The Pros and Con of Union-Management Cooperation: The Case of Scott Paper Company

Introduction

Cooperation between unions and a firm’s management remains one of the most influential relationships driving organizational performance today. In the United States, union-management cooperation emerged after World War I as a concept spearheaded by the government to foster cooperation between the management and labor to enhance productivity to support war initiatives. Over the years, changes in industrial relations legislation have transformed the manner employers and unions engage at various organizational levels. In the practical context, collective bargaining activities have been employed both at the local and national level as integral tools to enhance productivity and workplace efficiency at various organizational levels.

The adoption of participative management techniques by employers has largely contributed to numerous changes in work practices and labor-management relations to either eliminate or strengthen the involvement of the union as a partner. Over the years, the rise and fall of union-management cooperation experiments in different industries have remained a subject of discussion for various stakeholders including policymakers, employers and academicians. Based on theoretical and practical perspectives, the paper seeks to assess the impact of labor-management cooperation in the paper industry. The paper will analyze the case of Scott Paper Company, an American manufacturer of paper-based consumer products and its efforts to improve its overall effectiveness through union-management cooperation starting from 1989 to present.

An Overview of the Company

Established in 1879, The Scott Paper Company is often credited as the first company to market toilet paper products on a roll. For many decades after its establishment, the company enjoyed substantial success as one of the world’s largest producer of consumer tissue products and employed over 25,000 people. However, starting from the mid 1980s to the early 1990s, it performed poorly, having recorded a net loss of $277 million in 1993 for its consolidated operation management and restructuring charges. The lack of a clear industry bargaining and total ineffectiveness of the United Paperworkers International Union (UPIU), the paper industry experienced adverse struggle to redefine relationships in order to foster union-management cooperation (Jacoby, 2000).

According to Preuss and Frost (2003), the ongoing shifts in labor-management relationships and the reorganization of work at both the national and international scale played an integral role in shaping union-management relations between paper manufacturing companies and unions in the United States. The subsequent engagement between Scott Paper Company and the United Paperworkers International Union provided an avenue for the company to redefine union-management relationships not just for itself but also for the paper industry as a whole (Bacharach, Bamberger & Sonnenstuhl, 2001).

Similar to other sectors, the rising trend toward globalization and changes in the labor market necessitated the need to change traditional relationships and to create new roles for both the management and union. In this relation, the formation of a joint committee of senior leadership of the two organizations was affirmed by the motive to embrace cooperation and transform the traditional labor-management relationships between Scott Paper Company and the United Paperworkers International Union.

This committee became to be known as the Joint Advisory Committee or JAC, and among its primary responsibilities was to spearhead the introduction and implementation of the Declaration Statement as the panacea to increase collective bargaining. According to Gilson (1996), the declaration statement was an important framework that not only led to major changes in management and traditional union roles in the paper industry but also shaped the fabric of collective bargaining in general.

For the subsequent years, major shifts occurred in the collective bargaining approach, one of which was the abandonment of the traditional collective bargaining model by both Scott Paper Company and its unions. With the traditional labor-management relations model in place, the inevitable growth in the labor industry and the rising labor costs proved major forces contributing to labor disputes between employers, their employees and unions.

In this relation, ongoing grievance relief approaches dominated the union-management relationship during the establishment and implementation of the terms of the collective agreement between Scott and the UPIU (Bacharach, Bamberger & Sonnenstuhl, 2001). At Scott, the intention was primarily to establish a more participative union-management model that would provide effective avenues to address labor disputes, contract rejections, and to redefine the firm’s competitiveness in line with the realities in the modern business environment.

The adoption of the cooperative/transformed model offered Scott strategic approaches to initiate collective bargaining to transform the firm’s poor performance through innovative changes. For the next six years after its inception, joint efforts between Scott Paper Company and the union not only paved ways for new opportunities to ensure employee satisfaction and job security, it equally contributed to immense changes in management-labor relations in the paper industry afterward.

Union-Management Cooperation

Union-management cooperation is viewed by many as one of the critical aspects that can be adopted by a company to address its competitive woes and in return improve organizational performance. When applied at various organizational levels, joint efforts between the management and unions have been lauded as the solution to firms’ competitive challenges and an effective tool to ensure job security and employee satisfaction. Moreover, it is also deemed an integral aspect, when appropriately applied can greatly contribute to reduced costs while at the same time enhance employee outcomes and the overall organizational performance in the marketplace.

In the case of the Scott Paper Company, Collective bargain efforts entailed the new union contract negotiations at all its sites in which most of its provisions sought to revise work conditions and to negotiate new approaches to enhance employee motivation and job security at the firm (Nee, 1993). Moreover, the participative approach applied by the two organizations also allowed for the restructuring and introduction of new labor processes such as job enrichment programs and job layoffs. In this case, the workers at the firm received substantial autonomy and assumed a more leveraged decision-making responsibility than they had before. According to Preuss and Frost (2003), union-management cooperation is integral in fostering employee productivity, thus enhancing the overall competitiveness and profitability of the company in the marketplace.

