The End of Pluralism

Note: Below is selected text from my LERA Presidential Address delivered at the 78th Annual Meeting in Minneapolis (May 30, 2026). You can watch the full address in this LERA presidential address video 

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The 1930s ushered in a new era of labor policy in the United States under the banner of “The New Deal.” Many pieces are likely familiar to you, such as social security, the Fair Labor Standards Act, and for private sector labor relations, the National Labor Relations Act that was passed in 1935. But of course new federal legislation and policies didn’t emerge from a vacuum. The passage of the NLRA was the culmination of various twists and turns, including a number of important strikes in 1934. This includes the West Coast longshore and San Francisco general strikes, the southern textile strikes, and the Minneapolis Teamsters strike (Bernstein 1970; Millikan 2001).

If you went to the Lynx game on Wednesday night, or have had dinner in the warehouse district, you’ve been walking in the shadows of armed battles from the Minneapolis Teamsters Strike. I found this really cool map where someone overlaid existing Minneapolis landmarks onto the 1935 neighborhoods. We’re in the central business district, which a University of Minnesota sociology professor labeled as including “shady hotels” in 1935 (Schmid 1937, p. 361). 

Map by Tessera Design; photos from the Minnesota Historical Society.

As best as I can determine, during the intense Teamsters Strike, The “Battle of Deputies’ Run” in May 1934 occurred just next to where the Target Center is now located, just a couple blocks from here (Minneapolis Tribune, May 22, 1934). Two months later, Bloody Friday occurred a few blocks north, in what’s still known as the warehouse district (Minneapolis Tribune, July 21, 1934). The Citizens Alliance, which is what the employers called their anti-union open shop organization, reportedly planned this attack in the original Radisson Hotel that stood where we are today (The Organizer, July 21, 1934).

I think it’s fair to say that these events helped usher in the National Labor Relations Act a year later, which provides the foundation for private sector U.S. labor relations, and the model, later on, for public sector labor relations, too (Budd 2025). I think it’s important to appreciate that this system is not just a set of laws and practices. It’s also the embodiment of essential, foundational ideas that are different from, for example, the belief in unregulated competition that characterized policy-making before the New Deal. In industrial relations lingo, these foundational ideas are called “pluralism” (Budd 2025; Budd, Kammeyer-Mueller, and Pohler 2026). 

Pluralism believes that labor markets favor employers, who typically have deeper pockets than individual workers. Pluralism believes that labor is more than a commodity, and that worker dignity and workers’ rights are essential. So pluralism embraces the need for labor standards, like minimum wage laws or laws regulating AI and work, and the need for institutions like labor unions to give workers collective voice. 

But in some respects, pluralism is conservative. It mostly draws a circle around the work sphere and doesn’t pay deep attention to interconnected social inequalities. It doesn’t reject capitalism, and instead, in the words of John R. Commons, seeks to “save Capitalism by making it good” (Commons 1934, p. 143; Kaufman 2003). So pluralism sees both employers and employees as having legitimate interests in the employment relationship. This is where the “pluralism” label comes from: the employment relationship includes multiple stakeholders whose interests are legitimate, even when they conflict with the goals of others—akin to a pluralist political system.

I love this illustration’s representation of pluralism (Survey Magazine, February 7, 1914). The employment relationship is a bargaining relationship, as captured by the pendulum. But this isn’t a radical portrayal of a value system that prioritizes capital or labor. Negative outcomes are portrayed when either is too strong. And the best outcomes result when the pendulum is close to the middle, and both sides benefit. 

Source: Survey (February 7, 1914)

Balancing the power and interests of employers and employees is central in pluralist thought. That is, the system should try to strike a BALANCE (Budd 2025). Because both sides have legitimacy. So labor law, for example, tries to balance property rights and labor rights, even if both sides are often unhappy with where the lines are drawn. More generally some might even say we’re trying to balance efficiency, equity, and voice. Or maybe just one person says that (Budd 2004). 

So now we’re going to skip over my entire career and jump to “The End of Pluralism” today. I see at least two dimensions to this: 1) Destruction of pluralist institutions, and 2) Confronting deeply-embedded inequalities.

Let’s start with the first one. Of course, there has always been resistance to recognizing unions and bargaining with them. The original Radisson hotel that Curt Carlson purchased was right where we are today, and though torn down and rebuilt in 1982, this property was a Radisson hotel until just five years ago. Until 2013 it was owned by Curt Carlson’s company, not franchised.

In 1989, Local 17 of the Hotel Employees union—the union still representing workers here today—filed charges accusing this Radisson of surface bargaining. An  Administrative Law Judge ruled against Radisson (Radisson Plaza Minneapolis, George F. McInerny, Administrative Law Judge, 1990). The NLRB ruled against Radisson (Radisson Plaza Minneapolis, 307 NLRB No. 10, 1992). Rather than bargaining with Local 17,  Radisson challenged the previous rulings but lost in Federal Appeals court (Radisson Plaza Minneapolis v. NLRB, 987 F.2d 1376, 1993). That’s still not the end. After more refusals to comply, the NLRB General Counsel filed a petition for contempt penalties against Radisson, more than five years after the initial charges were filed by Local 17. 

There were a number of union rallies, including a sit down demonstration in the driveway of Curt Carlson’s home. I appeared in a 1994 video supporting the workers (Labor Education Service 1994, starting at 18:48), and given that I’m giving this presidential address in the very same hotel, I can’t resist showing 20 seconds of it. 

I heard later on that Curt Carlson wasn’t pleased that a professor—actually, an untenured assistant professor, contrary to what it says in the video—in the business school with his name on it, appeared in this video. 

Clearly there’s a long history of employer resistance to the pluralist bargaining system. But I think today is different. Extreme lawbreaking used to be refusing to bargain like Curt Carlson, or prompting a strike to hire replacements. Now employers are challenging the constitutionality and legitimacy of the NLRB just like it was 1935 (Meyerson 2025). President Reagan fired 11,000 air traffic controllers who were illegally striking. The Trump administration has tried to strip bargaining rights from a million federal workers (Glass, 2025). The hollowing out of the Federal Mediation and Conciliation Service (FMCS) is another attack on pluralist values and a dismantling of a core pluralist institution.       

Let’s turn to the second dimension of my “End of Pluralism” claim: Confronting deeply-embedded inequalities. Again, pluralism isn’t radical, even if it’s attacked as such by some. A pluralist approach to industrial relations largely tries to fix bargaining power imbalances by giving workers the opportunity to choose collective voice…in their workplaces. Inequality is seen as labor market inequality, so a better wage and just cause protections through collective bargaining will solve workers’ problems. This is different from more radical, critical, and heterodox schools of thought that see inequalities as deeply embedded in interlocking societal systems – not just the labor market, but the political arena, the legal system, housing, education, voting, and more (Lee and Tapia 2021; Rubery and Hebson 2018). 

After the murder of George Floyd just 3 miles from here, I spent several years developing and launching a new required core course for all undergraduates in my business school – 1,000 a year. It’s called “Race, Power, and Justice in Business.” I’m embarrassed to admit that I had never really thought about race very deeply in my work before then. A pluralist approach to understanding racial inequality focuses on labor market imbalances, and thus looks to anti-discrimination laws and collective power to redress this. That might, emphasis on “might”, be sufficient if racial inequality was purely a labor market phenomenon. But of course it’s not.

The more I read about systemic inequality and its roots in ideas as well as practices, and its reproduction through interlinkages involving housing, education, health care, voting, work, and more (Darity. and Mullen 2020; McGhee 2021; Trotter 2019)…well, it was hard for me to remain a pluralist. Yes, me, the author of multiple books grounded in pluralism, if not making the case for it (Budd 2004), questioning my own belief system. 

And many unions aren’t remaining pluralist either. It’s well known that labor unions have a complicated history when it comes to racial and gender equality (Zieger 2007; Milkman 2026).  But I think it’s safe to say that the U.S. labor movement has made great strides becoming more inclusive and becoming stronger champions of social justice, including beyond the boundaries of the workplace. 

