Radical Aer Rianta partnership compactlies dormant

The semi-state airport management company Aer Rianta’s 'compact for constructive participation', established in the mid-1990s, was viewed in many quarters as the most radical and wide-ranging exemplar of enterprise 'partnership' in Ireland to date. However, in late 2003 it appears to be dormant, or even defunct. Drawing on recent research, this article examines the main characteristics of the compact, as well as the opposition it encountered.

The 'compact for constructive participation' in the semi-state airport management company, Aer Rianta, dates back to the mid-1990s, when a Joint Union Company Group (JUCG), which was at the centre of the process, established multi-level proposals for 'partnership' in three Irish airports - Dublin, Shannon and Cork. These proposals were set out in two key documents (explored in more detail below): The compact itself, entitled 'Towards constructive participation: a positive approach to management/union relationships' (1994); and the 'Requisite arrangements' (1995) .

One of the central principals of the compact was 'jointness'. In other words, no one party would seek to impose unilateral change, and all proposals for change would go through an agreed partnership process involving those who would be affected by it prior to any decision being made to implement change. In 2003, these principals would appear at odds with the current adversarial approach which is being taken to the planned break-up of Aer Rianta, with the compact now seemingly having collapsed, and at the very least lying dormant. The compact was without precedent in Ireland in terms of the level of ambition in attempting to establish multi-level, direct and indirect, participation arrangements, and nothing has been attempted on the same scale since.

Almost since its inception, the evolution of the compact has been closely scrutinised by academics Bill Roche and John Geary of the Department of Industrial Relations and Human Resources, University College Dublin, who have written a number of papers on the subject, some of which are draw on in this article. The bulk of their research was conducted between 1997 and 2001, though they also conducted a review of constructive participation at the end of 2002 following a request by the JUCG.

Progressive industrial relations tradition

Aer Rianta currently employs about 3,300 people. The company has traditionally been highly unionised, with an overall trade union density level of over 90%. The main unions in Aer Rianta are: the Union of Retail, Bar and Administrative Workers (MANDATE), which organises workers in airport retail (formerly duty-free) shops; the Services Industrial Professional and Technical Union (SIPTU), which organises ancillary staff grades, airport police and fire services, operatives and clerical staff; the Irish Airline Executive Staff Association (IAESA) - now a branch of the Irish Municipal Public and Civil Trade Union (IMPACT) - which organises middle management; and a number of craft unions, prominent among them the Technical Electrical and Engineering Union (TEEU), which organises maintenance craft workers. The unions negotiate together on company-wide issues under the umbrella of the 'Aer Rianta group of unions'. Aer Rianta has a tradition of positive and progressive industrial relations and personnel management and was a pioneer of progressive policies in areas such as work-sharing and quality of working life. The incidence of industrial action has been significantly below the rest of the public sector, and compares favourably with the private sector.

In 1988, provisions for the election of 'worker directors' to the boards of state-owned companies were extended to Aer Rianta and three worker directors were elected to the board. In 1991, the Joint Union Company Group (JUCG) on participation was established. During 1994-5, the JUCG agreed a series of proposals for partnership in Irish airports. These were outlined in the two key documents referred to above, the compact and the 'requisite arrangements'. The compact sets out a series of principles aimed at rebuilding union/employee-management relations in Aer Rianta along partnership lines, while the 'requisite arrangements' identified a series of structures and measures to be put in place to facilitate the realisation of partnership. The main proposals in these two documents provided the framework for what came to be known in Aer Rianta as 'constructive participation' (CP). CP envisaged multi-level and multi-stranded partnership arrangements in which employees and unions would be accorded a role in decision-making, involving task participation, department and business unit strategy and competitive strategy for the company as a whole.

