top leaders with the knowledge and experiences of frontline employees.” 

The fact that conscious actions can shape culture is just more proof that culture is tangible.

Organizational Culture Impacts Everyone

Organizational culture impacts everyone in the organization, from the CEO to the frontline workers. Some brands have developed such a strong culture that just saying the brand name evokes a sense of its culture. Starbucks claims a culture that was initially viewed as inclusive, warm, collaborative, and friendly. Leaders put employees first so that employees would put customers first. Yet, things can change fast unless leadership understands what employees are thinking and experiencing; when employees have unresolved grievances and turn to the union for assistance, the culture changes. The internet is now full of stories about employees accusing Starbucks of low wages, poor working conditions, understaffing, and discrimination against certain groups of people, safety concerns, and more. Most stories involve unions in some way because unions thrive on negativity.

The Starbucks Workers Union was formed in 2004 by the Industrial Workers of the World for the sole purpose of organizing retail employees. Unionizing Starbucks sites has not stopped in the U.S. In other countries, there has been ongoing unionizing of Starbucks employees. As recently as August 2020, the United Steel Workers Union was voted in by the workers at a Starbucks drive-thru in Victoria, Canada. It was the first time the USW had organized a union drive digitally. 

What does this have to do with organizational culture? Unions are organizing by convincing employees that joining a union is the only hope for getting fair treatment, and leadership is often not even aware the organizing is going on. Long before a union vote is taken, the company’s positive culture is being eroded by disgruntled employees, many turning to social media to discuss working conditions.

disadvantages of labor unions

It’s Not One or the Other: Culture and Strategy Must Work Together

Peter Drucker said that “culture eats strategy for breakfast.” You can develop a great strategy, but the culture determines if the strategy will work. At UnionProof, we believe culture and strategy must work together. You can’t stay union-free and have one without the other – a great culture without a union-free strategy or a negative culture with a great union-free strategy. The strategy should be a good fit in the culture, and the culture should support the strategy. A positive culture makes it much less likely employees will turn to a union. They will talk to management. 

If culture is tangible and can be impacted by leaders, then culture can be affected by a union. When unions get involved, the company culture will inevitably change and seldom for the better. Following are some of the union disadvantages on company culture. 

Labor Unions Discourage Individuality and Encourage Groupthink

Like any membership organization, unions want people to think and act in a certain way. This is one of the many disadvantages of unions, since groupthink is essential to union success, where individuality encourages new thoughts, ideas, and collaborative efforts. Groupthink is defined as a phenomenon that occurs when people feel the need to conform or that dissent is impossible. It also discourages individuality. It can also lead to situations in which employees ignore moral or ethical consequences to avoid disagreeing with the consensus. A third consequence of groupthink is some employees that don’t want to join a union are afraid to say so and just go along with the crowd. It is not a good dynamic in a business environment where creativity and diverse perspectives are important to business success.

Unions Discourage a Collaborative Culture and Influence Work Norms

A truly collaborative culture is one in which employees are encouraged to work with people across functions and departments and to work with management to solve problems and innovate. Unions don’t like employees “working out of grade” or performing duties that aren’t specifically in their job description. There are often “jurisdictional restrictions” in union contracts. If an employee works out of their area, it opens up a whole set of issues that include union contract compliance.

Union contracts create a productivity disadvantage for two reasons. One is that unions usually impose restrictive work rules when negotiating union contracts. Management is restricted from organizing work activities. Employees are prohibited from being more productive (production limitations), working across jurisdictions (cross-department, function, location, etc.), and taking on responsibilities not explicitly included in their job descriptions. The second productivity disadvantage is that union members are expected to be supportive of other union members. You may have personnel work issues in one department that have nothing to do with other departments, but union members will join forces across the organization.

Labor Unions Make it Difficult to Identify Leadership Potential

Unions are diligent about ensuring regular staff doesn’t assume any leadership roles, even willingly. They are always striving to get as many people as possible who are supervisors and currently can’t join a union reclassified. When the PRO Act is passed (UnionProof assumes it will be since the Democrats are now in charge and wrote the legislation), there will likely be a surge of union efforts to have many employees reclassified from non-union to union-eligible status. Many current non-union employees are frontline supervisors. The general impact will be to discourage employees from showing leadership potential. 

Disadvantages of Labor Unions Continued

Labor unions discourage personal initiative – Most union contracts require promotions based on next-in-line rather than competencies. This isn’t very encouraging to people who excel in their jobs and deserve to advance. Watching someone less competent (in some cases) get the higher-level position only because of seniority harms the workplace culture.

