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1 A new spirit of enterprise: Articles and cases ATCEIVED I Hf L C; :ur Oiflc 3IT !! liii! liii!! III liii International Labour Office, Geneva

2 Copyright International Labour Organization 1999 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the ILO Publications Bureau (Rights and Permissions), International Labour Office, CH Geneva 22, Switzerland. The International Labour Office welcomes such applications. Libraries, institutions and other users registered in the United Kingdom with the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P OLP (Fax: +44 (0) ), in the United States with the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA (Fax: ), or in other countries with associated Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose. ISBN First published 1999 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address. Printed in Switzerland PCL

3 Foreword The Second ILO Enterprise Forum is designed to provide an opportunity for entrepreneurs, managers of major enterprises, senior representatives of governments and employers' and workers' organizations, business schools and others from civil society, to meet under the overall theme of "A new spirit of enterprise for the 21st Century". Well-known speakers will provide the setting by sharing their experiences and visions about future challenges and the place of business in the world at a time when rapid technological changes combine with increasingly integrated and competitive markets and rapidly changing consumer values to create fundamental shifts in the competitive realities facing business. One important aspect of these changes is a growing focus on the wider contributions which enterprises can and in many cases already do make to a range of pressing economic and social issues such as human resource development, community development, promotion of labour rights, and employment creation. The articles and cases in the present publication provide an additional source of inputs to the Forum. They concentrate on various aspects of the issues which will be dealt with by the three main technical sessions, i.e. Human Resource Based Competitive Strategies, Corporate Citizenship and Social Initiatives, and Tapping the Employment Potential of Small Business. Some contributions are prepared by resource persons who will also be part of the various Forum panels, while others are by individuals and organizations who have been associated in important ways with the preparatory process which has led up to the Forum. The various contributions do not represent ILO views on the various topics. Rather it is our hope that the publication will enrich the discussions at the Forum and provide a stimulating blend of views and experiences which can be referred to by participants as well as by a wider audience with an interest in the issues covered by the Second ILO Enterprise Forum I would like to take this opportunity to thank all the contributors, and also to acknowledge the valuable guidance which we have received during the preparatory process from a bipartite reference group consisting of Mr. A. Penalosa of TOE, Mr. D. Cunniah of ICFTU, Messrs. Retournard, de Silva and Chacko of ACT/EMP, and Messrs. Ryder, Flechsenhar and Kyloh of ACTRAV. Göran Hultin Executive Director, Employment Sector FOREWORD

4 Contents Foreword iii Human resource-based competitive strategies Human capital: Delivering on the promise Brian Friedman, Dave Walker and Jim Hatch, Arthur Andersen Capital Services 3 Corporate experience of partnership and learning Peter Cressey, University of Bath 7 Once more with feeling - People really are our greatest asset Manpower 13 The developing workplace Danish Confederation of Trade Unions (LO) 17 Le dveloppement de la démarche <<compétences>> Alain Duniont, MEDEF 23 Corporate citizenship and social initiatives The global partnership for new corporate citizenship: Business-civil society relations in a changing world David F. Murphy and Gill Coleman, New Academy of Business 33 Values in action for a sustainable future Mark Wade, Shell International 43 Ethical sourcing: The C&A experience C&A 49 Nike and independent monitoring Nike Inc 53 Responsabilité sociale des entreprises: mise en pratique par Entreprises dans Ia Cite Bettina Ferdman, Fondatrice, Entreprises dans la Cite 57 Corporate citizenship - The human workplace dimension Jannick B. Pedersen, Group Executive Director, Human Resources and Brigitte Kjergaard, Social Adviser, Carl Bro AIS, Danemark 63 International business social initiatives: Social codes of practice - The "new kid on the block" Alan Wild, International Labour Office 67 Current developments in codes of conduct: Their relevance to enterprises and managers Michael Urminsky, ENTIMAN, ILO 75 Financial markets, corporate governance and enterprise social initiatives Howard Gospel, King's College, University of London, and Centre for Economic Performance, London School of Economics 81 A planetary bargain and the bottom line: Corporate citizenship, financial performance and staying power Michael Hopkins, Director, MFIC International Ltd 87 La responsabilité sociale a l'dpreuve de la mondialisation GroupeDanone 93 Socially responsible enterprise restructuring George Starcher, Secretary General, the European Band '1 Business Forum 99 CONTENTS V

