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Chapter 12 Participatory Processes McGraw-Hill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserv 12 -3 1 - 3 The Evolution of Worker and Union Participation • Early efforts to create mechanisms for worker involvement included “Quality of Working Life” (QWL) programs - QWL is oriented toward improving organizational performance and the working life of the employees • The QWL programs operate at the lowest level of industrial relations activity, on the shop floor through the involvement of groups of workers 12 -4 1 - 4 Early QWL - Limited Success • Efforts to create interest in QWL expanded in the early 1970s - QWL sought to address a perception that modern factories alienated workers by providing few avenues for employee input - QWL sought to reduce worker alienation known as the “bluecollar blues” - Early efforts had opposition from labor and management • Neither labor nor management saw the need for change • Both labor and management felt that QWL questioned the basic assumptions of the collective bargaining process, and feared for their roles • Few line managers or executives saw the bottom-line relevance of QWL – but QWL was “reborn” in the 1980s as economic pressures intensified 12 -5 1 - 5 Quality Circles • In a typical Quality Circle (QC) program, workers in one area of a plant meet for one or two hours per week with their supervisor - Quality Circles allow workers and management to identify improvements in production and service delivery - Many companies initially reported large payoffs from QC activities, with scrap rates dropping and cost savings through new processes • The Limited Gains from Quality Circles - QC gains dissipated over time - Workers became frustrated when their suggestions were ignored - Workers ran out of suggestions or found them to be in violation of work rules 12 -6 1 - 6 The Broadening of QC and QWL Programs • The most successful QC and QWL programs involved broadening work rules, bargaining issues, and production methods - Without the broadening of work rules, QWL programs were not able to address performance and employment security • The Expansion of QWL at Xerox - Xerox and their union committed to expand problem-solving - Study teams of workers and management suggested changes in work organization that required contractual changes, and thus integrated QWL into the collective bargaining process - Unions agreed to subcontracting and management accepted a nolayoff provision - Xerox won the Baldrige award for organizational excellence, and the participatory activities received much of the credit • Strategic participation included top executive access by unions 12 -7 1 - 7 The Limits of Participation • Events at Xerox at the start of the twenty-first century also illustrate the limits of the participatory process - The process cannot override fundamental changes in market conditions or declines in core business caused by strategic mistakes - By 2000, Xerox lost market share, failed in elements of restructuring, and was charged with accounting irregularities - Employment in Rochester, NY, has been reduced by 50% - While the extent of the participation has diminished, efforts to work together have continued 12 -8 1 - 8 New Channels of Communication • The expansion of the participation processes is often associated with new communications between management and labor - Often led to expanded communication between union officers and higher-management • Work Organization Restructuring - Links to QWL - Work reorganization became a central part of many participation processes due to pressures for flexibility - More easily done in new plants or those that are completely retrofitted 12 -9 1 - 9 The Links between Teamwork, Participation, and Work Restructuring • Teamwork systems require a fundamental reorganization of the workplace - They replace multiple and narrow job classifications with jobs that are broader in scope - Workers make discretionary judgments and an investment in training - Some involve “pay-for-knowledge” plans 1 - 10 12 -10 New Roles for Supervisors • Traditional supervisors are sometimes replaced with team leaders - Many team leaders are members of the bargaining unit rather than first-line management - In some cases, such as the Saturn Corporation, union and nonunion team leaders are paired as partners who share responsibility for managing the teams • The Expansion of Teams - Some plants have an “administrative” team which includes the plant manager and union chairman - A key to such a team’s success is union participation in initial design of changes 1 - 11 12 -11 Managing the Overlap between Participation, Work Restructuring, and Collective Bargaining • As participatory processes expand, unions face a challenge to manage and coordinate the overlap - Unions try to avoid grievance or collective bargaining issues in team meetings - However, the line between collective bargaining and the participatory process blurs as the process matures - This occurred at Xerox, where workers made recommendations that altered job descriptions and subcontracted work - The situation at Xerox and Kaiser Permanente illustrated that some way of integrating contract negotiations with on-going participation must be found for the joint effort to survive 1 - 12 12 -12 Changes in Contractual Procedures that Emerge from Participation • As labor and management participate more directly in decisions, they find the formal contractual procedures less important - Such was the case at Dayton Power, which replaced a 114-page agreement with a 13-page “compact” - That compact introduced a no-layoff clause and new incentive pay system - This illustrated how increased worker and union participation can change practices 1 - 13 12 -13 An Issue for Unions: How Far to Go in Lessening Formal Rules and Procedures • Unions want more cost competitiveness and job security - But don’t want to abandon formal negotiations and grievance procedures - Union leaders can allow participation to proceed but coordinate the connection to collective bargaining - Cases show that if a union maintains an arms-length distance, as some point a confrontation develops or participation withers 1 - 14 12 -14 New Union Rules • Joint steering committees can help with oversight of the participatory process - Former union officers can make good facilitators • They tend to be respected by the work force and adept at compromise - The result is the creation of a complex set of committees and new jobs that coordinate participation and collective bargaining - In many settings, union officers now spend as much of their time on joint activities as they do traditional arm’s-length activities 1 - 15 12 -15 The Expansion of Joint Activities • Other joint activities tend to evolve from the participatory process - They include employee assistance programs, such as alcohol and drug abuse counseling, health and safety committees, absentee programs, training and education, and community service programs - Union officers spend more time