Partnership at work: Comparison and evaluation

Table of Contents

1. Introduction

2. Advantages and disadvantages of particular groups
2.1. Employer
2.1.1. Advantages
2.1.2. Disadvantages
2.2. Employees
2.2.1. Advantages
2.2.2. Disadvantages
2.3. Trade Unions
2.3.1. Advantages
2.3.2. Disadvantages

3. Evaluation of the prospects for success
3.1. Introduction
3.1.1. Example 1: Scottish Power
3.1.2. Example 2: Tesco
3.1.3. Example 3: United Distillers & Vintners

4. Comparison with previous approaches
4.1. Unitarism – Partnership at work
4.2. Pluralism – Partnership at work

Bibliography

Appendix:

Table 1: Unemployment from a wage above the equilibrium level

Table 2: Number of trade unions and union members; Great Britain,

1975-2000

1. Introduction

Partnership at work is the relationship between employers, employees and their representatives. The existing assignment deals with this approach which was created in 2001 of the TUC (Trade Unions Congress) Partnership Institute to help organisations to improve their relations to trade unions. It should illustrate the advantages and disadvantages of each particular group and evaluate the prospects for success of this approach. The last element of the structure deals with a comparison of partnership at work to previous approaches.

2. Advantages and disadvantages of particular groups

2.1. Employer

2.1.1. Advantages

First of all the possible partnership advantages for an employer should be assessed at this point. The main advantage can be described as a planning security. Due to long-term pay deals with duration of at least 2 years unions offer organisations the opportunity to concentrate on other matters (IDS Studies Partnership Agreement Oct. 1998 p. 8).

In this way it is for the concerning company also possible to invest, for example, in additional buildings or fleet of vehicles because there will be no increase in salary over the considered period of time.

The enhancement of productivity is mentioned as the second advantage for employers. To achieve higher productivity staff has to be trained better and act more flexible. When the employees are acquainted with this behaviour more responsibility can be delegated to them which were previously carried out by supervisors (Hollinshead 2003 p. 118).

A changing process in the working time is another benefit. At first sight this is not an obvious advantage for employer. Nevertheless the working time and especially the working year can be reorganised into a form which is more appropriate to respond faster to customer needs (Hollinshead 2003 p. 118).

2.1.2. Disadvantages

Besides the already cited advantages employers have additionally to reckon with disadvantages of partnership at work.

For many employers the most important disadvantage of this approach is the increasing influence of unions in decision making on internal matters (Hollinshead 2003 p. 118).

Claydon takes an additional step and argues that partnership may represent another ‘union Trojan horse’ (Hollinshead 2003 p. 119). Due to this rising influence employers are worried about the lack of union’s managerial skills (Salamon 2000 p. 230). It is obvious that unskilled participants in business negotiations do not have the necessary resources and knowledge to decide which objective is the most important for the company and their employees and which can be neglected. Furthermore the protection against unfair dismissal is stated at this point as second disadvantage for employers in the TUC partnership approach. In the case of ‘Blue Circle Cement’ the company offered their staff maximum employment security (IDS Studies Partnership Agreement Oct. 1998 p. 5). As a countermove the employees commit themselves to acquire additional skills and to develop flexibility. Generally speaking this is a suitable attempt but at the beginning of an economic downward trend with decreasing demand companies produce less. Therefore it is inevitable to set workforce free to cut costs and do not grant protection against unfair dismissal in an inappropriate manner.

2.2. Employees

2.2.1. Advantages

In addition to the advantages of employers on the previous page the advantages of employees should be evaluated at this point of structure. Job security is for many employees the most important benefit of the partnership approach. Without the fear of losing their job staff has the security to suggest and initiate changes and improvements (IDS Studies Partnership Agreement Oct. 1998 p. 5). The long-term pay deal we assessed at an earlier stage is an advantage for the personnel as well. The employees have the safety to gain their salary within the regarding period of time. Moreover in some cases staff is offered an annual bonus for good work. The ‘Co-operative Bank’ provides their personnel a 2.5 per cent of basic salary and a separate profit-sharing payment (IDS Studies Partnership Agreement Oct. 1998 p. 14). A change in working time by reduction of time worked due to improved flexibility and productivity of employees can be regarded as the third of the here examined advantages. ‘Blue Circle Cement’ reduced the hours worked per week from 39 to 37 in 2001. This issue was realized at no additional cost for the company and the quest for excellence (IDS Studies Partnership Agreement Oct. 1998 p. 12).

