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Ethics in the Workplace, Conestoga College, Winter

2005

Topic: The Changing Workplace: Unions and Employee Rights

Definition: Unions are groups of working people organized to protect


their rights in the workplace.

The Ethical Issue is one of Control, Conflict, Co-operation,


Rights

Union: 1410, "action of joining one thing to another," from O.Fr. union
(12c.), from L.L. unionem (nom. unio) "oneness, unity, a uniting," also
in L. meaning "a single pearl or onion," from unus "one," .Sense of
"action of uniting into one political body" is attested from 1547.
Meaning "group of people or states" is from 1660. Short for trade
union, it is recorded from 1833.

Control: c.1310, "to check, verify, regulate," from Anglo-Norm.


contreroller "exert authority," from M.L. contrarotulus "a counter,
register," from L. contra- "against" + rotulus, dim. of rota "wheel" (see
roll). From a medieval method of checking accounts by a duplicate
register. Sense of "dominate, direct" is c.1450.

Conflict: c.1430, from L. conflictus, pp. of confligere "to strike


together," from com- "together" + fligere "to strike."

Co-operation: 1398, from L.L. cooperationem "a working together,"


from cooperari "to work together," from com- "with" + operari "to
work"

Rights: O.E. rihtan "to straighten, rule, set up," from riht (adj.); see
right (adj.1). Cf. O.N. retta "to straighten,"

First Unions

The first unions were formed in the 19th century. They


protected members against financial disaster in times of illness or
unemployment. Unions were opposed by employers, and sometimes
were formed in secrecy. In 1872 the federal government passed the
Trades Union Act, making unions legal. Still, many employers would
not allow them. Many bitter strikes were fought before unions won
wide recognition.

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Today, union members make up about 34% of the non-
agricultural workforce; 4 million Canadians belong to unions.
Membership is greatest in British Columbia and Newfoundland, where
about 50% of the workforce belongs to unions. Most early unions were
craft unions, that is, they joined all the skilled workers in a particular
craft or trade. In the late 1930s, industrial unions began to grow in
Canada. Industrial unions join all workers in a single industry,
whatever their skill. Today the most rapidly expanding section of the
union movement consists of public-service unions, made up of
government employees (for example, teachers, postal workers, and
nurses) at the federal, provincial, and municipal levels of
government.

Unions are mainly interested in the wages and working


conditions of their members. But they also become involved in
political action. The Canadian labour movement as a whole supports
the New Democratic Party, but many union members vote for other
parties. In order to explain their position on various issues, unions
also organize educational and public-relations activities. Workers
created unions to protect themselves in these new impersonal labour
markets. Although the first unions were small, local organizations,
they attracted hostile reactions from governments and most
employers. In fact, governments declared unions illegal. Union
sympathizers confronted constant harassment, firings, blacklisting,
and arrests. Despite this opposition, poor wages and dangerous
working conditions led to an increasing number of strikes and
protests. In the 1830s and 1840s, huge and violent strikes
accompanied the construction of the Welland and Lachine canals, and
protests in the logging camps occurred frequently. These actions were
usually spontaneous outbursts of frustration that resulted in few
lasting organizations.

During the 1880s, signs of Canada's advancing industrial


revolution were unmistakably clear. Factory production increased
rapidly and the mining, forestry, and other resource industries
expanded quickly across much of Canada. Some of these businesses
were already large and complex, employing hundreds of workers.
These new times were not necessarily happy for many of Canada's
first generation of industrial workers. Conditions in many of our
factories and mines were harsh. Workers complained of long hours,
poor wages, and irregular employment. Often their lives away from
the factory were equally difficult. Many workers returned home each
evening to crowded neighbourhoods with few services, such as
running water and sewage disposal. Reports of widespread disease in
working neighbourhoods in Montreal, Toronto, and numerous other
towns ignited calls for urban reform.

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Workers fed up with intolerable conditions sometimes organized
shop committees to put their demands before employers. Occasionally,
they carried this action as far as a strike. Women who had little
previous union experience proved surprisingly militant in these
situations. For example, textile, boot and shoe, and tobacco workers
struck in several Canadian and Maritime centres in the 1880s.
However, such tactics rarely proved successful in the long term
against the growing power and organization of the manufacturers.

In these circumstances, workers experimented with different


types of organizations. Some tried craft unions with little success.
Others searched for totally new alternatives. In Nova Scotia, coal
miners organized the Provincial Workmen's Association (PWA). It
gradually expanded to include several lodges of glass, foundry, and
boot and shoe workers. The PWA managed to win some important
concessions on safety concerns from mine operators. The union also
nominated candidates for local and provincial elections, a practice
rare in Canada before this time. The PWA's workplace organizing and
prominence in provincial politics did secure important adjustments to
mine regulations from the government.

