Labor Relations

Focusing only on the bottom line is not the best way to improve profitability. That’s the conclusion of recent research conducted by Mary Sully de Luque and Nathan T. Washburn of Thunderbird School of Global Management; David A. Waldman, of Arizona State University West; and Robert J. House, of the University of Pennsylvania, that underscores the risk of single-minded pursuit of profits.

This finding is based on survey data gathered from 520 business organizations in 17 countries designed to test if a CEO’s primary focus on profit maximization resulted in employees developing negative feelings toward the organization. The result? Employees in these companies tend to perceive the CEO as autocratic and focused on the short term, and they report being somewhat less willing to sacrifice for the company. Corporate performance is poorer as a result.

But when the CEO makes it a priority to balance the concerns of customers, employees, and the community while also taking environmental impact into account, employees perceive him or her as visionary and participatory. And they report being more willing to exert extra effort, and corporate results improve.

So does this mean that CEO’s don’t have to worry about profits. No. What it does mean is that if you want a motivated workforce who will support all your goals, including bottom line goals, show them that you have a balanced approach. It also means that taking a balanced, “sustainable” approach is more profitable.

This research also confirms what many progressive companies such as Walmart, P&G, and Dell already know. That is that focusing on sustainability, aka – the triple bottom line, is not only good PR, but is the best strategy to maximize long term bottom line results.

In the supply chain world, turnover is an area that can have a big impact on costs, production, and quality. Many distribution centers live with 33% to 100% turnover per year.

It has been estimated that the recruiting, hiring, orientation and training of warehouse workers can cost $4,000 per worker. If you run a facility that has 200 people and have to replace 60 people every year due to turnover, this will cost your company $240,000. Clearly, retaining trained, dependable employees is a great way to increase the bottom line.

If you have a turn over problem in your supply chain, develop relationships and programs to hire disabled people. Disabled people have many advantages over hiring employees off the street, from the general public.

Most disabled people are hired through a non-profit organization. These organizations will provide special job coaches and training classes that you don’t have to pay for. Many will provide on site supervision as well.

Speaking from first hand experience, disabled people are very reliable. They take great pride in their job and follow direction much better than most employees. Once they are trained, you have a dependable employee for life.

In a recent article, Walgreens said they opened a new DC with 40% disabled workers. This is great for the community and really says something about Walgreens. However, Walgreens will see a big win financially as well. While unemployment for the disabled is over 70%, their turnover rate, once trained and oriented, is much better than the average employee workforce.

It has been proven through numerous studies that over time, productivity for the disabled is equal to that of a “non-disabled” workforce. This is true for quality and safety as well. Disabled employees have better attendance and less workplace issues than other employees. This combined with the support, training, and oversight a company gets from the numerous non-profit organizations makes hiring disabled workers a best practice for supply chain managers.

Bottom line – turnover costs business a lot of money. Every manager wants a dependable workforce that is enjoyable to work with. You can dramatically improve your turnover rate by hiring disabled employees without sacrificing productivity, quality or safety. Oh yea, one more thing, you will feel really good about making a huge difference in a disabled person’s life. Now that is really cool.

According to a recent email sent to their members, Teamsters are asking their members to call their Senators and voice concerns over the “excise taxes” built into the current Health Care Bill being debated by the Senate.  They write:

“It is important that Senators understand the damage that the excise tax provision could have on working Americans. This tax would fall on one-third of Americans in 10 years. The average affected household will pay $7,600 more in taxes between 2013 and 2019, according to a recent analysis of the proposal.

Please call and/or e-mail your Senators and inform them of the burden that the excise tax will put on working families and encourage them to work to have the excise tax provision removed from the final bill. Call 1-877-264-4226 to be connected to your Senators’ offices, or send an e-mail right now.”

It is interesting that they do not mention of $10 Billion bailout of underfunded union pension plans. They are happy to increase the deficit of the country while putting billions in their own pension fund lined pockets.

Recently, big labor has started to target students to develop relationships that can be used later, after they graduate, to organize non-union employers. Unions are targeting student studying to be electricians, nurses, care aides, meat cutters and mechanics.

In an email to organizers the benefits of targeting students were outlined:

Here are a few reasons your organizing department should speak to your future members before they enter the workforce.

