Living with Labor

Some years ago, I sat at the bargaining table with a group of labor-union representatives who sought to negotiate a new contract with a company I owned. Union 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 half way, 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 you 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 well. 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 conference 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 belief 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 responsibility 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 the 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 students 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 pension benefits ..."

"Hospitalization insurance ..."

"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 publicly 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 understands 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 of 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 employee must purchase."

Charles E. Wilson 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 production, the pace of business slows, and the economy withers.

Today, labor forms a sizable segment of the mass markets 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 important 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 the extreme 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. It is that 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 not long ago. "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 experience 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 – provided 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 (continued on page 141)Labor(continued from page 86) 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, in very large measure, 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.

Two or three photographers raise their cameras and focus on the dismal tableau. Flash bulbs flare, the vice-president mumbles something unintelligible – and he and his retinue beat a hasty retreat, returning to the pine-paneled peace and quiet of the company's downtown administrative offices.

A photograph of the vice-president and the lathe operator appears in the local paper the next day – and in the company's house organ the following week. "Mr. Wilbur Knowall, Bollix and Company's vice-president in charge of personnel, maintains close contact with the firm's employees," the caption under the picture reads. "He is shown conducting one of his frequent on-the-job interviews with Joe Smith, a lathe operator who has been with Bollix and Company for nearly three years."

The comments of Joe Smith and his fellow production workers when they see this are best left to the imagination. The only ones fooled by the transparent stunt are Mr. Wilbur Knowall and the company's so-called public-relations director.

Self-respecting workers resent such stunts which make a mockery of what has been called the dignity of labor – and so would I, if I were an employee of a "Bollix and Company." But then, my attitudes about work and toward labor were formed in the oil fields, where the inflexible governing rule was: The man who works for you is entitled to decent wages, decent working conditions – and your respect.

Although my father was wealthy, I worked in the Oklahoma oil fields as a roustabout and tool-dresser before I began operating on my own as a wildcatter. Even afterward, as was the custom among oilmen, I worked on the drilling rigs alongside the men who formed my crews. At one time or another, I worked as a rigger, driller, explosives man, drilling superintendent – at just about every job to be found on a drilling site.

Many years of such firsthand experience taught me that the men who actually do the work are most certainly entitled to decent wages and working conditions and their employers' respect. I also learned that nothing inspires worker loyalty or builds worker morale more swiftly than an employer's recognition of his employees' importance and his sincere interest in their well-being.

"A man likes to feel that what he's doing is important – and that the boss looks at him as a person, not just a number on the payroll," is the way a veteran driller once expressed it to me. "A man always does better if he figures he's actually part of the operation, not just a hired hand working on the job – and it sure makes him feel good if the boss comes around now and then to see how he's making out."

Executives who stay awake nights trying to find better ways to improve employee loyalty, morale and efficiency would do well to paste this old-time driller's words into their Homburgs. They could spend years searching for a better answer or more reliable formula.

Cheap stunts and tinselly moralebuilding schemes are definitely not the answer. The average worker is liberally endowed with common sense and healthy skepticism. He is quick to see through the bogus stratagems inept or inexperienced management personnel are likely to devise in bumbling efforts to get along with labor.

The important thing is to let the worker know that he and his work are important to the company – and to believe it and mean it. Any executive who doesn't believe the rank-and-file employees are really important has no right to be an executive, for he obviously doesn't have a sense of proportion or know what makes business tick.

As a matter of fact, it's hardly difficult to imagine situations in which the hourly-wage employee is far more important than the salaried executive. Thomas Jones may have the exalted title of third assistant vice-president, and he may – and probably does – consider himself indispensable. But my guess would be that he's far more expendable than, say, a crack punch-press operator on the assembly line.

Were Jones to vanish suddenly from the scene, his secretary – and he's sure to have at least one – can probably run things until he returns or until a replacement is found for him. In any event, the company will keep on going without Jones. But the absence of the punch-press operator might well slow or even halt a production line – and, in the last analysis, it's the production line and the products which come off it that count most.

The executive who understands and assumes his responsibilities takes every legitimate opportunity to demonstrate to his subordinates that he considers their work important and valuable – and that he respects them as workers and as individuals. And he takes a sincere interest in their well-being.

He does not flatter, patronize or coddle them. He does, however, always manage to find time to comment on a particular job that has been especially well done or to acknowledge the value of a worker's or an entire department's contribution to the success of a project. In short, he shows by word and action that he and the company are aware of the workers' existence and of the importance of their work. By so doing, he goes a very long way toward raising employee morale – and when morale rises, employee efficiency and production go up while such profit-devouring headaches as absenteeism and labor turnover go down.

The good executive does not disdain checking personally on working conditions and takes prompt remedial action when he finds them below standard. A broken rest-room washbasin may seem a minor thing. But, if the executive – as a representative of management – gets it repaired before the shop steward can bring the matter up before the grievance committee, the executive will be taking a major step toward building good labor-management relations.

Believe me, the remedies for many labor-management problems are just about that simple. When the desires and demands of labor are boiled down to their essentials and viewed objectively, they no longer loom as the deadly business-destroying menaces they are often represented to be. They shrink and become entirely understandable – and there is nothing unnatural, immoral or subversive about them.

Labor's basic desires and demands and an admonition to management for their fulfillment to the fullest reasonable extent are succinctly stated in that oil-fields adage – the right to decent wages, decent working conditions – and respect.

Management executives accepting this tried and proven rule and governing themselves by it are able to live with labor comfortably, successfully – and profitably. As any successful businessman will tell you, learning to live with labor is sound business.