Reasons Why Managers Oppose Public Sector Unions

Feb 23 Wisconsin solidarity rally

The controversy surrounding the State of Wisconsin’s move to partially limit public-sector collective bargaining rights is certainly a hot one. Arguments for and against the action have been largely emotional or political in nature, with few stepping back to analyze the issue in a non-partisan light. As someone who has been a consultant to public-sector union negotiators and a college professor currently represented by a union, I understand the perspective and validity of most of the arguments.

My goal for this article is not to advocate for one position or another, but rather to explore the non-emotional “business reasons” why public-sector managers might oppose bargaining on nonwage issues. Even if you oppose restrictions on bargaining, the following list might help you understand why some have an opposing view.

Possible Reasons Public-Sector Managers Resist Union Actions

As with all issues, it would be unfair to make blanket statements that all unions do this or that, but there are certainly tendencies and actions, values, and goals that are quite common in public-sector unions.

The following “business-impact” reasons have a reasonable likelihood of occurring in a large public-sector union. When appropriate, I have also noted where public and private sector unions differ.

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  1. Long-term contracts can limit flexibility — in a fast-changing world, flexibility and agility are required to stay afloat. Long-term union contracts “fix” many things in place and prevent public-sector managers from making major changes fast in response to shifts in the economic, business, and governmental environment.
  2. Work rules can limit reengineering and innovation — strict work rules make it difficult during a departmental reengineering effort to move workers and to redesign jobs in response to budget cuts and the need to continuously improve government services. You seldom hear the word “innovation” in the context of government, in part because rigid work rules make it nearly impossible. Unions place high value on adhering to “past practices,” which by definition restrict innovation and change.
  3. “Members first” values can limit technology — public-sector unions are by definition advocates of their members. Union leaders are well aware that leveraging new technologies may result in reduced membership. In order to maintain membership levels, it is not unusual for unions and their members to engage in efforts to slow down the implementation of new technologies, even though the technologies would reduce costs and increase efficiency.
  4. In a monopoly situation, strikes can cripple — in the private sector, if a union goes on strike, there are often many alternative product and service suppliers available to customers. Because many government agencies operate as a monopoly, work slowdowns, sick outs, and strikes can really damage a community. Faced with this severe damage, government executives can give into demands that would not be agreed to in a non-monopoly environment.
  5. Maintaining  jobs can limit productivity — primary union values often include maintaining jobs. Unfortunately, protecting jobs can limit flexibility and increase costs in area where a reduction in staff is really necessary. Putting “people first” also frequently means reducing all expense items to the point where it can hamper productivity, when travel, training, and the latest tools are essential for improvement.
  6. Seniority first might restrict performance — citizens and businesses both demand that government agencies maximize their performance. Unfortunately, seniority is not the same as performance, so getting the most senior slotted into work assignments and schedules prohibits those assignments from going to top performing employees. Promoting the most senior, rather than the most qualified, into management jobs will also likely lower productivity due to weak management. Employees with nothing but seniority (which could include dated experience and obsolete knowledge) are becoming a poor substitute for employees with the latest skills, knowledge of technology, and the ability to innovate. Senior people might turn out to be the best performers but they should have to prove their superior performance each and every time.
  7. Across-the-board rewards can limit performance — unions routinely push across-the-board pay. Unfortunately, this almost eliminates a manager’s ability to incent and monetarily reward individual performance and innovation. Governments instead need a performance culture, where those that produce dramatic results get significantly differentiated rewards compared to those that simply show up. Without an incentive for individuals or the team to produce, it is also easier for union stewards to implement secret limits on productivity (bogies) that they expect all members to adhere to.
  8. Across-the-board rewards can increase top performer turnover — once top performers realize that they won’t be treated differently or rewarded for their results, they will likely leave for businesses that reward performance.
  9. Job security as a value may reduce necessary terminations — strong union support for job security may lead to severe restrictions on firing poor performers (a major issue in schools districts across the country). Some union contracts mandate steps and appeals so elaborate that managers simply give up, or that result in employees remaining on the payroll without assignment.
