Changes are Coming in Canada
October 1, 1985 -
Despite the adherence of many Canadian companies and unions to the adversary system in labour relations, a growing number of Canadian employers are trying to involve their employees more directly in the affairs of their companies.
One way to stimulate employee involvement is to give workers a financial stake in the enterprise through bonus, profit-sharlng, stock option or employee stock ownership plans. Until recently stock option plans were largely restricted to key management personnel.
Some companies combine profit sharing with employee stock ownership plans. For example, Rumble Equipment, a Toronto-based distributor of automated welders and other industrial equipment (1984 sales of $14 million) has been owned by its employees since 1962. The company distributes part of its pretax profits (20% this year) to all its employees, and beginning this year, one quarter of the profit payout will be in the form of stock. Rumble's president believes this compensation method builds the team spirit needed for the company's success. "Often we sell a product before we make it. To achieve that, everyonefrom the woman who answers the phone, to the people in the shop, who are on their best appearances when we show a customer through, to the president, who stickhandles the project to completioncontributes to success."
Last year Canadian Astronautics, an Ottawa-based aerospace firm, added to its cash bonus plan a stock purchase plan that's open to all employees of at least one year's standing. According to personnel director Brenda Wallace, who is among the 40% of Astronautics' 235 employees participating in the stock plan, "People are happy to have the opportunity to share in this company. There definitely is a positive effect. I'm showing confidence in the company I work for, and I have the chance to make money on it in the future."
Broad-based stock plans (as opposed to plans restricted to top management) are much less common in Canada than in the United States. Herbert Brown of the Profit Sharing Council of Canada estimates that no more than 1,000 Canadian firms, public and private, have broad-based employee stock plans. This compares to an estimated 75,000 such American firms. Americans enjoy more favourable tax legislation and ESOPsemployee stock ownership planswhich allow workers to borrow collectively from a bank in order to acquire shares in their company.
Many unions oppose profit sharing and stock ownership because they fear that these schemes will undermine their position. Basil Hargrove, administrative assistant to the Canadian UAW director, says that the union is in favour of such programs provided they come on top of wages and benefits. "But all the plans proposed to us have been instead of proper wages."
Employers who use profit-sharing and stock option plans to justify inferior wages (unless as a temporary emergency measure) will have tough sledding. However, when such plans are accompanied by improved communication and more flexible arrangements in the workplace, they provide a real alternative to the Us-versus-Them mentality permeating Canadian labour relations.
In his Globe and Mail column of October 7, 1985, Andrew Campbell describes how the Firestone plant in Hamilton, the McDonnell Douglas plant in Toronto and the Copper Cliff, Ont. division of Inco have tried a variety of management innovations with resounding success. He lists the following specifics:
All of these companies discovered that implementing new techniques in job design, training and asset management first of all required the development of a solid base of trust among management and employees, and thus an investment of time, money and perseverance. This investment has certainly paid handsome dividends, judging by the increased profitability and productivity of these companies. Campbell concludes: "Managers in these companies have realized that some of their productivity initiatives and innovations may result in a loss of certain types of jobs in the short run. However, it is also their belief that, in the long run, these actions will create jobs, secure the company's future and benefit the majority of the employees."