From conflict to consensus?
This chapter looks at the principles
and practices that form the basis of partnership at work. We examine the reasons
why partnership is on the increase and the business case for making it the main
focus of employee relations in today's business environment.
KEY POINTS
A consensus approach to employee relations is one aimed at achieving "a common set of values and beliefs".1 Its main characteristics are cooperation and collaboration. Thus it is a far cry from the commonly held view of UK industrial relations which has tended to see it as adversarial and, prior to a raft of legal changes over the past two decades, one that is typically strike prone. Partnership at work agreements, which attempt to build consensus between employers and employees, are a growing feature of the UK's employment landscape, a scene that has undergone radical change since the late 1970s, not least in the dramatic decline in trade union membership (see figure 2.1 ).
Figure 2.1: Number of trade unions and union members; UK; 1976-1997

Source: Certification Officer
As the previous chapter highlighted, partnership is promoted by both sides of industry, as well as by the UK Government and the European Union. Why? Because in the current economic climate - in which business success is increasingly dependent on the speed at which organisations respond to change - employee participation and involvement are seen as vital components for achieving long-term prosperity. There is growing support for the idea that a workplace environment that encourages employee creativity and innovation is mutually beneficial for all stakeholders (employers, shareholders, staff and customers). Commenting on the Tesco-Usdaw partnership agreement, the then DTI minister Ian McCartney was of the opinion that: "Employers working closely with their workforce is at the heart of a successful and competitive business. This culture of shared values and goals, joint approaches to problem solving and effective staff development, benefits all through boosting commitment, morale and productivity."2
Change underpins the partnership philosophy. The Barclays and United Distillers examples in chapter one illustrate this, while the GMB, the general union, makes the same point, stating: "We know that union members' interests depend on their employer's success in a competitive world, and that success depends on workers who are ready to meet the challenge of change."3 This approach highlights a change of emphasis on the part of trade unions. It reflects a "more positive and proactive stance" to management initiatives like HRM and substitutes traditional collective bargaining structures with consultation and advisory mechanisms such as works councils.4 For example, Legal & General's partnership deal with MSF replaces the previous procedural agreement - which provides the framework for collective bargaining - governing relations between management and the union. In its place, the company has established a new employer-employee forum to discuss issues that are relevant across all business units.5
Studies have shown that greater employee involvement and participation produce tangible business benefits (see below and figure 2.2 ). However, the concept of partnership, particularly where it includes trade unions, contains several ambiguities. Its unitary perspective - illustrated by the emphasis on shared culture, shared values and shared goals - does not sit easily with the pluralist traditions of UK industrial relations which recognise a conflict of interests between those of employers and employees. For example, unions will seek employment security - and many partnership agreements contain support for this aim, at least in principle - whereas this is not always feasible, nor is it always compatible with corporate needs, especially in a rapidly changing business environment. One critic of partnership has claimed that it has "proved to be an effective strategy for boosting profits and dividends at the expense of jobs and wages, while at the same time marginalising union influence".6
Figure 2.2: Partnership at work: a summary of five studies
Source |
Theme of study |
Conclusions |
People, partnership and profits: the new labour-management agenda, Jerome Rosow and Jill Casner-Lotto, Work in America Institute, 1994 |
In-depth examination of joint union-management partnerships in the US, including evidence from five organisations |
Joint approach can help create flexible and customer-responsive companies; unions, far from holding back innovation, can provide a powerful impetus to the creation of greater trust and commitment, thereby improving productivity and overall business performance |
"Partnership at work: a survey ", IRS Employment Review 645, December 1997 |
Survey of employee relations practices in 50 named organisations |
Unionised organisations thought partnership was very or quite successful; non-union companies less enthusiastic |
The partnership company: benchmarks for the future, David Guest and Riccardo Peccei, IPA |
Survey of more than 80 of the UK's leading employers drawn from IPA members and supporters |
Over 65% of organisations reported better productivity; better quality of goods and services; and improved ability to retain customers. Over half said partnership had produced better product and service innovation; sales growth; greater sales volume; higher profit margins; and better overall profitability |
"The nature and impact of employee 'voice' in the European car components industry", Mari Sako, Human Resource Management Journal, vol 8 (2), 1998 |
Whether employee voice has business benefits - based on results of International Motor Vehicle Program plant survey of 221 plants across Europe |
Results provide evidence in favour of IPA view - that business performance can best be achieved when employees can influence both day-to-day operational activities and wider business policy issues |
Partnership at work, John Knell, Employment Relations Research series 7, DTI |
Study of 15 union and non-union partnerships in the UK |
Partnership helps companies achieve enhanced competitive performance; companies report lower levels of employee turnover and absence - retention often above the industry norm |
Nonetheless, partnership proponents would claim that such agreements provide a better way of managing, and resolving, potential conflicts and are therefore a big improvement on the previous adversarial model of industrial relations. This point is emphasised by TUC general secretary John Monks, who explained: "Real partnership depends on a clear understanding that the interests of workers and employers sometimes diverge. But the purpose of partnership is to manage these differences better."7 In addition, there is a long list of workplace issues, including employee development, health and safety, equal opportunities and the organisation of work, on which employers and workers, as well as third parties such as trade unions, have common interests.
