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JANUARY 2024

Labor Issues and HR in 2024: 3 Key Considerations for the C-Suite

Mehreen Khan

Introduction: Addressing Labor Issues, Strikes and a Changing Workplace

The 2023 U.S. labor market experienced a dramatic increase in union negotiations and strikes. With almost a million unionized workers engaging in negotiations with their employers and nearly 400 strikes recorded, the last year reflects a change in the labor landscape and a heightened focus on labor and employee relations. This period witnessed a shift in U.S. workers’ attitudes towards their workplace and working conditions, as noted by Sharon Block, Executive Director of Harvard Law School’s Centre for Labor and a Just Economy.

While unions saw significant support across generations, Gen Z stands out as the most prominent in their pro-union stance, increasingly participating in strikes and indicating a growing willingness to advocate for their rights.

The unionization at a Costco location, a first for the company, underscores how these changes are affecting even sectors traditionally less open to union activities. In December 2021, the first Starbucks location, based in Buffalo, NY, voted to unionize. This led to over 380 of its stores doing the same. Starbucks will begin collective agreement negotiations with unions this year. These developments along with collective agreements coming up for re-negotiation in 2024, suggest a continuing wave of potential labor disruptions.

In 2024, C-suite executives as well as Human Resources (HR) leaders in all types of HR roles need to proactively engage with and address labor relations concerns, both to prevent disruptions and to adapt to evolving workforce dynamics.

Labor Trends in 2023

Significant labor unrest in the past year involved strikes within various sectors, including the entertainment, healthcare, automotive, and services industries. Notable unions that engaged in strike action were the Writer’s Guild of America (WGA), Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA), and United Auto Workers (UAW). UPS narrowly avoided what could have been the largest single-employer labor disruption in U.S. history. The UAW representing over 150,000 members went on strike across the Big Three automakers, while WGA and SAG-AFTRA had 80,000 workers forgoing pay due to strike actions. As of September 2023, strikes in the U.S. led to 7.4 million missed working days, which marks the largest rate of work stoppages in the 21st century.

Strikes focused on demands for livable wages, job security, improved working conditions, and employee demands to have input into how artificial intelligence (AI) is integrated into businesses.

Labor lawyers observed that the public nature of these strikes in 2023 could inspire further action in 2024, as many workers will re-enter contract negotiations. Labor experts anticipate more union successes, supported by increased worker engagement and recent victories, such as the UAW’s 25% wage increase over four years.

Addressing Labor Relations: 3 Key Areas for C-Suite Leaders to Consider

These labor trends of 2023 and projections for 2024 make labor relations a crucial area of focus for C-Suite leaders now. The rising wave of unionization and labor unrest is not just a fleeting trend but shows a significant shift in the workforce landscape and attitude of workers. The notable instance of the first Costco location to be unionized signals a broader movement towards more organized labor representation across industries.

For executives, these trends aren’t only about responding to immediate challenges. They present an opportunity to reshape the narrative around labor relations. By proactively understanding and addressing employee needs, leaders can avert potential disruptions, foster a culture of engagement and loyalty, and maintain a competitive edge in a dynamic labor market.

Staying ahead of labor trends is not just a tactic to mitigate risk. It strategically positions the company for long-term success, for example by ensuring a competitive total rewards strategy with compensation that is benchmarked with industry standards.

C-Suite leaders also need to focus on the health and safety of workers, create better working conditions, include workers in discussions around the integration of AI into the business, and make employees feel heard and valued.

Key Area 1: Total Rewards

Cost of living wage adjustments and overall wage hikes were among the top demands of striking workers last year. As inflation rose in the U.S., the salaries for many workers didn’t increase to correspond with the higher cost of living, leading to a leadership period of relative buying power once inflation is factored in.

Income inequality gaps between workers and top leadership were among the top reasons workers resorted to costly work stoppages. In just the first quarter of 2023, workers successfully negotiated on average a 7% wage increase, the highest since 2007.

