All the rage about Union rights..... and Employee Engagement

It is very interesting to me that just two years ago - the big union issue was the effort to pass the so called "Free Choice Act" (popularly described in some HR circles as the Forced Choice Act). After the election of the Democratic administration after years of Republican dominance - it was time for the unions to exert their powers.

The current unionization process allows for solicitation of interest with a signature indicating the employee would be interested in unionization (this is often done in secrecy). With enough interest - a campaign is held and both parties (Union and Management) have the right to discuss the issue and employees vote yay or nay "behind the curtain". The proposed Free Choice Act would require the Company to recognize the union with just the signature process (card check).

Now - just two years later - we are no longer talking about expanding unionization - but in Wisconsin, Ohio and other states - the talk and controversy is about limiting union bargaining rights. Historically, unions, once certified, can bargain on wages, benefits and working conditions. With the state budget issues - one of the areas that is targeted for cuts are state workers benefits. State workers are largely unionized - so the unilateral Governor budget proposal to cut benefits without bargaining has created an uproar around union bargaining rights. Ironically, the unions have now agreed to the budget cuts but state government are not backing down on the state rights to unilaterally make these changes (i.e. the unions protest on weakening of their bargaining rights).

So with that background - how does this impact the Energy Industry? With the exception of Refining, Chemicals and Power sectors - the Energy industry has largely gone union free... so the impact should not be large.

In most companies that "get it" - engaged employees are the key to improved business results. There are numerous studies that shows that companies with engaged employees deliver far better performance than companies with low engagement. A TowersPerrin Global Workforce Study showed that companies with high employee engagement had a 19% increase in operating income a 28% growth in earnings per share. Conversely, companies with low levels of engagement saw operating income drop more than 32% and earnings per share decline by 11%.

So what is the connection -- in my view - during the industrial revolution era - companies did not get the need to engage employees and thus there was a need to unionize to get basic rights. However, in today's highly competitive global environment - enlightened companies treat their employees basic needs and involve them in the business creating an environment where unions are not needed. In fact, my view is that the inclusion of a third party (unions) in the Employer and Employee relationship is a hindrance to engagement. However, if you do find yourself in a union environment, don't forget that you have rights to engage your employees directly.

As Gasoline Prices Rise - Time to bash Oil Companies

They have started -- the emails about boycotting the bad and greedy oil companies by not purchasing gasoline on a certain day or through other boycott ideas.

There has never been much love between the general population and Big Oil - and it certainly heats up anytime the price at the pump escalates.

The fact is that the U.S. needs a comprehensive Energy Plan that addresses all forms of Energy including fossil fuels (which will be the dominant form of Energy for many years) and alternative Energy sources.

Today, the U.S. consumes roughly 21 million barrel of oil today out of the 85MM barrels that are produced around the world daily. That is 25% of the World daily oil production by 4% of the World population - Houston we have a problem!

Since the U.S. produces roughly 9 million barrels of oil today - to meet our demand we must import 12 million barrels a day.... and we wonder why problems in the Middle East cause our gasoline prices to rise.

T. Boone Pickens has been outspoken about the U.S. need to develop an Energy Plan. You can learn more about his idea at Pickens Plan.

Egypt, Wisconsin and the Dodd Frank Bill...

What do these three events have in common? To some degree they are all protesting the gap between rich and "poor". In Egypt and many other countries in the Middle East and Africa, wealth is concentrated at the top while others suffer through unemployment and high cost (especially the recent food inflation). Wisconsin budget issues has resulted in a crackdown on the high cost of union negotiated health care benefits. Protesters are concerned about their union rights (that is topic for another blog post) and what they believe is an example of the continuing chasm between the upper echelon and the common worker in the U.S.

Finally, one of the key features of the Dodd Frank bill is the requirement to show a CEO/Worker ratio of pay. It requires disclosure of “the median of the annual total compensation of all employees of the issuer,” except the CEO, the CEO’s annual total compensation, and the ratio of the two amounts.

This will put a tremendous amount of effort on the Company's part to calculate all the components of pay for all workers. Previously, the Compensation Discussion and Analysis (CD&A) section of the Proxy required detailed calculation for generally the top five paid employees.

It will be interesting to see what kind of gap exists in U.S. Company pay. As always, we can help you navigate the new requirements.