It is argued that mutual-gains bargaining in management and labor allow the involved parties to participate in activities that are primarily intended inclusiveness and greater collaboration on issues that directly or indirectly affect workers. Such activities include the establishment of autonomous work teams, quality cycles and gain-sharing plans among others. At Scott Paper Company, the demand to improve productivity and ensure increased job satisfaction played a critical role in the adoption of the new labor-management relations model to accommodate the changes in the global marketplace (Nee, 1993). In addition, union-management cooperation mechanisms when effectively implemented can likely enhance industrial peace by creating an environment that accommodates the requirements of all stakeholders, particularly those between employers and their employees (Bacharach, Bamberger & Sonnenstuhl, 2001).

On a wider scale, industry-level agreements tend to support firms’ capacity to develop more formal human resource management practices and policies. For its part, the company tends to operate in an environment where the interest of the management and workers are balanced―a critical factor in the establishment and maintenance of trust and mutual respect in the organizational context. The corporate level, the ongoing engagement between the company and the United Paperworkers International Union in the Joint Advisory Committee enabled behavioral changes at all of the firm’s sites through Enabling Agreements established by the Joint labor-management committees (Zink, 2008).

These agreements marked proved critical in setting specific paths and ground rules for working together on mutual interests between the management, workers and the union. At Scott Paper Company, union-management cooperation allowed the adoption of work design approaches based on participative leadership, share responsibility, high communication, and alignment on purpose and increased focus on innovative change. Moreover, this new model also outlined the need for identifying and nurturing creative talents among the employees through increased investment in programs geared toward tapping individual talents and skills (Gilson, 1996 and Schuster, 1984). The company also sought to enhance customer connectedness as well as the adoption of a rapid response mechanism to address changes and to identify and act on opportunities in both the present and the future.

Economic Adversity

The joint efforts between Scott Paper Company and the United Paperworkers International Union came about as a result to address the economic adversity facing the paper industry, particularly the mill segment. The hard economic conditions triggered the need for increased collaboration between the manufacturing companies and the union to reduce cost on one hand and enhance the firm’s productivity and organizational performance on the other. The potential labor savings resulting from the joint efforts due to the huge layoffs in the United States, Mexico, Canada and other outside sites offered a new way to reduce costs (Zink, 2008). The agreement between the management and the union was critical in the development of a cooperative plan that sought to ensure improved relationships and work practices as well as addressing issues related to organizational change and interests in line with the interests of all parties involved.

The Competitive Environment

Almost two decades prior to the establishment of joint efforts between the Scott paper company and the UPIU, the firm’s market position had greatly reduced. In the mid-1980s, the competitive environment facing manufacturing companies necessitated the need for a shift in relationships between firms and their unions to address the growing demands for goods and to overcome competition from rival companies around the world (Gray, 1984). For Scott Paper Company, the creation of union-management relations allowed the adoption of a more participative model capable of addressing competition and labor disputes at different organizational levels. Preuss and Frost, (2003) assert that by the time Scott’s merged with Kimberly-Clark occurred in 1995, substantial improvements had been recorded in most of its sites. For instance, the development and adoption of training programs fostered the development of new skills among the employees, most notably people skills, communication skills, problem-solving skills, and teamwork coordination. Moreover, other transformations included dramatic changes in technical and business skills exhibited by teams and team members remained impressive (Nee, 1993).

Choice of Methods of Handling Issues

Collective bargaining provided the Scott paper company and its unions with a clear platform to address both the traditional and emerging issues at work. According to Deery and Iverson (2005), the dependant variable of principle interest was the opinion of the United Paperworkers International Union concerning its effectiveness to address job-related issues facing employees at the Scott paper company. It is important to mention that, the decision for joint efforts with the United Paperworkers International Union labor disputes was based on established terms of the agreement with the Scott Paper Company (Zink, 2008). The collective bargaining agreement between the two organizations gave the union formal capacity to engage in collective bargaining through joint programs in order to address three main areas namely human motivation, productivity, quality of work, and to address traditional issues facing both the union and the firm’s management.

Therefore, collective bargaining provided an efficient avenue for both the company and the union to seek job-related issues they felt should be addressed through joint programs. With the new method of handling issues, the company gained improved competitive advantage based on how the new relationship helped to transform both the physical conditions surrounding its operations and the overall engagement between the management and workers (Preuss & Frost, 2003).

