What Are the Benefits of a Collective Bargaining Contract?

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A collective bargaining agreement, also known as a union contract, is an agreement between an employer and the union that represents the company's employees. The contract covers pay, benefits and working conditions such as hours, overtime, holidays and seniority privileges. It also covers the rules for resolving a conflict between employees and their supervisors, or the union-represented employees and the company. Given the historically adversarial relationship between labor and management, it could be a Herculean task to envision the collective bargaining pros and cons, much less the benefits of a collective bargaining agreement. One of the obvious benefits of collective bargaining for employers is that it produces a streamlined and efficient vehicle for determining wages and benefits for similarly situated employees, instead of working with every single employee on an individual basis to set a pay rate and benefits package.

What Is a Union?

Labor unions or trade unions – the terms are interchangeable in many instances – are a group of employees who share a common interest in achieving economic parity in the workplace. In addition to wages and benefits, union representatives work with management to reach agreement on workplace safety measures, work-life balance provisions, working hours and shift assignments.

The professions with union-represented workers range from nursing and educators to protective services. The largest union in the U.S. is comprised of workers in the public sector. Public-sector employees accounted for nearly 35 percent of union members in 2017, according to the U.S. Department of Labor, Bureau of Labor Statistics. Union membership among private-sector employees is approximately 6.5 percent. The professions with the highest rates of union membership are protective services, training and education. Gender-wise, approximately 11.4 percent of men are union members, while approximately 10 percent of women belong to unions. Overall, almost 15 million U.S. workers are union members, according to 2017 BLS data.

Union membership gives your employees a voice in those negotiations, and they express their feedback and opinions to union leadership through a democratic process where they vote for officers and representatives who campaign as the best qualified to lobby for the members' interests. Union members elect the union representatives who will sit at the bargaining table with management to reach a mutually agreeable contract for their pay, benefits, hours and working conditions.

Benefit of Collective Bargaining 1

As a business owner, your primary focus is likely to be developing a strategy for your company's growth or expansion. You probably spend countless hours, seven days a week, creating a strategy for sustaining your operations, identifying markets and potential customers and overseeing the financial viability of your organization. Because your time is limited, your leadership team should include qualified human resources and legal experts to whom you can delegate responsibility for negotiating a collective bargaining agreement.

The benefits of a collective bargaining agreement include freeing yourself from the often laborious tasks of compiling wage rates, researching benefits trends and calculating labor costs. The people most involved in negotiating a collective bargaining agreement are HR leaders, lawyers and their direct reports. Of course, in addition to delegating these tasks to them, you must give them the authority to negotiate the terms of the union contract on the company's behalf.

Before your company negotiation team sits at the bargaining table with union representatives, they'll discuss with you the wage ranges and costs of benefits, and you should trust them to achieve a common ground that satisfies all the parties. As the company president, the time you spend at the bargaining table can be minimized by choosing negotiators who are skilled at reaching consensus with the union. That said, if you believe your presence at the bargaining table conveys the message that you are a hands-on leader, then, by all means, participate in the negotiations. But you don't need to be the one spending late nights agonizing over combinations of labor costs and various proposals to present to the union during negotiations.

Benefit of Collective Bargaining 2

The time your HR manager and attorney spend preparing for labor negotiation sessions could be a heavy lift on the front end, but a collective bargaining agreement can save an enormous amount of time on the back end. A collective bargaining agreement that covers all your union employees saves company time in negotiating wages, benefits, hours and working conditions for individual employees.

Suppose your HR specialist or HR manager spends three weeks from the time the candidate accepts a conditional job offer to the day on which the new employee begins working. Consulting and research firm Workable estimates that it takes approximately 21 days to hire for administrative positions in the U.S. A great deal of that time is likely devoted to negotiating a wage rate or salary, informing new employees of benefit options and similar discussions. While a collective bargaining agreement doesn't reduce the recruiting and applicant tracking time, it can cut down significantly on the time your HR and legal team spends negotiating wages, benefits and onboarding for new employees.

Further, suppose that you have 100 union employees; even if you reduce the time-to-hire to a conservative estimate of 14 days, that means your HR and legal team potentially devote 1,400 days, or 11,200 hours to ensure your company is ready to bring 100 employees onboard. If you have deep enough bench strength in your HR department, devoting that kind of time to bringing 100 employees onboard might not be the heavy lift it seems. But one of the greatest benefits of a collective bargaining agreement might be the time and money (salaries for HR employment and benefits specialists) you save by negotiating the compensation packages for 100 employees in one union contract.

Benefit of Collective Bargaining 3

In addition to being a money-saver, one of the advantages of collective bargaining is that it provides structure and objectivity to your company's conflict-resolution process. A component of the union collective bargaining process is that several viewpoints are considered before making a final decision on how union workers and their supervisors work together.

Most collective bargaining agreements contain clauses on how to resolve workplace issues, such as the conflict between employees and supervisors, called a grievance process. Union contracts set out the process and conditions for notification of employee-supervisor conflict and the steps required to either resolve or escalate the issue. For example, a typical grieva_n_ce process has five steps that range from an employee notifying the supervisor of their dissatisfaction to the unresolved conflict going to arbitration.

In addition to the prescribed steps in the typical grievance process, an advantage to collective bargaining is that the manner in which workplace issues are addressed and resolved becomes standardized. Also, the union representative and the management representative share the responsibility for ensuring that the process is carried out according to the collective bargaining agreement terms and conditions.

This shared responsibility practically guarantees collaboration at a basic level, which can become a foundation for a productive and mutually respectful relationship between organized labor and management. When employees, supervisors and managers witness this type of collaboration, it can only make the workplace better, and eventually, diminish the all too prevalent adversarial tone of labor-management relations.

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About the Author

Ruth Mayhew has been writing since the mid-1980s, and she has been an HR subject matter expert since 1995. Her work appears in "The Multi-Generational Workforce in the Health Care Industry," and she has been cited in numerous publications, including journals and textbooks that focus on human resources management practices. She holds a Master of Arts in sociology from the University of Missouri-Kansas City. In addition, she is a certified facilitator for the Center for Creative Leadership Benchmarks 360 Assessment Suite, and is a Logical Operations Modern Classroom Certified Trainer . Ruth resides in North Carolina and works from her office in the nation's capital, Washington, D.C.