Unions As Value-Adding Networks:
Possibilities for the Future of U.S. Unionism
SAUL A. RUBINSTEIN*
Rutgers University, New Brunswick, NJ 08903
I. Introduction
Over the past forty-five years nonagricultural private sector union density in the U.S.
has declined from a high of over 34 percent in 1956 to below 10 percent in 2000. This
dramatic and unprecedented drop in private sector unionizadon raises serious questions
about the possibilities for the future of the U.S. labor movement. This trend has led to
three different (but connected) streams of commentary: reasons for the decline in union
density; debates about whether the decline is temporary or long term; and recommendadons for practices, strategies, and policies that might turn the trend around.
The underlying causes of this decline identified by students of industrial reladons include the changing demographics of the work force, employer opposition to
unions, structural shifts in industry, new information technologies, the subsdtution
effect of government policies, the globalization of labor and product markets, and the
libertarian and individualistic values of the United States (Lipset and Katchanovski,
2001). Other researchers have viewed the decline in union density as either cyclical
or long term (Kaufman, 2001). Central in this debate has been whether labor law needs
to be reformed to correct unfair employer resistance (Commission on the Future of
Worker-Management Relations, 1994; Kleiner, 2001), and the level of union resources
directed toward organizing new members (Sweeney, 1996).
Scholars have also explored new directions labor organizadons might take to reinvent themselves in order to deal with the underlying structural problems of changing
markets, economies, technologies, demographics, and global competition. These include
the expansion of models of employee representation that are not bounded by the firm,
such as occupational unionism (Cobble, 2001) and associational unionism (Heckscher,
1988, 2001). There have also been proposals to experiment with the development of
new labor institutions, specifically firm-level labor-management committees that would
operate similarly to European works councils (Kochan, 1995; Freeman and Rogers,
1999), as well as recommendations for a re-orientation that would emphasize the voice
rather than the monopoly aspect of unionization (Freeman and Medoff, 1984).
I explore yet another direction — the way unions have begun to restructure themselves in an effort to increase the value they add to firm performance as well as to
their members. An important consideration in the debate over the future of U.S. unionism is whether unions today can provide additional resources to firms and employees
JOURNAL OF LABOR RESEARCH
Volume XXII, Number 3 Summer 2001
582
JOURNAL OF LABOR RESEARCH
attempting to compete in this rapidly changing economic environment, thereby reducing managerial opposition, increasing demand for unionization from labor, and promoting the public interest. Unions will survive in the long run only if their forms "fit"
the structure of the economy and industrial organization and they contribute to the
strength of the economic system in ways that also promote the interests of their members (Osterman et al., 2000; Kaufman, 2001; Heckscher, 2001).
Herein I examine how unions have added value and argue that they are creating
new approaches to representation while providing resources of value to firms and that
these developments can affect the character and prospects of unions in the future offering one path of resurgence. My data come from research conducted on a group of
twenty innovative local unions that have developed strategies, organizational structures,
as well as capacities for adding value to firm performance while representing the collective and individual interests of their membership. The local unions drawn on for this
study were chosen based on recommendations by national unions, academics, and the
AFL-CIO, and represent workers in a variety of tJ.S. manufacturing and service industries including airlines, automotive, communications, defense, healthcare, papermaking, Pharmaceuticals, and steel. (For a more complete report on this research see
Rubinstein, 2001b). The U.S. union movement has much to learn from these experiences, and these value-adding strategies can both strengthen the base of the current
labor movement as well as provide avenues for its growth among the unorganized.
IL Labor's Value Added: A Review of the Literature
The industrial relations literature on the value added by organized labor deals with both
social and economic value. There are various types of social value that unions add to
workers, firms and society including extending to the workplace those rights citizens
enjoy in a political democracy (Webbs, 1897), and the administration of industrial
jurisprudence (Slichter, 1941). While recognizing the importance of the role unions play
in adding social value, I focus herein on their economic value added to firm performance.
Early 20th century advocates of business unionism were highly skeptical of unions
adding value to the firm through their involvement in the "executive" functions of management. In this view management should be left to managers, and unions should
remain independent of managerial decision making so they could challenge management's decisions without assuming any responsibility for them (Perlman, 1928).
Although they did not favor explicit union involvement in the management of firms,
they nonetheless did recognize (Commons, 1913) that unions can promote improved
firm performance, albeit often as an incidental or indirect outcome of policies that aimed
at restricting management (e.g., higher wages motivate managers to seek productivity
improvements).
These early proponents of business unionism were followed by a generation of
industrial relations researchers who built on this earlier work and expanded it to include
the perspective that at times organized labor has adopted the goal of adding value to
firm performance. One view was that unions can add value to firm performance through
SAUL A. RUBINSTEIN
583
collecdve bargaining agreements which discipline both the work force and management, making work pracdces more efficient (Slichter, 1941; Slichter et al., 1960).
Another stream of research analyzed cases of labor adding value to organizational
performance through increased involvement in planning, problem solving, and decision making. These examples began in the textile, apparel, and railway industries in
the 1920s and 1930s (Slichter, 1941). Slichter concluded that the policies inidated by
the Intemadonal Ladies Garment Workers Union (ILG) and the Amalgamated Clothing Workers (ACW), which combined the principles of scientific management with
union-management cooperation, could resolve the contradiction between "industrial
jurisprudence" which protects worker rights through a system of rules and productivity
which may be restricted by those rules. These efforts in the texdle and apparel industries largely fell apart during the depression, but they were also limited by their topdown focus which allowed the union greater influence in managerial decision making,
yet did little to increase direct influence and voice opportunides for the rank and file.
