IMPACT OF TRADE UNIONS PERFORMANCE IN AN ORGANIZATION

Authors: Hewathanthrie1, T* and Jayawardena, L.N.A.C2 Affiliations: Department of Agricultural Extension, Faculty of Agriculture, University of Peradeniya, Sri Lanka

Contact details of authors: 1. thilanka.h@bcs.org.uk 2. chandanacj@gmail.com (corresponding author)

Paper track/ theme: Human Resources Management and Organizational Studies

IMPACT OF TRADE UNIONS PERFORMANCE IN AN ORGANIZATION Hewathanthrie1, T* and Jayawardena, L.N.A.C2 Department of Agricultural Extension, Faculty of Agriculture, University of Peradeniya thilanka.h@bcs.org.uk, chandanacj@gmail.com Abstract Trade Union Ordinance No 14 0f 1935 has defined a trade union as any association or combination of workmen or employers organized to achieve objectives specified therein. Understanding of trade unions performance facilitates relations between employers, and employees. The study was conducted in the Sri Lankan plant of a global beverage brand, which had four trade unions, with a history of industrial disputes. Overall objective of the study was to examine the impact of trade unions performance on employees performance in the organization. Specific objectives were to assess the major trade union activities, to identify the main reasons for employees to join trade unions, and to ascertain the impact of trade union performance for employees performance. Two trade unions, viz; CMU-Staff and CMU-Manual workers, were selected for the study. Respondents were selected through stratified random sampling. Data analysis was conducted using statistical tests viz: Chi- squared test, frequency tests, Regression, and Correlation using SPSS computer package. Majority of the employees had joined trade unions to bargain for better salaries, and to ensure job security. Over 70% of employees perceived that trade unions have influenced their job performance in three dimensions viz: improved productivity, job satisfaction, and self efficacy. Majority of the employees indicated that unions performances have influenced their professional development. Union activities involved preparation of collective agreements, CSR activities, entertainment and welfare of employees. It was found that the trade unions influence contributes significantly to employees job satisfaction. There was a significant relationship between the influence of trade unions, and employees contribution to organizational performance. Keywords: Trade Union, Employees Performance, Unions Influence

1. INTRODUCTION

1.1 Trade Unions in Sri Lanka

The formation of a trade union provides employees the power, in order to achieve certain goals related to the employment and to secure the well being of the employees through collective actions. Reasons for employees to join the trade (employee) unions may differ, since they may have own reasons. Trade unions in Sri Lanka dates back to 1893. The Ceylon printers Union, is regarded as the first employees union in country (De Silva, 1978). Up to 2005 the total number of active trade unions in Sri Lanka amounts to 1,735. Table 1 shows trade union details in Sri Lanka from 1995 to 2005. However, it does not differentiate public sector and private sector unions

Table 1. Trade Unions in Sri Lanka (1995-2005)

No. of unions Trade unions in No. of unions cancelled and Sri Lanka, 1995 registered dissolved 2005 Year during the year during the year 1995 243 110 1996 101 37 1997 136 96 1998 111 14 1999 70 120 2001 147 15 2002 154 198 2003 140 130 2004 172 55 2005 129 11 (Source: Department of Labor, Sri Lanka) 1.2 Rationale of the Study.

No. of unions functioning at the end of the year 1,364 1,428 1,465 1,581 1,532 1,580 1,513 1,523 15,93 1,735

Total membership 1,441,149 1,264,641 883,107 799,821 693,513 433,162 640,673 413,485 583,323 385,466

Employee Unions contribute to achieve certain common goals and objectives of the employees. It also establishes the power of bargaining, unity, and communication with the employer effectively. A collective decision carries much weight and can be more influencing. Study focuses the crucial areas in maintaining a better employer-employee 3

relationship. Understanding by the management of the requirements of employees, reasons for their involvement in unions and how the unions performance contributes in strengthening the overall performance will facilitate smooth functioning of organisations. This will enhance strategic decisions of the organisation.

1.3 Objectives of the Study Overall objective of the study was to examine the impact of Employee Unions performance for employees performance in organizations. Specific objectives of the research were to identify and assess the major activities conducted by Employee Unions, to identify the main reasons for employees to join Trade Unions, and to ascertain the impact of Unions performance to employees performance in an organization.

