It’s time for Labor-savvy business leaders
Harvard Business Review says cooperative management/worker strategies make for a better business and a better society.
If companies continue to assume that organized labor destroys value and to reflexively fight all collective-action efforts, as has been happening at Starbucks, Amazon, and elsewhere, they run an enormous—even existential—risk. They may permanently disenchant their workforce and stamp out employees’ investment in their company’s success. They also risk harming their brands: U.S. consumers now consider the treatment of workers to be the most important of environmental, social, and governance issues. Even some shareholders are starting to look positively at organized labor.
Business leaders can choose a different path: They can start working to reinvent corporate America’s relationship with labor so that more people can share in the rewards and companies can compete and grow in new ways. Choosing that path will require leaders to learn how to work with, rather than against, labor. Indeed, in the next 20 years, the skill of leading an organized workforce—or leading as if your workforce is organized, regardless of its union status—may well become the critical leadership skill.
To be sure, the unions’ old playbooks need updating, too. In conversations with labor leaders, we’ve heard that the societal shifts that challenge companies also prompt disruption and soul-searching among traditional labor organizations. Both must evolve.
Leaders have many choices in responding to organizing—choices that respect workers’ rights and result in a stronger company. Options range from voluntarily recognizing the union without requiring a National Labor Relations Board–administered election (an increasingly popular approach), to remaining neutral and leaving your employees to decide whether to organize (as Microsoft recently did), to respectfully communicating why you don’t think organizing is the answer to employee concerns.
Ironically, the labor organizations likely to be most valuable to business will be the strongest ones. Good partnerships require partners with balanced power. Strong unions cultivate deep relationships with workers and are their legitimate, democratically elected representatives. A labor organization capable of deploying a full range of methods—collaborating, yes, but also building coalitions with customers, community leaders, and investors; seeking a role in corporate governance; and, as a last resort, striking—might be exactly the balance of power that will serve business best in the long run.
The holy grail in labor negotiations is a contract that gives workers what they want and strengthens the company. If you see a negotiation as a zero-sum game where any gain for workers costs you, then you’ll miss opportunities to invest in worker success that will benefit the company. There are no cookie-cutter approaches here, so you and the union have to innovate to find shared wins. (And if you’ve built a healthy negotiation process, you’ll find it’s easier to innovate from a place of trust.) Eventually, yes, labor negotiations come down to tough trade-offs. Experiment where you can, and make sure you know your limits.
However strong your company’s culture and communications may be, and whether or not your employees are unionizing or unionized, you can make your firm’s relationship with its workforce even stronger by affording your workers as much direct agency as possible over the issues that matter to them most.
After World War II, the United States experienced a sea change in labor-management relations. Society and the economy had been transformed by the war, and work needed to evolve to reflect the new reality. After years of often-violent struggle, employees at big companies organized and bargained for regular raises, health care, weekends off, retirement plans, and more. In 1950 General Motors and the United Auto Workers negotiated the so-called Treaty of Detroit, which pegged wage increases to increases in the cost of living and the national rate of productivity growth. That effort set a new standard that spread quickly to other companies and ultimately brought a new social contract into being that would govern employment, drive growth, and help workers share in prosperity for decades to follow.
Today, our society and economy have transformed again, encompassing everything from new technology to a tighter labor market, rising worker expectations for a voice in decision-making, increased public demands to hold businesses accountable for treating employees fairly, and even the risks of political extremism that stem from workers’ discontent. Workers are calling for a new social contract. If business leaders stretch to create a new playbook for working with organized labor, we can again set our economy and society up for prosperity for workers and thriving success for companies in the decades to come.
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