In fact these policies may have had the reverse effect, because as the union expanded
its control through the institutionalization of "scientifically" determined standards of
producdon, these standards further removed the average operator from any workplace
control or decision making, as thinking and planning (management acdvity) were separated from execudon and implementation (the role of labor). While the attempts by
unions in the apparel and textile industries were essentially top level, at the same time
efforts between the railroad shopcrafts, led by the Intemadonal Associadon of Machinists (IAM), and the railroad industry were centered on shop-level joint labor-management committees which focused on waste reducdon as well as working condidons. The
most famous case began on the Baldmore and Ohio (the B & O plan) in 1923 and
survived in part at least into the late 1950s (Slichter et al., 1960). Slichter (1941)
reported that union membership grew as the unions received credit for these efforts,
wages increased, and management resistance decreased with improved productivity,
quality, and labor relations. However, like those efforts in textile and apparel, the unemployment and wage cuts of the depression also destroyed most of the efforts by the
unions to add value to railroad management.
A resurgence of attempts by unions to add value to management grew along with
the organizing drives of the CIO (Steel Workers Organizing Committee, 1938) following the New Deal, and expanded extensively in the armaments industries during
the early and mid-1940s (Golden and Ruttenberg, 1942; Golden and Parker, 1949;
Slichter et al., 1960). During WWII, with the blessing of leaders such as Sidney Hillman, Walter Reuther, and Philip Murray, a large number of local unions, mostly the
United Auto Workers, United Steelworkers, United Electrical Workers, and the IAM,
were involved in over 600 plant-level labor-management committees established to add
value by solving producdon problems. While these joint labor-management committees increased product quantity and quality that can be attributed to both problem solving acdvity and increased "effort" on the part of the work force, most were based on
the involvement of only top-level union leaders and plant management. They were also
organized "off-line," that is structures that existed outside of the normal production or
584
JOURNAL OF LABOR RESEARCH
managerial activides. However, most such arrangements disappeared by the 1950s as
the need to bolster war-dme production diminished and as management reasserted its
claim to its managerial prerogatives. During this same period Reuther attempted to
expand the UAW's involvement in managerial decision making through collecdve bargaining proposals to GM in 1945 and 1948 that would de wage increases to prices but
require that GM open its books to the union. Again, not wanting to give up its prerogatives, GM rejected the proposals.
More contemporary research has examined the impact of unionization and collecdve voice on managerial performance. Unions are credited with establishing checks
and balances on management by exerting institutional discipline backed up by legal
contract. In establishing legal barriers to some forms of unilateral, short-term managerial decision making, unions can create longer time horizons resuldng in economic
as well as social benefits. Unions are also credited with improving human resources
management (Marshall, 1992), and by creadng a voice opdon for their members, unions
contribute to efficiency by increasing tenure, decreasing turnover, and giving information to management on organizational slack (Freeman and Medoff, 1984).
Transforming Workplaces. Global competidon has forced many U.S. industries to
restructure their organizations, management systems as well as the supporting labor
relations and human resources pracdces (Piore and Sabel, 1984; Kochan et al., 1986;
Hecksher, 1988). Accompanying these changes have been a series of transformadons
in work organization and industrial reladons including quality of work life (Davis and
Cherns, 1975), problem-solving teams and quality circles (Cole, 1979), and labormanagement committees (Cutcher-Gershenfeld, 1987; Eaton and Voos, 1994). In recent
years there has been an expansion in the use of "lean" producdon systems employing
the use of self-directed work teams which make workers responsible for their own quality as well as other formerly managerial functions (MacDuffie and Krafcik, 1991). In
particular, emphasis has been placed on greater levels of problem solving, coordinadon, and communicadon, both internally and with suppliers and customers (Aoki, 1990;
Womack et al., 1990).
While there is no single model of a transformed work system, they increasingly
include greater lateral flexibility on the part of labor in determining and performing
work tasks, and more vertical involvement of labor in decisions previously reserved
for management. These systems have also tended to flatten organizations by employing fewer supervisors and have less adversarial relations between labor and management insdtudons. There is increasing evidence that these innovadons which transform
workplace practices result in substantial improvements to firm performance both in
productivity and quality (Ichniowski et al., 1996; Appelbaum et al., 2000).
Freeman and Rogers (1999) esdmate that workplace transformadon efforts which
increase employee participadon result in productivity increases of 2-5 percent. There
are multiple explanadons for this result. Work force alignment with and commitment
to managerial goals is thought to increase performance through greater effort and motivadon (Levine and Tyson, 1990; Kaufman, 2001). By encouraging more workers to
SAUL A. RUBINSTEIN
585
make suggestions and solve problems, greater resources are directed toward improvements in products and processes (Freeman and Rogers, 1999; MacDuffie, 1995a).
Employee participation also provides top management with more information about
the management of their organization thereby reducing sub-optimal decision making
(Levine and Tyson, 1990). Furthermore, labor's involvement in decision-making creates an environment where workers are more likely to support decisions, implement
them more effectively, and make adjustments where necessary (Rubinstein, 1996; Freeman and Rogers, 1999). It also decentralizes organizational communication and coordination allowing information to flow more freely and decisions to be made by
employees who are closest to the point of implementation (Levine and Tyson, 1990).
My research at Saturn (Rubinstein, 2000) demonstrated that the union developed
a dense communication network through its own leadership infrastructure which greatly
facilitated rapid coordination and decision making. This union-based network had no
functional equivalent in the non-represented management organization and was credited with significant impact on quality performance (discussed in greater detail below).
I argue herein that unions can add value through their organizations and networks
because they are composed of elected leaders with whom members identify and trust
more than they do non-represented appointed management. Kaufman and Levine
(2000) argue that unions add value in instances of market or organizational "failures,"
and in cases of "imperfect information" labor leaders can provide an infrastructure that
facilitates lateral communication and coordination. Networked organizations are
increasingly important where information is widely dispersed, change is rapid, and
flexibility, responsiveness, and organizational problem solving are critical for success.