2.2.2. Disadvantages

Every approach is accompanied by advantages and disadvantages. After the evaluation of advantages for employees this work provides the disadvantages as well. From ‘Blue Circle Cement’ there is an example which can be stressed at this juncture. After the company negotiated in March 1996 for a partnership agreement with trade unions and staff representatives they decided to abstain from industrial action during the agreed time (IDS Studies Partnership Agreement Oct. 1998 p. 9). In some instances this is a disadvantage for the employees due to the fact that there is no option to change the working conditions within the regarded period of time referring to a long-term pay deal. The second disadvantage which will be evaluated at this point seems not to be a disadvantage at first sight. It is about high wage settlements. Assuming that a company agree a long-term pay deal for three or even more years with a fixed or increasing wage but immediately after the accord is signed the market wage declines. On the job market the fixed wage of our example company is now situated above the market equilibrium (Mankiw 2001 p. 592) (Table 1). The disadvantage for the staff is that the employer pays them a wage which is too high. So he tries to cut cost by lay off employees.

2.3. Trade Unions

2.3.1. Advantages

At this point the possible advantages for the third group concerned, the trade unions, are discussed and analysed. By putting the partnership at work approach in place unions obtain more and more influence in particular companies (Hollinshead 2003 p. 181). At Co-operative Bank the union achieve ‘greater access to business information and improved opportunities to influence what is going on’ (IDS Studies Partnership Agreement Oct. 1998 p. 15). That means that unions move away from an adversarial position they adopted in the past to a more constructive and acting position. As second point the improvement of union’s knowledge about their members is mentioned. This means that an enhanced information exchange leads to more satisfied employees and a higher productivity. The union is also able to assess how staff is treated at the company concerned.

2.3.2. Disadvantages

Within the whole Partnership at work approach it is quite difficult to discover disadvantages for trade unions. The main problem for a trade union is to convince their members of the necessity and the benefits of the partnership (IDS Studies Partnership Agreement Oct. 1998 p. 31). Furthermore it is an issue for unions to explain the outstanding modifications and how the working environment will be adjusted to a decreasing number of members (Table 2). To summarize the approach from union’s point of view it can be assumed that unions achieve more advantages than disadvantages from partnership at work.

3. Evaluation of the prospects for success

3.1. Introduction

The following evaluation of the prospects for success of the partnership at work approach will be analysed on the basis of practical examples of companies from different branches of industry.

3.1.1. Example 1: Scottish Power

Our first illustration is about ScottishPower which offers almost every kind of electrical services from the generation of electricity to the retailing of electrical goods.

By the introduction and the implementation of the partnership approach ScottishPower achieved an improvement of making decisions on restructuring. Furthermore the analysis of the annual hour system and the evaluation of value added as a result of the new skills acquired as part of the introduction of competence-based pay are cited. The process at ScottishPower can be summarized by saying that the quality of decision-making has improved and staff and management have developed higher levels of trust (IDS Studies Partnership Agreement Oct. 1998 p. 23).

3.1.2. Example 2: Tesco

As second example this work provides an overview of the execution of the partnership approach at the retailer Tesco. After the introduction of the modification many issues enhanced. The 1998 pay negotiations were completed in a single day due to easier discussion than the usual adversarial event. More information was supplied to the union than previously including the business situation, the budget available and the potential payroll costs (IDS Studies Partnership Agreement Oct. 1998 p. 32). Tesco's pay offer was considered and accepted by the committee with a paramount majority. To sum up it can be stated that the cooperation led to an improvement of the situations of Tesco, the union and the staff as well.

