LIVING WITH LABOR
Living with, working with labor—not fighting it or ignoring
it—should be an assumed obligation of the business execu-
tive. Success and profits can be gained more easily—and
happily—with labors honest cooperation than without it.
This should all be obvious, but deplorably few businessmen
see labor relations as anything but an obstacle. Yet my own
experiences have proven to me that a successful (and mu-
tually respectful) liaison with labor
can
be achieved.
Some years ago, for example, representatives of a labor
union sought to negotiate a new contract with a company I
owned and I met with them at the bargaining table. Their
demands centered around an hourly wage increase which I
knew the company could not afford to grant in full. I did,
however, believe we could meet the demands halfway and
felt that such an increase was justified.
Before the negotiations began, my labor-relations
“experts” urged me to give no hint of this in the early
bargaining sessions. “Play it close to the vest,” they
advised. “Offer nothing at
all until the last possible
moment, when the talks reach an apparent impasse—as
they doubtless will. Then start low and edge the offer up
slowly, raising it only as much as is absolutely necessary.”
To my way of thinking, this approach smacked strongly
of bazaar haggling. It seemed to me that such a strategy
was beneath the dignity of the company and an affront to
the union representatives’ intelligence and could only serve
to cause lasting bitterness on both sides. As I owned the
company outright and thus would not be taking risks with
the interests of other stockholders, I had no compunctions
about following my own, and in
my opinion wiser, counsel. I
decided to try an experiment.
I went to the initial bargaining session armed with a few
simple—but accurate, informative—reports. These showed
the company’s production costs and output, its profit-and-
loss statement for the previous year, and reviewed its over-
all financial situation and the outlook for the immediate
future. I listened patiently while labor stated its position
and demands. Then I handed the documents I’d brought
with me to the union spokesman and took the floor.
“I suppose we could be here for days, arguing back and
forth,” I said. “But, as far as I’m concerned, it’s more
sensible to start off where we’d have to end up in any case.
The company is unable to give you all you’re asking—the
reports I just handed yo
u will prove that. You
can
have
half the wage boost—and that’s the absolute limit at the
present time. If production and profits rise in the next year,
I’ll be glad to talk seriously with you about the other half.”
Having said my piece, I glanced around the table, noting
with considerable amusement that my aides looked
horrified, and the union representatives appeared
astounded. I thereupon suggested a recess—a suggestion
the labor side seized upon gratefully. We adjourned the
meeting, agreeing to resume it in the late afternoon.
My assistants were glum. They were certain I had taken
the first steps toward giving away not only my company,
but my shirt and theirs as we
ll. They were convinced I’d
handed the union the proverbial inch—and that it would
consequently insist on taking its mile. At best, they
expected the union to double its demands; at worst, they
feared a long, costly strike.
When the meeting resumed, my aides filed into the con-
ference room with the air of men being led to the tumbrels.
I said nothing, but grinned inwardly at their discomfiture. I
still believed I had assessed the situation correctly and had
followed the right course, a belie
f soon verified by the union
spokesman’s opening remarks.
“To tell you the truth, we thought we were in for a long,
tough fight,” he declared. “But you laid everything on the
line and gave us all the facts at the beginning—so there’s
really nothing to argue about.” He paused and reached
across the table to shake my hand.
“Mr. Getty, you’ve just gotten yourself a new contract,”
he announced with a broad smile. The remaining details
were quickly agreed upon and the contract duly signed. My
“experiment” proved to be a success that had long-lasting
and beneficial aftereffects.
Within the next 12 months, production and profits rose
sufficiently to justify granting an additional wage increase.
A lasting bond of mutual respect was established between
management and labor. To this day, any disputes are still
discussed and settled in the same sort of atmosphere, and
the company has been singularly free of labor strife. The
straightforward approach backed by facts worked—just as
it has in most similar situations I’ve encountered during
my years as a businessman and employer.
The incident is illustrative of my over-all experience, in
that I’ve usually found that organized labor is
fundamentally fair—but that it wants to know the facts.
And, when I say facts, I mean precisely that. I do
not
mean
tailored versions, half-truths or vague platitudes.