In such firms networks add value by facilitating communication and coordination, linking people who have the information and resources necessary for quick and effective
decision making and problem solving. Moreover, if these "high trust" networks are not
replicable by non-represented management themselves, union forms of representation
can provide greater net value than nonunion forms dominated by management, even
if the cost of union representation is marginally higher (Kaufman and Taras, 2000).
Over the past decade studies have also shown that most U.S. firms have implemented some form of innovative work system or human resource practice (Osterman,
1994, 2000; Ichinowski et al., 1996), in some cases to improve organizational performance and in other cases to avoid unionization (Verma and Kochan, 1985; Kaufman, 1997). Among these practices are contingent pay, job rotation, employment
security, multi-skilling, reduced classifications, and the use of teams. Widespread implementation has also occurred in heavily unionized sectors such as apparel, auto, and
steel (Bailey, 1994; Ichniowski and Shaw, 1995; MacDuffie, 1995b). Use of these practices has increased over the decade with Pil and MacDuffie (1996) estimating that
almost 50 percent of the auto industry has implemented forms of direct employee participation, while Osterman (2000) estimates that off-line direct participation occurs in
almost 60 percent of firms nationwide. Therefore, the number of unions facing the
implementation of comprehensive change to work systems and employment practices
appears to be growing as well, and the adoption of such systems has been encouraged
586
JOURNAL OF LABOR RESEARCH
by the AFL-CIO (1994). Furthermore, recent surveys of American workers have shown
that a large majority want greater input into decision making in their jobs and workplaces, and they desire forms of employee representation that can promote such opportunides with management (Staines and Quinn, 1979; Freeman and Rogers, 1999. See
Kaufman, 2001, for a cautionary note).
Transforming Unions. Transforming workplace pracdces in a unionized environment presents unique challenges and opportunities. Union leaders have great difficulty giving up past practices and moving to systems of contingent pay with fewer
seniority rights, job classifications, and work rules. However, participation in what
has traditionally been considered managerial work creates opportunities for greater
influence in decisions that run the business. The key for union leaders has been balancing the risk of these challenges with the opportunity to represent the needs of the
membership in new ways.
Over the past decade an increasing number of unions have taken on the challenge of actively participadng in managerial decisions, thereby represendng the needs
of the membership in the early stages of the decision-making process. They hope that
by represendng labor's collecdve interest in management decisions and policy making, workers' interests will be incorporated into the early stages of strategic decisions,
thereby improving the quality of the choices made and the speed of implementadon
(Rubinstein et al., 1993; Frost, 1998). Researchers have shown that employee participation efforts in the union sector tend to be more extensive which leads to greater
productivity, and that value is added when the unions are involved in program administration and management (Cooke, 1990, 1992; Eaton and Voos, 1994). In addidon to
the value added by improving the quality of decisions and the speed of implementation, studies of transformed labor-management relations suggest that where unions
serve as participants in joint efforts they may add value directly by organizing the workplace, articuladng the collective voice of labor and providing management with an efficient means to communicate and negotiate with the work force, and integradng labor
into cooperadve efforts (Cutcher-Gershenfeld et al., 1989; Eaton and Voos, 1989). In
addition, protection of individual worker rights and job security are more likely in a
unionized company and have been shown necessary for effective efforts to increase
employee participation (Levine and Tyson, 1990).
As union leaders contribute to managerial decisions with worker interests in mind
they often take a broader firm-based perspecdve than do individual managers who
may make sub-optimal decisions based on their own interests and incentives. It is their
different perspecdve that adds value, otherwise they would be no different than other
competent managers. The legidmate independence of the union allows it to challenge
positions taken by management that it believes to be against the long-term interests of
the membership and perhaps of other stakeholders as well. Union leaders also have a
longer-run perspecdve since unlike their management counterparts, they do not have
career paths that take them to other divisions and companies. Rather, they typically see
their economic future tied to the success of their firms. Part of the value unions offer
SAUL A. RUBINSTEIN
587
then is a way to surface an alternative perspective in decision making which can supplement that of non-represented management. Nonunion employee representation plans
which simply align employee goals with those of management lose this opportunity.
Diversity of perspective in decision making does not necessarily lead to adversarialism or dual loyalty. Rather, it can enrich the decision-making process and bring greater
commitment to the implementation of decisions. Thus, when unions engage in designing and administering employee participation efforts they not only add value to the
firm, but they also help create systems that can potentially outperform nonunion forms
of participation. In addition to being more effective in unionized settings, proportionately more employee participation efforts are carried out in unionized firms than in
nonunion firms (Freeman and Rogers, 1999). However, unions that choose to block
or not engage in employee participation efforts can cause them to fail or produce only
marginal benefits for employees and firms.
III. The Union As an Organizational Network
Few studies in the literature have looked at the specific internal organizational mechanisms by which local unions have added value to firm performance through the development of new strategies and organizational structures that support their involvement in
managerial processes. With some exceptions (Verma and Cutcher-Gershenfeld, 1993;
Kaufman and Levine, 2000), researchers have been limited in their analysis because
they don't disdnguish representative forms of firm governance from employee direct
participadon, or on-line (as part of daily processes) mechanisms for decision making,
from those that operate off-line (outside of normal operations) decision making. We
need to differendate among these different forms because they result in very different
processes of decision making as well as different firm outcomes. The framework in
Figure 1 (Rubinstein et al., 1993) illustrates these disdnctions.
For example, in the cases from the textile, apparel, steel, and auto industries from
the 1920s through 1940s, unions were involved largely in off-line representative forms
of participation involving top-level union leaders. The exception to this may have been
the railroad unions where some direct participation was extended to the rank and file.
Figure 1
Forms of Union Involvement in Firm Management
Representative/Indirect
through Union Leadership
Direct Membership
Participation
Off-Line
Governance through
Labor-Management Committees
Consultative through
Problem-Solving Teams
On-Line
Co-Management through
Union-Management Partnerships
Operational through
Self-Directed Work Teams
588
JOURNAL OF LABOR RESEARCH
European works councils operate as off-line representative forms of participation.
