Kochan and Osterman offer the further hypothesis that mutual gains theory will work better if the enterprise recognises independent trade unions. They argue that union based voice mechanisms are more effective than the alternatives because they recognise that the interests of the workforce and the company will not always be in unison. Where conflicts do arise, union voice mechanisms allow them to be negotiated and resolved without compromising the climate of co-operation and trust. This is not a view shared by everyone. Nestle provide an example of a company introducing HRM practices to achieve mutual gains objectives in parallel with traditional collective bargaining. In the long run, Nestle management expect traditional industrial relations to wither away, replaced by individual relationships between the company and its employees. (Taylor, 1994:131).
Given that there are conditions in which employers are more likely to pursue employee involvement policies I would offer the hypothesis that the union attitude is an important factor influencing the way in which an employer introduces HRM and employee involvement strategies. If the union is not prepared to work in partnership the employer may proceed with policies that would have the effect of de-collectivising the workforce and marginalising the union. If the union side are prepared to engage in partnership at a strategic level then the form of partnership may be considerably more favourable to unions and there members. There is currently no data available to test this hypothesis rigorously, however case studies may shed some light on the area.
The partnership agreement between United Distillers and the GMB union (see Marks, et al. 1998) provides a detailed case study of the introduction of HRM and employee involvement through partnership. Under the Towards World Class program, introduced in 1994, the workforces got a three year deal offering employment security, a retail price index plus pay formula and improved training in return for undertakings on productivity and flexibility. Although the unions’ shop stewards were against the deal, the package was sold to the membership by the GMB’s regional industrial officer who actively promoted a more integrated, strategic, and collaborative role for trade unions. In the view of the full time official the deal was necessary in order to safeguard jobs. He believed that the consequences of clinging to traditional confrontational industrial relations would be more redundancies and closures, something he had seen too much of. He had also experienced the introduction of HRM and EI in other companies and observed at first hand the way in which they could be used to weaken union organisation. He thought that by being proactive the union would be able to negate the effects of this. While some have argued that the union was forced into accepting partnership by the company, this was not the FTO’s view. He saw the offer of partnership as an opportunity to be grasped. His perception that traditional collective bargaining could no longer fully meet the needs of the membership was drawn from and supported by opinion poll evidence collected by the GMB which found that interesting work and job security were ranked above pay among workers concerns (cit. Bacon & Storey 1994:59. Neither of these concerns could be dealt with by traditional collective bargaining.
Observers of the United Distillers deal have noted significant changes to the industrial relations system (Marks et al. 1998). The introduction of teamwork and improved training seem popular with the workforce, but there were drawbacks for individuals and for the GMB’s organisation. While the institutions of the industrial relations system have remained intact, there has been a shift from representative to participative structures at a local level. Shop stewards power and influence has declined. The drawback of this system is that management at a plant level are not always willing to live up to the rhetoric of the agreement. The weakened shop steward system and the weakening of the grievance procedure that happened as part of the new agreement has weakened the union at the workplace level. The barriers to macho management have been removed. Whether this was an inevitable consequence of the partnership deal or an effect of the attitude of the shop stewards committee to the partnership is difficult to tell. It remains to be seen how this will affect the unions membership levels within United Distillers. The trade off is that the union has greater influence in corporate decision making. The way in which the union and management address the future role of the shop steward will be central to the future success of the partnership.
What makes the United Distillers case most interesting is the way that the employer fails to behave in the way theory would predict they would act. The partnership program was introduced as a response to a crisis of profitability that threatened the companies’ long-term survival. At a time when you would expect the employer to be increasing control, attacking terms, conditions, and reducing employment the employer actually sort co-operation with its employees through a representative union. We may be witnessing the development of a new type of employer policy that may require a new type of union response – the partnership agreement.
