Labour-management cooperation leads to better firm performance

Here’s a piece of union trivia. What western country ranks the highest in lost time due to strikes between 1991 and 2000? Here’s a hint: It’s a country known for peacekeeping and conciliatory approaches to conflict.

That’s right, it’s Canada. According to the German research institute, IAB, which recently published a study on strike statistics for 17 western countries, Canada lost an average of 189 days of work for every 1,000 workers over a nine year period. The United States ranked 8th with 51 days lost and Switzerland had the lowest days lost at 1.5 days. In a similar study looking at the period between 1960 and 2002 conducted by the International Labour Organization, Canada ranked 34 out of the 38 countries studied for most time lost.

Peacekeeping may be our reputation abroad but at home it looks like we Canadians are warriors in the workplace.

Most of us would agree that peaceful relations in the workplace should be the goal of labour and management. But why should it be the goal? Why is cooperation a more worthy purpose than adversarial relations? Intuitively most of us would answer that getting along improves job satisfaction, commitment, workplace community, and productivity. Would it be a stretch to say that cooperation between labour and management improves the performance of a company, paving the way for the financial success of the company and its employees? According to researchers at the University of London and Simon Fraser University, there is conclusive evidence linking labour/management cooperation to improved firm performance.*

The study, which was conducted among 2,500 unionized bank employees in Australia over 18-months, hypothesized that a cooperative labour relations environment is the result of at least ten management, union, and individual behaviors. Additionally, they hypothesized that cooperative labour relations result in improvements to organizational commitment, union loyalty, productivity, quality of service, and work attendance.
Not surprising, the study found that the three most important elements leading to a cooperative labour relations environment are management’s acceptance of the role of the union in the workplace, the union’s willingness to problem solve with management, and the members’ desire for a non-combative employment situation.
In the figure below, it is interesting to note that a union has the ability to influence the many of the variables listed on the left-side of the diagram, which can lead to cooperative labour relations. The union’s variables are directly within a union’s sphere of influence, and through the consistent application of cooperative principles through steward training, regular membership contacts, and labour-management meetings, unions can influence the management and individual variables, as well.
The authors of the study conclude: “[Union-management collaboration] has important implications for the labor relations strategies of unionized firms. Managers and unions make choices about the nature and conduct of their relationship. They may choose to adopt an adversarial approach or to embark on a program of cooperation. Where the parties seek to collaborate, our research indicates that cooperative labor relations climate is associated with higher levels of performance.”

The message is simple: where the parties presume to work together there is a return on that investment in the form of organizational commitment and union loyalty, which in turn helps the enterprise accomplish its business goals through lower absenteeism, better service, and more productivity. The sooner unions and management accept each other as legitimate participants in the workplace, the sooner we will see larger returns that will benefit the whole enterprise.
* Derry, Stephen J. and Iverson, Roderick D. “Labor-Management Cooperation: Antecedents and Impact on Organizational Performance,” Industrial and Labor Relations Review, Vol. 58, No. 4 (July 2005): 588-609.

Chris Bosch is the Director of the Research and Education Department with the Christian Labour Association of Canada, one of the largest independent unions in Canada with over 50,000 members. He can be reached at [email protected].