With the reality of an increasingly empowered workforce ready to resort to strikes in 2024, it is imperative for leaders to be proactive and revisit their total rewards strategies. This includes several key approaches:

  • Benchmarking against industry standards: Leaders must regularly review and adjust compensation packages to ensure they align with industry norms.
  • Performance-based incentives: By providing incentive programs that recognize and reward individual and team achievements, companies can motivate their workforce while aligning employee interests with organizational goals.
  • Cost of living adjustments: Salaries need to keep pace with inflation and cost of living changes. This measure not only aids in maintaining employees’ standard of living but also signals an organization’s commitment to fair and responsive compensation practices. The rapid increase in inflation in 2022 and 2023 caught many people off guard, so some more catch-up work on wages may still need to be considered.
  • Transparency in pay structures: Open communication about how pay levels are determined, and the availability of pathways for advancement, can build trust and clarity in the workforce. They demonstrate a company’s commitment to fairness and can significantly reduce misconceptions and grievances about compensation.

Key Area 2: Improved Working Conditions

Workers on many picket lines demanded that their employer provide a better work-life balance through reduced working hours, a shorter work week and more staffing to avoid worker overload.

The UPS Teamsters deal negotiated last year demanded limitations on forced overtime. In July 2023, 900 nurses at Rochester General Hospital walked off the job due to harsh working conditions after the standard ratio of nurse to patient of (1:4) soared as high as (1:10) at times. According to Benefit News, “Hospitals brought the staffing shortage on themselves due to poor pay and harsh working conditions.”

In a similar case, the United Auto Workers (UAW) asked for work-life balance for union members with a proposed 32-hour work week.

These examples signify the need to support employee relations by creating healthy workplace environments that promote employee wellness, thereby improving employee satisfaction and engagement.

Adopting the following approaches can lead to improved working conditions:

  1. Flexible scheduling options: One trend we’ve observed is the increasing implementation and expansion of flexible working hours and remote work. This adaptation not only acknowledges the changing needs of a workplace that promotes diversity, equity and inclusion (DEI) initiatives and diversity recruiting but also demonstrates a commitment to accommodating personal and professional life balance. Advances in employee timekeeping products and software continue to deliver tools that companies can use to support easier management of a flexible workforce.
  2. Enhanced leave policies: Progressive organizations offer more generous and inclusive leave policies. This can include not just the traditional parental leave but also mental health days and sabbaticals. Such policies signal an understanding of the varied life circumstances employees may encounter, fostering a more supportive and empathetic workplace.
  3. Employee autonomy: Promoting a culture of trust where employees have greater control over their work schedules and environments has been shown to boost morale and productivity. When employees are able to give feedback on how their workflows can be improved, along with feeling listened to they gain a sense of autonomy that allows them to feel more invested in and satisfied with their work.
  4. Feedback and continuous improvement: Regularly soliciting employee feedback on working conditions and actively implementing improvements is crucial. An open channel of communication, for example in practices such as stay interviews, ensures that employees feel heard and valued, leading to a more engaged workforce.
  5. Proactive safety measures: Continually updating and enforcing safety protocols is essential to prevent workplace accidents and injuries. This proactive approach enables compliance with regulatory standards and also demonstrates a genuine concern for the well-being of employees.
  6. Mental health support: Recognizing the importance of mental health in overall employee well-being has become a central focus. Providing resources for mental health is not only beneficial for individuals but can also contribute to a healthier, more productive work environment.
  7. Ergonomic work environments: Investing in user-friendly office equipment and encouraging regular breaks are aimed at preventing physical strain. Such initiatives show a commitment to the long-term health and comfort of employees, which in turn can lead to reduced absenteeism and higher job satisfaction.
  8. Emergency preparedness: Putting clear policies and training in place for handling emergencies and health crises is more critical than ever. Preparedness not only supports safety but also builds trust and confidence among employees.

These strategies support a broader shift towards creating workplaces where employees are not seen as ‘human resources’ but as people.

It’s imperative for organizations to recognize that these efforts are not just beneficial for employee relations, but are also integral to maintaining a competitive edge in the market. By adopting these practices, companies can foster a culture of trust and respect, thereby enhancing employee engagement and loyalty.

