New research on flexibility and HRM in Danish companies

New research published in 1999 suggests that Danish enterprises have not introduced new work organisation methods such as human resource management in order to circumvent trade unions and shop stewards, but that, on the contrary, managers regard shop stewards and trade unions as important partners in the implementation of new work organisation. Companies typically want new work organisation in order to achieve greater flexibility but the study, which examines five industrial enterprises, indicates that it is critical to realise both what the management means by flexibility and what the consequences of one form of flexibility being given higher priority are for other forms of flexibility.

In discussing the future development of the labour market and industrial relations, the debate is usually littered with "buzzwords" such as new forms of work organisation, group-managed work, the quality and meaning of working life, greater interrelation between family life and working life, decentralisation of the collective bargaining system and flexibility. But what do these concepts of new forms of work organisation entail? What are the forms of flexibility which are being aimed at? What demands do employers make of employees and vice versa, and how are they to be met? And what role do trade unions and employers' organisations play in connection with new forms of work organisation?

These questions are analysed and discussed in a 1999 paper from the Department of Sociology at the University of Copenhagen entitled New work designs, flexibility and decentralisation - a sociological case study of work organisation and cooperation in five Danish industrial enterprises.

HRM and unions in a Danish context

As the title indicates, the study is based on five in-depth case studies of Danish companies in industry. A total of 85 managers, intermediate managers, shop stewards and employees in these five industrial enterprises were interviewed about their experience of how new forms of work organisation, such as human resource management (HRM) interact with the desire for flexibility, and how this affects cooperative relations, both at company level and in relation to trade unions.

The basis of the study is a thesis that enterprises try to acquire employees' loyalty via new flexibility priorities and HRM-like work organisation, at the expense of the community between the workers themselves and of their loyalty to trade unions. In other words, the thesis - which is inspired by Anglo-American experience with HRM - is that management tries, more or less intentionally, to break down "worker communities" by introducing HRM. The line of thought is that HRM individualises both job descriptions and the relations between management and the individual employee. This individualisation trend threatens existing informal and formal worker communities and, consequently, in the long term, trade unions because these are based precisely on uniformity - on the workers' common understanding of the work and the pressure which the management puts on them.

This thesis was tested on five industrial enterprises which, to a greater or lesser extent, work on the basis of HRM principles. The findings are that the managements in none of the five enterprises has intentionally tried to circumvent or marginalise collective organisations - either the informal organisations at company level (typically shop stewards) or the more formal ones (trade unions). On the contrary, the case studies indicate that management regards it as a great advantage if the trade union and/or the shop stewards are involved in organisational changes. The "rubber-stamping" of a management measure by the union or shop stewards may be crucial to it being accepted by the employees and consequently being successful.

A prudent conclusion on the basis of the five cases is that the strong Nordic tradition of cooperation between the parties renders it less likely, and less rational, to try to circumvent collective organisations via new forms of work organisation. However, even though managements do not intentionally try to circumvent and marginalise the labour trade unions, new work organisation may unintentionally have this effect.

Challenges for the collective bargaining system

The study discusses how HRM and similar types of work organisation seek to meet the employees' wishes and requirements for a meaningful working life which suits their individual lives. If employees's requirements for a good working life change and the new requirements are increasingly met by company managements, this may be the germ of an erosion of the role of trade union organisations. For why join a collective organisation such as a trade union if your personal ambitions and wishes are met satisfactorily at company level and by an understanding with the management? Furthermore, the trend towards introducing self-managing teams may also threaten collective organisations. In the team, a new and perhaps more up-to-date collective function is offered which gives the individual employee a possibility of having more meaningful work and closer relations with his or her colleagues. This community may replace the community which the trade unions have, so far, provided.

Another aspect which is discussed is the trend towards a division into core employees and peripheral employees. Several of the industrial enterprises in the study have had informal divisions into "A employees", in whom the management invests in terms of training and who are therefore the very last to be dismissed, and "B employees", who are dismissed and employed depending on the inflow of orders, and in whom the management does not invest in terms of training. Even though the two employee categories may come from exactly the same trade group or staff group, their vocational interests may be quite different depending on the group to which they belong. This may, in the long term, weaken traditional trade communities which have traditionally been strong and heavily compartmentalised in Denmark. Moreover, the study also suggests that it is not so much concrete specialist competence which employers are looking for as employees with the ability and willingness to acquire new competence and skills in a relatively short period of time. This means that traditional trade communities and job demarcations may be in the process of dissolving, and this may erode the basis of the trade unions in the long term.

These trends mean that trade unions in particular and the collective bargaining system in general are faced with new requirements. The question is whether the existing bargaining system can adjust to the reality that employers seem increasingly to be demanding that the parameters governing employees' work are "soft" and without regard for the trade background which the unions are built around. These "soft" parameters are, in the nature of things, difficult to formulate and put into agreements, and the existing bargaining system is to a great extent built around more traditional job demarcations.

New work organisation and the quest for flexibility

If, as has been suggested above, management's intention is not to threaten collective organisations, why does it introduce new forms of work organisations at all? What drives the enterprises to make changes, rather than simply continuing with the existing work organisation?

An important reason is the desire for greater flexibility caused by external pressure in the form of international competition. In all the enterprises in the study, flexibility is valued highly by management, but not all the enterprises have defined what forms of flexibility they want. Typically, it has not been realised that giving higher priority to one form of flexibility has consequences for other forms of flexibility.

The study indicates that notions of what flexibility actually is are relatively unclear in the enterprises. For some companies, flexibility is about pay flexibility, while for others flexibility is a question of numerical flexibility - ie the possibility of varying the number of employees. For yet others, flexibility in terms of working hours is given high priority, while some enterprises want flexibility in all areas.

An important point made by the study is that the case studies indicate that it is not possible to achieve flexibility in all areas. The study states that it is critical for management to realise that giving higher priority to one form of flexibility has consequences for other forms of flexibility. If too many forms of flexibility are aimed at - or if the enterprise has not fully realised which unintentional consequences organisational changes may entail - it may be costly in terms of production, and if the shop stewards and/or the trade unions are not involved, this may damage cooperative relations.

Commentary

Flexibility has been a widely discussed issue in Denmark in the 1990s. In the middle of this century, the collective bargaining system was relatively centralised, and this gave limited flexibility at local level. The decentralisation of bargaining in the past couple of decades can be seen as the response of the institutional system to the desire for increased flexibility at the company level. With the greater possibilities of achieving flexibility locally, the new challenge for the enterprises will be to define which type of flexibility they are trying to achieve and, not least, the interrelation of the various forms of flexibility.

Company managements are increasingly trying to involve shop stewards and trade unions in management decisions. This has resulted in increased insight and responsibility, but it may also be a challenge for the trade unions vis-à-vis their members, because co-responsibility and influence may potentially blur the line between "us" (the employees) and "them" (the management). Consequently, the traditional conflicts of interest are potentially in the process of being dissolved.

This probably does not mean that there are no conflicts of interest at all, but that the disputes are of a different nature and are perhaps more complex than in "the old days", when most of the disputes concerned fundamental pay and working conditions - ie they were disputes which gave some highly tangible results.

Denmark's relatively good cooperation means that the trade unions must work to render visible the new items which are to be bargained over and the new victories which can be won - and this will be one of the greatest challenges for the trade union movement in the new Millennium. (Steen E Navrbjerg, FAOS Research Centre on Employment Relations)

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