MBA Thesis Final Getachew PDF
MBA Thesis Final Getachew PDF
MBA Thesis Final Getachew PDF
2020-09-02
GETACHEW ALEMNEW
http://hdl.handle.net/123456789/11164
Downloaded from DSpace Repository, DSpace Institution's institutional repository
THE EFFECT OF LABOR UNION ACTIVITIES ON ORGANIZATIONAL
PERFORMANCE IN ETHIO TELECOM
BY
GETACHEW ALEMNEW
DEPARTMENT OF MANAGEMENT
ADVISOR
July 2020
I|Page
THE EFFECT OF LABOR UNION ACTIVITIES ON ORGANIZATIONAL
PERFORMANCE IN ETHIO TELECOM
BY
GETACHEW ALEMNEW
ADVISOR
July 2020
I|Page
BAHIR DAR UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
MASTERS OF BUSINESS ADMINISTRATION (MBA)
II | P a g e
DECLARATION
I, the undersigned, declare that this thesis work comprises my own work. In compliance with
internationally accepted practices; I have dually acknowledged and referred all materials I
used in this work. I understand that no adherence to the principles of academic honesty and
integrity, misrepresentation/ fabrication of any idea/data/facts/sources will constitute sufficient
ground for disciplinary action by the university and can also evoke penal action from the
sources which have not been properly cited or acknowledged.
----------------------------------
Signature
-----------------------------------
Name of the student
------------------------------------
Date of submission
Advisor’s Approval: This thesis is submitted for examination with my approval as a university
advisor. Name--------------------------------------signature--------------------date---------------------
III | P a g e
CERTIFICATION
This is to certify that the thesis work entitled “The effect of Labor Union activities on
organizational performance: in case of Ethio telecom, North West Region” submitted in partial
fulfillment of the requirements for the award of the degree of Masters of Business Administration
to the College of Business and Economics, Bahir Dar University; through the Department of
Management, done by Mr. Getachew Alemnew.
Signature ________________________________
Date____________________________________
IV | P a g e
ACKNOWLEDGMENT
First and for most, I would like to give my everlasting glory and praise to the almighty God who
created me as a human being and for his invaluable care and support in every aspect of my life!!
My journey entertaining this wonderful life would not have been possible without the
encouragement and support of many individuals. In this regard, I want to acknowledge those who
had an influence on my studies by providing support in completing this journey.
Next to the Almighty lord I would like to express my deepest, whole-hearted gratitude and
appreciation from the bottom of my heart to my advisor Alebachew Asifaw (PhD.), without his
supervision, support and critical comments and corrections, the completion of this research work
would not have been successful. His follow up, dedication and patience he shown me in all of his
advisory activities were exemplary.
Next, many thanks go to the unreserved and precious support of my family specially my elder
daughter Tsyon for her support on data incretion to SPSS and unreserved motivation. My friends
Eba and Desita deserve a great appreciation and acknowledgment for their motivation and
guidance on the way how could I do data analysis, paper formatting and their motivational
aspirations while I faced challenges that could make me to postpone my thesis completion time to
next year. If not they completing my research work in this time was unthinkable.
At last, I would like to thank all of Ethio telecom, North West region human resource department
for their kindness in providing all the necessary data for the study and to the respondents who have
contributed by responding the questionnaires in time even in this hard and incontinent time.
V|Page
TABLE OF CONTENTS
CONTENTS PAGE
DECLARATION .......................................................................................................................... III
CERTIFICATION ........................................................................................................................ IV
ACKNOWLEDGMENT................................................................................................................ V
LIST OF FIGURES .......................................................................Error! Bookmark not defined.
ABSTRACT.................................................................................................................................. XI
Acronyms: .................................................................................................................................... XII
CHAPTER ONE ............................................................................................................................. 1
1. Introduction ................................................................................................................................. 1
1.1 Back Ground Of The Study:.................................................................................................. 1
1.2 Statement of the Problem ...................................................................................................... 4
1.3 Research Questions ............................................................................................................... 6
1.4 Objectives of the Study ......................................................................................................... 6
1.4.1 General objective ............................................................................................................ 6
1.4.2 Specific objectives .......................................................................................................... 7
1.5 Research Hypothesis ............................................................................................................. 7
1.6 Significance of the study ....................................................................................................... 7
1.7 Scope of the Study................................................................................................................. 9
1.8 Description of the Study Area ............................................................................................... 9
1.9 Limitations of the Study ...................................................................................................... 10
1.19 Organization of the Study ................................................................................................. 10
1.11 Conclusion......................................................................................................................... 11
CHAPTER TWO .......................................................................................................................... 13
2. Literature Review...................................................................................................................... 13
2.1 Introduction ............................................................................................................................. 13
2.2 Conceptual definitions ........................................................................................................... 13
2.2.1 Trade unions/ Labor unions .................................................................................... 13
2.2.2 Collective bargaining and agreements ................................................................... 14
2.2.2 Dispute resolution ................................................................................................... 14
2.2.3 Industrial Relations ................................................................................................. 15
VI | P a g e
2.2.4 Performance ............................................................................................................ 15
2.2.4.1 Organizational performance ...................................................................................... 15
2.3 History of Labor Unions ..................................................................................................... 17
2.3.1 Labor unions in Africa .................................................................................................. 17
2.3.2 Labor unions in Ethiopia .............................................................................................. 18
2.3.3 The Labor Union in Ethio telecom ............................................................................... 18
2.4 Theoretical Literatures on Unionism................................................................................... 19
2.4.1 Webbs Theory of Industrial Democracy (Evolutionary Theory): ................................ 19
2.4.2 S. H. Slitcher Theory of Industrial Jurisprudence: ....................................................... 20
2.4.3 The Gandhian Approach/Theory: ................................................................................. 20
2.4.4 Theories on Collective Bargaining ............................................................................... 21
2.4.4.1 Webb's Classical Approach: ...................................................................................... 21
2.4.4.2 Chamberlain's Theory ................................................................................................ 21
2.4.4.3 Dunlop's Theory ........................................................................................................ 22
2.4.4.4 Flander's Theory: ....................................................................................................... 22
2.5 Empirical Literatures ........................................................................................................... 23
2.5.1 The Effects collective bargaining on organizational performance ............................... 25
2.5.1.1 Effect of terms and conditions of employment on organizational performance ....... 26
2.5.1.2 The effect of occupational Health and Safety on organizational performance ......... 27
2.5.1.3 The effect of employees Salary & Benefits on organizational performance ............. 31
2.5.2 The Effect of Dispute Resolution on Organizational Performance .............................. 33
2.5.3 Summary of the Role of unions on organization performance ..................................... 34
2.6 Conceptual Framework ....................................................................................................... 35
2.7 Conclusion........................................................................................................................... 36
CHAPTER THREE ...................................................................................................................... 37
3. Research Methodology ............................................................................................................. 37
3.1 Introduction ......................................................................................................................... 37
3.2 Research Design .................................................................................................................. 37
3.3 Sources of Data ................................................................................................................... 38
3.4 Data Collection Instrument ............................................................................................ 38
3.4.1 Questionnaire .......................................................................................................... 38
VII | P a g e
3.5 Population and Sampling Design of the Study............................................................... 39
3.5.1 The population of the study .......................................................................................... 39
3.5.2 Sample Design .............................................................................................................. 39
3.5.2.1 The sampling frame of the study .............................................................................. 39
3.5.2.2 Sampling technique of the study ............................................................................. 40
3.5.2.3 Sample Size Determination ..................................................................................... 40
3.5.3 Methods of Data Collection .......................................................................................... 41
3.6 Data Analysis .................................................................................................................... 41
3.6.1 Research Model ............................................................................................................ 42
3.7 Methods of Data Analysis .............................................................................................. 43
3.7.1 Descriptive analysis ................................................................................................ 43
3.7.2 Pearson Correlation Coefficient .............................................................................. 43
3.7.3 Multiple Regression Analysis ................................................................................. 43
3.8 Issues of Validity and Reliability ................................................................................... 44
3.8.1 Reliability ..................................................................................................................... 44
3.9 Ethical consideration ...................................................................................................... 47
3.10 Conclusion of the Chapter .............................................................................................. 47
CHAPTER FOUR ......................................................................................................................... 48
4. Data Presentation and Analysis ............................................................................................... 48
4.1 Introduction .................................................................................................................... 48
4.3 Demographic Characteristics of the Respondents .......................................................... 49
4.1.1 Gender composition of the Respondents ...................................................................... 50
4.1.2 Age of the Respondents ................................................................................................ 50
4.1.3 Work experience of respondents ............................................................................. 50
4.1.4 Educational Level of the Respondents .................................................................... 50
4.2 Descriptive Statistical Analysis...................................................................................... 50
4.2.1 Mean Score and Standard Deviation of union activities of Ethio telecom and
organizational Performance ................................................................................................... 51
4.3 Correlation Analysis of labor union activities Dimensions and organizational
Performance .............................................................................................................................. 51
4.4 Multiple Regression Analysis ........................................................................................ 54
VIII | P a g e
4.4.1.1 Normality Test ........................................................................................................ 54
4.4.1.2 Multicollinearity Test.............................................................................................. 56
4.4.1.3 Linearity Test .......................................................................................................... 57
4.4.1.4 Homoscedasticity Test ............................................................................................... 58
4.4.2 Multiple linear Regression Test for the effects of labor union activities on
organizational performance ................................................................................................... 59
4.4.2.1 Regression Model Analysis on the Effect of Labor Union activities on
organizational Performance ................................................................................................... 59
4.4.2.2 Analysis of Variance (ANOVA) of Effect of labor union activities and
organizational Performance ................................................................................................... 60
4.4.2.3 Coefficients of the Effects of Labor union activities on Organizational Performance
............................................................................................................................................... 60
4.5 Hypothesis Test .............................................................................................................. 62
4.6 Discussion of Results ..................................................................................................... 63
4.7 Conclusion...................................................................................................................... 65
CHAPTER FIVE .......................................................................................................................... 66
5. Summary, Conclusion and Recommendations ......................................................................... 66
5.1 Introduction ......................................................................................................................... 66
5.2 Summary of Main Findings ................................................................................................ 66
5.2 Conclusion........................................................................................................................... 69
5.3 Recommendations .......................................................................................................... 70
5.4 Study Limitations ........................................................................................................... 71
5.5 Direction for Future Research ........................................................................................ 72
References: .................................................................................................................................... 73
IX | P a g e
LIST OF TABLES
TABLES PAGE
X|Page
LIST OF FIGURES
Figure 4.1 Histogram regression of standardized residual of union activities and
organizational performance .....……………………………………………………………................53
Figure 4. 2 Normal P-P Plot of regression of standardized residual..…………………………..55
Figure 4. 3 Scatter plot of dependent variable organizational performance……………………56
ABSTRACT
XI | P a g e
This study was intended to investigate the effects of labor union activities on organizational
performance of Ethio telecom by taking the North West region as its case area. To achieve the
stated objective the researcher employed a quantitative research approach and descriptive
research design. The research was conducted in all shops and offices in the region.
The target population was 630. From this number the sample size was determined by Yemane
formula and it becomes 245 as a representative sample which was used for data collection.
Furthermore, the selection of respondents from the target population was done by a simple random
sampling / lottery method/. For the purpose of the study, primary data were collected through a
well-structured 5 point Likert scale questionnaire and administered to employees in all shops and
offices of Ethio telecom, North waste region and the data was analyzed using SPSS.
In the analysis frequency descriptions, correlation, and regression tests were implemented. Most
importantly, a multiple regression model was applied to determine the cause and effect
relationship between the dependent and independent variables. The findings revealed that labor
union activities on terms and conditions of employment, occupational health and safety, salary
and benefit and dispute resolution have a positive and significant effect on organizational
performance.
The study recommends the employers to consider the effects of the labor unions on organizational
performance and give due attention of facilitating the playground favorable to the union in their
premises. In addition the researcher recommends further researches to be conducted on the effects
of labor union by considering all activities in relation to organizational performance.
Key Words: Labor union, collective bargaining, dispute resolution and organizational
performance
Acronyms:
XIII | P a g e
CHAPTER ONE
1. Introduction
Researchers who conducted study on the effect of labor unions show that there is a positive
relationship between union activities and organizational performance/productivity. Deery, S. J., &
Iverson, R. D. (2005), study on “Labor-management cooperation: Antecedents and impact on
organizational performance”, resulted with that a cooperative labor-management relationship
contributed to higher productivity and improved customers service. Similar studies done by
Pencavel, 2009; Griswold, 2010; Devinatz, 2011; and Amah & Ahiauzu, 2013 came up with
almost similar argument to that of Deery, S. J., & Iverson, R. D.; unionized organizations are
much more productive and with higher performance compared to that of non-unionized ones.
Some researchers argued that even if the impact of unions on productivity is high in some cases
where their monopoly effect is high to influence the employers on salary and wage issues the
performance of the organization on financial issues may be to the opposite. In such scenario
employers may be forced to shift the resource from the human to others. As per Deery, S. J., &
Iverson, R. D. (2005) argument, when influence of the union increases to compensate the
productivity reduction management may try to adopt new technology by shifting the financial
resource to machinery. This in turn may result in disagreement between the union and the
management. If there is a disagreement the ultimate result will be reduction in productivity as
employees may be engaged in sabotage and production speed reduction.
When unions are good in negotiation and strong in bargaining power can influence the
management to work with the union on employee issues. When management becomes active
participant on issues of employees that are agreed in the collective agreement employees will be
satisfied and become effective and efficient in fulfilling their tasks in time and this will result in
high employee performance and organizational performance respectively.
1|Page
The main straggle of Labor unions is on securing benefits for their members. Fundamental
straggling areas are financial benefits and non- financial benefits. From the financial some are like
raise of wages, bonuses, various allowances insurance benefits, overtime payment and the non-
financial benefits are like job security, comfortable work place recreational facilities and
decreasing fear of employer through collective bargaining (Khan 2010, and Khan, 2011). Even if
the main objective of unions is straggling for the benefit of the union members, mean while they
will benefit the non-union members and the employers in many terms.
It is obvious that in any organization labor unions have had dramatic effects on organizations'
relationships with employees and employers. If the relationship becomes smooth the environment
will be easy for discussion and negotiation.
Before labor unions came on board the focus of Workers and the factory owners are always
engaged in a dispute related issues. Those disputes are resulted from the disagreement on minimum
wages, medical benefits to themselves as well to their families, number of working hours,
overtime, compensation, bonus, pension or provident fund contribution, etc. now labor unions are
working on behalf of workers and make the negotiation fruit full and dispute will be reduced
(Reddy S., 2009).
The demand of employees may mismatch to that of the employers. Such a mismatch in demand
between employers and employees may lead to dispute. If there is a dispute in an organization that
may lead to poor productivity and that turn may lead to low organizational performance. In order
to solve the disagreement it needs a third party that can come in between to make to negotiation
ground smooth; that is the labor union. Therefore, to increase their bargaining power within the
organization, employees form unions (S, Ali and S, Preeti, 2017). However, the objective of the
unions is not only to increase the bargaining power but also have other benefits to the employees
and employers like, increasing the productivity as well as the performance of the employees’.
Even if it is theoretically believed that unions have positive effect on organization performance
some researchers came with different results when they analyze their empirical data. For instance
the research output of Laroche and Wechtler (2011), indicated that unionization in France is
associated with poorer financial performance in the workplace.