In 2024, these trends are likely to continue gaining traction, with an increasing number of organizations recognizing the value of proactive and employee-centric approaches to labor relations.

Key Area 3: Strategic Integration of AI

The 2023 strike by the Writers Guild of America (WGA), spanning five months, was a high-profile example of the emerging challenges in the labor market concerning the use of AI.

A key issue in the negotiations was the potential over-reliance on AI sparking fears among writers and actors of AI. overshadowing human creativity and talent in Hollywood. The resolution of this strike, with the WGA securing terms that put stringent controls on AI usage, allowed writers the choice to use tools like ChatGPT. This landmark agreement is seen by labor experts as a precursor to similar discussions and negotiations in various industries where AI will play a growing role.

Effectively integrating AI into the workplace is about harmonizing technological advancement with human input and oversight, ensuring that AI is a tool for enhancement rather than replacement. Adopting strategies that prioritize both the potential of AI and the indispensable value of human creativity and insight will be crucial for long-term success and harmony in the workplace.

  1. Listen to employee concerns about AI:
    Establishing a culture where employee feedback is actively sought and valued is critical. By listening to their concerns, especially about AI integration, managers can demonstrate empathy and a commitment to addressing issues. Eliciting feedback can include providing regular open forums or anonymous surveys where employees express their views on how AI impacts their work. Such practices help employees to feel heard and valued, fostering a sense of inclusion and trust in the organization’s decision-making.
  2. Empower workers to Use AI tech for efficiency and productivity:
    Rather than positioning AI as a replacement for human workers, it’s essential to frame it as a tool to augment their capabilities. Training and empowering employees to use AI technologies can enhance their productivity. For instance, AI can take over mundane, repetitive tasks, freeing people to focus on more creative and complex aspects of their work. This approach not only maximizes the potential of AI but also helps in upskilling workers, making them more adaptable to future technological advancements.
  3. Develop workplace policies and guidelines around AI:
    Craft clear policies about AI use in the workplace. This should include ethical considerations, privacy concerns, and usage protocols. By doing so, employers can demonstrate that they take the implications of AI seriously and are committed to using it responsibly. Policies should be transparent and easily accessible to all, so that everyone understands the boundaries and expectations regarding AI in their daily work.
  4. Have ongoing conversations to ensure issues and worries are addressed:
    The integration of AI into the workplace is not a one-time event but an evolving process. Regularly scheduled discussions and check-ins can help address any emerging issues or concerns employees might have about AI. These conversations can be structured as periodic meetings, feedback sessions, or even informal catch-ups. The goal is to create an environment where employees feel comfortable sharing their thoughts and concerns, and where management can provide updates, clarify doubts, and adjust strategies as needed.

In Summary

Reflecting on the labor trends of 2023, it’s clear that both the rise in union activities and the integration of AI in the workplace represent significant shifts in workforce dynamics.

For C-suite and HR leaders, these shifts present a call to action to engage with their teams proactively. By benchmarking compensation, focusing on working conditions, and incorporating employee input on AI, leaders can address these challenges head-on. Embracing these strategies not only mitigates potential labor disruptions but positions companies for long-term success, enabling a workplace where employees feel valued, heard, and integral to the organization’s evolution. Looking forward, these approaches will be essential in navigating the evolving landscape of labor relations in 2024 and beyond.

Strong People leadership is key to thriving in today’s dynamic business landscape. For a tailored leadership solution that propels your organization forward, contact us.

 

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 Mehreen Khan, Marketing and Communications Specialist, Frederickson Partners

Mehreen Khan , Senior Marketing Communications Specialist at Frederickson Partners, a Gallagher company, has past HR experience as a Workplace Practices Specialist. Mehreen is currently pursuing her Masters in Industrial Relations and HR at the University of Toronto, where she also earned a B.A. with Honors in English. She holds an advanced diploma in Journalism and two graduate certificates in HR management. (See Mehreen's LinkedIn)

Read Mehreen Khan’s Full Biography.

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