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Chapter

12

Participatory Processes

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

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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 bluecollar 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 nolayoff 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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12 -10

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 teams 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 dont 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 arms-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 multiemployer 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 its a better way to reach their
memberships 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 Companys


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
Chryslers 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 employeeowned 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 managements 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