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Business Journal

Employee Engagement and Labor Relations

by Jessica Tyler

Organizations that are worried about unionization should ask themselves: Are our employees engaged?

Gallup's experience and research offer insights into a perennially controversial subject for executives: why employees are more or less likely to form unions in their workplaces. This is a particularly hot topic right now as pending legislation before the U.S. Congress -- the Employee Free Choice Act of 2009 -- aims to make it easier for employees to organize even as public support for union membership seems to be waning.

Through its poll, Gallup has researched opinions on unions for more than seven decades. In addition to studying opinions from the general public and the U.S. working population, Gallup consults with more than 500 organizations in more than 70 industries -- unionized, non-unionized, public, and private. Data from all these sources give Gallup a research-based perspective on the topic of labor unions and today's workforce. Here are a few key findings from our research.

About 1 in 10 Americans report belonging to a union. The U.S. Bureau of Labor Statistics (BLS) reported that union members accounted for 12.4% of workers in 2008, a near 25-year low in the BLS' history of tracking.

What's more, Gallup's most recent polling shows that U.S. public support for labor unions has dropped sharply in the past year and has now reached an all-time low; only 48% of the general population approves of labor unions, compared to 59% in 2008. When asked in a 2005 poll about labor disputes of the past two or three years, 52% of the general population said their sympathies have been on the side of unions, versus 34% who said their sympathies were on the side of companies. But 41% of the general population thinks labor unions will become weaker in the future.

Sharp Drop in Union Approval

In addition, here are the U.S. working population's views on unions:

  • 53% of union workers believe that union representatives share the same values as leaders of the organization they work for.
  • 72% of union workers say they see union representatives cooperating with their organizational leaders to achieve what is best for employees.
  • 71% of workers who are members of unions believe that labor unions "mostly help."
  • 51% of workers who are not members of unions believe that labor unions "mostly hurt."
  • 29% of union workers and 25% of non-union workers strongly agree that they are paid appropriately for the work they do, compared to 48% of engaged employees, regardless of union membership.

Employee engagement predicts performance

Gallup has studied employee engagement for more than 30 years with more than 15 million employees in more than 160 countries. Through this in-depth research, Gallup has developed and identified 12 core elements -- the Q12 -- that predict employee and workgroup performance and link powerfully to crucial business outcomes, including productivity and profitability. (See graphic "The 12 Elements of Great Managing.")

These 12 elements represent employees' basic needs in the workplace, regardless of union status. When these needs are met, workers are involved in and enthusiastic about their work. They are more productive, innovative, inclusive, and aligned with the objectives of the overall organization. When these needs are not met, disengagement can lead to a decrease in profit, productivity, and customer outcomes, and an increase in safety incidences, absenteeism, turnover, and theft/shrink.

Employees' responses to the 12 elements provide a measure of their engagement with their overall work environment. These results are used to help teams discuss key issues that can improve the work environment and increase the likelihood of achieving unit and company goals.

The 12 Elements of Great Managing

Gallup's meta-analysis (an analysis of data from 125 organizations -- unionized and not unionized) shows dramatic differences between top-quartile and bottom-quartile (in engagement) workgroups on key business outcomes, including productivity. Though the difference in performance between union and non-union groups is minimal (approximately 6%), engagement creates dramatic differences in productivity. Highly engaged workgroups (those at the 90th percentile) have, on average, 32.8% higher productivity compared to the median.

High performance can be attributed to a workgroup's engagement, not whether or not it is unionized.

Beyond the dramatic differences that engaged workgroups show in productivity, profitability, safety incidents, and absenteeism compared to disengaged workgroups, Gallup research has shown that engaged organizations have 2.6 times the earnings per share (EPS) growth rate compared to organizations in their same industry with lower engagement. (See "Investors, Take Note: Engagement Boosts Earnings" in the "See Also" area on this page.)

