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How the Unionization Trend is Changing Workplace Dynamics

How the Unionization Trend is Changing Workplace Dynamics

ALISON BEARD: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Alison Beard.

Across OECD countries from Australia to Germany, Israel to Mexico, union membership has long been on the decline. And a lot of businesses probably welcomed that as good news. Employees who once might have negotiated as a powerful collective could now be managed as individuals. Some workers benefited, others didn’t.

In recent years though, we’ve seen something of a resurgence in the labor movement. As of 2020, the OECD reports that union membership has increased in countries like Ireland, Costa Rica, and the United States. And here in the U.S., stories of scrappy employees who are fighting to unionize their Amazon distribution centers or Starbucks cafes, and actually winning – despite lots of opposition from their corporate employers – are all over the news. So what’s going on? Why do unions seem to be on the rise again?

Thomas Kochan is a professor at the MIT Sloan School of Management who’s long studied work and employment policies. And he’s here to answer some of these questions. Hi Tom.

THOMAS KOCHAN: Hi Alison. Good to be with you.

ALISON BEARD: So anyone who follows business news has heard about these recent union victories at Amazon and Starbucks. But how widespread is the trend? Does it extend to both blue collar and white collar workplaces? Is it mostly the U.S., or many other countries?

THOMAS KOCHAN: Well Alison, there’s no question there’s an upsurge in organizing. And in the United States, it’s broadly distributed across a wide range of service industries in particular. In retail, in the media, obviously in hospitality with Starbucks and other food service organizations. And even then in services like warehousing with Amazon. But it’s not just a U.S. phenomenon. Other countries in some respects are growing in union membership faster than the United States. And we’re currently experiencing a big upsurge in unrest in Europe, particularly in the transportation sectors.

ALISON BEARD: So obviously around the world, there are big disparities in what the OECD calls trade center density. I learned prepping for this podcast that it’s anything from 6% in Estonia to more than 90% in Iceland. But what factors determine how union friendly a country has been historically and might be today?

THOMAS KOCHAN: Well in that respect, actually the United States is pretty much of an outlier. If you talk with executives in Europe as I do very frequently, you often hear them talk about unions as social partners. That they accept as part of their democratic fabric and their culture that workers have a right to organize and they need to respect that right. They need to work with unions. It doesn’t mean that conflict goes away. It doesn’t mean that they embrace all of the demands that unions might put on the table. But they respect the right of workers to be represented.

The United States has a long history of a managerial ideology of go it alone. That management can manage the workforce as individuals, and it doesn’t need what they might call a third-party. That has accelerated in the last 40 years because as unions decline, fewer and fewer companies, and fewer and fewer executives, and fewer HR executives have any experience in working with unions. So their knee-jerk reaction is to resist at all costs with all resources available anytime workers express an interest in unionizing.

ALISON BEARD: But in the past, there were very strong unions in the United States. Why has union membership declined so much, is it because of that resistance by employers?

THOMAS KOCHAN: Employer resistance is a big part of it. And we saw that accelerate in the 1980s and beyond. There were strong pressures on the business community, given the high rate of inflation, and the sluggish growth, and increase in international competition, to become more aggressive in limiting what they saw as some of the restrictive policies of unions. But there are other things as well. Clearly unions have been slow to adapt to the changing workforce. And now we’re seeing that come home to roost because workers are taking action and asking unions to be supportive, but not necessarily being driven by union strategies.

ALISON BEARD: So it’s more ground up organizing now rather than coming from the top down.

THOMAS KOCHAN: Absolutely more ground up organizing. And I think it’s surprised many people. But we have to also understand that the pressures for organizing have been building up over a long period of time. We’ve done national surveys of the workforce prior to the pandemic 2017. We found that there’s a voice gap of considerable magnitude, where a majority of the American workforce today says they don’t have as much say as they believe they ought to have on issues of certainly compensation and job security. But also, what does this company stand for? What are the values and are they living their values? Are we getting respect at the workplace? Do we have means for resolving disputes and conflicts that are fair? What about new technology? Those are the issues that are on the minds of workers today. And they’re saying, “We don’t have enough of a voice.”

