Gen Z, Unions, and the New Era of Labor Relations

[00:00:00] Mo Fathalbab: Welcome to today's episode of People and Strategy. I'm your host, Mo Fathelbab, president of International Facilitators Organization, People and Strategy is a podcast from the SHRM Executive Network, the premier network of executives in the field of human resources. Each week we bring you in-depth conversations with the country's top HR execs and thought leaders.

For today's conversation, I'm excited to be joined by David Rittof, president and CEO of Modern Management Inc. Welcome, David.

[00:00:36] David Rittof: Thank you Mo. Good to be on your show.

[00:00:38] Mo Fathalbab: Great to have you with us. So David, you are recognized as a national expert on labor relations. Tell us how you got into this field.

[00:00:48] David Rittof: It goes back quite a ways, Mo. It was 44 years ago that I joined Modern Management, the organization. I now head and lead, but I started it. I got recruited from University of Illinois in my graduate program in organizational communication. And the firm at that time of, well, well-known, largest labor relations consulting firm in the country, traditional labor, focused on traditional labor and.

They would win a campaign, they'd help an organization win a campaign with a union, and the organization was looking for what's the alternative. And at the time in graduate school, I was working on something called Quality Circles, which was a Japanese management technique of decision making among the staff.

And I ended up, working with one of the partners and wrote three books on it, three textbooks on that, and joined the firm July 1st, 1981. Now, I put this in context, I'm sorry. July 5th, 1981. August 5th, 1981. Air, president Reagan fires the air traffic controllers. And labor took a dive considerably at that point.

So I was, I joined right at the time. It was a very tumultuous time among labor people. The best time to start, right? it is. there's, a lot to learn and a lot to go through at that time.

[00:02:14] Mo Fathalbab: Absolutely. So in your current role as CEO and President of Modern Management, what are some of the types of issues that you help companies and HR departments navigate?

[00:02:25] David Rittof: Well, I'm generally the person they call when a union has started, activity at their organization. So they call for assistance in one of two ways, whether it's a consultant to help guide them through the process. Normally with the attorney. They, always have an attorney involved who's helping coach them through this, but they have a consultant oftentimes that develops communication and strategy for how to process a campaign and go through the petition and walk the organization through the eventual vote that occurs, just like any election.

That's the end result of this. And so I get called upon when that activity generally starts. But that's, probably 70% of our work. We also get called in on, you know, how to prevent it in the first place. How to, not, waiting for the crisis, but what are things we need to be doing to so that our employees don't ever think they need a third party to have come in and represent them.

[00:03:28] Mo Fathalbab: So what trends are you currently seeing, in unions and labor relations?

[00:03:34] David Rittof: Well, it's, it's. It's getting very acrimonious. It's getting very us against them. It's always been to some extent that, and you go back to the very olden times, meaning the early 19 hundreds, mid 19 hundreds, there were, you know, questions of, violence in the workplace and all that.

It's not that anymore, but I've seen a rise in unions getting much more aggressive than they have in the past. And I think some of that's a, simple reaction to what's going on out in the Workplace Union membership. Is it an all time low? I mean, it's down. you know, in the 1950s it was almost 37% of the nation's workforce was unionized.

Now it's down to 11%. And if, we even look further. It's only 5.9% of private sector. If you take public sector outta that figure, policemen, firemen, postal employees, teachers, those kind of things, if you take them outta that picture, it's only 5.9%. So unions are really in a battle for their survival. because if you see that kind of drop.

It's not that the employment has gone down, the number of employees are still there, but unions represent close to only about 14 million people. So where when they drop from the numbers they used to have, their only source of income is employee dues. So if you drop the number of employees. Their business model is in, in significantly bad shape.

So the aggressiveness has gotten up there. We've seen in the last year or two a significant increase in the number of elections being held. So they're out there campaigning very hard and for good reason, for just existence anymore, and they're using things like, I don't know if you've ever seen in d dc Probably in DC you see it.