1. No fear of retaliation. At school, people are away from the prying eyes of employers. They can learn about the difference your union makes without worrying about job security.

2. Trust building. In a cold campaign, organizers have a short time to build trust. Approaching future members in school starts the slow process of building trust years before you might organize a workplace.

3. Incubate future leads. Collect contact information of students and give them a call after they enter the workforce.

There are two questions that come to mind. First, how will the schools react? There is a danger for schools that get a reputation of producing educated union organizers. Second, will businesses recruit from schools that are being actively and aggressively targeted by unions?

While this seems to be a new agressive tactic, I think it will be short lived and self defeating. Schools recruit students based on their ability to place them in good jobs after they graduate. Schools that get a reputation for producing union organizers will quickly face challenges getting businesses to hire their graduates.

The big question for educational institutions will be how are they going to address union organizers targeting their students.

According to an article appearing Workforce.com, employers are getting hit with lawsuits related to criminal background checks and credit checks. As always, consistency and common sense will keep you out of trouble but the trend is clear. See exerpts from the article by Fay Hansen below:

Explosive growth in the background screening industry during the past decade has generated near-universal adoption of criminal checks and a steady rise in credit checks for all U.S. job candidates.

…this growing reliance on screening is on a collision course with new legislative restrictions, legal challenges and mounting evidence that such results are poor predictors of behavior and performance.

…The EEOC says these exclusionary practices are not job-related or justified by business necessity.

…A spate of EEOC and private lawsuits are pending against other companies for unlawfully denying employment to people with criminal records or bad credit histories.

…EEOC hearings on screening practices in November 2008 included expert testimony that the results are not good predictors of employee behavior or performance. In addition to greater EEOC scrutiny of criminal record screening practices, a growing number of states now prohibit or limit pre-employment arrest inquiries.

One in five U.S. adults now have a criminal record that would show up on a routine pre-employment background check, according to estimates based on Bureau of Justice data.

…HireRight’s 2009 survey results confirm this, with 93 percent of employers reporting that they run criminality checks, up from 85 percent in 2008.

…HireRight surveyed 1,411 employers of all sizes from more than 15 industries. The survey found that 84 percent of employers conduct comprehensive screening before the first day of work; 8 percent screen immediately after the start.

…The HireRight survey found that 42 percent of employers check credit histories, up from 36 percent in 2008, but legislators are increasingly challenging the use of credit checks in pre-employment screening.

Congress is considering a bill that would prevent employers from using credit reports in their hiring or promotion decisions. In June, Hawaii joined Washington state in limiting the use of credit checks in pre-employment screening; bans or restrictions also are under consideration in Michigan, Ohio, Connecticut, Missouri, New York and Texas.

…What is clear is a growing legislative and regulatory backlash against screening practices that are not tied to demonstrable risk and business necessity.

Follow this link to the complete article.

President Barack Obama’s rival for the White House last fall will block the confirmation of one of his nominees for the National Labor Relations Board.

Sen. John McCain, R-Arizona, criticized Craig Becker, Obama’s choice for one of the Democratic slots on the board, at a Wednesday, October 21, meeting of the Senate Health, Education, Labor and Pensions Committee.

Although the panel approved Becker and two other NLRB nominees, 15-8, McCain said that he would place a “hold” on Becker, denying him and the others a vote by the full Senate.

Echoing objections from business organizations, McCain is wary of several articles that Becker has written on labor relations. McCain asserted that Becker, currently the associate general counsel for the AFL-CIO and the Service Employees International Union, would try to circumvent labor law through NLRB rulings.

“This is probably the most controversial nominee that I’ve seen in a long time,” McCain said. “I will, and others will, put a hold on his nomination.”

The NLRB has been operating for nearly two years with only two members—one Republican and one Democrat. At full strength, it has five. With Obama in the White House, the board will have a Democratic majority.

The tenor of Becker’s articles has the business community worried that the NLRB political pendulum will swing more forcefully—this time toward unions—than it normally does when a new president takes office. The NLRB is an independent agency that governs relations between unions and employers.

McCain vented his frustration that Becker had not appeared before the committee. The chairman of the panel, Sen. Tom Harkin, D-Iowa, however, said that typically hearings are conducted only for the NLRB chairman.

“The tradition has been for a long time that we do not have hearings on these nominees,” Harkin said. “At this transition point, I want to continue that tradition.”