While they add value through this form of employee involvement in decision making,
they do not necessarily include off-line direct forms of participation or the on-line forms
which I argue are critical for developing the communication and coordinadon networks
so important for high performance work systems.
In contrast, most contemporary U.S. unions adopting the value-adding strategy
participate in several forms of decision making involving both leaders and rank-andfile members. For example, the unions in Acme Steel, Bethlehem Steel, and BristolMyers Squibb provide opportunides for direct participadon in off-line problem-solving
teams and off-line labor-management committees that engage a variety of strategic and
operational issues. Unions at Coming, Lockheed Martin, LSE (LTV-Sumitomo Metals Electro-galvanizing), and NUMMI (Toyota-GM joint venture) provide for direct
participadon through on-line self-directed work teams making daily operating decisions as well as off-line problem-solving teams. These unions are also involved in firm
governance around activides like planning; facility, process, and work systems design;
training; health and safety; and the development of production standards through representation on off-line labor-management committees.
Finally, a few locals including Saturn, Xerox, Republic Engineered Steels, Union
Camp and American Axle have developed multiple forms of participation (filling all four
dimensions in Figure 1) that reinforce one another, and are both direct and representative involving members and union leadership off-line and on-line. What distinguishes
these unions is that they are adding value through their engagement in systems of operadons co-management, with union leaders assuming full-dme responsibility for managerial decision making. Researchers (Eaton and Voos, 1994; Levine and Tyson, 1990;
Ichniowski et al., 1996) have shown that value can be added through employee direct
participation in off-line improvement activities and on-line self-directed operations, as
well as through union representation in off-line governance activities. While there have
been fewer instances and therefore less research on this more recent representative form
of on-line participation (co-management), in combination with the other three forms of
participation, my research shows it has the potential for enabling unions to make even
greater contributions to firm performance as well as expanding opportunities for local
leaders to represent collective interests. Furthermore, I contend that co-management is
at the core of the "union as network" argument advanced earlier and, therefore, is not
replicable by nonunion forms of representation since these management-dominated
efforts are not based on elected leadership and are therefore rooted in the exisdng managerial processes and structures. More research on these contrasting forms of participation and representation is necessary to see if this proposition is correct.
IV. Performance Effects of Value-Added Unionism
Research conducted at Saturn illustrates the mechanisms by which a local union can
add value to firm performance particularly through its role in co-management and the
Creadon of a union-based communication and coordination network. This example rep-
SAUL A. RUBINSTEIN
589
resents one of the most extensive cases of a labor union adding value by taking on managerial responsibilides while condnuing to represent the collecdve and individual interests of its membership. The design of the organization calls for the UAW to be a partner
in all business decisions including job design, product development, manufacturing
systems, quality systems, technology, suppliers, retailers, planning, and training. To
accomplish this management and union leadership developed a system of co-management in which jointly selected bargaining unit members fill half of the operadons and
staff management positions as partners of non-represented management. In attempting to balance their roles in represendng members' interests as they participate in running the business, labor leaders at Saturn have reinvented the local union (Rubinstein,
2001a).
The local union at Saturn adds value to firm performance through the expertise
and independent perspecdve union leaders bring to problems, which increases the quality of decisions and the effectiveness of their implementation. In addition, network
analysis reveals a dense intra-organizadonal communicadons network among the unionrepresented partners filling managerial roles in which these representatives communicate frequently with each other within and across departmental lines to solve problems
affecting quality and other aspects of the production process. Through this rich communications and coordination infrastructure and the system of on-line co-management,
the local union provides direct and indirect forms of participation to its leaders and
members which adds significant economic value to the organization. Regression analyses showed that 30 percent of the variadon in first-dme quality and 53 percent of the
variation in quality improvement could be explained by the communications and behaviors of these union managers and the dynamics of the relationship with their nonrepresented partner. These analyses also demonstrated that the greatest effect on quality
performance came from the communicadon and coordinadon behavior of the unionrepresented managers, not the non-represented managers. This finding further supports
the proposition that the union can add significant value to firm performance that may
not be replicable by management-dominated nonunion forms of representadon (Rubinstein, 2000).
The union-based communication network and co-management system at Saturn
provides one model of value-added unionism, one in which a union shares the management function and accepts responsibility for company performance as well as
employee representation. While I believe that a viable labor movement is a cornerstone
of a democratic society and necessary for shared prosperity, I am trying to go beyond
the tradidonal arguments for the union's value added — balance of bargaining power,
industrial jurisprudence, or disciplining of labor and management arguments for the
union's value added. Instead, I advance an organizational argument that the local union
also has the potential to provide an infrastructure for the kind of communicadon and
coordinadon network needed to produce the flexibility and responsiveness required of
today's "high performance" organizations.
While some research has shown that high performance work systems (HPWS)
can decrease the demand for unionizadon (Kaufman, 1997; Freeman and Rogers, 1999),
590
JOURNAL OF LABOR RESEARCH
the experience at Saturn has been the reverse. This union has been successful in organizing two additional UAW units encompassing 120 cafeteria workers and 240 groundskeeping and janitorial workers, which are now amalgamated to the Saturn local. The
union has also organized another 600 truck drivers who have now formed their own
UAW local. Moreover, through its direct involvement in supplier selection, the local
has facilitated the creation of additional union jobs through preference for and technical assistance to union suppliers, specifically an additional 3,500 UAW jobs in GMallied component plants, 350 UAW jobs in non-allied suppliers, and 250 non-UAW
union jobs in other suppliers.