For example, the labor movement was active in Black Lives Matter protests after the murder of George Floyd. The “bargaining for the common good” initiative is a movement away from pluralism as it seeks to integrate collective bargaining with community alliances to push for structural changes beyond the workplace, such as affordable housing, community-owned banks, and criminal justice reform. “Whole worker organizing” is another trend away from pluralism’s workplace focus (McAlevey 2016). 

And now we get to the winter of 2026 here in Minnesota. As highlighted at yesterday's labor breakfast, the labor movement was a key participant in the anti-ICE actions. The Minneapolis Regional Labor Federation and many local unions endorsed and provided extensive support for the January 23rd Day of Truth and Freedom protests. The national presidents of SEIU, AFT, and the CWA all spoke at the Target Center rally that day. Local unions and federations supported their members and the community throughout this occupation. The hotel employees union that represents workers here at the Royal Sonesta created an emergency food distribution network, which included delivering food to members who were afraid to leave their homes. 

And these weren’t “labor actions” narrowly defined—they were community actions, done with faith organizations, community organizations, and neighbors. In fact, while Minnesota’s largest corporations could only muster a weak PR statement, many small businesses in affected neighborhoods also participated in community and worker support actions during Operation Metro Surge. 

So at the risk of oversimplifying complicated stories, perhaps we could see the era of pluralism in U.S. labor relations as ushered in by the Teamsters Strike in 1934, and ushered out by anti-ICE actions 92 years later. 

But what happens next? Predictions are hard. The only previous LERA president from the University of Minnesota, Dale Yoder, in 1959 predicted that “By 1990, the 35-hour week should be well established, and many employees may enjoy a 4-day, 32-hour week” (Yoder 1959, p. 4) Even if we give Professor Yoder an additional 36 years for this to emerge, his predictions have obviously not come true. But I think Professor Yoder got the most important prediction correct:

“What actually happens in wages, hours, productivity, union membership and public regulation will depend largely on what happens to our ideas about employment and working relationships. Changes in our ideas and ideals are the real determinants of our future in industrial relations” (Yoder 1959, p. 5).

Unfortunately, the two trends I’ve identified push ideas and ideals in opposite directions. The destruction of pluralist institutions is animated by the ideals of unfettered capitalism and individualism, or things even less principled. In sharp contrast, the confronting of deeply-embedded inequalities pushes in a sharply contrasting direction towards ideals associated with social democracy. 

I’m not sure where things will go, but given these clashing forces, it’s likely to be tumultuous. And it might bring on difficult times for LERA if it’s harder to bring different stakeholder groups together. But I’m grateful for everyone working hard to push things in directions that are consistent with the fundamental values of our field, and to develop new ideas and new understandings. My granddaughter, and a few billion other young people, are counting on it. 

References

Bernstein, Irving (1970) Turbulent Years: A History of the American Worker, 1933–1941 (Boston, MA: Houghton Mifflin).

Budd, John W. (1991). Pattern Bargaining, Wage Uniformity, and the United Auto Workers: An Empirical Analysis. PhD dissertation, Princeton University.

Budd, John W. (2004) Employment with a Human Face: Balancing Efficiency, Equity, and Voice (Ithaca, NY: Cornell University Press).

Budd, John W. (2011) The Thought of Work (Ithaca, NY: Cornell University Press).

Budd, John W. (2025) Labor Relations: Striking a Balance, 2025 release (New York: McGraw Hill).

Budd, John W., John Kammeyer-Mueller, and Dionne Pohler (2026) “Competing Frames of Reference on the Employment Relationship and Their Importance for the Study of Work,” in Jonathan Lavelle, Tony Dobbins, Tony Dundon, and Dionne Pohler, eds., New Frontiers and Trajectories in Labor-Management Relations (SIOP Organizational Frontiers Book Series) (Oxford: Oxford University Press).

Carlson, Curtis L. (1994) Good as Gold: The Story of the Carlson Companies (Minneapolis, MN: Carlson Companies, Inc.).

Commons, John R. (1934) Myself (New York, NY: Macmillian).

Darity Jr., William A. and A. Kirsten Mullen (2020) From Here to Equality: Reparations for Black Americans in the Twenty-First Century (Chapel Hill: UNC Press).

Glass, Aurelia (2025) “The Trump Administration Ended Collective Bargaining for 1 Million Federal Workers,” Center for American Progress (May 22).

Kaufman, Bruce E. (2023) “John R. Commons and the Wisconsin School on Industrial Relations Strategy and Policy.” ILR Review 57, no. 1: 3-30.

Labor Education Service (1994) “Turning Up the Heat: The Struggle at the Radisson Hotel,” video produced and directed by Howard Kling and Randy Croce (Minneapolis, MN: University of Minnesota, Industrial Relations Center). Available at https://youtu.be/bi_rKJKhe9w?si=ehpNtvpYPODjD5rX 

Lee, Tamara L., and Maite Tapia (2021) “Confronting Race and Other Social Identity Erasures: The Case for Critical Industrial Relations Theory.” ILR Review 74, no. 3: 637-662. 

McAlevey, Jane (2016) No Shortcuts: Organizing for Power in the New Gilded Age (New York: Oxford University Press).

McGhee, Heather (2021) The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together (New York: One World).

Meyerson, Harold (2025) “A Federal Appellate Court Finds the NLRB to Be Unconstitutional,” The American Prospect (August 25).

Milkman, Ruth (2016) On Gender, Labor, and Inequality (Urbana: University of Illinois Press).

Millikan, William (2001) A Union against Unions: The Minneapolis Citizens Alliance and Its Fight against Organized Labor, 1903–1947 (St. Paul: Minnesota Historical Society).

Rubery, Jill, and Gail Hebson (2018) “Applying a Gender Lens to Employment Relations: Revitalisation, Resistance and Risks.” Journal of Industrial Relations 60, no. 3: 414-436.

Schmid, Calvin F. (1937) Social Saga of Two Cities: An Ecological and Statistical Study of Social Trends in Minneapolis and St. Paul (Minneapolis: MN: Minneapolis Council of Social Agencies).

Trotter, Jr., Joe William (2019) Workers on Arrival: Black Labor in the Making of America (Oakland: University of California Press).

Yoder, Dale (1959) The Outlook in Industrial Relations (Minneapolis, MN: University of Minnesota, Industrial Relations Center).

Zieger, Robert H. (2007) For Jobs and Freedom: Race and Labor in America since 1865 (Lexington: The University Press of Kentucky).

The Importance of Cognitive Frames for Understanding HR Practices, Part 2 (Adding Workers In)

In the recent union organizing drive at an Amazon warehouse in Bessemer, Alabama, workers were presented with competing narratives. Amazon portrayed unionization as unnecessary because it already provides good wages and benefits along with direct communication between workers and their managers, whereas union advocates emphasized the need for increased power through collective voice to counter Amazon’s power. While this messaging taps into employee fears or material interests, it also fundamentally reflects different beliefs about the underlying nature of the employment relationship. Is it best seen as a market-based transaction (which unions interfere with), a partnership in which organizations and workers share long-term interests (so unions are unnecessary), or an unequal relationship that includes conflict interests (so unions are needed to better balance power)?

Each of these underlying beliefs, which may be subconscious, comprises a distinct frame of reference on the nature of the employment relationship, where, more generally speaking, a frame of reference is a cognitive lens through which we perceive the world. In a previous post, I described the first part of new research with Dionne Pohler and Wei Huang in which we assert that we need to better consider leaders’ frames of reference in determining human resources (HR) strategies and practices. But as this example is meant to highlight, the second part of our research asserts the need to also factor in workers’ frames of reference.