Employee Rights

To get a better picture of what employee rights can be involved


in workplace innovation programs, it is necessary to look first at
extreme situations, and then at some common examples.

In a conservative firm, employees typically have no rights at all -


unless they are members of a union. On the other end of the
spectrum, the employees of a fully- democratized firm have all the
rights traditionally associated with ownership - rights to the net book
value of the firm, rights to profit (and loss), rights to ultimate
decision- making, as well as the basic political rights common to a
democracy (e.g., freedom of speech, due process, etc.). These rights
are specified in a formal constitution which can be changed only by
amendments voted on by all employees. From this perspective, a
critical assessment of any particular program of workplace innovation
requires us to identify first what rights it gives to employees, and
secondly, the extent of these rights.

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What rights and how extensive? Most workplace innovations
involve employees in one or more of the following areas:

Shop floor or workgroup decision-making;


Management decision-making;
Boardroom decision-making;
Distribution of profit, surplus, gain, or cost savings;
Ownership of the firm through equity or stock.

A wide range of employee rights is possible in each one of these five


areas. If we consider the extent of rights in each of these areas as a
dimension running from none to absolute, we can generate a simple
chart:

The typically conservative firm lies on the far left on all of the
dimensions - employees have no explicit rights in any of these areas.
In contrast, the worker cooperatives of Mondragon, Spain - almost
100 firms and 20,000 workers - lie on the far right-hand side, except
for the first dimension. While these firms have only recently begun to
experiment with shop floor and work group decision-making,
employees have well-established rights regarding full ownership of
these firms, distribution of the profits, management decision- making
at several levels, and hiring and firing of management through all
elected boards of directors. Furthermore, the rights of these
employees in all these areas are firmly guaranteed by constitutions
within each firm. For these reasons, the Mondragon cooperatives
currently represent the most advanced example of democratized
workplaces.

But what about the middle ranges of these dimensions? How do


current efforts at workplace innovation fit into this schema? A few
examples may be helpful:

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Shop floor / work group decision-making Undoubtedly the most
popular innovations in this country have been quality circle programs.
Typical quality circle programs are based upon weekly meetings of
shop floor or work group employees and their supervisor. The purpose
of these meetings is to encourage employee problem-solving of quality
issues regarding the group's product or services. Suggestions for
improving quality are developed in the group and then presented to
management for approval and implementation. Within this basic
format, many other aspects of programs can vary, such as the extent
of employee training in problem-solving techniques, the role of the
supervisor in the quality circle, and so on.

While these programs are innovative in that they allow employees to


perform important problem-solving functions previously considered
the sole domain of management, it is important to note that most
programs do not confer any special rights to employees.
Consequently, typical quality circle programs fall on the extreme left-
hand side of this dimension. In some firms, however, quality circle
programs have specific rights associated with them, such as the right
to meet, the right to speedy management responses to suggestions,
the right to consider any topic in group discussions, etc. These rights
are usually spelled out in a formal document of agreement between
managers and the employees. Programs which guarantee specific
rights are located somewhere between the "none" end and the
midpoint of the dimension - these rights allow some employee
influence, but not control. In even more progressive innovations, such
as autonomous (or semiautonomous) work groups, employees may be
given additional rights to hire and fire co-workers and supervisors, the
right to meet for any reason, the right to schedule their own hours
and more. Programs of this sort are clearly located to the right of this
dimension's midpoint - employees lack absolute control of shop floor
or work group decision- making, but still wield considerable influence
over the production process.

Management-level decision-making One popular form of this


innovation is the labor-management committee, which provides an
opportunity for top management and top union officials to meet
regularly to discuss topics of mutual concern other than grievances
and contract issues. Labor-management committees can vary greatly
in terms of the extent of employee rights involved. On one hand, the
role of the committee may be solely advisory; on the other hand, many
firms have given considerable decision-making power to these
committees, especially regarding workplace innovation programs and
long- range planning. These decision-making rights may be extended
as well to lower level labor-management committees in each
department of a firm, creating a "parallel organization" of problem-

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solving committees with local authority. In evaluating labor-
management committees, it is crucial to examine carefully the letter
of agreement between the two parties, with special attention to the
decision- making process. Ideally, labor and management should exert
equal voting power on the committees.

