Survey: EFCA raises concerns among retailers

Philadelphia A survey by global-management consultancy Hay Group has found that the Employee Free Choice Act, which would ease worker entry into a labor organization, is a concern among a majority of retailers.

The survey, which queried 178 companies, found that 89% believe EFCA will increase their companies’ vulnerability to unions -- yet only 16% are projecting the labor costs associated with unionization.

Specifically among retail respondents, the survey found:

• Eighty-nine percent of retail respondents are concerned about the impact of the EFCA and 96% believe the EFCA will increase their company’s vulnerability to unions;

• Just 23% of retail respondents are projecting the potential costs of unionization at their organization;

• More than 73% of retail respondents rated their current work climate with hourly employees as positive; and

• Only 34% of retail respondents administer employee opinion surveys to address union avoidance and vulnerability.

“Retail CEOs are very concerned about the impact of EFCA,” said Maryam Morse, consultant in the retail practice at Hay Group. “Most believe that some form of legislation that makes unionization easier will pass this year -- even if it isn’t in its current format.”

According to Morse, retail chief executives are worried that the movement will negatively impact customers and the companies’ ability to serve them.

“Companies that are organized often have increased work rules and processes that dictate what employees and managers can do -- and this will often get in the way of meeting customer needs,” she explained. “Retail lives and dies on a flexible work force where anyone in the store can be placed in a department where customers need help. Work rules would limit this responsiveness to the ebb and flow of customers through the store.”

In addition, retail leaders fear that sales and gross margins would also be difficult to control in an organized environment.

“All retailers are looking to improve efficiencies and reduce operating expenses,” said Morse. “Organized companies typically have to invest in people and processes to manage the relationship with the bargaining unit, as well as dealing with more restrictions on how work is done. Experience shows that these costs can raise expenses 10% to over 20%, even if there is no increase in pay or benefits.”

These challenges are new to most retailers, which could help explain why the industry has been caught off guard by a law that would propel potential pervasive unionization.

“Retailers and their stores have historically not been a target of unions because of the difficulty in conducting a campaign when there are so many locations [stores] to have to work through,” Morse said. “The proposed changes in the law will make it easier to sign employees up and increase the likelihood of unionization. A billion-dollar retailer can employ 10,000 people, and this is a tempting target for a union looking for new dues-paying members.”

The Employee Free Choice Act (H.R. 1409, S. 560) is pending legislation whose latest version was introduced into both chambers of the U.S. Congress on March 10.