How the Unionization Trend is Changing Workplace Dynamics | HBR IdeaCast | Podcast

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1:10Welcome to the H. Bear IdeaCast from Harvard Business Review. I'm Alison Beard.

1:22Across OECD countries, from Australia to Germany, Israel to Mexico, union membership has long been on the decline. And a lot of businesses probably welcomed that as good news. Employees who once might have negotiated as a powerful collective could now be managed as individuals. Some workers benefited, others didn't. In recent years, though, we've seen something of a resurgence in the labor movement. As of 2020, the OECD reports that union membership has increased in countries like Ireland, Costa Rica, and the United States. And here in the U.S., stories of scrappy employees who are fighting to unionize their Amazon distribution centers or Starbucks cafes, and actually winning despite lots of opposition from their corporate employers, are all over the news.

2:06So what's going on? Why do unions seem to be on the rise again? Thomas Cohen is a professor at the MIT Sloan School of Management who has long studied work and employment policies, and he's here to answer some of these questions. Hi, Tom.

2:20Thomas Kochan:Hi, Alison. Good to be with you.

2:30so anyone who follows business news has heard about these recent union victories at amazon and starbucks but how widespread is the trend you know does it extend to both blue collar and white collar workplaces is it mostly the u.s or many other countries well allison there's no

2:47Thomas Kochan:question there's an upsurge in organizing. And in the United States, it's broadly distributed across a wide range of service industries in particular, in retail, in the media, obviously, in hospitality with Starbucks and other food service organizations, and even then in services like warehousing with Amazon. But it's not just a U.S. phenomenon. Other countries, in some respects, are growing in union membership faster than the United States. And we're currently experiencing a big upsurge in unrest in Europe, particularly in the transportation sectors. So obviously around the world, there are big disparities in what the OECD calls trade-centered density.

3:32I learned prepping for this podcast that it's anything from 6 % in Estonia to more than 90 % and Iceland. But what factors determine how union-friendly a country has been historically and might be today?

3:47Thomas Kochan:Well, in that respect, actually, the United States is pretty much of an outlier. If you talk with executives in Europe, as I do very frequently, you often hear them talk about unions as social partners that they accept as a part of their democratic fabric and their culture, that workers have a right to organize and they need to respect that right. They need to work with unions. It doesn't mean that conflict goes away. It doesn't mean that they embrace all of the demands that unions might put on the table, but they respect the right of workers to be represented. The United States has a long history of managerial ideology that That management can manage the workforce as individuals and doesn't need what they might call a third party.

4:39Thomas Kochan:That has accelerated in the last 40 years because as unions decline, fewer and fewer companies and fewer and fewer executives and fewer HR executives have any experience in working with unions. And so their knee-jerk reaction is to resist at all costs with all resources. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean.

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6:00Thomas Kochan:is available anytime workers express an interest in unionizing. But in the past, there were very strong unions in the United States. Why has union membership declined so much? Is it because of that resistance by employers? Employer resistance is a big part of it. And we saw that accelerate in the 1980s and beyond. There were strong pressures on the business community, given the high rate of inflation and the sluggish growth and increase in international competition, to become more aggressive in limiting what they saw as some of the restrictive policies of unions. But there are other things as well.

6:41Thomas Kochan:Clearly, unions have been slow to adapt to the changing workforce. And now we're seeing that come home to roost because workers are taking action and asking unions to be supportive, but not necessarily being driven by union strategies. So it's more ground up organizing now rather than coming from the top down. Absolutely more ground up organizing. And I think it's surprised many people. But, you know, we have to also understand that the pressures for organizing have been building up over a long period of time. We've done national surveys of the workforce prior to the pandemic. 2017, we found there's a voice gap of considerable magnitude where a majority of the American workforce today says they don't have as much say as they believe they ought to have on issues of certainly compensation and job security, but also what does this company stand for?

7:40Thomas Kochan:What are the values and are they living their values? Are we getting respect at the workplace? Do we have means for resolving disputes and conflicts that are fair? What about new technology? Those are the issues that are on the minds of workers today, and they're saying we don't have enough of a voice. And then to top it off, we asked, well, and this may be a surprise given the decline of unions, well, if a union election were held on your job and you had the opportunity to vote yes or no, what would be your answer? And we saw numbers that were larger than anything we've seen in prior decades.

