UK: New model unions.

UK: New model unions. - No one wants a return to the bad old days of poor industrial relations - least of all the unions. They need to collaborate to survive.

by Alan Mitchell.
Last Updated: 31 Aug 2010

No one wants a return to the bad old days of poor industrial relations - least of all the unions. They need to collaborate to survive.

'Pay day for the unions,' screamed the Daily Mail. After months of acrimonious lobbying about the details of proposed union recognition provisions, the newspaper's view of the Government's Fairness at Work White Paper was grim. 'Britain could be plunged back into the dark days of industrial strife,' it warned. This was 'the biggest shift of power to the unions since the 1970s'.

At first sight, the Daily Mail has a point. In the public sector, industrial action by the RMT (Railway, Maritime and Transport) union on the London Underground suggests that militancy is rising; and for the first time ever, non-union companies may face union officials representing individuals in grievance or disciplinary procedures. 'We only have to win one case and it will have a rocket effect,' says Bill Connor, general secretary of USDAW, the shop workers' union. In addition, any employer considering following Rupert Murdoch's example with his newspaper group at Wapping and sacking a recalcitrant workforce will now have to think again. The White Paper's move to allow sacked strikers to sue for unfair dismissal and to lift the ceiling on compensation puts this strategy in a file marked 'crazy'.

The union recognition provisions are already having an effect, claims John Edmonds, general secretary of the GMB (formerly the General, Municipal, and Boilermakers) union, one of Britain's biggest general unions. 'Companies big and small are looking to make arrangements with us because they know things are changing,' he declares. 'Over the last six months we have had a lot of people signing (union) recognition agreements with us, who used to say that hell would freeze over before they did.' Throw in a whole new body of European legislation, which creates an obligation to consult over issues such as redundancy (and requires larger firms to set up works councils) and you can see why unions and employers alike sense that change is in the air.

But the least likely change is the one predicted by the Mail. The Government won't stand for it. Employers won't countenance it. The unions certainly don't want it. Combined with far-reaching changes both in management strategies and trade union thinking, the White Paper is propelling us all into new, unexplored territory, 'a brave new world of partnership'. Dismiss it as empty rhetoric if you will. But today's big-hitters are all talking about it. The whole idea of Fairness at Work is to 'promote a new culture of co-operation and partnership in the workplace,' says Margaret Beckett, president of the Board of Trade.

'There's increasing evidence that the morale, motivation, and the involvement of the workforce leads to productive advantage,' agrees John Cridland, director of human resources policy at the Confederation of British Industry (CBI). 'It is critical for businesses that they get their employee stakeholders involved, and where the union is on the same wavelength it can provide a super-conduit. Many, though not all, of the best examples of partnership include trade unions.'

'There is no future in "join the union to fight the boss",' chimes in TUC general secretary John Monks. 'Our period of adversarial scrapping didn't do us too much good. The partnership way is the modern way.' Bill Morris, general secretary of the TGWU (Transport and General Workers union) believes that 'partnership will increasingly focus in an international direction', mirroring the growth of global business.

But what is partnership, and how does it change the agenda for employers and unions? The core idea is as old as the hills. Adversarialism is a 'lose-lose' strategy. The harder unions and employers fight over whose share of the cake is bigger, the smaller the cake as a whole gets. What both sides need to do is work together to bake a bigger cake: what Cridland calls 'a competitiveness agenda', where the union 'adds value' to companies as well as members. What's different is that yesterday's wishful thinking is becoming today's big experiment.

Details of partnership agreements differ from company to company, but they all recast traditional industrial relations and play down - even sideline - the adversarial agenda of the annual wage round. Pay may be wrapped up by an employer commitment to give annual retail price index pay increases, plus an opportunity to share in the success of the business via profit-related pay or share options. Likewise, most partnership agreements guarantee some degree of job security (or no compulsory redundancies) in return for greater job and work flexibility. 'If you take the fear of redundancy away, the workforce will be relatively honest with you about how money and jobs can be better used,' comments Allan Black, a GMB national officer who helped negotiate such a deal at cement manufacturer Blue Circle.

