Reorganized Labor

By Robert J. Grossman Jan 1, 2008
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HR Magazine, January 2008 Since dissident unions pulled out of the AFL-CIO in 2005, longtime observers see more bark than bite in organized labor's efforts to revitalize. Still, there's fight left in the movement. Tactics such as disruptive corporate organizing campaigns--by either faction--can damage a company's employee relations and drain finances. Savvy organizers have plenty to spend and are in the field in record numbers. Labor leaders see the 2008 presidential election as an ace in the hole, expecting a new administration and federal legislation that would make union organizing far easier.

With the gavel set to fall on the AFL-CIO's convention in July 2005, the half-century marriage that bound 57 unions and 13 million members was on the rocks and the infighting had become public and personal. Dissident union leaders blamed AFL-CIO President John Sweeney for failing to reverse the free-fall in membership--especially in the private sector, where it had trickled from the 1958 high-water mark of 39 percent of the workforce to below 8 percent in 2005. In 1953, the high point for unions overall, 32.5 percent of the workforce--public and private--was unionized.

Today, 12 percent--15.4 million people--belong to unions. The dissidents saw Sweeney as unable to face the crisis, still running the AFL-CIO like a mom-and-pop deli in a world dominated by Wal-Marts and Disneys. In their view, he was wedded to grass-roots "retail" organizing that wasn't keeping up with attrition, and unwilling to heed their wake-up call to union leaders: Restructure, change your strategy or die.

Instead, the 73-year-old former president of the Service Employees International Union (SEIU) was loyal to cronies, intent on preserving the unions they headed, and unwilling to address competition among them. He was reluctant to commit to organizing approaches that bypass the need for National Labor Relations Board (NLRB) supervised elections and focus on whole industries rather than bargaining units. And he stubbornly clung to the idea that changes in labor laws could pave the way for labor's renaissance. As a result, dissidents claimed he was squandering the AFL-CIO's war chest--a percentage of dues collected from the rank and file--on politics, while membership faded.

To Sweeney and his supporters, of course, the AFL-CIO was progressive and strategic. Politics was important, but so was organizing; they promised to fund both. Leading up to the convention, they were patient and conciliatory, offering compromises to dissidents while suggesting sotto voce that the rift was not over substance, but succession: When would Sweeney step aside, and who would replace him? Was he challenged because dissident leaders, such as the SEIU's Andrew Stern or UNITE HERE's John Wilhelm, were no longer heirs apparent?

The Breakup

The scene was set, but the fireworks never came. The day before the convention, leaders of four unions boycotted--SEIU; Teamsters; UNITE HERE, formerly the Union of Needletrades, Industrial and Textile Employees (UNITE) and Hotel Employees and Restaurant Employees International Union (HERE); and United Food and Commercial Workers (UFCW). Later, as delegates headed home, the Laborers, Carpenters and United Farm Workers unions signed on to form Change to Win (CTW). Leaders of these seven unions proclaimed a direction featuring multifaceted organizing of workers in industries where employers cannot easily outsource jobs--industries including cleaning, health care, hotels and restaurants, retailing, and transportation. They promised to ramp up efforts to grow head counts and gain leverage over entire sectors.

Since the rift, the AFL-CIO is now left with 55 member unions representing 10 million workers. The CTW faction now represents seven unions with 5 million to 6 million members. (CTW claims 6 million, but impartial observers are not certain.)

The Aftermath

As the dust settled, employers wondered what a fragmented labor movement would mean. Would it stabilize with two major players? Would CTW live up to its rhetoric? Was the AFLCIO as inept as critics claimed?

Today, more than two years later, the impact of the split has not impressed experts. "It was much ado about nothing; CTW was selling a new vision, but it's turning out to be old wine in a new bottle," says Gary Chaison, professor of labor relations at Clark University in Worcester, Mass.

"Little has happened," agrees Marick Masters, professor of business at the University of Pittsburgh. "The breakup is all sizzle and no steak. They continue to encounter the economic reality that even as they gain new members, they're losing more." The number of NLRB elections continues to be surprisingly small: In 2006, there were 2,147, and unions won 55.7 percent. In elections, unions are becoming "more selective in where they go forward. But the win rate, though good, is not keeping up with what they're losing," says Jim Gray, SPHR, a labor consultant for management in Charleston, S.C., and a former member of the Society for Human Resource Management's (SHRM) Labor Relations Special Expertise Panel. Federal law requires the NLRB to conduct an election if 30 percent of the workers in a bargaining unit petition for one. Efforts to gain large numbers of new members through other means, such as corporate campaigns that force employers into neutrality agreements, show mixed results. Though both AFL-CIO and CTW organizers are adept at publicizing their activities, so far, on balance, there's little indication that union organizers are having a significant impact by gaining large numbers of new members.

