Two benefits firms derive from unionized workforces
| Published date | 09 October 2017 |
| Pages | 234-238 |
| DOI | https://doi.org/10.1108/SHR-07-2017-0039 |
| Date | 09 October 2017 |
| Author | Steven Eric Abraham |
| Subject Matter | HR & organizational behaviour,Employee behaviour |
Two benefits firms derive from unionized
workforces
Steven Eric Abraham
Steven Eric Abraham is
Professor at the School of
Business, State University
of New York, Oswego,
New York, USA.
Abstract
Purpose –The purposes of this paper are to discuss why firms are resistant to unionization of their
employees and to discuss the potential benefits firms derive if their employees are unionized. There are
benefits to firms if their employees are unionized, however, and firms whose workforces are unionized
should take advantage of these benefits.
Design/methodology/approach –Analysis and discussion of the drawbacks and benefits of
unionization to firms.
Findings –Firms benefit in two ways if their workforces are unionized. First, unionization reduces
employee turnover. Second, employee involvement programs are generally more effective in unionized
firms, while they are often held to be illegal in nonunion firms. Therefore, managers in unionized firms
should work with the unions representing their employees to further reduce turnover and make
Employee Involvement programs even more effective.
Originality/value –As employees sometimes opt to unionize despite firms’ wishes to the contrary, this
paper discusses the benefits of unionized workforces and advocates that management in unionized
firms develop positive relations with unions to derive these benefits.
Keywords Human Resource Management, Strategy
Paper type Viewpoint
Introduction
When a firm’s employees attempt to unionize, management almost always opposes, and
there are good reasons for this opposition. First, unions and many events associated with
unions reduce firm profits. Second, unions greatly decrease management’s flexibility.
Nevertheless, if an organization’s employees do opt to unionize, there are benefits to the
firm associated with unionization. First, turnover among unionized employees is much less
than it is for their nonunion counterparts, and employee turnover is very costly to firms.
Second, various types of employee involvement (EI) programs are much more successful
and much less likely to be held illegal when they are implemented among employees who
are represented by unions. Therefore, if a firm’s employees are unionized, it is suggested
that management work with the union an attempt to further reduce turnover and make these
programs even more successful.
Reasons organizations oppose unionization
There are two main reasons that firms oppose the unionization efforts of their employees.
First, it has been demonstrated frequently that profits and shareholder wealth (a particular
measure of firm profitability) are lower in firms whose employees are represented by unions
than they are in firms whose employees are not represented by unions. Research also has
shown that union victories in representation elections reduce shareholder wealth (Ruback
and Zimmerman, 1984;Bronars and Deere 1990), strikes by unionized employees reduce
shareholder wealth (Becker and Olson, 1986;Neumann, 1980) and collective bargaining
agreements that are favorable (unfavorable) to employees reduce (increase) shareholder
wealth (Abowd, 1989;Becker, 1987). Because earning profits is a primary goal of most
On another note
PAGE 234 STRATEGIC HR REVIEW VOL. 16 NO. 5 2017, pp. 234-238, © Emerald Publishing Limited, ISSN 1475-4398 DOI 10.1108/SHR-07-2017-0039
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