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It is in the best interests of management and labor to work together because working together can accomplish more for the firm than conflict can. When labor and management are in conflict with one another, neither side trusts the other. Neither is willing to give in, even on issues that would allow the firm to operate more efficiently. If the firm would operate more efficiently, more money would be made. This would be good for both sides. But a lack of trust can prevent this from happening. Therefore, it is better for the two sides to work together so they can simply pursue the best strategies rather than trying to make sure that their side "wins" victories that will not be best for the firm in the long run.
Management and labor must coexist for the benefit of both. Management is impotent with respect to productivity absent labor, and labor is directionless and lacking the physical infrastructure necessary to produce without management, which represents the interests of ownership. When there is conflict between the two, and that conflict extends to the imposition by labor of a work stoppage and/or the implementation of a plant closure by management, then both sides suffer. While one could argue that labor can function absent management, that assumes the presence of an anarchical society in which labor committees can exist in perpetuity without any hierarchical structure. Such a society, however, will inevitably give way to the emergence of a managerial hierarchy, thereby restoring the very division between management and labor that the anarchical society sought to prevent. Labor by itself can rarely raise the capital necessary to acquire and maintain equipment and to train personnel, and the history of organized labor provides few encouraging examples of a labor-run operation succeeding for a long time in a competitive environment. One exception, of course, are the collective communities such as the kibbutz of Israel, but these are small operations limited in scope and often agricultural in nature.
At the end of the day, it is manifestly in the interest of both management and labor to work together towards a common goal, such as profitability. Assuming the aforementioned free-market system, excesses or incompetency on the part of one or both sides of the management-labor equation will invariably lead to failure. The risks to labor include unemployment, possibly resulting from management decisions to relocate operations to a more "business-friendly" environment. The risk to management can include bankruptcy.
Management and labor are two sides of the same coin: while one works for the other, they cannot work in isolation. It is in the best interest of the organization if management and labor work in conjunction with each other.
Being at loggerheads will lead to lack of trust and friction between the two groups and will ultimately cause loss of productivity since valuable resources will be dedicated to in-fighting. This situation may also cause escalation of minor issues that could otherwise have been resolved in a very amiable manner.
If these two groups work together, the organization as a whole will progress and achieve higher productivity, which will be a win-win situation for all. In such a scenario the profits will be shared between the management and labor and everyone will progress.
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