It is vital that every business closely monitors its union risk. A union organizing effort can derail the strongest of companies – hurting its image, productivity, and profitability. As long as unions exist, the threat to companies will always be present. Union risk must not be ignored. Successful company’s manage their risk. To do this, you must first assess your risk then take proactive steps to reduce any risk.
Why Knowing Your Union Risk is Vital
Failure to know your risk can easily result in the end of your business as you know it. The best defense is always a strong offense. You want to avoid a National Labor Relations Board (“NLRB”) election at all costs. After all, you cannot lose an election you do not have. Here are just a few brief costs that a failure to know your exposure can bring to a company.
Union Election Campaign Costs
A recent study determined that companies facing a union election campaign spend between $50,000 – $2,000,000. Costs include attorney’s fees, travel expenses, meetings with employees, video presentations, lost productivity, and other investments that are often hard to quantify but quickly add up to significant expense.
Loss of Market Value
A successful effort to unionize a workplace reduces the market value of a business, even if there is no immediate change in its operating performance. Authors David Lee and Alexandre Mas estimated the average effect of a union election win at a workplace is to decrease the market value of the affected business by at least ten percent!
Increased Non-Compensation Operating Costs
The cost of operating a unionized organization is 25 to 35 percent higher than a union-free organization before factoring wage and benefit costs into the equation. Unionized businesses have more extensive human resources staff, increased legal costs, increased involvement with regulatory agencies, loss of flexibility, and increased labor costs due to rules, grievances and arbitration processing, and many other requirements. Additionally, there are the countless lost hours of company leadership as they deal with these and other issues brought about by the presence of a union in their workplace.
Loss of Control & Agility
In today’s competitive business environment, businesses that thrive do so because they have the agility and ability to quickly adjust and adapt to market forces and customer needs. A unionized business loses much of this control and ability. Unionized companies must bargain over any changes to the business that directly affect the working duties, hours, or compensation of the workforce before implementation. The changes can only be implemented if the union agrees.
Lower Profits
It likely goes without saying based on the above that unionized companies are less profitable. However, it may surprise you to know just how much unionization affects the profitability of a business. A recent study by the Employment Policy Foundation found that a company with just ten percent of its workforce unionized can experience a twenty-one percent reduction in before tax profit.
Determine Your Risk
You must assess and regularly monitor your risk to avoid the pitfalls described above. Unions won nearly sixty-five percent of Representation Elections in fiscal year 2020. The most successful companies know their risk, prepare, and utilize experts giving them a win rate of over ninety percent!
Take this brief Union Risk Assessment. Assess your risk and secure your business in less than five minutes.
