7.7 The Labour Relations Process

Tens of thousands of American firms are unionized, and millions of U.S. workers belong to unions. Historically, the mining, manufacturing, construction, and transportation industries have been significantly unionized, but in recent years, service-based firms, including health care organizations, have been unionized.

labour union, such as the International Brotherhood of Teamsters, is an organization that represents workers in dealing with management over disputes involving wages, hours, and working conditions. The labour relations process that produces a union-management relationship consists of three phases: union organizing, negotiating a labour agreement, and administering the agreement. In phase one, a group of employees within a firm may form a union on their own, or an established union (United Auto Workers, for example) may target an employer and organize many of the firm’s workers into a local labour union. The second phase constitutes collective bargaining, which is the process of negotiating a labour agreement that provides for compensation and working arrangements mutually acceptable to the union and to management. Finally, the third phase of the labour relations process involves the daily administering of the labour agreement. This is done primarily through handling worker grievances and other workforce management problems that require interaction between managers and labour union officials.

The Modern Labor Movement

The basic structure of the modern labour movement consists of three parts: local unions, national and international unions, and union federations. There are approximately 60,000 local unions, 75 national and international unions, and two federations. Union membership has been declining over the past three decades and is now half what it once was. The number of employed union members has declined by 2.9 million since 1983, the first year union statistics were reported. In 1983, union membership was 20.1 percent of workers, with 17.7 million union workers. In 2017, membership declined to 10.7 percent of workers, with 14.8 million members.12

local union is a branch or unit of a national union that represents workers at a specific plant or over a specific geographic area. Local 276 of the United Auto Workers represents assembly employees at the General Motors plant in Arlington, Texas. A local union (in conformance with its national union rules) determines the number of local union officers, procedures for electing officers, the scheduling of local meetings, financial arrangements with the national organization, and the local’s role in negotiating labour agreements.

The three main functions of the local union are collective bargaining, worker relations and membership services, and community and political activities. Collective bargaining takes place every three or four years. Local union officers and shop stewards in the plant oversee labour relations on a day-to-day basis. A shop steward is an elected union official who represents union members to management when workers have complaints. For most union members, his or her primary contact with the union is through union officials at the local level.

A national union can range in size from a few thousand members (Screen Actors Guild) to more than a million members (Teamsters). A national union may have a few to as many as several hundred local unions. The number of national unions has steadily declined since the early twentieth century. Much of this decline has resulted from union mergers. In 1999, for example, the United Papermakers International Union (UPICU) and the Oil, Chemical and Atomic Workers Union (OCAW) agreed to merge under the new name of PACE, or Paper, Allied-Industrial, Chemical and Energy International Union. PACE has about 245,000 members.

Union Organizing

A nonunion employer becomes unionized through an organizing campaign. The campaign is started either from within, by unhappy employees, or from outside, by a union that has picked the employer for an organizing drive. Once workers and the union have made contact, a union organizer tries to convince all the workers to sign authorization cards. These cards prove the worker’s interest in having the union represent them. In most cases, employers resist this card-signing campaign by speaking out against unions in letters, posters, and employee assemblies. However, it is illegal for employers to interfere directly with the card-signing campaign or to coerce employees into not joining the union.

Negotiating Union Contracts through Collective Bargaining

A labour agreement, or union contract, is created through collective bargaining. Typically, both management and union negotiation teams are made up of a few people. One person on each side is the chief spokesperson. Bargaining begins with union and management negotiators setting a list of contract issues that will be discussed. Much of the bargaining over specific details takes place through face-to-face meetings and the exchange of written proposals. Demands, proposals, and counterproposals are exchanged during several rounds of bargaining. The resulting contract must be approved by top management and ratified by the union members. Once both sides approve, the contract is a legally binding agreement that typically covers such issues as union security, management rights, wages, benefits, and job security. The collective bargaining process is shown in Figure 7.9: “The Process of Negotiating Labor Agreements”.

The chart starts with two separate boxes, one labeled employer bargaining preparation, and the other label reads union bargaining preparation. These both flow into a box labeled exchange of initial demands and proposals. This flows into bargaining agenda. This flows into bargaining compromise, concession, and tentative agreement. This branches in two directions. In one direction, it branches to top management approval. This is the end of this branch. In the other direction, it flows into vote of union members. This then flows into 2 directions. In one direction, it branches to ratification, which is the end of this branch. In the other direction, it flows into rejection and strike, which then flows into resumption of bargaining. This is the end of the flow chart.
Figure 7.9: The Process of Negotiating Labor Agreements (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)


  1. Discuss the modern labour movement.
  2. What are the various topics that may be covered during collective bargaining?


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Introduction to Management Copyright © by Kathleen Rodenburg is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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