You see it more in New York, certainly seen in Chicago. Is that inflatable rat? That will show up at some business place that is using non-union labor and you're just seeing lots more of that. In fact, there's different characters out there now. It's not just the rat. They'll have Frankenstein or any huge blow up piece to try and draw attention to villainize the employer and to try and gather support from employees.

But I just see it a lot more aggressive than it's been.

[00:05:54] Mo Fathalbab: And, what do you think is the cause of that?

[00:05:56] David Rittof: Well, one is that, they see an opportunity like they've never seen before. the Gen Z, the new, the most recent generation category they call is potentially is seen in the statistics is the most pro-union generation ever.

Something like 71% approval rating. So with that kind of, I mean, years ago. Labor union organizers, their credibility was down right near car dealers. today that credibility has gone up because Gen Z believes in alternative ways of representation in the workplace. They're looking for something to solve issues where they don't trust management.

And so we're seeing, I think unions are just seeing the opportunity that they haven't had.

[00:06:48] Mo Fathalbab: And what do you think is the cause of, less and less employees being in unions and that drop that you described a second ago?

[00:06:57] David Rittof: There's a few different reasons for that. I think, one of them. Certainly the biggest is the costs have gone up and people don't like sharing their income.

And if you belong to a union, there's dues associated with that. So people are now, and it's, not a de minimus cost At one time it used to be kind of minor, it was minimal. It was maybe, you know, an hour of pay per month or something. Now you're looking at. Some unions charging three, three and a half percent of annual income.

So if you look at an increase of 3% a year, you've just wiped out that increase. So it's, there's a cost to it that they haven't expected. I think they're also, as they get more and more educated, they turn down. Union representation. Once they're educated, people think, gee, that looks like it might be a great answer to our situation or to solve problems.

But when they really look at the collective bargaining agreement or a contract they see it doesn't there. There are many issues I see employees have that would never see the light of day in bargaining a contract, and once they get educated to that, but clearly mode. The largest reason for the big drop in union representation over the past several decades has been the, exiting of production and manufacturing jobs from the country.

We don't, we just don't make anything here anymore. we don't make TVs or radios or. You know, car parts are made somewhere else. We assemble the car here, but we don't make it here. So, gosh, in 81, when I started this business, I think UAW was over a million members. They're now somewhere around 364,000, and I think that's just the exporting of our jobs in the country.

[00:08:48] Mo Fathalbab: Amazing. So your work with companies, David, is primarily to help them stay union free. What are some of the mistakes you see them commonly make that cause the employees to even consider unionization?

[00:09:01] David Rittof: The number one reason people go after union is not. They'll say wages and benefits. That's always part of every campaign, but they normally go to a union because they feel the employer has ignored them in the decision making process for making a change, and they want involvement and they wanna say, you've got to talk to my union rep before you do this.

And if an employer could just get much more focused in on the, runway of time leading up to change, making sure people get oriented to it, get some time to adjust to it, it makes a big difference in whether or not people go out and seek third party representation.

[00:09:45] Mo Fathalbab: Well, that is a great explanation.

So what are some of the early warning signs that a workforce is becoming? vulnerable to potential unionization.

[00:09:55] David Rittof: 44 years in the business. I can walk into a place and smell it. I mean, you can just can smell it. I love that. Well, you can. What does it smell like? You can just, feel it. You, really start to feel the difference in a workplace when, people start to become just more adversarial.

They're, they're not accepting of things. They're angry. the, they're. Disrespectful in public ways, Mo where they, start shouting out at meetings, angry phrases or things. Those are, you know, pretty obvious signs. There are other signs, though, when language starts to change. They use terms like grievance and contract and, arbitration norm words that just normally aren't out there.

All of a sudden they're starting to see that now, of course. When you see flyers show up or you know, a union organizer out front, standing out, passing out flyers or something, that's the obvious sign, but someone will it. It normally starts with indication of, it starts with an employee going to a supervisor and saying, Hey, you know, this person gave me this authorization card and said I should sign it and join up.

What do you think now? What that supervisor says in that next 20 seconds makes a difference whether the campaign takes off or whether it gets diminishes. And if a supervisor goes, gee, I don't know what it is, doesn't matter to me, or, you know, do what you have to do, and never reports it, or never talks about it from then going forward, union has a lot of opportunity.