in such roles - This trend has led to changes in job titles of workers and more facilitation - In service industries, such as hotels or hospitals where multiemployer bargaining structures exist, joint efforts often cut across employers 1 - 16 12 -16 Worker and Union Participation in Strategic Decisions - Some worker involvement comes from the formal participatory process • In other cases from an informal basis - An example of this evolutionary expansion occurred in some auto plants • Workers and union representatives now sit on planning committees that operate at the plant level • They assist in developing new practices to avoid outsourcing and win new business 1 - 17 12 -17 The Effects of Downsizing and Outsourcing Pressures: Heightened Concern for Employment Security - Downsizing and threats of outsourcing in the 1990s led many unions to increase their involvement in business issues - Unions bargained for employment security clauses that included participation as well as concessions - The process has led to extensive cooperation, including avoidance of representation elections 1 - 18 12 -18 The Sources of Failure • Joint processes seldom last forever - Many fail in the early stages because leaders are unable to make the organizational and role adjustments needed to integrate joint efforts in union/management relationships - Recognition that participatory process are vulnerable to business decisions traditionally under the control of top management is why some labor leaders pressed for a voice in strategic decision making 1 - 19 12 -19 Worker and Union Voice in 21st Century Corporations • The U.S. experienced a crisis of corporate confidence in the early twenty-first century - The scandals arose from accounting and executive compensation issues in companies such as Enron, Tyco, Polaroid, and Adelphia Communications - These scandals raised questions about the role of employees and union representatives in corporate governance - Given the growing importance of knowledge and skills as a source of competitive advantage to corporations, this issue will be important in future debates over the roles of employees 1 - 20 12 -20 The Debate Surrounding Participatory Programs • Critics argue that participatory programs do not lead to meaningful worker involvement - They claim that the team systems are used to put peer pressure on workers and remove the independent voice of the union - They call such programs a “halfway house” to nonunion operations - Proponents argue it’s a better way to reach their membership’s goals 1 - 21 12 -21 Assessing the Effects of Participatory Processes - Management seems convinced that participatory processes and work reforms can improve productivity and quality - A number of unionists are coming to a similar judgment - Research shows that narrowly defined QC and QWL programs have only a small positive effect on product quality and negligible effects on productivity - Auto plants with the highest productivity and quality are not the most technologically advanced, but those that integrate human resource strategy with production processes - The best performing plants link “humanware” and “hardware” through participation 1 - 22 12 -22 Union Representation on a Company’s Board of Directors - Formal representation on the board of directors is another way unions have achieved involvement in strategic decisions - Started with the addition of a UAW representative on Chrysler’s board as part of the federal loan guarantees in 1980 - Not all are success stories, as with Rath Packing and Eastern Airlines - Evidence suggests that board membership alone does not lead to substantial payoff for workers 1 - 23 12 -23 Employee Ownership - A more radical form or participation is employee ownership - In some cases, employee buyouts occurred in the face of impending plant shutdowns - Some unions have promoted employee ownership as a way to improve job security - The employee buyout of United Airlines is the most noteworthy example - In 1994, United became the largest employee-owned company in the U.S. - It is not clear that the employee ownership had a positive effect on morale or corporate performance at United 1 - 24 12 -24 The Views of Labor Toward Employee Ownership - Unions have been traditionally unenthusiastic - Union leaders may fear that ownership will lead to a lack of need for a union - However, studies show this may not be the case - While new forums arise in ESOPs, members still prefer traditional bargaining for wage and benefit negotiations - Unions fear that economic pressures will bring wage and benefit cuts to save jobs - Unions are also concerned about the effects of such wage cuts on other unionized firms in the industry 1 - 25 12 -25 The Impact of Worker Ownership on Economic Performance • Evidence suggest that performance improves in employeeowned firms when workers have broader decision-making opportunities - ESOPs may work best in small, stable firms, where skilled workers can improve productivity and economic performance through motivation and group performance - Critics say ESOPs put worker pensions at risk without any real increase in decision-making 1 - 26 12 -26 Participation through Industrywide Labor-Management Committees • In some competitive industries with numerous employers and a single union or small number of unions, industrywide labor-management committees historically were used to discuss problems of mutual interest outside the collective bargaining process • Those committees represented early efforts by unions to participate in broad strategic issues outside of formal collective bargaining 1 - 27 12 -27 The Textile Industry Case - The Amalgamated Clothing and Textile Workers Union (ACTWU - now part of UNITE) became involved at the early stage in research and development to mechanize production to help stem the flow of imported goods - In contrast to other unions, the ACTWU became deeply involved before management’s strategic decision to implement the technology - Later, the union agreed to an experimental program that allowed some importation of goods in exchange for a commitment to reinvest in U.S. facilities - Joint committees can be useful in creating links between participation and the formal bargaining process 1 - 28 12 -28 Summary - Experience suggest that new participatory processes cannot operate in isolation from collective bargaining - Reforms work best when they are associated with changes across all three levels of industrial relations activity - The ultimate success of reforms depends upon the ability to reinforce and sustain high levels of trust - To achieve tangible benefits, participatory programs have often been accompanied by contract changes - Shop floor participation has been spurred by strategic participation - This helps convince workers that enhanced job security will follow strategic participation - Union critics fear that they will be co-opted by management in the participatory process and their independence will be compromised - Participation has rarely expanded without a crisis setting