Suppose you are the HR manager at a small unionized manufacturer of auto parts l

Question

Suppose you are the HR manager at a small unionized manufacturer of auto parts located in a small town in the South. The production work is repetitive and routine, and there are no particular skills or educational requirements for the production employees. Nearly all the parts produced are sold to one major automaker. This automaker demands a 10 percent price cut. To reduce labor costs, do you use an escape, forcing, or fostering strategy with the union? Why?

Now suppose instead that you are the HR manager for a local school district where the teachers are unionized. Most teachers have a minimum of a Bachelor's Degree. Some teachers have additional degrees. To balance the state budget, the school district’s budget is cut by 10 percent. Do you take the same approach as in the auto parts scenario? Why or why not?

Explanation / Answer

1st scenario

As it is instructed by the automaker to do a cut of 10%in the cost of the produced goods it has to be negotiated by escape, forcing, or fostering method so that the labor cost can come to minimum. As the hired employees are not skilled and they also have no educational background so they cannot raise any demand in this decision by the organization, as from automaker side it has come a proposal to cut 10% price in the manufactured goods of ours. The union should get the point that the price rate is to be negotiated by reducing the labor cost. This will bring equal balance workflow in the production process and the organizational objectives will also be fulfilled.

2nd Scenario

No, the same approach cannot be taken as the hired employees are well educated with their bachelor degrees and some are also having additional degrees which show that their labor cost cannot be reduced with any negotiations methods. It may reduce the work efficiency of the teachers in the school which is not desirable. Only the approach that can be taken by consulting with the unions to raise the student fees which will help the organization to make balance in their budget. With a small hike in the fees of the students, the whole matter can be negotiated very easily in the school.

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