3.1.3. Example 3: United Distillers & Vintners

United Distillers & Vintners is the third and last example which will be assessed at this point. In 1997 the first negotiations were undertaken since the introduction of ‘Positive Partnership’, which is a partnership approach. The two parties discussed in a constructive and responsible way which is similar to the above mentioned discussions at Tesco. Another three-year pay deal was the outcome of the negotiations. Within the same year United Distillers & Vintners provided a presentation which showed an indication of the benefits achieved. An impressive efficiency improvement took place in all areas of the business. Thus it should be declared that the company list lower levels of overtime, shorter lead times, new product capability and a healthier budget for four consecutive years (IDS Studies Partnership Agreement Oct. 1998 p. 36). These achieved benefits confirm the success of partnership at work.

After the evaluation of the above mentioned examples the partnership at work approach has to be seen as a chance to improve productivity, trust and cooperation.

4. Comparison with previous approaches

At the last juncture the assignment deals with a comparison with previous approaches experienced in the UK since the Second World War.

4.1. Unitarism – Partnership at work

Unitarism is the first approach which should be compared with partnership at work. The unitarist approach implies that management and labour pursue the same objectives (Leat 2001 p.15). Willingness for cooperation is taken for granted and disagree can not be comprehended. Therefore strikes are not an issue and are perceived to be malevolent and interrupting to them who want to follow their profession. Employers want the staff to act as a team and to facilitate the achievement of the company targets. When conflicts occur in a unitarist orientated company they can only be caused by faulty communication or misunderstandings. In a case like that it is the management’s responsibility to eliminate those problems at an early stage (Bennet 1997 p. 4-5). Within the unitarist approach the workers must observe the following. They have to be flexible, they must regard the trade unions as an intermediary and they have to show responsibility for the quality of the firm’s output and for achieving total customer satisfaction. Furthermore pay negotiation are made individually and what management order has to be done. The employer is looking for staffs that have an appropriate outlook and seem to be loyal. Besides the employee should be aware of the organisation’s wider objectives. Supply in training and support are aimed just as inspiration and motivation. Unions are not required because management look after their employees (Bennet 1997 p. 5). After the analysis of the unitarist approach this work will now provide a comparison with partnership at work. The main difference between these two approaches is the fact that unions are unimportant and that employees do not have the possibility to participate in decision making. Collective bargaining exists in the partnership approach but in the unitarist one each individual has to negotiate his payment on his own. To date unions have far more possibilities to interact in decision making and have equal rights as an entire partner. Moreover employees have responsibility for the company but they have also to be treated as individuals with own life’s and expectations.

4.2. Pluralism – Partnership at work

As second comparison partnership at work and pluralism will be evaluated at this point. Pluralism can be seen as a more pragmatic and effective alternative to unitarism. In contrast to the unitarist approach the pluralistic approach sees conflicts and disagreement between workers and management as the normal state of affairs (Bennett 1997 p. 6). To achieve long-term stability management has to recognise conflicting interests, to negotiate compromises and to balance the demands of various groups (Bennett 1997 p. 6). Pluralism considers trade unions as essential to occupy a key role in solving conflicts. Collective bargaining is regarded as a possibility whereby management and labour can allocate the profits of companies in an orderly fashion. Some benefits of pluralism are forward planning, orderly and consistent procedures, realistic approach of dealing with unions, increasing flow of information, stability achieved through compromises and the balance of interests of management and staff (Leat 2001 p. 16 - 17). Pluralism is not usable at small business due to face-to-face contact of management and employees. Another disadvantage of the pluralistic approach is that the establishment of procedures for settling problems could itself support ‘them and us’ attitudes which can cause disputes (Bennett 1997 p. 7). Compared with the partnership at work approach pluralism has got some similarity but also some differences. Collective bargaining, the necessity of unions and the motivation of staff are the main resemblances the two approaches have. The flow of information is comparable but only the partnership approach provides a flow from bottom up and top down. At least the major differences are the destructive ‘them and us’ attitudes and the need for an external arbitrator to solve problems. In the partnership approach problems are solved by unions and employer to everyone’s satisfaction.

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