Partnership agreements focus on the 'win-win' items, including training and development, devolution of responsibilities, schemes to make dull jobs more interesting, careers and promotion opportunities.

The trouble with old industrial relations system, remarks Cridland, is that 'all the unions were offering was agreements on pay and manning levels, which had very little to do with the actual running of the business'.

Meanwhile, he says, 'business was shutting them out from doing anything more useful'. Communication is another key ingredient. 'Constant, honest communication of business issues, both good and bad news, is key,' says Bruce Warman, personnel director at Vauxhall Motors, which recently negotiated a ground-breaking deal with the unions which related pay to the strength of sterling.

Partnership would be all hot air if it didn't chime with a sea-change in employers' thinking about industrial relations. In the post-war economy, managers sought optimal efficiency by treating workers as cogs, industrial or administrative machines, commoditising and standardising work instructions into interchangeable units of labour. But as global competition intensified, and the industrial age began to make way for an information age, routine work was either increasingly automated or relocated to cheap labour areas. This changed the management challenge which was now to unleash employees' creative potential, so that they could deal sensitively with customers, use their judgment to solve problems and create new products and services.

The new strategy, under the broad umbrella term, 'human resources management', focuses much more on the potential of individuals than on broadly interchangeable units of labour. And through initiatives such as profit-related incentive schemes, 'empowerment', self-directed teams, quality circles, cell manufacture, and multi-skilling, the strategy emphasises direct communication and involvement, not negotiation via a union intermediary. Managers realised, says Geoff Armstrong, director-general of the Institute of Personnel and Development, that the industrial relations system 'we constructed was 180 degrees in the wrong direction'.

The big unanswered question is whether unions have a role in this new environment. As defenders of old-style collective bargaining, the answer is clearly 'No'. But as partners in industry, the answer may be 'Yes' as partnership deals at companies such as Tesco, Blue Circle, Rover, Vauxhall, United Distillers, Scottish Power and Levi-Strauss suggest.

Other equally big and influential companies, such as Asda, Unipart and Marks & Spencer, do not agree. Thus, while Tesco embraces partnership with a union (see case study, p32), its rival, Asda, rejects it. 'You cannot let workplace representation get between management and the employees in terms of communication,' declares Asda's chairman, Archie Norman. 'Our starting point is that we care more about our colleagues than we care about our customers. We care about them and they care about us, and we trust them and they trust us.' Asda does recognise the GMB (though not for collective bargaining purposes) but, says Norman, 'I regard it as helpful to colleagues if they don't have to find the necessary £80-£90 a year to join a trade union, to protect themselves against what we might do'.

Likewise, across the fence from Rover, which is a long-standing exponent of union-involving partnership, there are companies such as Unipart. Chief executive John Neill has gone out of his way to build what he calls an 'inclusive' company built around the concept of 'a shared destiny relationship with its stakeholders'.

But Unipart is resolutely non-union.

Neither route, 'union or non-union', is easy. Human resources management is notoriously prone to empty rhetoric, and implementation involves far-reaching changes to management attitudes. It involves aligning corporate and individual staff members' personal objectives: maximising shareholder value may not be as inspiring for an hourly paid worker as it is for the chief executive. In addition, many empowerment programmes turn out to be counterproductive, says Chris Argyris, Harvard Business School organisational behaviour expert. They work in a top-down way, killing what they are trying to create. 'Managers love empowerment in theory, but the command-and-control model is what they trust and know best.'

Cosy phraseology about everyone being in the same boat often turns sour when business is tough. 'So much trust has been broken with downsizing and re-engineering,' says Joanna Foster, formerly head of the Equal Opportunities Commission and now chair of British Telecoms' 'national work-life forum'.

Enter, or re-enter, the unions, supplying a sense of security and protection.