Formal Approach to HRM

The decision to develop and adopt union-management cooperation in large organizations is mainly influenced by both internal and external factors. The growing international competition, technological changes, and the changing labor force structure have so far been identified as some of the major factors influencing the decision by firms to invest in union-management cooperation.

On the other hand, this relationship tends to foster the establishment of formal human resource practices, which are primarily designed to enhance active participation and increased commitment on part of both the company and the union. However, in most unionized plants, employee-involvement programs, when ineffectively designed have been found to be the main cause of work-related stress, employee turnouts and reduced organizational performance (Deery & Iverson, 2005). The existence of negative union attitudes in workers tends to undermine the capacity of most unions to offer substantial benefits to its members, making it difficult for workers to trust unions on grounds of corruption and mismanagement.

It can be mentioned that the formal approach to human resource management at the firm offered both sides with real learning opportunities primarily intended to empower teams through joint work designs. The increased involvement in training and resourcing on the part of the company and the union was viewed essential in transforming the poorly performing work systems in both existing and new Greenfields. Moreover, the contract also allowed the adoption of a pared job classification approach, making it possible for the management to develop and implement the team concept.

Management-labor Relations

Historically, the existence of enormous union-management problems in the paper industry has had immense effects on collective bargaining initiatives in the United States. With about 5 percent of the 250,000 workers represented by the united Paperworkers international union in the United States and Canada having worked for Scott by 2009, management-labor relations remain of great importance to both the management and the union. It is noted that, up until the late 1980s, the company had experienced immense labor issues and remained an object of strikes.

The formation of the joint advisory committee allowed the adoption of a highly cooperative relationship between the company and the United Paperworkers International Union. This committee enabled workers to gain a more leveraged role in decision-making thus reducing supervision at the workplace. Generally, workers responded well to these changes based on the reduced cases of workplace absenteeism, filling of disputes and insurance premiums in the subsequent years (Deery & Iverson, 2005). Moreover, the strengthened relationship between the management and workers provided more opportunities for information sharing, a critical factor in the promotion of transparency, accountability and trust between those two sides. As explained in Gilson (1996) numerous scholars have noted that a successful union-management relationship relies on the capacity of both sides to establish and maintain good communication practices at all levels to enable an effective flow of information to all workers through the union.

Employees Attitudes

The poor labor relations environment facing the paper industry undermined the success of cooperative programs at the company. Cooperative efforts in the paper industry in the 1990s were marred by negative employee attitudes due to the high-unionization rate, which led to huge layoffs. At Scott Paper Company, collective bargain effort led to a loss of many jobs, with figures showing that at the time of its adoption, the number of employees at the firm fell from 30,800 workers to just 29,300 in 1994. While the organization sought to enhance staff flexibility, the unions opted to ensure job security using employee seniority as the basis for determining the layoffs in the organization. In addition, wage increase for the bargaining unit members and reported cases of favoritism in the assigning of training and certification challenged the union’s commitment to foster efficient reorganization of production lines into the various teams Nee, Kennedy & Langham, 1999). While the union-management programs enjoyed local support in some areas, the expansive team system adopted by the company contributed to dissatisfaction with the training, and hence support for the team concept undoubtedly reduced.

A Temporary Solution

Participative management techniques may inherently improve productivity and quality of work-life, lack of open communication and goodwill hampers the capacity of union-management efforts to participate fully in addressing labor disputes in the long-term. In the case of Scott Paper Company, the lagging management interests and the constant resurgence of labor-management conflicts contributed to a reduced performance of participative management initiatives (Jacoby, 2000). Combined with the changes in the labor markets around the world, the growing competition, and the uncertain economic environment, tangible benefits from such initiatives seemed elusive for both sides. Gilson (1996) noted that the results for labor and management at the organizational level represent a short-term ‘marriage of convenience’ to address poor performance and not necessarily a permanent step toward establishing and strengthening workplace democracy. Looking at the wide range of objectives, ranging from increased workplace productivity, communication, increased employee satisfaction and job security to improved problem solving, measuring the success of participative management efforts becomes difficult.

Conclusion

Union-management cooperation has evolved to become a prime mover of organizational performance and productivity at various organizational levels. The concept of participative management has evolved over the years to encompass numerous activities geared toward increasing job satisfaction, employee morale, employee development, and overall organizational advancements. The case of Scott Paper Company elucidates how companies adopted this new paradigm as a tool to redefine its position in the marketplace and at the same time establish clear relationships between management, workers and unions. Largely, union-management efforts provide effective in enhancing productivity, reducing costs, and enhancing the revitalizing of the firm’s performance following its inception in 1989. However, issues resulting from a lack of goodwill and negative employee attitudes and perceptions challenged the widespread implementation of participative management techniques in the company. To ensure success, firms must design their union-management efforts to accommodate the ongoing changes in both the national and international labor market practices and practices.

References

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