2. LITERATURE REVIEW

2.1 Performance of Employees Dessler (2008) identified performance as the record of outcomes produced on a specified job function or activity during a specific period. Robbins (2008) cited that participative process increase the employees commitment to organizational success. Involvement in decisions, and having an autonomy and control over their working lives motivate them. The formation of trade unions through Trade Union ordinance no 14 of 1935 aimed to achieve this. Kahya (2007) viewed several factors in determining employees performance. a.) Job Factors: Job experience, subject knowledge etc. have a positive relationship with the overall performance of employees. Dessler (2008) and Robbins (2007) added factors like technology change, job rotation, job enrichment, and job enlargement. b.) Personal Factors: Age, sex, physical, and mental strength of employees contribute to a better performance of the organization (Kahya, 2007). Studies show that educational level, family environment, moral conduct, and even the dress code contribute to successful job performance. c.) Employees Job Environment: Applies to the chemical, biological and physical environment of the job and the location becomes an important aspect for an efficient performance (Kahya, 2007). Hazard in the job environment is cited as a negative factor for the performance of employees. Jonathan 4

Bohlmann (2006) has mentioned group interactions as a contributing factor to employees performance.

2.2 Trade Unions

Trade unions are organizations formed at work. Trade Union Ordinance No 14 of 1935 has defined a trade union as Any association or a combination of workman or employers whether temporary or permanent having among its objects one or more of the following i.) Regulations of relations between workmen and employer or between workmen & workmen or between employers & employers, ii.) Imposing of restrictive conditions on the conduct of any trade or business, iii.) Representation of either workmen or employers in trade disputes, iv.) Promotion or organization of financing of strikes or lockouts in trade or industry, v.) Provision of pay or other benefits for its members during a lockout or strike. (The word trade union will be used hereafter to mean employees union). All Ceylon Trade Union Congress was formed in 1928. In 1933 its leadership changed. Political Party leaders became trade union leaders and, the unions were colored by the beliefs of the parties and political influence.

2.2.1 Models of Trade Unions Companies having an employees union generally operate on several models. A closed shop: company can hire only those applicants who are already union members. A union shop: company employs non-union workers as well, but sets a time limit within which new employees must join a union. An agency shop: requires non-union workers, who do not belong to the union, to pay a fee to the union for its services in negotiating their contract. An open shop: does not require union membership to secure employment. Maintenance of membership arrangement: employees do not need to belong to a union, but the union members must maintain the membership until the job contract period ceases. (Dessler, 2008)

2.2.2 Trade Unions and Industrial Relations in Sri Lanka Unions are structured according to departments, units, class and category of services. This has led to a large number of unions being formed in the public sector. In 5

the statutory bodies and public corporations of Sri Lanka, unionization is influenced by political considerations. The political party in power usually controls the major union.

Table 2: Strikes in Private Sector Organisations

Year No. of strikes 78 63 42 24 31 43 45 44 17 19 Plantation Workers Man days involved lost 27,383 100,406 15,468 83,319 16,018 41,195 8,408 23,540 26,069 32,548 12,068 40,086 17,779 45,421 15,832 40,779 4,283 8,370 196,520 4,821,394 Other* Workers involved 30,249 27,875 26,326 17,450 16,275 15,629 24,782 17,514 49,282 13,283

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

No. of strikes 78 59 83 63 61 61 53 46 40 34

Man days lost 255,071 181,626 263,051 40,941 37,449 30,312 41,761 40,321 149,982 72,513

(Source: Department of Labor, 2007) Industrial relations (IR) is recognized as a vital HR practice in many Sri Lankan private sector companies. Sound IR practices and processes are used by employers to improve relations with workers and to convince their fairness (Employees Federation of Ceylon /ILO, 2006). As shown in Table 2, the number of strikes from year 1997 to 2006 has been reduced in private sector organizations. Overall figures for all the sectors are given in Table 3.

Table 3: Total number of strikes in Private, Public, and semi Government sectors
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 No of strikes 156 122 125 87 92 104 98 90 57 53 Workers involved Man days lost 57,632 355,471 43,343 265,145 42,345 304,246 25,858 64,481 42,344 69,997 27,717 70,350 42,561 87,172 33,346 81,100 53,565 158,352 209,803 4