Says Cridland: 'We need to give employees confidence that they have some stake and rights, that they are not entirely powerless.' Director of the industrial relations unit at Warwick University Keith Sisson, adds: 'As a manager, you are kidding yourself if you believe your workforce will really tell you how it is'; an argument employers such as Tesco accept.

Indeed, Tesco claims to embrace the union as its 'conscience'. 'It is perfectly reasonable,' says Lesley James, Tesco's director of human resources, 'to have someone who can poke you and say,"be careful", or "you haven't behaved very well here". It makes people feel more secure.'

Partnerships with unions are not an easy alternative. For the unions, they pose huge challenges. Partnership thinking represents a complete break with the past in terms of aims and methods of working. As democratic organisations, unions cannot impose changes on their members. Many recognise they need to become far more professional. Most of the organising and representing is still done by lay volunteers, who are by definition 'amateur'.

Potential areas of conflict don't simply disappear. Building trust is hard. Tesco's agreement with USDAW took seven months of painful 'argy-bargy', and both sides admit they couldn't have done it without the help of an outside facilitator, in this case, Cranfield School of Management's Centre for Strategic Trade Union Management. 'When you put together two parties that have had one type of relationship going back to the 1950s, it is very difficult to get them to talk in a different way,' says the Cranfield unit's leader, Chris Brewster. Vauxhall's Warman agrees: 'You can't just rush out and do something radical because it is the right thing to do. You have to work at it over a long period of time.'

Finding genuine philosophical common ground is proving difficult. 'Unions must help individuals get the right relationship with their employer, rather than seeking to maintain that relationship on their behalf,' says Cridland.

'But I think the unions are starting from the opposite end of the telescope, with collective representation, rather than the individual.'

On the other hand, declares Edmonds, 'the problem of constructing a new system of industrial relations is not a trade union problem but a management problem. Managers were told in the '80s and '90s that they could do what they liked. But you cannot have partnership unless management accept that they must concede some power. And they are finding it very difficult to come to terms with this fact.' Armstrong adds: 'While Monks and the General Council are persuaded of the need for a partnership agenda, they can't let go of their power political leanings.'

All of which leaves a big question mark. Over the last 20 years employers have had a choice of three core employee relations strategies: old-fashioned adversarialism (treat unions as 'the enemy within'); traditional collective bargaining; or kill unions by kindness, via old-fashioned paternalism or new 'inclusive' human resources management.

The options are different now. The law no longer favours a union-busting strategy. And both unions and management accept that old-style collective bargaining is, increasingly, anachronistic. Many managers believe that human resources management without union involvement is an attractive option. Partnership represents a new joker in the pack, backed enthusiastically by most trade union leaders, the Government and some employers.

So far, it is the exception rather than the rule. As Monks notes, most experiments have taken place in companies that are 'close to death's door'. That may change. As Edmonds comments, 'we are very much in a transitional stage. The old system of two-sided collective bargaining has not collapsed but is in decline. And nothing has come in its place - yet.'

Depending on their history, culture, size and sector, different firms will opt for different strategies. Says Cridland, 'there will be a mixed market'. That means there's a chance for the unions to find a role. Monks believes that 'everything depends on what unions make of the changed climate.

Are they really committed to persuading both employers and employees that they can add value?' Likewise, for managers, fresh thinking is needed. Either way, for both sides, a return to the past is not an option.

How UK Union Membership Compares - Attempting to negotiate a way forward

Compared to most other industrial countries, the UK's 29.5% representation of the workforce looks very strong. In France where, judging from media reports they are always on strike, unions represent only 9.4% of the workforce, in the Netherlands 25.5%, West Germany 23.9%, Japan 24%, Italy 22.6%, the US 14%.

So what are the prospects for Britain's trade union movement? Opinions differ. UK union membership may be down from 12 million in 1979 to seven million today, but many union leaders believe that membership will soon rise. GMB leader John Edmonds estimates that 'union membership is at least two million lower than it should be'. But Geoff Armstrong, director-general of the Institute of Personnel and Development, disagrees. 'The trade unions are in long-term structural decline,' he says. 'It is not a pendulum swing.'

