The question of whether America would be better off with more strikes is the wrong question as it makes the assumption that a strike will produce favorable results for the striking workers and this is simply not an absolute. The determining factor in this equation is not about which side is more powerful, has more leverage or how much each side is seeking. It is actually much less complicated. In its simplest form it is solely determined by whether the bargaining unit is negotiating from a position based upon what it believes is best for the bargaining members or for the strategic positioning and betterment of the union itself.
Yes I said it and it won’t be popular but before you say I represent the position of the corporate world and that I am the devil himself ask yourself this. If all unions cared about what was best for the members in all cases, why do they often get to decide whether the members get to see an offer presented by the company or even worse, whether the members will even be able to vote on a company presented offer? That is correct. Many unions don’t give their members these very basic rights. In fact, very often the current economic challenges facing the members and the long term economic impact of their demands on the company are not the primary considerations in negotiating – it is the long term strategic goals of the union itself that are put first.
I hear over and over again as we approach the November election that the Democrats are the only hope and the only ones that can save the middle class. I firmly disagree. The only thing that can save the middle class is the unions BUT only if they start acting less corporate and start representing the rights of the members as they were originally designed to do.
In the age of high profile risk management and shareholder accountability, it is critical to be protected against an ongoing labor dispute that could adversely affect the company’s bottom line. Revenue goals should be able to withstand a long term strike or even a short seven day walkout. If not, it’s possible that the company’s stock or enterprise value will drop as it struggles to stay profitable in the throes of a work stoppage. Most importantly, how long will your customers remain loyal if the company’s employees or major suppliers disrupt the customer’s ability to get what they need? When will the ‘cascade’ of your unavailability send them elsewhere?
When taking a look at a list of major issues that can affect shareholders, a labor dispute is towards the top of the list. It brings a company to a halt, which in all cases has a profound impact on profitability. Not being able to get products built, means there are no products to sell and inventory turnover will unavoidably be affected. In the manufacturing and retail industry, the number of times inventory is turned over is directly relevant to profitability.
When it comes to a work stoppage, expect little or no loyalty from your customers. They are not going to wait until the strike security is gone. Instead, if they can’t get the products or services they want, they will go to a more accessible competitor.
When companies plan poorly and the customer base starts to erode, there is panic and business owners may meet unreasonable demands by the union to get the labor dispute resolved. Then business owners have the worry of dealing with the unaffordable labor costs once the company is back up and running, adding additional and sometimes unsustainable burden on the business.
Shareholders want to see positive proof of the company’s ability to cope. The company must demonstrate how it can keep up operations while negotiating a strong deal with a union that best ensures the future at a price the company can easily afford – not what it can afford under duress. If a labor dispute is planned properly, shareholder and customer confidence can be maintained.
How to prepare when facing a labor dispute.
When union workers go on strike.