The committee reins passed from Sen. Edward Kennedy, D-Massachusetts, to Harkin several weeks ago following Kennedy’s death. Sen. Mike Enzi, R-Wyoming and the ranking Republican on the committee, expressed reservations about Becker but voted with Harkin and the panel Democrats to approve all three NLRB nominees.

Harkin downplayed the need for a hearing, pointing out that Becker had answered 282 written questions from Republicans.

But that didn’t satisfy McCain. “There are a lot of questions about his answers to the questions,” he said.

McCain’s move was welcomed by the U.S. Chamber of Commerce. The organization spearheaded an October 20 letter to the Senate Labor Committee opposing Becker’s nomination that also was signed by the Society for Human Resource Management and the HR Policy Association.

“Many of the positions taken in his writings are well outside the mainstream and would disrupt years of established precedent and the delicate balance in current labor law,” the letter states.

A chamber analysis of a 1993 Becker article for the University of Minnesota Law Review says that he “expresses the view that employers should have no role in union organizing campaigns and union representation elections.”

But worries about Becker go beyond his approach to labor law. Steven Law, chief legal officer and general counsel at the chamber, said there are questions about whether Becker played a role in the vote-buying scandal that drove former Illinois Gov. Rod Blagojevich from office.

Law also said that Becker may have drafted Obama administration executive orders on organized labor while working at the SEIU.

“Senator McCain ensures that there will be a more substantive debate on this nominee than he received in the committee,” Law said. “We’ve got an Act II to play out next.”

An SEIU spokesman referred questions about Becker to the Senate labor committee Democratic staff.

Harkin defended Becker, a Yale Law School graduate and former UCLA law professor. He said that in his answers to committee questions Becker had pledged to “fairly and impartially decide cases based on the relevant facts and established law.”

“I am confident that he will approach his new position objectively and without bias,” Harkin said.

With a bill that would make it easier for workers to form unions stalled in the Senate, many observers say that it is possible for a Democratic-majority NLRB to implement changes that would benefit labor in organizing campaigns.

“They could achieve through decision-making a lot of the facets that the Employee Free Choice Act in its current form proposes,” said John Bowen, a partner at Ford & Harrison in Minneapolis.

But he cautioned that major policy changes made by the board would be ephemeral.

“You’d be flipping back and forth depending on who’s in the White House,” Bowen said.

—Mark Schoeff Jr.

While Washington seems concerned only with “health care reform”, Obama continues to do for the economy what he did for world peace, and unemployment is still too high, there is some good news.

The market is over 10,000 and Apple showed that if you make products that people want to buy, they will. In addition, PNC Business Banking sent out the following which is encouraging:

The Great Recession of 2008 to mid-2009 appeared to end in the summer quarter. The third quarter’s real GDP growth rate was close to 3% annualized, thus putting an end to the longest U.S. recession since the Great Depression. Third quarter GDP was supported by an end to the huge inventory drawdown of the past three quarters, the resumption of the new “normal” production at GM and Chrysler, consumer spending on automobiles motivated by the Cash-for-Clunkers program, and increasing government spending as more fiscal stimulus dollars were engaged.

After pessimism of small and mid-sized business owners rose last Spring to an all-time high in the history of the PNC Economic Outlook survey, owners are now more cautiously optimistic, still waiting for a boost from the federal stimulus program. The new Fall findings support PNC’s forecast that the U.S. economy has started a moderate U-shaped recovery in the latter half of this year that will continue throughout at least 2010. The PNC survey, which began in 2003, gauges the mood and sentiment among small and mid-sized business owners, who represent the bedrock of the American economy.

Now, if Obama and gang can keep from killing us with regulations and taxes (direct or indirect), and focus on job creation, 2010 might be a pretty decent year. As John Lennon would say “Come on Mr. President, give growth a chance.”

How does Wall Street react when the word gets out that a publicly traded company lost a union election?

The National Bureau of Economic Research found an estimated abnormal post-election returns of about negative 10% in companies where unions won certification elections, measured over the two-year period following the union’s victory.

The study analyzed all publicly traded firms that had NLRB union elections between 1961 and 1999. The data-set includes 6,114 elections gleaned from a database of nearly 200,000 certification elections.