A we-they attitude develops in unionized companies – Unions promote a we-they workplace attitude in which employees (we) assume management (they) will always try to take advantage of employees. This negative attitude leads to a culture of suspicion, which increases the number of conflicts and grievances.

Adversarial relationships can develop at any time – There are places where management and the union work well together. The problem is that the union can quickly change the culture of cooperation by promoting an adversarial attitude among employees over an issue – usually a charge of an unfair labor practice. The power play is always a union option, even when currently kept in check. Adversarial relationships are tense, unproductive, and will inevitably impact employer-employee engagement. 

The management-union relationship always maintains some level of wariness, for this reason, making it difficult to develop positive employee relations. It’s like a proverbial “dark cloud” hanging over the business. 

Labor Unions Resist Change

Companies must have a culture that embraces agility and flexibility, and that means having the ability to make changes and adapt as necessary to marketplace dynamics quickly. Unions usually resist change to protect union member interests. This difference in perspective means success is only possible through successful management-union negotiations, which is very difficult when unions resist change and end goals are different. 

Change adaptability is a significant component of the modern company. Legacy hierarchical organizational structures that unions are used to operating in are ineffective, which means they must be changed. Instead of the hierarchy, command-and-control structure, organizations are moving to a structure that empowers employees. Only 14 percent of the executives believe the model of hierarchal job levels based on specific area expertise makes the organization effective. 

Many forward-thinking companies have already adapted their structures. There is a need for a team-centric structure that encourages shared values and culture, the free flow of feedback and information, and employees rewarded for their skills and abilities and not their position. These are organizational culture features that are in direct opposition to the union culture. In social enterprise, individuals are empowered. Unions say they give each employee a voice, but in reality, it’s a collective voice in which individuals are only empowered through the union membership. 

Labor unions create a separate culture – Paul F. Clark, author of the book Building More Effective Unions and School Director and Professor, Labor and Employment Relations at Penn State, points out that unions create their own culture among employees. He writes, “Many of us are familiar with the slogans, songs, jackets, parades, banquets, and picnics of unions because they are all part of the labor movement. To some, they are simply window dressing, unconnected to the important things that build an effective union. But these things are part of a potentially powerful phenomenon called “organizational culture.” (page 10) He mentions how union members call each other “brother” and “sister” to create a bond. 

The union culture must be integrated with the company’s culture of beliefs, attitudes, values, and objectives to achieve a truly positive organizational culture. Employees must be fully engaged in their workplace culture in order for management to develop strong employee engagement. It can be very difficult to integrate two cultures because one must be willing to be a subculture, something neither entity wants to do. 

Compounding the Disadvantages of Union Membership

There are many disadvantages of union membership. Each of the impacts on culture can be viewed from the employee perspective. Union employees lose their right to speak for themselves, pursue their career goals as they see fit, work with whomever they want to work with, collaboratively solve problems with management, and agree to changes they approve of without union intervention. For these privileges, employees must pay union dues, receiving less net pay while knowing the dues are spent in whatever manner the union leaders see fit. 

The disadvantages of union membership are compounded by the disadvantages unions bring to company culture. Notice that most of the union disadvantages are interrelated. Creativity is needed for innovation, and innovation flourishes in a culture of change. Employees who are highly engaged are more productive and successful in a collaborative culture because they feel empowered. Unions can harm the very aspects of the culture that lead to success for employees and the company. 

Culture and strategy must work together. In a survey of senior executives at 1,348 North American firms, 92 percent believed that improving culture would increase its value. Still, only 16 percent believed their culture is where it should be. Executives linked culture to ethical choices, which includes short-termism, innovation, which includes creativity, and value creation, which includes productivity. 

Sharing Deep Knowledge of Labor Union Behaviors

UnionProof and A Better Leader professionals have worked over the decades with hundreds of large and small companies that are trying to stay union-free or effectively manage the company’s relationship with a union. Having studied union philosophies and behaviors for so many years, we have a deep understanding of unions’ influence on organizational culture. We can look ahead to the long-term impact of unions on your culture. 

Successfully negotiating a union contract has little to do with the union’s influence on the organization’s culture yet to come. Think of it like this: There is nothing in the contract union bargaining agreement that says: “Union representatives will always maintain a positive culture.”

The tools and resources developed through Projections, Inc. specifically and directly speak to the strategies for developing and maintaining a culture of employee empowerment and engagement. Culture may eat strategy for breakfast, but culture plus a positive employee relations strategy for staying union-free is a full day’s meal!

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.