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U.S. Department of Labor Futurework
  Trends and Challenges for Work in the 21st Century
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What Do Nonunions Do?
What Should We Do About Them?

Daphne Gottlieb Taras, University of Calgary and Bruce E. Kaufman, Georgia State University
Task Force Working Paper #WP14
Prepared for the May 25-26, 1999, conference
“Symposium on Changing Employment Relations and New Institutions of Representation”

September 1, 1999

Forms, Functions and Effects

Our authors discovered an enormous variety in the forms and functions of nonunion representation plans. There were well over 40 case studies of varying depth incorporated within our volume. Authors grappled with what in practice often were fine distinctions between participation systems (direct employee involvement) versus representation systems (workers indirectly channeling their concerns through employee delegates who interact with management), between on-line (production-related) and off-line (working and employment conditions) topics, and between formal and informal systems. There were differences in the degree of influence, the range of issues, and the membership of various nonunion plans. Distinctions were made between integrative issues such as productivity and quality control, versus distributive or “bread and butter” issues like wages, benefits, and the handling of grievances. There was general agreement among authors that despite the tremendous popularity of employee involvement (EI) scholarship in the past two decades, there has been remarkably little attention given to the capacity of employees to use the EI vehicles at their disposal for representational purposes. Although it is difficult to discern patterns from the remarkable proliferation of nonunion plans’ forms and functions, nevertheless, some findings are quite clear.

1. Penetration rates appear to be 20 percent. One fifth of nonunion employees in both the United States and Canada have formal NERPs at their workplaces (Lipset and Meltz). Just under one fifth of United Kingdom workplaces have consultative nonunion employee representation committees (Gollan, citing the 1990 Workplace Industrial Relations Survey, which shows a decline in nonunion plans over the previous decade). Among all the nations discussed in our research volume, only the United States has laws intended to severely proscribe the full range of NERPs. Nevertheless, the fact is clear: the extent of nonunion representation is similar in comparable countries regardless of the prevailing law.

2. Most forms of representation are employer-promulgated. Despite the distinctions in forms and functions of NERPs listed above, virtually all nonunion representation and participation plans are employer-promulgated and supported. The overwhelming number were established by management, although usually with some employee input.

3. Management retains decision-making authority. NERPs rarely yield permanent or even temporary authority to employees. Any “rights” are almost always delegated by management, which retains the ability to abrogate employee independent authority at any time (Hammer). As the worker representative at Delta put it, “We have power to influence but no authority to make changes” (Cone). In the highly formal, long term Joint Industrial Council plan at Imperial Oil, “The JIC can comment, advise, protest or praise, but it has no direct power to initiate or reverse corporate decisions” (Taras).

4. Union threat fuels nonunion systems. The union threat effect is an important underlying dynamic that should be acknowledged as a source of power which fuels nonunion systems. Despite the frequent complaints by opponents of nonunion representation that these plans confer no power to workers, there are a number of studies which suggest that the union threat effect is an important, though subtle, force. Managers take action to strengthen nonunion systems when they face a viable union organizing threat, thus bestowing privileges to workers. Workers also may exercise a union threat in order to achieve advantages in dealing with management, as Taras found was the case in Canadian NERPs. The union threat effect is a source of employee power, and may be a compelling reason for employers to launch nonunion representation. For example, Lipset and Meltz, and Verma, suggested that the higher the union membership in an industry, the more likely the penetration of nonunion representation plans in that industry. In such situations, we might speculate that the NERPs are more likely to take on representational functions, providing alternatives to unions.

5. NERPs are poorly configured for bargaining. In situations involving distributive issues in which a dispute cannot easily be resolved, NERPs suffer from an inequality of bargaining power that cannot be redressed by any of the characteristics indigenous to nonunion plans. Only a union, or the threat of a union, can break a logjam in favor of worker interests. As Senator Wagner put it in the 1930s, “collective bargaining becomes a sham when the employer sits on both sides of the table...” and a few years later, the Canadian Trades and Labour Congress echoed this view that “we cannot have true collective bargaining between and employer and his shadow.” Further, the nature of bargaining is such that workers are socialized to ensure their issues are linked to corporate interests of the firm (which Taras calls “vertical bargaining”) rather than clustered and traded-off (as they might be in traditional labor-management “horizontal bargaining”).

6. NERPS are well configured for communication and collaboration, particularly in matters involving work processes. The function of giving employees “voice” is a dominant and explicit theme, dating back even to the earliest plans (described by Kaufman, Nelson). However, as Hammer puts it: “If employee involvement programs offer the opportunity for employee voice of a broader scope [than discussing management concerns], it is incidental.”

7. NERPs are nonadversarial. They adopt decision-making techniques that de-emphasize divisions of interests between workers and managers, opting for collaborative and problem-solving styles. For example, votes are rarely taken, and consensus is a desired outcome. Managers tend to share more information and insight with workers in NERPs than they might in unionized settings.