And then to top it off, we asked, and this may be a surprise given the decline of unions. “Well, if a union election were held on your job and you had the opportunity to vote yes or no, what would be your answer?” And we saw numbers that were larger than anything we’ve seen in prior decades. Now about half of the non-union workforce say they would join a union if given the opportunity to do so. And some recent numbers that aren’t published yet and are still in process say that percentage has gone way over the majority number now.

So we’re seeing the workforce itself saying all the wage stagnation that we’ve experienced, the increase in inequality. And then the pandemic comes along and it just accelerates all of this frustration. And we see that workers feel they’ve got more power now as the labor market was tightened, and we had all this experience with people leaving their jobs and shortage of workers. So workers are saying, “Now’s the moment. And we’ve been concerned about these issues. We’ve been frustrated about them. Now we’re going to take some action.”

ALISON BEARD: And what variations have you seen across occupations and industry? Both in terms of workplaces where unions manage to sort of continue and stay relatively strong, and then workplaces where there are these new, very strong movements to unionize when those employers really didn’t have to deal with that before.

THOMAS KOCHAN: Let me start in the unionized sector. I spend a lot of time talking with executives that have collective bargaining relationships. And they are extremely concerned with the upsurge in worker unrest at the local level that’s putting pressure not only on them, but on national union leaders. So you saw this in the long strike that John Deere had about a year ago. And two different contracts were rejected by the rank and file that the company and the union leaders had worked out. That was a wake up call for many companies. And since that, more and more HR labor relations executives say, “We’re having those same pressures from our workforce.”

So there’s something going on with the workforce, whether it’s unionized or not unionized, that is saying both to companies and to their unions, “We want a stronger voice. And by God, we have put up with the lack of wage growth, the lack of respect long enough. And you all better help us address those issues.”

But then when you turn to the forms of organizing we’re seen out there, as you indicated, it’s a wide array of different kind of organizing. Yes. Some through traditional unions and the National Labor Relations Act processes for an election. But we’re also seeing worker centers grow. Worker centers are city based or regional based organizations of workers, largely immigrant workers, minority workers looking for help in addressing their individual problems. Whether it’s wage theft. That is, they’re not getting paid the minimum wage or whatever wage they contracted for with their employer.

Or there’s some other forms of discrimination or fear of being retaliated for, for taking action. So these worker centers are addressing those problems and providing legal services. We’ve seen a growth in that. We now have about 246 of those around the country. And the biggest growth has been with immigrants and with Black worker centers.

We’re also seeing more and more organizations coming along that provide services to workers to file petitions with their employer to say, “We want to see changes in different issues.” Or organizations like what was Google now is I guess Alphabet, but the Google workers going out on a one day walk walkout protesting the company’s treatment of executives who have been accused of sexual harassment.

We’re seeing new forms of mobilization. We’re seeing more people organize around gender and racial justice out there. Not necessarily getting a union, but saying, “All right employer, we want to have a voice. And we want to deal with you as a group. And we expect you to respect our rights to have a conversation with you to change practices that we find inappropriate or inconsistent with our values.”

And one final interesting note here. Most of these that we see, these are not people who hate their company, or even dislike their CEO. There’s a distrust that leaving it to top management will get the job done. And they’re saying, “Let’s talk directly with you as a group. Give us an opportunity to play a role in corporate governance in some productive way.” So I think that’s all a healthy development.

The challenge for executives is that they have to recognize that the old playbook of just knee-jerk resistance to all forms of organizing doesn’t play in today’s workforce. So we’ve got to develop a whole new set of leadership skills that have been maybe dormant for a while, at least in the United States, that show that you can work with collective groups. And you can strengthen the organization. You can build positive labor and employee relations in that way that produce higher levels of productivity and better customer service, and engage the ideas of the workforce. We have to give workers the opportunity to express their voice in a powerful way, and to channel that energy but respect their independence.

ALISON BEARD: And what would you say to employers that say, “But we can do all of that without unions”?