  10. Local regulation can create imbalance — private-sector unions are regulated uniformly by the federal government and its highly trained labor regulators. Because so many states and unions are involved at the federal level, things move slowly but there is also little chance of a major regulatory error. Most don’t realize that state, county, and municipal unions are regulated locally. These local regulators are likely to be less trained and are more likely to be political. The net result is that it is much more likely that a major error will be made in the local regulations or laws, resulting in an imbalance favoring one side or the other.
  11. Voted on once but they stay forever — under federal regulations, it is not uncommon for private sector unions to be voted out and decertified. In contrast, under completely different rules, it is highly unusual for public-sector unions to be completely decertified. That means a single employee vote, one that may have occurred years ago, may result in a permanent union presence.
  12. Public union members can also vote, shifting the balance — unions in the private sector have only one choice to get what they want: successfully negotiate with their business leaders. However, public-sector unions have two options for getting their way. They can negotiate at the bargaining table, but they can also vote, support candidates, and lobby legislatures and city councils. With this added political influence, they can end up with a richer contract then they could have earned through negotiations alone.
  13. Required union support is more likely to increase power further — because of their combined voting power, political fundraising, and powerful lobbying capabilities, public-sector unions are likely to convince political leaders to force public employees to either join the union or pay the equivalent of union dues. With a larger membership and more funds, they increase their ability to pressure negotiators and public officials.
  14. Grievance procedures are tedious — managers in the business world are driven by the need to produce quarterly results. Because of that, business managers learn to negotiate grievance procedures so that they begin and end relatively quickly. Because public-sector managers don’t have that quarterly drive to produce immediate results, they all-too-often negotiate grievance procedures that can literally draw out for years.
  15. Poorly trained managers can be weak advocates — training for managers in the public sector is almost always minimally funded. As a result, in many cases public-sector managers are not equipped to handle union representatives who are well trained and supported by a national union. In addition, it is a common practice in government agencies (but less so in business) for management pay to be directly tied to union pay. As a result, some management negotiators have little reason to fight against significant pay and benefit increases, because immediately after the negotiations are over, they themselves will receive the same percentage increase as the union gets.
  16. Taxpayer support for union officials drive up costs — it is not unusual in large government agencies for union representatives or stewards to receive government pay — part-time or even full-time for conducting union work — instead of any regular job duties. This practice increases costs and agency paid for help will increase the ability of union leaders to keep their members in check.
  17. There is no profit incentive to keep costs down — because businesses are driven to make industry-leading quarterly and yearly profit, most labor relations executives learn quickly not to give away the farm. Without that profit incentive, in the public-sector there is a tendency for managers to give greater concessions. Those concessions are primarily in non-pay areas (work rules and benefits), where the public and the press are not nearly as likely to notice and create an uproar.
  18. Bumping rights can be damaging — both private and public sector unions have contracts that allow job bumping. Job bumping is the practice where an employee losing their job can literally take any job beneath them and the employee that they bumped can then bump someone below them, etc. The practice is always disruptive but can be particularly damaging in the public sector where training budgets are miniscule. As a result each “bumper” is forced to learn their new job painfully, through trial and error.

As a professor of management and an advisor to hundreds of corporations, I certainly cannot claim to be an unbiased observer, but my goal was to present a list of business reasons why public sector managers oppose collective bargaining on non-wage issues. I considered writing a follow-up article from the union’s perspective, but I decided against it because public unions have so far done a noticeably better job of providing objective arguments in support of their cause then the opposition has.Post your non-emotionally charged additions to the list; I and many others will look forward to reading them. If for some reason you feel obligated to send me hate mail from either side, my e-mail address is johns@sfsu.edu.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.

 

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10 Comments on “Reasons Why Managers Oppose Public Sector Unions

  1. Dr. Sullivan, interesting article, thanks. State and local employees should have the same collective bargaining rights as do federal government employees.