8. NERPs are part of a “high performance” firm-specific philosophy rather than a corporate welfarist response to employment issues or societal ills. Contemporary NERPs are more than merely the erection by some paternalistic firms of modern industrial manors (the metaphor used in Jacoby’s acclaimed 1997 book on welfare capitalism). Some might speculate that the current interest in welfare capitalism may be because of employment insecurities as the welfare state is being cut back. As laudable as this motivation might be, we find little contemporary evidence that firms are taking on a larger societal mission to create a social safety net for their particular workforces. Instead, NERPs seem to be a tactic used by some managers to move to a different strategic human resource management model along “high performance” lines. The rhetoric of NERPs is replete with terms such as worksite voice, win-win solutions, and rational problem solving partnerships between employees and managers to further the goals of the firm. By contrast, there is little discussion of job security, of moral behavior, or of the role of the employer as a private supplier of a welfare safety net relative to the 1920s welfare capital period.

9. NERPs usually are one element within a consistent cluster of progressive human resource practices. NERPs were a signal step in the evolution of management from a commodity model of labor toward a more humane, strategic, and participative model, as Kaufman argues in his research. They form a part of a firm’s larger system of personnel/human resource practices. The notion that human resource practices of the past were fragmented and piecemeal is seriously misleading. NER is part of a progressive vision of employee relations embraced both by early welfare capitalist philosophies and by modern high performance workplaces. Firms became committed to NER because of its value to the development of harmonious relations with workers, and the belief that it has the capacity to deliver tangible benefits to the firm and its workforce (although these benefits appear difficult to quantify). Indeed, even the language of the historic NERPs is remarkably contemporary, dealing with “the essentials of team work” (expressed in 1921) and harmony (see Kaufman 2000). If NERPs’ purposes are to expose and resolve grievances, communicate ideas, fine-tune corporate policies to suit employees, and investigate the relationship between productivity and employment conditions (without necessarily bargaining), then NERPs have unique advantages over traditional unions.

10. NERPs likely have the macro-economic effects of raising and stabilizing wage rates. Because firms which operate nonunion plans are aware of the union threat or are paternalistic, they adjust wages to meet or exceed union wage rates and actually aid immeasurably in facilitating a stable wage contour. It is the less progressive, more tenuously viable firms that tend to attempt downward pressure on wages, and in these conditions NERPs do not endure. As Gibb and Knowlton (1956: 585) properly acknowledge, NERPs tend to “suffocate” by “sheer weight to generosity the force of unionism within the company.” Upward pressure on wages and benefits was a consistent finding in the historic studies as well as contemporary cases.

Another consistent finding is that NERPs preserved compensation premiums, paying members at or above union rates. On the one hand, this can threaten wage standardization policies pursued by national unions; on the other hand, it advances the interests of workers by setting high nonunion wages which unions can bargain to match. NERPs also bring about improvements to benefits programs, which also seep into industry-wide treatment.

11. NERPs are effective in fine-tuning blunt corporate policies (such as benefits instruments). They are better at implementation than initiation. Some authors applaud the substantial gains made by NERPs in creating more sensitivity to workers, and worker delegates speak of their important “watchdog” function (Chiesa and Rhyason). A more cynical view is provided by union leader, Basken: “Nonunion workers simply fine-tune decisions management has already made. Managers use company unions to answer the question ‘How can I make it possible to do what I already intend to do?’”

12. NERP structures rarely encompass more than the workers of a single enterprise. With few exceptions (e.g., Loyal Legion of Loggers and Lumberman described briefly by Kaufman, and attempts by counsel to link plans across an industry outlined in Jacoby), NERPs do not group together across firms or industries. Neither do they respond to issues which require a macro level to resolve, such as pension portability from firm to firm (Sims).

13. NERPs facilitate direct channels of communication between managers and shop-floor workers. Employee representation can improve the efficiency of information collection, processing and dissemination within a complex organizations with multiple levels of authority (Kaufman and Levine). By skipping various layers which naturally filter and distort information, workers and top decision-makers are able to communicate directly with each other. Verma suggests that interest in NER is partially a function of firm size, with larger firms likely able to reap the benefits NERPs offer of more intimate communication that smaller firms naturally enjoy. Basken describes the “insulation” barrier created by hierarchy, that causes managers to minimize to their superiors the true extent of shop floor discontent.

14. NERPs allow employee input into decision-making. Employee representation can counteract the excessive weight given by top managers to the management perspective, and can be an institutional device to ensure that employee perspectives get adequately factored into management decision-making (Kaufman and Levine).

15. NERPs rarely give employees independent resources. Opponents of NERPs argue that they poorly represent employee interests and, in fact, create a false consciousness in which employees perceive they are powerful when they are merely pawns. In 1921 Paul Douglas wrote that company unions neglect to provide vital resources and budgets that could help employees research issues and strengthen their positions. This remains true of the majority of nonunion plans, but there are exceptions (e.g., Delta AirLines and Royal Canadian Mounted Police). The imbalance of economic and information power raises concerns that employees are at a disadvantage, particularly when they lack sophistication and knowledge (Hammer). This is a serious flaw in plans with labor-management dealing over distributive, “bread and butter” issues.

16. NERP selection processes. In formal representation systems, employee representatives or delegates are usually selected either by election or appointment, and for a limited term averaging two years. Employees usually represent other employees, while managers represent the interests of the company. Meetings usually are chaired by management.

