Archives for April 2006

A Tale of Two Future Searches: A Methodology for Large Group Change Planning

One of the most frequently asked questions in change management is how can we  build genuine and inclusive support for change within our organization, and do  it quickly? One answer to the dilemma of time versus wide participation is to  use a large group whole systems change process. In this article, the author  examines one of the whole systems processes, Future Search, and presents two  case studies of its application in two very different change management  scenarios: a regional economic development story from Canada and the creation  of a national suicide prevention policy in Ireland.

Download PDF: A Tale of Two Future Searches: A Methodology for Large Group Change Planning

What’s to Love About Employee Ownership?

Unions often feel uneasy about employee ownership, Dr. Beatty says. But in these cases drawn from her research, they learned to love it, embracing it as a potent strategy for saving jobs, keeping plants open, and building better union-management relationships.

Surprising fact: in 2002, unionized workers made up a larger percentage of U.S. employees holding stock options than non-union workers (General Social Survey for 2002 – Rutgers University).

Surprising fact: U.K. workplaces with employee share ownership have much higher union membership than those without it.

Numerous carefully controlled studies have shown that companies with significant employee ownership grow faster, by about three percent annually. Furthermore, faster growth of eight percent to 11 percent was experienced by companies implementing employee ownership (EO) “well” (Beyster Institute website). For example, UPS, called “the tightest ship in the shipping business,” is majority owned by its 300,000 unionized employees.

So why aren’t unions jumping on EO? It seems that unions become enthusiastic about it only when it provides a way of saving jobs during looming crises. Some union leaders have become suspicious because the term “ESOP” has become associated with union busting during high-profile failures such as United Airlines. Others have a philosophical reluctance to participate in corporate decision-making because of their duty of fair representation. Also, some unionists view minority representation on corporate boards as a waste of time.

But my case studies of five unionized Canadian plants that adopted EO during a threatened closure might convince them otherwise. Two of the five, Great Western Brewery and Algoma Steel, survived as independent entities; and two others, Spruce Falls and Provincial Papers, were turned around and sold to larger companies. EO proved a potent strategy in the union’s struggle to save jobs and keep the plants open.

If we are interested in relationship improvements as well, the contrast between Provincial Papers and Algoma is very instructive. At both, the union-management relationship had long been difficult. But Algoma’s union got behind employee ownership took control of much of the buyout process and co-operated with the company to preserve jobs and union membership.

A key element of the union plan was the framework for governance. It helped the parties anticipate and resolve many future difficulties before they became severe. It also provided a statement of values that the new company had to live by – values which the union strongly endorsed.

After the buyout, union and management officers addressed gatherings of staff together, symbolizing the new way of running the company. Joint committees at all levels were put in place, and much effort went into gaining employee input into decisions. None of this co-operation prevented the difficult decisions to cut wages and jobs at Algoma, and both of the parties had to share in the pain. However, this pain did not poison the new relationship.

At Provincial Papers, by contrast, the unions did not take charge of the process. Management seemed reluctant to share power with the new employee owners, and so union officers felt they had to battle for information and influence. Whereas employee reps on the Algoma board of directors were able to make an important contribution, at Provincial Papers they were not effective. Despite having studied the successful Spruce Falls buyout, Provincial Papers seemed unable to understand or implement any of the joint structures, participative initiatives or a philosophy congruent with employee ownership. They held onto their old adversarial attitudes and beliefs. So it was a blessing when a large firm purchased the company and reinstated a traditional management hierarchy.

When a unionized company is in crisis, employee ownership can help it survive. But beyond survival, the following factors can raise the probability of sustained success and a better relationship:

  • New senior leaders should have expertise in the industry and experience with employee ownership;
  • Employees should make an actual investment in the stock, even if it is not large – and even if wage and benefit concessions are also necessary;
  • Management must work with the union and help the union leaders look good;
  • Implement the turnaround strategy quickly;
  • Work to create and maintain good employee relations;
  • Make a commitment to employee ownership as a philosophy;
  • Encourage employee involvement and participation.

As Canadian unions and companies become more experienced with employee ownership, they will learn how it can create many win-wins for both union and management – beyond saving jobs during a crisis.