8:17Thomas Kochan:Now about half of the non-union workforce say they would join a union if given the opportunity to do so. And some recent numbers that aren't published yet say that percentage has gone way over the majority number now. So we're seeing the workforce itself saying all the wage stagnation that we've experienced, the increase in inequality, and then the pandemic comes along And it just accelerates all of this frustration. And we see that workers feel they've got more power now as the labor market was tightened. And we had all this experience with people leaving their jobs and shortage of workers. So workers are saying now is the moment.

8:58Thomas Kochan:We've been concerned about these issues. We've been frustrated about them. Now we're going to take some action. And what variations have you seen across occupations and industry? You know, both in terms of workplaces where unions manage to sort of continue and stay relatively strong and then workplaces where there are these new, very strong movements to unionize when those employers really didn't have to deal with that before. Let me start in the unionized sector. I spend a lot of time talking with executives that have collective bargaining relationships, and they are extremely concerned with the upsurge in worker unrest at the local level that's putting pressure not only on them, but on national union leaders.

9:51Thomas Kochan:So you saw this in the long strike that John Deere had about a year ago, and two different contracts were rejected. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners. Sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com.

10:31When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

10:59Thomas Kochan:By the rank and file that the company and the union leaders had worked out, that was a wake-up call for many companies. And since that, more and more HR labor relations executives say we're having those same pressures from our workforce. So there's something going on with the workforce, whether it's unionized or not unionized, that is saying both to companies and to their unions, we want a stronger voice. And by God, we have put up with the lack of wage growth, the lack of respect long enough, and you all better help us address those issues. But then when you turn to the forms of organizing we're seeing out there, as you indicated, it's a wide array of different kind of organizing.

11:48Thomas Kochan:Yes, some through traditional unions and the National Labor Relations Act processes for an election. But we're also seeing worker centers grow. Worker centers are city-based or regional-based organizations of workers, largely immigrant workers, minority workers, looking for help in addressing their individual problems, whether it's wage theft, that is, they're not getting paid the minimum wage or whatever wage they contracted for, or there's some other forms of discrimination or fear of being retaliated for taking action. So these worker centers are addressing those problems and providing legal services.

12:28Thomas Kochan:We've seen a growth in that. We now have about 246 of those around the country. We're also seeing more and more organizations coming along that provide services to workers to file petitions with their employer to say, we want to see changes in different issues. Or organizations like at what was Google now is, I guess, Alphabet. bet, but the Google workers going out on a one-day walkout protesting the company's treatment of executives who have been accused of sexual harassment. We're seeing new forms of mobilization. We're seeing more people organize around gender and racial justice out there, not necessarily getting a union, but saying, all right, employer, we want to deal with you as a group, And we expect you to respect our rights to have a conversation with you to change practices that we find inappropriate or inconsistent with our values.

13:30Thomas Kochan:And one final interesting note here. Most of these that we see, these are not people who hate their company or even dislike their CEO. There's a distrust that leaving it to top management will get the job done. And they're saying, give us an opportunity to play a role in corporate governance in some productive way. And so I think that's all a healthy development. The challenge for executives is that they have to recognize that the old playbook of just knee-jerk resistance to all forms of organizing doesn't play in today's workforce. And so we've got to develop a whole new set of leadership skills that have been maybe dormant for a while, at least in the United States, that show that you can work with collective groups and you can strengthen the organization.

14:28Thomas Kochan:You can build positive labor and employee relations in that way that produce higher levels of productivity and better customer service and engage the ideas of the workforce. We have to give workers the opportunity to express their voice in a powerful way and to channel that energy, but respect their independence. And what would you say to employers that say, oh, but we can do all of that without unions? It hasn't worked. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra.

15:14Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast.

15:53That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

16:00Thomas Kochan:Just go out there and talk with your own employees about the forms of voice that they want today. And they will tell you, don't try and lead from the top down. You know, in law firms and other professional companies where there are partnerships, these partners operate as independent and often equal voices. They don't necessarily always agree, but they know that they are part of an overall entity. And by bringing their collective voices together, they are stronger and they are more productive. And they learn to respect the differences and to work them through in new ways. And that's where we need to go as a management community.

