Labour and Management on Trial Together
March 1, 1992 -
Change, change, everywhere! Canada's traditional reliance on resources no longer works. Rapid technological innovations are making it hard to stay ahead; severe competition and economic stagnation have closed numerous businesses and eliminated many jobs.
What should be done? How can companies survive? Such unsettling questions are now preying on the minds of employees and employers alike. One positive result of the economic hard times is that in some quarters the traditional, adversarial style of collective bargaining is being seriously reexamined. Business leaders are forced to conclude that the prosperity, if not the survival, of their companies requires the best effort of their workers. They're beginning to realize that the old-fashioned, top-down way of managing leaves a great deal of employee potential untapped, and that tapping this unused potential is the key to successful management.
At the same time, the worrisome state of the economy and the precarious condition of many businesses, makes employees fear for their jobs. Some of them are becoming aware of the vital link between a healthy business and employment security. They are no longer swallowing the old us-versus-them line that profit is management's concern and squeezing out the highest wage is the union's job.
There is nothing cheerful about the recession and rising unemployment, but the fact that labour and management are forced to work together is good news. We may question motives, but no one can deny that cooperation and building trust in the workplace is better than continuing a destructive power struggle in which both sides ultimately lose.
No Profits, No Jobs
Local 1005 of the United Steel Workers of America (representing some 6,400 employees of Stelco in Hamilton, Ontario) is known for being a tough negotiator. As recently as 1990, this union conducted a destructive 95-day strike against Stelco. Stelco has suffered staggering losses: $360 million in the last two years. The 1990 strike and the severe losses incurred during the last two years have startled both sides into rethinking their positions.
John Martin, president of Local 1005, was worried that continued fighting would destroy the businessand the jobs of union members. This concern led Local 1005 to call a historic referendum at the end of March. Union members were asked whether they wanted, according to the Hamilton Spectator, "a kinder, gentler relationship with their employer." The Local 1005 president explained that a sluggish global economy and an increasingly competitive steel market would require greater cooperation to make sure that Stelco remains a viable business. "It's clear to me that the union, from my level down, has to be more flexible and responsible to the marketplace. That doesn't mean we're not going to have our labor relations problems and bargain hard. It's not Utopia; it's just that we have to understand that if this plant doesn't make any money, we don't have a job."
Sandy Adam, vice-president of Stelco's Hilton Works, agrees with Martin. "I think there is a general recognition by anyone who cares about Hilton Works that things have to change." Fighting "isn't a way to the future," he said.
The referendum conducted among the members resulted in an 80 per cent vote in favour of burying the hatchet and looking for ways to cooperate with management. According to one Local 1005 spokesman, cooperation means that the union and the employees will take part in decision-making, dealing with such issues as productivity, skills training, and health and safety matters. For example, Eric Butt, Local 1005 vice-president, is looking forward to having workers speak directly to the customers. Mr. Adam said he would welcome such involvement by the workers. He was pleased about the decisive vote in favour of "a kinder, gentler relationship" with Stelco. "It's a very good response....Right down to the shop-floor level, there is a recognition of the need to change...that is, if this place is to be a viable, economic identity."
Lakehead Breaks New Ground
While layoffs have been plentiful in strapped public service institutions, the employees of Lakehead University in Thunder Bay, Ontario, have taken a different tack. Responding positively to Premier Bob Rae's appeal that public service employees use restraint and develop a sense of partnership, the Lakehead employees found ways to cut costs and save jobs.
The university management created a taskforce, comprised of representatives from every segment of the unionized and nonunionized staff, to help save costs and prepare the budget for the coming year. Every employee was asked for suggestions, and many came forward. During these discussions, a seven-part declaration of intention was signed in which the university committed itself to a policy of no layoffs in exchange for voluntary contributions by the employees of one week's unpaid leave or a donation of the equivalent of one week's pay. The combination of these measures amounted to a saving of one million dollars. There was excellent participation in the cost-saving scheme by the faculty association members and members of other staff associations and unions at the campus.
Robert Roseart, President of Lakehead reported: "Working together, we have met the Premier's challenge. We have maintained all jobs on campus. We have lifted our hiring freeze. All programs and services offered to northwestern Ontario by Lakehead University will be maintained at current levels." He challenged other publicly financed institutions to follow the example set at Lakehead. He admitted that it is not an easy solution and stressed that it takes a willingness on everyone's part to be open and honest. "But we have laid a foundation for future challenges to be worked out through dialogue and partnerships." (Robert Roseart, "Getting Together to Save Money and Jobs," The Globe and Mail, April 23, 1992.)
"Breakthrough Management" at Campbell's
Another example of changed labour-management relations is provided by the Canadian division of Campbell Soup Company Ltd. Faced with costs 25 to 40 per cent higher than their best counterparts in the United States, the Canadian management team went to work on a number of improvements. While their cost-cutting measures were largely successful, they were not enough to safeguard the independence of the Canadian operation.
