• authored by Members for Democracy
  • published Sat, May 11, 2002

What business doesn't want you to know about the competition

It's a pretty familiar song and dance: The business isn't competitive. If the business doesn't get competitive soon, it will go out of business. In order to be competitive, the business needs concessions. Wages and benefits need to be rolled back to decrease labour costs. This will either allow the business to pay the same as its competitors - thereby making it competitive or it will allow the company to pay less than its competitors, making it even more competitive. The business either needs to pay exactly what the competition is paying or less. Nothing short of this will do.

These statements are, of course, complete and utter bullshit and the people making them know it or, if they really aren't bright enough to know, suspect that what they're saying doesn't really add up. Nonetheless, spouting off about the competitiveness in misleading terms is very common at bargaining tables across North America and especially at bargaining tables in the service industry.

It's very common because of its effectiveness. Union representatives, particularly those in the biz-unions, have been swallowing the BS hook, line and sinker for well over two decades now. They've even rationalized their gullibility with some farfetched theories: The concessions we bargained were necessary to give the business a chance to get established. The concessions we bargained were necessary because the business threatened to leave town. The concessions we bargained were necessary because the company promised us thousands of new members in exchange and that will, one day in the distant future, make us a great union. The concessions we bargained were necessary because of the competition. When things get better, the company will give back - we just know it. If you're a committed biz-unionist, any one of these will do.

It's time we learned the truth about the competition so that when the song and dance is performed next time at bargaining we can tell the management negotiators where to take their act.

Competition is inherent in a free market economy. There will always be competition and the prospect of more competitors entering the market with new products, services and marketing concepts. If the mere prospect of competition or new competition is scaring the senior executives at the company you work for, tell them to get new executives. The current crop clearly isn't up to the task.

There is no perfect competition. Contrary to the song and dance that suggests that the business must be on a completely level playing field with its competitors in order to compete, there is no perfect competition in any industry. Small firms compete with large firms, new businesses compete with established firms, consumer preferences change, and each business has its strengths and weaknesses. No two are exactly the same at any given time. Despite this many compete on this chronically uneven playing field and do quite well. Competitive doesn't mean identical - it means that the business can keep its head above water in the marketplace.

It's management's job to make the business competitive. Everyone on the management side of the fence, from the CEO right on down to the front line supervisor, is responsible in one way or another for making the business profitable. For the CEO and senior management group, that's pretty much their reason for being. These people are, supposedly, paid the big dollars for their knowledge of business and the responsibility for making the business profitable. The business employs hundreds, maybe thousands, of highly paid experts in fields like marketing, sales, research and development, finance and so on, whose job it is to come up with new ways to meet and beat the competition. If all these highly paid people should get to work to make the business profitable. If they can't do it, maybe new ones should be hired.

Labour costs are only one fact that can affect a company's profitability. Management negotiators will often say that labour costs are making the business uncompetitive. What they are really saying is that increased labour costs will make the business less profitable - that does not automatically translate into uncompetitive. All it means is that, if labour costs go up, the shareholders or owners of the business won't have as big a pile of money as they would if labour costs were reduced. The business can still be very profitable - it's just that it would be nice to have even more profit. The myth behind "labour costs make us less competitive" is that if labour costs go down, the business will pass the savings on to its customers thereby creating more demand for its products and less for those of its competitors. In theory this could happen, however, there is no guarantee that reduced operating costs will be passed on to consumers. Businesses generally price their products very close to those of their competitors - why charge less if you don't have to?

It has been stated, in literally thousands of business publications, for many years now, that the greatest factor influencing a business's ability to compete is: its workers. People create the value in an organization. A knowledgeable, well trained, committed, fairly compensated workforce is what will make you or break you in business. Management types are always talking about this and nowhere does it seem more important, more imperative and more essential in a business strategy than in the service sector. People are the Power Source.

It's important that union members begin to educate their representative about the reality of competition so that unions can begin to deal with management arguments about the need for concessions in a more effective way at negotiations. Rather than imploring management to be "fair" or "reasonable" or other words lend themselves to multiple meanings, union negotiators take the business leaders' arguments and stand them on their heads.

Things to talk about at the bargaining table

Instead of pleading with corporate honchos to give the workers a break by letting them keep what they have, why not look 'em in the eye and say "how do we know that you corporate guys know what you're doing". Maybe even go a step further and say, "We think your strategy is all wrong". Workers should not have to pay for managerial incompetence or because managers prefer quick fixes or Band-Aid solutions to sound long term strategic planning. Ask the corporate guys to show you their strategic plan. Ask an independent business analyst to tell you whether it's a good one or a bad one. If it's bad, tell the company guys to come up with a better plan. If it's good, ask what the company is doing to ensure that its managers are competent and able to carry out that plan. Don't accept a bunch of vague generalities of bland statements for an answer. "We're working on it" isn't good enough.

Have union members talk about and identify aspects of the business and of workplace culture and practices that are getting in the way of competitiveness. What are the customers saying and what do they want? What is getting in the way of good service? Does the corporate guys know (quite often corporate office types are oblivious to this) and what is it doing about it? What are the most frequent customer complaints?

Is the business using 19th century management methods in the 21st century? This is a recipe for disaster. Gather information about the importance low staff turnover, proper training, fair compensation, respectful treatment of workers, and how these can affect the corporate bottom line. Again, there is a lot of information out there about this and much of it written by business people. The management guys you're dealing with may not believe it all, but it will be very difficult to argue against it. Management guys also hate being made to look unsophisticated. Nobody wants to be labeled a 19th century guy,

Tell management that if they want to make the company more profitable they're going have to look beyond quick fixes. Those don't work and there's no point making workers bear the burden of managerial incompetence.