2|Page
Doucouliagos H. and Laroche P. (2009) after doing a Meta regression analysis in their empirical
study concluded that unions have a negative impact on financial performance in the United States.
The unions have both positive and negative effects within the organization. They have influence
on management practices, recruitment, and selection process. In unionized workplaces, the role of
union leadership is considered to be as important as that of management.
Similar to other countries we can find labor unions in Ethiopia too not in all but in some of
government owned and private owned business organization. These labor unions collectively have
a confederation named “The Confederation of Ethiopian Trade Unions (CETU)”.
According to Thomas P. Ofcansky and LaVerle Berry (1991) the Ethiopian 1955 constitution
guaranteed the right to form workers' associations. However, it was not happen until 1962 that the
Ethiopian government issued the Labor Relations Decree, which authorized trade unions. In April
1963, the imperial authorities recognized the Confederation of Ethiopian Labor Unions (CELU),
which represented twenty-two industrial labor groups.
CETU is Ethiopia’s largest civil society organization, which came into existence in April 1963,
and is representing about 570,000 workers organized into nine affiliated industrial federations and
approximately 1,700 trade unions (Carolyn Butler, April 11, 2019).
One of the members of this confederation is the labor union that found under Ethio telecom, the
former Ethiopian telecommunication corporation (ETC).
Ethio telecom basic labor union was initially founded on 8th January 1958 and recognized in 1968
E.C. Ethio telecom basic labor union works for the interest and wellbeing of the company‘s
employees like that of other labor unions in the country. The union strives hard for building strong
working relationship between the company and its employees, and successful implementation of
the company’s mission and vision for guaranteeing industrial peace.
Thus, the maintenance of the health of workers in all its aspects for better productivity and also for
the development of better citizens is the reason for the existence of labor unionism philosophy and
programs. The main objective of this study is to explain how the activities of labor union in Ethio
telecom affect the productivity and performance in the workplace along with its influence in the
management. This research work therefore seeks to explore the influence of the labor union on the
3|Page
company performance in the past recent years by including performance critical factors that play
significant role in the process.
The main objective of labor unions formation is to represent their members in collective bargaining
to secure the demands of the employees in relation to benefits, work environment, dispute
resolution, training and development, etc. but this is not the only activity that unions perform in an
organization. While performing their main activity they would also perform some activities that
benefit the employers. Labor unions act as a bridge between the employees and the employer.
Organizations with labor unions have the opportunity to reduce turnover, simplify their budgeting
processes and reap several other benefits (Kevin Hart, 2017). Similar study conducted by Richard
Freeman and James Medoff came with a result that labor unions have positive impact on employee
turnover reduction. The turn over reduction is resulted from the employees feeling. When
employees perceive they are properly represented their frustration reduced. Frustration is one of
the main reasons for turnover.
When employees stay long in the company they become more experienced and develop sense of
ownership. When company has such employees it becomes productive and good in organizational
performance.
Thus, if the activities of labor unions properly implemented and regulated, they can contribute
great to the achievement of a harmonious working environment, great efficiency and quality. These
achievements depend on a motivated workforce, for which a sound industrial relations climate is
necessary. If the work environment is healthy and motivating its effect will be reflected on the
organizations productivity and performance. When the requests or demands of employees are
fulfilled they become motivated and fill responsibility, and that will result high performance. The
fulfillment of employee requests are mostly results of collective bargaining through labor unions.
Studies that have been done in many east African countries revel that, employees have no strong
representation by their labor unions. This fact was also proven by the study of Muluneh
Henok(2016) on commercial bank of Ethiopia labor union and the study done by Yetimwork
Abebe(2016) on Ethio telecom labor union. Both researchers found that labor unions in the two
4|Page
companies are not strong enough in representing their members. Even they are not in a position to
enforce the collective agreements that are agreed by the employees and employers of the
companies. The reason for such missed representation is the miss understanding of the benefit of
labor unions on employee performance and organization productivity. In order to fill this gup it
needs a research supported solution.
The other gup the researcher found at time of his exploration is that there are no empirical studies
done that indicate the relation between union activities and organization performance in Ethiopia
context.
As per recent reports of confederation of Ethiopian labor unions (CELU) indicated there are about
1700 trade unions and out of these 702 are basic labor unions which are registered as member
under the umbrella of CELU. But it is critically difficult to find researches about their impacts on
their organization performances. We may find some papers which are indirectly related to union
effect on organizational performance.
The only study the researcher found which have direct relation to labor unions effect on employee
performance is that was studied by Muluneh Henok in 2016, a research study done on labor
impacts of commercial bank of Ethiopia, the rest have no direct relation to performance
(employee/organization performance). Yetemwork Abebe also has done a research on impact of
labor unions in maintaining employment conditions at Ethio telecom in 2016. But as the title
indicated it was very specific only on maintaining employment conditions. This show that still
there is a research gap in the area.
The research conducted by Muluneh H.(2016) on the impact of labor union on CBE employees’
performance indicated that there is a direct relationship between union activities and employee
performance. But his study focuses only on employee performance. Even though there is direct
relation between employee performance and organizational performance the paper didn’t indicate
it.
Muluneh H. in his study generalized the impact of unions on employee performance is significant
but the actual data collected speaks the impact of CBE labor union activities on CBE employees’
performance is insignificant. This was because of that the union bargaining power is not as strong
as it should be. This result is almost in opposite to that of what literatures said. This implies that
5|Page
there is a research gap. Meaning it needs further exploration on the area by taking other
organizations as a case area before generalization.
As indicated above most of the studies where done on specific activities of labor unions in relation
to employee performance; but to conclude about the effect of all activities of labor unions on
organizational performance all factors should be studied in aggregate. But I didn’t found any
research paper the one studies in such approach in Ethiopia context.
The gaps identified needs to be studied seriously as their effect on performance is significant. The
researcher understands that there are debates about the effects of the union activities on
organization performance; some said its effect is negative compared to other factors but some said
its effect on performance is positive. Having identified knowledge gaps in the previous related
studies, this study attempted to answer the question, “what is the effect of labor unions on
organizational performance?” by considering Ethio telecom labor union activities. The study will
take North West region Ethio telecom offices and shops as a case area. This study seeks to fill the
gap and to add empirical literature on the area.
➢ Does the role of Ethio telecom labor union on terms and conditions of employment have strong
relationship to organizational performance in case of Ethio telecom, North West region?
➢ Does role of Ethio telecom labor union on occupational health and safety has strong
relationship to organizational performance in case of Ethio telecom North West region?
➢ Does role of the Ethio telecom labor union on salary and benefit issues have strong relationship
to organizational performance in case of Ethio telecom North West region?
➢ Does the role of Ethio telecom labor union on dispute resolution issues have strong relationship
to organizational performance in case of Ethio telecom North waste region?
The main objective of the study is to assess the effect of the labor union activities on organization
performance and how the labor union is strong on motivating employees in the organization. The
6|Page
study will forward important recommendations to stakeholders after analyzing the results of the
study.
H1. There is a significant positive relationship between the roles of labor union on terms and
conditions of employment and organizational performance in Ethio telecom, North West region.
H2. There is a significant positive relationship between the roles of labor union on occupational
health and safety and organizational performance in Ethio telecom, North West region.
H3. There is a significant positive relationship between the roles of labor union on salary and
benefit and organizational performance in Ethio telecom, North West region.
H4. There is a significant positive relationship between the roles of labor union on conflict
management and complains handling and organizational performance in Ethio telecom, North
West region.
As indicated in the problem statement the focus of most researches on performance ignores the
effect of labor unions but their effect is significant as they are near and representative to employees
7|Page
under the organization. In order to minimize this gap such studies on the effect of the unions is
relevant and have great significant on the management decision.
Labor unions in different organizations are involving in many activities that have direct
implications on employees. Labor unions involve on wage scale determinations, HRM activities,
(in some organizations the involvement goes up to hiring and layoff of employees), promotion and
demotion, disciplinary activities, training, and on determination of other benefit determinations.
This tells us that doing study on the effect of union activities is very significant to all stakeholders,
to employees, management, government and shareholders too by providing relevant information
for their decisions and for framing policies.
Specifically; the study will benefit the management of Ethio telecom by giving information about
the role and effect of the basic labor union which is organized under the premise of the
organization. Besides the study will recommend what has to be done by the management based on
the research result says, what literatures said and what other public business organizations
benefited from the role of their labor unions as far as organizational performance is concerned.
The second beneficiary of the study output will be employees; after the completion of the study it
the researcher is expected to show how employees are benefiting from the activities of labor unions
and that means employees who are not unionized will be motivated to be members of the labor
union based on the relevant information which will be disclosed in the research paper.
The third benefiter of the study will be labor union leaders. The study output is expected to show
how union activities are benefiting the employers and employees. This means union leaders’ effort
to increase the number of union members will be reduced. Besides the support from the
management to the union will be win-win basis as the management will understand how union
activities are benefiting it.
The fourth beneficiary of study will be the government. Such studies which will be conducted on
areas where there is a high gap will show what have to be done while framing policies and
procedures that are related to labor at a country level and on showing the way how the government
strengthen labor unions and the confederation to play their active role in GDP increment and
country development. This study may be useful in industrial relations policy formulation, human
resource management policy and the general labor laws.
8|Page
The last but not the least beneficiary of the study is the academics area. Such studies will add
knowledge by filling the gap and will be spring board for further studies on the area.
This study was limited interims of geography, target groups, and issues. Geographically the study
was delimited to Ethio telecom labor union activities specifically this study delimited to the case
Ethio telecom, North West region. The target groups were employees of the region other than the
management staff. The scope of this study was delimited only to examine the effect of labor union
activities on organizational performance in case of Ethio telecom. Accordingly, the study
specifically focused on the effect of collective bargaining and dispute resolution activities of the
union on organizational performance. The other delimitation of the study was the time frame. The
period of this study was delimited specifically from the month of March to the first half of the
month of July.
Ethio Telecom is owned by the Ethiopian government and maintains a monopoly over all
telecommunication services in Ethiopia. It provides telecom services like telephone services,
internet and other related to telecommunication services.
As of 2008, the number of fixed line subscribers is almost half to that of mobile line subscribers;
912,695 main (fixed) telephones Connection and 1,954,327 mobile subscribers (Iyasu kebede,
2009). According to the CIA report in world fact book (2020), the mobile subscribers’ number
grows alarmingly each year especially after the change from ETC to Ethio Telecom. In 2017 the
9|Page
mobile line subscribers’ number becomes 62.617 million but the fixed line subscribers couldn’t
grow in a parallel speed to that of the mobile line. In the same year the number of fixed line
subscribers was about 1.181 million only. According to the Ethio Telecom recent report the mobile
subscribers’ number is corrected to 42 million only. This was reported by considering only the
active subscribers.
As reported in the company website Ethio telecom has 23 regions and 6 zones which are managed
centrally under the umbrella of the corporate office in Adis Ababa. The company currently has
more than 22,288 employees including contract employees which are working in these different
regions and zones. From this number 16182 are permanently employed. From the permanent
employees 11,508 are currently members of the Ethio telecom basic labor union.
North West region Ethio telecom is one of the regions that center its regional office at bahir dar
and provides the telecom service using 15 own shops and 6 franchise shops. Under the region there
are 630 numbers of permanent employees. This study selected this region as its study area because
of different constraints which are to be discussed under the limitation part.
The study is limited to a single region, North West region Ethio telecom, as a case area. As a result
of this the data may not be fully representative for generalization to the company wide level and
to other similar public business organizations. The second limitation expected is the study may
face Information bias and misunderstanding of the question by the respondents. Time and budget
may become limitation to collect data in person from all shops. In order to minimize the effect of
the limitations in relation to time and budget the researcher will try to collect data from shops far
from region office using employees’ personal e-mails and through shop supervisors.
The research paper will consist of five chapters and the organization of the chapters will be as
follows:
10 | P a g e
Chapter one will be for; background of the research and the organization, statement of the problem,
basic research questions, objective of the study, significant of the study, scope and limitation of
the study. Chapter two will includes; literature review which discusses the related literatures of the
studied focused in terms of employee relation, supervisory behavior, welfare items and
organizational citizenship behavior and definition of terms. Chapter three will consists; research
approach and methodology, sources of data, population of the study, sampling techniques and
procedures, sample size determination, methods of data collection, validity and reliability, methods
of data analysis and ethical considerations. Chapter four will consists; data presentation, data
analysis and interpretations. Chapter five will includes; summery of findings, conclusions,
recommendations and implications of further study. And finally the paper will have the references
and appendix to be included.
1.11 Conclusion
Generally, in this chapter the researcher mainly discussed the main points such as the background
of the study, statement of the problem, objectives both general and specific, research hypotheses,
research questions, significant of the study, scope of the study, operational definition of terms and
finally about organization of the thesis. The next chapter presents the review of related literature
regarding conceptual, theoretical and empirical reviews that are related to the research objectives
and mainly to support the independent variable labor union activities (collective bargaining and
dispute resolution) and dependent variable (organizational performance) that was used in this
study.
11 | P a g e
12 | P a g e
CHAPTER TWO
2. Literature Review
2.1 Introduction
Most organizations give great attention to their management approaches when recognizing the
employees’ and organization performance and ignore the role of the employees’ and the labor
unions organized by the employees. Labor unions are not destructive as considered as by the
management rather have many benefits as far as the employee and organization performance are
concerned. Labor unions can boost the productivity of employees and as a result the performance
increase of the organizations by motivating the employees by building their confidence which is
resulted from the protection of their rights and interests (Collins, 2013).
The increments of Employee and organization productivity and performance have different
factors. From the many factors one is the effect of the union activity. If the activities of unions are
managed properly with integration of the management its result will be great towards performance.
Hence management should recognize the benefits of the union activities and should work it as a
partner. This will bring about harmonious working relationship so as to enhance greater
productivity and mutual resolution of conflicts.
This chapter presents theoretical and empirical literatures on effects of trade union activities on
organizational performance. The study was guided by research specific objectives; to determine
the impact of collective bargaining agreement negotiation on organizational performance, to
determine impact of work stoppage on organizational performance and to determine the impact of
despite resolution on organizational performance.
Sidney and Beatrice Webb (1894), also defined trade unions as it is a continuous association on
wage earners for the purpose of maintaining or improving the conditions of their employment.
13 | P a g e
According to Brent Radcliffe (2019) Unions are organizations that negotiate with corporations,
businesses and other organizations on behalf of union members. There are trade unions, which
represent workers who do a particular type of job, and industrial unions, which represent workers
in a particular industry.
From the definitions the modern one is that defined by the Australian Bureau of Statistics and that
states “a trade union is organizations consisting predominantly of employees, the principal
activities of which include the negotiation of rates of pay and conditions of employment for its
members”.
Collective bargaining and agreement is the process by which organized groups of employees and
employers search for ways to coordinate their conflicting goals through common circumstances
(Vettori, 2005).
Collective bargaining according to ILO’s (2006) instruments state that, Collective bargaining is
deemed to be the activity or process leading up to the conclusion of collective agreement.
Collective bargaining is main activity in trade unionism and industrial relations. Collectivism to
the opposite of individualism helps to achieve purposeful targets together.
AFL-CIO (2015) state that Collective bargaining is the process that helps employees to negotiate
with their employers on benefit issues, on terms of employment, about health and safety issues,
and about social justices in work environments.