THOMAS KOCHAN: It hasn’t worked. Just go out there and talk with your own employees about the forms of voice that they want today. And they will tell you, “Don’t try and lead from the top down. In law firms and other professional companies where there are partnerships, these partners operate as independent and often equal voices. They don’t necessarily always agree, but they know that they are part of an overall entity. And by bringing their collective voices together, they are -stronger and they are more productive. And they learn to respect the differences and to work them through in new ways. And that’s where we need to go as a management community. That’s where we need to go as a society. And why do we need to go that? Because that’s what our workforce expects today, particularly the younger workers who don’t know about the laws of labor management relations, and could care less about what issues they have a legal right to discuss and negotiate, and what issues are of greatest concern to them.

ALISON BEARD: So I’d love to dig into your research on the impact of unionizing, both for workers and organizations. First, how does it affect employees, sort of the pros and the cons?

THOMAS KOCHAN: Well, there’s no question that historically the effects of unions on workers is to increase their wages, and provide better benefits, and provide a security if they are discriminated against or fired illegally. On average, unions increase wages for workers between 5 and 15%. For low wage workers, for women, for minorities, those percentages are greater. So there’s no question historically, that’s been the case. Now that varies by the business cycle and so on, but that’s a large part of what unions do.

But today, you also see another effect. And I’ve been a mediator in cases over the last several years where increasingly the issues that are being discussed are diversity, inclusion, and equity. And how do we provide opportunities for people who have sometimes been marginalized? So we’re seeing the issues in collective bargaining expand as the workforce becomes more diverse and changes.

But, there’s also the issue of does this create more of an adversarial process? Are we destined to have arm’s length labor management relations? Workers don’t want that today anymore than business executives do. They want a positive, high quality, labor management relations that’s built on mutual respect and trust. And the best of labor management relations move in that direction. But if it turns into an adversarial battle, either because the employer doesn’t accept the fact that they are unionized and wants to hold on to the old legal protections, and doctrines, and limits, or the union brings in its traditional forms of negotiating. Then I think workers will get frustrated and say, “This isn’t what we signed up for. We want a better relationship, not more tension at the workplace.”

ALISON BEARD: Yeah. What about the argument that unions are good for sort of mediocre or poorly performing workers, because they help lift everyone up? But for the standout stars, they’re actually bringing you down, not allowing you to excel beyond the pack?

THOMAS KOCHAN: Well, there’s some truth to the fact that too often, unions provide, more of their resources going to help those who are causing more difficulties and are lower performing. And that by the way, is a concern that many professionals raise when the issue of unionizing comes along. They don’t want to be constrained. They want to do a good job. They want to have the autonomy to suggest ideas for how to improve operations. They want to build their own careers. And they don’t want to be encumbered by a bunch of standardized rules. So the challenge in organizing today is to provide protections where appropriate, and for everyone to make sure that they are not discriminated against and that they have a channel of appeal when they are treated unfairly. At the same time, really making sure that we maintain enough autonomy and enough opportunity for the high performers to do their job and to have promotional opportunities.

And this is an area where I think we have to see some change. Seniority has been a strong principle of labor management relations for years, and that came about because there were abuses of hiring one’s family members, and friends, and people of the same ethnic background or race and so on. But we can’t have a situation for example now where people are saying, “Gee, we want the flexibility to work from home where possible, and recognize we’ve got to work out ways to be on site when necessary.” And that can only apply to maybe some people, but not others. We’ve got to find in union management relations, the capacity to manage that variation in practice and variation in ways people work without creating another first class, second class citizenship.

Unions will need to be a bit more agile in working through those issues. And we’re seeing that happen in some cases. I think we have to have to continue to move in that direction.

ALISON BEARD: And in your work, what have you found about how workplaces unionizing affects organizational performance? I know the fear is that maybe you’re creating a better work environment, but you’re hurting the bottom line at the same time.

THOMAS KOCHAN: The evidence is very clear on this. There is no average union effect on firm performance. But you can increase productivity with unions and certainly reduce turnover, which helps to improve productivity and financial performance. If management really engages the union, holds it accountable for not having too many rigid work rules, but works together to solve problems. At the workplace, engaging workers in problem solving teams, and operational improvements, and continuous improvement processes. Investing in the workforce so that they have the skills needed to continue to be competitive, especially as technologies change. But making the appropriate investments in education and training on a continuous basis. And then engaging in modern forms of negotiation.