DEFINING PARTNERSHIP
There is no clear definition of partnership at work, just a range of "best" people management practices that should be included and a set of principles that should, where possible, be adhered too. Mick Marchington, a leading HR academic, points out that the lack of a partnership definition risks the possibility of it being seen as a "catch-all term for employee involvement or 'best practice' HRM".8 He has suggested that partnership can be viewed at three levels:
1. A set of operational practices and processes, including: direct communication, such as team briefing; upward problem-solving through employee attitude surveys, for example; financial participation, such as profit sharing; and representative participation via works councils or joint consultative committees, for instance.
2. A set of values and behaviours which the whole workforce hold and display, and which determine their attitudes to other stakeholders. This could include management acceptance that staff have a legitimate right to influence some business decisions, while employee representatives accept the need for flexibility and a specific level of performance. Underpinning the system is a commitment to mutual trust and openness.
3. A set of "complementary HRM features", including single status, harmonised terms and conditions of employment, and a commitment to employment security and employee development.
The IPA says that trust, legitimacy and commitment to business success form partnership's key underlying principles.9 In its 1992 report Towards industrial partnership, which laid the foundations for the current debate about partnership in the UK, the association identified the following points as being the key features of partnership at work:
The six partnership principles outlined by the TUC in its Partners for progress: new unionism in the workplace document are similar in places to those endorsed by the IPA, though there is a greater emphasis on quality of working life issues, such as providing employees with an "interesting and fulfilling job".11 The TUC's six-point description of what partnership should entail is as follows:
Further insight into the meaning of partnership comes from David Guest and Riccardo Peccei, who conducted an IPA-sponsored study of partnership in 1997.12 They identified four general principles and eight groups of practices - essentially a mix of worker participation and HRM - as being common to partnership organisations. The four principles, and the various work issues common to each one, were:
- Employees should share in the financial success of the company
- Employees should be given a chance to enhance their employability
- All employees should have an attractive future with the organisation
- There should be fair and equitable treatment of all employees
- Employees should be kept informed about all business matters
- Feedback should be sought from all employees
- Employees, individually or in teams, should have control over their own work
- The skills and competencies of all employees should be systematically developed
- There should be no hard and fast job demarcations
- Employees' right to collective representation should be formally recognised
- Organisations should provide long-term security for all employees
- All employees should have the same conditions and benefits
- Employees should be as flexible as required
- Employees should be committed to the organisation's business goals
- Employees should have a responsibility to actively seek out and suggest improvements to working arrangements and the quality of work
The eight core practices of partnership in practice were:
As a result of the absence of a comprehensive definition of what partnership is, it can mean different things to different people. This explains why unionised and non-union workplaces can both claim to operate partnership. A 1997 IRS survey defined partnership as simply: "The organisation involves employees in the drawing up and execution of company policies, but retains the right to manage."13 The survey's findings showed that nine unionised and three non-union organisations always adhered to this description of partnership in their approach to employee relations.
Several practical definitions, including what partnership actually means to some of those organisations that are pursuing it, can be found in figure 2.3 .
Figure 2.3: What partnership at work means to those involved
"A joint commitment to the success of the enterprise, to building trust and mutual recognition of the legitimate role of employer and employee representatives."
IPA, Towards industrial partnership: a new approach to relationships at work (1993)
"It means a problem-solving rather than a confrontational relationship. It is not going to work if you use it to try and cover up for poor management or to try and con the unions or staff."
Jill Cutts, CSL director of personnel, The new partnership at CSL , IRS Employment Review 693, December 1999
"A commitment from the union to a joint problem-solving approach in terms of the requirements of both the business and its employees."
Sue Dye, PCS negotiations officer, The new partnership at CSL , IRS Employment Review 693, December 1999
"It's about a commitment to the joint resolution of problems which means some rather innovative solutions are required. Both sides must re-examine the way that they have done things in the past. It also means having a longer-term pro-active agenda, to which all sides are committed, rather than responding to events in an ad hoc way as they arise."
Heather Wakefield, Unison deputy head of local government, The new partnership at CSL , IRS Employment Review 693, December 1999
"A partnership approach is one that puts centre stage the concerns of both employers and employees so that representatives of each can work on both agendas. It involves both sides acknowledging the other's role and legitimacy and seeking new ways to resolve differences."
John Monks, TUC general secretary, Partners for progress: next steps for the new unionism
"Partnership means that unions work with employers in building the business, in particular developing a committed, skilled and loyal workforce who know that their own prospects are inextricably linked to the performance of the company."
GMB, Working together, winning together - the GMB and employers: partnerships for success
"To promote a positive employment environment, based on openness, trust and confidence, whereby the major partners within the business will work together to deliver a competitive and successful business, balanced by maximum employment security."
BGT (the trading arm of Centrica), partnering agreement with GMB and Unison
"Partnership revolves around balance and trust. Differences of opinion are permitted but mutual respect has been stressed."
