Tom Zigray - The Alignment Group: The impact of unionization on business execution

Steve

Hi, this is Steve Hunt with Business Execution Radio. This week we spoke with Tom Zigray, who's a Labor Relations Strategist with The Alignment Group, and Tom talked about the role of unionization and the impact it has on execution. Basically, he said that one of the challenges is that, when companies are trying to execute, if they don't do a good job communicating why they're doing what they're doing, and really letting people know in advance why the organization makes decisions the way it wants and why it's beneficial to be a non-union organization, then the companies put themselves at threat to become unionized, because employees don't understand how decisions are made, they don't feel like they've been treated with respect or been involved in the decision-making process, and suddenly a company can become unionized, and he said, the big thing that comes out of unionization is it slows an organization down, it makes it less nimble, because you have a lot more formal contracts and things as far as implementing changes.

The other thing he pointed out is this is becoming a very major issue, because there's some legislation that is pending, that if it goes through, and it probably will, unions are going to be much more nimble in their ability to execute on unionization, he said it's going to take the average union drive (and I'm not sure if I've got the terms exactly right here, but that's why you should listen to Tom), I think he said 45 days down to like two weeks, so suddenly union drives are going to happen much much faster, and if companies have not planned in advance for this, they could suddenly find themselves hampered in something that really is going to slow them down in general, if the unionization does occur. So let's listen to Tom Zigray, a Labor Relations Strategist with The Alignment Group.

Hi, this is Steve Hunt with Business Execution Radio. Today we're talking with Tom Zigray, who's a Labor Relations Strategist with The Alignment Group. Tom, welcome to the show.

Tom

Thanks very much, Steve.

Steve

So Tom, can you tell us a little bit about what you do at The Alignment Group?

Tom

Yes, our organization really supports companies in terms of being pro-active as far as labor relations are concerned. The country is going through a change with the new administration, and we're going to see some new rules and regulations and laws as it pertains to union organizing. We're very likely to see some changes in the length of time it takes for a union to follow petition to when they have an election, it will be shortened, and that will mean companies are really going to have to do a better job at being pro-active at what they do, because unions are going to have a great advantage when this change occurs.

Steve

Well definitely, that relation, at Business Execution Radio our focus is those two things, we talk about leadership is one, thinking about what you need to get people to do, and the second part is getting people to do it, and certainly being union versus non-union is going to have major implications on how a company, and indeed whether a company, is able to execute certain types of strategies. Can you talk a little bit about how does being an union organization affect the company's ability to execute? - I mean, I'm personally a believer, I think unions aren't necessarily a bad thing, they've certainly historically played an important role in society, but I'm curious in your work with that - what are the implications of becoming a union shop, in terms of a company's ability to execute?

Tom

Well, they are significant, there is a book called "What Unions Do", which is a 20 year longitudinal study which came out a few years ago, which really took a look at that over a period of time, and it is significant as far as the business is concerned, from an investment perspective, whether or not people or the company is going to be able to do something with automation, all types of costs, so even if there is not a contract, there are costs associated with that, and in addition to those costs, it is the loss of flexibility that a business has, if they were to enter into a contract with the union, that is significant as far as the business flexibility and being able to do what you need to do in an environment which is changing almost on a daily basis.

Steve

So it really slows companies down, it makes them more bureaucratic, if you will, because now everything has to go through formal contract negotiations as opposed to just asking people to do something and have them do it.

Tom

That is the flexibility part of it, the other part of it which is a concern when you look at what unions have done over this 20 year period, the cost and the investment and the ability to compete with non-union employers becomes significant, and again that really doesn't have anything to do with the contract, that's simply something a union can do in slowing down the company's profitability, it's a real concern.

Steve

So I think most business leaders agree that, in general, it's better to not be union that to be union? - but I've always believed that companies that go union go union for a reason - is that true, and if so, what are the reasons that companies tend to become unionized?

