Unions Improve Companies' Efficiency, Researchers Say

Study finds that strong union-like structure enables workers to voice concern and helps increase productivity

TO many US companies, unions spell trouble: more conflict, less cooperation, higher wages, and less profit. So it's bound to cause something of a stir when two university researchers conclude that unions may, in fact, improve a company's efficiency. In certain cases, they even enhance worker-management cooperation.

That's what Maryellen Kelley and Bennett Harrison of Carnegie Mellon University found in a soon-to-be-published survey of more than 1,000 United States metal-working and machinery companies.

The study suggests that branch plants of large metalworking companies, for example, are 31.2 percent more efficient on average when they have a union than when they don't.

Among small companies, the union advantage is 10.1 percent.

"The union model may need reform, but it certainly bears looking at," says Dr. Kelley, associate professor of management and public policy. "If unions can work, surely some form of participative mechanism should be able to work as well."

Yet, the study suggests otherwise. Employee-participation programs didn't increase workers' productivity, job security, or the level of power-sharing with managers.

These are controversial findings. Employee-participation became a buzz word in the 1980s as companies scrambled to find ways to make workers more productive. Everyone understood the concept: Given a greater say in how the workplace was organized, workers would be more motivated to work.

The actual results have been mixed, however. Some researchers have found positive results from employee-participation programs. Others have found as much fluff as substance.

Kelley suggests that a key ingredient for success is the presence of some type of union-like structure that gives workers a strong, formal mechanism to voice concerns and resolve conflicts. German work councils are one example, she says. American unions are another.

While it is true that unions force firms to pay higher wages than nonunion companies, this may well lead these companies to make bigger investments and new technology and, thus, boost productivity, she argues. Higher wages and greater control over the work place also attract highly skilled employees who will be more productive than their nonunion counterparts.

Finally, unions can reduce employee turnover and keep trained workers on the job, she argues.

Privately, many US managers recognize the value of unions, Kelley adds. "I wish some of the people who said those things in private were ready to speak out in public."

Some scholars and labor-management officials doubt these findings.

"I think that's too negative," says James Lincoln, coauthor of a book on new work systems called "Culture, Control and Commitment." His research suggests that employee involvement programs do reduce negative work habits such as absenteeism and high turnover of employees. US auto- makers in particular have successfully implemented employee-involvement programs.

Other experts argue that these organizations are so complex and varied that it's difficult to point to one feature as the key to success or failure. Secondly, measurements are still crude.

"Managers have known intuitively 201> that there's much more going on than what gets measured," says Gib Akin, a University of Virginia professor who consults for union and nonunion companies. "It transcends the question - Is it better? - because no one's exactly sure what 'it' is."

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