16:46Thomas Kochan:That's where we need to go as a society. And why do we need to go that? because that's what our workforce expects today, particularly the younger workers who don't know about the laws of labor management relations and could care less about what issues they have a legal right to discuss and negotiate and what issues are of greatest concern to them. So I'd love to dig into your research on the impact of unionizing both for workers and organizations. First, how does it affect employees, sort of the pros and the cons? Well, there's no question that historically the effects of unions on workers is to increase their wages and provide better benefits and provide a security if they are discriminated against or fired illegally.

17:38Thomas Kochan:On average, unions increase wages for workers between 5 % and 15 % for low-wage workers, for women, for minorities, those percentages are greater. So there's no question historically that's been the case. Now that varies by the business cycle and so on, but that's a large part of what unions do. But today you also see another effect. And I've been a mediator in cases over the last several years where increasingly the issues that are being discussed are diversity, inclusion, and equity, and how do we provide opportunities for people who have sometimes been marginalized. And so we're seeing the issues in collective bargaining expand as the workforce becomes more diverse and changes.

18:29Thomas Kochan:But there's also the issue of, does this create more of an adversarial process? Are we destined to have arm's length labor management relations? Workers don't want that today any more than business executives do. They want a positive, high quality labor management relations that's built on mutual respect and trust. And the best of labor management relations move in that direction. But if it turns into an adversarial battle, either because the employer doesn't accept the fact that they are unionized and wants to hold on to the old legal protections and doctrines and limits, or the union brings in its traditional forms of negotiating, then I think workers will get frustrated and say, this isn't what we signed up for.

19:27Thomas Kochan:We want a better relationship, not more tension at the workplace. What about the argument that unions are good for sort of mediocre or poorly performing workers, you know, because they help lift everyone up. But for the standout stars, they're actually bringing you down, sort of not allowing you to, you know, excel beyond the pack. Well, there's some truth to the fact that too often unions provide more of their resources going to help those who are causing more difficulties.

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20:55Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

21:00Thomas Kochan:In our lower performing. And that, by the way, is a concern that many professionals raise when the issue of unionizing comes along. They don't want to be constrained. They want to do a good job. They want to have the autonomy to suggest ideas for how to improve operations. They want to build their own careers. And they don't want to be encumbered by a bunch of standardized rules. And so the challenges in organizing today is to provide protections where appropriate and for everyone to make sure that they are not discriminated against and that they have a channel of appeal when they are treated unfairly.

21:44Thomas Kochan:At the same time, really making sure that we maintain enough autonomy and enough opportunity for the high performers to do their job and to have promotional opportunities. And this is an area where I think we have to see some change. You know, seniority has been a strong principle of labor management relations for years. And that came about because there were abuses of hiring one's family members and friends and people of the same ethnic background or race and so on. But we can't have a situation, for example, now where people are saying, gee, we want the flexibility to work from home where possible.

22:31Thomas Kochan:and recognize we've got to work out ways to be on site when necessary. And that can only apply to maybe some people but not others. We've got to find in union management relations the capacity to manage that variation in practice and variation in ways people work without creating another first-class, second-class citizenship. Unions will need to be a bit more agile in working through those issues. And we're seeing that happen in some cases. I think we have to continue to move in that direction. And in your work, what have you found about how workplaces unionizing affects organizational performance?

23:20I know the fear is that maybe you're creating a better work environment, but you're hurting the bottom line at the same time.

23:28Thomas Kochan:The evidence is very clear on this, that there is no average union effect on firm performance, but you can increase productivity with unions and certainly reduce turnover, which helps to improve productivity and financial performance if management really engages the union, holds it accountable for not having too many rigid work rules, but works together to solve problems at the workplace, engaging workers in problem-solving teams and operational improvements and continuous improvement processes, investing in the workforce so that they have the skills needed to continue to be competitive, especially as technologies change, but making the appropriate investments in education and training on a continuous basis, and then engaging in modern forms of negotiation, not just the old horse trading notion that I come in and say, I need 20%, and then you as the employer said, well, we'll only give you two.

24:42Thomas Kochan:And then after months and months of horse trading, We end up, I don't know, 8 % or wherever the number takes us. That model is outdated. But using the tools of what we often call interest-based negotiations, every modern business. My life is booked and busy. I don't have time to try on a million outfits that still don't feel right. That's why I get styled with Stitch Fix. My personal stylist sends outfits picked for my size, style, and budget so I can get dressed and get on with my day feeling confident. It's no risk. All style. Free shipping, free returns, no subscription required. Get started today at stitchfix.com.