Automakers, Unions, and “Lobbying and Hammering”

Queen’s Industrial Relations Centre Director Carol Beatty sat down with CAW President Buzz Hargrove during his recent visit to campus and discussed developments in the automobile manufacturing sector and the role of his union in addressing major changes in the industry.

You mentioned in your Don Wood Lecture here at Queen’s that negotiated agreements with the Big Three auto makers are no longer set in stone, that they can be superseded by a crisis of the day. Given this, can you offer more detail about the recent GM and Ford announcements about plant closures? And what were you able to do for the downsized workers?

Let’s take General Motors as an example. Within a month of ratifying the collective agreement, we were suddenly called to a meeting at 7 a.m. CEO Rick Wagoner was scheduled to make an announcement in the United States that day. We knew it would have an impact on Canada when we were called in.

They told us that they were closing Car Plant 2 in Oshawa at the end of August 2008. They were reducing one of three shifts in Car Plant 1 sometime in fall 2006; thirty-nine hundred jobs total. We thought our operations were safe because we were the highest quality, highest productivity, lowest cost plant on the continent. We were shocked.

GM says they’re closing these plants because they have “no product” for them. They say they’re concentrating on producing vehicles that they know would sell. They were losing market share, and the pressure from Wall Street to get lean and mean was enormous. At the time, we were producing Buick LaSabre, Buick Lacrosse, and Monte Carlo. There was not enough demand for these models.

Our national settlement wasn’t touched but the job loss was huge. The message is: Even if you’re the best, you don’t necessarily keep your job. We’re still trying to help the downsized workers. A large number are ready to retire but we could still end up with layoffs. We’re trying buyouts, voluntary retirement, everything we can.

I know you believe that some of these crises are caused by the lack of a level playing field between North America and Japan in terms of auto imports. What do you propose to solve the problem?

The Canadian and American governments should say to Asia, “We’re not going to allow you to sell anything in our market you don’t build here unless you open your own markets to reciprocal exports.” It would also send a strong message to China for the future.

You’ve mentioned the industry will be in worse shape when China starts exporting automobiles. Is Ontario’s auto industry doomed?

All the analysts are saying that you can build a comparative vehicle [in China] for one-third to one-half the cost here. Wages, material costs, energy, tooling and machinery are all lower in Asia, even though every day you hear about mine disasters and other dangerous working conditions. There are no unions, no dissent. The real issue for us is: Do we really want to buy from whoever makes [a vehicle] cheapest at the expense of our own economy?

Without government policy changes, the industry will be a shell of what it is now in Ontario. Our economy was over-reliant on automotive to start with and the Auto Pact favoured Canadian parts as well as assembly. Now, all that has changed.

Way back in the days of Pierre Trudeau, the government was prepared to get tough in these situations. Why not now?

[Former union head] Bob White met with Trudeau and Ed Lumley back in the early 1980s when imports from Japan were growing. The Americans were forcing the Japanese to invest in the U.S. and Japan agreed to voluntary changes in the U.S. but Canada was ignored. Trudeau told Lumley to just “do it”: to tighten up inspection at the entry port of Vancouver. He also told Lumley to take the political heat from that decision and he did, and Trudeau defended him despite layoffs at the docks. There was a backlash in B.C. but they held firm until the Japanese government ensured that the major players made investments in Canada. It took a long time but they did it.

Why not now? Since we signed the Free Trade Agreement, there’s been this mood in the country that free trade is great, that it’s the fault of the auto makers and the unions if there are problems or layoffs in the auto industry. Politicians take great comfort from that. The Southern U.S. states were giving huge incentives to build plants there – 20 percent of start-up costs on average. But we couldn’t convince Jean Chretien to meet with us on this issue. No movement. John Manley was a free trader. Alan Rock was immovable. When Martin took over, we finally got a hearing. He appointed David Emerson as Minister of Industry, and Emerson listened and responded. Dalton McGuinty (premier of Ontario) too. They started offering incentives to the Big Three to invest here. We were finally getting to them on the trade issue. They made some strong statements.

Then the election came. Now we have to start over again. We’re not sure how the Harper government will respond to this issue, but we’re going to lobby and hammer. [Harper] will have to deal with me on this issue whether he likes it or not.

Thanks for your insight. We’ll keep a close eye on these issues and hope you make progress on creating that level playing field.

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