As described in that post, we highlight four frames of reference on the employment relationship (neoliberal-egoist, unitarist, pluralist, and critical), and these apply equally to workers as well as organizational leaders. That is, workers have an implicit frame which shapes their expectations. One Amazon worker who supported unionization was quoted as saying, “I ain’t going to lie, I thought it was going to be a great place to work.” We can see differences in these expectations most visibly in the context of unionization, but this thinking applies to workers in all settings and pertains to all aspects of HR policies and practices. So just as we predict that a neoliberal-egoist manager will favor practices consistent with a transactional approach, a unitarist manager with a commitment approach, a pluralist manager with an accommodative approach, and a reformist critical manager with a cooperative approach, so, too, do we assert that neoliberal-egoist worker will favor practices consistent with a transactional approach, a unitarist worker with a commitment approach, a pluralist worker with an accommodative approach, and a critical worker with a cooperative approach.

But what happens when workers’ expectations are violated? Before addressing that, we recognize that there are many factors that push toward alignment rather than mismatch. Workers are not randomly assigned to organizations; rather, they apply for and accept certain jobs, are socialized into the organization, and can quit when their expectations are unfulfilled. Nevertheless, mismatched frames can occur for various reasons, including limited job opportunities for applicants, selection decisions that overlook fit or prioritize diversity, the inconsistent application of HR policies, new organizational leaders, and new events that change manager or employee frames. We’re not claiming that mismatch is more common than alignment; rather, we’re saying that the possibility of mismatch should not be overlooked as an organizational phenomenon and explanation for under-performing HR practices.

So again, what happens when workers’ expectations about HR practices are violated? We theorize that this will prompt workers to engage in a sensemaking process. This may cause them to come to accept what they are experiencing, to quit, or to resist the status quo. So a key part of our research is exploring what we think emerges from different combinations of (mis)matched frames between leaders and workers. For example, if they both have unitarist frames, we’d expect high-commitment HR practices created by leaders that are then embraced by workers, resulting in a high-performance organization. But a worker with a pluralist frame working for a neoliberal-egoist manager may try to find other similarly-minded co-workers to band together to fight for more voice, better pay, and other improved conditions. This mismatch is predicted to lead to conflict. Or, a neoliberal-egoist employee working for a unitarist manager is unlikely to engage with the high-commitment HR practices, leading to managerial frustration over under-utilized HR practices. Here is a brief summary of our predictions, with more detailed tables in our article:

Previous HR systems research has focused on archetypes—bundles or clusters of HR practices within organizations that are structurally determined, internally consistent, relatively stable over time, and documented across contexts—what we label here as transactional, commitment, accommodative, and cooperative. Our research seeks to highlight the important role of leaders’ frames of references, in addition to environmental, structural factors, for influencing the type of HR approach that emerges (see part 1 that precedes this post) as well as the importance of shared frames with workers in order for an archetypical approach to be stable and result in less conflict. While there is a large research literature on person-organization fit, this has typically focused on job skills, organizational culture, or environmental and socially responsible values rather than beliefs regarding the structural nature of the employment relationship and resulting expectations about HR practices.

Moreover, by rooting expectations over HR practices in actors’ (mis)matched frames of reference, we can explain a broader and more nuanced set of HR policies and practices that better matches the variation observed in HR policies and practice in reality—including patterns that are more conflictual or the fact that competing organizations in the same industry can have very different HR strategies.

This also helps explain how conflict over HR practices sometimes results from employees wanting more, but also from managers’ frustration with a lack of employee commitment, loyalty, and participation. In this way, we propose a new categorization of HR practices: effective, underutilized, or causing recurring, antagonistic conflict.

 

 

Lastly, appreciating the potential importance of (mis)matched frames within the dynamics of an organization draws attention to the existence of framing contests within organizations. A framing contest is the intentional use of ideas and information to persuade others to adopt your frame, and thus follow your desired actions. We therefore expect managers to regularly use discursive practices to obtain and maintain employees’ acceptance of their frame of reference on the employment relationship as part of reinforcing a broader organizational logic that is viewed as legitimate. Organizations would generally have stronger communication channels than employees, but union organizing drives are one visible example where employees produce counter-narratives. In any case, this highlights the importance of communication practices within organizations not simply to inform, but to achieve conformity with the HR practices an organization wants its employees to buy into.

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Source: John W. Budd, Dionne Pohler, and Wei Huang (forthcoming) "Making Sense of (Mis)Matched Frames of Reference: A Dynamic Cognitive Theory of (In)stability in HR Practices," Industrial Relations. http://doi.org/10.1111/irel.12275 [free access to the pre-publication version here].

The Importance of Cognitive Frames for Understanding HR Practices, Part 1 (Organizational Leaders)

Last Fall, workers at two popular craft breweries in the Twin Cities (Fair State and Surly) announced their intent to unionize. The CEO of Fair State responded by saying “I am proud of the self-determination our team has shown by taking on the responsibility of organizing to make Fair State better,” and Fair State became the first U.S. microbrewery to unionize. However, Surly announced plans to close its taproom two days later. Even if this had already been planned due to pandemic-related financial losses, Surly certainly didn’t embrace the unionization effort, and it remains nonunion.

If market conditions determine human resources (HR) strategies and practices, such a stark difference is hard to explain. In a recent paper, Dionne Pohler, Wei Huang, and I assert that we also need to factor in the role of leaders’ frames of reference. A frame of reference is a cognitive lens through which we perceive the world. When someone says “labor union,” quick meanings probably come to mind; possibly, large, bureaucratic organizations protecting lazy workers, relics of a bygone era, or needed champions of social justice. This is because your brain has created a mental map based on prior experiences, assumptions, and beliefs. This then influences what you think is possible and desirable, perhaps subconsciously.

We focus on frames of reference on the nature of employment relationship, and consider four broad alternatives:

1. The neoliberal-egoist frame in which organizations and workers are seen as dispassionate agents pursuing their own self-interest in economic markets that approximate ideal competitive conditions, often with a view that work is lousy but serves economic interests.
2. The unitarist frame in which organizations and workers are seen as essential partners who can both thrive when appropriate policies and practices align and unite their mutual interests, which are often seen as psychological as well as economic.
3. The pluralist frame in which organizations and workers are seen as having complex relationships in which they are each an important partner, but also that this partnership is set against a backdrop of bargaining power advantages for the organization which is important because not all of their interests coincide and can be aligned, potentially leading to harmful inequities.
4. The critical frame in which capitalist organizations and workers are seen primarily as adversaries with opposing goals interacting in a world in which the dominant group uses its deep-seated economic and social power to maintain its advantages, systematically depriving the other of essential rights and standards.

We assert that most organizational leaders’ implicit views on the nature of the employment relationship can be usefully categorized as largely falling either in the neoliberal-egoist or unitarist frames. There can also be organizational leaders whose inherent beliefs are more consistent with the pluralist way of thinking.

Central to our work is that we assert that these views, even if subconscious, will influence what types of HR strategies and practices organizational leaders will prefer and implement. That is, neoliberal-egoist leaders will prefer transactional HR approaches, unitarist leaders will prefer commitment HR approaches, and pluralist leaders will prefer accommodative HR approaches:

Note that this dynamic can occur at various levels within an organization. The top leadership of an organization can have a certain frame that sets an overall HR direction, and then if lower-level managers have the same frame, their implementation practices will reinforce this direction. However, there are many ways in which lower-level managers can shape the implementation of HR policies consistent with their own frame. For example, a neoliberal-egoist manager could act in an authoritarian fashion while denying development opportunities to workers in a unitarist organization. So we admit that these relationships are complicated, but nevertheless we believe that research needs to place more attention on the importance of organizational leaders’ beliefs about the nature of the employment in considering how HR strategies and practices are determined and implemented. 

But what about the critical frame? The critical frame of reference sees the employment relationship as a deeply unequal one rooted in socio-political-economic dominance by an elite group, such as capital. A leader who holds this view could exploit this by acting only in the organization’s interest without regard for employee well-being. By dismissing employee welfare as something workers are themselves responsible for, such a leader would be acting in a neoliberal-egoist fashion, and would provide market-driven, take-it-or-leave terms and conditions of employment. Instead, consider a business owner who sees the employment relationship through a critical frame of reference but is bothered by the inequalities that disadvantage employees rather than seeking to exploit them.

