The Implications of Organized Labor for RetailersTerm Paper

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¶ … Organized Labor for Retailers

In response to your request for reviewing your company's collective bargaining policies, this paper reviews the relevant literature to identify the benefits of starting a retail company both with and without organized labor and a comparison between the differences in benefits for a retail company started without unions and later after unions are introduced. In addition, an analysis of the controlling laws that provide protections for workers and management is followed by a discussion concerning the new union issues that would likely be encountered if the company launches retail stores in India, China and Mexico, including the respective benefits and drawbacks for the union and management. Finally, an assessment concerning what the responses that are available to the company's leadership during the unionization process is followed by a summary of the research and important findings concerning the foregoing issues in the conclusion.

Review and Analysis

Major benefits to starting a retail company with and without using organized labor

One of the major benefits of starting a retail company without using organized labor is the fact that lower wages and benefits can be paid workers. For example, in the United States, members of unions are paid, on average, about 30% more than nonunionized workers; likewise, the vast majority of unionized workers (93%) receive health benefits versus 69% for nonunionized workers and more than three-quarters (77%) of union members are entitled to guaranteed pensions versus just 17% for nonunionized workers (All about unions, 2016). In addition, starting a retail company without unions avoids collective bargaining initiatives for ongoing improvements in working conditions that can also add significant costs (All about unions, 2016). In addition, starting a retail company without organized labor also means that products and services can be offered at lower prices, making the company more competitive during an especially fragile point in its developmental history (Pros and cons of collective bargaining, 2016). Finally, a significant benefit of starting a retail company without organized labor is the additional flexibility in firing incompetent workers that would not be possible if workers were protected by a contract (Pros and cons of collective bargaining, 2016).

One of the overarching benefits to starting a retail company with organized labor is the avoidance of future unionizing efforts that can be disruptive to organizational performance. In addition, starting a company with organized labor also means that retailers avoid the necessity of addressing employee concerns on an individual basis and the job security provided by unions serves to improve employee morale and productivity as well as reducing unplanned turnover rates (Pros and cons of collective bargaining, 2016). Finally, organized labor can contribute to improved relationships between management and employees in ways that are mutually advantageous (Pros and cons of collective bargaining, 2016).

Differences in benefits for a retail company started without unions and later after unions were introduced

As noted above, starting a retail company without unions can provide new enterprises with a competitive advantage by paying lower wages and benefits compared to their unionized counterparts (All about unions, 2016). Because most retailers fail within their first year of operation, starting a retail company without unions can make the difference between failure and survival, an outcome that inevitably affects all stakeholders (Bouvier, 2016). Some of the benefits that can accrue to unionization later in a retail company's history include most especially the contributions that unionized employees can make to the firm's operations. In this regard, Klein emphasizes that although unions means higher wages, they also mean "workers can go to their managers with safety concerns or ideas to improve efficiency and know that they'll not only get a hearing, they'll be protected from possible reprisals" (2011, p. 18). In addition, unionizing later can also provide retailers with an improved public image (Klein, 2011).

Analysis of available laws that separately protect both the workers and management

The available laws that provide separate protections for workers and management vary by country, but some indication of the types of laws that are typically encountered can be discerned from those that are in place in the United States. In the U.S., the main laws controlling organized labor are the National Labor Relations Act (NLRA), the Labor Management Relations Act (aka Taft-Hartley Act), and the Labor-Management Reporting and Disclosure Act (All about unions, 2016). Pursuant to these laws, workers are legally allowed to organize union campaigns provided their activities do not interfere with the company's operations; while management is prohibited from threatening to fire workers for trying to organize, they are allowed to inform them that if they participate in a strike, they may be permanently replaced and only given their jobs back if an opening occurs in the future (Union organizing, 2016).

Examination of new union issues that would be introduced if the company opens stores in India, China, and Mexico

India. The new union issues that would be introduced if the company opened stores in this country would depend on the jurisdiction that was involved. For instance, Sodhi (2013) also reports that, "Recognition of trade unions is voluntary except in states like Gujarat, Maharashtra, Rajasthan and Madhya Pradesh. In other states, it is governed by voluntary Code of Discipline and Inter-Union Code of Conduct" (p. 170). Assuming that the company launched a retail enterprise in one of the states where recognition of unions is mandatory, the company could be faced with the need to negotiate with several trade unions. Although precise numbers are unavailable because registration of trade unions with the Indian government is not mandatory, Sodhi (2013) reports that pursuant to the Trade Union Act of 1926, there are numerous trade unions in place in India because as few as seven people can form a union. This means that a single workplace can have numerous trade unions representing workers with each requiring separate negotiations with management (Sodhi, 2013). While this arrangement ensures that both union members and management benefit from feedback concerning occupation-specific issues of mutual interest, it also means that the process can be far more time-consuming and expensive compared to single union representation (Sodhi, 2013).

China. Like India, China has some unique qualities that affect the benefits and drawbacks of unions for union members and management. For example, in sharp contrast to unions in the United States, unions in China lack effective bargaining power and union officials are appointed by the Chinese government rather than being elected by union members (Ge, 2014). In addition, Ge (2014) reports that, "Chinese unions have multiple objectives: to assist the State-Party in an administrative function by retaining social and political stability, to collaborate with enterprise management to improve production efficiency, and to represent and protect the interests of employees" (p. 188). This means that foreign retailers launching an enterprise in China would be faced with the need to conform to politically motivated goals that might be contrary to their best economic interests (Ge, 2014).

Mexico. One of the net impacts of the North American Free Trade Agreement (NAFTA) with Mexico has been to restrict the bargaining power of organized labor (Macdonald, 2009). In this regard, Macdonald emphasizes that, "The absence of a binding labor regulation regime in NAFTA, and the refusal of elites to negotiate the like in future trade deals, has further promoted labor union contestation and the emergence of independent 'governance from below'" (2009, p. 174). This means that although retailers may be able to initially pay lower wages to Mexican employees, they will inevitably encounter backlash in the form of diminished worker productivity and morale as well as informally coordinated collective bargaining efforts (Macdonald, 2009).

Steps leadership can take during unionization or union organizing

A retailer's human resources department is well situated to support the organization during all phases of union organizing, including before, during and after as follows:

Advise workers that management does not support the union organization effort;

Inform workers that they are not required to execute union documents and that they have an irrevocable right to remain outside any union organization;

Advise workers that they are not required to communicate with union organizers in the workplace or their homes;

Provide workers with a comparison of benefits they currently receive with those offered by companies that have been unionized;

Inform workers of the obligations that go hand-in-hand with unions such as weekly or monthly union dues and other recurring fees;

Ensure that workers recognize that they could be obligated to participate in strikes against other companies;

Perform due diligence concerning the backgrounds of union representatives and inform employees of the results;

Encourage workers to vote against any unionization effort and recommend that they ask others to follow suit; and,

Inform workers that they are not obligated to vote for a union if they sign union cards or applications (Union organizing, 2016, para. 1-2).


While many critics charge that unions have lost their relevance in the 21st century workplace, the research made it clear that organized labor remains a powerful force in the business world today. The research also showed that… [END OF PREVIEW]

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