Chapter 12

1. Chapter 12 • Participatory Processes

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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 may settings, union officers now spend as much of their time on joint activities as they do traditional arm’s-length activities

14. 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

15. Worker and Union Participation in Strategic Decisions • Some worker involvement comes from the formal participatory process • In other cases from an informal basis • Like the wire harness team at Xerox, a strategic decision to outsource for costs savings was not on the agenda • It evolved in that direction

16. 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

17. 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

18. 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

19. 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

20. 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

21. Union Representation on a Company’s Board of Directors • Formal representation on the board of directors in 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

22. 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

23. 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

24. 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

25. 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

26. 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 involve 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

27. 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