This value-adding approach provides rewards to the union membership through
greater voice in decision making, employment security provisions, and compensation
contingent on performance. At Saturn this has resulted in performance bonuses which
have averaged $5,440 over the past eight years, more than ten times the profit-sharing
bonuses received in the rest of GM. Increased decision making opportunities coupled
with employment security and increased compensation should increase the demand
on the part of employees for value-adding approaches to unionization. Since these compensation and employment security levels exceed those of the rest of GM and most of
the auto industry, the gains from this value-added approach must exceed the costs in
order for management to reduce its traditional resistance to unionization. Top management at Saturn have reported that in their case the net result has been positive. However, more systematic study in other settings is required to confirm these propositions
regarding both increased employee demand and decreased employer resistance.
V. An Emerging Model of Value-Adding Local Unionism
Research at Saturn explored the value added by the system of co-management (Rubinstein, 2000), which required that the union establish new strategies, structures, and roles
for its leadership (Rubinstein, 2001a). This experience illustrates the challenges that
unions must confront if the labor movement is to be renewed in ways that contribute
to the interests of workers for greater voice, "industrial jurisprudence," and a fair share
of the economic pie, and to society's need for increased productivity. However, as discussed above, the local at Saturn is not alone in this journey as an increasing number
of unions have begun taking on many more of the tasks that used to be exclusively the
domain of management (Rubinstein, 2001b). Recognizing the need to access decision
making opportunities beyond collective bargaining, these leaders are challenging the
line between labor and management roles which has been the standard of the New Deal
industrial relations system. This direct involvement in firm governance and management has required changes in union leadership roles, union structures, and the allocation of union resources. It has also required changes in job structures, seniority
arrangements, work systems, compensation plans, and a variety of other practices that
union members and their leaders have worked under for decades. These adjustments
are difficult and cause considerable debate within local unions, between local and
national unions, and within the larger union movement.
SAUL A. RUBINSTEIN
591
Research conducted on innovative local unions that have taken on greater responsibility for business decision making, firm governance, and management shows that
they have become extensively involved in areas formerly reserved for management such
as strategy formation; capital investment; product development; technology selection
and implementation; quality assurance; budgeting; finance; manpower recruitment,
selection and allocation; supplier relations; and operations management (Rubinstein,
2001b). These additional roles and responsibilities have required unions and their leaders to develop new capacities while continuing to administer contracts and handle grievances balancing their roles as participants in co-management with their responsibilities
to represent individual members. This requires leaders to find new ways to mobilize
and organize their membership and structure the union to provide resources for these
various roles. Viewing management as a vehicle for representing the collective interests of the work force rather than as a class of employees has meant acquiring managerial skills.
This model of value-added unionism is certainly not characteristic of the majority of unions, and may never be. It is likely to be one of a number of models of employee
representation that better fit the new economic environment. Over 1,500 formal learning and benchmarking visits to Saturn by other organizations have taken place, including over 80 by General Motors' units. A second Saturn plant has adopted a contract
allowing for greater direct and representative participation by the union, albeit under
the national agreement. Unions such as the Communication Workers of America
(CWA), the Union of Needletrades, Industrial and Textile Employees (UNITE), and
Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE)
have worked to expand these highly participative arrangements to additional plants in
the industries where they represent employees. And the USWA used pattern bargaining nationally to negotiate a "Cooperative Partnership Agreement" providing for extensive direct and representative involvement in decision making throughout the basic steel
industry. Yet, the diffusion of value-added models of unionism has been slower than
might be expected given the potential benefits as reported by both researchers and
participants.
While nationals have endorsed policies promoting greater union participation in
decision making (AFL-CIO, 1994), related changes in leadership roles, union structures, work rules, job classifications, seniority rights, and compensation systems run
counter to many policies and contractual provisions also historically embraced by these
unions. For example, if compensation is contingent on performance, the value-added
approach no longer allows wages to be taken out of competition through national rate
structures. Adapting to the global economic environment has motivated local leaders
like those at Saturn to take the position that employment security is tied to firm performance, and therefore they need to become involved in strategic and operational decision making which can not be accomplished simply through collective bargaining. As
this happens power shifts from nationals to locals. These are some of the reasons why
the UAW preferred to implement the second Saturn plant in Wilmington, Delaware
under its national agreement. And, this is why active implementation of alternative con-
592
JOURNAL OF LABOR RESEARCH
tract language, union strategies, supporting structures, and skill development have often
not accompanied the policy statements. While there are some notable exceptions (e.g.,
both NUMMI and Saturn were developed by national unions), to date most of the best
examples of value-added unionism have been created by local unions in response to
specific firm problems or opportunities. Even when nationals have been involved, their
role has largely been limited to creating enabling contract language and providing
resources. Thus, much of the organizational and work systems design as well as skill
development have come from the locals. These forms of participation may be best
developed locally in order to meet firm-specific needs and develop local ownership.
While strong local unions focused on adding value to firms may be seen as a movement toward a model of Japanese enterprise unionism, there continues to be critical
roles for national unions in creating locals which add value. For example, strong
national unions are needed to negotiate with corporations when necessary to protect
innovative locals and prevent whip-sawing based on wage rates and employment security provisions. However, if nationals are to play a central role in the creation of more
value-added unions they will need to become more pro-active by researching and
benchmarking practices throughout the country, sharing information, and creating learning networks within their unions and across the union movement.
On the other hand, management's resistance to giving up its prerogatives and sharing decision making control has not eroded. And, historically, the greatest threats to
value-added unionism have been cyclical changes in labor markets, wages, and
employment security. However, the biggest challenge today may come from shifts in
the industrial structure of the economy as firm boundaries are increasingly permeable
which makes the role of an enterprise-based union, trying to add value to an individual firm, more and more difficult.