Masters says the union message no longer resonates with enough workers. The traditional job-security message appeals to a niche market. "There has to be value that a worker can take along to the next job that makes paying the dues worthwhile. The average worker moves six to eight times and will not be as attached to a particular employer as in the past," he says.

Chaison agrees that union leaders need to come up with alternate forms of representation to expand ranks. "It's like having a Mexican restaurant that only serves breakfast," he says. "To stay in business, you have to also serve lunch."

Infighting Under Control

Still, despite tepid reviews and predictions of fragmentation, the breakup appears to have strengthened, not weakened, CTW and the AFL-CIO.

Predicted squabbling and raiding between factions, in the main, hasn't materialized. "The split has not been as large as many expected," says Tom Juravich, director of the Labor Relations and Research Center at the University of Massachusetts in Amherst. "The movement is chugging along." But according to the AFL-CIO, nirvana it's not.

"Solidarity and unity are harder to achieve on policy and legislative initiatives," admits Stewart Acuff, national organizing director of the AFL-CIO in Washington, D.C. "Had we all stayed together, there would be a more accessible forum for resolving differences; we would not have had the few raids that have occurred."

In contrast, Greg Denier, CTW's director of communications in Washington, D.C., reports smooth sailing between the federations. "The AFL-CIO continues to try to gin up some controversy that's not there. We continue to work together on politics and legislation."

Borrowing from Each Other

Both camps have been energized by confrontation. They learn from each other and borrow liberally. They pursue techniques including highly publicized corporate campaigns; both are more aggressive and better staffed. They react to the shifts in the U.S. labor force: Today, just 2 million manufacturing workers belong to U.S. unions, down from 3.5 million a decade ago. That compares with more than 3 million workers in service and retail unions, and more than 7 million in public-sector unions.

Primary targets include retail or health care establishments; hospitality organizations such as hotels or restaurants; and employers of janitors, security guards or other low-wage workers. These industries employ an estimated 40 million workers, many low-income, female, minority and immigrant.

Both federations include member unions with organizing opportunities in the target industries, although the AFL-CIO is saddled with more old-line manufacturing unions where membership decline seems inevitable. As a result, leaders of the AFL-CIO and CTW hype growth of individual member unions, downplay overall membership, and focus on strategic victories that will allow them to wield sectorwide or geographic economic influence.

Investment in Organizing

These days, CTW and AFL-CIO organizers are smarter, better prepared and more numerous. "We recruit from schools with labor centers such as Berkeley, Cornell and Wisconsin," says CTW's Denier. "We also go to schools that are pipelines for employers, [schools] such as Wharton." In 2007 alone, the AFLCIO Organizing Institute trained 560 organizers.

"In the old days, a union like SEIU might have two organizers on a team," says Stephen Cabot, chairman of the Cabot

Institute for Labor Relations in Plymouth Meeting, Pa. "Now, teams are four or more, and they're specialized, [including] representatives of the ethnic groups they're trying to reach." Three years ago, the national Teamsters union had fewer than 20 organizers on the ground. Today, it employs 200. Gray says campaigns are more sophisticated, "They're presenting their benefits much better; the marketing is smarter." And an impressive amount of money flows in: CTW funnels 75 percent of the funds it collects from dues to campaigns, while six AFL-CIO unions recently committed $150 million.

Strategic Planning and Analysis

Both are deep into strategic planning to help affiliates operate campaigns aimed at picking off hundreds, even thousands, of workers at a time while bypassing NLRB elections. These corporate campaigns--unions call them "strategic campaigns"-- originated during the 1970s with activist legend Saul Alinksy against Kodak in Rochester, N.Y., and have been in the union arsenal since then. What's different now: The national AFLCIO and CTW mastermind them.

Strategists in the AFL-CIO's Center for Strategic Research and CTW's Strategic Organizing Center use "competitor analysis" and other tools to target workforces. Currently, AFL-CIO officials oversee as many as 20 campaigns. Among them: the Atlantic City Casinos and Foxwood Casinos of Mashantucket, Conn., being organized by the United Auto Workers and the International Union, Security Police Fire Professionals of America; and the New Orleans City Schools being organized by the American Federation of Teachers.

CTW continues to make Wal-Mart a priority. It also promotes campaigns focusing on 90,000 drivers in port facilities in California, Florida and Washington being organized by the Teamsters; 10,000 Bashas' grocery workers being organized by the United Food and Commercial Workers, and 4,650 workers in a Bladen County, N.C., Smithfield Foods porkprocessing plant being organized by the UFCW. Nationwide, Smithfield has 53,100 employees.

Research helps organizers avoid companies where victory is unlikely, such as Whole Foods Market based in Austin, Texas. "The unions leave them alone because they have deep pockets," Juravich says.