A dispute resolution procedure is a method of resolving a conflict between parties. Most of the
times dispute resolution was judicial in its nature; however, in recent times disputes are resolved
at the organization level by negotiation between employer and employees. Employees mostly
represented by Labor unions at time of negotiation. When negotiation failed parties follow
14 | P a g e
procedures and go for alternative dispute resolutions such as arbitration and mediation. (Yarn,
1896)
Cambridge business dictionary defined Industrial relations as, the relationships between
employees and employers, including whether employees are happy with their pay and working
conditions.
As cited by Kamal Akanta I(2015) in his article Industrial relations, J. T. Dunlop defined industrial
relations as “the complex interrelations among managers, workers and agencies of the
governments”. According to Dale Yoder “industrial relations is the process of management dealing
with one or more unions with a view to negotiate and subsequently administer collective
bargaining agreement or labor contract”.
From the definitions we understand that the aim of industrial relations is building a strong
relationship between the employer and the employees. It also aid to create strong relationship
between employees themselves.
There are three main pillars in industrial relations, Collective bargaining, conflict prevention and
conflict resolution. Collective bargaining is at the center of industrial relations. The other pillars
are addressed within the collective bargaining framework.
2.2.4 Performance
Michael Armstrong in his book, “performance management”, defined performance as; it is the
achievement of quantified objectives.
According to M. Armstrong (2006), high performance results from appropriate behavior and the
effective use of the required knowledge, skills and competencies.
15 | P a g e
According to market business news “Organizational performance involves analyzing a company’s
performance against its objectives and goals. In other words, organizational performance
comprises real results or outputs compared with intended outputs. The analysis focuses on three
main outcomes, first, shareholder value performance; second, financial performance; and third,
market performance”.
According to Richard et al. (2009), the organizational performance includes three specific areas of
firm outcomes: financial performance, product market performance and shareholders return.
After analyzing different scholarly articles before him Steer (1975) generalized the measurements
of organizational performance to be financial performance, business performance and organization
effectiveness.
Customer intimacy, product leadership and operational excellence are the three organizational
performance capabilities. All the three organizational performance capabilities have direct relation
to the employee performance. If employees are performing well in all aspects the three pillars of
organizational performance it will create a competitive advantage to the organization. In addition
to other factors, employee performance can be affected by the union activities.
There are different types of organizational performance measurements. From the different types
this study considered Balanced Score Card /BSC/ as performance measurement while assessing
the effect of the labor union on organizational performance. BSC was selected as a measurement
tool because of that Ethio telecom is currently using BSC as its performance measurement tool.
16 | P a g e
BSC measures performance in four dimensions; financial perspective, customer perspective,
internal business process perspective and learning and growth perspective.
The origin of labor unions dates back to the eighteenth century and the industrial revolution in
Europe. During this time there was a huge surge of new workers into the workplace that needed
representation (Union plus reports). As an organized movement, trade unionism (also called
organized labor) originated in the 19th century in Great Britain, continental Europe, and the United
States.
In the United States history of unions, early workers and trade unions played an important part in
the role for independence. Although their physical efforts for the cause of independence were
ineffective, the ideas they introduced, such as protection for workers, became part of the world
trade unions culture.
The history of labor unions in Africa dates back to the beginning of the 19th century. For instance
in South Africa the first labor union was formed in 1880s. The first labor union in South Africa
was formed only for the white workers. The black were not allowed to be member of the union as
it was used as a reflection of the racial disunity of the country. Through the turbulent years of
1948–1991, after black workers joined the union, trade unions played an important part in
developing political and economic resistance, and eventually were one of the driving forces in
realizing the transition to an inclusive democratic government (ICTUR et al.,, ed., 2005).
As reported in labor force survey in South Africa (2006), today trade unions are still an important
force in South Africa, with 3.11 million members representing 25.3% of the formal work force.
The other well-known trade union in Africa is the one formed in Zimbabwe, the former Rhodesia.
Its first name was Southern Rhodesian African Trade Union Congress (SRATUC) and was formed
in 1962; then changed to African Trade Union Congress (ATUC), (Chikuhwa, Jacob W. (2008).
In contrary to the union in South Africa the one in Zimbabwe represented black African workers,
and was opposed to the system of white minority rule in Rhodesia.
17 | P a g e
2.3.2 Labor unions in Ethiopia
According to Edmond J. Keller (1991) reported in his paper “Revolutionary Ethiopia: From
Empire to People's Republic”, Ethiopian constitution granted forming labor unions is a right to
workers in 1955. Even if the constitution gave the right the first union was formed in 1957. The
first union had 15 583 members from different firms and organizations. The reason for the number
of the members is small was the size of the industry work force was too small besides to this the
Ethiopian government viewed any type of organized protest as a form of insurrection.
As wubne, Mulatu (1991) cited, In April 1963, the imperial authorities recognized the
Confederation of Ethiopian Labor Unions (CELU), which represented twenty-two industrial labor
groups. By 1973 CELU had 167 affiliates with approximately 80,000 members, which represented
only about 30 percent of all eligible workers.
The formal history of trade unions in Ethiopia dates back to the year 1963 when the monarchical
rule of Hailesselasie adopted the Labour Relations Decree of 210/1963. Though the 1955
Constitution guaranteed right to form workers’ association, it was only after the Labour Relations
Decree came into force that the ‘Federation of Employers of Ethiopia’ in 1963, and the
‘Confederation of Ethiopian Labor Unions’ (CELU) in 1964 came in to picture(Desset Ab. T.,
2013).
The Ethiopian 1995 Constitution, unlike the Constitutions in the previous regimes,
comprehensively recognized rights of labor in general and trade union rights in particular. Based
on this proclamation the 2003 labor proclamation came on board as Labor Proclamation no
377/2003. Every employee, employer and unions were governed by this proclamation. And some
amendments have done on it by the year 2019. The amended labor proclamation is referred as
Labor Proclamation No.1156/2019.
As per the report of "Education International Barometer of Human & Trade Union Rights in
Education" (2007), the trade unions of Ethiopia have members of approximately 300,000. Over
203,000 are members of the Confederation of Ethiopian Trade Unions (CETU).
The basic labor union is working for the interest and wellbeing of the company‘s employees
whether they are members of the union or not. Specifically it work on bargaining and negotiation,
representation of members at trade unions confederation at national level, involve in different
committee like carrier progression, discipline, different clubs, risk management and employee’s
health and safety materials, inter organization employee movement and employee recruitment
(revised Ethio telecom collective agreement, 2010 EC).
In this part of the literature the researched discussed what theoretical concepts stated by different
scholars about trade unions and their activities.
There is no one theory of Trade Unionism, but many contributors to these theories are
revolutionaries like Marx and Engels, Civil servants like Sydney Webb, academics like Common
and Hoxie and labor leader like Mitchall. From the Important theories of trade unionism three
theories are much more relevant to this study; the Webbs Theory of Industrial Democracy
(Evolutionary Theory), S. H. Slitcher Theory of Industrial Jurisprudence and The Gandhian
Approach to trade unionism.
Webb’s book ‘Industrial democracy’ is the Bible of trade unionism. According to Webb, trade
unionism is an extension of democracy from political sphere to industrial sphere. Webb agreed
with Marx that trade unionism is a class struggle and modern capitalist state is a transitional phase
19 | P a g e
which will lead to democratic socialism. He considered collective bargaining as the process which
strengthens labor.
Gandhi emphasized that the direct aim of a trade unionism is not, in the last degree political.
Instead, its direct aim is internal reform and also evolution of internal strength. Also, trade
unionism, according to the Gandhian approach, is not anti-capitalistic as is generally viewed.
Most industrial relations literatures on collective actions are about strikes as Kelly indicated in his
1998 research article. However, there are other forms of actions which are more effective than
strike. Especially the contemporary theories of unionism are more focused on collective bargaining
and negotiation than strike on employee requests. From the listed theories the Ghanaian theory is
much more relevant in the 21st century labor unions. As indicated in the theory it gives priority to
“class collaboration rather than class conflict and struggle” which is practically happening in
20 | P a g e
today’s labor unions and trade union confederation activities. Similarly, S. H. Slitcher Theory of
Industrial Jurisprudence focuses on collective bargaining rather than individualism and group
strike. As discussed above the focus of evolutionary theory of webb is on negotiation through
collective bargaining. These three theories have similarities on their concepts about unionism. So
these theories will be considered throughout the research work.
All the three unionism theories focus is on collective bargaining rather than other theories so it
needs to see what theories or models available about the collective bargaining in order to
understand the concept in depth.
According to Sydney and Beatrice Webb (1965), collective bargaining is an economic process. In
the process trade unions act as a representative of employees to bargain on employee benefits.
They also bargain on the implementation of agreed legislations which favor interest of employees.
The webbs argued that collective bargaining is the alternative of mutual insurance and legal
enhancement. According to webbs collective bargaining is an enforcement or burden fall on
employers without their free will by employees. The collective bargaining ends up with the
contract between employer and individual employee and this agreement is called a unilateral
agreement. Such agreements have their own disadvantages to employees. Once the agreement
signed the employee will have no right to ask further requests that are not included in the first
agreement.
Chamberlain and Kuhn in 1965 developed another theory on collective bargaining by dividing in
to three theories; marketing, governmental and managerial theories. The marketing theory is
21 | P a g e
focused on sale of labor, the government on industrial governance and managerial on the method
of management.
Their Marketing theory states that Collective Bargaining is a means of contracting for the sale of
labor. According to this theory every employee will sign a labor contract with employer and that
agreement will govern both parties.
The governmental theory is also similar to that of marketing theory as it considers bargaining
process as it has a contractual character but the agreement is much more than to the earning of
high labor price. It is also about the sharing of power between management and the labor union.
The bargaining process in this theory is a political process while in above theory it is an economic
process. The basic pillar of this theory is industrial democracy. That is why it is considered as a
political process.
The Managerial theory of Chamberlain states the collective bargaining is a system of industrial
management or the conduct of industrial relation. According to this theory the union and the
management do negotiations and reach at an agreement or decision on employee matters.
Dunlop j. t. (1958) developed a theory that states collective bargaining is the activity of unions to
maximize the benefit of employees (wage and employment opportunity) by negotiating with
management. According to him marketing theory has no value as the final agreement depends on
the bargaining power of the parties. If the union has high bargaining power employees could
maximize the benefits. The reverse is also true but Dunlop felt on this aspect by considering the
union bargaining power is always dominating. His argument bases the actors in the process.
According to him there are three actors in the collective bargaining process the workers/the union,
the employer/management and the government. The involvement of the government will bind the
industrial relation. The government participation is by developing laws and regulations that will
govern both parties. According to Dunlop the involvement of the government gives higher power
to the union at time of bargaining.
22 | P a g e
For Flander collective bargaining is a rule making process between union and the
employer/management. According to him any rule and regulation that is not developed by the
consent of both parties have no legal ground in the organization. Sometimes these parties may seek
the assistance of a third party in the form of conciliation or mediation.
The focus of this part is on the empirical evidences about the effect of unions on organizational
performance. To understand the effect of unions on organizational performance it is important to
see by examining what unions do to managerial practice in the workplace. Unions can be an
instrument of social change but even when they play a larger role in society, their core activity
remains focused at the workplace.
Most of the results of the studies are varied; in some cases we see positive relationships and in
some cases negative relationships even at firms’ level. As heterogeneity of outcomes increases
with decentralized bargaining the need for firm level studies becomes even stronger.
The presence of unions in an organization may have both effects, good and evil. They can influence
industrial relations and personal management in both ways. If the union and management
integration is good the result will be higher productivity/performance and good industrial relation.
Unions’ presence lower productivity of employees in four ways; restrictive work practice,
industrial action, union firms may invest less than non-union firm and associated with an
adversarial style of industrial relations. If one of these practices happened in the organization, it
may result with low trust and lack of cooperation between management and the union. (David M.
2002)
On the other hand there are five practices of unions in organization that can enhance productivity;
firms’ responses to union relative wage effects, unions may play a monitoring role on behalf of
the employer, familiar collective voice arguments may have favorable consequence, union
presence may make managers less lethargic and when unions stop exploitation of labor, resulting
in improved productivity.
23 | P a g e
Slichter, Healy and Livernash (1960) in their study argue that unions can improve efficiency by
“putting pressure on management to tighten job production standards and accountability in order
to preserve profits in the face of higher wages”. SHL found that unions can have both positive and
negative effects on management and hence on efficiency. Among the positive effects of unions,
SHL point to better management, a better balance between employer and employee interests, and
better communications.
Even though the SHL study reported both positive and negative union effects on managerial
practice, it is most often cited, only for unions’ positive effect on efficiency. As we can see in some
instances some others argue that the monopolies face of unions actions and policies have the effect
of restraining productivity or efficiency as well as enhancing efficiency.
Empirical evidence confirms that unions have monopoly power on firm’s management and when
they use their monopoly power that will force employers to pay better wages and benefits (Freeman
and Medoff, 1984). Besides, unions do straggle for the achievement of other goals that are equally
important to them and their members, like fair treatment from management. Demand for fairness
leads the union to get into almost every area of day-to-day managerial decision-making at the
workplace level. This scenario is what the researcher observed too in Ethio telecom managerial
activities at time of his preliminary exploration; Ethio telecom basic labor union participates in
almost many day to day managerial activities. Slichter (1941) called the emergence of labor-
management relations in the 1930s a system “industrial jurisprudence” in which the union gains a
voice in almost all aspects of management decision-making in the workplace that have
consequences for workers.
Blanch F. (1996) in his study argued that Unions reduce total hours of work. They tend to reduce
standard hours and unpaid overtime hours but increase the number of paid overtime hours. Part-
time work is less prevalent in union settings than it is in non-union settings. The size of working
hours for members of union appears to be lower in most developing countries. This led to working
performance of workers to rise.
Trade unions have another role which is related to environment issues as well they deal with
training issues, education and skills building to employees as a way of improving their
performance. Trade unions could ensure improved workers’ performance by enabling them to
24 | P a g e
work under good environment. Various nations establish Health and Safety standards organ as a
way of securing workers against incidents which can lead to injury and death; and trade unions try
to negotiate based on the standards. Because when employees feel safe and secured they become
effective and productive.
The other important activity of trade unions is follow ups on daily activities of workers. Karugaba
(2015) and Harris (1998) showed that trade unions do make regular follow ups on daily workers
(members) attitudes and ability of working and it was crucial. Unions give feedbacks to union
members and to the management on the follow up results. The feedback could add positive
efficiency to the workers and management.
As per different studies indicated unions have also another activities like creating new jobs,
represent their members in grievance and disciplinary matters, checks and balances in the decision-
making process, the creation of a culture of legitimacy and fairness, and the acceptance of co-
dependence on and respect for each other (Rust, 2001), (Grogan, 2003), Mwilima (2008) as cited
by Shaibu S. Ch. (2017).
As discussed in the theoretical literature part all the three basic theories about unionism gave great
attention to collective bargaining as a basic tool to resolve disputes that appear in work places
between employees and employers. The result will be effective if that is done through the labor
union representation at time of negotiation.
25 | P a g e
Labor unions in every organization straggle to have a collective agreement that will govern the
employees and the employers. The agreement is a document that have acceptance in the laws and
rules of the country where the company is working in.
There number of activities that are considered in the collective bargaining. From the many some
basic that have high significance on organizational performance are considered as independent
variable to the study; and are discussed in the preceding sections.
As Cecilia M. (2018) cited in his paper by taking the postulate of Boheim and Booth (2004)
“employees join trade union for protection and improved terms and conditions of employment”.