5 The new codes of conduct and the social partners International Confederation of Free Trade Unions (ICFTU) 109 International Organization of Employers: Position paper on Codes of Conduct International Organization of Employers 115 Globalization, corporate citizenship and employers' organizations Hans Hammar, former Assistant Director-General, ILO 121 Tapping the employment potential of small business La creation d'entreprises en tant qu'enjeu dconomique et politique Anne Southam-Lingjaerde, cofondatrice et directrice de GENILEM 131 L'entreprise de petite taille Chambre de commerce et d'industrie de Lyon 137 Women's entrepreneurship Dr. Candida Brush, Associate Professor Management Policy, Director, Entrepreneurial Management Institute, Boston University 141 L' entrepreuneuriat fdminin: constats et perspectives Bertrand Cuchdnaut, PDG du Groupe Sico 151 Cooperation between large and small companies: A stimulus to job creation 155 Shell Live WIRE Sandy Ogilvy, International Director, Shell Live WIRE Susan Saloom, Manager, Shell Enterprise Unit, Shell Centre 161 Youth enterprise promotion - A brief overview of issues affecting policy and programme development Simon White, the ideas Group 167 Youth unemployment and youth employment policy: A summary of the findings of the Action Programme on Youth Unemployment Niall O'Higgins, ILO-CEET Budapest 173 vi CONTENTS

6 Human resource-based cornpetitive strategies

7 Human capital: Delivering on the promise Brian Friedman, Dave Walker and Jim Hatch, Arthur Andersen Capital Services This is an excerpt from the book Delivering on the Promise. How to attract, manage and retain Human Capital, by Arthur Andersen Human Capital Services partners, Brian Friedman, Dave Walker and Jim Hatch. Published by Simon & Schuster. All organizations now say routinely: "People are our greatest asset. Yet few practise what they preach, let alone truly believe it." (Peter Drucker, "The New Society of Organisations", Harvard Business Review, September-October 1992). People are our most important resource. As Peter Drucker observed at the beginning of the decade, this has become a cliché and borders on being a lie. Re-engineering guru Michael Hammer has called it "the biggest lie in contemporary American business," and it is hard to disagree. How can companies truthfully say that they "value" employees, if firms are willing to lay off thousands of workers to boost share price? And how can employers claim that they put their employees "first" when the salary of a chief executive officer is higher than the entire training budget for the next five years? But are companies really lying when they say that human resources are their greatest asset? Or are they merely indulging in some wishful thinking7 In Our view, based on extensive work with major corporations and other organizations the world over, the problem is not that companies don't value their people; it is that they don't know how to value them. They have not found a reliable way to appraise the worth of what they have, or to increase its value through better management. In order to value people, companies must move beyond the notion of human resources and toward the notion of human capital. The very term "resource" implies an available supply that can be drawn upon when needed. In the corporate context, people seem like water in a well that wili never run dry. Fire today, hire back tomorrow. Easy come, easy go. But are people really a "resource" in this sense? Or are they more like a form of capital, something that gains or loses value depending on how much and how we invest in it? The idea of "human capital" "Human capital" sees people not as a perishable resource to be consumed but as a valuable commodity to be developed. The idea is not entirely new. It dates back to the Bible's "Parable of the Talents". For companies, the lesson of the parable is that people become more valuable when we invest in them. Moreover, we can measure returns on that investment. So what is "human capital"? Parsing the phrase can provide some answers. Human (from the Latin hominem, for man) means of or relating to people. It signals our biological species: to be human is to be a person not an animal, a god, or a machine. Capital (from the Latin caput, for head) has many nuances. In its simplest usage, capital means the first, biggest, or best. In modern accounting, it means net worth, the remaining assets of a business after all liabilities have been deducted. In the 17th century, the term began to be used in business. Capital came to mean funds used to launch an enterprise (such as a joint stock company or a professional practice). Soon the notion of capital transferred from the realm of the company to the even larger domain of the nation. The utilitarian philosopher and economist Jeremy Bentham, in Emancipation (1793), speaks of capital as the money circulating in a nation. "In proportion to the quantity of capital a country has at its disposal will be the quantity of its trade." By the early 19th century, the term extended beyond money or stock to value itself. Capital no longer meant merely funds, but something above and beyond funds - a unit of value linked to the work expended to create it. HUMAN CAPITAL: DELIVERING ON THE PROMISE 3