Tom

Well, I think it is true in a sense in that, if a union shows up and wins an election, and even if a union shows up and doesn't win an election, I think each company has to take a look at themselves, and say, "Well, where are we? - there's a certain level of dysfunction within the organization, people don't do this because they think it's an interesting thing to do, or a fun thing to do", this turns out to be very serious for the organization, and for the employees involved. So companies really have to look at it and say, "Where are we off - what is it that's happening within the organization that caused this level of dysfunction, what is it and what can we do about it?"

There are three basic things that I think surveys have shown, both in North America and Europe, that employees say that they want, and they've said this over and over again, and those three things are: employees want respect, they want to be treated fairly, so there's a fairness piece of this, and they want honesty from the leadership of the organization.

I was in a meeting at the University of Michigan a while ago, where a former head of the United Autoworkers, Doug Fraser, talked to a group of leadership, and said, "Look, you guys never got it, and here's the message - if you treated your employees with respect, there would be no unions". Clearly unions believe that one of the things that is of great benefit to them is if the employees in the organization don't feel respected, so this idea where employees have input into surveys, that we want respect, fairness and honesty, should be looked at - those are three key factors. The other factor is, I think which is key, is communications within the organization, that is, how the front line managers and how the leadership of the organization communicates with their employees, that plays a lot into it, I mean what you tend not to hear, I mean the issues which revolve around pay and benefits tend not to be the key issues around a union organizing drive; most companies in the United States are really looking at what it takes to attract and retain people with or without a union, you are going to have to pay good wages and good benefits and provide a good working environment, if you're going to attract the type of people that you want in your organization to be successful. You don't need a union to do that, and you shouldn't need a union to treat people with respect and dignity within an organization as well, so those are they key factors.

Steve

OK, so I think that, the respect, fairness and honesty, communication obviously is a key part of that - if you get into that, if you walk into a company, what's the difference in terms of, assuming that, OK there's respect, but people are saying, insulting their employers? - I think that's extreme example; I'd rather say, when you look at a company, in terms of within the bounds of decent, polite behavior, what's the difference between a company that respects people versus doesn't respect people? How does their management practices look different? Because I'm sure you've seen both.

Tom

Yeah, I think it is a good question, and there's often not a lot of clarity to it, we do a lot of training sessions around the country, and we spend a lot of time talking about, what does it take to show the employees of an organization respect? I mean, how does that come across? What's interesting about this question is that there is no contract in North America or Europe where a union has negotiated: "You will be treated with respect as a result of having a union here" - that is really up to the leadership of the organization. It tends to come up as an example, I don't think employers want to go down this route, but it may be that, let's say the leadership of the organization is focused on the financials of the organization, and if they don't fix the financials, the business may not survive. In a case where an organization is focused on that, the communication with the employees may decline, the focus may be taken off the employees for a period of time, for whatever reason, financial is one of those things that tends to happen, and I think it's a matter of pulling it back, I think employers, companies really want to do the right things, but sometimes the focus is taken off that, unions try and take advantage of that. But it also has to do, I think, with the training of the front line leadership of the organization, sometimes they are just thrown in, they come out of the ranks of the organization, they really don't have the proper training to be able to execute on things like respect and communication, and that sometimes can be a key factor.

Steve

I think both of those things, and certainly that is true in the experiences I have had, I think, to start on the communication, one of the things that somebody told me is, look - when you make a decision as a leader, people are going to interpret it somehow, when you decide to do something, if you communicate a goal, people are going to read something into it, so you'd better manage that communication, otherwise they may read something into it that you'd never intended them to do, and that's probably the same thing with managers too, and managers give feedback, or make some suggestion. There's different ways people can interpret that, and you shouldn't leave it to chance - is that what you see as the difference between the companies that are really good at avoiding unionization versus the ones that are always at risk, it really comes down to not what they do, but how they communicate why they're doing it?

Tom

Well, I think as an example, I think that's right, I think as an example most companies right now are going through a tremendous amount of change within the organization, so a big differentiator I think, as far as companies is concerned, is how well that change is managed - how one involves the front line employees of the organization. I think the better companies are going to have processes which tend to involve the employees, the front line employees within the organization, and I think manage the change, I mean it becomes difficult to be able to communicate everything which is changing within the organization, because decisions generally aren't made at a point in time where you're ready to communicate them, but if you involve the employees in the change process, and tell employees how you're going to go through this change management process, and how it's going to be communicated, I think those employers tend to be on the leading edge as far as what employees feel about that particular organization.