17. Mixed results on outcome variables. Given the breadth of forms and functions of NERPs, it is not surprising that the larger empirical studies produce mixed results. Addison, Schnabel and Wagner found in Germany (where works councils are complements to unions) that works councils are associated with higher wages, lower profits, and reduced turnover, but they point out a number of methodological issues that beset these findings. They suggest that small firms “may be well advised to avoid works councils” because the benefits in terms of collective voice may be exceeded by the costs to employers. Morishima and Tsuru demonstrate that in Japan, nonunion plans are more of substitutes for unions than complements. Though Japanese NERPs strengthen employee voice (but not to the same extent as do unions), they produce no effects on employee separation rates or reported satisfaction with employers. Gollan cites a number of studies of the UK and Australia that demonstrate positive effects on employee morale and behavior.

18. Limiting the petty tyrannies of the foreman and reducing the ever-present threat of discharge without recourse to appeal were two victories of NERPs. With a burgeoning individual rights employment law regime, in tandem with protections for unionized workers, most large firms today pay far more attention to training foreman and handling industrial justice at the worksite. It remains the case today, despite these improvements, that employee representation gives workers a direct channel of communication to senior managers in order to report heavy-handed or inequitable treatment by supervisors and foreman. Foreman and first line supervisors are not only vulnerable to being reported, but they are also cut out of the communications loop by a system which bypasses them in favor of more direct communication lines between workers and senior managers.

19. Reprisal. Though workers’ fear of management retribution is still evident in some of the case studies, the degree to which this was a serious concern was tempered by the manner in which employees made their views known to management, and by management style (Boone). Direct systems forced workers to take risks in voicing their own opinions to managers, or remain silent. The “kill the messenger” effect is a problem for any employee representation, despite managers’ attempts to assuage worker fears. Indirect systems of representation lessened the chance of reprisal against employees because messages were channeled through worker representatives whose formal responsibility was to speak on behalf of constituents, (sometimes without attribution when necessary) (Chiesa and Rhyason). But this problem must be put into a context in which a substantial number of American workers are unjustly dismissed for supporting union organizing. Any form of voice, union or nonunion, carries attendant risk.

20. Justice. NER can help firms develop and maintain a sense of fair dealing and equitable treatment among employees (Kaufman and Levine). Many NERPs offer some mechanisms for worksite justice internal to the enterprise, and allow for the disposition of complaints. However, the vast majority of NERPs do not allow workers the opportunity to seek outside counsel or take their grievances to third-party neutrals from outside the firm (although it must be noted that the field of nonunion employer-promulgated arbitration is growing exponentially).

21. No public policy advocacy role. There is no evidence of any significant public policy advocacy role for employees belonging to NERPs (Sims). While unions are active players on the public policy stage, workers who belong to NERPs are to all intents and purposes, invisible. They are not a political force, and they do not provide any sense of worker identity (as do diversity groups, rights and interest groups, and protest groups).

22. Historic advantages. There are a number of features of nonunion plans that were progressive at one time, but are no longer relevant. Early formal nonunion plans shielded union members from discrimination, an important protection which predated labor statutes. For example, only since the 1930s in the US and since 1944 throughout Canada, was discrimination against union members banned as an unfair labor practice. Because statutes now expressly protect union members from discrimination, this aspect of NER has almost irrelevant.

23. More inclusive. NERPs included workers who were not, for various reasons, attractive targets for A. F. L. craft-based organizing, at a time when industrial unionism had not developed. These workers would have been without any form of collective representation but for the advent of NERPs. There is incontrovertible evidence that some large national unions had an inglorious history of discrimination against blacks and women, while NERPs (e.g. at Standard Oil, at Thompson Products, at Swift, in the Bell System) were more inclusive. Since the rise of the C.I.O. and its broader organizing strategy, this is no longer a salient argument for many workers. On the other hand, it remains true, as Commons noted in 1921, that some employers “may be said to be so far ahead of the game that trade unions cannot reach them. Conditions are better, wages are better, security is better, than the unions can actually deliver to their members.” NERPs remain attractive vehicles to some workers who prefer to remain nonunion.

24. Effects on unionization. On the important question of whether NERPs interfere with union organizing prospects over the long term, the record is inconclusive. The Canadian paradox is that nonunion representation coexists with a relatively high level of unionism (34 percent, about two and one-half times greater than the comparable US figure), while in the US, almost the same level of nonunion representation occurs (much of it, allegedly illegal) as in Canada, with no appreciable modern boost to American union density as a result of banning nonunion representation. The evidence is suggestive however, of the following relationship: Where union representation is high, or a union threat is operating, nonunion representation systems are likely more effective for employees than they would be in the absence of unions. “The toothless dog got molars” is how Imperial Oil workers in Canada described the effects of union organizing on their nonunion system. We suspect that managerial attention to representation issues would diminish when coexisting with a weak union movement. Holding constant a cluster of firms dedicated to high involvement human resource practices irrespective of any union threat, it is the marginal employers who in significant numbers might be persuaded to turn their attention towards employee issues when kept alert by the union.

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