How to Increase Productivity and Reduce Labor Unrest

Abstract By altering an organization's hierarchical structure and making its employees feel as if they are participating in management, a company can decrease labor strife, increase productivity, and reduce personnel turnover. The Author presents the employee involvement matrix which can aid a management team in implementing employee involvement programs that will be successful at different levels of sophistication. The matrix utilizes two continuums: the employee involvement continuum, which contains the various types of participation; and the learning continuum, which specifies the skills that are required in order to implement a given level of involvement.

Keywords Employee involvement, Staff turnover, Productivity, Participation

Many old-line companies have a hierarchical structure in which directives are issued from top to bottom. It is not unusual for such companies to experience periodic labor strife, which brings with it a concomitant reduction in productivity and revenue. Labor is what companies want to prevent, but it is an integral part of a hierarchical corporate culture.

My experience with numerous clients over the last two decades has shown me that by altering its hierarchical structure and making its employees feel as if they participating in management, a company can decrease labor strife, increase productivity, and reduce personnel turnover.

Prior to changing a corporate culture, supervisors -- who reflect the views of senior management -- must learn new modes of behavior. Invariably in an authoritarian hierarchy, supervisors are expected to achieve certain rigidly sanctioned goals. Their roles may consist of checking off the names of morning latecomers, keeping close tabs on daily production quotas, and inspiring workers by instilling fear and insecurity.

After participating in training program aimed at team building and increased employee involvement, however, supervisors can be transformed into team leaders who coach and mentor workers, giving them a sense of pride in their accomplishments, Where supervisors and workers once followed rigid formulae, now they can be encouraged to be flexible and creative, to use their own best judgment, and to pitch in and help colleagues. Management and employees work together which a common mission: to make the company a better place to work. The end result goes beyond increased productivity and profitability to produce enhancements of company products.

Such successes, however, cannot occur without first changing the corporate culture. Experience has taught us that a number of initiatives are essential for improving workforce morale:

  • Developing a written, one-year plan for improving workforce morale.
  • Creating flexible task forces to handle every workplace issue.
  • Evaluating employee opinions on new ideas, tactics, and strategies.
  • Defining the existing corporate culture, through the use of contemporary surveys, so that the views of employees mesh with the company's financial goals.
  • Deciding how much to budget for training so this initiative can be an integral part of all future budgets.
  • Establishing a system for evaluating the success of both existing and future proactive endeavors.

Instilling enterprise-wide change

Three factors must be in place if the enterprise-wide change initiative is to succeed: a methodology for successful communications, an understanding of the various employee involvement activities, and senior management's commitment to cultural change.

A methodology for successful communication is essential if a corporate culture is to become flexible and open to change. A sophisticated method of workforce communication can help change the corporate culture and maintain those changes over time. Without back-and-forth flow of communications, a clearly defined corporate identity and purpose will become blurred, resulting in ambiguous expectations. It is essential that all workers feel they understand where their company I headed and how it plans to get there. There is a direct an axiomatic link between good communication and significant increases in productivity.

All businesses, regardless of size, have two distinct cultures: a management culture and an employee culture. For the most part, companies tend to operate under management's agenda, unaware of the employees' agenda.

Communications should serve to unite these cultures. The unification of divergent agendas is the key to any successful, long-term human resources strategy. Thus, communication is critical in any effort to achieve productivity gains while enhancing morale, which usually run on parallel tracks.

To create a truly effective change initiative, communication strategies must be blended with employee involvement initiatives. The employee involvement matrix can aid a management team in understanding employee needs and goals. (See Exhibit 1.) The matrix helps company leaders focus on what they must do to implement employee involvement programs that will be successful at different levels of sophistication. The matrix takes in to account organizational conditions, management commitments, and workforce skills; and it provides a guideline for the realistic and appropriate degree of employee involvement.

The basic concept underlying the matrix is that increased levels of employee involvement cannot be accomplished unless adequate employee and management sills exist. Increasing employee involvement can be attained as company-wide training levels and organizational conditions improve and become more sophisticated.

The matrix (See Exhibit 1.) utilizes two continuums to project an appropriate level of employee involvement for a particular company. The horizontal continuum, labeled "Employee involvement," contains the various types of programs. The first program, cooperative goal setting, is the least complicated and requires the least "cultural commitment" on the part of the company. The continuum progresses to program No. 10, which is employee ownership and control.

