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New Labour Law Rule: Think Global, Act Local

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In a case that pitted B.C. health unions against contentious labour legislation, the Supreme Court of Canada ruled last fall that collective bargaining is protected by the Charter of Rights and Freedoms. The decision significantly changes the lives of many Canadian labour law practitioners and policy-makers, says Kevin Banks, assistant professor in Queen’s University Faculty of Law.

Kevin practised labour and employment law for several years, and worked in senior posts in the federal public service—most recently as Director General, Labour Policy and Workplace Information. In this article, he talks about the decision and describes how lessons learned in international law can provide practitioners with guidance on constitutionally protected collective bargaining rights.

What did the Supreme Court of Canada decide, and what happens next?

The court gave the freedom to bargain collectively constitutional protection under section 2(d) of the Charter of Rights and Freedoms. That section protects freedom of association for all Canadians. For practitioners, international labour law can provide guidance in determining which aspects of our collective bargaining system should be treated as fundamental to freedom of association, which aspects represent policy choices among a range of viable alternative ways of protecting that freedom, and which ones should fall outside of the reach of constitutional protection.

Why was the Supreme Court’s decision such a surprise?

The Supreme Court reversed itself completely on the issue of whether collective bargaining was constitutionally protected or not, and did so within a relatively short time span—20 years in constitutional law is not a long time.

The court had previously said that collective bargaining was not constitutionally protected by section 2(d) of the Charter of Rights and Freedoms, which protects freedom of association, and had said so quite explicitly. In a trilogy of cases dealing with the right to strike in decided 1987, the court laid out an understanding of freedom of association clearly suggesting that collective bargaining was not protected under section 2(d). And the court specifically affirmed that this was the case about three years later in the case of the Professional Institute of the Public Service of Canada vs. Northwest Territories.

Now with B.C. Health, the court has reversed its line of thinking, and ruled that providing meaningful protection of freedom of association to those who choose to join a trade union includes protecting the freedom to bargain collectively.

What explains this remarkable reversal?

The judgment in B.C. Health lays out a completely different way of looking at the importance of collective bargaining in Canadian society.

How the court gets to this point is an interesting story. It essentially reverses its own previous understanding of Canadian labour history. The court says that collective bargaining is not properly characterized as a set of ‘modern rights’ that were simply created by legislation—which was its previous understanding. It says that this view was actually inconsistent with labour relations history in Canada, and that if you look back through that history, collective bargaining has been of fundamental importance to working people, and that’s why it was eventually incorporated into legislation. The court’s view now is that the statutes didn’t create the right; they simply afforded it some protection.

The court also rethinks what freedom of association means, and says that it must protect activities that can only really be performed by a collectivity. In the trilogy of cases I mentioned earlier, the court had said that the Charter did not protect an activity just because it was essential to giving an organization meaningful existence.

The majority on the court had been leery of protecting particular activities of associations because it did not see any basis for distinguishing between the activities of different associations. So it simply said that section 2(d) protected the freedom to establish an association, and any activities of associations that were already protected somewhere else in the Constitution, like freedom of expression. This left legislatures free to prohibit certain activities that really could only be carried out in association.

The court’s approach was criticized as formalistic because it treated all associations as essentially the same—a group of golfers coming together for a match had the same constitutional importance as a trade union seeking to bargain collectively. This, critics said, ignored the importance to Canadians and Canadian society of employees’ joining together to bargain collectively to improve their conditions of work.

What the court says in B.C. Health is that we have to move away from a formalistic equivalence between different kinds of associations. A book club is not the same thing as a trade union, and we need to look at these organizations in their social and historical context. You have to inquire into the significance of collective bargaining as a form of association on its own terms. That was the importance of the historical review.

The court also looks to the international legal context to understand the significance of collective bargaining in Canada. It finds that international law can help in interpreting Charter guarantees, and that a number of different conventions to which Canada is a party recognize the right of members of a union to engage in collective bargaining as part of freedom of association. So international law was also an important influence in the B.C. Health decision.

What key issues do Canadian practitioners need to understand about the judgment?

The court’s decision means that some aspects of our collective bargaining system are going to be given constitutional protection. But it is clear that not all aspects will. Practitioners are already being called upon to assess and present arguments on where the lines ought to be drawn.

The court provides some very general guidance on this issue. It says that the legislature must not substantially interfere with the ability of a union to exert meaningful influence over working conditions through a process of collective bargaining conducted in accordance with the duty to bargain in good faith. But that leaves open a number of major questions. What is meaningful influence? Does it include the ability to exert economic pressure, say by taking strike action? And what is substantial interference?

Unfortunately, the judgment is a bit vague with respect to both of these concepts, and this already giving rise to further litigation. Before the overall impact of the decision becomes clear, we’re going to have a number of other court decisions to begin to clarify some of these issues.

What are the implications for labour and employment law practitioners?

There are a number of direct and concrete implications. First, legislation that restricts the scope of issues that can be bargained collectively may be subject to challenge. This will have potential implications for public sector labour relations legislation in particular, which often does restrict issues that can be bargained collectively.

The decision also raises directly the question of whether the right to strike is protected. Other aspects of labour relations law that might be affected include legislation that purports to redefine the scope of bargaining units: can the government redraw bargaining units in any way that it sees fit, or will that amount to substantial interference?

Another way to look at it is through the lens of what the Constitution requires of government as an employer directly regulated by the Charter. The government needs to be careful about what sorts of methods of self-help or avoidance of collective bargaining it engages in that capacity.

What are practitioners going to be grappling with now?

In very concrete terms, they are going to be grappling with whether the kinds of laws and other government actions that I just mentioned substantially interfere with the capacity of employees to exert meaningful influence through collective bargaining. This means they will be advising and making arguments on whether such measures interfere with the capacity of employees and their unions to deal with issues of importance to them in a way that undermines good faith bargaining.

Over time, the case law that practitioners are involved in creating will sort out which aspects of our collective bargaining system should be treated as fundamental to freedom of association, which aspects represent policy choices among a range of viable alternative ways of protecting that freedom, and which ones should fall outside of the reach of constitutional protection.

No real attempt to separate the fundamental provisions from the ad hoc compromises that are inevitably part of the legislative process has been undertaken before. Now we’re going to be engaged in a debate and discussion about the core elements that really have to be protected constitutionally. This is an entirely new kind of legal analysis for us: it’s is an exercise we have never really engaged in within Canadian domestic labour law.

Where can practitioners look for guidance?

The court articulates a couple of propositions in B.C. Health that make international labour law directly relevant to deciding the scope of Charter protection.

The first is that, as the court says, the Charter should be presumed to provide at least as great a level of protection as was found in the international human rights document that Canada has ratified.

The second is that international labour obligations reflect principles that Canada has committed itself to uphold. And such commitments to principle along with the current state of international thought on them can be persuasive sources for interpreting the scope of Charter rights.

So we can draw some guidance from the body of international labour law that has been developed over the years as we begin to articulate what’s fundamental in Canada and should be constitutionalized.

After all, the international labour law community has had to make sense of very broad protections like freedom of association in the context of many different legal histories and cultures across many different countries. It has created a relatively small set of binding norms that say: “This is what any meaningful conception of freedom of association needs to include in the way of protections for collective bargaining.” It has also created a lot of persuasive doctrines about what kinds of alternatives are acceptable ways of protecting the freedom to bargain collectively.

For example, various committees of the International Labour Organization (ILO) have elaborated detailed doctrines, with supporting arguments, on when binding arbitration might be substituted for the right to strike. These doctrines often enjoy the support of management, government and labour representatives at the international level. So they might well have persuasive influence here in Canada as well.

If I’m right that the Supreme Court has made appeals to international labour law a lot more authoritative and relevant, then practitioners are going to need to get to know more about it: what sources of international labour law are binding, which ones are simply persuasive, and what makes them persuasive or not.

The ILO is probably the most important source for international labour law. There are also two important UN covenants: the International Covenant on Civil and Political Rights, and the International Covenant on Economic Social and Cultural Rights. Canada has ratified both of those.

International Labour Organization: http://www.ilo.org/global/lang–en/index.htm

The Rigour of Requisite Organization

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Requisite Organization (RO) is a science-based management theory that traces organizational dysfunction to poor structure and systems rather than underperforming employees. According to RO adherents, the way to fix dysfunction is to fix the system. That means having crystal clear management accountability, setting compensation and employee capability to job complexity, and ensuring the proper number of organizational layers. The result: souped up organizational effectiveness, says Ken Shepard, founding president of the Toronto-based Global Organization Design Society. In the following Q & A, Ken discusses RO’s relevance to people management practitioners.