Trade union can achieve this by developing a collective strength and solidarity of its members.
Working conditions includes; training, skills, health, safety and well-being; working time and
work-life balance (Armstrong and Taylor 2014).
Freeman and Medoff (1984), have stated the assumptions underlying this approach quite clearly:
Unionism may increase productivity in some settings and decrease it in others. If the increase in
productivity is greater than the increase in average unit costs due to the union wage effect, then
the profit rate will increase; if not, the rate of profit will fall.
As Kim B. Clark framed in his paper (1982), the impact of the union on a firm's economic
performance depends on the wage setting process, the structure of markets, and the technology of
production.
The research output of Sharon M. G. (2013), pointed out that union activities if done with
integration of the management will have positive impact on terms and conditions of employment.
According to his data more than 80% 0f the respondents agreed the labor union is playing
important role on terms and conditions of their employment.
A study by Roelofsen (2002) indicates that improving the working environment reduces
complaints and absenteeism while increasing productivity. When work place facilities and
amenities like things provided for the health, safety, welfare and personal hygiene needs of
26 | P a g e
employees are fulfilled the work environment becomes motivating to be there all the working days
and that will result in an increase on employees’ performance.
Different countries included in their labor acts and lows what things are to be fulfilled to employees
in order to make the work environment safe and healthy. And the responsibility lays on the
employers.
Johnny, Prof. & Eluka, C & Nwonu, Christopher & Okafor, (2014) in their research paper try to
list out what basic facilities are enforced to be fulfilled in working premises. Those are like:
Drinking water, toilet and washing facility, Dining rooms, seating areas at time of break,
temperature moderating facilities, proper working rooms with good lighting, and painting,
changing rooms and personal storage facilities, etc.
As sited by Johnny C. and Christopher N. (2014) facilities to healthy work environment are
fundamental prerequisites for sustainable development.
The data analysis result of Johnny C. and Christopher N. (2014) revealed that there is a direct
relationship between improved working conditions and organization performance. And they added
that Occupation safety and healthy workforce contribute to the attainment of organizational goals.
Improvements of the facilities have benefits in reducing absenteeism, sick days, occupational
injuries, stress conditions and turn over.
The human, social and economic costs of occupational accidents, injuries and diseases and major
industrial disasters have long been cause for concern at all levels from the individual work place
to the national and international. Measures and strategies designed to prevent, control, reduce or
27 | P a g e
eliminate occupational hazards and risks have been developed and applied continuously over the
years to keep pace with technological and economic changes.
ILO has different international labor standards, and code of practices in relation to occupational
safety and health. Unions in firms take responsibility in the provision of technical advice and the
dissemination of information about health and safety in work areas.
The ILO Conventions and Recommendations on occupational safety and health embody principles
which define the rights of workers in this field as well as allocating duties and responsibilities to
the competent authorities, to employers and to workers.
From the many occupational safety and health conventions main are : The Promotional
Framework for Occupational Safety and Health Convention (No. 187), The ILO Occupational
Safety and Health Convention, 1981 (No. 155), The ILO Occupational Health Services Convention
(No. 161) and Recommendation (No. 171), 1985.
Grace K. J. & Rosemary W. Mb. in their research article “Maintaining Health and Safety at
Workplace” indicated maintaining health and safety of employees at work place is the
responsibility of employees, employer and labor unions. Without the integration of the three parties
the result on occupational safety and health will be insignificant.
Employee health and safety programs should be a major priority for management because
their safe lives increase productivity, and reduce costs (Anthony et al., 2007). Health and safety
at work is therefore aimed at creating conditions, capabilities, and habits that enable the
worker carry out their work efficiently and in a way that avoids events which could cause them
harm (Garcia-Herrero, S. 2012).
28 | P a g e
As Alejandro D. G. (2011) indicated in his research paper, Unions have influenced occupational
health and safety (OHS) outcomes in several important ways. These include the provision of job
hazard information, the protection of workers who refuse to accept hazardous assignments, and
the assistance and representation of workers in accident compensation claims.
In short unionization helped organizations in three important ways; by creating a safe working
place , by helping in making clarifications on conflict of interest between unions and firms on
medical bill issues, compensation issues, and change in health standard issues and by playing a
crucial role in pushing for OHS standards and work on the practicality of the standards.
Different scholars argue that as OHS is costly to employers it will result with decrease in total
factor productivity(TFP); that is why employers and individual firm owners are not interested in
unions movement towards OHS. Hence, both at the firm level and at the economy-wide level, there
is conflict of interest between unions on the one hand and firms and capital owners on the other.
But for a certain range of OHS, unions and capital owners agree on implementing OHS standards.
This agreement depends on the bargaining power of unions at firm and industry level and the
binding level of the law in the area.
In some organizations the health benefit extends up to family. Some reimburse 50-100% of family
medical expenses. The observation of the researcher indicates Ethio telecom covers 100 % for the
employee if treatment done in government health centers and in a pre-agreed private health centers;
and 70% of family medical expenses if the treatment was done in private but it will cover 100% if
the treatment was taken in government health centers.
Iheanacho and Ebitu (2016) conducted a study on effects of industrial safety and health on
employees’ job performance in selected cement companies in Cross River State, Nigeria. And the
result revealed that there was a positive significant relationship between industrial health/safety
strategies and employee job performance. Similarly the study done by Abihud (2013) in the case
Arusha Airport Authority indicated that occupational health and safety program has an impact on
organizational performance.
Similar study done on Kenya Power Company Limited by Oluoch (2015) indicated that there is a
direct relationship between occupational health and safety to employee performance.
29 | P a g e
Muluken (2016) conducted a study on impact of occupational safety and health on organizational
performance in East Africa Bottling Company findings revealed that despite the fact that East
Africa Bottling had occupational safety and health policy, rate of employee injury was high. 82.1%
faced minor injuries with 67.9 % of them being hospitalized hence having a negative impact on
organizational performance. It was also revealed that employees faced this injury due to their
carelessness, lack of awareness and training, poor OSH implementation supervision.
The study conducted by Esayas Assefa(2018), on The Practices and Challenges of Occupational
Safety and Health in Meta Abo Brewery Sc. Co, indicated that employees of the organization are
not working in a safe condition and this resulted in frequent at work area injuries. As per his
observation and what his data said such occupational safety and health problems are resulted from
lack of awareness, lack of management attendance to safety program, insufficient government
regulations and guidelines, inadequate resources and lack of government audits and/or inspections.
This result tells us that the management and the labor union, especially the labor unions are not
playing their roles in relation to occupational health and safety.
Organization can increase performance, job satisfaction and employee commitment by reducing
the rate of occupational accidents, diseases and unwanted stress, naturally medical leaves, job
abandonment and absenteeism. In this regard the role of unions at the firm level is significant.
According to Muluneh Henok(2016) study on commercial bank of Ethiopia labor union activities,
the result indicates that the union impact on securing employees health and safety benefits at work
places is not as satisfactory as that the employees are expecting. And he concluded that the union
is not as strong as expected to be towards benefiting union members in OHS.
OMONDI D. (2015), in his empirical research “Effect of occupational safety and health
programmes on employee performance” found out that OSH programs bring a measurable result
on employees performance by increasing the employees commitment. But this could happen if the
management is highly committed in making healthy and safety as its priority to the employees.
Kaynak R. et al., (2016) in their study concluded that Safety and health rules were found significant
and positively related to organizational commitment. Besides Organizational safety support, First
aid support and training, Safety procedures and risk management have a strong relationship to
30 | P a g e
organizational commitment. In turn organizational commitment found to be a considerable
determinant of high performance.
The study output of Wambulwa, Nasimiyu B. et al., (2018) reviled that accident reduction which
is one of the basic activities in occupational safety and health was found to be positively related to
performance in Nzoia water services company Trans-Nzoia County.
The Main goal of unions and a major reason that workers seek collective bargaining is for salary
and benefit issues. According to ILO report on its journal “Innovative Finance for Social Justice”
(2012), In the United States labor unions have different activities in relation to employee benefits.
The benefits have different packages like, health benefits (which are provided through self-help,
mutual benefit societies), discount group purchases, informal sickness funds, death benefit funds
that support disabled workers and facilitate funeral processes. Unions also try to enforce employers
to pay life and health insurance premiums to employees. Such union activities are also common
practices in Europe and Asian countries. We can find such unions in some African countries too.
According to The IPPR Commission on Economic Justice 2018 report, trade unions and collective
bargaining can play a vital role in boosting wages by strengthening the bargaining power of labor.
As different scholars indicated in their articles Union workers continue to receive higher wages
than nonunion workers and have greater access to most employer-sponsored employee benefits.
Such differences are making employers to fear labor unions to be available in their firms.
As per the study of George I. Long (2013), by taking data from United States bureau of Labor
Statistics (BLS), indicated that union workers receive larger wage increases than those of non-
union workers and generally earn higher wages and have greater access to most of the common
employer-sponsored benefits as well.
Cote (2013) argues, an increase in wage expenditure forces organizations to be more efficient in
resource use and increase output to compensate for increased wage bill.
31 | P a g e
In most of the firms that have labor unions the labor organization is recognized as the bargaining
agent for all workers and wage and salary rates are determined through collective bargaining or
negotiations.
According to Employer Costs for Employee Compensation (ECEC) data, used by George I. Long
(2013) for his study, wages and salaries for private industry union workers were greater by about
$4 per hour compared to that of nonunion private industry workers averaged cost per hour. Almost
same amount of difference was seen on the 2011 data too.
Similarly the Data from the Employment Cost Index (ECI) used by the researcher show that union
wages rose faster than nonunion wages. This benefits data from the NCS show that union workers
tend to have greater access to the more common employee benefits than their nonunion
counterparts.
From these out puts we can understand that a union effect for employee benefits is undeniable.
When employees are satisfied by the benefit that they already expected they become productive
and turn over also reduced. But employers mostly consider only the cost and they become negative
towards labor union existence in their firms.
Matthew W. and Lawrence M. (2003), as cited by Muluneh, Henok(2016), pointed out in their
study report by referring different studies of economists like Alfred Marshall, H. Gregg Lewis,
and Freeman and Medoff, “Unions raise wages of unionized workers by roughly 20% and raise
compensation, including both wages and benefits, by about 28%”.
In addition to wage increasing impacts unions lessen wage inequality by raising the wages to a
greater degree for “low-skilled” than for “high-skilled” workers (Hirsch and Schumacher, 1998).
Freeman and Medoff (1984) also confirmed that “the greater union representation and the larger
union wage impact for low and mid wage workers are key to unionization role as a major factor in
reducing wage inequalities”. If unions were not working on this issue the gap between the juniors
and seniors will be wide and may be reason for dissatisfaction for low skilled and junior workers.
The study result of Yetimwork A. (2016) after conducting her research on “The Role of Labor
Union in Maintaining Employment Condition in the Case of Ethio Telecom”, indicated that the
role of the labor union on enforcing and following up the implementation of the collective
32 | P a g e
agreement is week. According to her the Labor union is not trying to protect members from abusive
acts of the employer and is not securing their benefits as per the agreement.
Similarly, the study done by Muluneh Henok in 2016 the research result indicates the impact of
the salary and benefits on employees’ performance are negative. Meaning the result imply that the
labor union is not playing its pivotal roles effectively to bring a substantial impact on the
compensation and work lives of workers through securing legislated labor protections and rights.
Berhan E. (2017) after his study on ‘the effect of reward system on perceived employee
performance’ concluded that the reward systems in companies have its vital role on employee
motivation.
The study of Ekere, A.U and Amah, E (2014) on staff benefit and organizational performance on
Nigeria private hospitals reveal that the impact of benefits on employee performance depends on
the existing compensation and performance management package in the organization. In the
specific study area employees are complaining on the benefits as that are not compensating their
sacrifices and resulted in demotivation towards their performance. If the performance of
employees reduced its impact would be on organization performance.
Another empirical study done by Adibah, Abdul K. et al, (2019) confirmed that compensation and
benefits have a significant relationship to that of employee performance. In order to boost the level
of performance the organization must plan the effective strategies for employees’ motivation.
All the empirical studies discussed by the researcher as well scholars related to the subject show
that there is a significant relationship between employee benefits and performance. If performance
of employees enhanced the performance of the organization in general will be high as the main
factor for higher organization performance are the human resources.
In a unionized work environment, employees follow a step-by-step process for handling grievances
or disputes between management and labor. Conflicts over contracts, however, are far more
challenging to resolve and may result in the union or employer imposing economic pressure.
33 | P a g e
The union’s main way of policing the contract is the grievance procedure. A grievance is a formal
complaint by an employee or the union that management has violated some part of the contract.
Every workplace has a conflict management system. In a non-union workplace the system
generally consists of managerial decision making, organizational and government regulation, peer
negotiation, and the exercise of the exit options resignation or dismissal. Unionized workplaces
rely primarily upon the grievance procedure to manage conflict (Blaine D., 2006).
According to Blaine D. (2006), the non-union workplace has primary deficiencies in the Justice
and Engagement Quotients. Too much employer power may lead to abuse of authority. It also
marginalizes opportunities for fair and protected workplace participant feedback. This results in
reduced engagement among workplace participants in the system.
As Hotepo, et. al. (2010) indicated in their paper work area conflict arises due to scarcity of
resources and freedom, due to high position demand, when the goals and interests of individuals
or groups are incompatible. Ramani and Zhimin (2010) noted that if conflict is not managed in
time it may result grievance, dispute, complains and may be grow to strike.
Different researchers study findings revealed that conflict management had a significant effect on
organizational performance. If conflict managed effectively in time its effect on organization
performance would be positive if not it may result a poor organization performance (Kituku, Abdul
and Sehar, 2015, Olang, 2017, Cecilia M., 2018).
Awan and Anjum (2015) concluded that, as cited by CeciIa Maina (2016), organizations that
handle the conflicts that appear in the organization properly are able to increase their performance
by using their available resource. However, conflicts that are not managed properly will have a
negative impact performance.
Freeman and Medoff (1984) argument was that unions would raise productivity only under very
strict circumstances: ‘if industrial relations are good, with management and unions working
together to produce a bigger “pie” as well as fighting over the size of the slices, productivity is
likely to be higher under unionism’.
Pencavel (1977) in his study gives attention to the important role of unions, monitoring work
activities of employees. In his argument the labor union is considered as the auditor of employees
and the management.
When employees feel that they have collective voice provided by their union could help on
improving their efficiency within the firm and that will result with better productivity and
organizational performance (David M., 2002). The collective voice may improve morale,
motivation and cooperation, communications leading directly to better plant layout or improved
working practices and provide a mechanism to improve the employment contract. Besides it has
high effect on lowering turn over. If turnover is low productivity will be high as the relationship
is direct.
Deery and Iverson (2005) argue that, As Bett M. cited in her paper, trade unions can also have a
negative effect on the organizational productivity by causing employees to stop working or to
engage in sabotage. This shows that attitude of employers towards the activities of unions is vital.
If employers are not willing to implement as per the collective agreement the result of the union’s
effect will be negative as stated above.
The study findings of Bett M. J.(2014), which was done on cement manufacturing industries in
Nairobi, revealed that Trade unions has an effect on organizational productivity this is because
through their activities such as negotiations for better wages, better working conditions, and
facilitation of education opportunities for members, these members tend to be motivated and even
work hard in performance thus leading to high productivity at an individual level which then
translate to the entire organization.