Steve

Would you be able to compare, sort of contrast, two different companies that you've worked with to sort of make this as tangible as possible in terms of, maybe organizations ideally in the same industry, or maybe not, but saying, here's one - they both went through the same economic changes, but here's one that did it the right way, and came out with a stronger, more engaged, non-union workforce, and here's another one that did it the wrong way, and either weren't unionized or was almost unionized. Could you sort of compare two, and say how they handled that? - maybe with some actual examples?

Tom

Yes, I think we have one particular client we're working with for probably about the last two year period, it goes back a little bit more than that, but when we began working with them, they had literally no idea of how to communicate relative to their front line leadership and front line employees, or what the front line leadership, what the company wanted to do as far as a union-free philosophy was concerned. They didn't even think they were allowed to communicate about unions, and so you're at a disadvantage if you think you can't communicate anything, it's your company, you're hiring the people, you're paying the people, you have not only a right to communicate, but a responsibility to communicate on what's going on. So we helped them design a program where we were able to train the front line leadership, work with them, put together a union-free philosophy for the company, communicate that through a very large organization which is very much spread out, and continue to train them, so that at this point in time, this particular organization is probably on the leading edge of any company in the United States relative to maintaining its union-free status, and it is in an industry which is going to be targeted when we see these rules and regulations changing, and that's going to come down relatively quickly.

Contrast that with a company who is facing the same type of challenges, the industry is facing the same type of challenges, but makes a decision of, look - we don't have time for that, we have to be focused on the financials of the business, and maintaining our occupancy, so we are going to hope that we don't get involved in this, and doing nothing is really what is going to be a big problem, as we come up within the next several months, because of the changes that are taking place, and I'll just speak very briefly to that - right now, the average time it takes from when a union files a petition, to when the National Labor Relations, to the time that there's election in the United States, is 41 days. There is a process which the National Labor Relations Board will be looking at in the next couple of months that's going to change that to a 14 day period, that is what unions are looking for, that's what they want. If they get that, companies that are not pro-active are going to have a very difficult time trying to run a campaign where they remain union-free in their organization in a two week period of time, that's extremely difficult.

So the message here is, be pro-active, take a look at where you are, make some decisions, and make some plans about what you want to do within your own organization before these changes take place.

Steve

So it's really like saying, don't wait to begin campaigning about the virtues of being union-free until the union drive starts, because you won't have time to react?

Tom

Actually, that's correct, and you could take a look at where you are now, what you think the concerns are now, what the issues are now, and there's an easier way to do that, we help organizations with that all the time, and you could then make some decisions without the pressure of the union in a couple of week campaign, so the idea is, get it front of this, you don't want to be playing from behind on this issue.

Steve

So you'd mentioned this importance of communication, this one company has done this - what actually are some of the things they communicate? - when you get to the front line manager, what is it a front line manager would say to their employee that's going to avoid this unionization threat that another front line manager might not say? What are some of the things that you train them to do?

Tom

Well, one of the things that the front line leadership should be aware of, and each company should have this, is what is your philosophy relative to remaining union-free? The company that we are working with, and I spoke about earlier, as an example, incorporated that into their orientation program, there's a DVD that goes along with this, it talks about the union-free philosophy, and why the company believes it is important to remain union-free, its managers are trained to go out and talk to employees about, "Hey, I've gone to these meetings, I've received information, I want to share this with you, I want to be open about this" - the idea is to demystify what the union organizer does, the organizer's position is, "Look, we don't want management to be aware of this, because they're going to come back and they're going to lie to you" - well, we want to get ahead of that before a union shows up, and have people understand, here's what unions are trying to do, they're dying, they only represent about seven and a half percent of private industry workforce in the United States, they need to get that number up, this is a business decision from a union perspective, and they're in it for what they believe is good for the union, not in what is good for any particular company. They simply try and take advantage of any level of dysfunction within an organization, when most companies, I would say 98% of them are going to be able to easily resolve those issues internally by refocusing on the employee issues.