  2. Here’s some other perspectives:

    Comment
    Union Blues
    http://www.newyorker.com/talk/comment/2011/03/07/110307taco_talk_hertzberg#ixzz1FvrR7Yzs
    by Hendrik Hertzberg
    March 7, 2011

    “Fifteen million Americans bring you Edward P. Morgan and the news.” From 1955 to 1967, that line, heard on the ABC radio network every weeknight at 7 P.M., heralded the nation’s best news broadcast. Those fifteen million Americans were the members of the A.F.L.-C.I.O., a federation that included nearly every union in the land. Organized labor was powerful and, for the most part, respected. Its economic and political muscle had played an indispensable role in insuring that the benefits of postwar prosperity were widely shared, transforming much of what many had unironically called the proletariat into an important segment of the broad American middle class.

    Labor has come a long way since then—a long way down. At the outset of the nineteen-sixties, one in four workers had the protection of a union. By the early eighties, after President Reagan destroyed the air-traffic controllers’ union, the proportion was down to one in five. Now it’s one in eight. In a workforce twice the size it was in Edward P. Morgan’s heyday, the A.F.L.-C.I.O.’s onetime fifteen million has shrunk to twelve million, with a couple of million more in unions unaffiliated with the federation.

    Organized labor’s catastrophic decline has paralleled—and, to a disputed but indisputably substantial degree, precipitated—an equally dramatic rise in economic inequality. In 1980, the best-off tenth of American families collected about a third of the nation’s income. Now they’re getting close to half. The top one per cent is getting a full fifth, double what it got in 1980. The super-rich—the top one-tenth of the top one per cent, which is to say the top one-thousandth—have been the biggest winners of all. What is always called their “compensation” (wage workers lucky enough to have a job simply get paid) has quadrupled.

    Over the same period, the composition of the labor movement, as it still defiantly styles itself, has radically changed. A few weeks ago, the Bureau of Labor Statistics reported that, for the first time, more union members are government workers, not private-sector employees. The Times quoted an official of the United States Chamber of Commerce as pronouncing himself “a little bit shocked,” and he wasn’t the only one. Yet this development has nothing to do with some imagined spike in public-sector unionism. It is entirely a function of the collapse of organized labor in the private sector. For the past four decades, the portion of the public workforce belonging to unions has held remarkably steady, at a little more than one in three. In the private sector, just one worker in fifteen carries a union card.

    The causes of the disparity are many and mostly familiar, the hollowing out of American manufacturing notable among them. Unlike factories, government agencies cannot be relocated to China. Nor can government agencies flout the (notoriously weak) labor laws with the insouciance of private employers, many of whom, guided by anti-union “consultants,” regard it as their fiduciary responsibility to fire troublesome workers illegally now and, in the rare cases where a worker tries to get justice, pay a trivial fine years later. In short, union-busting has traditionally been a matter for private business. But this winter it has suddenly gone public, and its weapon is not flouting laws but making them.

    from the issuecartoon banke-mail thisLast Friday—in the wee hours of morning, after two weeks of tumult and protest demonstrations—Republicans in the Wisconsin Assembly passed a bill that is breathtaking in its fealty to the ideology of the far right. The bill, dictated by the new Republican governor, Scott Walker, strips the state’s employees of their half-century-old right to bargain collectively—except over base pay, which can never be increased above inflation without a public referendum. It makes union dues purely voluntary and prohibits their collection via paycheck deduction. It requires the unions to face a certification vote every year—and, to get recertified, a union must win a majority of all employees, not just a majority of those voting.

    The bill has not yet passed the Wisconsin Senate, because all fourteen members of its Democratic minority decamped for Illinois, thereby depriving the chamber of the quorum required for legislation of this type. Governor Walker claims that his bill is needed to close a budget gap. That is false: the unions have already agreed to all the cuts and givebacks he has demanded. Anyhow, Walker has called his dedication to deficit hawkery into question by pushing through large tax cuts for business (with more to come) and a law forbidding tax hikes without either a two-thirds legislative majority or a statewide referendum.