35 | P a g e
Organizational performance is directly impacted by individual and group performance of
employees. If employees perform effectively and their productivity increased that will positively
impact organizational level productivity/ performance. To increase employee performance there
are factors to be considered. One of the factors is labor union activities towards the welfare of
employees in the organization. From the many activities that labor unions perform in unionized
organizations some that have direct impact on employee performance are indicated in the research
conceptual framework; that are collective bargaining, and dispute resolution for this research as
independent variable. Collective bargaining has three indicators under it, terms and conditions of
employment, occupational health and safety, salary and benefit. Similarly dispute resolution has
two measurements, conflict management and complains handling. This concept was developed
based on the variable definition of Stephen J. Deery and Roderick D. Iverson (2005). They defined
the variables that determine organizational performance in relation to union activities.
This conceptual framework shows that labor union activities which are listed as independent
variables have direct relation or impact on organizational performance.
2.7 Conclusion
The theoretical literature showed that there are number of theories developed in relation to labor
unions and collective bargaining by different scholars. Some of the theories which have direct
relation to this research were discussed. In line with these theories empirical literatures were
reviewed and their findings were used for comparisons to the findings of the present researcher.
36 | P a g e
The literature reviews were presented based on the research objective; to determine the effect of
labor union activities on organization performance. In the next chapter research methodology that
was used for the data collection is discussed.
CHAPTER THREE
3. Research Methodology
3.1 Introduction
This chapter will points out the research methodology to be followed in the research process. It
will discuss the research design, target population, data collection and data analysis.
This study adopted a descriptive design. Descriptive research studies are those studies which are
concerned with describing the characteristics/ phenomenon of a particular individual, or of a group
under investigation (C.R. KOTHARI, 1990). It is not concerned about explaining why, how or
when an event occurred but rather focuses on what characterizes the phenomenon. Studies
concerned with specific predictions, with narration of facts and characteristics concerning
individual, group or situation are all examples of descriptive research studies.
The choices of descriptive and explanatory studies were appropriate because this study aimed at
describing the characteristics of trade unions activities and explain the relations of variables effect
on organization performance in Ethio telecom, North West region offices and shops. The choice
of these designs in this study is appropriate because the focus of the study will be on the impact of
trade union on organizational performance in a single region, North West region as a sample taking
area to generalize for the company based on what the data will say. The data may be relevant to
do generalization to other public business organizations which has labor unions in their premises.
37 | P a g e
Moreover, both qualitative and quantitative designs will be used for the study. For the
measurement the five point Likert scales (i.e., Strongly Agree, Agree, neutral, Disagree, Strongly
Disagree) will be introduced in the questionnaire to obtain and measure the responses of the
respondents.
3.4.1 Questionnaire
A questionnaire is well-defined as a formalized structure that contains a group of profoundly, in-
depth inquiries for data gathering (Kothari, C., 2004). And also, according to Bryman and Bell
(2003), a self-administered questionnaire is the appropriate method to prompt self-report on
people’s opinion, attitudes, beliefs, and values. Therefore, to examine the hypotheses, data was
gathered with a self-administered questionnaire conducted among employees of Ethio telecom
North West region; as a result, the questionnaire was used as the main tool to collect data from the
respondents. Questionnaires were adopted from that are formulated by different researchers in the
38 | P a g e
area by conceptualizing the variables defined by based on concepts and theories of labor union
activities like collective bargaining and dispute resolution. Mainly the researcher used questioner
by adapting that were developed by Bryson and Wilkinson (2002); Dastmalchian et al. (1991);
Deery et al. (1994).
In research, the concept of population refers to the totality of all the individual people or objects
that possess the characteristics or qualities that are of interest to the research at a hand (Liu et al.,
2014). It refers to all the subjects that the researcher wants to investigate or study. All possible
subjects of investigation such as people, events, and objects that combine to form a given known
completely constitute what is referred to as the population.
In this study, the target population will be all permanent employees of Ethio telecom and the
management but because of different constraints like time, finance and proximity the target
population for the study will be restricted to permanent employees under Ethio telecom north west
region only that are 630 in number.
According to Cooper, D., and Schindler, P., (2008) sampling design is a component of the research
plan that shows how cases are to be selected for observation. The design maps out the process to
be followed to draw the study’s sample. Sampling design indicates that a road map, that serves as
the basis for the choice of a survey sample and provides the fundamental plan and methodology
for selecting the sample (Cooper, D., and Schindler, P., 2008). Sampling design incorporates a
sample frame, sample technique, and sample size.
A sampling frame is a list of elements in the population from which a sample is drawn (Saunders,
et al, 2012). In this research, the 2020 payroll register of the region employees was used as the
sample frame. And the number of employees in the sample frame was 630 names in the payroll.
39 | P a g e
3.5.2.2 Sampling technique of the study
A sampling technique involves the process of selecting a sample from a large population (Cooper,
D., & Schindler, P., 2008). In this research, probability sampling technique was used particularly
from probability sampling technique; simple random sampling was used to determine the sample
size from the total population of 630 employees of the region.
The sample size is a smaller set of the larger population (Cooper, D., and Schindler, P., 2008). It
must be keenly selected to be an agent of the populace.
As stated above the target population size is 630 in number. To conduct data collection the
researcher will use simple random sampling technique to select samples from the total population.
If a population from which a sample is to be drawn constitutes a homogeneous group, simple
random sampling technique is generally applied in order to obtain a representative sample (C.R.
KOTHARI, 1990).
C.R. KOTHARI (1990), in his book “Research Methodology: Methods and techniques”, presented
a sample size determination model for random sampling. The researcher will use this model to
determine the sample sizes from the targeted population.
For the sample size determination of this study, Yamane, (1967:886) provides a simplified formula
to calculate sample sizes because of the similarity and homogeneity of the target population. A
95% confidence level and e=0.05 was assumed for the following equation:
𝑵
n=𝟏+𝑵(𝒆)𝟐
Where,
n= sample size
e= level of precision
40 | P a g e
For this research:
N= 630, e=0.05
This study mainly has depends on primary data that was collected from the field through the use
of a questionnaire for employees and interview for management and union leaders as the primary
tool. Besides secondary data was collected from different journals, books, publications, bulletins,
newsletters, union documents, policies & procedures and collective agreement papers has been
analyzed to support the primary data. But the data to be collected from management and union
leader through interview couldn’t be conducted in relation to corona virus (Covid 19) pandemic.
So the researcher was forced to use the data collected from employees only.
The target respondents from employees were randomly selected from targeted population of the
region. The researcher planned to go to the field in person to give out the questionnaires and collect
for the respondents’ response in time. But the current situation of the corona virus affected the
movement and making in person contacts with respondents so enforced to collect all data from
sample employees using intranet e-mail communication.
The questionnaires distributed for primary data collection were divided into four sections: Section
A: demography of respondents, Section B: Effect of Collective Bargaining Agreement Negotiation
on Organizational Performance, Section C: Effect of Dispute Resolution on Organizational
Performance. And Section D: Organizational Performance.
The questions in the questionnaire were mostly closed ended questions and some open ended
questions were included to confirm the confidentiality of the responses of the respondents but are
not be included in to the analysis part.
The data to be collected will be thoroughly inspected with the aim of separating relevant
information from irrelevant information.
41 | P a g e
The researcher will use qualitative analysis technique for the interview question and used simple
quantitative analysis techniques for the questioners. The collected data then will be transferred to
SPSS and will be analyzed using descriptive statistics such as frequency and percent. Data will be
presented in to tables.
The general linear regression model commonly estimates using ordinary least square (OLS) has
becomes one of the most widely used analytic techniques in social sciences (Cleary & Angel,
1984). Most of the statistics used in social sciences are based on linear models, which means trying
to fit a straight line to data collected. Ordinary least square is used to predict a function that relates
one dependent variable (OP) to one or more independent variables. Therefore, this study was used
multiple linear regression model function that can be expressed as:
OP=β0+β1(TACE)+β2(OHS)+β3(SAB)+β4(UROPS)+β5(CM&CH)+εi
Where:
β0: The intercept term- constant which would be equal to the mean if all slope coefficients are 0
β1-6: Slope of line (Magnitude of the coefficients of the variables) are the coefficients associated
with each independent variable which measures the change in the mean value of Y, per unit change
in their respective independent variables.
42 | P a g e
Accordingly, this statistical technique was used to explain the relationships between organization
performances as a dependent variable on the selected linear combination of the independent
variables using multiple linear regressions.
The researcher was carried out descriptive statistics on demographic factors such as gender, age,
tenure and level of education. Furthermore, based on the response of the respondents, the present
researcher analyzed and compared the “mean” and “standard deviation” score of each variable
using descriptive statistical analysis.
43 | P a g e
As indicated by Kotari, C. (2004) and Julie P. (2005), standard multiple linear regressions is used
to explore the relationship between one continuous dependent variable and a number of
independent variables or predictors (usually, continuous) simultaneously enabling to get answers
regarding how well a set of variables is able to predict a particular outcome and which variable in
a set of variables is the best predictor of an outcome. It helps in showing the impact or effect of a
given independent variable on variation in the dependent variable. Thus, the researcher used
multiple regression analysis to examine the effect of labor union activities dimensions on
organization performance particularly in Ethio telecom, North West region.
To ascertain the validity and reliability of the questionnaire, a pilot testing was conducted. The
purpose of the pilot testing was to establish the accuracy and appropriateness of research design
and instrumentation and to provide proxy data for the selection of probability sample (Cooper, D.,
& Schindler, P., 2006).
3.8.1 Reliability
It is the degree to which the measure of a construct is consistent or dependable. There are four well
known types of reliability measurement techniques; inter-rater reliability, test-retest reliability,
split half reliability, and inters consistency reliability tests. In most researches like that am planning
to do require to be check the internal reliability. For internal reliability test we have also different
approaches like, average inter-item correlation, average item-to-total correlation, or more
commonly, Cronbach’s alpha (A. Bhattacherjee, 2012). Thus, to check the reliability of the
instruments Cronbach alpha reliability coefficient was used and the result is indicated in table
below. According to Cronbach’s alpha the acceptable reliability value is when it becomes greeter
that 0.70 value (Cronbach, 1951). Moreover, to ensure the reliability and validity of the result of
this research, the studywastriangulatedthrough interpreting findings and results of this studyin
relation to thereview of the related literature and previous research studies for the purpose of
analytical generalization. Generally, the pre and post-test reliability of each item used in this study
are depicted in table 3.1 below.
44 | P a g e
The suitability of the questionnaire for this study was tested by first administering it on 30
professional employees of Ethio telecom, North West region main office which was approximately
10% of the sample size of this study 245. After the sample survey the feedback obtained was
instrumental in refining the questionnaire before it was finalized for the study.
No of No of Cronbach's No of Cronbach's
Items Items samples alpha Value samples alpha Value
45 | P a g e
Source: researcher‘s computation with SPSS [DataSet2] C:\Users\Hp\Documents\mba2.sav
From the Cronbach’s alpha test for the pre-test we found more than 0.70 values for each
independent variable and for all values in aggregate too; which indicates that the questionnaire is
reliable. Similarly, the post-test Cronbach’s alpha coefficients of each independent and dependent
variable are greater than 0.70 values so the data is reliable.
3.8.2 Validity
Bond (2003) comments that: “validity is foremost on the mind of those developing measures and
that genuine scientific measurement is foremost in the minds of those who seek valid outcomes
from assessment”. From this comment we can understand that checking validity is the core for any
assessment that is trustworthy and accurate or not.
Even if there are different forms of validity; when we mean validity it is about construct validity
in most researches. It refers to the extent to which a measure adequately represents the underlying
construct that it is supposed to measure (A. Bhatta Cherjee, 2012). Construct validity is the most
abstract validity assessment. It should be evaluated if specific criteria cannot be identified that
adequately define the construct being measured.
Testing Validity ensures the ability of a scale to measure what it is intended to measure and reveals
vague questions and unclear instruction (Sekaran, U., 2003). Thus, in order to assure the validity
of this study, the researcher implemented a pilot-test to assess the clarity, complexity and the face
46 | P a g e
validity of the measure. In effect, the revision was made to improve the total look and content of
the final questionnaire in terms of readability, wording, and arrangement.
The study will be conducted in such a way that it considers ethical responsibility. Ethical
responsibility include, providing information about the study for respondents (like who’s
conducting the research, for what purpose to be conducts and who will benefit), also the study
provided anonymity, means the information from the respondents will be confidential and will
not be used for any personal interest. The researcher takes the responsibility for the originality of
the paper.
Basically in this chapter the present researcher try to clearly state the critical points of the
methodology part such as type of research, approaches of the research, research design used,
sources of data, instruments for gathering of relevant and valuable data, population and sampling
design, measurement of variables, data analysis methods, validity and reliability issues, and finally
the ethical consideration. The next chapter presents the data presentation and analysis of the study.
47 | P a g e
CHAPTER FOUR
4.1 Introduction
This chapter presents the result and discussion of empirical findings. The research instrument used
was a survey questionnaire. A fairly representative sample was obtained by employing a stratified
sampling technique. This section is divided into subsections such as the response rate,
demographic characteristics of respondents, descriptive statistical analysis of research variables,
and correlation test, normality of data test, multicollinearity and linearity of data test. Finally, the
result was analyzed using descriptive presented first followed by the inferential statistics models
were applied by the help of statistical software packages (SPSS). The descriptive statistics analysis
that was employed using tables, mean, and standard deviations in examining union activities
dimensions as well as organizational performance. The inferential statistics model was used to
identify the relationship between the three union activities dimensions with organization
performance.
To conduct this study the researcher distributed 245 questionnaires North West region Ethio
telecom employees which are randomly selected to be participant in the research. And their
response rate is indicated in the table below.
48 | P a g e
4.3 Demographic Characteristics of the Respondents
The profile of the respondents are collected by the distributed questionnaire and the information
is summarized in the below table. For this study demographic characteristics of the respondents
such as gender, age, level of education and Number of years worked in the company are included in the
questionnaire.
Age
Education
49 | P a g e
Total 230 100.0 100.0
As itis shown in Table 4.2 above, the data provides the gender profile of respondents by frequency
and percent. The results show that out of 230 respondents, 141 (61.3%) of the respondents were
males and 89 (38.7%) were female respondents.
Descriptive statistical analysis was used to summarize the responses of respondent and to know
the effect of each union activity dimensions on organization performance of employees of the
Ethio telecom, North West region, based on the response the respondents for each item the
researcher analyzed and comparing the “mean” and “standard deviation” score of each variable.
Therefore, descriptive statistics for both dependent and independent variables were performed and
their results are as detailed in next subsection.
50 | P a g e
4.2.1 Mean Score and Standard Deviation of union activities of Ethio telecom and
organizational Performance
According to Zaidaton and Bagheri, (2009), Comparison cut-point of Mean Score of Five Point
Likert Scale Instrument, the mean score below 3.39 was considered as low value; the mean score
from 3.40 up to 3.79 was considered as moderate and mean score above 3.79 was considered as
high.
The Mean Score and Standard Deviation of union activities and organizational Performance of
Ethio telecom, North waste region employees are stated in the below table.
