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Factors Impacting Contract Administration

Chapter 9 /  Lesson 22
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Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

Let's dive into contract administration. Once negotiated between labor and management, a contract must be administered. Contract administration is influenced by technological impact, job placement, project management, work scheduling, and policies.

Issues Affecting Contract Administration

Malia was recently promoted to human resources (HR) manager for Soupies. Soupies is a company that makes high-protein soups for people on the go. Now that Malia is in HR, she will be one of the management representatives who help administer the collective bargaining agreement, the contract negotiated between labor and management.

Once a union is established, it will go through contract negotiations every so many years. Soupies renegotiates every five years. After the contract is ratified, it goes through a process to implement it. Then, the contract has to be administered. Malia is now a part of this process.

Contract administration involves the implementation and enforcement of the collective bargaining agreement. Working to prevent conflict between labor and management is key to a successful administration.

Even though she has a good relationship with union representatives, Malia is intimidated by this process because it is new to her. She wants to avoid any conflicts because they are costly and time consuming. After doing some research, she comes up with multiple issues that affect contract administration. Because Soupies is so new and profitable, Malia wants to make sure everything is in place to keep production humming, so she narrowed down her focus to several important issues.

Technological Impact

Technological impact, the influence of modernization on the work environment, can affect contract administration in a variety of ways. Soupies will need to make decisions on whether to automate certain activities, how much to involve employees in decision-making, what labor skills are needed, and how much to monitor production. Let's see how technology could impact contract administration.

  • First, automation advances may cause jobs to get replaced or exchanged for others. This can result in lay-offs, which is something the union wants to keep from happening.
  • Second, Soupies might consider whether high performance work organization (HPWO) would work for them. HPWO puts a lot of focus on employee involvement when it comes to implementing technology. With HPWO, employees are asked to assist with making decisions that will enhance productivity. This means new technology, more training, and higher wages. According to HPWO, having employees involved in decision-making will increase their satisfaction and productivity. However, the union contract at Soupies prohibits most of labor from being involved in the decision-making of what technologies should be implemented. Therefore, Soupies will have to wait for HPWO.
  • Third, deskilling can be a problem. Automating jobs results in a decrease in the quality of employees. Machines will be doing the work instead of the workers. Needing workers who are less skilled can affect wage negotiations.
  • Fourth, electronic monitoring of employees is on the horizon for Soupies. Many workplaces monitor employees because technology has advanced to the point where it is easy to do so. This can be for security purposes or to improve production. The union will want a say in how employees are monitored. Most want restrictions on monitoring because employees feel their privacy is being violated.

Job Placement

Job security is another area that can influence contract administration. Under union contracts, employers can't threaten employees with termination. It's also important that employees are not placed into undesirable work assignments as punishment. Also, if any restructuring occurs, the changes should be cleared through the union.

For example, if Malia punished an employee by forcing a work transfer to a shift that is undesirable, she would be in violation of the contract. Malia needs to make sure that anything related to job placement be cleared with the union.

Project Management

Subcontracting and outsourcing work is usually a problem for unions. It means fewer jobs for those who are members. Let's say Soupies needs a new database to track its soups. If Soupies' management chooses to send this to an outside company, and meet a need by temporarily assigning it to an outside vendor, this would be subcontracting. Soupies' union will need determine if it is necessary.

Once the database is sent out to a contractor, Soupies may want to outsource the maintenance of it. This is a permanent way to delegate its management.

Work Scheduling

Work scheduling consists of how many hours employees work and when those are worked. It is something that is specified in union contracts. For example, any more than 40 hours a week or 8 hours a day is considered overtime. Malia knows that in the Soupies contract, it's very clear that scheduling is done by seniority. Otherwise, it is a contract violation.

Policies

Three types of policies can influence contract administration. These are seniority, affirmative action, and employee training. Malia, for example, will need to work with the union to develop and implement policies on each.

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