Let’s start with the basics: what exactly is the Requisite Organization philosophy?

For the senior human resources practitioner, Requisite Organization (RO) is a strong beacon of light in the darkness of the management theory jungle. It’s an integrated management system that helps organizations achieve their strategic business results. It brings fairness to a radically higher performing workplace, and builds trust between managers and subordinates – as opposed to the exploitive and paranoid relationships that exist in most organizations. It all adds up to strong employee engagement.

RO includes many evidence-based tools to design and align roles and practices throughout the organization. It can be used to better understand and bring together the many partial truths that makeup the craft of designing and managing organizations.

I understand it was developed by a Canadian management guru Elliott Jaques.

Yes, Elliott Jaques was born in Canada. He was a multi-disciplinary scientist and long-time organizational clinician. He graduated in psychology with honours from the University of Toronto, then completed a medical degree at John Hopkins Medical School, and a doctorate in social relations at Harvard. After service during World War II with the British Army, he settled in the UK, where he was one of the founding members of the Tavistock Institute. He worked in the UK as a scientist and researcher for many years, and that’s where he developed his theories.

These theories are being applied with dramatic results to the world’s largest organizations. He was a pioneer and a brilliant innovator. He died in 2003, and wrote 20 books on how organizations using his integrated organization design and management systems can be made to work effectively.

What characterizes his method?

His levels-based approach to organization design and management creates significant increases in employee satisfaction, customer satisfaction, and financial results. It involves three main steps: getting the right structure; getting the right people in the right roles; and holding all managers accountable for using the right managerial practices.

RO provides leverage and power for working strategically, and you can do it with less energy. It’s a good theory that makes complicated work actually light and easy. Rather than carrying around100 tools, I would rather have one integrated tool. Jaques’ system is like having the Swiss Army Knife as opposed to all the disorganized tools in different sizes, all with different handles.

RO is a nonsense screen. There’s no field so full of fads and puffery than HR. So many things in the marketplace are being sold to HR managers. How do you make sense of them? Knowing this theory helps you sort it out really quickly.

How was RO developed?

It was in a unique partnership between a British industrialist, Wilfred Brown, and Elliott Jaques. These two worked in daily partnership over15 years solving problems at every level of a major manufacturing organization, and then carefully building an integrated management system that they carried around the world. The system was further developed during a subsequent 15 years in an interdisciplinary management consulting institute at Brunel University with major contracts in redesigning the UK Public Health Service.

Senior consultants brought RO ideas to General Electric’s talent pool work in the 1970s; McKinsey consultants took it to CRA in Australia in the 1980s; and the U.S. Army has used it for over 20 years. Recent world conferences on RO practice have brought together practitioners from 14 countries to Toronto to share their experiences and to learn.

Why should HR leaders be interested in RO?

Senior HR practitioners need to understand the organization as a system and to support the CEO’s work in leading that system, to contribute to strategic business results, and to enhance the quality of work life for managers and employees at every level. RO provides methods to support the CEO in preparing and developing the senior management team for re-design and strategy execution. In terms of structuring the organization, its methods enable measurement of the level of work complexity required to accomplish the organization’s strategy; design of the optimum number of managerial levels for the organization; and role design and related vertical and lateral authorities and accountabilities. RO methods are valuable for recruitment, for establishing effective managerial leadership practices throughout the organization – including a transformed, trusting, and accountable relationship between manager and subordinate, and for designing aligned and effective systems. These might include setting fair compensation systems aligned to work level sand capabilities, effective talent pool systems including identification and development of high potentials, and effective cross-functional teaming systems.

Which Canadian organizations have applied RO principles successfully?

Since the 70s in Canada there’s been a lot of RO activity in the private and public sectors. RO has been applied by Bank of Montreal, Canadian Tire Acceptance Ltd., Canadian Tire, Imperial Oil, Inco, Inglis, Ontario Hydro, Roche Canada, Suncor, Chapters Indigo, and Tembec, among others. Many VPs of HR ran RO projects, including at Roche Canada. Various elements stuck very well: restructuring corporations, getting rid of pay for performance systems, putting in the requisite compensation programs, and introducing product launch teams. (See below to read a case study from Organization Design, Levels of Work and Human Capability: Executive Guide.)More recently, Denis Turcotte – Canadian Business CEO of the year last year – used it to turn Algoma Steel around. After being bankrupt Algoma became one of the most profitable steel companies in the world, and that was using Requisite Organization. As well, the Government of Canada, including Health Canada and the Public Service Commission, has used RO extensively on its own structure and in evaluating and assessing levels of executive leadership in the public service. Not-for-profits such as the Victorian Order of Nurses have used it. In the HR field five years ago we used it to help the board of HRPAO to reposition the organization, and it led to an explosive growth period.

Is RO a radical approach for North American organizations?

It is. It challenges conventional assumptions. It’s a more thoughtful approach to management. The people who like it are those who read – and not many managers read anymore. They’re people who think, are reflective, who have a longer time horizon. They’re systems thinkers. To get your head around RO requires more than a one-day workshop. It takes some time and study, because it has substance. It’s foundational. You can build on it – you can use it. It gives you such a powerful lens, grounded in solid theory. No matter what part of management you do – and as an HR person you might be recruiting, you might be in compensation, you might be in labour relations – if you understand this theory, you can do whatever you do so much better.

Can HR practitioners benefit from RO’s leadership practices?

Yes. In the HR field there is this current interest in competencies, which tend to explode in number, and it gets fairly bureaucratic and difficult. In the RO system, there are about 10 leadership practices, all based on the need to dialogue. These require some study and practice. But it’s a much lighter system. You don’t have to have 150 competencies to do the job well. If you can do these dozen or so practices, and grow in your ability to do them as you move up the organization, they will serve you well. They’re very well thought out, and very well designed.

Resources:

For an introduction to Requisite Organization theory, download The Global Organization Design Society’s new book, Organization Design, Levels of Work and Human Capability: Executive Guide. It is available free at: http://www.surveymonkey.com/s.aspx?sm=YqqII66AKGuK5y_2fCVAKoUw_3d_3d

If you have limited time, focus on these articles:

The Long View of Leadership

An Executive’s Guide to RO-based Organization Design

How Did Dennis Turcotte become Canada’s CEO of the Year?

The Inglis Story: How It Became The Number One Appliance Company in Canada

Teams Can’t Be Better Structured Than Your Organization: How Roche Canada’s Created High Performing Cross-Functional Product Launch Teams

The Global Organization Design Society – formed in 2004 to promote the RO approach – has a website with articles, books, and video interviews. Go to: http://www.GlobalRO.org

There’s a useful, keyword-searchable, 1,000-page bibliography at: http://www.globalro.org/en/go-library/comprehensive-annotated-ro-bibliography.html

Corporate Social Responsibility: The Void HR Has To Fill

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Jay Handelman, Director of the Centre for Corporate Social Responsibility (CSR) at Queen’s School of Business, says CSR presents the ideal opportunity for HR practitioners to become strategic partners in their organizations. Read on to learn more about CSR, HR’s role in driving it, and why managers are not yet embracing it with open arms.

What is corporate social responsibility?

Handelman: CSR is when a company genuinely tends to the expectations of its societal members, not just its customers or shareholders. If you extend that, CSR is the way a company demonstrates that it is genuinely part of the social fabric, and genuinely cares about the communities and countries in which it resides. The people benefiting from CSR programs look at these companies and say, ‘They genuinely do care about issues that are important, and are not just paying lip service.’ CSR makes sense, because if an organization is not meeting the expectations of constituents, there won’t be enough support for it to survive.

What opportunities does CSR present for HR practitioners?

The initial reaction by lot of companies when they see external pressure to be socially responsible is, We need to do something. So then it becomes a public relations exercise, because the PR department can do something immediately, maybe put out an ad to say, Look what we are doing. I’m sure there are exceptions, but if CSR only resides in the PR department, I don’t think the company is really serious.

Human resources is a pivotal area. Think of the contrast: when CSR is part of the PR department, it’s something externally put out there, but not necessarily internalized within the organization.

I had an MBA student in his 30s who was well along in his career, successful in sales, and he said: “In my company if you read our mission statement and values, and listen to our corporate leaders, it brings tears to your eyes. But if in doing my job I actually followed our code of ethics I’d probably be fired because I wouldn’t get the sales.”

