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Work-to-Rule

Sigma Investment Counselors

April 17, 2019

Wikipedia defines work-to-rule as an industrial action in which employees do no more than the minimum required by the rules of their contract, and precisely follow all safety or other regulations, which may cause a slowdown and/ or a decrease in productivity.  Such action is considered to be less disruptive than a strike or lockout, and strict adherence to rules is less susceptible to disciplinary or legal action.

This is a strategy that is sometimes pursued by workers whose ability to strike or invoke other job actions are restricted by law.  This would include individuals engaged in generally considered essential services such as; first responders, nurses, teachers and providers of travel services.

Recently, Southwest Airlines was involved in a dispute with its mechanics that resulted in an unusual number of aircraft being unavailable for timely deployment.

Investors should recognize that mutually respectful labor relations are material to long term financial results.  Strikes and/or other job actions are disruptive, costly and often damaging to customers and to positive, long term labor/management cooperation.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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