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Environmental factors in labor-management relationships.

Environmental factors in the labor-management relationship In recent years, there has been an explosion of interest in cooperative labor relations. Employee participation programs, gain-sharing programs, and joint union-management committees of various types have all received considerable scrutiny. However, while there has been discussion of the economic circumstances which lead the parties to experiment with such programs, there has been less consideration of the extent to which the collective bargaining environment is itself separately and systematically related to the type of labor relations that emerge.

This is surprising insofar as the influence of economic and organizational factors on labor-management relations was discussed at length by an earlier generation of industrial relations scholars and practitioners. On the basis of numerous case studies, the earlier scholarship concluded that the environment was extremely influential and probably set the limits of union-management cooperation in any particular firm. If the environmental factors are very influential, they may seriously constrain the success of programs to improve labor relations.

This analysis explores the impact of certain environmental variables on the overall labor relations climate of the firm as it is perceived by management. The variables were selected after careful review of the earlier literature. Hypotheses concerning each variable were tested using a multiple regression equation context and cross-sectional data gathered by the author.

Study scope and method

The data used in the study are from an anonymous mail questionnaire sent to a 624-member sample of managers of unionized Wisconsin firms in autumn of 1984. In addition to questions on key firm characteristics, managers were asked to categorize the overall relationship existing between their company and the union representing their employees as (1) exceptionally good, (2) very good, (3) fairly good, (4) neither good nor poor, (5) fairly poor, (6) very poor, or (7) exceptionally poor.

Usable questionnaires were returned by 339 managers. While there is always some self-selection in survey data, more than 50 percent of the managers in the initial sample produced the assessment of their firm's labor relations which is used in this research. Consequently, these data provide a reasonable basis for the test of a number of hypotheses about the impact of the environment on labor relations, at least insofar as the overall union-management climate is perceived accurately by managers.

Because the managerial assessments of the overall union-management relationship were categorical, a simple probit model was adopted in the initial analysis. The coefficients produced by maximum likelihood estimation of such a probit model can be interpreted as measuring the impact of each economic or organizational variable on the probability that the firm will be perceived by the responding manager to have good or better labor management relations. The hypotheses about the important environmental variables were generated from an examination of the earlier literature. Specifically, it was hypothesized that good labor-management relationships are more probable where:

* Companies are of moderate size.

* The union-management relationship is of longer duration.

* The company is located in a metropolitan area.

* There have not been major changes in production technology, skill requirements, or product produced in the 4 years prior to the survey.

* The economic position of the firm is secure as indicated by the trend in company profits over the 1980-84 period.

* Industry bargaining patterns are stable, that is, there has been no major change in the bargaining pattern in the industry in the prior 4 years.

* Management is stable and secure as indicated by the absence of a major change in company management or ownership in the preceding 4 years.

* The local union is stable and secure, as measured on two variables: 1) no major change in local union officers had occurred in the past 4 years, and 2) there had been no other organizational instability on the union side, including internal political turmoil in the union, a recent unsuccessful decertification attempt, or an unsuccessful attempt to change the union representing employees.

Along with the above hypotheses, an additional contemporary factor was examined: management's strategy in recent collective bargaining negotiations. The hypothesis was that concession demands can be a source of disruption in overall union-management relationships. Two variables were entered to gauge the effects when management had sought 1) major concessions with regard to wages, health benefits, COLA clauses, or work rules in the most recent negotiations, or 2) minor concessions in these same items.

Results of the estimation

While several of the hypotheses were substantiated by the estimated probit equations, others failed to receive support at conventional levels of significance. As predicted, organizations moderate to large in size were more likely to have good labor relations than either small or very large firms. The probability of good relations increased up to unit sizes of between 1,700 to 1,900 employees and decreased thereafter.

Moreover, good relationships were significantly less likely if the union involved had represented employees for less than 4 years. New labor-management relationships were less smooth, as expected. However, relationships that had lasted more than 20 years were neither better nor worse than moderately old (4- to 20-year) relationships. The estimates also indicate that firms located in the urban area of Milwaukee had better labor-management relations than firms located in the smaller cities and towns of Wisconsin. It would be interesting to learn if this is also the case in other States.

On the other hand, most of the variables measuring recent economic and organizational stresses on the union-management relationship failed to be significantly related to the probability that a good union-management relationship was present. As anticipated, major changes in industry bargaining patterns, company ownership, or management, and turnover of local union officials carried negative coefficients, but these coefficients were not significant. Only other organizational instability in the union, a variable measuring internal political turmoil or union insecurity in the collective bargaining relationship itself, carried a significant coefficient. Thus, this study does provide support for the view that union leaders must be secure if they are to pursue cooperative labor relations. Either political strife within the union or an insecure relationship with management can lessen the probability of good relations.

Finally, changing technology, skill requirements, or product, and major decreases in company profits actually had positive, albeit insignificant, impacts on labor relations. Similar positive results were also obtained for the variables measuring increases in foreign and domestic competition, contrary to the hypotheses. It appears that economic pressure on the firm can be accompanied by either good or poor union-management relations; the point estimates from this study were all in accord with the view that relations are better in companies under more economic pressure, on average, but the insignificance of the coefficients indicated that this is not a reliable conclusion.

It is also interesting to note, given the recent increase in concession bargaining, that management demands for concessions did not necessarily worsen overall relations; the coefficients on both variables designed to test the hypothesis were negative but insignificant.
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
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Title Annotation:conference paper, Industrial Relations Research Association
Author:Voos, Paula B.
Publication:Monthly Labor Review
Date:Apr 1, 1986
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