By Dr. Gary L. Deel, Ph.D., J.D.
Faculty Director, School of Business, American Public University
(Note: This article contains content adapted from lesson material written for APUS classes.)
This is the seventh article in a 10-part series on the dynamics of union and employer relations in the United States.
In the previous part, we looked at the wage-and-benefit issue and ancillary issues that are commonly negotiated in union contracts. Now, we’ll explore workplace interventions that disrupt the traditional union negotiating environment.
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For the viability or continued growth of an organization, it may be necessary from time to time to revise workplace policies and reallocate resources to improve efficiency and productivity. At the same time, unionized organizations will be looking to maintain or improve working conditions, compensation, and other employment variables. As a result of these situations, a variety of workplace intervention methods can be neatly split into two categories: gainsharing and non-gainsharing.
Gainsharing Plans in Union Negotiations
These plans usually change the compensation structure so employees can expect increases in pay commensurate with increases in efficiency, productivity or other targeted goals. Below is a brief summary of three different types of common gainsharing plans and their details.
The Scanlon Plan is a committee effort among the employees, the union and management for an appropriate pay out of monetary bonuses based on business metrics. Bonuses under the Scanlon Plan are typically paid monthly and are calculated in terms of performance, by dividing sales by payroll to quantify production per labor hour.
The Rucker Plan is similar to the Scanlon Plan in that payout to employees is monthly. However, a major difference is that additional compensation is calculated by dividing payroll of the bargaining unit by the total production value of the team, which might include sales, supplies, materials and services.
Improshare is the third type of standardized gainsharing plan. Unlike its monthly paying counterparts, an Improshare plan typically pays weekly. The calculation for the Improshare plan payout is to take the product of an engineered standard and the base production factor and divide them by the total hours worked within the labor unit. This is another way of establishing productivity metrics.
Non-Gainsharing Plans in Union Negotiations
On the other side of workplace intervention strategies are non-gainsharing plans. Non-gainsharing plans do not tie changes in productivity or efficiency to monetary pay structures, but they may change other types of reward structures for employees. Depending on the nature of employee concerns within the work environment, non-gainsharing plans may actually be more appealing than gain-sharing plans. Below is a summary of three different types of non-gainsharing approaches.
One type of non-gainsharing approach is called a labor-management committee. These committees form a collaborative effort among unions, employees, and management to address employment concerns and improve the working conditions of employees. Generally, they look at a company’s savings gained through these efforts and compare them with the improvements retained.
A second non-gainsharing approach is called an employee involvement program. These programs focus on improving the work climate, generating commitment and implementing change. These initiatives measure success in much the same way that labor-management committees do, but usually a greater management style change, such as democratic or laissez-faire approaches to leadership, is necessary to successfully implement these programs.
A third type of non-gainsharing work intervention is called a self-managed work team. As the name implies, self-managed work teams eliminate the need for constant formal oversight from management; they allow teams to self-govern as they complete their daily duties. Obviously, these self-managed work teams require some of the most drastic management style changes. However, this can be a very effective way to balance employer goals with employee/union concerns, provided that the teams are mature enough to self-manage.
In the next part of this series, we’ll discuss how modern workplace transformation through flexible scheduling is altering union-employer dynamics.
About the Author
Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a J.D. in Law and a Ph.D. in Hospitality/Business Management. Gary teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University and others.