Virtual Corporations and American Labor Unions:

So Many Unknowns, So Much Potential

Arthur B. Shostak, Ph.D.; Professor of Sociology; Dir., Drexel Center for Employment Futures™

"...the virtual organization is built around trust and cooperation. Those who cannot accept this new reality risk becoming superfluous. Union leaders face the same challenges as do their long-time antagonists in management." William H. Davidow and Michael S. Malone, The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st Century, 1992, p.214.

What are the implications for America's 14-million unionized workers of the likely arrival soon of the virtual workplace? How is the AFL-CIO and its 74 constituent international unions likely to react? What are the major problems here for organized labor? And what opportunity does this pose for improving labor-management relations tomorrow?

Implications for Organized Labor. What lays ahead where virtuality in the workplace is concerned is anything but clear this early in the innovation process. The likelihood appears good, however, that resulting business organizations will resemble a film production company:

"A film is produced at a specific location by a 'unique' combination of people with different skills who come together utilizing various technologies and techniques to produce a film. Once the product is completed, the crew disbands only to reassemble again to produce a new film, with different people, technologies, and techniques. (Roberts; 205).

Unionists challenged to imagine relating to more and more such models of workplaces early in the 21st century wince at the thought, but regain composure and hope when reminded that many such American film crews at present are thoroughly unionized.

A virtual corporation, with its ephemeral organizational structures, its far-flung dispersion of resources, and its culture of high-speed change, will probably set organized labor challenges unlike any it has thus far confronted. To judge very cautiously from speculative literature and the very few prototypes of this amorphous phenomena available today, much of what unions are conventionally about may be turned upside down, on its side, and inside out.

Where the traditional unionized workplace, for example, valued the stability a labor contract could help assure, a unionized virtual corporation is likely to value instead an amorphous culture, one whose roles, rights, and responsibilities are constantly shifting. Where labor and management once considered the situation in hand if routine dominated matters, the unionized virtual organization will probably enmesh the parties in "continuous, unremitting, almost unendurable transformation." (Davidow and Malone, 7).

The concept of a definable job could give way to continuous mixing and matching of employees with unique skills. Where the worker was traditionally protected by unions from regimentation, exploitation, and/or dehumanization, labor's new problems will probably derive from unpredictability, lack of a comfortable structure, and more responsibility than certain workers desire.

Another highly-probable change on the shopfloor involves the greatly increased allocation of corporate resources to employee training in consensus building, group dynamics, and problem solving. Labor will be expected to help develop a cooperative workplace culture, and this may leave unionists confused about the remaining utility of their traditional skills in conflict management (Chapin, 1995).

As if this was not enough, a virtual organization will probably rely on massive outsourcing, a downsizing strategy strenuously opposed by labor. It may reward speedy employ of labor-displacing equipment. It may induce ever more efforts to capture the skill and experience of craftsmen in computer software. It may, in short, exacerbate tensions between labor and management on more fronts than any will find comfortable.

Labor has long depended on organizational stability to underwrite the credibility of its multi-year contracts. It has long depended on the compactness of a worksite to support the role of its shop stewards in workplace co-governance. Similarly, it relies on its skill in conflict management to keep both sides on their toes. And it seeks to keep its dues-payers on a respectable and predictable company payroll.

Virtuality would seem to undermine these mainstays of union well-being, the traditional "way things are done around here." This is no trivial matter for a social movement whose survivability has always been problematic in a social order regretfully known for the highest degree of anti-union animus among all advanced industrial nations. Plainly, then, if organized labor is to survive the shift to what some virtuality enthusiasts insist is an economic necessity, it must make major changes in its culture and behavior.

Reaction of Organized Labor. Much of labor's response will hinge on what it perceives to be the real motivation, the basic intent of the corporate sponsor. Labor has very guarded trust in corporate America. It believes the dark history of labor-management relations demonstrates much that management promotes undermines the power of employees and their union representative alike.

As well, labor associates its own growth prospects with the likelihood that management abuses will continue to drive aggrieved employees toward union organizers, e.g., a leading futurist contends that "corporate abuses are relentless, continuing, and growing - and will ultimately lead to pressures for redress ... in the form of the revival of unions...." (Coates, 1992; 29; see also Craver, 1983; 78).

At the same time, however, a new mood is apparent within certain labor circles, one that has more and more union influentials open to taking a chance on selected management innovations, lest the payroll of an entire stateside industry steadily go overseas, or in some related way, fall victim to global competition. Accordingly, organized labor is now helping progressive companies that meet it halfway, and this could probably be expanded to include experiments in virtual organization formats.

