Mgt-485 17-1
Mgt 470CHAPTER 17
LABOR RELATIONS &INDUSTRIAL DEMOCRACY
Mgt-470 17-2
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
Mgt-470 17-3
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
Mgt-470 17-4
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 union’s 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
Mgt-470 17-5
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
Labor Relations in the International Arena (cont.)
Mgt-470 17-6
Labor Relations in Other Countries– MNCs have to adjust labor relations
strategies because host countries differ in terms of:
Economic developmentPolitical environmentsStrike activityRegional differences
– Great BritainLabor 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.
Labor Relations in the International Arena (cont.)
Mgt-470 17-7
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
Labor Relations in the International Arena (cont.)
Mgt-470 17-8
How Industrial Conflict Is Handled Around the World– Strike
Collective refusal to work to pressure management to grant union demands
– LockoutCompany’s refusal to allow workers to enter the
facility during a labor disputeUnited States
– Most contracts outlaw strikes– Rely on grievance procedure to resolve
disputes
Labor Relations in the International Arena (cont.)
Mgt-470 17-9
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
Labor Relations in the International Arena (cont.)
Mgt-470 17-10
How Industrial Conflict Is Handled Around the World (cont.)– Japan
Strikes and lockouts are very rareFew areas of disagreement between unions
and management
Labor Relations in the International Arena (cont.)
Mgt-470 17-11
Annual Average Days Lost Due to Labor Disputes in Economically Advanced
Nations: 1990-1999
Belgiu
m
Nether
lands
Britai
n
Sweden
Portugal
United S
tate
s
Germ
any
Austria
Japan
Switzer
land
Luxem
bourg0
50
100
150
200
250
300
350
400
Canad
a
Icel
and
Spain
Denm
ark
Finla
nd
Turkey
Italy
Norway
Austra
lia
Irela
nd
France
New Z
eala
nd
Mgt-470 17-12
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
Mgt-470 17-13
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
Mgt-470 17-14
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
Mgt-470 17-15
Industrial Democracy
INDUSTRIAL DEMOCRACY involves the rights of employees to participate in significant management decisions wages vacation work rules plant closings and expansions
Mgt-470 17-16
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
Mgt-470 17-17
Industrial Democracy in the U.S.
Problem solving teamsSpecial purpose teamsSelf-managing teams
Mgt-470 17-18
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
Mgt-470 17-19
Real Wages of Low-Paid Workers
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3U
.S. 1
980-
89C
anad
a 19
81-9
0A
ustr
alia
198
0-91
Fran
ce 1
980-
87A
ustr
ia 1
980-
91B
rita
in 1
980-
92D
enm
ark
1980
-90
Nor
way
198
0-90
Italy
198
0-87
Ger
man
y 19
83-9
0
Sw
eden
198
1-91
Mgt-470 17-20
Manufacturing Labor Costs (per unit of output, annual average percentage change:
1990-1997)
Dollar terms
Local currencies-5
-4
-3
-2
-1
0
1
2
3
4
Sw
eden
Ital
y
Sou
th K
orea
Can
ada
Fra
nce
Uni
ted
Sta
tes
Tai
wan
Bel
gium
Den
mar
k
Ger
man
y
Brit
ain
Nor
way
Japa
n
Mgt-470 17-21
New Labor Force Trends
Flexible working arrangementspart-time workersshift worktemporary contractssubcontracting
Joint partnering virtual corporations
Mgt-470 17-22
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