(Source: Department of Labor, 2007) 6

2.3 Collective Bargaining in Sri Lanka

The right to collective bargaining in Sri Lanka was strengthened in 1999 when it became mandatory to bargain with an employees union having a 40% membership. Unions in the public sector have expressed their interest in engaging in collective bargaining, a mechanism that could in fact be an answer to the lack of mechanisms to address collective issues in the public sector (Amerasinghe and Ranugge, 2007). In Sri Lankan context, common bargaining items are: rate of pay, salaries, wages, pensions, overtime, work shift differentials, holidays, insurance benefits, job security, union security etc. Many employees unions bargain for a better salary, pay, and better welfare facilities to members. Job security has been a sensitive issue, especially in private sector. Unfair labor practices are recorded in Sri Lankan employees unions. Manhandling of non-striking members from entering the plant, actions of force and violence detrimental to organizational discipline during continuation of the strike, threats of injury, harm or job loss unless active participation to union activities, pressurizing employees to resign if they speak against the union, including illegal provisions in the union membership contracts, and having political influence in union activities, etc. (Source: A guide to Basic Law & Procedures under National Labor relations Act, 2008).

2.4 Challenges of Present Day Unions

a.) Foreign competition and technological change: Importation of items such as steel, electronics, clothing, shoes etc, has made a significant loss of jobs in several organizations. Outsourcing of people from foreign countries is also a threat to Sri Lankan workers. Technological advancements have diminished the effectiveness of strikes in automated working environments. b.) Decrease in union membership: A shift from traditional unionized industries (manufacturing, mining etc) to high technology industries (computers, pharmaceuticals, chemicals etc), growth in employment of part time, temporary workers, growth of small businesses, globalization of workforce especially among low wage employees (Bohlander and Snell, 2010). c.) Employers focus on having nonunion status: Managers are vocal to maintain a union free environment. They 7

offer many incentives to discourage the union participation of employees. d.) Political Influence: In Sri Lankan (and Asia) many (big) unions are highly influenced by party politics. The priorities of the employees are not focused at times by unions.

Job Factors Job experience Knowledge Training Technology Job Rotation Job enrichment Job enlargement

Trade Unions Performance Member Participation Level of Decision making Union Activities Communication Leadership Financial strength Recognition

Employees job environment Group interactions Freedom of association Job location Nature of work

Employees Performance Productivity Job satisfaction Self efficacy Professional Development

Personal Factors Age Sex Education Marital status Political contacts Physical & mental strength Family Envt Moral Conduct Social etiquette Figure 1- Conceptual Framework

METHODOLOGY

3.1 Selection of the organisation and respondents The organization (hereinafter referred to as Company) selected for the study was the Sri Lankan plant of a world famous brand of beverage product. It had over 400 shop floor employees and over 200 management staff, spreading across the divisions of Supply Chain, Finance, Sales, Marketing, and Human Resources. The Company has experienced severe union disputes a number of times during the last 15 years. At present it maintains healthy industrial relations among employers and employees, and won special awards for employee relations. Company has four trade unions. They were; a.) CMU-Manual Workers: Ceylon Mercantile, Industrial & General Workers Union for Manual workers or shop floor employees, b.) CMU-Staff: Ceylon Mercantile, Industrial & General Workers Union for staff members, namely the junior executive level and the executive level staff, c.) ICEU-Inter Company Employees Union - membership was exclusively for manual Workers, and d.) FBTU: Food and Beverages Trade Union consisting of manual workers which was the most powerful trade union in the company. Management staff included Executives, and Junior Executives. Target group of the study was shop floor employees and the non executive staff members who were union members. Total population was 200 employees. Target population was restricted to 121 employees from the two main trade unions. Proportionate to total membership 71 and 30 employees were selected randomly (as per Table 4) from the two main trade unions viz: CMU-Manual workers, and CMUStaff. Non-executive staff members had membership in three employees unions, whilst executives and junior staff members were not union members. Table 4: Structure of the Sample Trade Union CMU-Staff members CMU-Shop floor workers Total Total membership 36 85 121 Sample 30 71
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3.2 Variables and Data Collection

Performance of employees was dependent on three major factors: viz: Job, Personal and Environmental factors, which are depicted in Conceptual framework in Figure 1. Main research instrument used was the survey questionnaire. Key informant discussions (KIDs), case studies of unions, collective bargaining agreements between management and the union, and authors observations were used to triangulate findings. Questionnaire focused on the performance of trade unions, performance of employees due to the influence of trade unions, and other factors contributing to employees performance. KIDs were conducted with the four unions leaders, supervisors, and the industrial relations manager. Grievance handling procedure of the company was perused. News articles of the trade union activities, companys quarterly news magazine consisting of trade union activities, and collective bargaining agreements (CBAs) were also perused. CBAs were between the management and staff of CMU (Ceylon Mercantile, Industrial & General Workers Union), and the manual workers entered in 2007 and 2010. They contained legal provisions and employee practices at work. Statistical package for Social Sciences (SPSS) was used for data analysis. Descriptive analysis, Chi Squared tests and Regression analysis were employed. The Cronbach Alpha was used to test the reliability of the analysis carried on 42 subscales of 14 variables. The obtained alpha score of 0.8237 indicated that the scale has high internal consistency (reliability).