"[If real cultural change is to occur] there must be a genuine commitment by management to a meaningful level of employee involvement as part of its ongoing business strategy."

The vertical continuum on the matrix is the learning continuum. It specifies the type of knowledge and skills that will be required throughout the company in order to implement a desired level of employee involvement. The learning continuum has five general areas, ranging from interpersonal relations to business process.

To determine the reasonable level of employee involvement in a given company setting, management should begin at program No.1 on the employee involvement continuum and work upward.

If employees are already involved at given level -- cooperative goal setting or an employee idea system -- and wish to do more such as convene focused task forces, the group process and problem-solving skills shown in the next section of the learning continuum would have to be in place before that new activity could be attempted.

The basic premise of the matrix is that successful implementation of employee involvement at any level must be preceded by requisite workforce skills and managerial commitment.

The final factor in the success of the cultural change process is commitment by management. Simply instituting training on the skills in the learning continuum will not be sufficient. There must be a genuine commitment by management to a meaningful level of employee involvement as part of its ongoing business strategy. A constant re-evaluation of the level of cultural commitment by management is essential to moving further along the employee involvement continuum.

Employee involvement continuum

  • The employee involvement continuum progresses through ten steps of increased involvement.
  • Cooperative goal setting -- the joint establishment of goals b each individual and his or her supervisor after mutual discussion. Goals are set and reviewed on a work-cycle basic.
  • Employee idea system -- a managed and funded program, which provides formalized feedback and includes a reward system. The program results must be highly visible for maximum success.
  • Focused task forces -- the convening of a group to work on a specific issue of set of issues and to recommend alternative solutions within a given time period.
  • Problem-solving teams -- work-unit teams that spend a specified amount of time each week trying to solve identified work-related problems.
  • Cross-functional groups -- problem-solving at interdepartment level with representation from various group functions within the work environment.
  • Union management committees -- can be considered if the employees are represented by a labor union. Joint union-management involvement will help to maximize union participation in all phases of employee involvement.
  • Process improvement groups -- selected groups to solve macro-level problems and improve key enterprise processes, such as product development, quality control, marketing, and distribution.
  • Self-managed work teams -- unsupervised teams of individuals working together for the purpose of improving skills, rotating jobs, and making work-related decisions that affect the total team.
  • Entrepreneurship -- creating opportunities for employee to implement innovative ideas, including designating a special team to pursue an idea, accepting the risks, and appointing a champion to execute the idea within the organization.
  • Employee ownership and control -- employee ownership of all or part of an organization or subsidiary within that organization. Increasing degrees of ownership can improve a business's profitability.

The Learning Continuum

The Learning Continuum denotes the skills and processes necessary for each level of employee involvement.

A. Interpersonal relations involves five skills:

  • Team building -- creating and sustaining high-performance oriented teams.
  • Effective meetings -- conducting purposeful and productive meeting and methods of meeting planning, leadership, participation, and follow-up.
  • Leadership styles -- understanding and practicing leadership styles and straits and the factors that make certain styles more effective.
  • Motivation theory -- knowledge of what motivates individual human behavior, e.g. personality, needs, expectations, dependency/maturity theories.
  • Communications skills -- understanding and practicing effective, two-way communication, e.g. listening, writing, speaking, and giving and receiving feedback.

B. Group process involves four skills

  • Presentation skills -- techniques for preparing and giving a persuasive and effective presentation.
  • Data gathering/organization -- methods of collecting data such as surveying and interviewing, and methods of organizing and presenting information.
  • Group problem solving -- utilizing group problem-solving techniques as compared to the individual-solving process.
  • Group leadership -- analyzing how people behave in groups, what constitutes a group, and the roles of a group's leaders and participants.

C. Employee relations consists of four types of learning:

  • Stakeholder analysis -- analyzing the goals, motives, and behaviors of all internal and external stakeholders of a given enterprise and determining how to maximize mutual benefits.
  • Conflict resolution -- understanding, mediating, and resolving conflicts between groups.
  • Negotiation -- methods and strategies for achieving win-win results in negotiations and avoiding the zero-sum game.
  • Collaboration -- comparison of cooperative versus competitive strategies and their relative impact on goal achievement.