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
TACE 230 1.70 4.50 3.5039 .59026
OHS 228 2.00 4.62 3.6329 .59357
SAB 230 2.25 4.63 3.5641 .44906
CMACH 229 2.20 4.80 3.5236 .58786
OP 225 2.30 5.00 4.0058 .57579
Valid N (listwise) 222
Source: researcher‘s computation with SPSS [DataSet1] C:\Users\Hp\Documents\mba2.sav
Table 4.3 above, indicated that terms and conditions of employment has a mean distribution of 3.5
and a standard deviation of 0.59, the second variable occupational health and safety has a mean
distribution of 3.63 and a standard deviation of 0.593, the third component salary and benefit has
a mean distribution of 3.56 and a standard deviation of 0.449, the 4th component which is conflict
management and complain handling has a mean distribution value of 3.52 and standard deviation
value of 0.587. From the list of components OHS/occupational health and safety/ is with the
highest mean distribution value of 3.63. The relatively minimum standard deviation value is for
SAB with 0.449 while the dependent variable which is organization performance has a mean
distribution of 4.00 and a standard deviation of 0.575 as shown in the table above.
51 | P a g e
Correlations are the measure of the linear relationship between two variables. It measures the
degree to which two sets of data are related. Correlation (r) is a parametric technique which gives
a measure of the strength of association between any two variables. The standard correlation
coefficient is (Pearson's r) which applies primarily to variables distributed more or less along with
interval or ratio scales of measurement (Andy, F., 2006).
As Dejene K. (2019) in his book summarized by taking the idea of Quinn and Keough (2002), the
bivariate normal distribution is defined by the mean and standard deviation of each variable and a
parameter called the correlation coefficient (r), which measures the strength of the relationship
between the two variables. A bivariate normal distribution implies that any relationship between
the two variables is a linear one or straight line.it implies that an increase in value of one
independent variable leads to an increase to the value of the dependent variable; as well the
correlation is positive.
By definition the value of r is limited to -1 to 1. A perfect relation means when the value of r=1
which means all points lie exactly on the straight line and the relationship between the bivariate is
very strong. If the value of r=0.80 it indicates the association is strong and positive. When the
value of r is about r=0.30 it indicates the relationship is week. The variables are said to be
negatively correlated if the increase of one variable leads to a decrease on the other which will
have negative slope. If the r value is about -0.90 it means it has a large and negative correlation
coefficient.
As per Marczyk, Dematteo and Festinger, (2005) correlations of 0.01 to 0.30 are considered weak,
correlations of 0.30 to 0.70 are considered moderate, correlations of 0.70 to 0.90 are considered
strong, and correlations of 0.90 to 1.00 are considered very strong.
Correlations
TACE OHS SAB CMACH OP
52 | P a g e
Pearson Correlation 1
TACE Sig. (2-tailed)
N 230
Pearson Correlation .596** 1
OHS Sig. (2-tailed) .000
N 228 228
Pearson Correlation .376** .544** 1
SAB Sig. (2-tailed) .000 .000
N 230 228 230
Pearson Correlation .511** .528** .534** 1
CMACH Sig. (2-tailed) .000 .000 .000
N 229 227 229 229
Pearson Correlation .462** .527** .367** .503** 1
OP Sig. (2-tailed) .000 .000 .000 .000
N 225 223 225 224 225
**. Correlation is significant at the 0.01 level (2-tailed).
Source: researcher‘s computation with SPSS [DataSet1] C:\Users\Hp\Documents\mba2.sav
From the above correlation table we can understand that in general there is a positive and
significant relationship between union activities and organizational performance. But we see each
variable correlation with organization performance they have different level of correlations.
Finding of each variable showed that there different levels of correlation to the dependent variable,
organizational performance. Terms and conditions of employment which is one of the collective
bargaining component has a moderate positive correlation with organizational performance with
(r=0.462), P=0.000 values as per Marczyk, Dematteo and Festinger, (2005) indicated. The
correlation between occupational health and safety with organizational performance is also
moderate and positive with r=0.527, p=0.000. The third variable, salary and benefit similarly has
a moderate positive correlation with organizational performance with r=0.367, p=0.000, values.
The fourth variable, dispute resolution (conflict management and complain handling) has moderate
correlation with organizational performance with r=0.503, p=0.000 values. These results indicate
that all activities of the labor union which are taken as independent variable, the collective
bargaining, the dispute resolution and representation of employees on policy and strategic issues
have significant positive influences on organizational performance but the magnitude of the
53 | P a g e
influence is moderate for all variables. However, from the five dimensions of labor union activities,
the highest positive coefficient of correlation was between OHS and organizational performance.
Furthermore, according to Bryman and Cramer, (1997), the Pearson’s (r) between each pair of
independent variables should not exceed 0.80, otherwise, the independent variables that show a
relationship at or in excess of 0.80 may be suspected to exhibit multicollinearity problem. As
illustrated in the above table 4.5 the Pearson’s r between each pair of independent variables are
below the cut point of 0.80. Therefore, there is no multi-collinearity problem across each
independent variable.
Regression analysis is a statistical technique that investigates the relationship between a dependent
variable and specified independent variables. When paired with assumptions in the form of a
statistical model, a regression can be used for prediction, inference, and hypothesis testing, and
modeling of causal relationships (Aron, 1994). As per Dereje K.(2019) in his book noted the
relationship is expressed in the form of an equation or a model that connects the relation of
dependent and independent variables.
Multiple regression analysis employed to examine the effects of labor union activities on
organizational performance on Ethio telecom, Northwest region. Before going to analyze multiple
regressions test results, the test result of the main assumptions of multiple regression analysis
should be presented.
Normality can be seen on the data distribution when the curve does not pass through either the left
or the right (Ghozali, 2006). In order to test the normality of the data, kurtosis and skewness
54 | P a g e
measurement are critical. Kurtosis measure the level of peak of the histogram. High peak has
positive kurtosis, while flatter distribution has negative kurtosis. For a normal distribution, the
value of the kurtosis is zero. On the other hand, skewness measures the degree to which cases are
clustered towards one end of an asymmetry distribution. Skewness is the measures of the
asymmetric. The normal distribution is symmetric with a skewness value of zero. In order to test
the normality of the data, kurtosis and skewness value was checked and illustrated in Figure 4.1.
Figure 4.1: Histogram regression of standardized residual of union activities and organizational
performance
55 | P a g e
The above figure revealed that the data of all scores are distributed symmetrically around the center
and created a bell shape which shows that there is a normal distribution. In general from the above
figure the researcher concluded that the normality assumption of multiple linear regression
analysis was satisfied.
From the assumptions of multiple linear regressions one is that the independent variables should
Coefficients a not
Independent Collinearity Statistics have a
Variables Tolerance VIF
very
(Constant)
high
TACE .579 1.727
OHS .486 2.059
1 SAB .581 1.721
a. Dependent Variable: OP
association or correlation. When the independent variables are highly correlated, it is regarded as
a problem in the model and this problem is called multicollinearity. The existence of
multicollinearity can be tested by analyzing the values of tolerance and Variance Inflation Factors
(VIF) (Gujarati, D., 2003). As most authors have suggested, a tolerance value of < 0.10 and/or a
VIF >10 indicates the existence of multicollinearity problem. For this particular research the
results in relation to multicollinearity test are stated below.
56 | P a g e
Source: researcher‘s computation with SPSS [DataSet1]:\Users\Hp\Documents\mba2.sav
In specific context tolerance is a statistics used to indicate the variability of the specified
independent variable not explained by the other independent variables. For this model as stated in
the multicollinearity matrix of independent variables in table 4.6 above, the results of tolerance for
all independent variables are above 0.1 and below 1, which are acceptable tolerance values.
Similarly, the results of variance inflation factors (VIF) for all independent variables are between
1 and 10, which are also acceptable. Therefore, the researcher concludes that there was no
multicollinearity problem between the predictor variables, as the results are in the acceptable
ranges.
According to Gujarati, D. (2003), linearity means that the amounts of the rate of change, between
scores on two variables, are constant for the entire range of scores. The underlying assumption of
the regression analysis is that the relationship between the variables is linear, meaning that the
points in the P-P plot form a pattern that can be approximated in to a straight line.
57 | P a g e
Source: researcher‘s computation with SPSS [DataSet1]:\Users\Hp\Documents\mba2.sav
According to the information of the Normal P-P Plots in figure 4.3 show the linearity assumption
had been met for this study.
In this particular context as we can see from figure below, it can be assured that the point is random
and evenly throughout the scattered diagram so Homoscedasticity (no heteroscedasticity) in the
data is confirmed.
In conclusion, all of the assumptions are necessary for regression analysis. According to
Tabachnick and Fidell (2001) statement if multiple regression assumptions are confirmed
acceptable hence the results of the regression analysis will be taken to be statistically viable.
58 | P a g e
4.4.2 Multiple linear Regression Test for the effects of labor union activities on
organizational performance
As per Kotari, C. (2004) and Jullie,P. (2005), when there are more than one independent variables
it is necessary to do multiple linear regression test specially when the study is explanatory.
4.4.2.1 Regression Model Analysis on the Effect of Labor Union activities on organizational
Performance
The regression model value was determined by the value of R2. Coefficient of determination R2 is
the measure of proportions of the variance of a dependent variable about its mean which is
explained by the independent or predictor variables (Hair,et. al, 1988). A higher value of R2
indicates greater explanatory power of the regression equation. The results regarding this were
summarized and presented in table 4.7 below.
b. Dependent Variable: OP
The above table 4.6 shows that the adjusted R square value is 0.720 which means the independent
variables, (Terms and conditions of employment, occupational health and safety, salary and
benefit, and conflict management and complain handling), can explain 72.0 % of the variation in
the dependent variable, organizational performance in case Ethio telecom, North west region.
However, there are 28% of the variance remain unexplained in this study and need further research.
The Durbin-Watson statistic permanently will have a value between 0 and 4. The value of 2.0
means there is no autocorrelation detected in the sample. While Values between 0 and 2 shows
59 | P a g e
positive autocorrelation and values from 2 to 4 designate negative autocorrelation (James and
Geoffrey, 1950). As we can see in the above table for the value of Durbin-Watson is 1.771 whish
is between 0 and 2 meaning that there is a positive autocorrelation hence the researcher can
conclude the analysis is valid.
4.4.2.2 Analysis of Variance (ANOVA) of Effect of labor union activities and organizational
Performance
As stated by Dejene K. (2019), ANOVA was developed by the statistician Sir Ronald A. Fisher in
1918. ANOVA means that the total variance is divided in meaningful components to have a better
idea how a particular object reacts to a change applied to it. ANOVA has two aims, to explain the
relative contribution of each variable to the total amount of variability and to test the null
hypothesis.
The present researcher in this research produced the ANOVA model to determine whether the
model used for research purpose is fit/appropriate or not. The result regarding this is summarized
and presented in table 4.7 below.
Table 4.7 ANOVA Model of Effect of Labor union activities on organizational Performance
ANOVAa
The study finding in ANOVA table 4.7 indicated that the above-discussed coefficient of
determination was significant as evidence of F ratio 105.264 with p-value 0.000 < 0.05 (level of
confidence). Therefore, the model was fit or appropriate to predict organizational performance in
relation to the labor union activities in case of Ethio telecom, North West region.
60 | P a g e
As stated by Kotari, C., (2004) and Jullie, P., (2005), standard multiple linear regressions is used
to explore the relationship between one continuous dependent variable and a number of
independent variables or predictors, how it enables to get response on regarding how well a set of
variables are able to predict a particular outcome and which variable in a set of variables is the
best predictor of an outcome. Thus, the researcher implemented multiple regression analysis to
examine the effect of labor union activities on organizational performance and the results were
presented in table 4.8 below.
a. Dependent Variable: OP
Table 4.8 above is a coefficient table that showed the degree of relationship between each
independent variable under labor union activities components with the constant at (1.576) while
terms and conditions of employment at (0.147), occupational health and safety at (0.261), salary
and benefit at (0.097) and conflict management and complain handling at (0.227) were statistically
significant since all of them had (p<0.05).
In the regression analysis using the coefficient of determination with the developed research model
equation (OP=β0+β1(x1)+β2(x2)+β3(x3)+β4(CM&CH)+εi ), the researcher arrived at the
following results and conclusions;
From the list of independent variables that are tested in relation to the dependent variable,
occupational health and safety (OHS) variable contributes the highest for the variation by
controlling other variables as its beta value is the greatest of all which is 0.261.
Based on the above multiple linear regression results the researcher has proved the statistical
significance and decided on accepting or rejecting the already developed hypothesis. Totally, there
were 4 hypotheses developed as explanatory variables in the regression analysis. On the bases of
the standardized coefficient of beta and p-value, the hypotheses of the study were tested and the
results are presented below.
❖ Hypothesis1 (Ha): There is a significant positive relationship between the role of labor union
on terms and conditions of employment and organizational performance in Ethio telecom,
North West region.
As the results showed in table 4.9, Terms and conditions of employment has positive beta
coefficients and p-value less than 0.01(Beta = 0.147, p < 0.01). Thus, it leads to the acceptance of
the alternative hypothesis (Ha) and concluded that terms and conditions of employment has a
significant positive relationship with organizational performance. As a result, hypothesis 1 (Ha) is
fully accepted.
❖ Hypothesis2 (Ha): There is a significant positive relationship between the role of labor union
on occupational health and safety and organizational performance in Ethio telecom, North
West region.
The test result in table 4.9 shows that the beta value and P value of occupational health and safety
in relation to organizational performance was positive value and p less than 0.01(Beta=0.261,
p<0.01) which leads to the acceptance of the stated hypothesis. Based on this result the researcher
62 | P a g e
concluded that occupational health and safety has positive and significant effect on organizational
performance. As a result the alternative hypothesis 2 is accepted.
❖ Hypothesis 3 (Ha): There is a significant positive relationship between the role of labor union
on salary and benefit and organizational performance in Ethio telecom, North West region.
The test result in table 4.9 shows that the beta value and P value of salary and benefit in relation
to organizational performance was positive value and p less than 0.01(Beta=0.097, p<0.05) which
leads to the acceptance of the stated hypothesis. Based on this result the researcher concluded that
salary and benefit has positive and significant effect on organizational performance. As a result
the alternative hypothesis 3 is accepted, even if its significance is moderate compared to that of
other variables.
❖ Hypothesis 4 (Ha): There is a significant positive relationship between the role of labor union
on conflict management and complain handling and organizational performance in Ethio
telecom, North West region.
The test result in table 4.9 shows that the beta value and P value of labor union role conflict
management and complain handling in relation to organizational performance was positive value
and p less than 0.01(Beta=0.227, p<0.01) which leads to the acceptance of the stated hypothesis.
Based on this result the researcher concluded that the role of union on conflict management and
complain handling has positive and significant effect on organizational performance. As a result
the alternative hypothesis 4 is accepted.
In this part main findings of the regression analysis are discussed in relation to the findings of other
researchers mentioned in the empirical literature part.
This research is related to the effect of labor union activities on organizational performance in the
case of Ethio telecom, North West region. The objective of this study is to investigate the effect of
labor union activities on organizational performance in the case of Ethio telecom, North West
Region, by analyzing the relationship of every construct in the conceptual framework.
Preceding to any regression statistical tests multiple regression assumptions like normality,
multicollinearity, homoscedasticity and linearity tested. Normality test was done by visualizing
shape of the histogram produced, multicollinearity test was undertaken on the specified model
63 | P a g e
using correlation coefficient as well as variance inflation factor (VIF) and tolerance,
Homoscedasticity by using scatter plot and linearity of the relationship among variables was
checked using P-P plot because all the above four basic assumptions should be fulfilled as required
for further analysis. The assumptions test results indicated that all the above basic assumptions
were fulfilled.