That’s where the HR department comes in. They are the ones who can take it beyond either the PR department or a few passionate people in the upper echelons of the company, so that the sales person is given incentives to be motivated in terms of CSR, and is rewarded for it. If the employee is not, then it looks nice, but that’s it. As many people have noted, one of the best codes of ethics around was the one written by Enron.

So HR’s role is to embed CSR internally?

When an employee is saying, I hear the ads of our company and seethe glossy brochures, but then I think of my day-to-day job and there’s a complete disconnect, that to me is the void HR has to fill. And if that void is not filled, then in my opinion, it is not CSR. CSR will only work if it is a genuine display of being part of the social fabric. And that authenticity comes only when it is internalized. So that is the role the whole HR department has: hiring the right people to achieve CSR goals, then rewarding them and providing incentives. The role of HR department is to foster CSR organically: I see HR as planting seeds within the organization that will develop.

Are Canadian organizations and HR departments being proactive in adopting CSR?

No, Canadian companies in general are lagging behind companies in Europe, and HR here has been lagging too. There are very large exceptions. One consulting company I know of, for example, provides workers with the opportunity to go on a six-month sabbatical every seven years, during which they don’t lose their status in the company. They go and work in a developing country on a project that uses their skills and they receive basic pay.

Recently a top student I know had four or five job offers upon graduation, and I asked her how she decided which one to accept. She told me about this program, and said, “Even though the pay is a little less, I’m going with this one because I can grow as a person and express my values aside from just earning money and focusing on my career.” So an incentive/reward program attracts this kind of person. And then CSR initiatives will start to grow on their own and we won’t need top-down projects.

How widely has CSR been adopted in Europe?

The European Union doesn’t have binding legislation but a treaty whereby they work with countries at the national level implementing programs and supporting companies’ programs. So decisions are made not just by managers about company practices but unions are part of it, and they bring in community groups. So with that blending of decision-making, which speaks to the ideal of CSR, I see Europeans are far advanced: it is just part of what they do. In North America, the distance between the company and community can be quite stark.

Which European best-practices will HR leaders here want to emulate?

In terms of tactics, there are very specific things being done, such as incentive programs to attract the kind of people who will embed CSR, and rewards for that behaviour. But at a more strategic level, what I see is that HR – and this also applies to all other functional areas of organizations – sees just its functional job of working with employees but not the broader stakeholder engagement view.

HR professionals need to ask, So how can we have employees be more engaged with a broader range of stakeholders? How can I help employees to do that? You can’t just go to an employee and say, “Here’s more for you to do – in addition to what you already do, we want you to also go and engage stakeholders.” Rather you need to make this an integral part of what they do. (See sidebar for details of the HR-driven CSR transformation of Paris-based Lafarge Cement.)

So CSR has considerable benefits to organizations, and HR has a pivotal role in changing internal culture?

Right, it is changing culture. So at Lafarge, the individual plant manager, who before would have never even have thought about much less be given responsibility for environmental issues, was asked to engage in community dialogue and come up with solutions. And now this has become just part of what they do. HR is enabling that organic cultural change, helping workers to do that, rewarding workers, re-assigning jobs and job definitions so that the work still gets done. That is strategic level HR.

Why aren’t HR professionals here embracing this strategic role?

In Europe there is a different thinking about what an organization is. In Canada the first thing I hear from HR and other managers is: How much will this cost and what will our return be? As soon as I hear that, I know that this is an organization that just doesn’t get CSR because a lot of the costs and benefits are hard to measure. But if you can step back and think about Lafarge, for example, that became one of most reputable companies in their country via CSR and is able to attract the most talented people, how do you put a price tag on that? You really can’t.

A company that gets CSR realizes this is for its long-run health; it’s not for a quarterly return on investment. I’m not saying throw endless buckets of money at CSR, but you are not asking the question, “If I spend a dollar will I get 10 percent return on it?” Those are the questions I hear in North America, and this mindset permeates HR too.

How do HR managers make the case for CSR – and why they should be leading it?

It think the best way to do that is to be armed with the best practices from other organizations and to share those success stories – especially from competing organizations. They have to sell it and convince others, but it will need to be by way of vision, something greater than, “It will boost our stock price this quarter.”

If HR takes the approach that this is just a cost-benefit thing, then I think they are marginalizing their own role within the organization. When HR says, “Now here’s a vision we have for our organization,” it is increasing its importance as a strategic partner, going beyond its functional aspects.

Who are HR’s CSR allies within the organization?

To embed CSR, HR will have to work with many departments. For example, the CSR aspect in marketing is from a branding perspective. We know in branding if you are not genuine, if it is just a veneer, you are going to be exposed. So marketing has realized that it needs to work with HR to put that authenticity into the brand, because if it is not based on what the organization really stands for, the brand won’t work.

HR also has to work with those who run the organization, who have strategic control, which increasingly are the finance people. So how do you share a passionate vision with bean-counters? You need to get the financial people to see the greater mission of the company. Quite often the way to do that is to point out other companies that have faced threats, whose survival has been threatened by not looking after these social issues – so from a risk-management perspective.

Look at Microsoft: in the late 90s it was threatened. Leaders realized if they didn’t define the company as more than a software monopoly with no larger purpose, even though they were financially successful, they might not continue to exist. What they have done is not philanthropy, but as a company they are contributing more to communities and so on. I was talking to someone from Microsoft and he said when the company was at risk, “No one was in our corner,” and that it was a scary feeling to think everybody in society was saying, “Good riddance to you.”

SIDEBAR: Lafarge’s CSR Transformation

A good example of HR’s importance in a strategic role comes from Lafarge, a cement manufacturer with quite a presence in Canada that’s based in France. Lafarge faced a problem in the 90s. The global economy was really heating up and there was an economic upswing, which was very good for cement manufacturers as there was lots of construction. So Lafarge’s global operations were growing, but they were having a problem as they are a cement company–not a very sexy kind of industry, and probably not very environmentally friendly either. So they were having problems attracting talented people to help grow their international operations.

Ten years ago they implemented a fundamental change, not as a PR exercise, but in terms of who they were as a company. Their HR department was very much part of redefining jobs throughout the organization; not just considering functional jobs, but rather, ‘Your job is to think about a greater purpose for the organization aside from making cement.’

In France Lafarge has become part of many important cultural initiatives, and many environmental initiatives, and has given incentives to people within the organization to come up with solutions about how to be more environmentally responsible. People on the ground decide how that will be done, and it has become part of their jobs.

What has happened over the decade is Lafarge has redefined itself as not just a cement company, but as a French company that has a cultural contribution to make and environmental solutions, as opposed to problems. Now, surveys that rank the 50 best companies to work for in France show Lafarge is in the top 10.

What they did was driven internally by HR, by giving employees incentives to do not just their job in producing cement, but to think about their company in terms of French society.

SIDEBAR: Resources to get up to speed

One of the best online resources for research into CSR is the website of the United Nations Global Compact. In particular, the Learning Forum has dozens of case studies searchable by industry. http://www.unglobalcompact.org/

The Canadian Business for Social Responsibility provides members with services such as networking, consultation, and conferences. http://www.cbsr.ca/

IR Scene is All Shook Up

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Rob Hickey, a facilitator in the Queen’s Master’s of Industrial Relations program, says restructuring is the big issue of 2007 for both labour and management. Below, Rob – who worked as an organizer for the Teamsters for a decade in the United States, and earned his MA and PhD from Cornell University’s School of Industrial Relations and Labour Relations Studies – discusses IR issues, and what he’d most like to see happen in IR in the year ahead.

What are the most crucial labour-management issues for 2007?

Key issues facing labour and management over the next year continue to revolve around the process of economic restructuring. The recent announcements of layoffs by Chrysler, preceded by Ford, the ripple effect that the Big Three auto sector has on parts suppliers – that type of restructuring is certainly impacting the field of IR and labour unions, the Canadian Autoworkers in particular.

This also plays into other forms of restructuring at the level of the workplace. Take the current CN strike: one dimension is a wage dispute, but the other is restructuring of work processes, or the drive for flexibility on the part of management.

I continue to see the issue of restructuring, both on the broader, industrial level and on the micro, workplace level as being the key challenge facing management and labour in the coming year.

What are the top priorities for management?

Management’s priorities are consistent with the term ‘flexibility’, and it creates clear tensions with unions over questions of job security, and economic security in general.

