I should note that my little hiatus from writing here was mostly due to attending the SPS show last week in Nuremberg. My report will be at Automation World hopefully by tomorrow. Then I had a friend who had a critical situation over the weekend. Then I had to plan to replace someone on the magazine. By the way, the show was packed.

My longstanding belief about labor unions is that if management were any good, there would be no need for one. This belief was shaped initially by personal experience while I was still in college. It was solidified through study of Lean manufacturing and principles such as respect for people.

Most of my friends would react to the word “union” with a strongly emotional reaction. Some think in terms of lazy, wanting too much money, obstructing change. Others in terms of protection from tyrannical bosses. Some truth to both positions exists, I’m sure. I’ve been there.

I just read two articles that point out problems with the way things are, though. Henry Blodget has been writing about the growing income gap in the US. In his post, We May Need Labor Unions After All, he takes on the economic view.

I encourage you to read the entire article, but here are a few points.

First, the negative side of unions:

* They create an “us versus them” culture within companies, instead of putting everyone on the same team
* They create a culture of entitlement
* They restrict flexibility and hurt competitiveness
* They drive companies to move jobs out of the country, to places where there are no unions
* They often become career employment for their leaders, who pay themselves well (much better than the workers they’re representing)
* They maintain ludicrous compensation and benefit levels for jobs based purely on seniority (some bartenders in one of the New York hotel unions, for example, apparently make ~$200,000 a year)
* They force companies to treat all union employees equally, regardless of the relative skill and value of particular employees–thus reducing incentives for people to do a great job
* Etc.

Then he addresses the growing wage inequality:

Contributing to this inequality is a new religion of shareholder value that has come to be defined only by “today’s stock price” and not by many other less-visible attributes that build long-term economic value.

More to the point, Blodget says, “Great companies in a healthy and balanced economy don’t view employees as ‘inputs.’ They don’t view them as ‘costs.’ They don’t try to pay them ‘as little as they have to to keep them from quitting.’ They view their employees as the extremely valuable assets they are (or should be). Most importantly, they share their wealth with them.”

And he concludes:

Healthy capitalism is not about “maximizing near-term profits.” It is about balancing the interests of several critical constituencies:

* Shareholders
* Customers
* Employees
* Society, and
* The Environment
It’s time more of our business leaders started to understand that.

Further irresponsibility

Then one of the Lean gurus I follow, Bill Waddell, wrote an analysis of some of the consequences of our lowest possible cost philosophy in Who are we kidding.

The occasion was the tragic fire in a garment factory in Bangladesh. As he says, “The similarities between the fire in Bangladesh last week and the fire at the Triangle Shirtwaist factory in New York in 1911 are striking. Locked doors, blocked exits, abusive management in a factory full of over-worked, grossly underpaid women doing garment work. Those practices were shamefully common in the Unites States a hundred years ago, but we don’t allow that sort of thing any more. We collectively examined our consciences and decided that, while we want the things we buy to be cheap, we don’t want to save money so badly that workers should suffer and even die in the process.”

He goes on to state, “That’s the way of it in democracies with functioning economies driven by free enterprise principles. We strike that balance, or attempt to anyway.”

Check out his entire analysis. I am with him in the conclusion that there is a dynamic tension that exists between regulation and free market. We in the west (U.S.) may be on the pendulum swing of too much regulation. But too little results in these disasters perpetrated by owners/managers who care too little about people and environment in the pursuit of the lowest possible cost.

Or as I always say, “You get what you pay for.”

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