Employee engagement and unions

Building an engaged culture includes having employees who act as company advocates -- not only for the products and services of the organization, but also for recruiting talent. Engagement is the key to building a critical mass of employees who promote the organization as a great place to work. Applicants view an organization's current employees as the most effective resource for decisions they make during their job search; 81% of engaged workers strongly agree that they would recommend their company as a place to work to friends and family members, compared to only 33% and 39% for union and non-union employees, respectively.

Employees who are promoting, living, and engaging customers in a company's brand every day are an organic sales force. They believe in the products and services of the organization, and they want everyone to know it: 72% of engaged employees strongly agree that they recommend their company's products and services to friends and family members, compared to 38% and 46% of union and non-union employees, respectively.

Among the U.S. working population, 20% of those who report being in a union are engaged, while 27% of those who report not being in a union are engaged. Among the more than 500 organizations with which Gallup consults on employee engagement:

  • 38% of union employees are engaged.
  • 45% of non-union employees are engaged.
  • Union workgroups are at the 39th percentile in Gallup's global employee engagement database and have, on average, 6% lower productivity compared to the median.
  • Non-union workgroups are at the 45th percentile in Gallup's global employee engagement database and are on par with average productivity among all groups in the global database.
  • 17% of union workgroups, compared to 22% of non-union workgroups, are in the top quartile of Gallup's global employee engagement database. Groups in the top quartile are considered best practice.
  • 34% of union workgroups, compared to 26% of non-union workgroups, are in the bottom quartile of Gallup's global employee engagement database. Groups in the bottom quartile are considered low performing -- not only for engagement, but for business outcomes as well.

Managers are the key

Gallup's latest research in the area of unions and engagement consistently shows that engagement is the strongest predictor of workgroup and organizational performance -- and that employee engagement is the accelerator to organizational success. Whether unionized or not, world-class organizations have two crucial things in common: They recognize that talented managers are the core of an organization's success, and they understand and leverage the fact that engagement predicts performance.

The manager-employee relationship is the most crucial connection in an organization; more than half the perception of leadership is related to the perception of the local workgroup. Managers act as the agent between leadership and employees. The world's top-performing organizations recognize the key role managers play in achieving business objectives. Great managers, through their strong relationships with employees, can mitigate outside influences that affect productivity, absenteeism, turnover, and customer interactions.

Great managers also attract and retain the best talent. Job seekers listed "quality of manager" as the second most important organizational characteristic when they were looking for a place to work, right behind "interest in the type of work." (See "Job Seekers Ask: Who's the Boss?" in the "See Also" area on this page.) And, in Gallup's research on why people voluntarily leave organizations, nearly 75% of the reasons can be attributed to an employee's direct manager.

Conclusion

There are highly engaged workgroups that are unionized and highly engaged workgroups that are not unionized -- just as there are disengaged teams from both groups. The difference in performance between top-quartile and bottom-quartile teams in terms of engagement remains the same regardless of union status. High performance can be attributed to a workgroup's engagement, not whether or not it is unionized. Employee engagement is a leading indicator, and the best organizations are using that knowledge to create a competitive advantage.

Building a Culture of Engagement

  • Equip the managers you have today. Measure engagement, share results, and teach managers how to create an engaged, performance-oriented workplace.
  • Align the organization and remove systemic barriers. Align performance systems, procedures, people, and resources to meet company goals. Be sure what is recognized and rewarded encourages the kind of behaviors that will ensure the long-term sustainability of the business. Constantly identify and eliminate barriers to high performance -- both at the enterprise and local level -- to promote an engaged, productive culture. Communication, technology, compensation, people, and processes can be root causes of barriers that get in the way of performance.
  • Identify and develop the right managers and leaders. Select and invest in managers and leaders who have the right talent for the role, the innate ability to engage their teams, and a track record of performance. Build a strong bench for manager and leadership roles throughout your organization.
  • Identify and develop the right associates. Attract and hire associates who have the right talent for the role, who will add to the engagement of the team they join, and who will fit with your culture. Create a deliberate approach to strengthening the recruiting pipeline for associates.
Gallup


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