Through a critical lens, redressing these inequalities requires structural changes in resources and decision-making rights. We label leaders who have this perspective as “critical reformist” because of the implied need to reform traditional capitalist organizational forms by creating non-hierarchical organizations or alternative employment models that are characterized by a relatively equal distribution of resources and shared authority over decision-making between managers and employees. We label this a cooperative approach where “cooperative” indicates worker-owned cooperatives (e.g., Mondragon) and other multi-stakeholder organizational governance forms (e.g., Stocksy). And thus, we can add another row to table above:

To return to the opening example, Fair State is, in fact, a cooperative, and hence the CEO sees unionization as “one more step to building the business that we have envisioned from the beginning—one where workers and consumers each have a say and stake in a business, working together to build something beautiful and thriving.” The Surly leaders might not be surly, but with more of a unitarist mindset they did not embrace unionization. More generally, previous HR systems research has focused on archetypes—bundles or clusters of HR practices within organizations that are structurally determined, internally consistent, relatively stable over time, and documented across contexts. Our research seeks to highlight the important role leaders’ frames of references can play in influencing an organization’s HR approach, in addition to environmental, structural factors.

But what about workers? They are also humans (!), and as such have their own cognitive frames, including on the nature of the employment relationship. So they have their own expectations about HR practices. This is an essential element of our paper, and is addressed in a follow-up post. Or you can watch our animated video overview.

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Source: John W. Budd, Dionne Pohler, and Wei Huang (forthcoming) "Making Sense of (Mis)Matched Frames of Reference: A Dynamic Cognitive Theory of (In)stability in HR Practices," Industrial Relations. http://doi.org/10.1111/irel.12275 [free access to the pre-publication version here].

Workplace Cooperation: Important, But Difficult

On Monday I had the honor of the receiving the 2020 Melvin Lurie Labor-Management Cooperation Prize. This award honors the memory of Melvin Lurie, a Professor of Economics at the University of Wisconsin-Milwaukee and founder of what is now its Master of Human Resources and Labor Relations (MHRLR) program. The prize is intended to continue and enhance Professor Lurie’s legacy of promoting the practice and further the development of cooperation between labor and management.

As part of the ceremony, I delivered a lecture on "Workplace Cooperation: Important, But Difficult." This presentation highlights the connections between balanced employment relationships and workplace cooperation, and the difficulties of achieving and sustaining meaningful cooperation. Here is a video version:  

Using Employment Relations Frames of Reference to Think about Discrimination and (Institutional) Racism

Central to my approach for labor relations teaching is the explicit recognition of schools of thought (equivalently, “frames of reference”) on the employment relationship. Four schools of thought, in particular, illustrate sharply contrasting perspectives on labor unions, and it’s important to understand how these views are rooted in different models of the employment relationship that embrace differing assumptions. In brief, the four key models are:

1. Neoliberal egoist: Dispassionately rational employers and employees freely pursue their own self-interest in competitive labor markets; when these interests align, they transact with each other, when they do not align, they keep searching for mutually-beneficial exchanges.

2. Unitarist: Although labor markets might not be perfect, employers and employees share a unity of interests (hence “unitarist”), especially in that treating employees well improves the company’s bottom line and vice versa.

3. Pluralist: Employers and employees interact as unequals with some shared and some conflicting interests that are accepted by the other as legitimate (hence, “pluralist”), but these conflicts are economic in nature and limited to the employment relationship.

4. Critical: Employers and employees interact as unequals with key conflicting interests and significant power differentials that are embedded in societal institutions.

In this post I hope to illustrate the usefulness of explicitly considering these alternative frames of reference as a way for thinking about discrimination and (institutional) racism, especially with respect to the limitations of some perspectives.

First, some definitions would be useful. Prejudice is an individual bias against others based some identity; individual racism is prejudice based on race and beliefs of racial superiority. Discrimination is a pattern of behaviors and practices that harm members of a group. Institutional racism is the systematic allocation of resources and opportunities that advantage racial groups at the expense of other racial groups. Individual racism might be easy to see; institutional racism can be embedded in hard-to-see institutions and norms.   

Now turning to the frames of reference, in the neoliberal egoist employment relationship with perfectly-competitive markets and self-interested agents, discrimination on any basis except economic value should not exist because those who discriminate would face a competitive disadvantage, and market competition would force them to change or go out of business. But perfectly-competitive markets only exist in economics textbooks, and discrimination obviously exists. However, consider what happens if we make this model more realistic by recognizing that employers do not perfectly know an individual worker’s true qualities. In this case, for employers to generalize on the basis of demographic characteristics (for example, by assuming that parents of young children will be absent more frequently) can be rational behavior driven by profit-maximization (self-interest) rather than prejudice. This is called statistical discrimination.

As a concept, statistical discrimination is useful for thinking about how seemingly-benign self-interest can lead to racial and other forms of discrimination. But in reality, attempts to explain broad-based racial discrimination as statistical discrimination ignore the racism that leads to race being seen as a meaningful indicator in the first place, and overlook the inherent racism that causes the believed attributes to always be negative. In other words, when it comes to race, we should not see statistical discrimination as a benign explanation of patterns of inequality, but rather as ultimately rooted in racism.

In the unitarist school of thought, discrimination is largely ascribed to individual or organizational failings that can be addressed through improved organizational policies and practices that are voluntarily adopted. Unitarism rests on the assumption that workers and organizations have common interests that can be aligned. As such, conflicts in the workplace, including those pertaining to discrimination, are seen as resulting from the aberrant attitudes and behaviors (e.g., prejudice) of specific individuals, and that this can be improved through interventions like training. At an organizational level, high-functioning organizations are seen as those that tap into workers’ interests for mutual benefit, which leads to an emphasis on diversity management as a win-win source of organizational performance and respect for all individuals. Organizations that don’t do this are urged to recognize the so-called business case for diversity.

At its best, the unitarist organization can change individual attitudes and behaviors while giving employment opportunities to people of color. But talking about race is hard (even with the many tools available) and change is hard. Moreover, a unitarist approach places an excessive reliance on organizational self-interest and self-policing. What happens when an organization believes its business case is serving a racist segment of society, or segments its workforce along racial lines to make it easier to manage? Or if it doesn’t back up public relations statements with meaningful action or if its diversity training fails (as is often the case)? And since racism, prejudice, and structural inequalities are social phenomena, even the most well-intentioned organization can only have a limited impact.

In the pluralist employment relationship, discrimination stems from unequal bargaining power. African American workers, for example, might be (1) paid less than white workers because they lack the bargaining power to get higher pay, and (2) crowded into certain occupations because they lack the leverage to break into better-paying occupations or because intentionally-constructed racial divisions can lower all workers’ bargaining power. Integration and improved labor market power, not just diversity or non-discrimination are therefore highlighted. Consequently, multi-pronged institutional changes are championed, including legislative action and labor union representation to enhance workers’ power.

Unlike the previous two approaches, the pluralist school of thought recognizes the importance of power differences across racial groups. But there are limitations. Relying on labor unions or other groups to increase the power of African American workers or those with other identities requires union leaders committed to this and able to overcome racist attitudes among the rank and file. But these are not guaranteed, especially when these institutions are embedded in a society marked by racism. In other words, the pluralist approach focuses largely on the labor market, which makes it inadequate to address racism and labor market inequalities that go beyond the labor market. For example, even though many aspects of the 1930s New Deal were worker-friendly, the New Deal’s Federal Housing Administration created racially-segregated neighborhoods by making restrictive racial covenants a condition of receiving subsidized mortgages. The result of this segregation often persists today, and continues to make it more difficult for workers with marginalized identities to access good jobs in the predominantly white suburbs. So a pluralist focus on the labor market doesn’t do enough to uncover why there are power differences between white people and people of color, and fails to redress systemic racism. As with the unitarist perspective, important initiatives can emerge, but they are inadequate by themselves for combating institutionalized racism.   