VI. Flexibility and Inter-Firm Networks
Are there limits to the opportunities for local unions to create intra-firm networks and
add economic value while promoting their members' interests? The value-adding model
of unionism described above may be limited over time to a certain segment of the economy — firms with clear organizational boundaries where intra-firm (firm-bounded)
networks can add to performance. In settings where the boundary of a single enterprise
is highly uncertain or porous, co-management arrangements built on a single enterprise
model may not be stable or effective. In these settings other institutional arrangements
may be better. One argument discussed elsewhere (Rubinstein and Heckscher, 2000;
Kochan, 2000; Osterman et al., 2000) explores the way volatility and rapid change in
capital, labor, and product markets, as well as advances in information technologies
are reshaping management strategies in certain sectors of the economy. In the current
environment companies are no longer able to develop everything they need internally
at a competitive pace. This has led many firms to emphasize core competencies and
knowledge work, and to an expansion of contracting out parts of their businesses
through a wide network of corporate alliances (Kochan, 2000; Heckscher, 2001). Above
SAUL A. RUBINSTEIN
593
all, they appear to want inereased flexibility (Rubinstein and Heckscher, 2000). Aided
by the new information technologies that reduce the costs of integration with contractors, they are increasingly focusing on design and marketing and leaving manufacturing to others. Even the auto industry in recent years has attempted to push more of its
parts manufacturing and assembly onto contractors, focusing instead on design, marketing, and key components.
While the type of intra-firm, union-based networks discussed above increase flexibility, productivity, quality, and responsiveness, constraints on flexibility remain. In
particular, they are bounded by the firm and typically based on a commitment to
employment security. If the economic environment moves increasingly toward more
rapid change, porous flrm boundaries, decreased integration, and increased alliances
and sub-contracting, firm-based models of employee representation, including valueadding local unions, will come under increased pressure.
However, several alternative forms of value-adding labor networks not bounded
by single enterprises have been explored. Heckscher (1988, 2001) has argued for a
model of associational unionism in which employee bodies add value to their members and employers by providing various services that facilitate mobility. These bodies operate like alliances or /n/er-firm networks that cross organizational boundaries
and support firms and workers as technologies and markets change rapidly in unpredictable ways (Rubinstein and Heckscher, 2000; Kochan, 2000; Osterman et al., 2000;
Heckscher, 2001). Cobble (2001) has studied an expanding model of occupational
unionism "emphasizing cross-firm structures and occupational identity" that appeals
to a more diverse, mobile, and increasingly independent work force in a service and
knowledge-based economy.
Multiple models of value-adding unionism will likely co-exist for some time. The
industrial relations environment will continue to vary such that no one model will fit
all contexts. Craft unions have always co-existed with the industrial unions that succeeded them. Furthermore, current economic trends may be only sectoral or a transition to new vertically integrated large-scale corporations which require large stable
work forces. Thus, the form and structure of value-adding network unions, whether
(intra-firm or inter-firm) will depend on where one is looking in the economy.
VII. Conclusions
The decline in private sector union density in the U.S. coincided with increased innovation at the local level. One trend in particular, value-adding unionism, may offer some
hope for those who believe that workers, the economy, and the nation benefit from
strong, independent trade union movement. Unions that can add value to firm performance while at the same time fulfilling their responsibilities to represent the collective and individual interests of their membership have greater appeal to potential
union members seeking opportunities for both representation and participation. Since
they add economic value to firms, they may also reduce the level of managerial resistance that we have seen in recent history. Farber and Western (2001) argue that the over-
594
JOURNAL OF LABOR RESEARCH
all U.S. decline in union density is almost entirely due to falling employment in unionized firms and increases in nonunion firms. This value-adding approach offers one strategy to preserve and expand union employment in firms where it is already established,
thus slowing or reversing the decline. Moreover, as structural changes in the economy
have led to shifts away from sectors with high levels of union density, they have at the
same time put a premium on the ability of firms to respond quickly to changes in the
marketplace and the competitive environment. Value-adding unions can provide the
infrastructure for organizational networks that facilitate the communication and coordination necessary to adjust to such changes. Thus, new forms of representation that
provide unions and their members with greater opportunities in decision making, management, and governance can add value to both management and labor.
As an increasing number of locals move toward this model in response to managerial initiatives and their own needs to ensure economic security, they will require
important changes in the leaderships, strategies, and structures of their unions. While
most of the experience to date has focused on the ways union networks can add value
to a single enterprise through participation in co-management and governance, interfirm networks rooted in employee organizations can also support the trends in the current economic environment.
These models will continue to be controversial in the U.S. environment of historically adversarial labor-management relations. Yet, in the rapidly changing, knowledge-driven economy, organized labor will have increased opportunity to add value to
firms in ways that management can not produce on its own. As this meets management's need for greater productivity, quality, and responsiveness, and labor's need for
greater voice and participation in decision making, it provides one viable path for the
future of the labor movement. Adding value to economic growth as well as economic
justice are requirements for any successful labor organization. Achieving this will mean
participating in business decision making in a way that advances the interests of the
work force as well as the firm. The U.S. labor movement of the future must be able to
accomplish both.
NOTE
*1 thank Charles Heckscher and Bruce Kaufman for comments on earlier drafts of the paper and the National
Science Foundation, Rutgers University, and MIT for financial support.
SAUL A. RUBINSTEIN
595
REFERENCES
AFL-CIO. The New American Workplace: A Labor Perspective. Washington, D.C: AFL-CIO, 1994.
Aoki, Masahiko. "Toward an Economic Model of the Japanese Firm." Journal of Economic Literature 27
(March, 1990): 1-27.
Appelbaum, Eileen, Thomas Bailey, Peter Berg, and Arne Kalleberg. Manufacturing Advantage: Why HighPeiformance Work Systems Pay Off. Ithaca, N.Y.: Cornell University Press, 2000.
Bailey, Thomas. '"High Performance' Work Organization and the Apparel Industry: The Extent and Determinants of Reform." New York: Columbia University, Institute on Education and the Economy, October, 1994.