To, gain a foothold into a place. But the, you know, some of the early warning signs there are just to, you see people start to gather in places that normally don't. you see gathering of folks out in the parking lot and. You walk up for some reason, you walk by 'em and man, they just huddle and shut down and, stop talking.

Well, they're not planning your birthday party, you know? I mean, it's very likely there's something awry and they're upset. And those, to me, are the very really warning signs of union activity.

[00:12:14] Mo Fathalbab: Yeah. that's really insightful. Thank you. So what do you think the role of the, CHRO is as it relates to labor relations?

[00:12:24] David Rittof: Well, as the head of HR, their duty is, to establish what the company's strategy is on this at all. I mean, you, have to, and well, two big things. What is the strategy? What's our relationship going to be? And secondly, how do I create alignment of everyone around that strategy? So when I say strategy.

I can give you a few different examples without mentioning names of clients, but you know, a large, production. They have, unionized production and maintenance employees, but the union often is going after trying to organize their salaried side engineers, drafters designers, those types. Well, that's a very difficult strategy for a CHRO to establish.

At one point, they're trying to create a productive and collaborative relationship with the union that represents a large majority of their workforce, and yet at the, on the other hand, they're trying to say, but not here for salaried employees. So the CHRO is really in charge of, how do we say this? How do we structure this?

And then getting alignment. Among all the executives to say, yes, that's what our strategy should be and should be going forward. And then the third piece of their duty is to make sure that alignment goes below just the executive team. Because the most critical element in all of this is the relationship between the supervisor and the employee.

That's what changes the most. If a union comes in, it's that relationship that becomes fractured the most. And so as a result, the CHRO has to be in charge of making sure that supervisors are trained on this, aligned with the principles and supportive of the employer's position on this.

[00:14:22] Mo Fathalbab: And, what else can the head of HR do to help their companies in today's labor environment?

[00:14:29] David Rittof: Well, as I mentioned that the supervisor's a very critical element. One of the biggest cost cutting efforts employers have done in the last decade or so is to reduce the number of supervisors and so where historically, the span of control of a supervisor would have anywhere from average, was supposed to be anywhere from 12 to 20 direct reports.

And if you have 12 to 20 direct reports, you can actually know them. You can understand them, you can accommodate individual differences, things like that. But we're seeing now with some employers where that span of control can reach over a hundred sometimes. Now that supervisor doesn't know a hundred people.

They're lucky if they know their names. The engagement of the supervisor is as important as anything else. So we have to have them believing that the company's doing the right things, supporting the right policies, and if we've lost, what I'm finding so often now is the campaign. Within the campaign. Yes.

Your campaigning employees to vote yes. Vote no for the company, meaning no union that we're asking them to vote that way and hoping they vote that way, but you won't get those votes. If you don't have the supervisor who also believes that's the right way to go, and we're losing our supervisors these days, they're feeling as fractured and as stressed, and as pushed and as pulled as the employees are.

[00:16:00] Mo Fathalbab: So, you know, I know a lot of, CEOs who don't think twice about the possibility of their, teams unionizing. what do you say to those people who don't think it's even remotely possible?

[00:16:13] David Rittof: Unions are getting far more creative about who they go after. So if you're in a business or an industry where you didn't used to feel subject to it.

They're, looking any place where there are non-union people than before. So some places felt rather exempt. You know, banks for a long time thought that they weren't subject to these things. Well, that changed, and the union started to talk Target credit card operations and some of those card operations, and they would go after them.

Communication Workers America did that for quite a while. We're seeing that they're going after teachers in charter schools. They're going after, they're certainly going after every healthcare professional where we lost all these production and maintenance jobs that I mentioned where manufacturing's gone.

We've increased in volumes, the number of service jobs. Especially places like healthcare, as we're an aging population, we're needing healthcare a lot more, and so there's far more. Years ago, in 1980s when I started this business, Mo, you walked into any town, you tried to find out what part was made there, what manufacture, and that was the biggest employer.