    Liberals who applaud the Wisconsin senators’ interstate flight have been accused of hypocrisy, given that these same liberals indignantly reject the undemocratic use of the filibuster in the Senate of the United States. The analogy is as clever as it is flawed. The Wisconsinites are not trying to kill the bill (they can’t stay away forever); they merely want to delay a vote in the hope of mobilizing public support for compromise. And, instead of simply declaring an intention—the only effort a modern filibuster requires—they have to do something; to wit, camp out in cheap motels at their own expense, away from their families. They even have to forgo their own salaries: the Republicans have halted direct deposit to their skedaddling colleagues’ bank accounts. If they want to get paid, they have to come back to Madison to pick up a paycheck. And the Democrats have another point: although Walker now claims that he ran on curbing collective bargaining as well as cutting employee benefits, no one has been able to find any record that he ever said anything of the kind.

    What’s getting awfully difficult to deny is that what the Wisconsin Republicans are doing—and they have plenty of imitators and admirers—is solely for a partisan purpose, and a potentially lethal one. Of the five biggest non-party organizational contributors to political campaigns in 2008, the top two were unions, both of them pro-Democratic and both composed partly or wholly of public-sector workers. The other three were pro-Republican business groups or PACs. In 2010, after the Supreme Court threw open the cash sluices in the Citizens United case, only one union made it into the top five, and it came in fifth. And from now on, thanks to five Justices, corporate campaign spending will be literally limitless.

    Yes, unions will have the same freedom. But unions are already maxed out—and their resources, stretched to the breaking point, are diminishing. If, as Anatole France observed, the law in its majesty forbids rich and poor alike to sleep under bridges, the Supreme Court, in its majesty, permits both to spend as much as they can lay their hands on. If a Republican Party that has lately become rigidly, fanatically “conservative” can succeed in reducing public-sector unions to the parlous condition of their private-sector brethren, then organized labor—which, for all its failings, all its shortsightedness, all its “special interest” selfishness, remains the only truly formidable counterweight to the ever-growing political power of that top one-thousandth—will no longer be anything close to a match for organized money. And that will be the news, brought to you by a few very rich, very powerful Americans—and many, many billions of dollars. ?

    =========================================================

    The Financial Page (http://www.newyorker.com/talk/financial/2011/01/17/110117ta_talk_surowiecki#ixzz1FvqFSSWP)
    State Of The Unions
    by James Surowiecki
    January 17, 2011

    In the heart of the Great Depression, millions of American workers did something they’d never done before: they joined a union. Emboldened by the passage of the Wagner Act, which made collective bargaining easier, unions organized industries across the country, remaking the economy. Businesses, of course, saw this as grim news. But the general public applauded labor’s new power, even in the face of union tactics that many Americans frowned on, like sit-down strikes. More than seventy per cent of those surveyed in a 1937 Gallup poll said they favored unions.

    Seventy-five years later, in the wake of another economic crisis, things couldn’t be more different. The bailouts of General Motors and Chrysler saved the jobs of tens of thousands of U.A.W. workers, but were enormously unpopular. In the recent midterm elections, voters in several states passed initiatives making it harder for unions to organize. Across the country, governors and mayors wrestling with budget shortfalls are blaming public-sector unions for the problems. And in polls public support for labor has fallen to historic lows.

    The hostility to labor is most obvious in the attacks on public-sector workers as what Tim Pawlenty, Minnesota’s former governor, calls “exploiters”—cosseted, overpaid bureaucrats whose gold-plated pension and health plans are busting state budgets. But there’s also been a backlash against labor generally. In 2009, for the first time ever, support for unions in the Gallup poll dipped below fifty per cent. A 2010 Pew Research poll offered even worse numbers, with just forty-one per cent of respondents saying they had a favorable view of unions, the lowest level of support in the history of that poll.