The whole concept of partnership has come under fierce attack from critics in academia and the trade union movement. Kelly (1994) has argued that the correct response to HRM and Employee involvement programs is trade union militancy. Kelly’s reasons for this are: The growing hostility of employers to any form of unionism, the beneficial consequences of industrial action, the meagre consequences of moderation and the continuing antagonism of interests between workers and employers. Kelly’s arguments are far from convincing; while there is evidence of growing hostility to unions, there is also plenty of evidence of employers retaining good relations with unions. Any way the argument misses the point, by arguing for social partnership unions are not simply throwing themselves at the mercy of employers, they are attempting to engage management at a strategic level in an effort to change corporate behaviour towards something more favourable to union members. Unions are well aware that social partnership would be vulnerable to the whims of employers if it were not based on strong union organisation. A recent partnership agreement concluded by MSF and Legal & General states that necessary conditions for a durable partnership agreement are ‘A cadre of well trained union representatives…. [And a] high profile union in the workplace’ (Power, 1998). That way if the employer fails to live up to the agreement the union retains the strength to take action. Kelly’s second two arguments are well aimed and well judged shots at the problem of EETPU style no strike agreements and AEU business unionism, but they misunderstand the nature of modern partnership agreements being signed by unions like the GMB and MSF. In these agreements, the union retains the right to take action in the traditional way if the company fails to live up to its commitments. MSF particularly is weary of entering into partnership with companies that the FTO’s involved feel untrustworthy. The final point requires investigation that is more detailed. The key flaw in the argument is that it views employers as a homogenous whole, quite clearly, they are not. Because of the principle/agent, relationship management has a high degree of latitude over the way in which it secures returns for an enterprises stockholder. The problem that union’s face is that the information available to capital and the scope for investment opportunities has increased dramatically over the past twenty-five years. This has necessarily weakened the position of Labour compared to capital. If it can be demonstrated to managers that they will be able to secure the necessary returns to capital through co-operation then some will respond positively to the offer.
There will always be managers with ideological opposition to trade unions, and where unions encounter ideological opposition; they have no alternative to respond with militancy. Any union strategy based on assuming management homogeneously hostile is bound to be inadequate. It could also have considerable costs, more de-recognition’s, lower investment in the unionised sector and consequently fewer unionised jobs. That is why unions are adopting strategies based upon partnership. Modern partnership agreements are qualitatively different from the business unionism of the 1980’s because they recognise the importance of maintaining a strong union organisation. However, they are not without problems for unions. The shop stewards role is a particular area of ambiguity that may prove problematic. However by entering into partnership unions may find themselves in stronger positions to resolve these ambiguities than if they had simply resisted management and face marginalisation.
Bibliography
Bacon, N & Storey, J. (1994) Individualism & Collectivism and the Changing Role of Trade Unions, in Ackers, P., Smith, C & Smith, P. (eds) The New Workplace and Trade Unionism, London: Routledge
Freidman, (1977), Industry and Labour, London: Macmillan
Fisher, J. (1997) The challenge of change: the positive agenda of the TGWU, International Journal of Human Resource Management, December 1997
Kelly, J (1994) Union Militancy and Social Partnership in Ackers, P., Smith, C. & Smith, P. (eds) The New Workplace and Trade Unionism, London: Routledge
Kochan, T.A. & Osterman, P. (1994) The Mutual Gains Enterprise, Boston: Harvard Business School Press
Power, M. (ed) (1998) Creating Partnerships, Report of Unions 21 Conference 1997. London: Unions 21
Taylor, R (1994) The Future of the Trade Unions, London: Deutsch
Of course, an alternative interpretation would be that by 1994 when the agreement was implemented the recession was over and conditions had already improved. This is not convincing for a number of reasons, the weak financial performance of the company, the continuing weakness of the product market, increasing foreign competition, and the widespread feeling in the country at the time that the recession had not really ended.
Conversation between the author and MSF’s National Secretary for the Finance Sector at MSF North Thames Regional weekend school ‘Negotiating for Change’ March 1998.
