Managing without Unions

1.A Sense of Caring

First and perhaps foremost, many of the founders of the nonunion companies in my sample held fiercely egalitarian views about treatment of employees. Today, many of the customary symbols of corporate rank and status are absent. In many of the companies, everyone from vice president to sweeper has access to the same parking spaces, receives identical medical benefits, and eats in the same cafeteria. Frequently, executive offices are Spartan or even nonexistent. Employees at all levels call each other by their first names.

2. Carefully Considered Surroundings

Several situational factors are also important both in fostering an effective personnel program and in encouraging a climate of trust and confidence. These factors include, among others, plant location and size and the handling of “sensitive work” and particular employee groups.

Determining location & size. The companies I studied consider carefully effects on employees and the chances of remaining nonunion when they select sites for new plants. Among the criteria used by one company are the quality of the public schools and the proximity to a university—as well as the area’s attitude toward unions.

3. High Profits, Fast Growth, & Family Ties

Certain financial and ownership characteristics seem to have an important bearing on personnel policies. Most of the companies studied are profitable—some, extremely so. Many are high technology growth businesses, have dominant market positions, and are leaders in their industries. Growth enables them to offer many promotion opportunities, provide full employment, and make profit sharing pay off.

Another important company characteristic is close ties between ownership and management. Two of the companies in my sample are privately owned, and members of the founding family are still active in management. In several of the public companies, a significant percentage of the stock is owned by one or more families, whose members remain active in top management. Thus, management is pushed to endorse the ideals of the founders and owners.

4. Employment Security

Many of these companies attempt to minimize workers’ usual nagging uncertainty regarding future employment. Several of the companies use various techniques to ensure full or nearly full employment.

During its early years, for example, Hewlett-Packard rejected large government contracts that would have created huge fluctuations in work load, forcing the company often to lay off and then rehire people. Moreover, during the 1970 recession, Hewlett-Packard cut everyone’s pay and work time 10% for a six-month period rather than lay anybody off. The pay cut applied to everyone, from chairman of the board to assembly-line worker, as did the practice of not working every other Friday.

5. Promotion from Within

A policy of promoting from within—accompanied by training, education, career counseling, and (frequently) job posting—is most attractive when a company’s growth rate opens up many advancement opportunities. When computerized operations were expanded at one company, it chose to train current employees to be programmers instead of hiring qualified applicants. The training opportunities were simply posted, and interested employees who bid and passed the aptitude tests were trained to be computer programmers on company time and at company expense.

Like employment security, such efforts go a long way in building employee loyalty. Indeed, two-thirds of the companies in my sample have institutionalized the principle of promotion from within by routinely posting job openings. Some companies even provide plant workers extensive training and education so they can move into white-collar positions.

6. Influential Personnel Departments

Not only are the personnel departments of the companies studied usually extremely centralized, they also have access to and in many cases are part of top management. More than half of the personnel vice presidents I interviewed report directly to the presidents of their companies. At a few of these companies, the head of personnel is a member of the board of directors.

The personnel departments of the companies studied are well staffed. Many have at least one professional person per 100 employees. Many also devote much attention to training and encouraging personnel people. At one predominantly nonunion company, trainees in employee relations get experience in a union plant, a nonunion plant, and finally in a corporate staff assignment. One company employs a staff person whose sole function is to help plan the career paths of the company’s personnel people.

7. Competitive Pay & Benefits

As might be expected, the 26 companies in my sample work hard to ensure that employees perceive their pay and benefits policies as equitable. All of them, therefore, compensate their employees at least as well as their unionized competitors do. The companies studied thus pay well by both industry and community standards. The nonunion companies watch carefully the union settlements of competitors.

Also, the nonunion businesses make careful and thorough attempts to communicate with workers about their pay increases and benefit improvements. Few of the companies studied will likely ever be vulnerable to a union drive on the basis of either benefits or pay.

8. Managements that Listen

The companies studied use a variety of mechanisms to learn employees’ views on various matters. Attitude surveys “take the temperature” of the organization and expose developing employee concerns. Some companies regularly conduct “sensing sessions,” or random interviews to understand employees’ sentiments.

A number of these companies exclude supervisors from the upward communication process, so employees feel freer to speak out. For example, one company keeps its local managers out of its annual benefits presentations, which include a suggestion, complaint, and discussion session.

9. Careful Grooming of Managers

Managers in these companies know that effective management of people is an important part of their jobs. Many of the companies studied avoid bonuses that reward short-term performance. Instead, they emphasize long-term results, including successful employee relations. They use stock options or other incentives associated with longer-term company success.

Thus, the selection of managers is a carefully considered procedure. Some nonunion companies use a series of panel interviews to evaluate potential managers instead of the traditional process whereby the boss picks his or her favorite for a promotion. Other companies send managerial candidates to “assessment centers” for a series of rigorous and imaginative tests that assess their ability to identify priorities and subdue crises in the managerial ranks.