Barry Dowsett, Blue Circle Cement personnel manager, IPA case study 5
A SUM OF ITS PARTS
Perhaps the best way of understanding what partnership means is to examine the core principles and practices which are common to such arrangements and how they are linked (see figure 2.4 ). The different components also need to be placed in their business context - why are they important in today's business environment? Distinguishing the rationale for partnership gives an insight into why some practices are included in such arrangements while others are excluded or not afforded the same degree of importance.
Figure 2.4: Partnership - linking principles and practices

Company success
Most partnership agreements open with a joint commitment by the parties (management and employers) to further the success of the business in the interests of all stakeholders. For example, one of the four core beliefs of Blue Circle Cement's Way Ahead partnership deal, signed with three unions in 1997, contains the following:
"Business Purpose: To be a winner in the 1990s we must be a commercially aware European business providing growth, cash generation and shareholder satisfaction. Fundamental to achieving this will be full active participation by everyone."14
Drawing employees into an explicit commitment to the pursuit of business excellence is a recognition that staff are increasingly the prime source of competitive advantage. Most enterprises have improved quality immeasurably over the past two decades, and technological innovation can be quickly replicated by competitors. Employees' individual and cumulative knowledge, however, is unique and can provide a significant advantage as customer service becomes the single most important factor in determining corporate success and failure. Knowledge management - ensuring that all corporate knowledge, both tangible and intangible, is shared across the organisation - has attracted much attention recently and partnership can be a way of tapping the knowledge and skills employees possess but do not make use of in their day-to-day work activities.
Employee involvement is a key partnership practice, encouraging workers to be creative and to explore different ways of fulfilling their role with the ultimate aim of securing business success. Total quality management and continuous improvement systems - which spread from Japanese companies throughout much of UK industry in the early 1980s following the success of the former in taking market share from their western competitors - recognise the important role staff can play in driving forward business performance. Continuous improvement is based on the concept of incremental improvements following suggestions from employees (see Management Review 1). It involves everyone in the continuous search for product and process improvements, and in identifying solutions to problems. Continuous improvement forms a key element of the partnership model at BorgWarner's South Wales plant (see case study 1, Partnerships with trade unions), while the Blue Circle agreement has led to the creation of a 12-strong improvement team at the company's Northfleet cement works. The team's job is to go around the plant identifying and, with the help of five craftworkers, carrying out improvements.15
A commitment to corporate success on the part of employees not only manifests itself in greater involvement in problem-solving and improvement initiatives, but also in improved attendance and lower labour turnover. At BorgWarner employee turnover is less than 0.5%; employee attendance is 98% and accidents at the site have been reduced by 60%. Rhône-Poulenc's Staveley Chemicals plant also operates a partnership philosophy and in 1994 it reported that absenteeism, described as a key measure of workforce commitment, showed a downward trend.16 Guest and Peccei's study of partnership in practice also found that high rates of labour retention and low levels of absenteeism were positively linked to two specific partnership components: employee share ownership and a high degree of direct and representative participation in personal employment decisions.17 A US study also reported that joint union-management partnerships had led to a decline in absenteeism, labour turnover and grievances, as well as productivity gains, quality improvements, a reduction in cycle times and a better motivated and flexible workforce.18
Aside from shopfloor involvement in improvement activities, engaging a wider range of people, including trade union representatives, in an organisation's decision-making can provide alternative and more creative solutions than is the case if the process is left entirely to managers. Though partnership deals almost always retain the management's right to manage, allowing other parties an input into developing strategy and in solving problems can be beneficial. As one shop steward at the Welsh utility Hyder remarked:
"Partnership for us is being involved at the highest level in discussions about change and the way work is actually done. We are the experts on the ground and can help this business significantly."19
Partnership forums can be more productive than previous arrangements. The topics discussed in partnership forums are more likely to focus on business issues - though these are still mainly employment-related matters (see case studies in chapters three and four ) - and much less on time-consuming conflict resolution and grievance handling. Partnerships in which employees and their representatives are party to framing management decisions also provide a more stable environment for business operations. This can produce bottom-line benefits since problems are likely to be resolved through cooperation, and at an earlier stage than was previously the case.
Direct participation by staff and employee representatives in corporate affairs, other than those directly related to employment matters, rarely occurs in the UK, however. Guest and Peccei's study found that in very few cases do employee representatives participate to any great extent in what are deemed organisation-related issues (major capital investment; development of new products/services; changes in departmental organisation; and introduction of new technology). The authors concluded that: "The results reveal, as might be expected, that on balance the level of participation in and influence over employment issues is greater than over broader policy issues."