I think flexibility relates to both numeric and functional flexibility; functional flexibility as seen in the CN dispute and numeric flexibility based on the employers’ ability to outsource, contract out, to rationalize and downsize their workforce. We saw this at Chrysler, among the Big Three, and at a host of companies including Eastman Kodak and Nortel.

You see companies trying to adapt their operations to the changing global economic environment, and that includes in some cases shifting production from North America to Mexico, or low-cost offshore locations in the Far East. Or it includes what I call “in sourcing” – bringing non-employee contractors into a local workplace. So the work may still be done locally, but no longer by core employees of a particular employer. These forms of flexibility continue to be attractive to employers as part of overall cost containment or cost reduction strategy.

It’s not simply a question of adapting to current economic pressures: it’s also about restructuring the work process, and creating different structures in the employment relationship.

What are the top priorities for labour?

Pressures from economic restructuring are increasing the profile of economic and social security concerns. So job security and also broader social security remain a serious focus of labour’s agenda. I include social security because while the loss of manufacturing jobs is one element, it also contributes to concerns about a crisis in the provision of public services and the quality of the health care system – which the Canadian labour movement is deeply concerned about.

Wages will of course not disappear from labour’s concerns, and that will continue to ebb and flow. Statscan has tracked contractual wage increases at slightly above the rate of inflation, and I don’t see that changing significantly in the near term. Labour unions do not want to see their members’ purchasing power decline.

Related to the first point on economic restructuring, we see rapid changes taking place in ownership structures through mergers and acquisitions. Take Novelis here in Kingston – an India-based firm, Hindalco, just made one of largest buyout offers in the industry’s history to purchase this aluminium manufacturing company. This type of global capital restructuring creates concern for unions but also opportunities that may bring much needed capital investment to operations that have historically been efficient, productive, and profitable, but lack money to recapitalize.

So restructuring in this case is not just about job protection and layoff concerns, but also about investment flows, capital improvements, and commitment to innovative technology to local operations.

A recent Conference Board IR report said management/labour interests are converging, and identified the “war for talent as “the tie that binds.” Do you agree?

I was left unconvinced that pressures for convergence overcome the inherent tensions in the drive for flexibility. Management’s drive for flexibility may indeed trump the ability of the parties to cooperate on issues of retention and skills, and I think we are seeing that. One of the commentators in the report was from CN, and she was prescient in talking about types of flexibility changes they were seeking in their contract negotiations, claiming that current contractual work-rules were still based upon operations using steam locomotives. I’d venture there is some hyperbole involved in that statement, but I do think it accurately reflects what the real tensions are and that there will continue to be serious areas of dispute in terms of restructuring at the workplace level.

There are concerns on the union’s part about safety and economic and social security; and on the employers’ part about winning greater flexibility and efficiency gains. It is not enough to say that the changes in the work rules are merely about modernizing in the current economic environment – one also has to recognize the serious concerns unions have about the health and safety impacts of work rule changes and the challenges of maintaining health and safety standards with a significantly reduced workforce.

Employers call it flexibility when one person can do three jobs; unions call it a safety hazard. So how the parties resolve that fundamental dispute is a real challenge, and will not be overshadowed by changes in the demographic makeup of the Canadian workforce. That’s just part of the background context for what will remain in the foreground of challenges facing labour and management in the global economy.

Do you think the changing demographics will promote grassroots labour-management partnerships, as predicted in the report?

One of the challenges even in successful partnerships between labour and management is moving the partnership down to the shop floor. There may be great relationships among top negotiators and top officers of the two organizations, but frontline supervisors and rank-and-file workers still see traditional disputes. So how you move the culture of partnership down to a grassroots level? I think that’s a real challenge to the long-term maintenance of partnership agreements.

To the extent there are new opportunities, I don’t know that they will stem strictly from changes in the demographic makeup of the Canadian workforce. I think the real challenge of partnership is to build it throughout organizations, and not just on the top tiers.

Each organization has its own approach to more grassroots engagement. So the extent to which labour and labour leaders have been able to develop more inclusion in terms of membership participation, democracy and communications is one element of that. At the same time management has developed more team-oriented approaches, flatter structures, and broader engagement with front-line employees.

I’d say both trends are happening, but I’m not convinced they are always happening in concert with one another – meaning sometimes they are vying for the hearts and minds of members more than moving partnership agreements deeper into the culture of the organization.

What other developments can we expect to see in IR this year, and beyond?

In 2007 on the collective bargaining front a number of important contracts are coming open. In the public sector, health services in Ontario and Alberta will involve about 60,000 workers. In the federal sector there are contracts involving Quebec public workers particularly in transit in Montreal. So certainly the public sector remains a rich area for labour-management relations, partly as it is so highly unionized, and partly because it does set the tone for labour-management negotiations across a spectrum of industries.

Also the pace of restructuring, both on an industrial scale and workplace scale, will continue to be an area to pay attention to. Whether we continue to see contraction of the unionized auto sector or not we will certainly see the ripple effects as Chrysler contracts by 2,000 jobs in Windsor, and all the jobs that feed into those assembly operations are affected. How unions and managers negotiate those changes and help the workforce adjust will be critical in the coming year.

What development would you most like to see in IR this year?

I’d like to see the parties have an ability to take a step back and think about not just how they deal with restructuring on an individual basis, but how Canada manages the restructuring process on a nationwide basis. So to consider it both in terms of changes on an industry level, and in terms of changes in geographic flows and demographic flows.

There’s not currently a good forum for this interchange, at least directly between organizations of labour and organizations of management. A tripartite forum could exist where you have federal/provincial ministers of labour, along with representative of the Canadian Labour Congress, and Canadian employer associations. I think would be a tremendous step forward, helping parties navigate the restructuring process.

I don’t see it happening. But if I had a wish-list, I would really like to see a forum for a broader-based discussion on how we handle restructuring on a national basis and all the way down to the workplace level.

Lechery’s Toll

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Jana Raver, Assistant Professor and E. Marie Shantz, Research Fellow in Organizational Behaviour at the Queen’s School of Business, is an expert in counterproductive behaviours at work. We spoke to her upon the release of her ground-breaking study, “Beyond the individual victim: Linking sexual harassment, team processes, and team performance.” Managers and leaders may be startled by her findings: that sexual harassment is widespread and is not just a problem for its direct targets; it’s also bad for team performance and the bottom line.

Why should managers pay attention to this study?

I would like them to first take notice from an absolute bottom-line standpoint. This research directly demonstrates that when sexual harassment occurs in teams, it is associated with important financial implications. So it’s not just that women are suffering or men are suffering on an individual basis; there are performance implications where team members don’t work together as effectively when sexual harassment is occurring. Managers need to take this seriously in a business sense – and not only in a moral and legal sense.

What exactly did you examine in your research?

We looked at different types of sexual harassment – sexist hostility, sexual hostility, and unwanted sexual attention – and looked at their effects on teamwork (conflict, cohesion, citizenship behaviours) and team financial performance.

Sexist hostility is harassment simply based on gender – “Men are all pigs,” or “Women aren’t smart” – and lot of this goes on. This was highest level of harassment experienced. [26% of the 160 women in the study said they had experienced this in the previous two years.]

This was separated from sexual hostility – insulting verbal and nonverbal behaviours that are explicitly sexual in nature, such as trying to get you to talk about sex. This is about sexuality versus just gender. The last type was unwanted sexual attention, which consists of behaviours aimed at eliciting sexual or romantic co-operation, such as repeatedly asking for dates despite efforts to discourage the harasser. [17% had experienced sexual hostility, and 10% unwanted sexual attention.]

We surveyed 160 women at a large food services organization that operates restaurants in the mid-Atlantic United States, in which 35 teams operate independently of one another. If anything I think our results have underestimated the prevalence of sexual harassment and its impact on teams because the organization had done a pretty good job reducing harassment. The incidence of sexually harassing behaviours was 31%. Other studies have shown higher levels of 40%-60%, or up to 70% in the military.

What were your key findings?

Different types of harassment are associated with different outcomes. We found a huge distinction between sexist hostility and sexual hostility regarding outcomes associated with teams, for example.

Sexual hostility – for example, people making very crude sexual comments, or maybe commenting to a woman that she is very promiscuous on weekends and trying to get her to talk about who she was with – had a strong relationship with the levels of team conflict, cohesion and financial performance. Teams with high levels of sexual hostility had significantly more conflict, less cohesion, and ultimately had worse financial performance than teams with little or no sexual hostility.