RESULTS AND DISCUSSION

Great majority (98%) of the respondents were male employees. This was due to the fact that shop floor level duties demanded hardships, including night shifts. Over forty percent (41.6%) of respondents had passed G.C.E Ordinary Level examination, and 35.6% had studied up to Grade 9. Majority (54.5%) was shop floor workers, 32.7% belonged to allied and clerical grades, and 12.9% were supervisors. Forty percent (40.6%) of employees had a service experience of over 5 years, and 32.7% had a work experience of 1 to 3 years.

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4.1 Major activities conducted by the employees unions of the company

i.

The main activity of CMU-Staff and CMU-Manual workers unions was the involvement in the collective bargaining process with management. Other two unions (FBTU and ICEU) had been present during the overall process with CMUManual workers union.

ii. iii. iv. v.

Focus on employee benefits from the employer Coordination of CSR activities, through employee participation. Bring forth employment related issues, views, relating to labour enactments. Organize general strikes- within or outside of the company (regional, nationwide), liased with CMU federation.

vi. vii.

Death Benevolent activities; Follow up the status and provision of uniforms of the employees and monitor the compliance with regulations related to health and safety at work.

viii. ix. x.

Monitor the EPF and ETF proceeds. Manage personal files of members and document their welfare needs and benefits. Work against misconducts of employment.

The above two major unions had been actively involved in bargaining, and their presence had been felt by the overall management.

4.2 Reasons for employees to obtain membership in trade unions

Majority of the CMU - staff members has joined the union to negotiate for better working facilities. Other major reasons to join the union were job security, and opportunity to discuss with the management for better opportunities (eg. Training). Members of CMU-Staff union (97%) agreed that they joined the trade union in order to secure their jobs. Unlike the staff members, the manual workers had ranked the bargaining for a better salary as their first reason for joining the trade union. As the employees are not fully satisfied with the remuneration package they always bargain for a better salary by joining a trade union and collectively approaching the expectations. They also believed that union membership improves their job security. 11

4.3 Performance of unions of the company

Performance of the trade unions of the company was measured by the following seven variables. a.) Member Participation b.) Union Activities c.) Communication with management and members d.) Decision making e.) Leadership f.) Financial strength, and g.) Recognition. Members active participation in union activities in CMU-Staff was 73%. However, most of the members agreed that it could be further improved. Members active participation in Union Activities in CMU-Manual workers was 67.6%. Nearly 96% believed that members participation should be further improved in union activities of CMU-Manual workers. Membership of CMU Staff union were satisfied of the activities and progress of the union. Membership of CMU-Manual workers union was of the view that the activities were not enough to fulfill their overall expectations. The overall mean values of the two trade unions of their communication level with management and the members were satisfactory. Membership of both unions was unhappy that their respective unions did not organize adequate discussions among members. Lack of a proper employeremployee relationship in company has led to severe industrial disputes. Respondents felt both the union and the management were responsible for that. CMU-Staff union members agreed that the union leadership has conducted the overall activities well. However, the CMU-Manual workers union membership was dissatisfied of coordination of union activities. Memberships of both unions felt the financial strength of respective unions needed improvement. They were in unison of the lack of sufficient resource personnel to provide financial support. Membership of both unions perceived that their trade union was recognized by the company. However, they were unhappy of the seriousness of the management towards union activities. There were no significant relationships between the following variables for CMU Staff union, and CMU Workers union at p<0.05. a.) Decision making, and Leadership b.) Financial strength of union, and recognition by management c.) Membership participation, and activities of the union, 4.4 Impact of the trade unions performance to employees performance The performance of employees due to the influence of the trade unions performance was measured by using the following four variables: a.) Productivity, b.) Job

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satisfaction, c.) Self efficacy, and d.) Professional development. These variables were measured in two dimensions. They were; level of contribution as perceived by the employees, and the impact of them towards trade unions performance. Memberships of both unions were of the view that union activities were moderately productive and they can perform above the current productivity level. Membership of CMU Staff union believed achievements of the union to ensure work success at office was 76.7%, whilst it was 66.2% for CMU Manual workers at shop floor level. Majorities of CMU-Staff union (83.3%), and CMU Manual workers union (90.1%) mentioned that unions' approach to problem resolving with management had not improved the performance incentive frequencies at office and shop floor. It was note-worthy that, most of the union members of both unions identified that the achievements of trade unions did not significantly influenced the frequency of performance incentives at shop floor or office employees.