Then after, regression model analysis was performed and as the results reveals that the model
passes its statistical acceptance. Based on the r square value of the test the five independent
variables that the labor union play its role(terms and conditions of employment, occupational
health and safety, salary and benefit, representation on policy and strategic issues, dispute
resolution) have contributed or explained 72.0 % (adjusted R square = 0.72) on the organizational
performance. The remaining 28 % variance is explained by other variables not included in this
study. Subsequently, the multiple linear regression tests were performed and the result indicated
that the five dimensions considered as independent variables had a positive significant effect on
organizational performance. The result of multiple linear regressions separately discussed below
in light of empirical finding of the various researcher on similar or related studies. β0 = 1.576, β1=,
β2= 0.261, β 3= 0.097, β 4=0.227.
Terms and conditions of employment had positive standardized beta coefficients and p-value less
than 0.01(Beta = 0.147, p < 0.01). Thus, it has a positive significant moderate relationship to
organizational performance in the case of Ethio telecom, North West region. Previous researcher
in other related studies, Sharon M. G. (2013); Roelofsen (2002); Johnny C. and Christopher
N.(2014); Berberoglu A. (2018); Anthony et al. (2007);also found the same result that is there
exists a positive significant relationship between terms and conditions of employment and
organizational performance.
Occupational health and safety had positive standardized beta coefficients and p-value less than
0.01 (Beta = 0.261, p < 0.01). Thus, it has a positive significant relationship to organizational
performance in Ethio telecom, North West region. This beta value is the highest of all as a result
the highest effect on the dependent variable comes from this construct while controlling other
variables. In related studies done by Anthony et al. (2007); Garcia-Herrero, S. (2012); Iheanacho
and Ebitu (2016) ; Abihud (2013); Oluoch (2015); Muluken (2016); Esayas A. (2018); Omondid.
64 | P a g e
(2015); Kaynak R. et al., (2016) also obtained the same finding that there is a positive significant
relationship between occupational health and organizational performance.
Salary and benefit had positive standardized beta coefficients and p-value less than 0.05 (Beta =0.
097, p < 0.05). Thus, it has a significant positive relationship to organizational performance in
Ethio telecom, North West region. Previous researchers in related studies, Berhan E. (2017);
Ekere, A.U and Amah, E (2014); Adibah, Abdul K. et al, (2019) came up with the same result that
there exists a positive significant relationship between salary and benefit and organizational
performance. In the contrary the research result of Muluken H. (2016) revealed that there is no
significant relationship between union role on salary and benefit to performance in case of
commercial bank of Ethiopia.
Conflict management and complain handling had positive standardized beta coefficients and p-
value less than 0.01 (Beta= 0.227, p<0.01). This shows that, it has a significant positive
relationship to organizational performance in Ethio telecom, North West region. Other related
studies like, Kituku, Abdul and Sehar (2015); Olang (2017); Cecilia M. (2018); Ramani and
Zhimin (2010); Awan and Anjum (2015) also found a positive significant relationship between
dispute resolution and organization performance.
4.7 Conclusion
Generally, in this chapter, the response rate is justified and all the collected data analyzed using
descriptive statistics including means and standard deviation and presented in summary form using
tables. Inferential data analysis was done by the using coefficient to determine the strength and the
direction of the relationship between organizational performance and labor union activity
dimensions. Multiple regressions assumption tests namely normality, multicollinearity, linearity
and homoscedasticity tests were done so as to see the viability of the model to use in this research;
And then multiple regressions tests were done to determine the relations between the labor union
activities dimensions and organizational performance. Finally, hypothesis testing was done using
p-value. Since the p-values of all variables for this research were less than 0.05 the alternative
hypothesis were accepted. The next chapter presents the summary, recommendations, and
conclusion of the study.
65 | P a g e
CHAPTER FIVE
5.1 Introduction
The main objective of this study was to examine the effect of labor union activities on
organizational performance of Ethio telecom, North West region. This chapter summarized and
discussed the main findings obtained from each of the research questions. It also dealt with the
conclusions that were derived from the analysis, as well as recommendations that can be
implemented or used for future research. This chapter further presents the limitation of the study,
the contribution of the study, and areas for further research.
As stated above the main purpose of this study was to investigate the effect of labor union activities
on organizational performance of Ethio telecom, North West region. The study had the following
as research objectives:
❖ To examine the effect of terms and conditions of employment on organizational
performance of Ethio telecom, North West region.
❖ To investigate the effect of occupational health and safety on organizational performance
of Ethio telecom, North West region.
❖ To assess the effect of salary and benefit on organization performance of Ethio telecom,
North West region.
❖ To examine the effect of dispute resolution on organizational performance of Ethio
telecom, North West region.
This research study used the quantitative research method and descriptive design in particular. The
study adopted a quantitative approach to the effects of labor union activities on organizational
performance. The variables for the research study included terms and conditions of employment,
occupational health and safety, salary and benefit, and conflict management and complain
handling as independent variables and the organizational performance was the dependent variable.
The target population comprised of 245 employees of Ethio telecom, North Rest region.
66 | P a g e
Simple random sampling technique was used to select the respondents. Research findings were
analyzed to enable the researcher to understand what the findings from the data collected meant
and this was done with the help of the statistical packages for social sciences (SPSS Ver. 20). The
demographic profiles of the respondents were analyzed using percentages and frequencies. For the
data analysis inferential statistics tools such as correlation, regression, coefficient, and ANOVA
were used to analyze and study the nature of effects between independent and dependent variables.
After analyzing the gathered information through the questionnaire, the following major findings
were identified:
Demographic factors such as gender, age, educational level, and work experiences of research
participants have been assessed so as to know the general characteristics of the respondents. Based
on the results of demographic factors, the gender composition of the research participants were
61.3 % male and 38.7 % of female. In terms of age, the majority of respondents were in between
31-40 years old which accounted 72.6 %. With regard to the educational level of respondents, the
majority of the respondents were the first-degree holder and Master’s degree holders which
accounted 51.7 % and 46.1 % respectively. And finally, in terms of work experiences, the majority
of respondents had above 14 years’ experience which accounted 33.0 % of the total. The next
majority for work experience was that had between 6 - 10 years’ experience which accounts 27%.
As stated in the descriptive statistics part of this study, the five variables indicated that the mean
score response of the participants responded for all independent variables item on five-point Likert-
scales variables are above 3.40. According to Zaidaton and Bagheri, (2009) mean result between
3.40 and 3.79 are considered as medium value. This showed that the terms and collective bargaining
terms (terms and conditions of employment, occupational health and safety, salary and benefit),
and union role on conflict management and conflict handling have medium effect on organizational
performance. On the other hand, the mean value of the organizational performance was 4.0058.
This result implies that the organization performance of Ethio telecom, North West Region was
good. This implies that the existence of the labor union in the company representing the employees
on the three stated dimensions, collective bargaining, representation on policy and strategic issues
and participating in conflict management and complain handling affects the organization
performance positively and significantly.
67 | P a g e
Based on the Pearson correlation test the dimensions of labor union activities, the three collective
bargaining dimensions, the union representation on policy and strategic issues dimension and
conflict management and complain handling dimensions are positively correlated with
organization performance. The relationship between terms and conditions of employment to
organizational performance is
When we see the correlation of each dimension of labor union activities with organizational
performance, there exists a 46.2 % positive relationship between terms and conditions of
employment and organizational performance; for occupational health and safety the relationship
to organizational performance was positive with a value of 52.7 % ; as well there was a 36.9 %
positive relationship between union salary and benefit with organizational performance; a positive
relationship exists between union representation on policy and strategic issues to organizational
performance with a value of 48.6%; the relationship between conflict management and complain
handling to organization performance was also positive with 50.3% in the case of Ethio telecom,
North west region.
With regard to the regression result, this study demonstrated that, the regression effect between
labor union activities components and organizational performance was significant and positive.
Based on the r square value of the test the five independent variables that the labor union play its
role(terms and conditions of employment, occupational health and safety, salary and benefit,
representation on policy and strategic issues, dispute resolution) have contributed or explained
72.0 % (adjusted R square = 0.72) on the organizational performance. The remaining 28 %
variance is explained by other variables not included in this study.
The result of multiple linear regressions that were expressed by beta values and P-values of each
independent variable in relation to dependent variable, organization performance, indicated there
is a positive significant relationship. And the results were supported by different researchers’
results as stated in the preceding chapter conclusion.
According to the results of this study, employees who have a higher level of emotional intelligence
are more successful in their work and have higher working performance. Hence the study
generalizes that emotional intelligence is significantly correlated with employee’s work
performance.
68 | P a g e
In general, the regression effect of emotional intelligence components on organizational
performance confirmed that all independent variables (terms and conditions of employment,
occupational health and salary, salary and benefit, and conflict management and complain
handling) have a significant positive effect on the dependent variable (organizational
performance).
5.2 Conclusion
The main aim of this study was to investigate the effect of labor union activities on organizational
performance in Ethio telecom, North West region. This research had raised basic research
questions to be answered by the research output. The questions were developed based on the
research problem identified. The main gap identified was insufficiency of researches and
literatures that study the relationship between union activities and organizational performance.
With this knowledge gap in mind this research attempted to answer the question; what are the
effects of labor union activities on organizational performance in the case of Ethio telecom? By
taking North West region as its case area.
In order to answer the stated research questions the researcher has selected the four dimensions of
labor union activities identified by different researchers and scholars to be tested for their effects
on organization performance. The dimensions includes; terms and conditions of employment,
occupational health and safety, salary and benefit which are under collective bargaining, and
conflict management and complain handling under dispute resolution.
The present researcher on this study reaches the following conclusions based on the result obtained
from descriptive statistics, correlation analysis and multiple linear regression analysis which were
discussed in preceding chapter.
The results of descriptive statistics mean score of the five variables indicated that the participants
responded for all independent variables item on five-point Likert-scales is between 3.40 and 3.79.
This showed that the independent variables, terms and conditions of employment, occupational
health and safety, salary and benefit and conflict management and complain handling have a
moderate effect on organization performance in the case of Ethio telecom, North West region.
Similarly the results of the correlation and regression of the research shows that there is a positive
69 | P a g e
and significant relation between the independent variables and the dependent variable. Hence, the
researcher concluded that the role of labor union stated activities, collective agreement and dispute
resolution, have significant effect on organizational performance in the case of Ethio telecom,
North West region. This can be generalized to all regions of the company even if the current
research has some constraints that may slightly affect the generalization.
From the study result, it is evident that the roles of labor unions in organizations are significant in
achieving organizations’ planed targets. Therefore, the existence of labor unions in the
organization should not be seen as destructive instead, it should be seen as a booster of growth and
development of the company. Labor union has to be considered as an opportunity for the
employees and management as it works for the workers general welfare and conditions of work
environment are improved. The existence of labor unions has more advantages in dispute
resolutions that happened between employer and employees through negotiations and maintaining
the advantage of parties, employer and employees. Finally, it has been ascertained from this
research that organizational performance increases when employees are motivated, feel as if they
are secured, as their benefits are maintained and conflict are mutually resolved. This means that
the settlement makes the workers more confident thereby making them put more effort toward
attaining organizational productivity and performance.
5.3 Recommendations
As the finding of this study indicated that the role of labor union on terms and conditions of
employment, occupational health and safety, salary and benefit, conflict management and
complain handling, were positively and significantly affecting the performance of the organization
in Ethio telecom, North West region. Based on these findings the present researcher has provided
the following recommendations.
➢ Labor unions in an organization play an important role in lowering accident rates at work
places by insuring safe working practices and work environment, thus management should
give great attention to the labor union activities and provide support to the union to maximize
its effort
70 | P a g e
➢ Strong Labor unions negotiate on their members’ behalf with employers to find solutions that
meet business needs, by insuring staff retention, building trust among workforce by providing
a mechanism for dialogue between workers and employers, by helping the management on
making better informed business decisions, by promoting equality, by increasing productivity
of employees. So the researcher recommended to the management to consider the labor union
as a partner and should facilitate the working plat form better than the existing.
➢ Organizations should try to encourage the growth of labor unions since they are associated
with increasing organizational performance.
➢ Organizations should try to create a positive working relationship with labor unions and the
negotiation environment should be friendly enough to avoid disputes that may turn to strikes
since strikes disrupt productivity and affect the work environment.
➢ Organizations that don’t have trade unions in their premises should encourage employees to
form strong union as unions have great importance for the company productivity and
performance.
➢ The main objective of the labor union is securing the benefits of the employees like monetary
benefits, health and insurance benefits, representation on dispute resolution and maintaining
good work environment. Thus all employees are expected to be members of the labor union
and strengthen it to play its vital roles.
The researcher acknowledges some inherent limitations which were associated with this study.
First, the researcher used only questionnaires as an instrument that has only closed end questions
and the study was only qualitative. Secondly, the research couldn’t include the management
response on the role of the labor union as the reason of that the planned interview could not be
conducted because of the current situation, corona virus (covid19) pandemic. Third, the study
was limited to one region and in spite of the fact that the sample size was too small in order to
represent the whole population of Ethio telecom and makes the generalization weak. In order to
reflect a stronger image on the issues the research areas should cover more than one region and
different organization for comparison; this could make the sample size bigger and much more
representative for the generalization. Fourth, Future results that consider these limitations could
71 | P a g e
shed more light on the question of the effect of trade unions on organizational productivity. Most
specifically, the research instrument in future research should be improved by including open-
ended questions. Respondents should also be expanded to cover production-level employees who
are unionized. It would also be helpful for a survey of those firms whose employees are not
unionized so that comparison can be done. This would help in making more informed
generalizations about labor unions and their effect on organizational performance. Furthermore,
the research had limitations in relation to the resistance of the respondents to fill hard copy
questionnaires. The fear was resulted from the current situation, fear of corona. The researcher
collected more than 70% of the data through e-main using the intranet of the company by
requesting permission from the region management. The last but not the list limitation was the
respondents’ biasedness; the study was heavy reliance on the respondents’ information and what
they perceived about the labor union there may be group and personal bias.
This research tried to examine the effect of labor union activities on organizational performance
by taking Ethio telecom labor union as the target. The study only focused on Ethio telecom North
West region as the study area which was inadequate to make inference about the effect of union
activities on organizational performance business sectors that have labour unions under their
premises in Ethiopia. Hence, further research needs to be carried out on the area by considering
more regional offices of Ethio telecom as well other similar business companies to make the
generalization effective. In addition to this, the research approach that applied for this research
was quantitative type so further researches are required by incorporating the qualitative approach
too in order to explore more information about the effect of the labor unions activities on
organizational performance. As stated in the research gap identification there is limitation of
research on the effects of labor unions in relation to performance. This implies that still the area
requires much more researches and as a researcher I would like to motivate upcoming researchers
to give due attention to the area.
72 | P a g e
References:
Abebe, Yetemwork (2016), “The role of labor union in maintaining employment conditions in the
Abdul, G., A., & Sehar, S. (2015). Conflict management and organizational performance: A case study
of Askari Bank Ltd. Research Journal of Finance and Accounting
Abihud Greepherson (2013), “The impacts of the health and safety programmes on the organization
Ali Soylu and Preeti Singh (2017), Union Effects in Employee Performance and HRM Policies,
ALDamoe, A. M., Yazam, M. & Ahmed, B. K. (2012), “The mediating effect of HRM outcomes
(employee retention) on the relationship between HRM practices and Organizational
Performance”: International Journal of Human Resource Studies.