Sexist hostility – for example, derogatory comments about gender – didn’t have any relationship with team functioning. Cohesion, conflict, citizenship behaviours and financial performance were all unrelated to sexist hostility. To a certain extent it may be that the team gets together, and there are gender battles, and it hurts individuals. For instance, there is good evidence that if woman is called not smart because she is a woman it is individually damaging. However, it doesn’t seem to affect the team as a whole. That was a surprise.

Unwanted sexual attention – for example, when someone is trying to get a date even though it has been made clear to them that the person is not interested – was associated with increased team conflict, but didn’t affect cohesion or financial performance.

Why do you think the relationship between sexual hostility and teamwork is so strong?

We suspect that sexual hostility may be particularly damaging for team processes because the acts are both clearly hostile and overtly sexual. Earlier research has shown that women who experience harassment tend to subtly tell co-workers what’s going on, or others in the team see it occur. This creates ambient stress for the entire team – that is, many people in the team know what’s going on and are affected by it. There is empathy for others, and a certain amount of fear it could happen to you.

When people get together and talk, if someone makes sexist types of comments, people might say, “Well maybe he’s old-fashioned, has been raised with particular belief set.” There are other explanations why he might have done that. With unwanted sexual attention as well, there is the possibility that maybe even if you’ve told him you are not interested, maybe he is just clueless, doesn’t understand that no means no, and is not trying to be hostile and harm you. So there’s this process of trying to make sense of what’s going on among team members.

But with sexual hostility, it is clear harassers aren’t just being sexist, or trying to get a date. They are bringing up sexual things in a hostile manner to make you uncomfortable and perhaps to have fun with that. In that case it doesn’t seem like there’s another explanation for their behaviour except that they are trying to harm you or at least make you uncomfortable, and it’s usually for their own benefit.

What other results surprised you?

We were surprised in general by the strength of the relationships – especially that the relationship between sexual hostility and levels of conflict on the team was so high. Sexual hostility accounted for about 30% of the variance in reports of conflict.

The relationship is so strong, and that’s one reason why I really think harassment needs to be discussed more broadly in managerial training, team training, and in organizational policy. A lot of managers have been sent to interpersonal skills types of training in order to help resolve conflicts, to negotiate, or to manage teams better. But what isn’t brought up is that there could be sexual harassment or other types of abuse going on that aren’t typically addressed as important causes of that conflict.

What practical steps can team leaders take to deal with sexual harassment?

The number one thing is for managers to create a climate of respect, where not just sexual harassment, but any form of abuse or aggression, is not tolerated. So much of it is about making sure abuse and mistreatment are taken very seriously, so that when they do occur, managers can take immediate action. Zero tolerance policies for harassment, aggression, bullying or other forms of abuse at work can be helpful.

Yet unfortunately, that’s not the case for many organizations. In other research, I’ve heard stories of people who are known sexual harassers who are moved from unit to unit to unit. Women know about it, and tell each other, “You stay away from him,” but nothing is ever done about it. Organizations really need to take a strong stance on this – and realize that it is important to do so. Not only does it help individual employees’ well-being, it also helps employees to work together more effectively, and to ultimately perform better for the company.

How is sexual harassment training best delivered?

Sexual harassment training is typically offered in isolation or as part of diversity training. Organizations should also consider integrating it into other managerial and employee training programs, to prevent harassment from being seen as a rare event that is disconnected from everything else.

To my knowledge, nothing about sexual harassment is being included in most organizations’ leader effectiveness programs. Managers often get trained on conflict resolution or negotiation skills, but it would be helpful if these programs would explicitly address harassment – how to recognize it, how to deal with these difficult situations, and how to create an open, respectful climate where harassment doesn’t occur.

This research also demonstrates that sexual harassment training needs to address team dynamics. Training should emphasize the negative outcomes of harassment for the entire team so that members realize that they are harming everyone when they perpetrate harassment.

Organizations also need to address the broader implications of sexual harassment in their training and policies. For instance, what can bystanders do? If you haven’t been the target of harassment and yet you know it’s going on, you’re getting stressed out, and there’s a lot of conflict in your team because of it, do you have a right to go tell someone and complain about it? Will they listen to you? Can you file a grievance? The answers to these questions are very vague in many organizations. In the absence of any kind of guideline, I think everyone is confused about what to do. So this is something organizations and leaders need to start to deal with in their policies and training.

Do you have suggestions for managers who want a better understanding of sexual harassment in their organizations?

Include measures of harassment in the company’s annual survey about employees’ opinions and experiences. And if there isn’t such a survey in place, there should be. Employers that don’t know what their employees are experiencing at work are missing out on so much valuable information.

There are a few ways in which you can find out what employees are experiencing. First, for direct managers, it helps to establish positive, trusting relationships with your employees. If managers are seen as open and approachable, employees are more likely to come and tell them what’s going on. If employees aren’t comfortable talking to their managers, they often go to talk to a human resource representative instead. HR reps frequently have an understanding of what employees are experiencing. But for upper management to get a better picture of what is going on throughout the organization, employee surveys or employee focus groups seem to work best.

Women – and in some environments, men – are experiencing sexual harassment, and the rates are pretty high. It’s often a matter of first admitting that it might be out there, because if you don’t want to know what’s going on, it is hard to address the problem. Many managers are afraid of collecting data on this, but denial unfortunately just perpetuates the problem. In the organization where I did this research, there were no negative impacts from doing the survey; if anything, it made employees feel that management cared because they were soliciting input about their experiences.

What is the main message you’d like managers to absorb from the results of your study?

It is so important for managers to realize that taking sexual harassment in the workplace seriously is in their best interest. It is in their employees’ best interest, in their teams’ best interest, in their financial best interest, and in their customers’ best interest. It’s in everyone’s best interest to be proactive and do something. Sexual harassment is not just something that happens infrequently. It is probably happening in your organization. It’s simply a matter of whether you know about it and are doing something to prevent its negative implications for your employees, teams and organization.

The State of Our Unions – and Critical Issues in Labour-Management Relations

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Dr. Pradeep Kumar of Queen’s University School of Policy Studies is an expert in unionism, collective bargaining, and workplace change in North America. Dr. Kumar, Director of the Masters of Industrial Relations program, spoke with us recently about union-management relations, and what is likely to develop in 2005 and beyond.

How important are labour relations in Canada?

First, let me emphasize that union-management relations are particularly important in Canada since unlike the U.S., we are heavily unionized. Although Statistics Canada numbers suggest that only one-third of workers are unionized, if you look at the impact of unions on the workforce, it is closer to 50 percent because there are a number of non-union companies that pay their employees on par with unionized organizations. Japanese transplants such as Toyota and Honda are examples where compensation packages follow the pattern of General Motors, Ford, and Chrysler.

If you look at the rate of unionization by workplace size, 50 percent of workplaces with more than 200 employees have a union. These represent some of the leading industries essential to the Canadian economy: auto, steel, pulp and paper, telecommunications, the auto sector. These key industries are all very heavily unionized – financial services is the one exception.

In the Canadian case another important thing is that while union density has been declining in most countries, here it has been stable at 30 to 35 percent. Union membership has been going up steadily but marginally. Unions here have even made significant inroads in service industries, though it is still rare to see organized labour at Wal-Mart or McDonalds.

However, most international observers believe that if Wal-Mart unionizes in any country, it will be Canada. There have been many applications to organize, and one was successful in Quebec. The place is unionized and is negotiating its first agreement. If the union is successful in reaching the first agreement, Quebec will have the first unionized Wal-Mart in North America. The only existing Wal-Mart with aunion is in Germany.

How healthy are unions and union-management relations in Canada?

Union-management relations have been very tense over the past 10 to15 years. It’s partly due to globalization and its impact on companies. Competitive issues have become very crucial, affecting labour-management relations through corporate downsizing, for example.

In addition to economic changes, there has been significant change in the labour force. Work-family issues have become more and more important with the accelerated workforce participation of married women. Work-family issues are important for everyone, but for the 70 percent of married women in the workforce, it is a matter of survival. This has brought many issues to the bargaining table. I’m not just talking about flexible work practices, but also about anti-harassment policies, especially in male-dominated professions, and in hospitals, where harassment of nurses has gone up tremendously. Violence in workplaces overall has increased significantly. The presence of women creates a totally different type of workplace, and with that, new labour-management issues have emerged.

Work-family conflict is made more acute by the lean orientation of the workplace, with most organizations in the public and private sectors cutting costs and trying to produce more with as few resources as possible. The reason why the work-family issue has become such a topic of discussion is that it is hitting the professionals and managerial workers. It has been a problem for clerical, administrative, and blue collar workers for years, but now even the managers are complaining.