The study’s authors analyzed stock market returns for each company for the 24 months prior to the certification election event, and for another 24 months following the election. The pre-election data were used to develop a predictive model for post-election returns for two panels of companies: those in which the union won; and those where the union lost the certification election. The predictive model accurately tracked actual returns in both panels in the 24 months before the election, and is viewed as an excellent predictor of what returns would have been during the next 24 months had an election not occurred.

The study firms’ average returns are quite close to the predicted returns every month leading up to the election, for both the panel of firms where unions were victorious, as well as those where unions ultimately lost.

But at precisely the time of the election, the actual and predicted returns diverge for companies that lost elections. The pace of the value adjustment is slow, but steady and significant over the 24 months following the election.

In contrast, companies that beat the union continued to exhibit positive returns that track closely with the predicted values.
The amount of decline in union victory firms is correlated with the union margin of victory. The largest negative returns were experienced in companies in which unions won their elections by large margins. When unions win with greater than 60% of the vote, the cumulative return is -20 to -30%.

Big labor is finally pushing organizers to use the web to develop issues, recruit sympathetic employees and conduct organizing campaigns. Recently, the Teamsters conducted a workshop to….

“….introduce you (the organizer) to ways you can use your own web site and other free web applications to organize workers or mobilize supporters for both online and offline action”

In addition to teaching organizers about how to leverage social media and email, unions like the Teamsters have taken it one step further and set up a www.teamsteractive.com that they defined as:

“the ultimate tool for Teamster organizations to maintain a professional web presence with up-to-the minute information and powerful membership communication tools.”

Along with the web building tools, the Teamsters provide instructions and down loadable presentations that instruct organizers on how to use the web to identify targets, issues, and sympathetic employees. This is Big Labor’s version of Web 2.0 for union organizers. It challenges organizers to consider:

• What are your goals?
• Who are you trying to reach?
• What actions do you want them to take?
• Who are the “influentials?”
• How will you spread word about the resources on your site?

Who are “influentials?” The Teamsters define them as:

• Water cooler experts
• Read and write Blogs
• Politically active – online or off
• Regularly participate in email actions
• Active online social networkers MySpace, FaceBook, Listservs

Big labor is clearly looking to introduce unions to the younger, more internet savvy generation. Businesses should take note and ensure they are ready to take their campaign tactics to the next level to meet the new threats.

The Department of Labor announced it will hire an additional 250 people to help police employers and ensure they follow labor laws. This was in response to a recent study that showed rampant violations of virtually every labor law imaginable.

While on the surface the study is troubling, it should be noted that, a number of labor organizations and unions including the Teamsters and the SEIU were named advisers to the team of academics who conducted the study. This begs the question “Is this one more way for the Obama Administration to pay back big labor?

The study included surveying over 4,000 hourly workers in LA, Chicago, and New York to determine if their employers followed wage and hour laws. The study found, among other things that:

“Many employment and labor laws are regularly and systematically violated, impacting a significant part of the low-wage labor force in the nation’s largest cities….

…Fully 26 percent of workers in our sample were paid less than the legally required minimum wage ƒƒin the previous work week….

…Over a quarter of our respondents worked more than 40 hours during the previous week. Of ƒƒthose, 76 percent were not paid the legally required overtime rate by their employers….

…ƒƒNearly a quarter of the workers in our sample came in early and/or stayed late after their shift during the previous work week. Of these workers, 70 percent did not receive any pay at all for the work they performed outside of their regular shift….

…The large majority of our respondents (86 percent) worked enough consecutive hours to be ƒƒlegally entitled to at least one meal break during the previous week. Of these workers, more than two-thirds (69 percent) received no break at all, had their break shortened, were interrupted by their employer, or worked during the break—all of which constitute a violation of meal break law….

ƒƒ…We found that when workers complained about their working conditions or tried to organize a union, employers often responded by retaliating against them. Just as important, many workers never made complaints in the first place, often because they feared retaliation by their employer….

…One in five workers in our sample reported that they had made a complaint to their employer or ƒƒattempted to form a union in the last year. Of those, 43 percent experienced one or more forms of illegal retaliation from their employer or supervisor….”

This study will clearly be ammo for unions trying to organize low wage earners. Employers must ensure they obey all the laws and keep in mind that the penalty for not following these regulations could be very costly.