Which brings us to critical schools of thought on the employment relationship in which inequalities between a dominant elite and others are rooted in a number of social inequalities, such as education, housing, banking and loans, health care, media, and political and judicial influence. The dominant elite, therefore can use these material and normative advantages to maintain its dominance, which includes controlling access to good-paying jobs. This way of thinking can be applied to various fault lines such as class and gender, but of particular relevance to racism is critical race theory which focuses on racial divisions and the ways in which white people have systemic advantages that go beyond the labor market.

Of the four conventional schools of thought on the employment relationship, the critical race theory wing of the critical school is the most powerful lens for considering institutional racism because it prompts us to consider the ways in which labor market discrimination is deeply connected to other key aspects of society that are material as well as normative, and more generally the ways in which capitalism is more accurately described as "racial capitalism" because identities are exploited for profit. In other words, we must confront how racism is embedded in societal institutions including business. Consequently, redressing racial inequalities requires deep, anti-racist structural reforms that move beyond formal equality or corporate diversity programs. Genuine equality and inclusion requires re-defining society’s values and aggressively opening up good-paying jobs to traditionally marginalized workers. And this perspective deepens the traditional pluralist thinking on labor market segmentation by revealing the complex roots of segmentation that reside outside of the usual employment relations actors, such as racialized patterns of education, housing, and health care. So opening up good paying jobs requires addressing these underlying inequalities which means confronting the racist origins of these differences.

In closing, as part of broader personal reflections and conversations about race, I hope that these perspectives are useful for thinking about discrimination and racism at an individual as well as societal level. From an individual level, for example, white people can ask themselves whether they are trying to justify decisions on the basis of statistical discrimination and what not-so-apparent advantages they’ve benefited from. At a societal level, we can ask what are the roots of racial inequalities and what’s needed to redress them.

Cooperation—What Does it Really Mean?

When it comes to the practice of industrial relations, many people’s favorite word seems to be “cooperation.” During a union representation election in Tennessee, a Volkswagen executive bragged that “The Volkswagen Group is proud of its record of cooperation and co-determination between employees, management and the communities in which we live and work…it is a business model that helped to make Volkswagen the second largest car company in the world” and further indicated a desire for an American works council so that Volkswagen “would be able to work cooperatively with our employees.”  In Australia, conservative Prime Minister Scott Morrison recently said “our government believes in cooperative workplaces” and called for “a fresh look at how the system is operating” to remove barriers to cooperation. Last year, a leader of the Australian Workers’ Union argued that “Australia’s national interest is best pursued through cooperation between labour and management.” The International Labour Organization’s SCORE training process to improve productivity and working conditions in small and medium enterprises in the Global South starts with “Module 1: Workplace Cooperation – A Foundation for Business Success.”

But what does “cooperation” really mean? Unfortunately, it is rarely defined, which is a problem given that not everyone has the same thing in mind when using the term. So Mark Bray, Johanna Macneil, and I decided to confront this head on and carefully look at the different meanings of cooperation. We start by defining cooperation as “working together to the same end” while noting that this still leaves a wide range of alternative perspectives on who is working together, how they are doing so, and whose goals are being pursued. So we really need to dig deeper.

Ultimately, we think it’s necessary to identify six key alternative perspectives on workplace cooperation. Why so many? Because people have different views about how the employment relationship works rooted in alternative views about the extent to which employers and workers have conflicting interests. First, from a neoliberal market perspective comes a generic view of cooperation:

#1) A market-based perspective in which cooperation is employers and employees complying with freely-entered contractual obligations in self-interested ways. 

Note that this is not a very deep conceptualization of cooperation in that it doesn’t require much except a lack of deep-seated conflict manifested in a refusal to agree to abide by the terms of a job. In this way, it’s similar to a self-interested pluralist view of cooperation (the main difference being the pluralist respect for the legitimacy of the other side):

#2) An adversarial pluralism perspective in which cooperation is employers, employees, and their representatives pursuing their separate goals and compromising with each other in ways that respect the legitimacy of each party’s interests.

Next is perhaps what many conservative commentators envision as workplace cooperation—or what worker advocates think conservative commentators have in mind:

#3) An autocratic unitarism perspective in which cooperation is employees following managerial directives for serving organisational goals, that in turn also are assumed to benefit employees.

This is a one-sided view of cooperation, which essentially requires workers to do as they are told. So it’s not really a case of working together, and hence not a vision of true cooperation. It might not even be truly unitarist if organizational goals are not pursued in ways that also benefit workers. Indeed, this leads to the critical or radical critique that sees cooperation as disguised domination:

#4) A critical (radical) perspective in which cooperation is acquiescence by employees to employer-established goals and practices.

In these ways, we have four perspectives on cooperation that don’t actually embrace cooperation as working together. The critical perspective sees cooperation as a mechanism to control workers; neoliberalism sees cooperation as largely irrelevant because it assumes the voluntary negotiation of cooperation before workers enter the employment relationship; adversarial pluralism sees cooperation on common interests as very limited, overwhelmed by conflicting interests that need to be bargained in a largely arms-length style; and autocratic unitarism largely assumes the right of employers to direct employees and expect employee compliance.

But cooperation can actually exist in a meaningful way. In fact, we think it’s important to understand two views that can both be seen as representing a legitimate degree of working together:

#5) A consultative unitarism perspective in which cooperation is employers and employees working together on organizational goals, in ways that are established by management through consultation. 

#6) A collaborative pluralism perspective in which cooperation is employers, employees, and their representatives working together on mutual goals and compromising on conflicting goals in ways that respect the legitimacy of each party’s interests.

These views are distinguished by the extent to which management and workers share a single common interest in the attainment of organizational goals (=unitarism), or there are some conflicts of interest (=pluralism). This crucial distinction points to different variants of cooperation with different roles for labor unions and different levels of workers’ rights in decision-making. But what they have in common highlights what’s needed for genuine cooperation: the parties avoid opportunistic wins, organizational and employees interests are pursued, collaboration is not limited to short-term issues, and there are high levels of trust and information sharing. In these ways, cooperation is much more than workers simply following managerial directions without complaint.

At the same time, in contrast to many writers who reject the value of cooperation in the absence of trade unions, our framework reveals legitimate space for genuine cooperation within a unitarist frame of reference which downplays employer-employee conflicts of interest. The key, we think, is to recognize that this is not unconditionally—in other words, only particular forms of unitarist HRM truly rise to the level of cooperation (otherwise, it's more like #3) autocratic unitarism).

In closing, cooperation is advocated by politicians and policy makers of all complexions, but they bring very different meanings and assumptions about how increased cooperation will be achieved and what its consequences will be. Better recognizing the values that underlie the respective positions on cooperation will encourage more rational debate and allow policy making based on evidence rather than obscure rhetoric and opinion. In practice, greater clarity over contrasting perspectives on cooperation can lead to greater understanding among workplace actors with differing views, and can set the stage for aligning visions by reconciling frames of reference that can be roadblocks to developing and sustaining genuine cooperation. This will not be achieved by hollow rhetoric or a limited understanding of alternative perspectives.

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Source: Mark Bray, John W. Budd, and Johanna Macneil (forthcoming) "The Many Meanings of Cooperation in the Employment Relationship and Their Implications," British Journal of Industrial Relations. https://doi.org/10.1111/bjir.12473. Click here to read the full paper.

Thank You Wells Fargo...For Reminding Us of the Nature of the Employment Relationship

The biggest business story of the past month has been the Wells Fargo banking scandal. Driven by pressures to sell banking customers additional products, thousands of employees created perhaps two millions new accounts without customer approval. Over 5,000 workers were fired for creating fraudulent accounts, and some who were fired for failing to meet sales goals are suing Wells Fargo for wrongful termination. One lawsuit alleges that “The managers and bankers routinely harassed and pressured [the plaintiff] and she was denied promotions and bonuses because she would not engage in the unethical and fraudulent banking practices for unethical quotas.” 