This is not always the case in the US where partnership has a longer history. One of the most celebrated examples of employer-employee jointism in the US is at General Motors' Tennessee subsidiary the Saturn Corporation.20 The organisational structure of Saturn consists of a number of committees, each of which includes worker or union representation. At the top, a "strategic advisory committee" engages in long-term business planning and includes the president of the United Auto Workers local (UAW, the local union branch). Two other examples from the US illustrate that employee representatives are commonly involved in strategic business planning. At Ford's Cleveland Engine Plant 2 the UAW is "embedded in the decision-making and management processes", while AT&T's planning councils involve unions in key business decisions.21
Some partnership organisations also provide a degree of employee financial participation. Share options and profit-related payments, for example, enable the fruits of corporate success to be enjoyed at all levels within the business. According to John Monks: "Financial participation schemes can play an important role in cementing a partnership agenda".22 John Lewis Partnership is well known for its yearly profit-based bonus, which between 1988 and 1998 averaged 15.5% of annual salary.23 At Tesco "employees are encouraged to become involved in the financial performance of the group through a variety of schemes, principally the Tesco employee profit-sharing scheme, the savings-related share option scheme and the profit-related pay scheme."24
Financial participation is believed to bolster employee commitment to corporate success. Poole and Jenkins suggest that because financial participation increases the employee's stake in the company, it can generate a greater desire on the part of staff to "direct their individual and collective behaviour towards the corporate goal of increased profits rather than the traditional worker's goals of higher wages and improved conditions of work".25 Employee share ownership and profit sharing play a significant role in securing employee buy-in - commitment to, and support for, a common vision and objectives. Sharing the financial reward can also support the additional partnership aim of breaking down artificial workplace barriers such as status. It transforms the "us and them" concept into one in which "us" is now the organisation (or "we) and "them" is the competition.
(Financial participation was the theme of Management Review 11, and included a summary of the potential business benefits from such arrangements.)
Employment security
Of course the trade-off for employees and trade unions in agreeing support for measures aimed at securing corporate success is a degree of employment security. Several partnership agreements make an explicit connection between employment security and business prosperity. For example, Hyder's 1998 Working together partnership deal states the following:
"Business requirements - the ability of the company to support the employment and pay security provisions of the Working together agreement depends on the financial success of the group. This in turn depends on a range of issues where continued support of everyone is essential."26
Similarly, the opening paragraph of the partnership agreement at Rhône-Poulenc's Staveley Chemicals plant emphasises the point that maximising company profitability provides the "best opportunity for security of employment for the long term".27
John Knell's research for the DTI, which examined partnership in a mix of 15 union and non-union enterprises, reported that "organisations placed considerable stress on the importance of employment security guarantees in developing the trust and mutuality foundations of an evolving partnership approach."28 The IPA also stresses that employment guarantees are essential if "business is to develop the flexible and motivated workforce needed to achieve world-class standards of output and quality".29
In the US, the big three automobile companies (Chrysler, Ford and General Motors) operate employment security features as part of joint employer-union collaborations. General Motors' employment security package establishes "secured employment levels" (SELs) for skilled and non-skilled staff at each bargaining unit. Employees with at least 12 months' seniority are guaranteed continued employment if the lay-off would result in the SEL falling below the required number.30
The reference in partnership deals is nearly always to employment, rather than job, security. This reflects the demise of the so-called jobs-for-life culture and its replacement by the concept of employability - which rests on employee development (see Unisys case study, Partnerships with trade unions , where employee learning is central to partnership). The term employability describes a situation in which employers encourage staff, and provide them with the necessary support and resources, to enhance their employment opportunities by developing a broad range of skills. The Co-operative Bank's partnership deal with Unifi stresses the "inevitability that job roles will change over time".31 It promises that the bank will provide "support, training and development … to assist staff in fulfilling new and challenging job roles". ScottishPower's Generation Wholesale Division, which first signed a partnership with its unions in 1995, also distinguishes between a job-for-life and employment security, while highlighting the importance of developing skills and competencies:
"The achievement of the highest level of employment security is a major priority and key objective of the division and all partners to this agreement. Staff who feel that they have a high level of employment security will respond positively to change. In recognising that, in today's world, there can be no such thing as a 'job-for-life' and that there is, therefore a difference between 'job security' and 'employment security', the division shall take all reasonable steps to maximise the employability of staff."32
One important benefit to organisations offering employment security, rather than job security, is that it instils in staff an acceptance of change as being a fact of business life.
