Why It's Time to Quit Doing Labor Relations In-house
Candid Talk from the Field: Here's Why Internal Labor Relations Teams Don't Work
They come in, ask excellent questions, spot problems quickly, and leave with a hefty invoice. It seems easy enough to copy. Why not save hundreds of thousands of dollars a year by building your own in-house labor relations team?
It sounds sensible. Why outsource it when you could build institutional knowledge internally, keep continuity, and align everything with your company culture? You could save hundreds of thousands a year.
So you do it.
You hire a smart team, and they're a great fit. They're people who know labor law, negotiations, and workplace dynamics.
Yet, two years later, you’re not in a better position than when you started.
What happened?
The Problem Isn’t the People
In practice, in-house labor relations teams rarely work. It’s a conclusion that shows up again and again in academic research, government reports, arbitration outcomes, and decades of industrial relations experience. The problem isn’t the people. It’s the structure.
The Core Conflict of Interest Is Unavoidable
An in-house labor relations team reports to management. The fact that the employees they meet with know that is a conflict. The fact that they report to that same management team is also a conflict.
Effective labor relations strategy involves several things that in-house teams are not equipped for.
- HR audits and resolution of problems at every level of the organization:
An in-house labor relations team works for management. Their salary, career, and job security all depend on leadership. They are not in a position to point out mismanagement and other issues further up they org. chart than they are. A smart employee will keep their mouth shut. They will focus on avoiding trouble, not solving problems. A consultant, on the other hand, has nothing to lose (and a campaign to win) if they are tactfully candid. This conflict of interest alone dooms many great in-house labor teams from day one. - Audience credibility and neutrality:
No matter how polite or professional the team is, it will never be seen as independent. Workers and unions know, instinctively and correctly, that the “neutral” internal team is not neutral at all. Additionally, the in-house team may be reluctant to reveal structural flaws in the organizational structure, or even agree with employees' valid complaints. - There is an authority loop:
In-house labor teams rarely have much say. Decisions get pushed upward to executives. "We’ll get back to you” turns into weeks of silence, tentative agreements get reversed and it becomes nearly impossible to know if promises to communicate were kept. The very issues that caused the group to become dissatisfied.
Even if the internal team is acting sincerely, workers experience this as bad faith.
"The issue is that you're in a conflict of interests politically because you go to a site, as a representative of the corporation and you notice that there are legitimate issues. You try to correct things but they don't do anything. You talk to your boss, who talks to that guy's boss' boss. Suddenly, you're a "snitch" and you're walking into a hostile environment and can't do anything right. You're walking on eggshells because any complaint will shoot right back to your direct superior and your own job could be on the line. It motivates you to be ineffective by staying low and avoiding the radar."
Is it Really Cheaper?
I know, executives hear about hidden costs a lot.
Full disclosure, I'm a labor relations consultant. In situations where there is an in-house team, I get called in when demand exceeds manpower, which is often. That results in both the in-house team and I working in a redundant atmosphere. Essentially, for the time I'm there, the employer is paying twice.
Other times may be slow, forcing the employer to pay for resources that are not needed.
But that's not the worst part. It's the gamble.
If the outside consultant has objectivity and is given the authority to architect a workable strategy, and that results in conversations succeeding instead of failing, the cost savings are substantial.
Think of the legal fees alone. A month with a consultant is roughly equivalent to 4% of the average collective bargaining costs.
The numbers alone speak for themselves.
To illustrate this point, I spoke to someone in the medical field. Again, I promised not to use his name so that they could speak candidly.
"I was called in as an outside consultant. When I got there, I was told there was both an in-house labor team and Human Resources. I was working on a union campaign. Other parts of the medical facility were already union.
The in-house labor relations team had a standard approach with materials and prepared PowerPoint decks vetted by their (also in-house) legal team. Campaigns change daily, and a good consultant knows when to pivot. The layers of personnel cost us opportunities to make decisions that could have resulted in a win for the company. Any advice we gave was funneled through layers of bureaucracy. I got the sense were were not working together to create an effective strategy for this campaign. Things were not looking great, if I have to be honest.
It went downhill from there. Separately from our campaign, the existing union was negotiating a contract and threatened a strike. The company had little to lose. Pay was fair. And in their case, a strike would require the employees to pay back a portion of lost wages over time, which caused the idea of striking to be very unpopular to the employees. The union was not disagreeable to coming back to the table, and they too hoped to avoid a strike.
My view? The company had the opportunity, the time, the employee support, and the leverage to wait at least the couple of weeks remaining until the upcoming election was over.
Instead, they opted to capitulate to the demands. Instantly, that sent a message to the new voters that 'threatening a strike works'. The unionized employees ended up with a small raise.
For our own, ongoing campaign, that single decision effectively meant the end The medical facility lost by a landslide.
The results will be costly for the medical facility. Attorneys fees, time and resources for collective bargaining will far exceed what they paid us and their in-house team this year.
I'm not sure where the breakdown in communication was. To me, this was a preventable strategic error that could have been avoided if my team had been able to explain things to the right people."
The Bottom Line
In-house labor relations teams are often ineffective, not because people are bad at their jobs, but because the system is stacked against them.
Effective labor relations require independence, authority, and real incentives to resolve conflict. When communication channels are not present for them to provide valuable feedback, or when they are not included in campaign strategy, they are unable to get results.
Often, any savings are often offset by hidden costs and legal fees.
As always, if you have questions about any of this, it's better to seek qualified counsel than to try to decipher it on your own.
Comments are welcome!
These accounts are anonymized, secondhand yet reputable, professional opinions based on the speakers' experiences. I do not present them as my own views. The statements reflect personal observations and strategic interpretations, not allegations of wrongdoing or factual claims about any identifiable entity.