Corporate Campaigns

For HR professionals, the message remains clear: If you're in a large company in a targeted industry, you may find yourself involved in a corporate campaign.

"These corporate campaigns are consuming me," says attorney Michael Lotito, SPHR, a partner in the San Francisco office of Jackson Lewis LLP. "They are all-encompassing; the multiple levels of attack that take place require constant attention and anticipation. The union shows up at 70 percent of your facilities located in 25 states, same time, same day, with handouts that attack the company.

Simultaneously, it files unfair labor practices in some of the states, asks the Office of Federal Contract Compliance Programs to investigate a claim that you're not living up to your affirmative action requirements, and sends a critical letter to the investment community."

A campaign strives to get employers to sign neutrality agreements. In effect, these agreements permit unions to campaign while the employers remain neutral. Usually, the employer agrees to accept a card check to recognize the union without a secret-ballot election if the union produces a sufficient percentage of signatures.

Neutrality agreements also include provisions where the employer agrees that its managers will not campaign against or disparage the union, or that they will only provide facts about the union when they're asked a question, says Lynn Outwater, managing partner of Jackson Lewis LLP in Pittsburgh.

Why would employers accede to neutrality and a card check that offer a slam dunk for the union? Actually, few do, and acquiescence usually can be attributed to wilting from a blistering campaign. For example, the SEIU and UNITE HERE won neutrality agreements from Sodexho, Aramark and Compass Group PLC, multinationals employing more than 1 million workers, mostly in service jobs. Still, experts counsel against neutrality. They say letting a union in can drain resources and cripple managerial flexibility. "There's a cost, even if your wages and benefits remain the same," Gray says. "It spills over into grievances, arbitrations, regular contract negotiations. Whether [the cost] is 5 percent, 25 percent or 50 percent depends on how effectively the company manages its relations."

For their part, union officials describe their roles in organizations as shared governance, a win-win partnership. Attorney John Raudabaugh, a partner at Baker & McKenzie LLP in Chicago, disagrees. "We're no longer allowing business to be business and labor to be labor. We want all to be blended partners, and it doesn't work," he says. "How can a business operate like a round-table discussion?" continues Raudabaugh, a board member of the NLRB from 1990-93 and now a member of the SHRM Employee Relations Special Expertise Panel. "Any business that's not saddled with this works-council, multi-party way to run a company will have the ability to operate more quickly and at lesser cost."

Some companies have so much dirty laundry, however, that letting a union in without a fight may be best. "If your corporate governance is poor, if you have massive misclassification [of workers] and don't have women in management, you may be interested in a neutrality agreement," Lotito says. Organizers say carefully orchestrated campaigns are legitimate. And despite the outcry from employers, corporate campaigns are fair play, Juravich says. "Employers cry 'foul,' but [organizers just use] the same competitor intelligence methods that employers use."

The AFL-CIO's Acuff says: "Corporate America is running amok. There is more than enough bad stuff they do to bring to light--how they treat their workers, their communities, their business partners."

CTW officials cite victories in campaigns involving janitors and nurses; AFL-CIO leaders point to victories at Cingular Wireless and with home health care workers in Michigan and New York. But although campaigns are unpleasant, drain resources and can harm business in the short run, sometimes they don't stick. "I represented a large beer company that was attacked by the Teamsters," Cabot recalls. "They attempted to get workers and supporters not to drink the beer. Try to tell hard-working blue-collar workers not to drink beer. There was noise, fliers, public relations stunts, but the campaign petered out."

Rick Berman, executive director of the Center for Union Facts in Washington, D.C., and a former employment lawyer for Bethlehem Steel, worries that HR managers in nonunion settings are not prepared for organizers' tactics. HR professionals need to prepare for a "more rough-and-tumble world. ... Most HR managers will need a refresher course or will have to learn on-the-job about confrontational HR."

Political Tsunami Forecast

Perhaps most ominous for employers who want to remain union-free is that the political climate has shifted dramatically since the elections in November 2006. Prospects have improved for passage of the Employee Free Choice Act (EFCA), which passed the House in 2007 but stalled in the Senate. President Bush has said he would veto the bill if passed. But observers agree that if a Democrat wins the presidency this year and Democrats retain control of the Congress, the measure could become law.

Employers suspect EFCA will open the floodgates for union organizing because it would:

  • Eliminate employers' right to demand a secret-ballot election before union certification.
  • Substantially increase financial penalties for committing unfair labor practices under the National Labor Relations Act.
  • Empower an arbitrator to impose a contract if the parties don't reach agreement within 100 days.
  • Require employers to maintain neutrality while unions make their cases.

