BUSINESS NEEDED VETOED BILL : TEAM ACT COULD HAVE RAISED PRODUCTIVITY BY REOPENING COMMUNICATION BETWEEN MANAGERS AND WORKERS OUTSIDE OF UNIONS.

Byline: Gary M. Galles

WHEN the Senate, following the lead of the House, passed the Teamwork for Employees and Management or TEAM Act in July, more than 600 chief executive officers sent President Clinton a letter urging him to sign so they could deal more directly with workers over joint concerns.

The act would have re-established the clear legality of nonunion management-worker teams to consider a wide range of workplace issues, including safety, efficiency, benefits and quality control. The act was a response to recent National Labor Relations Board rulings striking down some of the thousands of work teams that began proliferating in the 1980s - for example, Polaroid's Employee Owner Influence Council, which was struck down in June.

When the bill was approved, the Senate Labor and Human Resources Committee chairwoman, Nancy Kassebaum, said the vote recognized the importance of ``harnessing worker ideas and putting them to good use.''

But Clinton vetoed the bill this week, echoing the position and rhetoric of organized labor that it does nothing but create sham unions.

The president's opposition to the TEAM Act ignores the clear efficiency argument in favor of worker-management cooperation, and it ignores the fact that both firms and workers often have valid reasons to oppose forcing such cooperation to go through unions.

The greatest efficiency advantage of worker-management cooperation is that it allows the valuable information that only workers have, whether on a shop floor or in an office cubicle, to be put to its most productive use. The alternative - top-down hierarchical organization - wastes much of this information because there are neither incentives nor mechanisms to convey it to those making decisions.

The proliferation of cooperative teams in the past 15 years - 30,000 firms have created them by one estimate - reflects the immense value of bottom-to-top communication and cross-discipline communication.

Teams also add to efficiency because it is very costly for each employee to monitor whether his or her employer is living up to commitments, particularly when the commitments are complex - for example, pension issues, health care policies, safety conditions and fringe benefits.

Having a specialist monitor such promises can lower the costs, benefiting both employers and employees.

But unions argue that such cooperation infringes on their turf. They also contend that employers don't really care about what workers have to contribute, so worker-management teams are nothing more than a plot to undermine real unions. Unfortunately for their argument, however, efficiencies often disappear or erode under union auspices.

Sharing information and concerns is hindered under union control primarily because unions rely on strike threats for their power. Filtering workplace information through a union hierarchy often slows or stops its transmission, destroying timeliness and value.

Further, an employer in search of a cooperative solution would not want to admit to workers that, say, a particular plant can be a production bottleneck for fear that the information would be used during a strike or work slowdown at the problem plant. Such a strike is more effective precisely because it is more costly to the employer, as with the recent GM brake plant strike.

And unions are openly hostile to any productivity enhancements that might involve layoff possibilities.

On the other end of the bargain, the flexibility and incentives necessary for workers to share more efficient production ideas is hindered by the often rigid and explicit contracts adopted through union negotiations. Absent trust, reliance on specific contractual terms replaces flexible cooperation.

Without adequate flexibility, overly specialized workers discover less useful information that could add to productivity, and employers are hard pressed to take advantage of such information by improving production processes. Attempts to implement such flexibility can trigger a slowdown, where workers do no more than what is explicitly spelled out in their contract.

The union's monitoring of employer promises is also imperfect. This is demonstrated in the long history of union corruption, such as abuse of pension funds for the interests of the union leadership, and the union leaders' limited accountability to the rank and file, as in less-than-open union elections and in the use of dues to support political campaigns that many members oppose. Cooperative teams could monitor both employer and employee commitments better, without so many possibilities for abuse.

When you add unions' artificially inflated wages, achieved by denying others the ability to work for less pay on those jobs, it is clear why many employers and workers would like to cooperate outside union control.

Employers value not only the elimination of artificially inflated wages and union expropriation risks, but also more effective workplace cooperation and flexibility.

Employees, too, value their ability to contribute useful information and put it to use, adding to their productivity and wages. And those excluded from a union or a job value a chance at a better job than they would have under unionization.

It is clear why President Clinton vetoed the TEAM Act. It threatened the multimillion-dollar AFL-CIO election war chest being spent on his behalf this year. And union leadership was rightfully concerned. While the TEAM Act did not undermine union work teams or collective bargaining power, it would have reduced union ability to hold potential cooperative workplace efficiencies hostage to unionization.

But if the Clinton administration truly hoped to create a more productive America, which would have resulted from truly empowered workers, the president would have joined the TEAM.

MEMO: Gary M. Galles is a professor of economics at Pepperdine University in Malibu.

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Photo: Better cross-discipline communication, as between sa les and accounting personnel, can be a great benefit of the management-worker team approach.

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