Steve

So it's really about making sure that managers are building trust with employees before they have to start defending that trust?

Tom

I think that's a big part of it, but front line managers are not able to do that unless we give them the tools and the support they need to go through that process, I mean we don't expect that this is the front line manager's job, but they should expect some support and help that they're not going to be in this alone when we have a union attacking a particular organization. Again, I think a good way to look at this is, you want to be able to play from ahead, and not from behind.

Steve

I think that's a good way of thinking about it. Now, you did mention that certain industries are going to be targeted - what are the industries that really should be thinking about this right now?

Tom

Well, I think every industry is going to be open, because the legislation or the administrative changes that unions want are going to be significant; however I think the organizations which are going to be most targeted are organizations, and I'll say it this way, that logistically can't move. We all know that there have been changes in the economy, we have a world economy organizations could look at, if they didn't feel that they could operate competitively in the United States, moving outside the United States in order to meet competitive challenges. There are a number of organizations which are going to be unable to do that, like healthcare, like hospitality, organizations which never had a threat before, like the insurance industries, administrative, call centers - those types of places, I think, unions are going to target, and I would expect significant activity there. Also industries which are, from a wage perspective, from a competitive wage standard, are generally lower than other industries, and from a front line perspective of the employees within the organization, I would think you would see that healthcare and hospitality and service industries are probably going to fall more in line with that, so they are more likely to be targets than others, but these changes are going to open up opportunities in all industries, and we're not quite clear on how unions are going to go about this at this point, but certainly the lower wage industries are likely to be more targeted.

Steve

That's interesting, I think it's coming up to the end of our show, I think a couple of things: you said, one, this risk is becoming much more real, and it's going to happen a lot faster, but a couple of things I think that were interesting and you were commenting on is that companies go union often because companies will make decisions very quickly, they won't communicate these decisions well, they'll get it misinterpreted or whatever, so the companies can go union, and as soon as they go union, you can't make decisions fast any more, at least you can't execute on them, so often it sounds like, in companies' desire to be quick, because they have to respond to financial pressure, they do the very things that could make them incredibly slow - that is, create a union drive within the organization, instead of taking a little more deliberative pro-active approach, saying, "Yes, we need to move fast, but we also need to make sure we communicate our decisions in the right way."

Tom

Well, I think change management in an area of high change environment, I think, it really speaks to how do we involve our employees? How do we get in front of this? How do we communicate with them? You can do a better job in thinking through some of those things than acting very quickly, and just doing what you think you have to do because of what the business situation calls for at any point in time, so a little pro-active in thought process as far as anything to do with how employees are being affected I think has a big pay off.

Steve

Well, thanks Tom, thank you, it's been a very interesting conversation, and I appreciate you appearing on Business Execution Radio. Do you have any last thoughts and comments for our listeners that might be listening to this, and going, "Oh my God! - I'd better start thinking about it right away"?

Tom

Well, I think the idea is - that's a good way to put it, they ought to be thinking about this right away, I think as an example, the National Labor Relations Board is being reconstituted with, there are five key members in Washington, Obama now has nominated three key Democrats to be in front of it; once they are in place, which we expect to happen within the next couple of months, they are going to be able to change rules and regulations, and that will affect all companies in the United States, and one of the key objectives there will be the shortened time between a union petition and an election - if that happens, and when it happens, as I expect it will happen, it will mean that companies will have to do things extremely quickly, and if they haven't been pro-active and haven't been thinking about these things from an employee involvement standpoint, from a change management perspective, from a communications perspective, they're going to find themselves with a great disadvantage, so my advice would be: take a look at it now, do what you think you need to do, and get ready.

Steve

I think that's excellent advice, and hopefully people will take action on that. Well Tom, thank you so much for appearing on Business Execution Radio, and we look forward to maybe having you on again in a year after some of this has transpired and see where we're at in a year from now, see how things have worked out.

Tom

That'd be my pleasure Steve, thanks very much.

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