Typically, partnership also includes a commitment by the company, other than in exceptional circumstances, to voluntary redundancy if job losses are necessary. Under the heading "employment security", Blue Circle says that it is "committed to 'right-size' its operations through voluntary means".33 Rover's New Deal, which at the time was heralded as ground-breaking employee relations agreement when it was first agreed in 1992, contained a commitment on employee security pledging that "employees who want to work for Rover will be able to stay with Rover".34 The commitment was to no compulsory redundancies. The flip-side was that employees had to accept that their current jobs might disappear. Rob Ball, a general manager at Rover, explained the company's position:
"The fact that someone is an accounts clerk today does not mean they will be an accounts clerk for the rest of their career. Technology changes, processes change, productivity improves. And there will be a time when we don't need accounts clerks. Our commitment is that if someone is prepared to reskill and be flexible, we will find them another job within the organisation. And they won't lose out in terms of salary and terms and conditions."35
However, changing business conditions can frustrate the best intentions. Hyder, whose 1998 partnership deal states that "a no-redundancy policy applies to permanent members of staff", announced in 1999 the loss of 1,000 jobs following a pricing review by the water and energy regulators, which would hit profits by up to £70 million.36 The job losses were condemned by the unions, and Unison threatened to end the partnership if Hyder staff were made compulsorily redundant. In the event, Hyder reported in January 2000 that three quarters of the target number had volunteered for redundancy.37
Partnership proponents would argue that job losses, whose announcement in the past may have been met with calls for industrial action, are better managed where such agreements exist. For example, Unifi, the finance union, responding to Barclays decision to axe one in 10 of its workforce (6,000 staff), reported that it had been in talks over the job losses with the bank for four months. The outcome, according to the union's deputy general secretary Iain MacLean, was that the procedures agreed for handling the cuts could become "a model for the industry as a whole".38 An example of how job loss at Barclays will be better managed as a result of partnership and how it differs from the old approach comes from Barclaycard. Jim Lowe, assistant secretary at Bifu (Unifi's forerunner), explained the situation:
"Take the Barclaycard jobs - in the old days, the union would simply have been told the jobs were going. But now we have been able to work out ways of retraining people and moving them elsewhere. There were no compulsory redundancies."39
Rhône-Poulenc Staveley Chemicals also shows that partnerships can survive significant job loss and provide the basis for agreeing how best to cut jobs. It was reported that commitment to employment security at the plant had been "tested quite severely" in the five years to 1994, with employment levels falling from more than 500 to less than 350 during the period. Where compulsory redundancies were required, the deal stipulates that individual performance will be the deciding factor in identifying staff.40
Typically, organisations expect a commitment from the workforce to functional flexibility - the ability of individual employees to perform a range of tasks so they can move between jobs - in exchange for an employment security guarantee. Unifi's partnership deal at Barclays illustrates how employment security and staff flexibility are connected:
"Joint commitment to job security for Barclays staff: The bank and the unions agree that the most effective way of providing Barclays' staff with job security and the business with flexibility is through multiskilling, investment in training for skills, qualifications and employability and by limiting the use of redundancy to a measure of last resort."41
Functional flexibility and teamworking tend to go hand in hand. At BorgWarner, for example, teams take responsibility for improving a defined part of the manufacturing process and operators have developed both vertical and horizontal flexibility, assuming responsibility for tasks such as their own minor maintenance, operation of fork lift trucks and carrying out inspections (see case study 1, Partnerships with trade unions).
Aside from functional flexibility, which has become a common feature in UK workplaces and has largely eliminated previous job demarcations, employers are increasingly pursuing temporal flexibility - that is variable working hours to ensure a better fit between output and input. For example, NatWest, which has taken its first steps towards developing partnership, has implemented an annualised hours system to accommodate peaks and troughs in customer demand.42 Hyder's first partnership agreement - signed in 1990 - also introduced the company's own version of annualised hours, titled "Planned Working Time", as well as measures to secure greater flexibility between work groups.43
Mutual trust
Adversarial industrial relations were devoid of trust. Its "us and them" terminology typified this lack of confidence in the other party and the absence of a positive working relationship. The lack of trust would lead to staff not believing what managers told them and looking for hidden messages in management communications. One of the main aims of partnership agreements therefore is to develop greater trust between employers and employees. One of the three key objectives of the partnership deal at Legal & General is:
"To work together in a spirit of mutual confidence, partnership and cooperation, both formally and informally."44
Similarly, at Littlewoods the partnership deal is characterised by "open, mature and high quality relationships built on mutual respect and trust" (see case study 2, Partnerships with trade unions).
Trust depends greatly on the level of openness between the parties. Hence information sharing is a key feature of developing confidence. Communication figures highly in many partnership deals. At Legal & General, the company recognised that "to manage change and go forward we needed to improve communication with staff and get to understand the rationale for change".45 It realised that more emphasis should be placed on informing and consulting staff, strengthening the processes of internal communications and providing more openness about business strategy.
Sharing business information, some of which is commercially sensitive and most of which has previously been for managers' eyes only, indicates a high degree of trust. Mostly, information is given to employee representatives in confidence, so the right to data is accompanied by a responsibility not to divulge the contents. Greater information sharing is a recognition that better informed staff are in a better position to make decisions - an important consideration as responsibility and accountability shifts to lower levels in organisations. A culture of information sharing and openness also encourages employees to share the knowledge they hold.
The underlying psychological contract - the unwritten expectations that exist between employers and employees - in an organisation where mutual trust is evident is that we take care of each other: the organisation responds to the individual needs of the workforce, who, in turn, give the best of their ability. Employment security and employee development are crucial to mutual trust. An IPD study, The new employment relationship, found that job losses have a "marked and adverse impact on staff attitudes". The survey showed that in companies with a history of redundancy there were low levels of trust which produced a visible reduction in employee commitment.46
High trust is a key feature of HRM (see figure 2.5 ). Trust takes a long time to establish, especially in an environment where deep mistrust was previously the norm. John Haslam, BorgWarner's human resources manager, acknowledges that "it took many months to build up the necessary trust to make it [partnership] work". Keith Scourfield, the AEEU's convenor at BorgWarner, explains why trust takes such a long time to develop where previously there had been mistrust: "The union had a lack of respect for management and there was a very strong 'them and us' attitude among employees. Initially there was a very negative response to management's proposals to introduce partnership. We decided that we would judge them by their actions to make sure that this was not just another company ploy." (See case study 1, Partnerships with trade unions.)