In looking for additional areas of improvement, Dave Clark, who heads Campbell's operation in Canada, decided to change the way decisions were made by implementing what he called "breakthrough management." He realized that the company was not going to perform at its best unless all of the employees became part of a team effort. This led him to believe in the necessity of involving all employees in decision making.
"You don't have to coerce or manipulate people to get them involved," he explained. "In most cases, they've been waiting for years to be asked to make some input. It's absolutely criminal the way most businesses have asked their employees to park their brains at the door when they come to work." Clark is convinced that management for too long has had the attitude, "We have all the answers, we'll tell you what to do. Just go out and do it."
To put employee participation into practice, layers of management were eliminated. Managers no longer told employees in detail what to do. Employees on the shopfloor were encouraged to make decisions and to come up with solutions, even if they broke with traditional routine. The result of all these changes has been a remarkable improvement in the performance of the Canadian division of Campbell's. Admittedly, some plants were closed down and certain product lines were discontinued. Also, some managers found it too difficult to change their method. One 27-year manager told Clark that he was unable to adjust to no longer being able to give orders. He and others left the company. Yet, the overall effect of the changes on the employees has been a new sense of "belonging" and achievement.
Edson Packaging Machine Ltd. is a 62-employee company, in Hamilton, Ontario. Like most other companies, it faced a tough market as a result of the Free Trade Agreement and increased global competition. Trevar Gibson, the company president, was convinced that Edson faced a choice of either meeting the new challenge or simply going out of business. Influenced by Peter Block, author of The Empowered Manager, Gibson realized that the key to success lay in the motivation of all employees. "We felt our people could do a lot more than we were allowing them to do. We want to get their interest and responsibility level up so that the guy actually doing the work is the guy making the decisions."
The company began to train its entire staff in a new way of working, centred on the idea of employee empowerment. Gibson believed that the key to employee motivation was to give them authority and responsibility. To begin the training in empowerment, every employee was authorized to spend $200.00 on a job-related purchase. The experiment was successful. For the first time, workers had a sense of control and real involvement. Some purchased new tools. Others used the money to put a deposit on a new piece of machinery. The employees are now involved in some 100 projects as part of the company's strategic planning process, and more than 40 areas of possible training needs have been targeted.
Transferring authority from management to the workers involves uncertainty and unpredictability. It takes time to include everyone in decision making and to reach agreements. Nonetheless, Edson management believes that the new approach is working. As Gibson explains: "If your people become competitive and creative, they'll become world class. You can compete anywhere in the world with a workforce like that."
Eliminating Boundaries at G.E.
Dennis K. Williams, Chairman and Chief Executive Officer of General Electric Canada Inc., is a management innovator. In a speech presented at a Canadian Club luncheon in Toronto, he challenged business leaders to "be bold and transformational and invest for competitive advantage."
Williams began by describing the traditional ways of managing the various divisions of General Electric in Canada, which employs 10,000 people (G.E. worldwide employs 300,000 people). Those traditional ways turned out to be quite unsuitable for the 1980s. Predictions of market demands were unreliable; the time lag from planning, designing, production, and marketing were long; and production runs were too large and responded too slowly to changes in the market.
With the increased competition of the late 1980s and the pressures from the new Canada-U.S. Free Trade Agreement, the company was forced to change its ways. Williams described those changes as they were introduced in the G.E. appliance manufacturing division and the Bromont (Quebec) aircraft engine blade facility.
Procedures were simplified and thus speeded up, boundaries between departments were eliminated, responsibility was moved down to the work teams, and decision-making was shared. In addition, at the Bromont plant (which has become a well-known model of participatory management style) over 50 per cent of the employees are multi-skilled. This provides a great deal of flexibility and employee involvement which, in turn, has greatly increased the employees' interest and enthusiasm for their jobs.
G.E.'s vision for the 1990s is to be, as Williams described, a "boundaryless" company. By this he meant that the various internal departments of the company (engineering, production, marketing, sales, and finance) would no longer perform in rigidly separate compartments. Instead, they would form interacting teams. In this way available information and competence could be combined more effectively.
The "boundaryless" concept would also apply to customers and suppliers, who become trusted partners in a total business process, rather than outsiders. Furthermore, the company is convinced that for it to function well in a "boundaryless" setting, employees must be given a say in how things are to be done.
A few years ago the company started a discussion with employees about "the need to eliminate non-essential work, management practices, policies and procedures." The central objective of this "Work-Out!" strategy was to simplify procedures and develop self-confidence among all the employees. "Empowerment for employees has become one of the main cornerstones for the future success of our Company. Managers no longer control and meddle, they lead or coach. We are putting responsibility where it belongswith the people closest to the work."
According to Williams, the new "boundaryless" concept applied at G.E. helped remove debilitating barriers to productivity and innovation. The need is to serve customers while building a company where everyone feels the thrill of being involved in a successful enterprise. As Williams put it: "We want employees to go home wanting to talk about what they did that day, rather than trying to forget it."