Not just the old horse trading notion that I come in and say, “I need 20%.” And then you as the employer said, “Well, we’ll only give you two.” And then after months and months of horse trading, we end up I don’t know, 8% or wherever the number takes us. That model is outdated.

But using the tools of what we often call interest-based negotiations. Every modern business school teaches modern tools of negotiations to nearly all of our students. And they’re coming into the workplace as the next generation of executive leaders steeped in how to negotiate effectively, and to work on these issues. So that has to be part of how we do it. If we do those things, the evidence is with high quality labor management relations, we get equal or higher levels of productivity, higher levels of quality. We certainly get higher levels of customer service because we have a more satisfied workforce in the service sector where there’s direct interactions. And we get lower turnover. But if you have traditional adversarial arm’s length relationship, it goes in the other direction. So management can shape the labor management relationship in positive ways if we use the modern tools of leadership, the modern tools of negotiation, and we respect the right of workers to have an independent voice in their enterprise.

ALISON BEARD: So when you talk to leaders or managers who are maybe seeing stirrings of unionization pushes at their organizations, what advice do you give them about how to respond?

THOMAS KOCHAN: First advice is don’t take it personally. It’s not the fact that they’re just upset with you and that it’s a personal failure if workers organize. That’s I think a natural psychological reaction, but it’s the wrong one. We’re seeing this too widespread to view it as just going after failed managers. It’s what workers expect today and what good management needs to provide.

Second thing is get over this silly notion, “Well, it’s just some outside third-party that’s coming in here as a union that’s going to get in the way of my interactions with individual employees.” That’s managerial, anti-union rhetoric that the consultants and the lawyers are spewing to try to suppress unionization. But it doesn’t work anymore. The workers are looking for their own voice, as we’ve said.

So the third piece of advice then is learn how to manage. Ask how you manage collective groups. Shift from union avoidance to how do we build successful employment relationships with a union, or with some other collective group, or whatever is out there? But be more agile in the managerial approaches that we take. And if we do that, then we can help shape a new era of employee and labor management relations that works for all stakeholders in our society, and that we so badly need to model how we can overcome these deep, deep divisions we see in society. In our politics, in our civic interactions in the community, in our race relations, and in our workplaces. So that’s the job of the modern executives, the modern managers is to learn how to manage these kinds of tensions, these kinds of conflicts with respect. And to use them as a healing mechanism in their organizations and in society, but also as a way to build a more productive, resilient, and inclusive and equitable economy.

ALISON BEARD: And if I’m an employee who thinks that my workplace could benefit from a union, what are some factors to consider and first steps to take?

THOMAS KOCHAN: First step is talk to your coworkers. See if they share your view. Often this is not something that people talk about, but that they harbor inside themselves. And then when they start to discuss it with their colleagues, they find that other people have similar kinds of views.

So you have to build some support from your coworkers. And if there are others who share that view, then you begin to turn to the tools that are out there. Maybe it’s first you file a petition. There’s organizations like coworker.org which will help you file a petition with your employer on the issues of concern. Secondly, there are unions out there that will provide support, or you build that more generically among your colleagues, and you use social media, and you use all the tools today to communicate concerns, indicate what issues are of highest priority to people, collect data from each other, and build an organization. Not necessarily a formal organization, but a network.

And communicate these to the employer as soon as you can. So that the employer is on notice that this isn’t some alien third-party that is at work here. It’s your talent. It’s the talent that you need to hold onto today, more than ever, and the talent that you need to attract. So the reputational risks of just suppressing or avoiding dealing with workers in unions I think are pretty pretty profound. That word gets around. And not only do your best people leave, but you’ll have a harder time attracting the workforce that you need to grow the business and make it prosper.

ALISON BEARD: Yeah. So the Amazon story has been really interesting to follow because there were two very high profile union fights. One in Alabama, one in Staten Island, New York. The first was a failure. The organizers lost. The second was a success. They won. So what can we learn from those disparate outcomes about what makes for a successful movement?