Figure 2.5: Key characteristics - industrial relations versus HRM
Dimension |
Industrial Relations |
HRM |
Psychological contact |
Compliance |
Commitment |
Behaviour referent |
Norms; custom and practice |
Values; mission |
Employee relations |
Low trust; pluralist; collective |
High trust; unitarist; individual |
Organisation and design |
Formal roles; hierarchy; division of labour; managerial controls |
Flexible roles; flat structure; teamwork; autonomy; self-control |
Source: "Human resource management, trade unions and industrial relations", David Guest, in Human Resource Management, John Storey (ed), Routledge (1995), p112
And while trust takes time to develop it can be destroyed by a simple perceived act of betrayal, or by the failure of one party to fulfil its promises. At Hyder, for example, partnership was initially threatened by the failure of some managers to adopt the right approach:
"In the early days, there were still examples of managers acting autocratically. This provoked a response from local trade union representatives that the fine words of senior managers were one thing, whereas in the real world managers were still acting as they always did. To a degree this was true, but time has led to the promotion of managers with an appropriate style, and the frequency of disputes/incidents has dropped dramatically."47
As a result, partnership organisations should tread warily even if deteriorating business conditions dictate job losses, for example. Compulsory redundancies which fly in the face of employment security agreements can seriously jeopardise the future success of partnership by destroying hard-won trust. Yet where genuine partnership exists alongside high-trust relationships there is every likelihood that problems can be overcome.
Involving employees and their representatives in solving problems and in planning strategy can be a huge step towards developing greater trust. This is illustrated by a 1992 Employment Department study, which reported that where efforts were made to involve staff there was improved employee trust of management.48 Later research supports this finding. It found that "when employee representatives were actively involved in establishing the terms of reference and in implementing the agreed programme of change … trust levels increased by the greatest amount."49
At a lower level, granting employees greater autonomy, either individually or to teams, can also promote trust (so long as the blame culture has been eradicated). Under such circumstances staff have day-to-day responsibility for managing themselves and their work, and for identifying process improvements. The emergence of the "lean organisation" - a business with fewer levels of management and a highly flexible workforce - has necessitated a switch to self-management, and a cultural shift away from traditional command and control in the workplace.
Legitimate role
Legitimacy, in terms of partnership, means that all the parties have the right to perform an agreed role. Generally, it includes the management's right to manage and employees' right to representation. In reality this means that management can take whatever action is necessary in the interests of the business, while staff have their interests represented. At Elementis Chromium - which first started to use the term partnership to describe its employee relations in 1995 - one of the key elements and objectives of its Partnership Charter is:
"Mutual respect: The relationship between the company and its employees will be based on mutual respect of the other's needs and legitimate interests within the employment relationship."50
Putting a structure in place that affords each party a legitimate role is one of the key learning points from partnership at the Royal Mail in London:
"Each side must recognise and respect the roles and the rights of the other and remove any suggestion that they are seeking to undermine the other's position."51
Legitimacy affords rights and responsibilities. Employees and their representatives have a responsibility to ensure that cooperative agreements are adhered too and to seek solutions to problems rather than to place obstacles in the way. Managers have a responsibility to be open and honest with employees, to share information, and to relinquish some of their previous powers.
In a unionised workplace, legitimacy relates to the role of the trade union: its rights and obligations under the terms of the agreement. This is highlighted by Rhône-Poulenc. The Staveley Employment and Prosperity Plan (SEPP), which was first agreed in 1988, involves three partners: site management, employees and trade unions. The agreement "put machinery in place which defined clear roles for the trade unions within the negotiating machinery and for employees to participate directly through elected consultative machinery."52 In a non-union organisation, legitimacy concerns the role played by individual employees and any collective consultation structures, such as a company council. At the John Lewis Partnership (JLP), a central council of around 130 members, at least 80% of whom are elected by the workforce and which sits six times a year, can discuss any subject and make recommendations to the company's management.53 It has been involved in advising and deciding on shop closing hours, holiday entitlement and changes to the pension scheme, among others. The aim is to "secure for the joint owners [the partners] of the business the degree of democratic influence that is compatible with perceptive and successful management" (see figure 4.1, Partnership in a non-union environment for more information about JLP's council structure).
Giving staff representatives a legitimate role in the business structure clarifies, if there are boundaries, what areas they can influence and become involved in. At Littlewoods, for example, the aim of the partnership board is to "influence the development of strategic business thinking and engage in consultation on matters of company-wide significance". The board's terms of reference stipulate the issues it will be involved in, including: to review, on an ongoing basis, the performance of business and potential implications for employees; and consult over all aspects of the company's business plans and, in particular, those matters which have direct implications for employees (see case study 2, Partnerships with trade unions).