Rhetoric has obscured the true state of affairs in the past, according to Chris Brewster of Cranfield School of Management's Centre for Strategic Trade Union Management. 'Unions were never riding as high as people thought they were 20 years ago,'

he says. 'But there is no evidence,' he adds, 'that unions will disappear or fade into obscurity.' From 1993 to 1996, the number of workplaces with union recognition fell only marginally.

Crude figures don't tell the whole story, however. In the Netherlands, where membership is relatively low, social partnership works smoothly.

In France, unions are an accepted part of social partnership-style political power-broking, and the terms they negotiate apply to many unorganised workplaces.

The Fairness at Work White Paper is an attempt to chart a course between US-style individualism and European-style social partnership.

GMB - A mission to attract new members

Study the GMB's mission statement and phrases like 'pay and conditions' or 'industrial action' are nowhere to be found. Instead, it declares, 'the GMB's purpose is to improve the quality of life for all our members and their families, widening horizons and bringing new opportunities into reach'.

The GMB, in other words, is focusing on what its general secretary, John Edmonds, calls 'the new agenda'. 'What we are trying to do,' he says, 'is construct a system based on the concept of social partnership, where non-wage issues such as training, promotion, job satisfaction and development are very important.'

The union's first priority is to 'work in partnership with more far-sighted employers'. Thus, the union vows to 'work to widen the understanding of employers whose horizons and objectives are more limited'. Even so, he contends that employers can use improved pay to help overcome recruitment difficulties and reduce absenteeism and high rates of staff turnover.

Being all sweetness and light doesn't make the GMB's life any easier, however. Its membership of 750,000 is well down from a peak of 987,000 in 1979. Some of this is due to structural changes in the economy. In addition, the move to what Edmonds calls a 'fragmented' workforce in smaller workplaces is 'unhelpful' to trade union organisation.

Through participation in various TUC initiatives, the GMB is searching for new organising methods better suited to a more female, part-time, service sector workforce. Received wisdom that these groups are difficult, or impossible, to organise is 'pretty daft', declares Edmonds.

Perhaps so. But until unions like his learn how to crack this nut, they will remain confined to sectors of the economy where employment, and therefore membership, is still on a downward trend.

A New System - Collaboration is the ideal agenda

Talk to Lesley James, director of human resources at Tesco, and she quickly conveys a powerful condemnation of traditional collective bargaining.

Awful, anachronistic ritual, absolute sham, undemocratic, rain dance, and a waste of time, are just some of her descriptions.

James claims it would have been very easy to have de-recognised the USDAW union at Britain's biggest supermarket.

'They don't work very hard to get or keep members.' But de-recognition would have been 'daft. The unions are here to stay. I would rather have a union working with me to drive my business forward than waste time on adversarial confrontation.' That is why Tesco has 'nailed its colours to the mast' via a new partnership agreement with USDAW. Under the old system, says USDAW general secretary Bill Connor, contact was basically once a year. 'You present your claim, get your offer, have a ballot, and if you don't like it, have industrial action.There was no serious dialogue.' Under the new system, there will be constant contact with staff reps at shop, regional and national levels.

Whereas before,Connor adds, 'the union was effectively 96 shop stewards representing 87,000 members, under the new agreement there will be closer to 3,800 shop stewards'.

The agenda is different, too, particularly what the 3,800 reps discuss at local level - 'the pinch points' as James calls them - 'what's causing them grief, what's causing them pressure, what could make their lives easier'. The idea is to win staff co-operation because then employees know how the business evolves, and are confident 'the company is not up to skulduggery, that nobody is getting sacked or having their conditions cut'.

Says James: 'I am very happy to have a third party who can legitimise what we do, if it makes people feel more secure. And it does.'.

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