What are the implications of this socio-political climate of deregulation and fragmentation for management conduct of industrial relations? Marginson and Sisson (1994) note the swell in number of Euro-companies since the mid-1980s, along with an acceleration of cross-border mergers, acquisitions and strategic alliances, and the growth in number of transnational companies organized on a European scale. This means that management is effectively ‘internationalized’. The consequence of this, note, Marginson & Sisson (1994: 23) is:
· the coordination and control of industrial relations across borders;
· the capacity to develop pan-European policies and practices and to crate new structures of industrial relations at pan-European level;
· the growth of ‘organization-based’ employment systems, which threatens the sectoral nature of multi-employer bargaining (the dominant system).
Coordination and control
Management by task has been replaced with management by performance. This has been made possible by the growth in information processing capacities and by developments in computer technology, which afford possibilities for intensive monitoring of ‘organizational performance’. This in turn means that transnational managers can compare performance across different sites and then ‘reward and punish’ individual sites (for example, by capital investment decisions), thereby increasing the power of management to harness concessions on working practices, terms and conditions in different localities. For example, in 1993, Hoover decided to concentrate its production facility in Scotland at the expense of a plant in France, conditional on securing concessions from the Scottish workforce. This illustrates the power of strategic management decisions beyond national boundaries to influence the working lives of thousands of employees. Employees in turn have few rights to be informed or consulted about corporate restructuring of this kind, nor do they have rights of representation at the transnational level: hence the pressure for international forms of trade unionism.
Pan-European industrial relations
Centralization of management and management structures at European level in place of national structures (for example, Ford, General Motors, Nestle, Unilever). This development has afforded the strategic potential to establish ‘organization-specific’ pan-European systems of industrial relations management. This may be expressed in common policy objectives across countries (for example, common philosophy of Human resource management as in IBM and Digital, employee involvement programmes as in Ford). Some corporates have introduced arrangements for employee information and consultation at European level within the EC (for example, work councils, as described in Chapter 5.2). Although the number of corporates that have instigated such arrangements is currently very small, it suggests that management is responding positively to the need for employee representation at the European level. Ths may also be in response to anticipated directive from the EC.
The European work council denotes a joint body of management and employee representatives (nominated by the trade union). The number of delegates is usually around 30 and the agenda is to deal with cross-border issues and ramifications of strategic decisions. In many cases these arrangements are informal and ad hoc, although formalized arrangements are beginning to emerge (for example, as in Volkswagen).
Organization-based industrial relations
In the case of devolved management structures emerging in mainly Anglo-American companies (and also many German-based companies) industrial relations management has also devolved. Devolvement is characterized by the establishment of quasi-autonomous business divisions, delegation of responsibility for operating matters, and devolution of financial accountability. In most cases, however, strategic decision making (and monitoring) responsibility is retained at the corporate level. In many instances this has generated an ‘internal company market’, where each business division is encouraged to trade and compete with one another for capital investment. However, wider competitive imperatives have led to the development of organization-specific employment systems reflected in the widespread growth of collective bargaining at company and workplace levels to deal with local industrial relations issues. These developments overshadow and detract from ‘bottom line’ management responsibilities in devolved organizational systems and thus produce tension between the corporate and the local therein.
The development of organization-specific employment systems has also led companies to opt out of multi-employer bargaining systems (for example, IBM) so they can tailor employment terms and conditions to particular conditions. Those companies who have not yet opted out of the multi-employer system are nonetheless voicing demands for greater flexibility and increased power for workplace-specific negotiations. The move towards single-employer bargaining systems involving local shop stewards rather than full-time union officials at the multi-employer level has implications for the industrial relations system as a whole. However, it is unlikely that small and medium enterprises of which there are very many, will have sufficient time and resources to develop their own local industrial relations systems. Thus no complete overthrow of the multi-employer system is expected.
Corporate Governance
Variation in systems of corporate governance across borders within Euro-companies have important implications for approaches to employee management. Within Europe, Marginson & Sisson (1994) describe two distinct modes of corporate governance: the Anglo-American ‘outsider’ system and the European ‘insider’ system. These two systems are distinguishable (in terms of their industrial relations implications) as follows:
Outsider Insider
Dispersed networks of shareholding Interlinked networks of shareholding
High exposure to Hostile Take-Over Protection from Hostile Take-Over
Financial Short-termism Financial Long-termism
The features of insider systems, note Marginson and Sisson (1994: 31), encourage greater commitment to enduring assets, particularly employee assets, which form a potential source of competitive advantage. The insider system is thus also more likely to adopt an employee development philosophy. In turn, employees are more likely to be long-term committed to the company. By contrast, in outsider systems employees are more likely to be regarded as disposable liabilities underpinned by a cost minimization approach to labour management. In Britain, this is excerbated by educational and training systems that put a low premium on sustained training. Whilst for insider systems employee management is a strategic issue addressed at central level, for outsider systems it is seen as merely a local level operational issue. It is indeed the ‘insider systems’ that have taken steps to secure transnational representation for their employees, whereas for ‘outsider’ systems where employee considerations are not seen as part of the strategic framework, the idea of transnational representation is a radical departure from their existing system of corporate governance.
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