This unfortunate mess raises many problematic issues, such as ineffective regulators, unrealistic pressures for unending corporate financial and stock returns, predatory corporate culture, leadership failings, and the danger of incentives (from stock incentives at the top, to managerial bonuses in the middle, down to the incentive to simply keep one’s job as a teller at the bottom of the banking organizational chart). And we shouldn't overlook the personal distress experienced by individual employees ("Wells Fargo's insatiable greed made me a monster," StarTribune, Sept 30, 2016). But I want to thank Wells Fargo for reminding us of the nature of the employment relationship.  

The debate over the nature of the employment relationship is as old as modern capitalism itself. Adam Smith’s model of self-interested employees and employers trading as equals in markets guided by the invisible hand continues today as the intellectual foundation of neoliberalism. I have called this the “egoist” employment relationship because of its emphasis on individual self-interest and personal responsibility. In order for this to work effectively for employers and employees, labor markets must be ideally competitive, not destructively competitive. This requires employees to have reasonable alternatives that are accessible without excessive switching costs, both economic (e.g., moving costs) and psychological (e.g., stress over the uncertainties of the nature of a new job, or a bias towards over-valuing what you already possess). In this way, if someone doesn’t like their pay, working conditions, or other elements of their job, they can legitimately quit and get another decent job commensurate with their skills and abilities. Minimal institutional supports like unions or protective labor legislative are not needed because competitive markets protect workers from abuse; indeed, they are bad if they interfere with the ideal discipline of the invisible hand.

The Wells Fargo fiasco seemingly rejects the accuracy of this way of thinking. Workers clearly didn’t feel that they could simply quit and find a comparable job. Instead, over 5,000 succumbed to corporate pressure to meet unrealistic targets, and thereby acted unethically by creating fake accounts to keep their jobs. Competitive labor markets also require potential employees to have good information about the nature of jobs, and one can question whether employees joining Wells Fargo fully understood these pressures. And competitive consumer markets require well-informed consumers, which also doesn’t appear to the case here. For example, many customers with potentially fraudulent accounts couldn’t remember whether they had requested them or not. The neoliberal or egoist model of the employment is an important theoretical baseline, but seemingly too idealistic for the messiness of real-world markets, human behavior, and therefore, employment relationships.

An alternative to the neoliberal or egoist way of thinking is the unitarist model of the employment relationship. Ideally competitive labor markets are not required, but this approach critically rests on a belief that the interests of employers and employees are largely one and the same (unitarist = unity of interests). Or more precisely, a belief that well-designed managerial policies and practices can always be found that align the interests of workers and their employers. For example, offering decent pay and benefits will create engaged, loyal workers who reward the employer with high levels of performance that serve the business and its customers. Minimal institutional supports like unions or protective labor legislative are unnecessary because companies will create win-win human resource management policies. The Wells Fargo fiasco seemingly rejects the accuracy of this way of thinking, too. Performance standards were unrealistic and incentives at various points of the corporate hierarchy were extreme. Ethical workers were fired; customers were harmed. And these problems were not self-corrected or policed internally. Rather, these practices were exposed by the Los Angeles Times which then resulted in a lawsuit against Wells Fargo by the Los Angeles city attorney.

This isn’t to say that high-commitment forms of human resource management (“high road” HRM) are a failed project. Well-designed HRM policies and practices are essential for any organization, and we need more HR leaders with sophisticated ways of thinking (like one gets with a Minnesota Master’s degree in HRIR!). But it is to say that as a society, we cannot rely solely on corporate self-interest and well-intentioned managers.

Which brings me to the pluralist employment relationship model. The pluralist model rejects the neoliberal assumption of ideally competitive labor markets, and again, the Wells Fargo scandal highlights why. Moreover, the pluralist model embraces a plurality of legitimate interest in the employment relationship. Yes, there are some interests that employers and employees have in common, but unlike the unitarist way of thinking, pluralists believe that there are also conflicts of interests. But both employer and employee interests are legitimate so none should be exclusively prioritized over others (akin to a pluralist democracy in the political sphere). HRM practices are important for aligning shared interests, but society should not rely exclusively on corporate self-interest to look out for workers. When times are tough or there are excessively strong pressures for financial returns, some companies favor their own interests at the expense of employees. This seems to me to be a better characterization of what happened at Wells Fargo than the other two models of the employment relationship can provide. And consequently, Wells Fargo employees have turned to the courts for relief. In other situations, they might turn to labor unions or other outside, institutional supports. In whatever form, institutional supports for employees, independent of the vagaries or markets or enlightenment of managers, are needed.

In conclusion, how we think the employment relationship works is critically important for determining the extent to we as a society want to rely solely on markets or managers for setting employment terms and conditions. It’s difficult to truly gauge the actual nature of the employment relationship in practice. But we can look to situations like what’s unfolded at Wells Fargo for clues. Maybe it's just me, but I see another example that supports the accuracy of the pluralist model.

Everything you need to know about the employment relationship in one tweet

At the end of March, #ModernCollectiveNouns was a trending hashtag on Twitter. Here are some examples I saw:

A clutch of car mechanics.
A fraud of bankers.
A Kardashian of crap.
An avalanche of skiers.

My (ultra-academic) contribution to this was the following:

My tweet probably didn't make much sense to most people, but students and other scholars should recognize this as capturing what I assert are the four key frames of references (or ideologies) on the employment relationship. I repeatedly return to these four frames of reference in my teaching and writing because they provide essential insights by revealing the roots of different views on labor unions, HR practices, and the like.

The first model of the employment relationship is derived from mainstream (neoclassical) economic thought and rests on a view of rational agents pursuing their individual self-interest in economic markets (because of the importance of self-interest, I label this the “egoist” model). Labor is viewed as a commodity, and only differs from other commodities in its tendency to avoid exerting full work effort (“shirking”). As labor markets are generally seen as perfectly competitive, they are embraced as the primary driver of the employment relationship. Under these assumptions, the egoist employment relationship is characterized by employees and organizations engaging in voluntary, mutually-beneficial economic transactions to buy and sell units of labor based on what the labor market will allow (and therefore outcomes are seen as fair), and abuses are prevented by labor market competition. HR practices largely implement what the market dictates, and unions interfere with the ideal operation of competitive markets.

In contrast, the unitarist model of the employment relationship views employees as psychological rather than economic actors. This model is most closely associated with scholarship in industrial/organizational psychology, organizational behavior, and human resource management such that the egoist model’s material economic interests are de-emphasized in favor of psychological interests such as satisfaction and esteem. Moreover, economic markets are seen as imperfectly competitive so profit-maximizing employers can choose their strategies for pursuing their organizational goals. And in the unitarist employment relationship, the optimal organizational strategies are those that align the interests of organizations and employees because a key assumption is that organizations and employees share a unity of all of their interests; thus, the label “unitarist” employment relationship. For example, jobs that are designed to be fulfilling will be rewarding to the employees, and the private or public sector organization will also benefit because these employees will be productive. High-road or high-commitment human resource management strategies are therefore key, unions are seen as unnecessary and as adding unproductive conflict.

An alternative perspective, the pluralist model, rejects the egoist model’s view of labor as a commodity traded in perfectly-competitive markets; rather, employees are viewed as human beings entitled to key standards and rights consistent with human dignity and citizenship. The pluralist model also rejects the unitarist view of largely shared organization-employee interests; rather, organizations and employees are seen as having a mixture of common and conflicting interests. That is, the pluralist employment relationship rests on a belief of a plurality of legitimate but sometimes-conflicting interests in the employment relationship. The classic example of conflicting interests is higher wages versus higher profits. These assumptions mean that institutional interventions are needed to better balance the bargaining power inequalities generated by imperfect labor markets, and to protect workers when organizations prioritize their own interests. Hence the important of industrial relations institutions such as labor unions and labor legislation to supplement high-road HR strategies.