Apart from issues relating to economic change and changes in the labour force, labour relations in the public sector have been going from bad to worse each year. This is partly due to the ideological orientation that comes from globalization that the private sector can always do things better than the public sector, as reflected in policies of the former Conservative government in Ontario, and now in B.C.. This has increased contracting out, deregulation, and privatization, leading to downsizing.

The other thing is that the public sector is the one area where employers have bargaining power not only as employers but as the government. So if the union does not agree to what they want at the bargaining table, they can pass legislation or designate a large number of employees as essential. The public sector is very centralized, with large bargaining units with a very high degree of diversity in which people are doing all kinds of different jobs. Interests are very different. This is difficult for both unions and employers, and creates problems for negotiators.

What are today’s most crucial labour-management issues?

I’d say the biggest immediate labour-management issue for the public and private sector is pensions, and this will be true into 2005. We have seen many private sector cases like Stelco and Air Canada where pensions have been the main issue: not just the pension entitlement of the employee, but the ability of the employer to pay the retiree’s pension. Often retirees outnumber current employees in older private sector companies. Therefore the pension liabilities are far greater in relation to employees who have already retired. Companies have significant unfunded pension liabilities in the millions of dollars – in some cases, billions. This, obviously, is a huge issue.

Another force causing change is the aging of the workforce. One-third of the workforce in the public and private sectors will be retiring in five to 10 years. A lot of employers see it as an opportunity to lower their costs on a permanent basis. We are already seeing a two-tier system: one pay level for current employees, another, lower one, for new hires. This is becoming common in the auto sector and with airlines, and we’ll be seeing more of that.

What developments would you most like to see in 2005 and beyond in labour-management relations?

I would like to see public policy changes to provide more rights of consultation and information to workers and their unions. I think one of the main causes of tense relationships and the reason unions get a bad name is mistrust between workers and management – which is really rooted in lack of information and consultation. I’m not saying give veto power to the union, but if you could somehow mandate consultation, I as an academic would be happy and so would many others, because this would put labour relations on a more stable footing.

One area where the right of information and consultation would help most is in workloads. We have to find a way to stabilize workloads so that there are no health and safety risks. We are spending millions of dollars in public health costs relating to increasing workloads.

We really have to find a way. Many organizations are aware of the issues and the consequences of not dealing with it. General Motors, for example, is spending a lot more on health and safety and ergonomics. Last time they gave $36 million to the union to undertake training, and an additional $15 million or so specifically for health and safety training. Management must realize that if companies want more productivity, with fewer people, there is bound to be higher workloads and greater health and safety costs. Without supportive policies, productivity gains will not be sustainable.

How are emerging labour-management issues affecting the training being provided to students in the Queen’s Masters of Industrial Relations (MIR) program?

The MIR curriculum has to be dynamic to meet the changing needs of students and employers. We added a new course a few years ago in public sector bargaining, and are adding another one this spring in public sector HR management. We also want to introduce a course on work and health. The content of our core courses evolves to provide students with the skills and knowledge they need.

As far as competencies go, in every reference I’ve given for a student for the past three years, the employer’s first question has been, ‘How good are their communication skills?’ They mean not just verbal but also interpersonal, and ‘Can this student work in teams? ‘That’s why we have such an emphasis on group work. Research skills have also become increasingly important, partly because things are changing so fast that what you learn today may not be relevant tomorrow. You have to be able to keep up with developments, with best as well as worst practices. Employers expect that. They don’t want to have to do a lot of orientation or training, and expect grads to be able to undertake it prior to joining the workforce.

The Seven Habits of Successful Mediators

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An expert in managing conflict, Dr. John S. Andrew teaches negotiation at Queen’s School of Urban and Regional Planning; provides independent facilitation and mediation services to parties involved inland use, environmental, and transportation disputes; and leads executive seminars on strategic consensus-building in corporate real estate.

Dr. Andrew spoke with us about what makes a good conflict manager. You need to be part problem-solver, part creative thinker, and part loner, undaunted by the prospect of eating lunch by yourself.

What is the role of a mediator?

In conflict resolution we try to find a solution that allows as many of the parties as possible to have their key interests met. Seldom is it all of their interests, but usually a settlement can satisfy their most important ones. That’s really the challenge.

There’s a classic example I use for teaching. There are two sisters fighting over an orange. Both of them want it – those are their positions, and they’re completely incompatible. I ask the students, ‘What’s a possible solution?’ and someone usually says, ‘Get a knife and cut it in half’, which of course meets only 50 percent of each party’s interests.’ That’s not great – if were trying to sell my house for $300,000 and got $150,000 for it, I would be pretty unhappy. The best answer is that you need to get all of the parties to identify and share their real interests underlying their positions. Ask them why they want the orange. It turns out one wants the pulp to make juice, the other wants the rind to make a cake. So it’s possible to meet 100 percent of the interests of both parties.

This is a simple example but it gets people thinking in a new way. Finding the interests is important because there are usually more compatible interests than conflicting ones in a dispute. Once everybody at the table understands the key interests of the other parties, then you can begin to make trade offs and “expand the pie” rather than divide it.

What are the key attributes and skills of a successful mediator?

1. You have to be able to quickly understand the essence of the conflict. You often get just a few days notice of a mediation, and you’re under pressure to come up to speed about the dispute as fast as possible.

2. You have to be able to get the parties to focus on their interests rather than their positions. For months or years they’ve been saying, ‘This is what we want, this is what we want.’ You need to get them to identify what they really care about. I was involved in a railway dispute in British Columbia that was fascinating and complex. It was a good illustration of the need to, and difficulty of, identifying true party interests. For quite a while it appeared to be a fairly straightforward transportation dispute, with many common interests between the parties. However, as we began to unravel the interests it became apparent that for some of the parties it was really more of a land use/real estate conflict, and their interests had little to do with the operation of the railway. The land adjacent to the railway was worth far more than the railway operation itself, and real estate eventually became a whole new set of issues. Only once they were on the table could we begin to make progress toward a solution.

3. It is essential to be completely neutral and impartial, and be able to convey that to the parties. Both perception and reality are important. Some of that is the language you use and how you conduct yourself during mediation, and it can be very simple: if there’s a lunch break, eat by yourself. The parties may be getting together and it’s natural that they invite you, but you can’t unless everyone is together. Disputants are very sensitive to your degree of fairness. If you lose the parties’ trust, it’s almost impossible to get it back.

4. You need to know when to let the parties hash it out, when to step in, and when to suggest possible options. You ask yourself, ‘Are they making progress on their own?’ Sometimes you’re better just sitting back and letting that process happen but it can be uncomfortable. Remember it’s their dispute and they have to craft the solution jointly – you can gently steer them but you can’t hand them any solutions, even if you see them. It sounds terrible to say, but a good mediator doesn’t care about the content of a settlement or whether the parties even reach agreement. You’d love to be able to say, ‘I’m such a good mediator, I’ve done 120 cases and 99 of those have been resolved,’ but that’s not a good measure of success. Lots of agreements are reached that are bad agreements. Sometimes the best thing is for the parties to walk away before that point. I’m there to help the parties to craft their own agreement, and if they reach one, that’s great. But there are lots of legitimate reasons why they might not. This is a voluntary process, and there has to be buy-in from all the parties. They won’t all love the agreement, but the key is that meets their most important needs and they crafted it themselves. If I come in and suggest something, they are less likely to implement it and buy in, and the agreement is more likely to break down later.

5. You need to know when to have a private caucus – when to take the parties aside. And then you do so with all of the parties. This can be very effective – you can give them a sense of what will likely be acceptable to the other side, and what they’re true BATNA is – their “Best Alternative To a Negotiated Agreement.” For example, if I hear people say, ‘Well, I really don’t want to negotiate because if we go to court we will win,’ I can sit them down and say, ‘Based on my experience you aren’t going to do as well as you think, and it’s going to cost everyone 10 times as much. So even if you don’t get exactly the agreement you want, you’re going to get it months or years earlier, and save a lot of money and anguish.’

6. Shuttle diplomacy – being able to effectively shuttle ideas and offers between the parties – is another skill. Sometimes parties will say, ‘Well, offer this to them,’ and I might suggest modifications that will make it more palatable to the other side. Sometimes they’re subtle changes in the wording or the order in which items are offered. The challenge is that a mediator obviously can’t give away any confidential information, so giving guidance to parties is a delicate business, and you have to keep careful track of where you obtained certain information and what needs to remain confidential to one party.