If EFCA passes, "Make a move that's a little over the line and you're in deep trouble," Cabot warns. "Currently, many employers engage in initiatives to counter union campaigns they wouldn't dare do under EFCA. Now, there's a minor fine; under EFCA, every unfair labor practice will be potentially a $20,000 fine. Now, even if management is not overtly instigating it, the feeling is 'if one of my supervisors is talking to people, it's not so bad.' With EFCA, it will be very costly."

Berman says if the law passes, private-sector union membership could double. If union leaders "put on a fullcourtpress, hire more experts, more 'salts' [paid union employees who apply for jobs and declare intentions to organize workers], they can get membership up to 15 percent of the workforce. That would give them an additional $4 billion-plus a year in dues. If they put some substantial portion of it into soft money for politics, every issue they care about will be in play. These guys are the ATM of the Democratic Party. Their investment will swamp the contributions of the business."

 

In September 2007, the AFL-CIO executive council approved a record $53 million political budget to mobilize votes during the coming presidential campaign. So, ironically, John Sweeney's focus on politics, the very thing he was excoriated for by the departing CTW leaders two-and-a-half years ago, looks prescient and brilliant, according to many union observers. As the presidential election nears, Acuff says, CTW leaders seem to have forgotten ever playing down politics. If the EFCA passes, it would be the most significant pro-labor legislation in more than two decades.

"If you've been union-free, and you haven't had to work at it, you've been lucky," Lotito says. And if you wait until the law is passed … well, that just wouldn't be a good idea.

Robert J. Grossman, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

Web Extras

SHRM videos:
Attorney James Ferber on why employees sign union cards. 

Attorney Lynn Outwater on the importance of employee engagement in union avoidance. 

SHRM articles:
Bid To Change Union Election Rules Falters in Senate (HR News) 

NLRB Reduces Protections for Provocative ‘Salts’ (SHRM Online Workplace Law Focus Area) 

SHRM white papers:
Union Organizing Trends and Tactics 

Union Awareness and Maintaining Union-Free Status 

SHRM research:
Union Organizing (Briefly Stated) 

Web sites:
AFL-CIO

Change to Win


On The Defense

If you're the human resource person in an industry targeted by labor for a corporate campaign and you're not educating top managers on why your company is vulnerable and putting together a preventive plan, you're not doing your job, says attorney Michael Lotito, SPHR, a partner in the San Francisco office of Jackson Lewis LLP.

Begin with internal and external analyses. Find your "weak spots, why you may be vulnerable," Lotito says. As a management attorney, "I am prepared to take your company apart the same way a union is going to take you apart. Then I'll put you back together again. At the end of the day, you'll be a better company whether or not a union ever attacks you." He says the nature of the work dictates that it be done by someone outside your organization.

Qualified experts are hard to find, but they're worth it, says Linda Lulli, SPHR, associate vice president of Bryant University in Smithfield, R.I., and a member of SHRM's Labor Relations Special Expertise Panel. "Most nonunionized employers are not equipped to handle a union campaign on their own. You will need help."

What can you do when a union comes calling? Treat people with dignity and respect, and do it before organizers hit the scene. Campaigns work because workers don't believe employers have their interests in mind, says Jim Gray, SPHR, a labor consultant for management in Charleston, S.C.

The issue comes down to why workers want a union, attorney John Raudabaugh, a partner at Baker & McKenzie LLP in Chicago, says. "If you look at all the things that attract the employees to joining a union, it comes down to matters that can be replicated fully and satisfactorily by the corporation."

Stephen Cabot, chairman of the Cabot Institute for Labor Relations in Plymouth Meeting, Pa., advises employers to improve interactive communication. For example, involve employees in decision-making, as does Wegmans Food Markets, based in Rochester, N.Y., and named by Fortune as one of the "100 Best Companies to Work For." "If you treat your employees properly, they won't feel the need for a union," he says.

Lynn Outwater, managing partner of Jackson Lewis LLP in Pittsburgh, counsels:

Make sure supervisors treat workers equitably.

Look behind disciplinary termination actions to make sure they're proper.

Educate supervisors about what they can or cannot say legally about unions seeking to organize.

Communicate your organization's employee-relations philosophy setting forth the employer's position on unions.

Have lawful solicitation and distribution rules.

Have lawful bulletin-board posting and e-mail rules.

But, Gray cautions, if you wait to address culture and pocketbook issues until a union shows up, it's too little too late. "For unions, that's low-hanging fruit. It's disingenuous to initiate changes to avoid the union. You should be doing the right thing. If the effect is that you're union-free, that's great, but if you're doing it just for that, I would question your logic. Company [leaders who] approach employee relations that way think their employees are naïve, and they're not."

Remember, it's not just your boss whose job and reputation are on the line: HR professionals may be personally liable for missteps. "Personal protection is your first priority," advises Mary Pivec, a labor and employment lawyer with Keller and Heckman LLP in Washington, D.C. An HR professional can be sued individually and held personally liable for breaking federal laws.

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