Unionization: What Franchises Should Know

It seems as though unions and unionization efforts are in the news every day. Should franchises be worried? How can they address these issues within their own brands? Here’s what every franchise owner should know about the recent push for unions.

 

Unionization and Brands

In the public eye, unionization efforts are increasingly being linked to major companies and recognizable brands. An enormous amount of media attention – and significant pro-union coverage – has been directed at unionization efforts at behemoths like Starbucks and Amazon.

 

It’s a sign of a trend that labor experts have known for some time: the decades-long decline in unionization has been largely an issue of the private sector. In 1983, around 20 percent of employees belonged to a union, but by 2021, that number had dropped to just over 10 percent. More significantly, almost all of that decline came from employees in the private sector. While union membership in public-sector roles has stayed mostly steady since the 1970s, at around one-third of the workforce, union membership in the private sector hit as low as 6 percent in 2021, compared with 17 percent in 1983.

 

What’s behind this significant public-vs-private gap? A large part of it is down to the response that private sector companies traditionally have to unionization efforts. A common tactic is to respond sharply and decisively from the top, working to undermine and intimidate to avoid unionization. The result is a slow but steady erosion of the unionization rate over the years, and the development of a culture that is less friendly to unions or any organizing efforts.

 

For franchises, there’s another layer of complication when it comes to unionization. Within a single franchise, some locations may try to unionize while others do not; it depends on a number of factors, so the parent brands must consider the unique situations of individual locations.

 

Unions and Public Perception

Wherever you look these days, the evidence seems clear: the public has more pro-union sentiment at this moment in time than they have had in quite a while. In 2021, Gallup reported that public approval of labor unions was at 68 percent — the highest rate since the late 1960s. Meanwhile, only 28 percent report disapproval, which is the lowest rate since 1999. Gallup also reported that, since 2017, confidence in labor unions (represented on surveys as having a “great deal” or “quite a lot” of confidence) has hovered between 26 percent and 31 percent; prior years had that number in the high teens or low 20 percentiles.

 

In general, the U.S. has a very different union culture than other, similar countries, such as European countries. The culture that has developed focuses on a more individualistic approach, with management preferring to deal with employees one-on-one and directly, rather than through a collective like a union. This culture and its associated actions, combined with a slow pace of change within unions themselves, has led to these low unionization rates.

 

However, the past few years seem to have moved the needle. COVID, certainly, was one of the major catalysts. As companies were forced to change their mode of business to meet the challenges of the pandemic, workers began asking if there was another way of doing things permanently, rather than trying to go “back to normal” as quickly as possible. Combined with public outcry over the serious and even dangerous issues faced by frontline workers, and a more union-friendly political environment, and unionization efforts are picking up. There’s even a domino effect, where unionization efforts – even unsuccessful ones – may inspire others to organize, particularly among younger generations.

 

What Franchises Need to Know

Just as business today looks different than it used to, so too does organizing. Rather than a top-down, hierarchy-based approach, today’s organizers are typically coming from the bottom up: employees who simply believe that they’re not getting the appropriate amount of say and respect in their workplaces. Organizing is also coalescing around issues other than traditional unions; workers are banding together to advocate for issues of gender and racial justice, with the understanding that they are stronger and more likely to be heard when they work together.

 

These efforts don’t signal antagonism towards upper management – on the contrary, they’re a signal that workers of all levels want to be included in decisions that affect them. While the ingrained instinct for management may be to respond with hostility towards organization efforts, success in today’s world may require new tactics and new leadership skills for a more cooperative model. Even within unions, there are long-standing issues to address, like issues of seniority or of protecting “mediocre” workers. The hope is to be able to work together without becoming a monolith, and this is particularly relevant for franchises, where each individual franchise location may be quite different from its corporate “siblings.”

 

In an interview with the Harvard Business Review, union expert Thomas Kochan, a professor at the MIT Sloan School of Management, offered three key observations that companies should keep in mind when considering responses to union efforts. The first is simple: respect the sheer level of effort that employees have to go through to organize, because of current labor law. The second is to understand how workers seek to build cohesion both within demographic groups but also across those groups, as part of building support.

 

The third point is perhaps the most significant, as it deals with the role of customer support in unionization.

 

“The community, the customers, the investors all have an important role to play. And you’re seeing that happen now,” Kochan told HBR. “Some investor groups, particularly those that invest in environmental, social justice issues… so-called ESG groups are becoming much more vocal in saying to the business community, ‘It’s time for you to step up and recognize what is going on, and not just put all your resources into resisting these organizing efforts. But maybe pay attention to how you build effective labor management relations.’”

 

That, in the end, is the key: viewing unionization not as a challenge or a threat, but as an opportunity to build a franchise that works better for everyone. Unique, individual franchisees and employees are the heart of a successful franchise, and addressing their needs both individually and collectively can go a long way.

 

About the Author

Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.

 

Blue Rock Search is an MBE Certified, minority-owned executive search firm, an SRA Network member, a Hunt Scanlon Top 10 global recruiting firm, and a member of the Hunt Scanlon HR/Diversity Recruiting Power 65.  We specialize in the targeted identification, assessment, and placement of executives across four distinct practice areas: Human Resources, Franchise, Higher Education, and Customer Experience.