Staff involvement in the business decision-making process tends to give the outcomes legitimacy - an important consideration especially if the conclusions contain unpalatable consequences. Employees are more likely to respond positively to initiatives they, or their representatives, have had a hand in formulating than to policies imposed unilaterally by management. Of course whatever mechanisms are put in place to gather staff input they should ensure that decisions are achieved speedily and that the focus of attention on business objectives is maintained throughout. Nonetheless, staff approval of a proposal will, in the long term, generate greater commitment.
Legitimacy also involves the question of employee representation. Employee voice - that is the mechanism through which staff views and concerns are aired - can be expressed individually or collectively, through independent representation or through a consultative body such as the JLP central council. Guest and Peccei found that "good employee consultation practices are more likely to be found where there is a commitment to the principle of representation".54 Whether the presence of independent representation is necessary for true partnership is a controversial point as chapter one outlined. Nonetheless, Tesco believes that staff representation - and hence employee voice - is best provided by a trade union. One of the partnership beliefs it signed up to was:
"Usdaw recruitment and organisation of all Tesco retail employees up to and including section managers is the single most important means of representing employees' interests effectively."55
SPREAD OF PARTNERSHIP?
ACAS, the conciliation and arbitration service, reported in its 1996 annual report that: "The old adversarial style of industrial relations was increasingly being questioned, and people were asking whether some form of partnership between management and employee representatives might not be a better and more productive way of handling issues."56 The TUC interpreted the low level of strikes in 1998 as an indication that a "partnership mood" had taken hold of UK workplaces. Commenting on the figures - the lowest calendar year total for strikes since records began in 1891 - Monks argued that partnership was now the "dominant mode" in UK industrial relations.57 And a 1997 survey of 170 organisations reported that a quarter of unionised employers had adopted a "partnership approach" to employee relations and almost three-quarters responded positively to the idea.58
However, there is little evidence that partnership is widespread in the UK, though there are indications that it is on the increase. David Guest estimates that there are only around 30 true partnership deals in the UK.59 The TUC believed in May 1999 that 50 partnership deals were in place.60 This figure is supported by the IPA.61 If partnership is viewed simply as employee involvement or as "best practice" HRM, then many enterprises could be labelled partnership organisations. Moreover, some new union recognition deals are lumped into the partnership category, though it is not clear whether every agreement adheres to the six partnership principles outlined by the TUC. Indeed, AEEU general secretary Ken Jackson has called for the establishment of an independent mark of approval for partnership agreements, which would expose deals that are "basic recognition agreements when you scratch the surface".62
Research by IRS in 1997 reported that only 12 (24%) surveyed organisations always adopted a partnership approach to industrial relations.63 Of these, three-quarters were unionised. In addition to Blue Circle Cement, Legal & General and Littlewoods, the list of unionised enterprises consisted of: Bradford Hospital NHS Trust, Central Middlesex NHS Trust, North Yorkshire Ambulance Service NHS Trust, SmithKline Beecham (Worthing plant), Suffolk County Council and Westcountry Ambulance Services NHS Trust. Non-union companies professing to always take a partnership approach to employee relations were Beneficial Bank, Nissan Yamoto Engineering and Pitney Bowes. The survey also reported that a further 32 organisations said they sometimes took a partnership approach to employee relations. This grouping consisted of 25 unionised organisations and seven non-union workplaces. Several respondents said their organisations were either moving towards partnership or examining whether to make such a shift. For example, BOC Gases, Europe, said: "We have sought in the last three years to introduce a partnership approach with our employees and unions, moving from a more 'traditional' position." And Continental Tyres' Newbridge site was reported to have been investigating installing partnership mechanisms at the time of the survey.
GOOD FOR BUSINESS?
Several studies have indicated that establishing a partnership with employees can make good business sense. The IPA-sponsored study by Guest and Peccei, for example, found that over 65% of surveyed organisations believed that partnership had produced:
Moreover, more than 50% of respondents reported that partnership had enabled better product and service innovation, sales growth, increased sales volumes, and higher profit margins and overall profitability. Significantly, Guest and Peccei also found that those organisations that had progressed furthest towards partnership reported the more positive outcomes.
John Knell's research into 15 partnership organisations reported that taking such an approach to employee relations produced positive business benefits.65 Specifically, it found:
Knell also gives some concrete examples from his research to illustrate the improvements generated by partnership:
The 1997 IRS survey provides further evidence of the positive
impact of partnerships on organisations. All the surveyed unionised enterprises
that answered the question thought that their partnership mechanisms were very
or quite successful; non-union organisations were slightly less enthusiastic.66
A study of European car components suppliers also produced clear support for
partnership. It indicated that plants using a partnership-style approach to
employee relations - such as direct employee participation through quality
circles and problem-solving forums, and representative participation via joint
consultation committees - had been more successful in reducing costs and
improving quality. The study's author, Mari Sako, concluded that the survey
"provides evidence in favour of the IPA view": that "good business performance
can be achieved by giving employees influence both at the day-to-day
operational level and at the policy level".67
1 "HRM: still marching on, or marching out?", in John Storey (ed), Human resource management: a critical text (Routledge, 1995), p.8.