7. Finally, I think it comes down to your own personality and how you relate to other people. Credentials are nice, but does having a Ph.D. really make me a good mediator? Not really. What makes you a good mediator is doing mediation, and you probably learn more from your mistakes than anything else.

Team-Building Wisdom from the Ottawa Senators

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We asked John Phelan – who teaches leadership at the Queen’s School of Business and has been the mental skills coach for the Ottawa Senators hockey team since 2000 – about the similarities between sports teams and organizational teams. He says that building relationships is the key to good teams and good leadership – both on the ice and off.

How long have you been studying teams?

I’ve been coaching since I was 16, so I’ve spent a lot of time asking the question, “How do we get everybody on a team to contribute and work toward a team goal?” I was at Queen’s in 1989 doing my Masters of Arts degree in sports psychology, and I had the opportunity to work with the three-week Executive Development program at the School of Business. I have continued doing that since 1989, except for a period of time when I coached in the American Hockey League in Prince Edward Island.

Based on your observations, what makes a good team?

The more people understand themselves, the more they’ll fit into a team setting because they won’t have inhibitions or doubts. It is important to have an understanding of your strengths and weaknesses, and to try and find out if you have any intellectual arrogance – when you stop listening because you think you know everything already – which can really damage a team.

Do the same rules for good teams apply equally to sports teams and organizational teams in workplaces?

Yes, they do. One important thing that sports teams do really well is identify roles. For example, on a professional ice hockey team, there are 12 forwards and 12 specific roles. They could be similar but each player knows what his role is. The same is true with defensemen. Often you see that when someone gets outside his role, or gets frustrated with his role, the team becomes less functional – or even dysfunctional, and people get traded.

The same thing happens in business; you come into a project setting and it is absolutely critical to define roles and everyone’s strengths and weaknesses. To create this openness for people to contribute you have to say, “Let’s open up and have a real brainstorming session,” as opposed to saying “That’s ridiculous,” or “That won’t work.” As soon as that happens, how are people going to react? They’ll say, “I’m going to be here physically, but my mind is going to be somewhere else.”

When you talk to some organizations, it’s amazing how often this happens. There was an executive from an oil company who suggested that her firm was getting 30 percent of what people had to give because of not developing personnel, and not developing teams to the capacity possible.

What is the role of a captain on a sports team? Is there an equivalent on a workplace team?

The key to being a really good captain is to deal with people one on one, to get to know all the team members really well. That way you know what makes them perform well, can see when they are not performing well, and can talk to them and listen to what they have to say. A really good captain brings out the intangible force that turns a really good team into a team with synergy, not a five plus five equals 10 team, but much more. As well, the captain can help the members create their own vision of what the team’s vision and goals really mean.

In business, the person who plays the captain’s role is often not appointed. It’s the person you don’t think is doing anything, but they know about everybody, and people come and talk to them because they are very good listeners. It is important to take the time to get to know people. You really need to build trust.

How should team conflict be handled?

There has to be confrontation in any team, and that is a good thing. Confrontation is simply how you resolve conflict. I might say to someone, “So tell me what is bothering you.” Humans too often see confrontation as bad, and they wait too long to address things. Then it gets emotional, and the issue doesn’t get resolved – people start to bring up skeletons in the closet from the past that have nothing to do with the issue at hand, and it all gets hijacked.

One of my roles in player development is to be there if players have issues. They say, “John, can we talk?” and we’ll sit down. I’ll hear the issue, and help them establish what we need to do to resolve it. I ask them, “What’s in your control? Do you need to talk to the manager, or coach?” They might say, “What if they don’t listen?” If they don’t, you can’t control that, and at some point, you have to let go. In professional sports, if you don’t, it will affect performance, and players may either get sent down or traded. You put in considerable effort, but if the coach doesn’t agree, you have to ask yourself how you can learn from this experience, and whether there’s anything you need to personally change – perhaps cultivate a better relationship with someone, or perhaps learn to speak more clearly. Too often people get frustrated and say, “The hell with you, I’ll isolate myself,” and more often than not end up hurting themselves as they are not performing up to the expectations of the team.

What can team leaders do to make sure that conflict gets raised and resolved?

This is one of those things you can’t force on people, and that’s where captains and people who understand teams recognize that relationship is the key. People will come to you if they know you are a good listener, and you can probably deal with conflicts before they get way blown out of proportion and start damaging team performance.

And that’s part of the real secret of good leadership on teams – in his books, Robert Greenleaf talks about becoming a servant leader. His premise is that true leaders understand that their role is to help other people around them develop, become healthier, freer, stronger, more autonomous, and that this stems from relationships.

What else have organizational teams got to learn from sports teams?

In my relationship with the Ottawa Senators, I’ve seen that the coaching staff is very objective on assessment of players. They come in and talk to players about things like how much ice time they’ve had, how many shots on goal, the percentage of time on the ice they’ve been in the offensive zone. I know business tries to be very objective, but sometimes it’s hard to be except to say, “Did the project work, or not?” The more you can develop objective criteria for individuals, the better it is. It helps the individual clarify and perhaps even adjust performance.

Also, sports teams tend to spend time together outside of their profession, and they get to know one another. I think that leads to that intangible synergy. The more I know about you, the more I’m going to care about you. Especially with project teams, the more you get together the better it is; it creates that synergy. I think in business, especially in project teams, it’s very valuable to get to know one another.

Task and relationship are both essentials for teams. And if you take a little more time with relationships, the tasks will likely have more of a chance of being completed successfully. But it is hard; building a working relationship is hard to do. And remember this is not about necessarily liking the person, but it is about respecting the person and the role that person has with the team.

Also, it is very important at the end of meetings to debrief and say what has gone well, what you need to work on, and who does what. So often you leave and assume everyone knows what they are supposed to be doing – but it is important to make sure that not just the person but everyone understands who doing what. This helps to clarify roles.

Further reading: Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness; The Power of Servant Leadership; and The Servant Leader Within: A Transformative Path, all by Robert K. Greenleaf.

In Conversation with Dr. Mark Huselid

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Dr. Mark Huselid is an authority on return on investment (ROI) for HR practices since long before ROI became a rallying cry. He will be among the top educators leading the Queen’s Industrial Relations Centre (IRC) High–Impact People Practices program this September. Dr. Huselid is Associate Professor of HR Strategy in the School of Management and Labour Relations at Rutgers University, and has for many years been doing original research in the linkages among HR management systems, organizational strategy, and firm performance. He is co–author of the best seller The HR Scorecard: Linking People, Strategy and Performance.

Queen’s Industrial Relations Centre spoke with Dr. Huselid recently about measuring HR’s impact – his topic for this fall’s program – and about highlights of his latest research. His new book, The Workforce Scorecard: Creating a Human Capital Scorecard for the CEO, will be published next year by the Harvard Business School Press.

When you say HR measurement, what do you mean?

Before we can define the term, I think that we need to start with a shared understanding about what we mean when we say HR. In our field, unfortunately, this is not always clear. When we use the term ‘HR,’ for example, we might be referring to the function, to the people in the HR function, to the organization’s workforce, or to the profession – but we use the same word.

When I say measuring HR, I’m thinking about measuring the contribution of the firm’s workforce to business success. For me that’s much broader than measuring the outcomes of the HR function. Historically, most businesses have focused on the latter. You hear questions from senior leaders who say, ‘Well, you spent $20 million on training last year – what are you delivering to the business?’

That’s really a question probing the HR function, and for me, it’s not really possible to answer it unless you really understand what the firm’s business is, its strategy, and how people and their behaviour at different levels and in different categories throughout the business contribute to firm’s success. Only at that point can you sensibly begin to answer the question of what HR delivers to the business.

How do you go about measuring the effectiveness of HR?

There are different roles in any organization, and the contribution of each role will likely be measured differently as well. For example, in a pharmaceutical company, value is created in one way in the R&D function, and in quite another way in the legal function, and in still another way in manufacturing. Each of those three elements is really crucial: if you don’t design better compounds in new drugs, you’ve got nothing to sell; if you can’t move them through the legal process, you’ll ever get them on the market; if you don’t manufacture drugs off lawless quality, you are in deep trouble. The question is, What are the human capabilities and competencies in each one of those three roles – and there certainly may well be others – that really drive firm success?

