Managing Leadership^®

When management takes the initiative to identify and establish relationships with those who might be influenced by its actions, the term “stakeholder” takes on a perfectly benign, helpful meaning. This is the case, as well, when management responds constructively to constructive suggestions from interested parties that such a relationship might exist. This is the general sense of the term as used by Wally Bock, in a comment to a previous post.

But the term “stakeholder” often suggests a combative relationship, as well. A group asserts that it has an unacknowledged “stake” in the decisions and actions of the corporation to such an extent that it must be awarded some degree of authority over those. In the normal course of such events, these demands take so aggressive a form that the corporation is forced to reject them. The result is confrontation.

It is this aspect of the term that might be used to describe the relationships between labor unions and many corporations in the United States. Gannon Beck, in a comment to “Creating businesses,” points out that this can have the effect of forcing firms within an industry to act in a fixed, monolithic manner with respect to its dealings with labor. Cam Beck adds that it converts labor into a monopoly within a firm or across an industry.

All too often, the adversarial mind-set and the organization of the two sides into unified negotiating blocks combine to create a non-competitive environment in the market for labor that can work to the disadvantage of all of its participants. These negative effects, as we can see from certain contributing factors to, and consequences of, the current credit crisis, can spread unpleasantly to other markets, and to the economy and society as a whole. The most obvious of these examples is that between union and management in the American automobile industry.

What should management do about this? Should existing unions be squashed? Why did these unions come in to existence in the past? Was it due to the failure of management to see opportunities to convert employees into collaborative stakeholders, with the consequence that they, of genuine necessity, became combative ones?

Should contemporary labor organizing efforts be routinely resisted by management? How do such efforts relate to the original labor movements? Do they seek to redress real wrongs, or to jump on the gravy train? Management may be inclined to believe the latter, but is there no reason to consider the possibility of the former?

Competitive bargaining between management and labor is perfectly natural, a normal phenomenon found in any market. But when the interactions in that market result in the formation of a monopoly on either side, the market ceases to meaningfully exist. All that is left is what might be described as progressively exploitative negotiations that can only weaken and, in the end, destroy both “host” and “parasite.”

These are roles that can be played by either party. But it is up to management, in either event, to avoid the problem. Whether or not labor is unionized in your firm or your industry, what can you do to maintain flexibility in meeting your own needs, as well as those of labor?

What effect on society as a whole arises from the peculiar coexistence of centralized, non-competitive markets within a nominally capitalist economy? What is management’s role in dealing with this, and what is that of government?

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This post is a part of a series. You can learn about and link to the other articles here: Conceptualizing capitalism

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Today’s tip: Speaking of looking for opportunities to find productive reasons and effective ways to bring people constructively into the process, please see this piece about Eclecticity’s experience with a new senior manager.

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Note: I am very pleased to discover that the Managing Leadership Blog has been included in a list of the Top 100 Leadership Blogs by the kind folks at Best Universities. Stop on over to see who else is there!

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