D. Organization analysis includes three processes:

  • Work and job design -- coordination of the interrelationship of jobs, workflow, and other factors in orders to improve quality, productivity, and employee commitment.
  • Organization structure -- design of organization structures to meet current and future economic and technological demands.
  • Systems/process analysis -- identifying and solving problems utilizing macro-level processes, which promotes the attainment of key business objectives.

E. Business process contains four skills:

  • Risk analysis -- pinpointing and quantifying risks in given enterprise and determining acceptable risk levels and trade-offs.
  • Life-cycle analysis -- identifying the critical steps in the development of strategies, plans, markets, products, and technologies to ensure their ultimate success.
  • Cost/benefit analysis -- methods and techniques for determining cost factors and projecting real and probable benefits in implementing new business ventures and technologies.
  • Business systems -- analyzing the goals, inputs, processing requirements, outputs, constraints, and feedback mechanisms in a business operation in order to maximize. Efficiency and effectiveness.

We have seen the implementation of this broad initiative effectively change the corporate culture of many companies, unifying the agendas of management and employees, Sustained through the proactive implementation of flexible communications programs, the resulting corporate cultures have achieved a significant increase in productivity, very low levels of personnel turnover, and an absence of labor unrest.

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Bring Binding Arbitration to Airline Disputes

As a labor-relations attorney who has regularly negotiated union contracts on behalf of employees throughout the U.S., I have witnessed how the inordinate growth of labor costs has had far-reaching negative consequences on the economic well-being of regional and national airlines.

When President Jimmy Carter deregulated the airline industry in 1978, he also should have imposed regulations on airline unions that would have outlawed strikes and walkouts, while requiring binding arbitration as a means to settle labor disputes between airlines and their unions. Binding arbitration would have yielded a greater balance between labor and management so neither side could have engaged in debilitating confrontations.

While the Carter administration forced airlines into price wars, it failed to ask Congress to pass legislation that would have simultaneously helped to lower and control labor costs. As a result, many airlines have been unable to support their ever-increasing operating costs as the price of tickets has fallen. In some cases, the cost of a plane ticket was less that bus fare. If the airlines could no longer set and maintain ticket prices, how could they support fuel and labor costs? With one eye closed, the government signed death notices for numerous carriers.

Labor costs are some of the highest expenses that airlines face. When it comes to airlines, unions are so much a part of the operating system that they exert life and death control. Unions can keep airlines grounded by the extraordinary weight of their demands. For some airlines, bankruptcy is preferable to meeting unrealistic union demands.

The unions representing pilots, mechanics, machinists and flight attendants at times seem more interested in grounding airlines than in ensuring job stability. One need only look at the post-Sept.11, 2001, situation: The terrorist attacks caused a rupture of red ink to spill over the balance sheets of numerous U.S. carries. The volume of passengers dropped precipitously as did the number of regularly scheduled flight.

In such dire circumstances, one would have thought unions, being both patriotic and concerned about preserving jobs, would have made the necessary concessions to keep airlines profitable. Instead, United Airlines experienced a significant jump in labor costs. Northwest Airlines lost hundreds of millions of dollars as a result of higher fuel and labor costs. And a strike at Delta's subsidiary, Comair, cost $4 million a day. The operating deficits at airlines are, unfortunately, prefaces to their obituaries.

Historically, none of this is surprising, for unions and corporations have always believed increased labor costs could be passed on to consumers. Such a scenario, of course, could no longer work in the airline industry after deregulation. Previously, airlines passed along increased costs to consumers in order to avoid strikes. After deregulation, airlines could no longer do this because of the cost-sensitive competition from low-priced carriers. Airlines could neither afford strikes nor pass along costs to consumers, so they simply absorbed the increases.

While the spiral of increased wages and prices for manufactured goods spun out of control and consumers turned to cheaper foreign-made products, airlines -- being service providers -- could not turn to foreign countries to lower their labor costs as did so many manufacturers. In factories, some unions simply priced themselves out of existence. Their demands grew so unrealistic that strikes and slowdowns were their dances of death. Beginning in the Reagan era, union membership steadily declined. Manufacturers opened factories in Third World countries or in right-to-work states in the U.S. The trend has continued in virtually every industry, except aviation and government service.