The fourth and final alternative model of the employment relationship reflects radical, heterodox, and feminist scholarship in sociology, economics, and industrial relations is therefore labeled the critical employment relationship. Like the unitarist and pluralist models, this model sees labor as more than a commodity and also sees labor markets as imperfectly competitive. But where the critical perspective differs is in its emphasis on sharp conflicts of interests and unequal power dynamics between competing groups. Marxist and related perspectives focus on unequal power relations between workers and organizations, feminist perspectives focus on unequal power relations between men and women, and critical race perspectives focus on segregation and control along racial lines. In all of these critical perspectives, the employment relationship is seen as one piece of a larger socio-politico-economic system throughout which elites are able to perpetuate or reproduce their dominance, albeit with some accommodation of the interests of the weaker party in order to foster compliance and consent.

Returning to the #ModernCollectiveNouns hashtag, a friend of mine responded with "a propaganda of HR managers." Provocative! But for those who understand the competing frames of reference, this reflects an important critique from a pluralist or critical frame.

OK, maybe this isn't all that you need to know about the employment relationship, but it's an essential foundation. And maybe my #ModernCollectiveNouns tweet will help you remember this foundation.

If you want to see more applications of this framework, take a look at some of my earlier blog postings, such as:

• Labor Relations Advice
• Why HR-OB Still Needs IR
• Will the Real HRM Please Stand Up

Or for a more academic treatment, see my book chapter titled "The Employment Relationship" with Devasheesh Bhave from the Sage Handbook of Human Resource Management. 

To Tip or Not to Tip, That is the (HR Policy) Question

I often think that us Americans know how to take a good thing and push it too far (e.g., youth sports, St Patrick’s Day, the size of burritos). Maybe tipping is next? Just as tipping seems to be expanding, a leading New York City restauranteur has announced an end to tipping in his restaurants. Why? With larger tips being given to servers and front-of-the-house workers but not shared with cooks, dishwashers, and other back-of-the-house workers, income differentials have widened. Ending tipping and raising menu prices is seen as a way to raise the pay of the back-of-the-house workers.

From an academic perspective, this could be seen as a contest of economic versus psychological approaches to human resources (HR). A system of tipping is consistent with an economics mindset—that is, the prospect of receiving a larger tip is believed to provide an incentive for providing better service to the customer. This is because economics assumes that workers are motivated by money, and need money to be motivated. As with many incentives, there can be additional effects. Some servers might expect that certain customers will be stingy tippers (like economists at a conference!), and provide weaker service from the start. And the prospect of tips provides an incentive for servers to turn over tables, which can also be good for the business but not necessarily for the diners. And if tipping prevents higher wages for back-of-the-house staff, then this makes those jobs less attractive, which can be a challenge for restaurants (to be frank, it’s not clear to me why tipping prevents raising back-of-the-house pay, but that’s the story the restaurant industry seems to believe, or wants us to believe).

Economic theory predicts that replacing tips with a higher charge that can be distributed to all employees will weaken these incentives and reduce customer service. From a different perspective, however, this shift is seen as creating greater levels of workplace fairness. Consistent with simple psychological theorizing (which is also taking hold in behavioral economics), greater levels of fairness should promote cooperation among employees. A manager at a Twin Cities restaurant with a no-tipping policy was quoted in the paper as saying “Without that giant pay disparity, the front-of-the-house/back-of-the-house dynamic is definitely different here” (StarTribune, October 22, 2015) And if employees are motivated intrinsically and value fairness, then customer service shouldn’t suffer. Tipped workers also bear the psychological burden of variability and unpredictability (e.g., some shifts are slower, and thus tips lower, than others) so eliminating tips can have other benefits for workers which can, in turn, benefit customers.

As an aside, traditional economic theory also suggests that pooling tips to share and replacing tips with higher menu prices distributed to all workers are essentially the same, and incentives will be weakened in either case. But psychological and behavioral economics thinking suggests that these are not the same if there is a psychological process involved with a server earning the tip and then being forced to share it. So there are many layers to this issue.

So what will happen in practice? Time will tell, and the responses and outcomes will probably vary—after all, workers are heterogeneous and bring different values, goals, and outlooks to their work. But I think this is a good example of the issues that HR professionals need to wrestle with, and it illustrates how critically important it is for HR professionals to have a deep understanding of the complex drivers of human behavior. It should also serve (no pun intended) as a reminder that managing people is not just about leadership (which is all the rage these days), but is also about wise policy design and implementation. Bon appétit!  

‘We’re All in This Together’: The Multi-Stakeholder Imperative for Healthy, Balanced Employment Relationships

Last month I had the pleasure of participating in a European Union (EU) Presidency event in Riga, Latvia, organized by the European Foundation for the Improvement of Living and Working Conditions (Eurofound) in cooperation with the Latvian Saeima (Parliament). Eurofound is an agency of the European Union whose mission is to provide information, advice, and expertise that helps create better living and working conditions in Europe. Visiting Riga was a fascinating cultural experience, and this was magnified by being the only full-time academic on the event’s program and the only non-European in attendance.

The event marked the launch of Eurofound’s 3rd European Company Survey Overview Report. Consistent with this and with the “Competitive Europe” priority of the Latvian EU Presidency, the theme of the day was “Workplace practices: Creating win-win arrangements for companies and employees” (in Latvian, “Darba organizācija: Uzņēmumam un tā darbiniekiem piemērotu modeļu meklējumos”). Videos are available in this Saeima news release.

The theme of my remarks was “‘We’re All in This Together’: The Multi-Stakeholder Imperative for Healthy, Balanced Employment Relationships.” Trying to create win-win employment relationships has been going on for at least 2,000 years. This suggests that it’s important, but also difficult. Otherwise, we either would have given up by now, or figured it all out! So why is this so important? From my perspective, it’s because the best employment relationships will be win-win-win: they serve workers and their families (win #1), organizations (win #2), and society (win #3). Moreover, the benefits from healthy employment relationships are far-reaching, and include economic gains, physical and psychological health, civic and political participation, and social inclusivity. This requires balancing multiple objectives in the employment relationship (objectives that I simplify as efficiency, equity, and voice).

But why is this so hard to achieve? The event participants indicated a number of reasons, but as the lone academic on the program, I highlighted the importance of ideas. Creating win-win employment relationships, designing effective human resources practices, and crafting supportive public policies are not just about the specific practices involved in those important actions, they are also about the mental models, frames of reference, or ideologies that support those practices. And not all ideas about the employment relationship support the pursuit of balanced relationships. Approaches that are firmly rooted in whatever the market will bear are more about organizational interests; approaches grounded in critical thinking prioritize worker interests. We need HR professionals, worker advocates, and policy makers to embrace ideologies that seek to align employer and employee interests while respecting both sets of interests as legitimate. So again, we don’t just need the “right” practices, we also need the right ideas behind them.

I’m also beginning some research with colleagues from the University of Newcastle in Australia as to why it’s so easy to deviate from the “right” practices and mental mindsets. It requires hard work to avoid slipping away from these ideals, but I’ll save that for another posting.

In conclusion, the parties to the employment relationship need to work hard to make it healthy, win-win, and balanced, and to sustain these win-win-win employment relationships. So they need support from many sources, including insights from Eurofound’s European Company Survey. And they also need to be mindful not only of their practices, but also about their ideologies.

Will the Real HRM Please Stand Up, or the Problem with Hard Unitarism

Think of what would make for a lousy job. Low wages, long hours, little autonomy, autocratic managers. Scholars call this a low-road or hard human resource management (HRM) approach. But is low-road HRM really HRM? In a practical sense, yes it is--it’s certainly one way for managing human resources, so in a definitional way, it's a form of HRM. But intellectually, I think it’s better to reject low-road HRM as HRM so that we can better appreciate the differing assumptions and implications of varied approaches to managing people. For practice-oriented readers, think of this as an opportunity to think about what HRM really means. For scholarly readers, this allows us to see the hard unitarism frame of reference as the oxymoron that I assert it is.