Typical of such cooperation is a Philadelphia coalition of building trade union locals known as Built-Rite, a forum that sponsors four task forces: Productivity and Cost Effectiveness; Communications and Training; Safety and Health; and Public Policy, Research, and Public Information. Each is made up of three traditional adversaries: Business Contractors; the users of large-scale construction projects (such as a hotel chains or mall developers); and union locals.

Each of the task forces reviews all proposed work contracts, and resolve worksite problems before they materialize: They assess which (once rival) locals should do what job. They discuss project budgets. They clarify the quality of work that is expected. They review health and safety guidelines. They agree to a regular schedule of problem-solving meetings throughout the duration of a building project. And they exchange traditional defensiveness and posturing for the freest flow of communica-tions ever known in the building industry.

Above all, in project after project the parties are able to boast they finished ahead of schedule, below budget, without accidents, and without a single work stoppage ... claims that help union builders beat out the non-union competition for the next big job.

At the national level, large-scale experiments exist that validate the payoff in a cooperative "win-win" approach ... one sensitive to research that finds "successful employee involvement in the long run requires that the workers' collective bargaining power not decline." (Levine, 68). The Painters Union, for example, has recently joined forces with progressive unionized companies to "bring fresh thinking and business practices to the changing construction industry."

Specifically, a Finishing Industry [Union-Management] Alliance promises to lower total project costs, reduce workers compensation costs, and promote innovative applications of new technologies - all pro-employment gains uniquely available at a unionized worksite. This is the sort of far-sighted labor-management cooperation that could substantially aid a virtual corporation - provided both labor and management were adult enough to give it a chance.

Problems and Possibilities Ahead. Where the option of the virtual organization is concerned, America is challenged to make the most of what began "as a vision of futurists, became a possibility for business theorists, and is now an economic necessity for corporate executives." (Davidow and Malone, 5). This innovation, however, like so many other radical alterations of existing realities at work, is endangered at both unionized and non-union worksites by supervisory resistance, incom-patible computer systems, lack of planning, and lack of adequate manage-ment support.

Change, however, "is killed just as effectively from below as from above." ((Lipnack and Stamps, 96). Experiments with virtuality do not need the added hindrance of opposition from organized labor. Quite welcome, therefore, is outreach by unions eager to learn more about 21st century possibilities, the better to help prepare to make the most of them.

Typical is the use now being made of long-range forecasts, scenario writing, and other powerful tools of the art form known as futuristics by the Communications Workers, the Postal Workers, the Service Employees Union, the Steelworkers, and other international unions.

These unions generally create a blue-ribbon "Committee on the Future" to put the thinking of leading futurists at their disposal. Many such committees, after carefully reviewing the literature and inter-viewing relevant forecasters (Alvin Toffler, John Naisbitt, etc.), draft alternative forecasts for the next 10 or 15 years, complete with the pros and cons of future-shaping policy options the union should consider as early as possible, e.g., cooperation with or opposition to virtual organi-zation advances.

Material of this sort enables labor organizations to improve their image and vision of a successful 21st Century Union, including long-term goals, strategic options, and priorities needed to come closer to matching that profile.

Known as "applied futuristics," this approach helps a quality union plan ahead, offer clear statements of its priorities, make difficult trade-off decisions, and substantially improve its strategic information base.
Neither an artificial exercise nor a cover for rubber-stamping a set of predrawn conclusions, "applied futuristics" sets quality unions firmly on an empowering path the public and media associate only with cutting-edge business organizations ... not bad company for progressive unions to keep.

There is finally the problem of spreading the word, of getting more and more union influentials to understand the critical importance of preparing for innovations like the virtual organization. Relevant here is the under-recognized existence of a union educational and communication system that quietly supports ever-finer examination of 21st century possibilities.

Outstanding in this regard is the Harvard Trade Union Program, created in 1942, which annually brings together as many as 30 top union officers and staffers for an intensive 10-week session on the leadership response to the challenges of the future. Comparable programs are held at the Steelworkers' educational campus in Linden Hall, PA.; the Autoworker's educational center at Blacklake, MI.; the Machinist's educational center at Hollywood, MD., and the AFL-CIO George Meany Center for Labor Studies, Silver Spring, MD.

Valuable debates at these educational centers enable unionists to explore the pros and cons of timely innovations like agile manufacturing systems, just-in-time approaches, TQM, quality circles, flextime, job sharing, and other comparably strategic options.

Opposition is voiced to mandatory overtime, speed-up, "Big Brother" surveillance schemes, greater insecurity, and the concentration of power only in the initiators of change - all of which issues are currently unsettled in the virtual work-place scenario.

