Blaming a Union for Financial Losses Makes No Sense

In 2012, Hostess, the American food manufacturer, filed for bankruptcy in the U.S. citing difficulties with its largest union (The Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union) as the culprit. The reality was that Hostess’ finances had been mismanaged and the company had failed to adapt to changing consumer taste. As they slowly discovered, Twinkies aren’t popular anymore.  One financial observer noted “you can’t blame them [the union] for management’s strategic incompetence, nor the decision to try to run a flailing company on debt, hope, and empty calories”.

It is not surprising that when preparing a news release that the Hostess management group was going to accept responsibility for the organization’s failure. It seems to have become part of our culture that people in leadership roles simply refuse to accept that responsibility. In addition, in unionized firms there unfortunately seems to be a ready scapegoat where blame can be shifted. In the Hostess’ case blaming the union made for a nice news sound bite. It is likely that many of the people who first read the news accepted the “fact” that the union was responsible for the company’s demise.

As management consultants, we hold the view that unions are never responsible for business outcomes. Unions simply represent the interests of an organization’s employees. If in voicing those interests the result is a collective agreement that the company cannot afford, then it is management who needs to be accountable for agreeing to an untenable contract.  Preparing for and having a Labour Strategy that is aligned with and supports the business realities and needs is management’s job!

Making the union a villain covers up the real problems. Moreover, it contributes to the adversarial nature of the relationship that ultimately pits not only the union against the company but employees against management.

A more recent Canadian example is the news release flagging that Canada Post was posting a quarterly loss of $242 million. One headline cited the loss being the result of a dispute with the Union and implicitly suggested that the union was in some way a villain. The article by Canadian Press August 28, 2018 had this headline “Canada Post reports $242M loss – and they’re linking it to a union pay dispute.

We know we are reading more into the story than was actually written, but our point is that the wording of the headline is suggestive rather than being neutral. Without a through explanation of the underlying issues the idea that the union’s dispute with management lead to this operating loss suggests culpability where there is none. The accompanying story did a little to explain the complexity of the issue.

The “dispute” was over a long-standing pay equity issue. An arbitrator found that pay practices between urban letter carriers (a male dominated role) and rural/suburban carriers (a female dominated role) were inequitable and that the company had to pay arrears for this. In very simple terms, it is the company that is responsible for abiding by the laws governing employment including paying equitably. The corporation and the Canadian Union of Postal Workers have until the end of August to agree to the actual payout to rectify the gaps, otherwise the arbitrator will use her authority to dictate the award.

While paying women equal to men for doing the same or similar work is, as they say “no brainer”, we can give Canada Post some latitude in an argument that in some way these roles were sufficiently different to justify differential treatment. However, once a third-party arbitrator has provided a decision determining that there is an inequity management needs to own the result.

More would have been accomplished by admitting the mistake rather than subtly blaming someone else. We cannot help but speculate that the inequity was in fact known to exist by Canada Post management for many years. It is doubtful that the HR professionals employed by Canada Post could not have done the same analysis the arbitrator conducted and come up with the same answer. It is, and we know we are speculating here, likely that a decision was made to fight the issue in order to defer a payout. Eventually, the company has to correct the inequity and that time has come. If these speculations are true then it becomes clear that the “financial loss” is a management responsibility.

Our point is simple: Management carries all the responsibility for how an organization is run. The union has none. It is inevitable that management is going to make mistakes, and in many cases, those mistakes are simply the result of not being able to keep up with changes in the environment that impact on management practices. So, it is okay to recognize this, own the mistakes and move on.

Never blame the union for poor business results. Doing so simply is a form of abdicating responsibility and relinquishing management authority.