    In part, this is a simple function of the weak economy. The statistician Nate Silver has found a historical correlation between the unemployment rate and the popularity of unions. Furthermore, an analysis of polling data by David Madland and Karla Walter, of the Center for American Progress, shows that, when times are bad, the approval ratings of government, business, and labor tend to drop in sync; voters, it seems, blame all powerful institutions equally. And although organized labor is much less powerful than it once was, voters don’t seem to see it that way: more than sixty per cent of respondents in the 2010 Pew poll said that unions had too much power.

    The recession has also magnified the gap between unionized and non-unionized workers. Union workers, on average, get paid more than their non-unionized counterparts—most estimates put the difference at around fifteen per cent—and that wage premium widens during recessions. Similarly, union workers often still have defined-benefit pensions, which sets them apart from all those Americans who watched their retirement accounts get ravaged by the financial crisis. That’s given rise to what Olivia Mitchell, an economics professor at Wharton, calls “pension envy.” This resentment is most evident in the backlash against public-sector workers (who now make up a majority of union members). A recent study by the economics professors Keith Bender and John Heywood found that, when you control for a host of variables, public employees are not actually paid more than their private-sector counterparts. But they do often enjoy good retirement schemes, and in states like Illinois and California politicians have agreed to hefty contracts with state employees and then underfunded the pension plans, leaving future taxpayers to pick up the bill. It’s no wonder that people are annoyed.

    Still, the advantages that union workers enjoy when it comes to pay and benefits are nothing new, while the resentment about these things is. There are a couple of reasons for this. In the past, a sizable percentage of American workers belonged to unions, or had family members who did. Then, too, even people who didn’t belong to unions often reaped some benefit from them, because of what economists call the “threat effect”: in heavily unionized industries, non-union employers had to pay their workers better in order to fend off unionization. Finally, benefits that union members won for themselves—like the eight-hour day, or weekends off—often ended up percolating down to other workers. These days, none of those things are true. Organized labor has been on the wane for decades, to the point where just seven per cent of private-sector workers belong to a union. The benefits that union members still get—like defined-contribution pensions or Cadillac health plans—are out of reach of most workers. And the disappearance of unions from the private sector has radically diminished the threat effect, meaning that unions don’t raise the wages of non-union workers.

    The result is that it’s easier to dismiss unions as just another interest group, enjoying perks that most workers cannot get. Even though unions remain the loudest political voice for workers’ interests, resentment has replaced solidarity, which helps explain why the bailout of General Motors was almost as unpopular as the bailouts of Wall Street banks. And, at a time when labor is already struggling to organize new workers, this is grim news. In a landmark 1984 study, the economists Richard Freeman and James Medoff showed that there was a strong connection between the public image of unions and how workers voted in union elections: the less popular unions were generally, the harder it was for them to organize. Labor, in other words, may be caught in a vicious cycle, becoming progressively less influential and more unpopular. The Great Depression invigorated the modern American labor movement. The Great Recession has crippled it. ?

    Read more http://www.newyorker.com/talk/financial/2011/01/17/110117ta_talk_surowiecki#ixzz1FvqFSSWP

  3. Excellent article, Dr. Sullivan. Very clear, with an obviously independent perspective. Unlike some of your articles, I find nothing at all to complain about.

    I think what alarms and concerns most Americans is the outrageous emotions that often (always) rip to the surface when any union is threatened. We like to consider ourselves fairly civilized, and especially expect that of those who are gainfully employed, or well-educated. Why, then, do we see so many examples of retarded thinking and hate-filled emotion? Death threats, hangings in effigy, and comparisons to Nazism or Muslim terrorists is not the minor exception of a handful of radicals we could dismiss as extremists. Such symbolism is now commonplace, sometimes voiced by the so-called mainstream media, and almmost overwhelming in the amount of ocurrences. Regardless of which side you are on in this debate, it is a disgraceful and glaring exhibition of classless behavior by those who are generally thought to be above such crude activity and comments. There is no “civility” in this civil disobedience.

  4. @Jim:
    Could you elaborate- I’m afraid I don’t know who you are referring to in this.