THOMAS KOCHAN: There are I think maybe three lessons that I would offer. One is organizing under our National Labor Relations Act procedures is very, very difficult for workers. There are so many hoops that you have to go through, and then a long legal process of deciding who’s eligible to vote, who’s in it, who’s not. And employers have enormous resources to resist, as Amazon is demonstrating. So it’s a very, very difficult process. And I think that’s the number one lesson to take away, that we all as citizens should take away from it, because our labor law has failed.

The second thing is that today’s workforce wants force wants and needs to have cohesion across racial groups, within racial groups for sure, using social networks. Using demographic similarity to build a cohesive organization. But then working across those groups within the organization. So building a network, a dense network of supporters and having them go out through their own social contacts until you have a critical mass is really important.

And then I think the third lesson is that the community, the customers, the investors all have an important role to play. And you’re seeing that happen now. Some investor groups, particularly those that invest in environmental, social justice issues. So-called ESG groups are becoming much more vocal in saying to the business community, “It’s time for you to step up and recognize what is going on, and not just put all your resources into resisting these organizing efforts.” But maybe pay attention to how you build effective labor management relations.

Workers need allies. They need those groups. They particularly need the customers in the service sector to speak out and to ally with them. And to the extent that they can get the investors with them, that’s another source of power.

ALISON BEARD: When a win like that happens, how does it change the relationships on the ground, in practice between employees and managers?

THOMAS KOCHAN: Well first of all, it builds an enormous set of expectations among the workers. There’s a euphoria that, “We won. We got an election. Now we have representation.” So there’s a tremendous excitement. But then, there’s also the challenge of getting a first contract. And that is not a foregone conclusion. About half of new union organizing doesn’t get a first contract because management just shifts its resistance from the election phase into the negotiating phase. So then the challenge is how do you build momentum and how do you build an effective bargaining organization to get that first contract?

And here’s where I think we need a lot of innovation. A number of us do training of business, and labor, and worker representatives on how to use state-of-the-art negotiation techniques to solve problems and to reach agreements among people who have different points of view. And I think we need to accelerate that kind of training and learning not just from us. There are multiple groups around the country and the federal government has a federal mediation service that provides this kind of training. But we’ve got to train a whole new generation of managers, because unions have not been part of their mindset for so long, that they have no experience in how to do this and do this effectively.

ALISON BEARD: So it sounds like you definitely think this unionization trend is going to continue in the U.S. and around the world. Do you think it’s going to accelerate?

THOMAS KOCHAN: Well, I think it’s going to expand and accelerate. Whether it is sustained long enough and reaches a scale that really fundamentally leads to a new era of union growth and labor management relations is yet to be determined. But I think the kinds of things that we have talked about here about how business responds to this upsurge will be a particularly important factor. I spend a lot of time talking with business executives. I spend a lot of time talking with union leaders. I want to bring them together for this dialogue so that we’re getting the multiple stakeholders who need to understand how the world of work is changing, how workforce expectations are accelerating, and how we can respond creatively to the world of work we have today and we’ll have in the future.

So I think we have a lot of work to do in bringing these parties together. There isn’t a history of that in the recent past. But we’ve had periods of time where we’ve been able to bring business and labor leaders together not just at the national level, but within sectors and within companies. And I think we’ve got to enter that phase of the challenge with skill right now.

ALISON BEARD: Wonderful. Well Tom, thank you so much.

THOMAS KOCHAN: Well, thank you Alison. It has been a real pleasure to work with you and talk with you about these issues. And I hope we make some progress.

ALISON BEARD: That’s Thomas Kochan. He’s a professor at the MIT Sloan School of Management.

If you like today’s episode, we have more podcasts to help you manage yourself, your team, and your organization. Find them at hbr.org/podcasts or search HBR in Apple Podcasts, Spotify, or wherever you listen. This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Hannah Bates is our Audio Production Assistant. And Ian Fox is our Audio Product Manager.

Thanks for listening to the HBR IdeaCast. We’ll be back with a new episode on Tuesday. I’m Alison Beard.