4.4.1 Job Satisfaction

Job satisfaction was identified as a main variable to measure the performance of employees. Respondents were specifically inquired of a.) Job satisfaction of the employees, and b.) Level of influence from union to the job satisfaction of employees. Results indicated that the unions influence for job satisfaction is low comparative to the self contribution to job satisfaction of CMU-Staff members, and CMU-Manual workers. This did not suggest that union activities have diffused the job satisfaction of employees. It was that the self contribution to job satisfaction was higher. CMU Staff and Manual workers sensed enhancement of Job satisfaction through union activities.

4.4.2 Significant Associations Following significant associations were observed in the CMU Staff union membership i. ii. Fellowship among employees, perceived and union influenced at 0.05 level Obtaining of equal benefits for the employees, perceived and the union influenced at 0.01 level (2-tailed). 13

iii.

Enthusiastic completion of work by the employees, perceived and union influenced at the 0.01 level (2-tailed)

iv. v.

Taking initiative at work, perceived and union influenced at 0.05 levels (2-tailed). Recognition from management, perceived and union influenced at 0.01 level (2tailed)

vi.

Importance of participation at union activities, perceived and union influenced at 0.01 levels (2-tailed).

vii.

Dedication for the job, perceived and union influenced at 0.01 levels (2-tailed).

There was a significant relationship between the union involved training and development activities and the union influenced grievance handling procedure to the self efficacy of employees at shop floor level, and at office. Unions influence to professional development remained moderate to the memberships of both unions. This was measured using 15 statements focusing professional development. In addition they preferred the interactions with peer groups by company, level of freedom, and the job environment.

5 CONCLUSION

Study revealed that the major parameters of union performances were: frequency of union activities, membership participation, financial strength, recognition of the union, leadership, decision making, and communication methods. Union performance was directly related with employee performance. Majority of the employees had joined the trade unions to bargain for better salaries, and for job security. Over 70% of employees perceived that trade unions have influenced the performance of their job in three dimensions viz: to improve the productivity, job satisfaction, and self efficacy. Union activities had significantly influenced organization's work through; membership participation, leadership and decision making, and frequency of activities. Union activities were found related to preparation of collective agreements, CSR activities, entertainment, and welfare of the employees.

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LIST OF REFERENCES

A guide to Basic Law & Procedures under National Labor relations Act, (2008), National Labor relations Board, Sri Lanka.

Amerasinghe, F. (2009), The Current Status and Evolution of Industrial Relations in Sri Lanka. India: Copyright International Labour Organization. Bohlander, G. W. and Snell, S. A, Managing Human Resources, 15th Edition, ISBN-10: 0324593317; ISBN-13: 9780324593310, (2010), NY

Dessler, G. (2008), "Human Resource Management",11th Edition. New Delhi: Prentice Hall. Sarkar, S. P. (n.d.). Individualism collectivism as predictors of employee attitudes towards union membership: an empirical study of employees of bpo sector in india . Mumbai 400 088, india: TATA institute of social sciences.

Freedom of association in Practice: Lessons Learned. Global Report under the follow-up to the ILO Declaration. International Labour Conference.

Jonathan D. Bohlmann, J. A. (2006), The Effect of Group Interactions on Satisfaction Judgments: Satisfaction Escalation.

Kahya, E. ( 2007,), The effects of job characteristics and working conditions on the job performance.

Raymond A.Noe, J. R. (1996), Human Resource Management Gaining a Competitive Advantage (second ed.). United States of America: Rob Zwettler.

Schunk, A. B. (n.d.). Cultivating Competence, Self-Efficacy, and Intrinsic Interest Through Proximal Self-Motivation. Journal of Personality and Social Psychology .

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Scott Snell, G. B. (2010), Principles of Human Resource Management. (Fifteen, Ed.) Ohio: Cengage imternational.

Stephen.P.Robbins. (2003), "Organizational Behavior",10th Edition. New Delhi: Pearson Education Inc.

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