The British industrial sociologist Alan Fox is widely-credited with first identifying the unitarist and pluralist frames of reference in industrial relations, and then adding a third, radical frame. In my own work, I’ve added a fourth: an individualistic, egoist frame that focuses on individual self-interest. In the forthcoming Finding a Voice at Work? New Perspectives on Employment Relations (Oxford University Press), edited by two UK employment relations scholars, Stewart Johnstone and Peter Ackers, I was pleased to see Bruce Kaufman use my four frames of reference. But two chapters continue to use Fox’s three-dimensional framework.

I think this is problematic because both low-road and high-road HRM strategies are forced into the unitarist frame of reference. This is done by distinguishing between hard and soft unitarism. In the words of Johnstone and Ackers (p. 2),

Old fashioned ‘hard’ unitarists assume that...the best approach is for management to command and control the organization. Work rules and strong management are believed to be needed to ensure workers perform as required.

To me, this contradicts the central premise of unitarism that the employment relationship is largely characterized by a unity of shared interests among employers and employees. That is, if workers need to be aggressively controlled and commanded, then there isn't a set of shared of interests. Unilateralism is not unitarism. Admittedly, unitarism can have an element of unilateralism because human resource management is often determined with little employee input. But unitarist human resources practices are designed with the objective of benefitting employees and their organization through high-commitment policies that create win-win interest alignment. A low-road employer that unilaterally slashes wages or benefits simply because it can is exercising a very different kind of unilateralism—a kind that I don’t think warrants the label “unitarism.” Indeed, a command-and-control management strategy is probably better seen as emerging from a radical frame of reference in that this employment relationship is highly conflictual and rooted in hierarchical power differentials.

A second description of hard unitarism in Finding a Voice at Work? is seemingly more congruent with my requirement that unitarism involve shared interests:

There is a ‘hard unitarism’, which typically is grounded in economics and which is most fully developed in the ‘the new economics of personnel’. In this formulation it is the capacity of managers to offer financial incentives on both an immediate and a deferred basis that produces the congruence of interests between workers and employers” (Ed Heery, pp. 21-22).

But this, too, is problematic because financial incentives do not really produce a congruence of interests. Rather, incentives are designed to provide the worker with a self-interest to act in the interest of the employer. Indeed, the need for incentives in the first place comes from a belief that workers and organizations are each selfish and will act in their own self-interest. 

Admittedly, this is a subtle distinction, but ultimately this is a different way of thinking about the employment relationship than what underlies the high-road HRM model. So I think it is better replace Heery's version of hard unitarism with an individualistic frame of reference. I call this an egoist frame of reference in which the egoist employment relationship is rooted in the pursuit of individual self-interest by rational agents in economic markets. Employers and employees engage in voluntary, mutually-beneficial transactions to buy and sell units of productive labor based on the what the market will bear. If the organization’s HRM policies are not in the worker’s self-interest, she will quit.

The need for this frame of reference is reinforced by the confusion that can come from mistakenly equating unitarism to neoliberalism. Neoliberalism embraces laissez-faire economic policies and the operation of so-called free markets. So forms of human resource management that emphasize adherence to markets, such as imposing wage cuts when unemployment is high, are consistent with neoliberalism. But they are not rooted in unitarism. So maybe there should be hard egoism (emphasizing markets) and soft egoism (emphasizing incentives), but not not hard unitarism.

This might seem like an esoteric academic debate, but I think it gets to the heart of how we want to define HRM. We can certainly define it as any strategy for managing people. But I think it’s better to distinguish among the key principles that underlie these strategies. In this way, hard unitarism is a problematic oxymoron and low-road HRM is self-interested unilaterism, not true HRM that seeks alignment of shared interests (which has its own problems, but that's a story for another day).

Why HR-OB Still Needs IR

Professor John Godard of the University of Manitoba has just published a very stimulating article that should be read by anyone in employment relations, human resource management, and organizational behavior ("The Psychologisation of Employment Relations?," Human Resource Management Journal, 2014). I have witnessed the trends that John describes--indeed, in my administrative roles at the University of Minnesota I have, with mixed feelings, contributed to some of them--and I share his concerns.

In this posting, I want to expand upon what he raises in this quote:

the growing psychologisation of employment relations means that there is less and less possibility for actually understanding these relations. The problems of motivation and control, and the dysfunctions to which they may give rise, tend to be attributed to individual or interpersonal phenomena that can be avoided through careful selection and training/socialisation procedures if not more directly through 'performance management'. Often, the assumption is not that these practices and innovations are flawed, or that it is the institutional design of the employment relation that is the problem, but rather that they are just not being implemented properly. (p. 7)

For starters, I think this particular problem is even worse than Godard conveys it. To see this, we need to distinguish between a human resources (HR) approach and an organizational behavior (OB) approach. The HR approach (or what some might see as a high-road, high-commitment HR approach) uses organizational policies and practices to align employee-employer interests to boost performance. In this paradigm, problems of subpar performance are assumed to reflect poorly-designed policies or flawed implementation. Sometimes the blame might be ascribed to employees (e.g., the organization selected the wrong kind of individual), but there is at least the scope for questioning whether the policies were appropriately designed, which means that there is some scope for questioning the underlying, structural nature of the employment relationship (albeit in limited ways, more on this in a minute).

But increasingly within academia (at least in North America), I assert that this HR approach is being supplanted by an OB approach that seeks to manage interpersonal dynamics, not organizational policies and practices, to boost performance. In this paradigm, subpar performance or other negative outcomes are largely seen as the product of interpersonal dysfunction among co-workers or between a worker and her manager. In this way of thinking, organizational policies such as selection systems or compensation plans are largely off the radar so there is even less cause for considering them than in the HR approach. So there is even less of a chance that the structural nature of the employment relationship will be considered.

In contrast, industrial relations perspectives focus attention on power relations between employers and employees as shaped by the allocation of resources and rights in modern capitalist societies. Problems of motivation and performance, then, might be rooted in systematic inequalities which in turn raise questions about the structural nature of the employment relationship. It is typically through industrial relations scholarship and coursework, then, that one confronts--or should confront--alternative models of the employment relationship, such as unitarism and pluralism (see my earlier blog posting). Industrial relations perspectives are therefore critically important for understanding employment relations and need to remain an important part of the field.

But there is another element to this story. Not only does the psychologization of employment relations draw attention to certain private policies and practices and away from public policies and institutions (notably protective labor standards and labor unions because their need is rooted in structural power imbalances not commonly recognized in the HR and OB approaches). But it also implicitly focuses attention on certain outcomes and objectives of the employment relationship--primarily economic performance and psychological well-being. As I show in my book Employment with a Human Face: Balancing Efficiency, Equity, and Voice, industrial relations perspectives embrace broader objectives of the employment relationship that I term equity (fair employment standards for both material outcomes and personal treatment) and voice (the ability to have meaningful input into decisions). In the industrial relations tradition, equity and voice are key objectives rooted in human dignity and citizenship, even when they don't enhance employee or organizational performance. So this causes us to question the nature of employment relationship on a broader basis. In other words, concerns with low pay or a lack of employee voice, for example, are problematic in industrial relations thought, but perhaps not in HR and OB as long as employees are satisfied and productive--and IR scholarship looks to the structural nature of the employment relationship as at least partly responsible for these problematic outcomes.

So the psychologization of employment relations makes it less likely that the nature of the employment relationship will be questioned not only because when there are problems, the blame will placed on specific policies or individuals (Godard's point), but also because the scope of important outcomes is narrower. Putting this a little differently, OB generally concerns itself with individual and team-level outcomes and HR highlights organizational outcomes; IR adds a concern with societal outcomes.

With that said, I want to be clear that I have great respect for the OB scholarship pursued by my University of Minnesota colleagues and others in the field. So the problem isn't with this scholarship per se, the problem, as I see it, is when one perspective becomes the sole approach to understanding the very complex world of work. The house of employment relations scholarship needs to be large enough to include diverse intellectual paradigms, adherents to different paradigms need to respect and learn from others, and the degree programs we offer need to educate students in diverse ways of thinking, even if some of these ways might seem a little old-fashioned. HR-OB still needs industrial relations.