Cobble, Dorothy Sue. "Lost Ways of Unionism: Historical Perspectives on Reinventing the Labor Movement." In Lowell Turner, Harry Katz, and Richard Hurd, eds. Strategies for Renewal: Transforming
the Labor Movement in the 199O's and Beyond. Ithaca, N.Y.: Cornell University Press, 2001.
Cole, Robert E. Work, Mobility, and Participation: A Comparative Study of Japanese and American Industry. Berkeley: University of California Press, 1979.
Commission on the Future of Worker-Management Relations. Eact-Finding Report. Washington, D.C: U.S.
Department of Labor, May 1994.
Commons, John R. Labor and Administration. New York: MacMillan, 1913.
Cooke, William N. Labor-Management Cooperation: New Partnerships or Going in Circles? Kalamazoo,
Mich.: W.E. Upjohn Institute for Employment Research, 1990.
. "Product Quality Improvement through Employee Participation: The Effects of Unionization and
Joint Union-Management Administration." Industrial and Labor Relations Review 46 (October 1992):
119-34.
Cutcher-Gershenfeld, Joel. "Xerox and the ACTWU: Tracing a Transformation in Industrial Relations." In
Fred K. Foulkes and E. Robert Livernash, eds. Human Resources Management, 2nd ed. Englewood
Cliffs, N.J.: Prentice Hall, 1987, pp. 348-73.
, Thomas A. Kochan, and Anil Verma. "Recent Developments in U.S. Employee Involvement Initiatives; Erosion or Diffusion." Unpublished paper. Presented at 1987 Pacific Rim Labor Policy Conference. Vancouver, BC: June 25-26, 1987.
Cutcher-Gershenfeld, Joel, Robert McKersie, and Kirsten Wever. "The Changing Role of Union Leaders."
Bureau of Labor-Management Cooperation, U.S. Department of Labor. Washington, D.C: GPO, 1988.
Davis, Louis, and Albert Chems, eds. The Quality of Working Life: Problems, Prospects, and the State of
the Art, Vol. 1. New York: Free Press, 1975.
Eaton, Addenne, and Paula Voos. "Productivity Enhancing Innovations in Work Organization, Compensation, and Employee Participation in the Union vs. Non-Union Sectors." Advances in Industrial and
Labor Relations, Vol. 6. Greenwich, Conn.: JAI Press, 1994, pp. 63-109.
. "The Ability of Unions to Adapt to Innovative Workplace Arrangements." American Economic
Review 79 (May 1989): 172-76.
Farber, Henry S. and Bruce Western. "Accounting for the Decline of Unions in the Private Sector,
1973-1998." Journal of Labor Research 22 (Summer 2001): 459-85.
Freeman, Richard B. and Joel Rogers. What Workers Want. Ithaca, N.Y.: Cornell University Press, 1999.
Freeman, Richard B. and James L. Medoff. What Do Unions Do? New York: Basic Books, 1984.
Frost, Ann. "Variation in Labor-Management Collaboration over the Redesign of Work: Impacts on Work
Organization and Outcomes." Advances in Industrial and Labor Relations, Vol. 8. Stamford, Conn.:
JAI Press, 1998, pp. 89-117.
596
JOURNAL OF LABOR RESEARCH
Golden, Clinton S. and Virginia Parker. Causes of Industrial Peace under Collective Bargaining. New York:
Harper & Bros., 1949.
and Harold Ruttenberg. Dynamics of Industrial Democracy. New York: Harper & Bros., 1942.
Hecksher, Charles. The New Unionism: Employee Involvement in the Changing Corporation. New York:
Basic Books, 1988.
. "Living with Flexibility." In Lowell Turner, Harry Katz and Richard Hurd, eds. Strategies for
Renewal: Transforming the Labor Movement in the 199O's and Beyond. Ithaca, N.Y.: Cornell University Press, 2001.
Ichniowski, Casey and Kathryn Shaw. "Old Dogs and New Tricks: Determinants of the Adoption of Productivity-Enhancing Work Practices." In Martin Bailey, Peter Reiss, and Clifford Winston, eds. Brookings Papers on Economic Activity. Washington, D.C. Brookings Institution, 1995, pp. 1-65.
Ichniowski, Casey, Thomas Kochan, David Levine, Craig Olson, and George Strauss. "What Works at Work:
Overview and Assessment." Industrial Relations 35 (July 1996): 299-333.
Kaufman, Bruce E. "The Emergence and Growth of a Nonunion Sector in the Southern Paper Industry." In
Robert Zierger, ed. Southern Labor in Transition 1940-1995. Knoxville, Tenn.: University of Tennessee
Press, 1997.
. "The Employee Participation/Representation Gap: An Assessment and Proposed Solution." Journal of Employment and Labor Law 3 (2001).
. "The Future of Private Sector Unionism: Did George Barnett Get it Right After All?" Journal of
Labor Research 22 (Summer 2001): 433-57.
and David I. Levine. "An Economic Analysis of Employee Representation." In Bruce E. Kaufman
and Daphne Gottlieb Taras, eds. Nonunion Employee Representation: History, Contemporary Practice,
and Policy. Armonk, N.Y: M.E. Sharpe, 2000, pp. 149-75.
Kaufman, Bruce E. and Daphne Gottlieb Taras, eds. Nonunion Employee Representation: History, Contemporary Practice, and Policy. Armonk, N.Y.: M.E. Sharpe, 2000.
Kleiner, Morris. "Intensity of Management Resistance: Understanding the Decline of Unionization in the
Private Sector." Journal of Labor Research 22 (Summer 2001): 519-40.
Kochan, Thomas A. "Using the Dunlop Report to Achieve Mutual Gains." Industrial Relations 34 (July
1995): 350-66.