Boardroom decision-making The most common example of this


innovation is the placement of employees on the Board of Directors.
Clearly, a single employee on a board affords only a small degree of
influence. In several European countries, however, federal legislation
requires that a significant number of employees sit on the Board, an
arrangement called co-determination. And in fully- democratized
firms, of course, employee rights to this type of decision-making are
absolute, since the entire Board of Directors are employee
representatives, elected by all the employees on a one-vote, one-
person basis.

Profit/surplus/gain/cost sharing In this country, most programs in


this area have no employee rights associated with them - typically
they are systems of rewards, like commissions, or bonuses whose
level and continuation is solely up to management. One important
exception is the Scanlon Plan, in which savings in labor costs are
regularly distributed to all employees. These plans are quite formal in
terms of specifying employee rights to the surplus, although it is
possible for management to terminate such a plan without
consultation.

Ownership of equity or stock The most popular ownership plan at


present is undoubtedly the Employee Stock Ownership Plan or ESOP,
in which stock in the firm is regularly distributed to all employees,
usually on an annual basis. The motivation for establishing an ESOP is
rarely a management interest in employee-ownership, however.
ESOPs are popular with management because of the considerable tax
breaks they make possible and the promises of increased productivity.
A close look at the rights involved usually reveals that many of these
plans are little more than glorified retirement plans - employees "own"
the stock, but do not really have the right to sell it until retirement
and rarely have any voting rights normally associated with stock
ownership. More progressive ESOPs do exist which correct these
deficiencies by giving employees a greater share of ownership rights.
In wholly employee-owned firms, like the plywood cooperatives of the
Pacific Northwest, employees have absolute rights associated with
ownership. As owners, they "vote their stock," have the right to sell
their share of the firm if they wish, and are also entitled to any profits
generated by the firm.

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Other possibilities Clearly, some programs of workplace innovation
can involve two or more of these dimensions at once. Quality circle
programs often add a profit or gain-sharing component after three or
four years of operation, providing employees a financial share in the
productivity increases that usually result from these programs.
Scanlon Plans for sharing reduced labor costs are usually coupled
with an employee-suggestion mechanism that influences management
level decision-making

Summary and implications Several points should be made about


this brief overview of workplace innovations:

Looking carefully at the extent of employee rights within any


particular program of workplace innovation can provide a no-
nonsense assessment of what, in fact, is being changed. If a program
expects employees to change their roles and responsibilities in
significant ways, but without providing specific rights and ways of
modifying them, then the program is suspect. Managers who are
reluctant to distribute rights as well as responsibilities to employees
are either unwilling or unable to commit themselves to real workplace
change. Their programs may succeed in the short term, but will
usually backfire over the long run.

The willingness of firms to look at workplace innovation in an


evolutionary way is also of paramount importance. Unfortunately, too
many organizations approach workplace innovation in an overly
simplistic way - as simply a static program that will enhance
productivity and employee satisfaction. Period. What they overlook is
that programs of this sort tend to raise employee expectations for
change in the workplace - many employees that are given new
responsibility, will, in time, want even more. At this point in time,
fewer than 50% of the quality circle programs that were started in the
past ten years still exist. While some failures can be chalked up to
poor initial implementation, recent research suggests that programs
which continue successfully have also added other timely innovations
such as profit-sharing. These additions not only rewarded employees
materially for changing their roles, but also served as concrete
demonstrations that management is sincere enough about innovations
to reward people for it. Viewed in this light, even a low-level quality
circle program with minimal rights is fine for starters, provided that
management understands the program as the first step in an ongoing
process. Without management commitment to an evolutionary
perspective, however, such a program is likely to be only a short-term
device for increasing productivity at the employees' expense.

For the progressive firm that wants to develop a longterm, evolving

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plan for workplace innovation, there is no single path. The particular
mix of innovations and their sequencing in time needs to be tailored to
local conditions and to the particular culture of each organization. The
most effective way to ensure the appropriate mix of innovations is to
involve employees or their representatives right from the start in the
decision-making about the process of workplace innovation. While the
results are less predictable than a program solely developed by
management, and the initial planning stage may take longer, a high
degree of employee involvement from the beginning has several
benefits. It guarantees that whatever program is developed has a high
degree of acceptance, and is tailored to the needs and wants of both
management and employees. It serves as an early demonstration of
management's openness and desire for collaboration with employees,
an important step for reducing resistance to change. And lastly,
because employees are involved in the process, the resulting program
of innovation will include important features that management would
have overlooked or ignored, aspects that give employees a real sense
of ownership regarding the whole enterprise.

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