To support joint decision-making, the unions received guarantees of institutional security, employees were assured of employment security (the preservation of employment levels would be an agreed parameter of commercial strategy) and financial participation was espoused. The company received assurances from the unions that they would assist in improving the economic performance of each of its constituent units. The parties pledged that Aer Rianta would seek to compete on the basis of service quality and workforce skill rather than on the basis of cost minimisation and low pay. There was also a pledge to provide training covering all aspects of engagement with CP.

In a recent paper ('Workplace partnership and the displaced activist thesis', Industrial Relations Journal, 2003, forthcoming), Geary and Roche observe that CP at Aer Rianta envisaged a clear-cut division of roles between partnership structures and established industrial relations and collective bargaining channels. The parties involved in partnership structures were not expected to arrive at a single common position with respect to any problem or agenda. Even if they did, it was understood that management and unions retained their established rights under collective agreements, and that either party, or both, could dissent if they chose. In short, partnership neither incorporated nor displaced established collective bargaining and industrial relations channels. Issues could be handled on a partnership basis, in which case it was ultimately open to unions and employers to accept or reject any proposals put forward. Alternatively, issues could be handled through established industrial relations channels.

The main unions in the company, operating under the Aer Rianta group of unions, supported CP, Geary and Roche suggest. The exception was the union representing middle managers, IAESA, which had not participated in the development of partnership, perceiving itself as effectively excluded from the process.

JUCG played pivotal role

Following the formation of the JUCG in 1991, it became pivotal in the development of CP, acting as steering group and 'trouble-shooter' for the process. The JUCG comprised senior managers and union officials and activists, and it sought to develop proposals on a consensus basis. It was integral to the operation of the JUCG that its members were expected to act in a non-representative capacity, contributing their expertise to the development of partnership and bringing their influence to bear in a general sense to promote partnership in the company. Funding was secured from the Department of Public Enterprise to provide resources for CP and to provide financial independence from the company. A senior full-time trade union official was seconded to the project, and he and a key senior manager became the main proponents of CP. They also became intimately involved in the day-to-day implementation process. Other JUCG staff were seconded to the project in the role of full-time facilitators, while others acted as mentors, supporting partnership in various parts of the organisation.

Geary and Roche note that the practical implementation of participative principles and structures began in 1997. 'This was overseen by the JUCG, which was increasingly drawn into the handling of operational problems. These included the reluctance of some managers to engage; attempts by others to use CP to push through changes on a unilateral basis; allegations that unions sometimes sought to use partnership to stall management proposals, and more generalised uncertainty and ambiguity concerning the relationship between partnership and established industrial relations processes.'

Strategy groups

Amongst the most significant partnership structures to be developed in Aer Rianta were the so-called strategy groups (SGs) and significant issue groups (SIGs). All were expected to address issues jointly, based on the collection, examination and validation of relevant data. SGs focused on single issues, such as the future viability of maintenance operations at Shannon Airport, problems with the provision of the cleaning service at Dublin Airport, and the future of Dublin duty-free shops. During 1997-8, seven SGs were established at Dublin and Shannon. All SGs addressed issues of service cost, efficiency, viability and development in the context of the strategic commercial priorities outlined in the compact, including employment security.

SIGs developed to address two distinct types of issues. First, a number addressed key issues linked with the progress of CP, such as the revision of personnel and industrial relations policies, the redesign of reward systems and the future of training. Second, a number examined cross-company commercial issues and challenges. Two SIGs in particular came to occupy a crucial role in the partnership process during 1998-2000. The duty free SIG produced a paper on how the imminent disappearance of duty-free sales, on the instigation of the EU, might be handled, and this became the basis on which management and unions subsequently addressed post duty-free retailing at the airports. The corporate strategy SIG arrived at a joint vision of the future of Aer Rianta, which accepted that the partial privatisation of the company represented the most realistic means of meeting its burgeoning capital requirements and pursuing its competitive strategy.