. "On the Paradigm Guiding Industrial Relations Theory and Research: Comment on John Godard
and John T. Delaney, 'Reflections on the 'High Performance' Paradigm's Implications for Industrial
Relations as a Field'." Industrial and tMbor Relations Review 53 (July 2000): 704-11.
and Joel Cutcher-Gershenfeld. "Institutionalizing and Diffusing Innovations in Industrial Relations." Bureau of Labor-Management Cooperation, U.S. Department of Labor. Washington, D.C: GPO,
1988.
Kochan, Thomas, Harry Katz, and Robert McKersie. The Transformation ofAmerican Industrial Relations.
New York: Basic Books, 1986.
Levine, David and Laura D'Andrea Tyson. "Participation, Productivity, and the Firm's Environment." In
Alan S. Blinder, ed. Paying for Productivity. Washington, D.C: Brookings Institution, 1990.
Lipset, Seymour Martin, and Ivan Katchanovski. "The Future of Private Sector Unions in the U.S." Journal of Labor Research 22 (Spring 2001): 229-44.
MacDuffie, John Paul. "Workers' Roles in Lean Production: The Implications for Worker Representation."
In Steve Babson, ed. Lean Work: Empowerment and Exploitation in the Global Auto Industry. Detroit,
Mich.: Wayne State University Press, 1995a, pp. 54-69.
. "Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible
Production Systems in the World Auto Industry." Industrial and Labor Relations Review 48 (January
1995b): 197-221.
SAUL A. RUBINSTEIN
597
and John Krafcik. "Integrating Technology and Human Resources for High Performance Manufacturing: Evidence from the International Auto Industry." In Thomas Kochan and Michael Useem,
ed. Transforming Organizations. New York: Oxford University Press, 1991, pp. 209-25.
Marshall, F. Ray. "Work Organization, Unions, and Economic Performance." In Lawrence Mishel and Paula
Voos, eds. Unions and Economic Competitiveness. Madison, Wise: IRRA Press, 1992, pp. 287-315.
Osterman, Paul. "How Common Is Workplace Transformation and Who Adopts It?" Industrial and Labor
Relations Review Al (January 1994): 175-88.
. "Work Reorganization in an Era of Restructuring: Trends in Diffusion and Effects on Employee
Welfare." Industrial and Labor Relations Review 53 (January 2000): 179-96.
, Thomas Kochan, Richard Locke, and Michael Piore. Reconstructing America's Labor Market Institutions. Cambridge, Mass.: MIT Institute for Work and Employment Research. Unpublished Manuscript, 2000.
Perlman, Selig. A Theory of the Labor Movement. New York: MacMillan, 1928.
Pil, Erits and John Paul MacDuffie. "The Adoption of High Involvement Work Practices." Industrial Relations 35 (July 1996): 423-55.
Piore, Michael J. and Charles R Sabel. The Second Industrial Divide. New York: Basic Books, 1984.
Rubinstein, Saul A. "Saturn, the GM/UAW Partnership: The Impact of Co-Management and Joint Governance on Firm and Local Union Performance." Dissertation, MIT, 1996.
. "The Impact of Co-Management on Quality Performance: The Case of the Saturn Corporation.
Industrial and Labor Relations Review 53 (January 2000): 197-218.
. "A Different Kind of Company, A Different Kind of Union: Balancing Co-Management and Representation." Industrial Relations (April 2001a): 163-203.
. "The Local Union Revisited: New Voices from the Front Lines." Industrial Relations 40 (July
2001b): 405-35.
, Michael Bennett, and Thomas Kochan. "The Saturn Partnership: Co-Management and the Reinvention of the Local Union." In Bruce Kaufman and Morris Kleiner, eds. Employee Representation:
Alternatives and Future Directions. Madison, Wise: IRRA Press, 1993, pp. 339-70.
Rubinstein, Saul and Charles Heckscher. "Labor-Management Partnerships: Two Views." In Thomas A.
Kochan and David B. Lipsky, eds. Negotiations and Change: From the Workplace to Society. Boston:
MIT Sloan School of Management, Unpublished Manuscript, 2000.
Rubinstein, Saul A. and Thomas Kochan. Learning From Satum: Possibilities for Corporate Governance
and Employee Relations. Ithaca, N.Y.: Cornell University Press, 2001.
Slichter, Sumner. Union Policies and Industrial Management. Washington, D.C.: Brookings Institution, 1941.
, James J. Healy, and E. Robert Livernash. The Impact of Collective Bargaining on Management.
Washington, D.C.: Brookings Institution, 1960.
Staines, Graham L. and Robert P. Quinn. "American Workers Evaluate the Quality of their Jobs." Monthly
Labor Review 102 (January 1979): 3-12.
Steel Workers Organizing Committee. Production Problems. Pittsburgh, Pa., 1938.
Sweeney, John. J. America Needs a Raise. Boston: Houghton Mifflin. 1996.
Verma, Anil and Thomas Kochan. "The Growth and Nature of the Nonunion Sector within a Firm." In Thomas
Kochan, ed. Challenges and Choices Facing American Labor. Cambridge, Mass.: MIT Press, 1985, pp.
89-118.
Verma, Anil and Joel Cutcher-Gershenfeld. "Joint Governance in the Workplace: Beyond Union-Management Cooperation and Worker Participation." In Bruce Kaufman and Morris Kleiner, eds. Employee
Representation: Alternatives and Future Directions. Madison, Wise: IRRA Press, 1993, pp. 197-234.
598
JOURNAL OF LABOR RESEARCH
Webb, Sidney and Beatrice. Industrial Democracy. London: Longmans, 1897.
Wever, Kirsten. "Toward a Structural Account of Union Participation in Management: The Case of Western
Airiines." Industrial and Labor Relations Review 42 (July 1989): 600-609.
Womack, James, Daniel Jones, and Daniel Roos. The Machine That Changed the World. New York: Rawson, 1990.