Once we know that, the hardest part is over. I tell people that coming up with the measures is the easy part of the process, and they always roll their eyes at me. Then once we go through it, it starts to dawn on them that coming up with specific measures once you know exactly what you are trying to measure is not the challenge. The challenge is to really understand what drives the organization’s success, however the organization defines it, and then asking, ‘How are we going to put markers along the road to help people understand where they are in the process?’

The answer to the question, ‘How you go about measuring HR?’ will be different depending on the organization. That’s why I’m so critical of broad–brushed benchmarking efforts. They don’t capture that richness.

Do HR practitioners like to think that everything they do supports strategy?

Yes, but in fact, a lot of behaviours might be counterproductive. The thing is that without measurement, you just don’t know. Lots of organizations have found that things they have done, and thought historically they had to do, just make no difference. And conversely, many weren’t doing things that really were important.

What progress have you seen in the field as a result of research such as yours that demonstrates the value of measuring HR?

I’d say there’s increasing recognition that just measuring the HR function doesn’t answer the key questions that are raised by business leaders. When you think about it, if you are the CEO of a corporation, you don’t care what it costs to hire an employee. You care about having competent, capable, committed employees who stay with the company and are happy and share values and vision, and if you have to pay more to get those folks, my guess is that you will be okay with that.

So if the HR leadership comes to you and says, ‘Well, we’ve just reduced cost per hire,’ your response is going to be, ‘That may be terrific, but I need to know that you’ve maintained or increased quality.’ That’s the distinction: today there’s really a greater focus on the workforce, and even more so on strategy execution, that really drives the business.

What skills and competencies do HR professionals need to implement strategy and to design and implement tools such as the HR Scorecard?

They need critical thinking skills, systems thinking skills, and the ability to understand causal relationships in organizations. I say that because the HR function is really unusual: it’s different than any of the other functional areas in the business in that we’re helping to hire, develop, select, and maintain the organization’s leadership. In most businesses, the senior leadership team, primarily, was hired anywhere from five to 20 years ago, so the decisions that are made in conjunction with HR and line managers really have an enormously long shadow in the organization.

So what you really need to understand are the long-term implications of hiring for the position as opposed to hiring for the firm, for example, or hiring for a certain skill set we need today versus hiring for a skillset we might need sometime in the future. And you need to see how development and training procedures link with that process. There are all those types of questions, so looking over the horizon and thinking about being able to meet challenges we haven’t even identified yet is really one of the key issues here.

Are there other competencies HR practitioners need to develop?

One needs to have a basic understanding of statistics, and one certainly needs to have a broad understanding of the business and its processes. A lot of times I’ll go into a workshop and ask the HR team, ‘Tell me about your most profitable products, what kind of customers does your company want to keep and what kind it would rather transition to competitors,’ – these are the kinds of business-related questions that folks really need to be able to answer, as they are central to the development of a world-class measurement system.

How can HR professionals develop the needed competencies?

I think that executive education is a huge lever here. Somehow, some way, we need to systematically develop these kinds of skills among the HR leadership. They don’t just fall out of the sky. Historically, HR is unusual in that out of all the professions, it’s one of those areas that doesn’t necessarily have a functional or credentials specification before entry. For example, most firms wouldn’t hire a leader in marketing without a degree in marketing, or finance or accounting, but HR has always had people coming from different areas. That’s not bad – it can be great – but what it says to me is that we need to think more carefully about the capabilities we have, and the functions, given that that is the case. We can’t simply assume that the key competencies are there.

Could you give us an example of a company that’s doing a great job in thinking strategically and measuring its HR?

Microsoft and IBM are doing some terrific things. So is SYSCO, a food service company that delivers food to grocery stores and restaurants that operates mainly in the States. You have to have in your mind’s eye what this company is doing; they have people working in warehouses and in trucks delivering foods to grocery stores and restaurants. So for them, the face of the company is these drivers – not a corporate person, but Jane the driver who has been on this route for four years. What SYSCO has been able to do is really clearly articulate what they are trying to do in the business and to begin to estimate the magnitude of the relationships between the key variables in the process – how much is a great driver worth to us as opposed to an average one? And that knowledge has helped them to push and figure out where to spend their limited training and development dollars because they really know where it will pay off.

Some say it’s a waste of time to try and measure the effectiveness of intangible HR activities. How would you respond?

What I would say is this: the market value of intangibles, R&D, brands, patents, and, primarily, HR, has increased dramatically over the last15 years. An example of the most popular bellwether of intangible assets is the market-to-book ratio – this is the book value of assets divided into market value. Right now, for example, on average, for every dollar shareholders have invested in hard assets, the stock market says that investment is worth $6 or $6.5 (for the Standard and Poors 500). What that means in practical terms is that $5.5 out of every $6.5 isn’t captured on organizational balance sheets. This figure is much larger in high tech companies.

What I take from this statistic is that conventional accounting systems, which were really designed over 100 years ago primarily to meet the needs of large industrial companies, are a miserable failure when we’re interested in managing and valuing knowledge-intensive organizations. We’ve got many more Microsofts being created these days than U.S. steels, and in an economy that’s dominated by intangible assets, we’ve got to develop accounting systems that reflect this new reality. To argue that the process is a waste of time is a bit like saying that the value of a university can be captured by the value of the bricks and the mortar. The real harm here is that conventional HR metrics can lead to a misallocation of people in organizations, which can lead managers to do things of that aren’t in the long term interest of either people or shareholders. Widespread layoffs would come to mind, for example. There is a wealth of literature now that shows that knee-jerk layoffs diminish shareholder value over the long term. But we continue to see them.

It doesn’t mean it’s easy to fix the problem, I hasten to add, that but there’s really an opportunity to make a difference.

What exciting developments do you see on the HR horizon?

I think there is a lot of interest in measurement. I see that people are trying to manage systemically as opposed to linearly. By that I mean that traditionally, compensation managers, benefit managers and recruitment managers in big companies all tended to go their own separate ways and optimize what was in front of them. But I think leaders now are starting to say, ‘You know, we have to manage the bundle. Optimizing all of these separate pieces might leave us with a heap instead of a hole, and so we need to think about how the pieces fit together and whether they really do drive strategy.’ And that’s why people get interested in measurement – because they don’t know how they are doing.

Are you saying that strategic HR is the most significant development we are approaching?

Strategy and strategy execution provide a framework for people to begin to think about what they are doing, and that’s new. Perhaps it shouldn’t be new, but for all the different functional areas of the business, things have gotten so competitive that they have to do it. They aren’t just doing this because they’ve always done it this way, they’re doing it because – and then fill in the blank. Most firms are reasonably comfortable with the idea that knowledge is now what makes the difference. Think of the consulting firm versus a type of commodity business. In that kind of world, you really have to think over the horizon and make sure you really know what you are doing, because if you don’t, somebody else will overtake you.

Your new book, The Workforce Scorecard: Creating a Human Capital Scorecard for the CEO, is coming out next year. How does it advance the model you introduced in your previous bestselling book, The HR Scorecard: Linking People, Strategy and Performance?

The basic difference is that The Workforce Scorecard is designed around senior line managers, and focuses on this idea of strategy execution through measurement and metrics. The HR Scorecard was focused more on senior HR leaders, but the new book is focused on the shared accountability fort he workforce – shared accountability between HR and line managers. We have designed the book to ask, ‘OK, what kind of culture do we need, what kind of employee attributes do we need, how will we get them, what’s the optimal investment in people – not the minimal one – and what types of capabilities and behaviours do we need for A players’ – excellent performers in what we call A jobs, or jobs are those that are really mission critical. We’re really focused on making sure we have A performers in A roles – and on designing measurement systems for strategy execution.

Do you have other key findings from your new book you’d like to share?

Here’s one of the interesting things that we found. If you think of a firm’s strategy having a couple of pieces, one piece is, ‘What business are we in?’ That’s the choice variable, and then the second part is, ‘How do we execute? How do we get that done?’ Firms can go wrong or right on either one of these. What we found is that generally, firms get the choice part right because there are not that many choices to make for most businesses. But the difference between firms lies in the extent to which they execute effectively. We found that strategy execution has six times the economic impact of choice.

If you think about it, the choice variable is, ‘We’re going to be an Internet service provider or we’re going to be in paper products,’ or whatever. Managers usually make those discrete choices, and then they execute them. So execution is a relentless part of the process, whereas choice is kind of discrete: you make it and go along and change or don’t change. However, historically we have focused – both academically and as practitioners – on choice. So that’s a very significant finding.

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