To maximize profits, private sector employers will seek to increase efficiency or productiv-ity. Efficiency means that goods and services are produced with the lowest possible amount
Figure 4-1 Employer Objectives and Processes
1. Efficiency or productivity 1. Union avoidance and opposition measures
2. Control 2. Contract negotiation
3. Lockouts
4. Grievances and arbitration 5. Court (legal) action 6. Political activity 7. Public relations
8. Collaboration with union 9. Unilateral action
Objectives Processes or Methods
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 Canada’s future eco-nomic prosperity. In 2012, Canada’s 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, Canada’s 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.2
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 union–management 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 govern-ment, 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 ref-erences 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 pur-sue measures such as outsourcing, making use of temporary workers, and adopting changes in technology, which will have implications for union contract negotiation and administra-tion. 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.4
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 con-frontations 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 suf-ficient to recruit and retain the quality of workers needed to carry out the firm’s strategy.
Concession bargaining is negotiation over employer demands for reductions in wages and benefits.
75 E m p l o y e r s : O b j e c t i v e s , P r o c e s s e s , a n d S t r a t e g y
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.5 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 employer’s 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 2004–05 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-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
relations activity to achieve their objectives. The Saskatchewan government announced it was going to amend the province’s 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 employer’s campaign was a success—the 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-ment’s 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.