Chapter

Participatory Processes

12

McGraw-Hill/IrwinAn Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

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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

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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 “blue-

collar 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

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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

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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 no-layoff 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

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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

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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

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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

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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

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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

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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

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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

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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

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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 multi-

employer bargaining structures exist, joint efforts often cut across employers

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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

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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

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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

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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

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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

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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

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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

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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

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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

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The Impact of Worker Ownership on Economic Performance

• Evidence suggest that performance improves in employee-owned 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

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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

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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

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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