Workers and union officials are not ignoramuses. They
are perfectly capable of recognizing attempts to mislead or
misinform them—and, like anyone else, they are quite
likely to resent and rebel against such treatment. On the
other hand, once they are given the unvarnished facts, the
representatives of honest labor unions are generally
cooperative to the maximum extent consistent with their
legitimate aims and their responsibilities toward their
members.
I have not encountered any very great amount of trouble
with labor during my business career. Possibly this is due
in some degree to my own attitude toward labor. Unlike
some businessmen, I’ve never objected to the activities of
free, honest labor unions. I recognize the right of labor to
organize and bargain with management, because I
recognize the innate human urge to a better life. Being a
realist, I understand that for many—possibly most—people,
this urge translates into a desire to have the best possible
working conditions and the highest possible living
standards, and manifests itself in the traditional demands
for shorter hours and more pay.
True, there are limits—set by such factors as production
and profits—beyond which it is impossible for management
to reduce hours and increase wages. It is management’s re-
sponsibility to convince labor of this, to define the limits
clearly and furnish irrefutable facts to prove its case. I’ll
agree that in this sense, management does have to engage
in give-and-take skirmishing with organized labor—but
this is a matter of reasoned argument, not class war.
I certainly have no patience with the all-too-familiar
variety of organization man who habitually and
indiscriminately denounces organized labor. I’ve frequently
observed that most vociferous union haters of this type are
individuals who demand for themselves identically the
same advantages they condemn organized labor for
seeking.
For example, interviews conducted recently with young
executives and business studen
ts show that the majority
declares itself to be against unions. At the same time, some
75 percent of them cite security as the principal reason why
they work—or want to work—for large corporations:
“There’s very little chance of
getting fired or laid off . .
.”
“Regular salary increases . . .”
“Retirement and medical benefits . .
“Yearly vacations with pay . .
Now, I would begrudge no executive what so many of
them have evidently come to regard as their due—be it
job tenure or an annual holiday. But I see no logic or
consistency in the admittedly security-seeking
organization man’s opposition to organized labor’s search
for a similar degree of security.
Like it or not, labor unions are here to stay—and so are
the benefits they have won for their members. The days
when a laborer earned a dollar for 12 hours’ work and
Henry Ward Beecher could pub
licly thunder that a worker
who was not content to live on bread and water was “not fit
to live” are gone.
None but the most antediluvian specimens dwelling in
the murky fens of reaction’s lunatic fringe would want to
turn the clock back to the sweatshop era. Enlightened
modern-day business understand
s and accepts the need for
trade unions, which labor historian Frank Tannenbaum
has called “visible evidence that man is not a commodity,
and that he is not sufficient unto himself.*
Calumet & Hecla executive H. Y. Bassett expressed the
modern business view in his frequently quoted essay,
What
Does Industry Expect o f a Community?
“Progressive
managements have no quarrel with unions, but on the
contrary feel that they have
a place in the present-day
world of business,” Bassett declared.
The late Charles E. (“Engine Charlie”) Wilson’s
comments on annual-improvement and cost-of-living pay
increases reflect progressive businessmen’s attitudes
toward the security benefits gained by labor unions in
recent years. “What we are doing is exploiting machines,
not men,” Wilson said. “It is logical, fair and reasonable to
maintain the purchasing power of an hour’s work in terms
of goods and services the em
ployee must purchase.” He was
clearly aware of a basic economic truth which lesser
businessmen unaccountably often choose to ignore or
overlook—namely, that the worker is no longer just a
worker. He is also a consumer—a customer.
The entire complex operational framework of modern
business rests on the foundations of mass production. And,
where there is mass production, there must also be mass
consumption—mass markets. Otherwise, there are
insufficient outlets for the prod
uction, the pace of business
slows and the economy withers.
