Sometimes when things aren’t working as well as they could, a time-out is called to give participants an opportunity to retool, regroup, or rethink the situation in hopes of improvement in the future. It’s a common practice in a wide range of activities that run the gamut from athletic contests to child discipline to even the world of economics.
In businesses, especially those involved in global trade, there is a need for continually enhancing competitiveness, particularly with regard to labor and management relationships. There has always been an underlying tension between these forces, with each one trying to get the best of the other while keeping an eye toward the success of the enterprise.
Although the fuss over carving up the pie continues, the parameters have changed markedly. In the current framework confronting many traditional industries (such as airlines, automobiles, and steel), the paramount task is to ensure that there is a pie left to share—what was once a relatively minor consideration has blown into an unavoidable obsession.
International competition is not the only force that is causing a shift in the paradigm of labor-management relations. In addition to the unique necessities associated with meeting global demands are other internal and external challenges. These include growth and development of products and distribution, the inexorable outsourcing of many tasks to domestic and foreign firms, aging of skilled workers, and environmental concerns, as well as the myriad requirements to achieve sustainable expansion. Demographic changes are affecting employee availability and costs, and technology and the quest for efficiency often undermine job security.
While the city of Las Vegas may have a slogan that indicates what happens there stays there, in the world of business, what happens one place can have a ripple effect on innumerable other places and impact the lives of many more people than those initially involved in a situation or a controversy.
The recent United Auto Workers strike at General Motors (GM) and the quick settlement that followed may serve as a harbinger of things to come. It points to the dwindling effectiveness of strikes, as well as the changing balance of power in a market that provides little comfort or flexibility to its players.
GM has traditionally claimed a large market share of the auto industry in the US. A decade ago, it was responsible for nearly one out of every three cars purchased. Through August 2007, GM’s market share has been reduced to less than one in four vehicles sold across the nation, a loss of almost 10%.
The brief strike last month involved around 73,000 employees in 30 states. Had the work stoppage continued for any period of time, corollary industries such as suppliers and truckers who transport the automobiles to specific destinations, as well as automobile dealers, could have also seen their financial opportunities drastically reduced. The shutdown of parts suppliers’ operations would have affected about 3 million workers, and a fresh round of economic challenges might have loomed on the horizon.
Lingering difficulties at GM could have resulted in significant losses to the corporation and to its workers, and thus, resolving the issues quickly was equally imperative to labor and management alike. Both sides recognized just how much they needed each other, particularly at this time when the production of 2008 models is ramping up. Fortunately, the negotiations ended the strike rather quickly. Not everyone got what they wanted, but it seemed like the most favorable answer in the current climate. At least it was a step toward mutual understanding and appreciation of the evolving partnership between labor and management which must, of necessity often preclude the traditional goals of large wage and benefit increases in favor of sustainability. This meeting of the minds was certainly not the first sign of things to come; the concessions by airline workers in recent years are also indicative of evolving patterns.
Undoubtedly, it is best that strategies to cement such partnerships not be formulated during crises. Rather, it is far more advantageous if dialogue and cooperation can be ongoing between both parties, particularly in today’s rapidly changing marketplace. This “time-out,” which had little economic impact, may well presage a new era and a fundamental shift of the labor-management equilibrium.