Discussions of special value are increasingly extended beyond the education centers by resort to the home-page of the AFL-CIO (http://aflcio.org), which was inaugurated in September 1995. While it initially got only about 250 visitors a week, in 1996 it was averaging over 1,700 "hits" weekly. Like increases have been reported by several dozen unions that have lofted their own home pages into cyberspace.

On a smaller scale, SEIU Local 790 in San Francisco reaches over 1,000,000 northern California household members with its new magazine cable TV show, "Talking Union." The Chicago Committee for Labor Access has been airing a one-hour TV series, "Labor Beat," since 1986. "Focus on Labor" is produced near Minneapolis by members of UAW Local 863 for viewing throughout the state. And in Nashville, trade unionists produce "Fraternally Yours," a creative TV interview show focused on labor topics.

These education and communication tools will carry labor's response far and wide if and when virtual organizations begin to multiply (Pizzigati and Solowey; 1992; Puette, 1992). Best of all, they will help remind concerned parties that research confirms "substantive employee involvement can revitalize the union movement." (Levine, 167).

In short, while the struggle to reinvent a labor movement open to collaboration with virtual organizations remains a work-in-progress, there is reason to believe it can be accomplished...and is being accomplished.

Union Ambivalence. Labor union influentials listen anxiously when virtual business experts warn that "by the year 2015 the United States will either be a leader in this new business revolution or it will be a post-industrial version of a developing country. Either a nation of independent knowledge workers or a colony of economic serfs .... what will emerge from the process of change will have little in common with what existed before" (Davidoff and Malone; 19; 5).

Naturally curious about labor's role in this vexing scenario, union power-holders ask what is there Organized Labor can do to both assure its place and promote the nation's well-being, as the two are thought inseparable? ( Adler and Suarez, eds., 1993)

These union influentials know full well that certain prominent futurists, including Daniel Bell (1958), the eminent thinkers represented in What Futurists Believe (Coates and Jarrett, 1989), and Krannich and Krannich (1993), dismiss the potential role of labor unions in a post-industrial society. These gloomy seers expect labor's impact to be "declining or unimportant to the information-based society" (Coates and Jarrett; 25; see also Beaumont, 1987; Goldfield, 1987; Geoghegan, 1992; Salvatore, 1992).

Forecasts of this stripe contend that the procedural rules, exclu-sionary rules, and bureaucratization associated with unionism assuredly consign unionism to the dustbin of history. These historic shortcomings are thought so firmly embedded in union culture as to defy modernization. Accordingly, detractors point to the inability of unions to win half of all the union certification elections annually run by the National Labor Relations Board (NLRB) as proof positive that most unorganized workers want little or nothing to do with unionism (Goldfield, 1987).

Intent on proving forecasters wrong about labor's impending demise, union power-holders insist organized labor has significantly updated its procedural rules, abandoned exclusionary rules (if largely at the insistence of the Law), and modernized its bureaucracy (at least as well as its corporate counterparts). They spotlight the value-added dimension of labor (Shostak, 1991; 1992; 1994; 1995).

Specifically, they believe all forms of a 21stCentury virtual corporation will have to rely on trust and cooperation between employees and employer - two dimensions of the work scene unionists contend they can uniquely and substantially aid. Union advocates insist trust and cooperation require the shield of due process protections provided by a written labor-management contract, a formal union grievance process, and the on-the-spot availability of a shop steward - none of which they consider anti-management, and all of which they believe an asset to a well-managed workplace.

Accordingly, such union influentials are sanguine about organized labor's prospects in a world of virtual business organizations. Provided, that is, that the historic animus of business toward labor - and vice versa - is soon replaced by an experimental and far more collaborative mindset (Chaison and Rose, 1991).

Progressive union leaders offer their corporate counterparts a fresh start at labor-management collaboration, believing as they do that this win/win option is worth all the attendant risks. These unionists understand that only in this way will a significant number of influential Americans ever agree that unions promote otherwise unattainable and invaluable gains in productivity (Freeman and Medoff, 1984; Kelly and Harrison, 1992; Bluestone and Bluestone, 1992).

Summary. Organized Labor could join with progressive business organizations to shape a distinctive value-added social invention, one that could assure a competitive edge for this country, namely, a virtual work-place co-designed, co-managed, and collaboratively hailed by organized labor and management alike. As the future of our organizations, our "organic ways of being and doing together," rests in our collective hands, achieving such a cooperative work scene would be a giant step forward. (Lipnack and Stamps, xx).

This alluring possibility should be taken seriously by virtual organization enthusiasts who grasp the strategic importance of shopfloor support for shopfloor change, as its achievement this early in the flexible evolution of virtuality-at-work is still plausible.

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