Today, you walk into any town, the largest employer, oh, that's at St. Joe's. That's St. Mary's the hospital. That's the largest employer any place. And so we're starting to see that those service jobs very subject to union campaigns. And they're going after physicians and residents and they're trying to organize, college athletes.

So the unions are getting much more creative. the workforce was, turnover rates were two and 300%, you know, so they would move so fast, a union couldn't get 'em. Starbucks changed that. So where you've got this company where unions have said, no, we're gonna organize them. We're gonna, we're gonna, you know.

Push the pedal to metal here, and they've been fairly active in trying to organize places like Starbucks, other fast food places they're going after. So the typically exempt places, things you never thought of it, they're going for every nook and cranny of any place they can find these days. And any union will go after anybody.

[00:18:28] Mo Fathalbab: Is there, a company size under which you don't need to worry about it if it's a small, business.

[00:18:36] David Rittof: You know, it's funny, you would, think that, you would think that, but most of the elections, so there's 1500 elections, vast majority of 'em are 10 or less employees.

[00:18:46] Mo Fathalbab: Oh, okay.

[00:18:47] David Rittof: So it's, yeah, you as long two or more is all you need to unionize.

You just can't unionize as a person in a job, but two or more and it unionized and vast majority, and I'll tell you something else, Mo, the smaller elections of small units are the hardest for an employer to win. They're the most difficult to influence. Once you've lost them, you have a hard time bringing 'em back into the fold.

And why is that? I think they're heavily influenced, once they've gone a direction, and the union is very careful about making sure that the employer doesn't hear about it for a while. So they're careful to try and make sure and convince them of all what they say are the benefits of a union.

So you're spent, you have a very hard time as an employer once you become aware of it, trying to unwind all the things that the union has told them and to say, well, wait a minute. Did you know that the average negotiations, I mean this one fact alone would shock I think a fast food worker, the average length of time it to negotiates to negotiate a union contract, 465 days.

They won't even be there 465 days. You know, so the, there are lots of facts that employees need to know and understand as they're making that decision. Now, the, they have a right to make that decision. We support that, right? The National Labor Relations Act passed in 1935 gives employees the right to go for a union, not for a union, but our firm tries to make sure that.

Employees see both sides. They understand all the facts to it, not just what they're hearing from one side, who has a very vested interest in them voting for them because they'll get income off of it.

[00:20:35] Mo Fathalbab: Is there a downside for employees when they unionize other than the expense that they actually, pay outta their check?

[00:20:44] David Rittof: I think the greatest downside is the sameness that is required under contracts. The rigidness of an A union contract all of a sudden has an employer in the position of managing sameness, not fairness. And so to me, that's one of the most compelling pieces. I think the other biggest thing is that the union contracts cause all kinds of lines of demarcation in jobs.

I do tables, but I don't do chairs. I do windows, but I don't do walls. Now, from a business model as a union, that makes great sense because the more people you have doing it, the more dues you're collecting. So that makes total sense. But from an employer side, you lose all kinds of efficiencies. But from an employee side.

I lose job differentiation and interest in my work and growth opportunities to now become somebody who eventually becomes a supervisor of multiple functions. So you get pigeonholed into one kind of job, I think you lose interest, you lose motivation in things, and you lose the ability to grow in an organization, even outside the organization, even to learn things, to maybe become more, recruitable to other companies.

[00:22:06] Mo Fathalbab: I think that's a beautiful little clip that every company should play for all its employees. thank you for that. So what about generational differences in the workplace, especially younger employees. what do companies need to think about with labor issues as they consider that?

[00:22:22] David Rittof: Every generation has had its individual differences.

You know, baby boomer that I'm part of, we had our generational differences. Gen X, gen Z, gen Y, they've all had different influences that make them somewhat individual. I think understanding. Number one is a company doesn't should stop trying to change or mold the generation into what they think is right, but should spend more time in just trying to understand what their needs are, what they're thinking of.

If they would spend more time on that rather than trying to get them to. Into compliance with what they think is correct. You know, people talk about the work ethic is such a work. No. Then do things that motivate them to want to be part of it. I really blame employers more than anything else about this is that they need to understand what is the motivation of the Gen Z and start to create things in your organization that either accommodate that or get them more interested in things.

