Wisconsin Union Busting Is a Massive Failure for Business

Wisconsin's legislature march to end public union collective bargaining rights may seem like a political issue, but it is just as thoroughly about business. But corporations that normally side against unions in what they think is their own self interest might want to think twice about Gov. Scott Walker's crusade.

What many executives might be tempted to celebrate as a victory over organized labor is actually going to be nothing but a painful long-run defeat. And the pain will come at the bottom line from competitors, consumers, and employees.

Political agenda
That Walker was primarily interested in breaking the public union and not resolving Wisconsin's fiscal situation became clear when the legislature stripped out the fiscal aspects of the bill to pass curbs on collective bargaining and even enable the state to fire workers for strikes and walk-outs.

Some of the big public sector unions had already agreed to the fiscal changes. But then, Walker had already said he wasn't interested in compromises, even if supported by a Republican state senator.

Conflict is nothing new in Walker's political background. He took all or nothing positions as a county executive, and Democrats previously tried to recall him. In other words, there have been plenty of ill feelings on both sides; today's scuffle is just a continuation of previous fights.

More importantly, Walker clearly wants to run for president. His references to Ronald Reagan put his interest in en masse firings in context. He's courted powerful and wealthy Republican backers, as the prank call by a blogger pretending to be David Koch showed.

In other words, whatever business people feel about unions, Walker is not a kindred spirit. Rather, he's looking to advance his own career, whether or not that comes at someone else's expense. That could well include any business supporting him or other governors trying similar policies.

Executives hate the invisible hand
Businesses have largely opposed unions since at least the Gilded Age for what seem to be five basic reasons:

• real concern over the potential of needless enforced inefficiency
• greed for more profits
• fear of losing control
• laziness over having to work around unions
• sense of inadequacy in dealing with limitations of organized workers

But that danger is a key to good business. Adversity and difficulty create opportunities to innovate. When you game the system, those opportunities never arise. And then executives turn to blame-shifting, just as you saw when General Motors (GM) leadership blamed unions for the company's woes. "Oh, if only we didn't have to spend so much on pension benefits," they moaned. They would have been better off focusing on why they couldn't build cars that people wanted to buy.

By rooting for the end of unions, businesses adopt a victim mentality. I have literally seen major executives wailing about how a certain regulatory requirement was "killing us!" And yet, the company refused to look at how revenue and profits both continued to climb. This is the mindset of willful failure. It's turning yourself and your company into risible losers.

Bad PR is bad for sales
Aside from the underlying issues of competitiveness, innovation, and competence, following the anti-union drive is dangerous in an entirely different way. Executives who back the measure will eventually be connected with it. Either they will outwardly support the move, or they will try to do so in secret but give themselves away.

That position will be largely out of step with where most Americans are, according to a Bloomberg poll from yesterday:

Sixty-four percent of respondents, including a plurality of Republicans, say public employees should have the right to bargain collectively for their wages. Sixty-three percent, including 55 percent of Republicans, say states without enough money to pay for all the pension benefits they have promised to current retirees shouldn't be able to break those obligations.

In addition, union bashing is also likely to put executives into a cauldron of hot water with their own employees. As my BNET colleague William Taylor writes, you can't effectively run an organization and " ridicule and diminish the rank-and-file workers who make up that organization."

Instead of trying to make all things sweet and easy, executives should instead embrace the concept of struggle and find new ways to overcome their challenges -- and know when that attractive sweet is laced with cyanide.

Related:

• The #1 Step to Improving Government
• Wisconsin Union Battle Brings Out the Worst in Leaders
• How Wall Street and Wisconsin Officials Blew Up the State's Pension Fund