Startups and Unions

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The Daily

The political cliché in Silicon Valley is that everyone is a libertarian (and that they want to be seen as a contrarian). The first part is in fact a myth, as disproven by this Stanford study. Actually most people here are some form of Democrat. But a Quartz article stated that this political leaning came with two big exceptions:

There were two key areas where the entrepreneurs’ views diverged from Democrats, hewing much more closely to most Republican donors and voters: strong opposition to labor unions and government regulation

This caught my eye a little. How many Silicon Valley CEOs have even dealt with a unionized workforce? And how much is this just an orthodoxy? In the spirit of offering a different perspective, I thought I would share my own experiences. I ran a startup and I thought working with unions was no problem at all. Let me tell you why.

Before I start – there are some caveats. My experiences of this was in Sweden where the unions work differently than in the US. Employer acceptance of them is also different, since the overall union membership in the whole country is 71% (the equivalent US figure is 11.1%). Unions obviously also differ a lot among themselves depending on trade category, but come along with me for this oversimplification anyway.

Here are three good things about having your startup employees unionized:

  1. You get a framework for compensation
    • We ran Toca Boca under a collective bargaining agreement which means that the unions and the representatives for the employers negotiate the overarching framework for salary increases and things of that nature. This may sound like socialist hell to some perhaps, but the reality is that is saves you an immense amount of time.
    • Generally, the agreement sets the lowest salary increase and then the employer can choose to go higher. Say it is 1.8%. While employees can still negotiate for more, it also sets an expectation across the whole company. It’s going be around 1.8% – not 15% or 30%. The collective agreements take inflation and a whole bunch of variables into consideration.
    • As a startup CEO, you now have a framework to work with which has been deemed and fair from both parties. You think it sounds expensive giving everyone a certain set wage increase? Disgruntled employees’ productivity loss is way more expensive.
  2. It creates a formalized outlet for change at work
    • Unionized workers create a structured group to handle issues and changes at work. As an employer this might sound like a bad thing. However, as most CEOs know, formations will undoubtably take place anyway. And they don’t necessarily act, meet, or run, in the most formalized of ways. This creates unpredictability for you as a leader, and that you do not want.
    • In having an existing structure for discussions with union representatives, you can decrease the amount of ad hoc meetings that come up. There is already a body through which to organize and have these discussions. It is streamlined, structured, and relatively efficient.
    • I should add that I very rarely had any issues with things that were brought up from the staff (whether it was through a union or not). The vast majority of suggestions were completely reasonable and improvements to what we had. These experiences go against the antagonistic nature that the image of employer and employee can sometimes have. It doesn’t have to be like that.
  3. It helps you avoid unnecessary mistakes
    • Labor disputes are hardly new. It is safe to say that most issues that you’re dealing with a startup CEO have been dealt with before, at least with one additional layer of abstraction. Similarly, the modus operandi developed between employer and union has been tested many times. There’s – generally – a reason why things work the way they do.
    • What I found was that having to stick to these rules, actually helped me avoid some unnecessary mistakes. It could be situations around letting someone go where I would have easily overlooked the risks and taken a shortcut. Instead, I had to do it by the book. And it turns out the book is pretty useful. It lowers your risk significantly.

Are there difficult or bad things dealing with unions from startups’ perspective? Sure. But they are are obvious, and the understanding of them is prevalent. There’s no need for an additional blog post about that.

I know my experiences constitute a focus group of one. As such it is unreliable as a data source. It is, however, real life experiences from a situation that clearly many have strong opinions about. See it as an opportunity to challenge your own orthodoxies. And who knows – perhaps adopt what would genuinely be a contrarian position in Silicon Valley: the pro-union CEO.

(Thanks to Peter Rojas who encouraged me to blog about this a long time ago.)

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