Earlier generations, they were about individuality, gen Z. Is, is fine with joining groups, with, participating in movement type things in demonstrations, and it's different than, previous generations. Not good, not worse, just different, just somewhat different. Well, if that's the case, then we should be creating those kinds of activities and talking about where the company is.

Concerned about the environment and what they do to be concerned about the environment. Talking about things that help them. Understand what they need to be doing to secure their future. And that's stop talking about pension plans 'cause they're not interested in that right now. But what are things that they should be interested in that will keep job enrichment for them?

Keep them interested in what they're doing, help them grow in the kind of function, help them learn more. They're big on education. Gen Z is. So if we start to look more at what they're interested in and pay attention to those generational differences. I'm gonna answer your question in another different diversion though as we talk about this, because I think I mentioned earlier, gen Z's more.

More supportive of unions than any other generation in the past. And when I say that, it's like 71% approval, I don't think it's because they really understand what a union can or cannot do. I think they appreciate the concept of together, we're better. And so that's the one thing that they jump into.

But they're also unaware. Of the downsides of unions. So one of, you know, I mentioned earlier, job differentiation and, you know, dues and things like, that's also, you know, when you, look at, what it means to belong in union potential for a strike, they've, because we're now down to 5.9% of the nation's private sector workforce, gen Z has never been in a union.

You know, maybe their granddad was. Because it dates back to the fifties, but currently the very few have any personal experience with it. And so when you don't have personal experience with it, you say, well, gee, let's try it as an option. Maybe this will do it. And participating in the union doesn't mean you're gonna be sitting at the table and bargaining.

they don't let employees anywhere near that table. But I think employee, I think Gen Z think it's gonna be a group of them all sitting down with a group of managers and they're gonna hash it all out. That isn't the way collective, even today, that isn't how collective bargaining works.

[00:26:14] Mo Fathalbab: And what is one thing you wish more CEOs understood about labor relations right now?

[00:26:22] David Rittof: I think that, it's in such a state of flux. Because the National Labor Relations Board right now is highly dysfunctional because there's only two members on it, and they're the big decision making body over policy and what you can and cannot do and all those things.

So I think what a CEO should understand is that there needs to be a tension for everything from their policies and procedures. within their organization and matching what Washington is now starting to do because it's, a moving target. CEO needs to recognize it's a moving target, and they need to, they need their HR, CHRO.

Given the opportunity and the express, need for them to follow these nuances and these changes and to stay abreast of it. A decade ago, changes didn't come as fast as they are right now. Right now it's just in such a state of flux. There needs to be some attention to that. Second thing is, if, they would just.

Dedicate more resources to engaging the first line middle manager of employees if they would train them, develop them, provide recognition for them. That middle manager has the toughest job in the country. They've gotta, they've gotta take the dreams and wishes and vision of the company and express 'em in such a clear t compelling manner.

Employees embrace it. And then they've gotta take the issues and hurdles and hassles the employees face and communicate them to the executives in such a clear coaching, compelling manner. They get the resources to do their job. My hope is that CEOs would recognize that's a very, difficult job and toss the resources toward that to, to support them, make sure you have enough of them and engage them as much as possible.

[00:28:20] Mo Fathalbab: Excellent advice. Last question, David, what is one piece of advice that has shaped your work or personal life?

[00:28:27] David Rittof: To control the things you can control, focus in on the things that you can, that you have, an ability to, work on. If, every day we just, everybody just focused in on what they can work on, we'd be a much more productive, but I think we get caught up in things that we can have no influence on or nothing that we can do about that.

I think the advice that has most shaped me is work on what you can work on.

[00:28:55] Mo Fathalbab: Sage advice. Thank you so much, and that's where we'll end it for this episode of People and Strategy. A huge thanks to David for your valuable insights.

[00:29:04] David Rittof: So nice to see you Mo. Thanks for your time.

[00:29:07] Mo Fathalbab: Thank you. Great to see you, David.

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