Nobody can bargain a better deal for you than you. Nobody knows the service end of the business better than you. It's time your employer and your community knew about it as well.

You are a community and not a commodity.

Top Stories

BCGEU bags employer big time
by the_hound Friday, May 3 2002 8:02 PM - Discussion

Vancouver - The B.C. Federation of Labour says it has evidence of plans for mass firings and blacklisting of health care workers, as the Campbell government privatizes hospital services.

The Fed says it has taped evidence that thousands of Hospital Employees Union food and laundry workers who make $17 an hour will be laid off and blacklisted. They would be replaced by $10-an-hour employees.

Union officials have released a secretly taped phone conversation between a man they identify as Spencer Green of Sodexho - a multinational company which provide hospital services - and a representative of the B.C. Government and Service Employees Union. They say Sodexho offered the BCGEU a sweetheart deal to represent the new lower-paid replacement workers.

The Fed also says Sodexho has promised health authorities that no laid-off HEU workers would be hired back:

Green: "I'm saying it's everybody, and I ain't hiring them and I think it's the thing that anybody would do. I mean, now you've got a huge problem with trying to figure out where to get all these bodies from. You can't be firing people with those kinds of pays and benefits, and think they're going to come and work for you for a third of the cost you know, and be happy."

"Bingo Bango" said the guy selling union members

This shocking story actually make it into the mainstream press. With the looming privatization of health care services in BC, a large multinational company looking to land a lucrative foodservice contract was looking to gain a competitive advantage over other bidders. How? By arranging a sweetheart deal with a union that would allow the giant corp to pay rock bottom wages (in the $9.00 per hour range) and by blacklisting thousands of better-paid health care service workers who are about to get pink-slipped.

There is nothing new about this kind of thing as some of our forum contributors were quick to point out. It's all been done before. What is unusual in this case is that the corporate guy and the management consultant who were putting the deal together were dumb enough to get caught on tape, making their pitch to union reps from the BCGEU.

The details of the discussion have been put on line for all to see and for those who have never been in the backroom, the discussion is illuminating. Notice the cool callousness on the part of the management consultant? He might as well be lining up a contract to sell beer or to make widgets. In this case, he's union members. "My client has something you want. Let's make a deal. Here's the price."

And the union reps (in this case they were just playing along) are just doing business also. "How many now, how many later, how do we seal the deal, how do we set it up, how do we dodge any flack".

This is really how it's done. Sometimes it's done on the golf course, sometimes over some drinks, sometimes in at the corporate office, but the sales pitch is the same: How many members? How much?

A snip from a telephone conversation

Luciano (management consultant) - if you have the appetite there but it's its just making that its done in a, so, I mean, the, the company is more than happy to have the discussions around you know the, how this have the process, how it happens, to minimize the impact for you and making sure as long as there, you know its sort of an interest based piece - right, to make sure that everybody's interests are addressed here

Jaynie (union rep) - uh ha

Luciano - and uh you know the overriding issue for them is trying to make sure that they've got you know some stability and uh and that they can move forward and they got a Union that they can deal with - right.

Our contributors had this to say:

The gift that keeps on giving

You'd think that these guys would learn that once you give a concession, you ain't never gettin' it back. Once you set a bottom all others will insist on matching the bottom.

When will these guys ever stop trying to help employers to manage their businesses?
- weiser - link

Put off for today what they can get tomorrow:

the deal is bogus, there will be a 2$/hour difference in the top scale between new employees and old employees, making old employees targets, and new employees bitter about being shafted. To top it all off Safeway is not happy because they didn't get the salary reduction they wanted and made it clear in April 30 Winnipeg free press that they will be seeking salary cuts when the contract expires in 2003, so all they did is buy a little time.
- harvardman - link

It's about the ability to provide more members. If Safeway was going to do something that would generate several thousand new UFCW dues payers, the deals might come through hot and heavy. If Safeway threatened to run with a new "banner" and invite the Teamsters or CLAC in to "have at" the new employees, the deals would come faster than you can shake a poop-covered stick.
- Richard - link

If Safeway was serious about closing the stores, why didn't they just pack up their toys and leave?
It seems to me that if they are asking for another vote that means they really didn't want to leave in the first place If they are granted another vote maybe the workers that voted yes last time will see thru' them and come up with a resounding ! no!!! vote
- Laura - link

Smoke screen

Mr Limpwright's Fighting spirit rhetoric is just that A pile of Stinking BS!. I have heard Mr. Limpwright's. words before. He was Our chief shop steward at LOMANS. The Overwaitea foods warehouse. And 12 years ago I heard. The Famous" Live to fight another day" Spiel. Don't worry Boys we have Lots of "Torpedoes" to shoot ....... Then as Usual the UFCW vanished. Push came to shove they cried" Uncle" and faster than you could say sassafras, there they were telling us Its OK We will get them next time.
- T S - link

After the 5 weeks on the picket line I think I remember the confusion most. Couldn't figure out what the hell happened. One day there was no way in hell we were going to give in to company demands and the next day the machine had made a complete about face, recommending acceptance of the concessionary offer.
- siggy - link

Across Golden Pond

Something that occurs to me that is both interesting and scary is that, up to now, I had believed that sweetheart deals were mostly a North American phenomenon. It would appear that biz-unionism has gone global.

Thanks for coming to our web site Arafi, Brian and Saymore. The CLC has become sort of a country club for biz-unionists so it doesn't surprise me that they would be featuring another union partner as a guest speaker. I'm sure Woodley will pick up a lot of pointers on the state-of-the-art. He'll be rubbing elbows and schmoozing with some of biz-unionism's finest.
- remote viewer - link

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