Alejandro Donado Gomez (2011), “Trade Unions and Occupational Health and Safety”: Julius-
Anam Iqbal, Hafiza Hafsa Nayab and Somia Yaseen(2013), Factors Affecting the Performance of
Employees at Work Place in the Banking Sector of Pakistan, Middle-East Journal of Scientific
Research 17 (9): 1200-1208, 2013 ISSN 1990-9233, IDOSI Publications, 2013
73 | P a g e
Armstrong, M., & Taylor, S. (2014). A Handbook of Human Resource Management Practice (13th ed).
London Kogan Page Limited.
A. Bhattacherjee (2012), “Social science research: principles, methods, and practices”, University of
South Florida Tampa, Florida, USA, a free textbook published under the creative commons
attribution 3.0 license the global text project, 2012
Anthony, V., Mark, P., Michael, B., & Ajay, D. (2007), “A data-based evaluation of the relationship
between occupational safety and operating performance”, The Journal of SH & E Research, Spring,
4(1).
Aron, A. a. A. E., 1994. Statistics for Psychology. International Inc ed. New Jersey: Prentice-Hall.
Assefa, Esayas (2018), “The Practices and Challenges of Occupational Safety and Health in Meta Abo
Benjamin O. ALLI (2008), “Fundamental principles of occupational health and safety” 2nd edition,
International labor office (ILO), GENEVA, 2008Devinatz, V. G. (2011), U.S. trade unionism
under globalization: The death of voluntarism and the turn to politics? Labor Law Journal, 62(1),
16-29
Boheim, R., & Booth, A. (2004), Trade union presence and employer provided training in Great Britain
Bryman, A. and Bell, E., (2003). Business Research Methods. 3rd ed. New York: Oxford University
Press.
Brent Radcliffe (2019), “Unions: Do They Help or Hurt Workers?” Investopedia Updated Jun
25, 2019
Broom Rust (2001), SO, YOU THINK BEING A TRADE UNION IS PLAIN SAILING?, South African
Carolyn Butler (2019), “Inclusive Labor Movement for Democratic Change, Ethiopia”,
Cecilia Maina (2018), “Effects of trade union activities on organizational performance: a case of thika
level five hospital”, United States international university-Africa, summer 2018
Collins, Emma N.O.(2013), “Labor Unionism and Its Effects on Organizational Productivity: A
Case Study of Jos International Breweries (JIB) PLC, Nigeria”, An International Multidisciplinary
Journal, Ethiopia Vol. 7 (4), Serial No. 31, September, 2013:36-48
Industrial Relations: A Journal of Economy and Society, Vol. 48, Issue 1, pp. 146-184,
January 2009
David Metcalf (2002), “Unions and Productivity, Financial Performance and Investment”: International
Evidence, CEP Discussion Papers dp0539, Centre for Economic Performance, LSE.
David Blanchflower (1996), "The Role and Influence of Trade Unions in the OECD," Centre for
Economic Performance, LSE. The American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
Deery, Stephen & Iverson, Roderick. (2005). Labor-Management Cooperation: Antecedents and
Impact on Organizational Performance. ILR Review. 58.10.1177/001979390505800404.
Desset Abebe Teferi (2013), Trade union rights of government employees in Ethiopia: Ethiopian journal
of human rights, Vol. 1, JOUR-109
Dr. Muhammad Tariq Khan; (2010) “Role of Labor Unions Beyond Collective Bargaining’”, Far
East Journal of Psychology and Business, Vol. 1 No. 1, Dec 2010,
Dr. Muhammad Tariq Khan and Dr Muhammad Aslam Khan (2011) “Efforts of Labor Unions
for Securing Non-Financial Benefits for Workers” – A Study of Pakistani Unions in Comparison
to Unions of Other Countries; Far East Journal of Psychology and Business, Vol. 4, Issue 3,
September. 2011
75 | P a g e
Donais, Blaine (2006), “Workplaces that Work”: A Guide to Conflict Management in Union and Non-
Union Work Environments
Etebu, Charity(2016), Financial Compensation and Employee Performance of Bayelsa State Civil
Ermias, Berhan (2017), The effect of reward system on perceived employee performance: the case study
Flanders Alan(1965), Industrial Relations What is Wrong with the system, Faber and Faber, London
Chamberlain N. W. and Kuhn James W.( 1965), Collective bargaining, McGraw Hill book
company, New York
Dunlop John.T.( 1958), lndustrial Relations Systems, Hanry Holt and Company, New York
Sydney Webb and Beatrice Webb (1965), The History of Trade Unionism, Augustus, M. Killey,
Newyork
Edmond J. Keller (1991), Revolutionary Ethiopia: From Empire to People's Republic (Bloomington:
Erick O. Oluoch (2015), “Effect of occupational safety and health programmes on employee
performance at Kenya Power Company limited”, University Of Nairobi, Published 2015
Study of Federal Universities in Nigeria; OSR Journal of Business and Management (IOSR-JBM)
e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 20, Issue 4. Ver. VII (April. 2018), PP 64-71
Fakhar, U., Afaq, A. K. (2008). Case of pearl continental hotels in Pakistan, relationship of training with
Grace Katunge Jonathan and Rosemary Wahu Mbogo (2016), “Maintaining health and safety at
workplace: employee and employer’s role in ensuring a safe working environment”, Journal of
Education and Practice Vol.7, No.29, 2016
Grogan J (2003), Workplace law, 7th ed. Cape Town: Juta Law.
Gujirati, D., (2003). Basic Econometrics. 2 ed. New York: McGraw-Hill, Inc.
Harris, C. (1998), “A comparison of employee attitude toward two performance appraisal system”:
Hair, Joseph, Robert P. Bush, and David, O., (2003). Marketing Research: within a changing
information environment. 3 ed. Boston: McGraw-Hill.
Hotepo, O., Asokere, A., Abdul-Azeez, I., & Ajemuigbolohun, S. (2010). Empirical study of the effect
of conflict on organizational performance in Nigeria. Business and Economic Journal, 15, 1 Public
Personnel management 17(14), 443-456
Hirsch and Schumacher (1998), Unions, Wages, and Skills, Journal of Human Resources, 1998, vol.
Iidt, Toke & Tzannatos, Zafiris (2001), “The cost and benefits of collective bargaining”: a survey
(English). Social Protection discussion paper; No. SP 0120, Washington, D.C.: The World Bank
Iheanacho Maryjoan U and Ebitu Ezekiel Tom (2016), “Effects of industrial safety and health on
employees’ job Performance in selected cement companies in cross River State, Nigeria”,
International Journal of Business and Management Review Vol.4, No.3, pp.49-56, April 2016
Industrial Democracy Part III Trade Union Theory by Sidney Webb and Beatrice Webb, 29 October
2015
ILO (2006), “Collective bargaining and the Decent Work Agenda”, GB.297/ESP/2, 297th Session,
ILO article (2015), “The role of trade unions in the policy cycle”: A guide for workers’ organizations
International Labour Office – Geneva: ILO, 2015, ISBN: 978-92-2-129344-6 web pdf
Agency, Ethiopia, 7th world telecommunication/ict indicators meeting, cairo, egypt, 3-5 march
2009
77 | P a g e
Joe Dromey (2018), “How stronger unions can deliver economic justice”, IPPR Commission on
John pencavel, (2009), “How successful have trade unions been? A utility-based indicator of union well
Joyce P., Corrigan P., Hayes M. (1988), "Theories of Trade Unionism”: Critical Texts in Social Work
Julie, P., (2005). SPSS survival manual a step by step guide to data analysis using SPSS for
windows (Version 12). 2 ed. Australia: s.n.
Kamal Akanta I(2015), Industrial relations: https://www.businessmanagementideas.com, 2015
Kevin Hart (2017), “Labor Union Advantages to an Employer”, biz fluent, September 26, 2017
perspective, 2019
Kim B. Clark (1982), “unionization and firm performance: the impact on profits, growth and
Titanium Base Limited Kwale County Kenya. Unpublished Thesis Submitted to University of
Nairobi.
Kothari, C., (2004). Research Methodology: Methods Techniques. 3rd ed. New Delhi: New A ge
International Ltd.
Laroche P, Wechtler H (2011), “The Effects of Labor Unions on Workplace Performance”:
New Evidence from France. Journal of Labor Research 32(2): 157-180
Li-An Ho (2008). What affects organizational performance? The linking of learning and knowledge
78 | P a g e
management: Industrial Management & Data Systems Vol. 108 No. 9, 2008, Emerald Group
Publishing Limited 0263-5577 DOI 10.1108/02635570810914919
Malaolu, V.A. & Ogbuabor, J.E. (2013), “Training and manpower development, employee productivity
Matthew Walters and Lawrence, M. (2003), “How unions help all workers”, Economic Policy Institute,
Michael Armstrong, 2006: -performance management- key strategies and practical guide line, 3rd
edition, London
Michael Treacy and Fred Wiersema (1993), Customer Intimacy and Other Value Disciplines, Harvard
the Case Study of Commercial Bank of Ethiopian”, Addis Ababa University College of Commerce
Nkirote, N. & Kiiru, D. (2018), “Influence of selected trade unions activities on performance of
public universities in Kenya”, International Academic Journal of Human Resource and Business
Administration, 3(4), 174-206
Ntwala Mwilima (2008), “The role of trade unions in job creation: a case study of the Job Creation
Ojokuku and Adegbite (2014), “The impact of capacity building and manpower development on staff
Pencavel, J. (1977), “Distributional and Efficiency Effects of Trade Unions in Britain”: British Journal
79 | P a g e
Raja, Furqan & Khan (2011), Impact of Training and Development on Organizational Performance,
University of Lahore, Islamabad Pakistan, Global Journal of Management and Business Research
Volume 11 Issue 7Version 1.0 July 2011
Reddy S. (2009), Increasing contract labor will lead to industrial disturbances, MP & President,
INTUC, SECTIONS, the Economic times, Dec 03, 2009, 03.23 AM IST
Richard B. Freeman and James L. Medoff (1985), “What Do Unions Do?”, Sage Journal,
Cornell University ILR School, Volume: 38 issues: 2, page(s): 244-263 Issue published: January 1,
1985
Richard C. Koven (2012), “Strategies for unions to provide benefits and financial services to workers:
Experiences in the United States”, ILO report on Innovative Finance for Social Justice, 2012,
Working Paper No. 56
Administrative Science Quarterly Vol. 20, No. 4 (Dec., 1975), pp. 546-558, Sage Publications, Inc
Richard et al. (2009), Measuring Organizational Performance: Towards Methodological Best Practice,
Journal of Management.
Shaibu said chanzi (2017), “The role of trade union practices in improving workers’ performance in
Sharon Matama Gichaba (2011), “Perceived influence of trade unions on terms and conditions of
Slichter, Sumner H., James J. Healy and E. Robert Livernash(1060), The impact of collective
Stephen J. Deery & Roderick D. Iverson (2005): “Labor-Management cooperation: Antecedents and
Impacts on Organizational Performance” Cornell university, ILR school, vol. 58, no. 4
Subbiah Kannappan (1992), “The Gandhian Model of Unionism in a Developing Economy”: The TLA
in India, ILR Review Vol. 16, No. 1 (Oct., 1962), Sage Publications, Inc.
Sumner H. Slichter (1941), Union Policies and Industrial Management, Washington, D.c. the
80 | P a g e
Thomas P. Ofcansky , Berry L (1991), Ethiopia: A Country Study. Washington: GPO for the
Journal of Engineering Technology, Management and Applied Sciences, November 2014, Volume
2 Issue 6, ISSN 2349-4476
Worku Bogale (2005), A Background Paper on Telecom & Telecom Statistics in Ethiopia: Ethiopian
Telecommunications Corporation, February 2005
Wubne, Mulatu(1991). "Labor Unions", A Country Study: Ethiopia (Thomas P. Ofcansky and LaVerle
Johnny, Prof & Eluka, C & Nwonu, Christopher & Okafor,. (2014). A Critical Review of The
Effect of Working Conditions On Employee Performance: Evidence From Nigeria. EBS Journal of
Management Sciences.
Ramazan Kaynak1 , Arzu Tuygun Toklu2 , Meral Elci1 & İsmail Tamer Toklu(2016). Effects of
Occupational Health and Safety Practices on Organizational Commitment, Work Alienation, and
Job Performance: Using the PLS-SEM Approach, International Journal of Business and
Management; Vol. 11, No. 5; 2016 ISSN 1833-3850 E-ISSN 1833-8119
Wambulwa, Nasimiyu B. et al., (2018), Effect of Occupational Safety and Health on Organizational
Performance: A Case of Nzoia Water in Trans-Nzoia County: European Journal of Business and
Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.10, No.11,
2018
81 | P a g e
Appendix: 1
MANAGEMENT DEPARTMENT
Dear Respondents:
I am a graduate student at Bahir Dar University College of Business and Economics, Department
of Management. Now I am conducting a research entitled ‘ the effect of labour union activities on
organizational performance in the case of Ethio telecom, North West Region’ as a partial
fulfilment of requirements for the award of Masters of Business Administration (MBA).
The purpose of this questionnaire is to gather data for the proposed study, and hence you are kindly
requested to assist the successful completion of my study by providing the necessary information.
Your participation is entirely voluntary and the questionnaire is completely anonymous. I confirm
you that the information you share will stay confidential and only used for the academic purpose.
So, your genuine, frank and timely response is vital for the success of the study. I want to thank
you in advance for your kind cooperation and dedication of your precious time to fill this
questionnaire.
Sincerely Yours;
Getachew Alemnew
82 | P a g e
Note:
1. No need to write your name.
2. Put this ‘√’ or ‘X’ mark (or any mark you want) on the appropriate block/cell both for
multiple choice and Likert scale questions.
3. For further information, please contact me freely at telephone No. 0930111870 and email
at [email protected] .
1. Age
5. Gender
Male Female
Please indicate your opinion as per the level of disagreement or agreement with the outline statement
using 1 to 5 scale guideline. 1= Strongly Disagree, 2= Disagree, 3= Neutral, 4 = Agree, 5= Strongly
Agree.
No. Statements 1 2 3 4 5
83 | P a g e
1. Trade union use collective bargaining agreement to
negotiate for better pay and workplace protection
84 | P a g e
1. My organization has lack of minimum facility and
Safety
85 | P a g e
12. My organization provides necessary safety
materials to employees based on the collective
agreement
86 | P a g e
SECTION C: Effect of Dispute Resolution on Organizational Performance
Please indicate your opinion as per the level of disagreement or agreement with the outline statement
using 1 to 5 scale guideline. 1= Strongly Disagree 2= Disagree, 3= Neutral, 4 = Agree, 5= Strongly
Agree.
Statements 1 2 3 4 5
No.
3 Dispute Resolution
87 | P a g e
2. The Labor union in my organization
represent us at disciplinary and grievance
hearing
No. Statement 1 2 3 4 5
Organizational performance
88 | P a g e
2. Trade unions can positively affect organization’s
productivity
1. What are the real problems that you observe regarding the role of labor union in the corporation?
(Please discuss it in brief)
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
2. Would you please suggest if there is anything to be changed with regard to the role of labor union
in the corporation?
----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
3. What opportunities are available for labor union that the union not uses to play their roles
appropriately? ---------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
4. What are the major challenges do you think that labor unions face in the corporation?
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
89 | P a g e