This scenario would have been far different had the Carter administration realized there are two sides to every equation: If airlines lower their prices, then they must be permitted to cut costs. The government could have created a more fairly balanced environment in which airlines and unions worked out their issues in a non-threatening, controlled environment -- one without rancor and debilitating tactics. Had the majors been permitted to institute balance on both sides, they would be in far better shape than they are today.

While deregulation provided low-cost flights, it caused the bottom lines of large carriers to lose altitude. Labor costs now are the foremost obstacle to airline profitability. If they are to survive and be self-supporting, carriers must be given the opportunity to reach reasonable and balanced agreements with unions through binding arbitration. Airlines have an immense impact on the national economy and security, thus making binding arbitration absolutely essential to the national welfare.

Soldiers, Police officers, Firefighters and air traffic controllers are forbidden to strike. Similarly, airline personnel, as part of an essential industry, should be in the same category. The government must act to treat the airline industry as an essential part of the nation's economy and security. No union should be permitted to clear the skies, keeping airlines grounded.

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Cooperating Will Bring Better Job Protection

American workers have always sought better wages and job security. Years ago they were just "employees-at-will," subject to the whims of their employers. They toiled in difficult working conditions and feared the day when their employers might fire them.

Workers eventually turned to unions for job security and improved conditions. Bolstered by the National Labor Relations Act, which prevented discriminations against employees because of union activity, unions became the bargaining agents for millions of workers. By the end of the World War II, it looked as if we would become a nation of unionized employees.

But the promises of unionism were never fulfilled. In the name of job security, unions compelled employers 10 accept inflexible, unproductive work rules. Unions spoke angrily and carried a big "strike" stick. They drove employers to pay ever-higher wages and contributed to an adversarial management-labor relationship, but did not assist in improving productivity. Unions gradually became anachronistic institutions, preaching the same 1930s message while the nature of work and the work force changed. Unions came to be perceived as self-serving institutions tainted by criminal indictments and prosecutions.

Unions also became less relevant as an increasing number of state and federal laws were enacted to protect workers. Various laws now regulate minimum wages, overtime, pension plans, workplace safety, Social Security and the like. Many of these regulations contain provisions making it unlawful for employers to terminate employees who report violations.

While these laws made work safer and more secure, state court decisions have built a new bulwark around individual employees over the last 15 years. These courts have further limited the "at-will" concept of employment by allowing terminated employees to file suits against their former employers for "wrongful discharge."

Some employees have succeeded in these lawsuits by alleging that employees violated public policy because they fired them for serving on a jury, taking time off to vote, or "blowing the whistle" on a health violation. Many courts also have recognized implied contractual theories of wrongful discharge. In such cases employers were found to have made and subsequently broken binding, or oral "promises" of employment. Still, wrongful discharge actions, since they are undertaken by individuals, can give only the most limited job security to the masses of working people.

Indeed, neither union bullying, statutes nor state court actions will provide American workers the job security for which we all struggle. Such security will be achieved only after both employers and employees deal successfully with two of the most vital economic issues of our times: international competition and productivity.

We all know that international competition has put American industry on the spot. Our nation is swamped with imports in almost every field of production. Japan of our fiercest competitors, producing top quality products, while paying its employs lower wages than comparable American workers receive. Yet labor relations in Japan are excellent compared with those in America. Japanese workers have a high degree of company loyalty, and Japanese management regards its obligations to them as a top priority.

It is the very need to compete with Japan and other productive, energetic nations that ultimately will force American industry to protect employees and provide better job security. American industry will become a competitive leader in the international marketplace only when it builds cooperative partnerships of labor, supervisors and management. Employers who see the "writing on the wall" will realize that they have to treat their employees fairly and work with them to harness their energies to meet the competition.

American managers must re-examine their methods. Management must communicate effectively with employees, encourage suggestions and participation, adequately train supervisor in international relations and introduce problem-solving mechanisms in which employees have confidence. Under such circumstances, employees would find that their employers are eager to solve problems in the workplace.

The American-managed Nissan plant in Smyrna, Tenn., is an example of a company that has built a working partnership of labor and management. The company trains its workers to do a number of jobs, involves them in decisions and gives them responsibility for the quality of the product at every level. The Nissan employees have shown no interest in unionizing and labor relations are harmonious.

The cooperative approach may have been born out of necessity, but it will be cooperation, rather than wrongful discharge actions, government regulations or union muscle, that will be the source of employee protections in the future.

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