According to Geary and Roche, the corporate strategy SIG’s report became the basis for a common front between the Aer Rianta board and management and the group of unions: 'On this issue, more than any other, partnership effectively subsumed or displaced collective bargaining and traditional industrial relations channels within the company. The [Aer Rianta] worker directors, however, disagreed with privatisation and openly opposed the position adopted by the unions and management under partnership, leading to a struggle between them and the group of unions.'

Significant obstacles

Despite having been adopted as official policy by Aer Rianta and group of unions, Geary and Roche suggest that partnership 'encountered significant obstacles'. They state: 'Senior management was divided on the merits of the approach. A minority supported partnership - most of these occupied staff rather than line management roles. Most senior managers were sceptics, and the rest were overtly opposed. The chief executive in office up to 1998 was a supporter, but supported the process in a largely passive sense. A new CEO appointed at the implementation stage provided more active support and altered the balance in favour of partnership at a time when the process began to engage major commercial issues.'

According to Geary and Roche: 'Many middle managers were apprehensive and insecure, a posture that hardened into formal opposition when their union instructed them at the implementation stage not to cooperate with CP. The postures of middle managers were also influenced by their perception of senior management division and ambivalence. Prevailing formal organisational structures and control systems remained substantially unaltered - partnership was expected, in effect, to colonise prevailing modes of decision-making and change them from within. Human resource and industrial relations policies were expected to change, but progress in these areas in joint bodies remained slow. In consequence, prevailing reward systems provided little incentive for either management or staff to engage with partnership.' Meanwhile, relations between the worker directors and CP had always been uneasy, Geary and Roche suggest, and they were among its most vocal opponents.

According to Geary and Roche, the largely benign commercial conditions faced by Aer Rianta during the 1980s and much of the 1990s favoured deliberation and planning in the development of CP. The same conditions also encouraged inertia in prevailing structures and modes of decision-making. From about 1998 onwards, however, changing commercial conditions provided more fertile ground for change. In particular, 'the acute challenge represented by the imminent loss of duty-free sales and the fundamental challenge posed by the review of the company, provided opportunities for supporters of CP to demonstrate the potential of partnership - while in the process tackling management scepticism and opposition. The dramatic growth in traffic volumes and a tightening in labour markets from the mid-1990s, as the Irish economy grew by about 9% annually, allowed scope for absorbing the loss of duty-free sales, while observing the employment security clause established in the compact.'

Review

In a second paper (Partnership in Aer Rianta: towards a new beginning), prepared for the JUCG - and dated March 2003, when CP was already in the process of being wound down - Roche and Geary provided a review of CP, and made some recommendations should the parties decide to recast it. In relation to the main achievements and failings of CP, Roche and Geary observed that all parties, though critical of some or even many aspects of CP, were able nevertheless to point to benefits and achievements that flowed from CP at some stages or levels in the process. In particular, the more intimately involved employees were with CP activities and the greater their level of job autonomy, the more positive their attitudes to partnership; and the more positively they viewed employee relations in the company, the higher their level of job commitment to Aer Rianta, and the higher their level of commitment to their unions.

According to Geary and Roche: 'In circumstances where unions strongly committed to the process engaged with committed management to address issues that held significant potential for mutual gains, most progress was made through CP, and the staff categories involved were more positive as to its advantages. In such circumstances, CP proved sufficiently robust to address major issues form beginning to end - essentially subsuming industrial relations processes.'

However, in circumstances where unions and staff were more divided as to the merits of CP and where the issues addressed through CP were intrinsically more complex to resolve, Roche and Geary suggest that major difficulties were encountered: 'These ultimately displaced CP in favour of traditional industrial relations postures and processes … The negative consequences engendered ultimately drew the CP process to a halt across most of the company'. Referring to 'structural design faults', Roche and Geary suggest that: 'While the main agreed documents guiding CP envisaged interlocking forms of representative participation and direct employee participation, the actual roll-out and operation of CP was 'top heavy', with greatest effort and resources devoted to 'strategic' and representative initiatives of various types, and commensurately less effort devoted to day-to-day employee involvement, the promotion of team working and new forms of work organisation ... This meant that for many employees CP appeared distant from their day-to-day activities, with the result that attitudes to CP, the company, work and unions would not appear to have been impacted on any widespread or deep basis by the process.'

