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Anyone have any examples of an employee union that improves business for both employees and employer?
The most salient feature of unions that I know about is that they prevent the employer from firing bad employees, or promoting good employees over ones with seniority. This makes sense to me because unions get their power/support from employees that need the union more than the employer needs them i.e. bad ones. A prototypical example of the leftist high-low alliance.
But there's no reason it has to be this way. It's technically possible for a union to say "fire bad employees, promote some faster than others, but pay us more". Is there any examples of this sort of thing working well?
First of all, unions don't prevent employers from firing bad employees or making promotion decisions based on seniority; rather, contracts do that, and only some contracts do so. Moreover, the general rule is the US is that workers can be fired at any time without cause -- i.e., at the whim of the employer. Union contracts, in contrast, permit firing only for cause. What constitutes "cause" varies, but still, here is one benefit: Those contracts not only make it more difficult to fire bad employees; they also makes it more difficult to fire a good employee who happens to get on the wrong side of a bad supervisor, or who doesn't "get with the program," even when the program is a poor one.
Let me explain in more detail.
First, it is well established that managers of companies do not always act in the best interests of the companies themselves. For that reason, giving employees the power to push back against managers can often be in the best interests of the company. See, eg, Dilbert.
Second, let's analogize with tenure in K-12 schools (which, contrary to popular belief, means only that teachers can be fired only with cause, as opposed to, as CA courts put it re teachers before they get tenure, being fired "for any reason, or for no reason.") When I taught high school, I had tenure, and hence I (and other teachers) were able to push back on all sorts of proposals by administrators which were unlikely to inure to the benefit of students (newsflash: teachers know more about their students than administrators do). Sometimes that was about budgeting -- federal law requires decisions about spending money to be made by a committee composed of administrators, teachers, and parents. Teacher representation would be pointless if teachers on the committee have to fear getting on the wrong side of the principal). Sometimes it was about the administration pushing teachers to teach how to game multiple choice tests rather than teaching real curriculum. The list goes on and on.
Now, this is not to say that teachers always act in the best interests of their students, nor that administrators never do. Ditto re the analogous positions in private companies. Nevertheless, a system in which those in supervisory roles have unfettered power is unlikely to yield anything close to optimal results.
Disagree, for counterexamples see every military and small business ever
Well, re small businesses, where is your evidence that small businesses are particularly effective? Anyhow, truly small businesses don't have principal-agent problem that I mentioned, so they are irrelevant to my argument.
As for every military, again, where is your evidence that militaries are particularly effective at what they do? Or that militaries which give have those types of power structures are more successful than those which don't? Because all the evidence I have ever seen implies the opposite. See eg this US Army manual on leadership, which repeatedly emphasizes that effective leaders need to exercise humility and to encourage candid input from subordinates.
Hierarchical organization does not exclude using feedback from subordinates or delegating decisions.
The most efficient organizations are small businesses on their way to becoming large businesses. Founders of unicorns always talk wistfully about how awesome the company was before it got too big. The least efficient organizations are the ones that have that reputation, e.g. the Toronto Transit Commission.
The common feature of organizations that suck is that they dilute accountability, both for success and failure. Within a hierarchical organization, this is not the case. Here's another example: sports teams. The best players have the most authority, and the coach has ultimate authority. It works, because if something else worked better, everyone would do that instead.
In America, sports teams are vanity projects ultimately run by billionaires who want a boost in name recognition. Their teams are exempted from anti-trust and artificially scarce, so the owners feel relatively secure they can flip their team if they run into financial problems, elsewhere, or pass it on to their children where it will retain some value. And, if those owners are bad at hiring general mangers, it’s not too much of a problem. They just need to be liked, or at least not disliked, by the other owners in their league. (Think Donald Sterling, who all the other NBA owners hated, versus Robert Sarver who just got a one year suspension and a fine, for pretty much the same offense. Not that Sarver is everyone’s favorite.)
The Sacramento Kings, New York Jets and Buffalo Sabres are all sitting on 10+ year playoff droughts in leagues with a salary cap. They and their owners will not be removed if things don’t improve.
Also, bad GMs love churning through multiple head coaches before ownership stops letting them pass the buck.
Sports teams in America are franchises of multibillion-dollar corporations.
Case study: Jerry Jones.
He's fascinating because he's so good at running the team as a business (his strategic decisions on marketing the Cowboys as America's team and separating their merchandizing rights have made them the most valuable team by far even though their market, Dallas is far from the top), but he's almost equally as bad at managing the team's on the field success. It seems like the more hands on he is the more mediocre they become, even with the luck of an undrafted All-Pro QB (that should have been an enormous advantage in his first few contracts).
Dallas is a pretty good market, to be fair. It’s the fourth-largest metro in the U.S. and the top two house a pair of teams, each, where the Bears and Cowboys have nos. 3 and 4 to themselves. Also, culturally, Texas is football mad. But 💯 on your point about Jones being a savvy businessman and bungling sportsman.
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