    Thank You,

    Keith

  5. John,

    Well written article however, public sector unions hold a special place in today’s society… These people fill a thankless duty at seriously reduced pay (in most cases) from the private sector.

    I live outside Washington DC. I am a Recruiter who staffs IT projects all over the nation. The federal IT worker is paid significantly less than private sector employees, 20-30% less in some cases. Increased benefits and job security are the reasons people take these jobs.

    Not everyone works for the money… Some WANT to be of service to their community and to their nation. Haters of these unions (I am NOT pointing fingers) need to look back at themselves and ask why? There is always an underlining reason for this hate. Perhaps it’s because you don’t have these benefits yourselves? Perhaps it’s because you always wanted a job like this and could never get one?

    I have never been in a Union… nor has anyone in my immediate family. In today’s economy they are needed, more than ever.

    BILL GALLOP

  6. Thanks, Gregg. It’s strange that the rage is focused on folks trying to do their work and keep their rights, when there is been so little rage directed at the folks who lost us $11T and several million jobs. Once again, thank you Billionnaire Koch Brothers (http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer) for showing us that it’s really working people who cause the economic woes in the US, not folks like you two!

  7. Isn’t the State of Wisconsin going to give to their state employees the same collective bargaining rights as the federal government gives federal workers?

  8. I am not a union member nor is anyone in my family. I joined the protests in Madison for my children’s educational future. I can tell you first hand that these are peaceful protests. I was treated with more respect at the rally than I am at the local Wal-Mart. Even when joined by anti-protesters supplied by the Koch Bros foundation, there were minimal altercations. Be mindful of what some media outlets are showing. These are few & far between. We do not have palm trees in WI, by the way.

    As you pointed out the many flaws of unions, there are also many benefits. Specifically, the teachers union can negotiate class sizes and beneficial programs (phy ed, music, reading specialists, etc). As recruiters, we can see the shortage of skilled American workers. When H1B Visas or sponsorship is not available, it can be very difficult to find qualified candidates for some positions. To remain competitive, we must improve our educational system, not destroy it further.

  9. http://en.wikipedia.org/wiki/International_comparisons_of_labor_unions

    International comparisons of labor unions
    From Wikipedia, the free encyclopedia

    The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (May 2010)

    Unions have been compared across countries by growth and decline patterns,

    Union growth and decline comparisons
    In the mid-1950s, 36% of the United States labor force was unionized. At America’s union peak in the 1950s, union membership was lower in the United States than in most comparable countries. By 1989, that figure had dropped to about 16%, the lowest percentage of any developed democracy, except France. Other union membership for other developed democracies, in 1990 were:[1]

    95% in Sweden and Denmark.
    85% in Finland
    Over 60% in Norway and Austria
    Over 60% in Australia, Ireland and the United Kingdom.
    Over 30% in West Germany and Italy.
    In 1987, United States unionization was 37 points below the average of seventeen countries surveyed, down from 17 points below average in 1970.[1] Between 1970 and 1987, union membership declined in only three other countries: Austria, by 3%, Japan, by 7%, and the Netherlands, by 4%. In the United States, union membership had declined by 14%.[2]

    In 2008, 12.4% of U.S. wage and salary workers were union members. 36.8% of public sector workers were union members, but only 7.6% of workers in private sector industries were.[3] The most unionized sectors of the economy have had the greatest decline in union membership. From 1953 to the late 1980s membership in construction fell from 84% to 22%, manufacturing from 42% to 25%, mining from 65% to 15%, and transportation from 80% to 37%.[4][5]

    From 1971 to the late 1980s, there was a 10% drop in union membership in the U.S. public sector and a 42% drop in union membership in the U.S. private sector.[6] For comparison, there was no drop in union membership in the private sector in Sweden. In other countries drops included: [7]

    2% in Canada,
    3% in Norway,
    6% in West Germany,
    7% in Switzerland,
    9% in Austria,
    14% in the United Kingdom,
    15% in Italy.

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