Meanwhile, central to the problems of process encountered were 'issues of unclear mandate affecting both sides and confusion over whether proposals could be progressed or agreements concluded through CP. This sometimes resulted in retreat back into [industrial relations], where ground-rules and mandates seemed more clearly defined and well understood.' According to Roche and Geary, CP also faced management and union 'succession' problems, because it became associated with a small number of key individuals on the management and union side: 'While these individuals remained with the company, the initiative was widely perceived to have had possessed a fair chance of succeeding. However, once these individuals left Aer Rianta, CP was seen to be without its champions and vulnerable to indifference or to hostile opinion.'

Moving forward

In terms of moving forward, Roche and Geary suggest that a valuable repository of knowledge and expertise exists at Aer Rianta that can be availed of should the parties choose to recast any new partnership initiative. They offer a number of proposals, should the parties attempt to move the process forward at some point in the future: 'The structural model or set of arrangements for giving expression to partnership under CP, outlined in the requisite arrangements document, now appears in need of significant revision in the light of some of the problems outlined above, as well as changes in the interim in the circumstances of the company and the priorities of its stakeholders.'

Management and the Aer Rianta board need to be coherent and unequivocal in their support for partnership, Roche and Geary suggest: 'Different forms of managerial behaviour will be required. Instilling a culture of mutual respect, trust and openness calls for constant vigilance on the part of senior management. The best demonstration of such commitment and vigilance is to alter the manner in which managers are themselves managed.' They add: 'Unless front-line management are appraised and rewarded for developing new behaviours, such initiatives are unlikely to take root. In altering the manner in which line management are managed, senior management send a strong signal to their junior colleagues that partnership and employee involvement are important processes and their wholehearted support is expected. If senior management continue to reward line management exclusively on the basis of traditional, short-term and 'hard' indicators of business performance, partnership has little chance to prosper.'

External validation

With regard to exploring ways of gaining external validation for any new partnership agreement at Aer Rianta, Roche and Geary advise the parties to 'explore the possibility of registering any agreement they might conclude on the principles and arrangements with the Labour Court … the parties should also be mindful that the EU Directive on information and consultation will be given expression in Irish law by 2005 [IE0309204F], from which point legal provision will exist for consultation in Irish workplaces.'

To handle the interface between partnership and industrial relations, Roche and Geary recommend that: 'For partnership-based channels to operate effectively, the parties will need to disavow and discourage tactical or opportunistic switching between partnership and industrial relations channels … The provision of appropriate mediation facilities will also act to buttress the operation of partnership-based channels for solving problems and concluding agreements'. Finally, they suggest that human resource management and industrial relations policies would have to be significantly reconfigured for partnership and employee involvement to take root: 'The introduction of performance management systems, together with reward systems, which make provision for team-based pay or a profit and gain-sharing component, would merit close attention in any future partnership initiative.'

Commentary

The Aer Rianta partnership compact offers some important lessons for policy-makers in Ireland interested in pursuing and developing workplace partnership initiatives. It is clear that the AR compact was overly reliant on key senior management and trade union 'champions', and once this inner circle disbanded, there was little to prevent the process from withering on the vine. In this regard, because there are currently few permanent legal and institutional supports for enterprise partnership in Ireland, voluntary partnerships always rely, to a large extent, on the goodwill of key senior personalities, and are vulnerable to collapse when these figures move on. At this juncture, there appears little chance of the compact being recast and resuscitated, though the forthcoming implementation of the EU information and consultation Directive (2002/14/EC) (EU0204207F) could provide the legal and institutional impetus required. (Tony Dobbins, IRN)