The cost of organizing

As the uncertainty of the current economic crisis mounts, union representation may appear more attractive than ever to workers concerned about job security, wages and benefits. The truth of the matter is that unions are targeting companies that are profitable. While many of these companies have had to make changes to remain competitive, they are still in the crosshairs of the unions. However, when they can’t seem to move toward well-run companies, unions will vilify a company that works to maintain profitability by engaging in orchestrated corporate campaigns.

Most employees do not realize how the presence of a union and even its outside activities can negatively affect the company and their job security, especially in today’s competitive and recovering market. The time has come for companies to take proactive steps to protect their company and employees by staying union free. The cost of doing nothing is too great a risk.

Some research, such as work by John E. Dinardo and David Lee at the National Bureau of Economic Research, has led many to believe that increasing wages and benefits have a negligible impact on an organization’s market value. . If this is the case, why did unionization play a major role in the auto industry crisis? United Auto Workers (UAW) still preaches to all who will hear about “The Union Advantage in Wages and Benefits” – that unionized workers receive higher wages and more benefits than non-unionized workers.

A March 2009 study published by the Bureau of Labor Statistics supports these claims. The study found that non-union employers paid an average of $ 19.06 per hour (wages and salaries), while unionized employers in the same industry were required to pay $ 22.76 per hour. Additionally, unionized workers received $ 13.82 per hour in benefits, while nonunion workers received $ 7.33 per hour in benefits. Of course, one could argue that union dues are not accounted for in this study, but does any of that matter if the company, or the entire industry, collapses under pressure?

Why do so many organizations, such as Wal-Mart, FedEx, Citigroup, Associated Builders and Contractors, even the US Chamber of Commerce, take such a strong stance against unionization? In his landmark text, “Unions are not inevitable!” Explained author Lloyd M. Field, referring to several studies conducted in the 5-year period after unionization. The findings, according to Field, were that the newly organized company’s operating costs increased by more than 25 percent of its gross payroll and benefits costs. In his book, Field provides an example of a company with a gross payroll of $ 18 million, for which organizing would result in $ 4.5 million in additional annual operating costs.

Jim Gray, president of Jim Gray Consultants, a firm that specializes in helping business leaders with human resources and business transition issues, found that companies could expect to spend approximately $ 400,000 to more than $ 2,000,000 on a single organizing drive. . These costs include items such as attorney’s fees, travel expenses, employee meetings, video presentations, lost productivity, and other items that are often difficult to quantify but can add up to thousands, even millions, lost.

In terms of annual expenses for an organization with a union presence, Gray estimates that the total incremental operating costs (for a company without unions) range from $ 900,000 for a company with 100 employees to more than $ 4,000,000 for a company with as many like 2000 employees. These amounts do not include salaries and benefits, but do include items such as additional manager training, additional Human Resources support, attorney fees, cost of arbitration and handling of complaints, in addition to negotiations, lost productivity, strike planning, security and Loss of sales. margin, as well as a number of other items.

Extending the investigation to 10 years after unionization, the Employment Policy Foundation (EPF) stated that the output per employee of a unionized company would be 2.4% less than that of a non-union competitor, if that unionized company experienced only one union. 0.25 percent reduction in productivity. Their conclusion was that unless the unionized company could sell its product at a higher price or other cost savings could be achieved, the unionized company is likely to make 14 percent less earnings per hour of work than its competitor. not unionized.

Research by David Lee and Alexandre Mas, which used a methodology similar to Lee’s previous study with DiNardo, found that organizing reduced the market value of an organization by approximately $ 40,500 per worker eligible to vote in a organizing drive.

In his book, “Union Test – Creating Your Successful Union-Free Strategy,” author Peter J. Bergeron notes that the cost of operating a unionized organization is estimated to be 25 to 35 percent higher than that of a union-free organization. unions. This is because unionized organizations generate more human resource staff, more legal advice, greater involvement with regulatory agencies, loss of flexibility, and higher labor costs due to overtime rules, complaint processing and arbitration, and many other requirements. .

With large operating costs and a possible loss of market value, organizations must be diligent in their strategies to avoid unionization. An integral part of any successful union avoidance strategy is communication with employees. As Bergeron noted, “Companies that fear the ‘U word’ are the easiest targets for unions. If your employees don’t know about unions, make sure you are the one providing that information; otherwise, the union will do it for you. , and not in a good way. Employers need to provide useful information. In short, employees need to see current and relevant factual information. They need to know about the things that may affect them, and they need to know that top management really is aware of the challenges those they face on a daily basis. “

The bottom line is that organizing can have a serious impact on the agility and profitability of any business. It is vital that all non-union employers take preventative action now, building relationships with employees so they know how much they are valued, not just for their output, but also for their skills and contributions. Employers should consider their responsibility to educate and inform employees about the reality of union representation. Times are tough; Stay union-free to avoid making them more difficult.