2 Ian McCartney, quoted in Tesco/Usdaw news release, 13 March 1998.
3 Working together, winning together: the GMB and employers - partnerships for success, GMB.
4 Partnership at work, John Knell, Employment Relations Research Series 7, DTI (1999), p.7.
5 "Partnership in practice at Legal & General", IRS Employment Review 650, February 1998, pp.12-16.
6 John Kelly, "Who wins, who loses, in partnership deals?", IPA magazine, November 1999, pp.12-13.
7 John Monks, "Partnership needs unions … ", IPA magazine, April 1998, p.8.
8 "Partnership in context: towards a European model?", Mick Marchington, in Paul Sparrow and Mick Marchington (eds), Human resource management: the new agenda, Financial Times/Pitman Publishing (1998), pp.208-225.
9 Willy Coupar and Bryan Stevens, "Toward a new model of industrial partnership: beyond the 'HRM versus industrial relations' argument", in Sparrow and Marchington, see note 8, above, pp.145-159.
10 Towards industrial partnership: a new approach to relationships at work, IPA (1992).
11 Partners for progress: new unionism in the workplace, TUC (1999).
12 The partnership company: benchmarks for the future, David Guest and Riccardo Peccei, IPA (1997).
13 "Partnership at work: a survey", IRS Employment Review 645, December 1997, pp.3-24.
14 Blue Circle Cement, IPA case study 5.
15 "Cementing a new partnership at Blue Circle", IRS Employment Review 638, August 1997, pp.11-16.
16 Rhône-Poulenc, Staveley Chemicals, IPA case study 2.
17 See note 12, above, p.39.
18 People, partnership and profits: the new labour-management agenda, Jerome Rosow and Jill Casner-Lotto, Work in America Institute, Scarsdale, New York (1994).
19 "Hyder maintains long-term partnership", IRS Employment Review 662, August 1998, pp.12-16.
20 "Collective bargaining in the US auto assembly sector", H Katz and J MacDuffie, in P Voos (ed), Contemporary bargaining: in the private sector, Industrial Relations Research Association (1994).
21 "Building cooperation at Ford Cleveland Engine Plant 2", IRS Employment Review 656, May, p7-12; "Employee relations in America", IRS Employment Review 627, March 1997, pp.7-12.
22 "Trade unions, enterprise and the future", John Monks, in Marchington and Sparrow, see note 8, above, pp.171-179.
23 Pay & Benefits Bulletin.
24 Tesco plc annual report 1999.
25 The impact of economic democracy: profit-sharing and employee-shareholding schemes, Poole M and Jenkins G, Routledge (1990).
26 See note 19, above.
27 See note 16, above.
28 See note 4, above, p.21.
29 See note 9, above, p.149.
30 "Job security and jointism in the 'big three' US auto companies", IRS Employment Review 604, March 1996.
31 "Co-operative Bank and Bifu launch partnership projects", IRS Employment Review 649, February 1998, p.2.
32 "From here to security", IRS Employment Review 631, May 1997, 6-12.
33 See note 15, above.
34 Rover tomorrow - the New Deal (1992).
35 Quoted in, see note 32, above, p.12.
36 Reported in The Guardian, 10 December 1999.
37 Personnel Today, 11 January 2000.
38 "United we stand", IRS Employment Review 682, June 1999, pp.6-11.
39 People Management, 25 February 1999.
40 See note 16, above.
41 See note 38, above.
42 See note 4, above.
43 See note 19, above.
44 See note 5, above.
45 Ibid.
46 The new employment relationship: examining the psychological contract, Ian Kessler and Roger Undy, IPD (1996).
47 "Dwr Cymru/Welsh Water: a case study in partnership", Colin Thomas and Brian Wallis, in Sparrow and Marchington, see note 8, above, pp.160-170.
48 New developments in employee involvement, Marchington M, Godman J, Wilkinson A and Ackers P, Employment Department Research Series (1992).
49 "The value of joint working parties", Ian Kessler and John Purcell, Work, Employment & Society, vol 10 (4), pp.663-682.
50 See note 4, above, pp.48-54.
51 Royal Mail in London: a case study of employee involvement in the reorganisation of the main letter offices, IPA, case study 1, p.30.
52 See note 16, above, p.24.
53 The John Lewis Partnership, John Lewis plc (1994).
54 See note 12, above.
55 "Partnership delivers the goods at Tesco", IRS Employment Review 686, August, pp.4-9.
56 ACAS annual report 1996.
57 Focus on balloting and industrial action, TUC (1999).
58 Industrial relations survey 1997, Dibb Lupton Alsop.
59 David Guest speaking to Sussex branch of the IPD, December 1999.
60 John Monks, 24 May 1999.
61 Conversation with Graham Dietz of the IPA, January 2000.
62 Quoted in People Management, 20 January 2000, p.14.
63 See note 13, above.
64 See note 12, above.
65 See note 4, above.
66 See note 13, above.
67 "The nature and impact of employee 'voice' in the European car components industry", Mari Sako, Human Resource Management Journal, vol 8 (2), 1998, pp.5-13.