Today, labor forms a sizable segment of the mass mar-
kets which consume and use the goods and services mass-
produced by business. Labor’s prosperity—its high earnings
and consequent high buying power—represents an impor-
tant factor in the prosperity of the nation as a whole. Free
and honest—and I strongly emphasize the words free and
honest—labor unions have helped raise the living
standards not only of the American worker, but of every
American citizen. The gains organized labor has won at the
bargaining table have, by raising the workers’ buying
power, contributed materially to the country’s growth. The
myth that labor is out to wreck the free-enterprise system
has been lovingly nurtured in certain quarters. I, for one,
could not disagree more. I cannot see that free, honest
American unions pose any threat to American capitalism. If
anything, they are among democracy’s strongest bulwarks
against political or economic totalitarianism.
I’ve observed that most American workers are well
aware that they are enjoying benefits and a living standard
they could never find in any other country or under any
other political or economic system. The majority of U.S.
labor leaders are cognizant of the grim alternatives to the
free-enterprise system and they have no taste for them, be
they alternatives offered by the extreme left or right.
The fact that our economy is thriving—that our gross
national product now exceeds
half a trillion dollars
annually
—would seem sufficient to refute any charge
that labor is wrecking or seeking to wreck that economy.
Even more convincing proof is provided by yet another fact
often ignored or conveniently forgotten by chronic union
haters: our free-enterprise economy has burgeoned during
the very period that labor unions gained their greatest
strength.
“Our members may clamor for higher wages, shorter
hours and fringe benefits,” a prominent labor leader told
me. “But neither they nor union officials want to destroy or
even change the American free-enterprise system. Labor
knows it has a big stake in business—but it wants business
to realize that it, in turn, has an equally big stake in labor.”
This is reasonable enough—and so are what my experi-
ence as a businessman and employer have shown me to be
labor’s two basic aims. First of all, labor wants to share in
the wealth it helps create. Second, it wants recognition of
its importance—not from the standpoint of the trouble it
can cause, but rather from the standpoint that it does, after
all, do the actual work of producing the goods and providing
the services which business sells.
There is nothing unreasonable about the first aim—pro-
vided labor understands that
wages and other rewards and
benefits constituting its share of the wealth
must
be keyed
to production and profits. This, unfortunately, is an axiom
many workers—and even some labor leaders—sometimes
fail to grasp. Management must explain this axiom and
drive home its implications at every opportunity in all its
dealings with labor. No effort should be spared to acquaint
every employee with the fundamental truth of business
arithmetic –that, in order to survive, a company has to
earn more money than it spends. Labor must be made to
understand that it is necessary for production rates to be
maintained or even increased and a reasonable profit
earned before wage increases can be contemplated. I have
found that this can be done successfully in most instances,
provided management can substantiate its statements.
There really aren’t many legitimate labor leaders who
have any desire to wreck a company that has a contract
with their union. Most will even cooperate in finding ways
to increase production if they are convinced it’s necessary to
keep the company solvent or if it will mean better pay or
greater security for the members of their union. In such
cases, it’s up to management to do the convincing—with
facts. It all adds up to one thing: Working together, instead
of fighting each other, both capital and labor can achieve
their material aims—each can share in the wealth their
combined efforts create.
Helping labor realize its second aim is no less important.
To satisfy labor’s desire for recognition, management must
give it just that. Management must show that it
appreciates the importance of the individuals who actually
perform the work. The responsibility and capacity for
accomplishing this rests, largely, with the individual
executive who, to the worker, represents and even
personifies management.
I never cease to be amazed by the numbers of executives
who do not realize the value of personal contact with rank-
and-file employees. In some companies, the only times a
production worker is likely to see a high-level executive are
during full-dress Army-style inspection tours or when
company “brass” escort VIP visitors through the plant.
Oh, yes. Then there are the executive visits occasionally
staged by the company’s public-relations department. The
scenario for such an expedition usually follows a routine
something like this: At a given hour—generally in the late
morning or midafternoon—an impeccably dressed vice-
president and a covey of bustling retainers descend on the
plant. The party hesitantly and cautiously picks its way
along the aisles between the rows of unfamiliar, noisy
machines and stops, say, in front of a lathe. The vice-
president fidgets, adjusts his necktie, shoots his cuffs and
self-consciously edges closer to the lathe. He tries to look
interested in the work being done on the machine and
pretends to talk to the lathe operator—whose name has
just been whispered into his ear, and which he has garbled.