8 Ironically, where human capital is concerned, it was the communist system that ultimately devalued human labour and ingenuity, and it was the capitalist system that increased its worth Human capital has little meaning in a controlled economy; it can be the engine of wealth and growth in a free one. Yet as the 20th century draws to a close, capitalism has not achieved its full potential in this regard. We have had effective financial capitalism, but ineffecfive human capitalism. Even in highly developed modern economies such as the United States, the 20th century has not completely broken away from the notion of "the employee-as-commodity". From Frederick Taylor's Principles of Scientific Management (1911) to Alfred Dunlap's Mean Business (1997), the idea of human replaceability runs like a thin, darkening thread in the tapestry of industrial ideas reminding individual employees ever more starkly of their relative unimportance in the grand scheme of corporate things. Today, to finish the Drucker quote with which we began, "managers still believe, though perhaps not consciously, what nineteenth century employers believed: people need us more than we need them." If you believe this you are missing a key part of the concept of human capital: companies need people. To say that there is "human capital" within a company (or other organization) implies many things human beings employed in their work are not merely people moving assets around - they themselves are assets that can be valued, measured, and developed like any other asset held by the corporation; human beings are dynamic assets that can increase in value over time, not inert assets that depreciate in value; human beings are prime among all assets. Capital, remember, is synonymous with net worth - the remaining assets of a business after all liabilities have been deducted; as such, human beings and the systems created to recruit, reward, and develop them form a major part of any company's value - as much or more than other assets such as cash, land, plant and equipment, and intellectual property; company value and therefore shareholder value can suffer when human capital is mismanaged. Over the past few decades, ideas like these have been slowly gaining acceptance in the marketplace. Although there is no single accepted definition of "human capital" there is a growing recognition that the old notion of "human resources" and the old way of managing those resources no longer serve the purpose of the modern company. Challenges to human capital We see two main sets of challenges impeding the spread of the human capital notion: first, limitations imposed by measurement and accounting systems; and second, limitations imposed by managers themselves - both in their perspective and in their motivation. The notion of "capital" is an accounting notion, yet there is no standard way of measuring its value and no current movement to do so. As such, the notion of human capital has remained a vague concept rather than a sharp tool. One might exuberantly call for the accounting profession to recognize "human capital" as consultant Kevin Thomson recently did in calling for recognition of "emotional capital" but this may not be realistic, at least in the near term. As partners in one of the world's oldest and largest accounting and consulting firms, we appreciate the deeply traditional nature of accounting. To become generally accepted in just one country, never mind around the globe, new principles must go through many years of dialogue and refinement. If it takes a decade to pass a new rule on a point that concerns only a minority of companies - such as the notion that derivative financial instruments should be valued at their market value - how much more time would a change in mandatory accounting for human capital take? We do not expect to see it in our working lifetimes. Nonetheless, companies can begin measuring and reporting on human capital on a voluntary basis in their financial statements. The tougher challenge is the challenge of perspective. Managers often find it difficult to assess human capital within their own organizations because they are a vital part of that capital itself. This makes it very difficult to take an objective stance in relation to a company's human capital as a whole, or from programmes created to obtain, manage, and enhance it. How can one be at arm's length from an entity that includes oneself? A research review People still need to prove to their employers or (if they are advisers) clients that human beings merit investment. Human capital today is a concept in search of a context. Fortunately this context is emerging. In 1992 Gary Stanley Becker won the Nobel Prize in Economics for his theories of human capital and researchers are now beginning to provide quantitative proof that investments in human resources pay off. Over the past few years, several academics have had success in finding correlations between 4 HUMAN CAPITAL: DELIVERING ON THE PROMISE

9 investments in human capital and in company performance: Cascio (1995) showed the negative effects of massive downsizing; Huselid (1995) found lower staff turnover, higher sales per employee, and higher stock price/book value ratios for firms that had programmes to develop and motivate employees; Bilmes (1996) found a high correlation between improvement in returns to shareholders and investment in both traditional and "intrapreneurship" programmes; Welbourne and Andrews (1996) showed longer post-ipo survival rates for companies that invest in human capital; Families and Work Institute (1998) linked job satisfaction and firm profits to workplace support, including flexibility, family-friendly policies, and other factors. Ongoing research by Linda Bilmes, a former consultant with a Big Six accounting firm and now US Deputy Secretary of Commerce, shows that companies with "employee-friendly" policies do better than peer companies lacking such policies. She studied 100 German companies from 1987 to 1994, measured employee focus both in terms of traditional human resources policies and in terms of opportunities for "intrapreneurship" within the company. Bilmes and her colleagues found a high correlation between improvement in returns to shareholders and investment in both traditional and "intrapreneurship" programmes. The Bilmes study also found that relatively few companies are making this investment at a significant level. Yet the notion of human capital has arrived en masse. The Amazon Web site lists over 200 books addressing the subject. The Lexis-Nexis database on the Web lists over 400 articles on the topic, and according to the Netfind search engine, the phrase "human capital" appears in nearly 2 million Web sites worldwide. However there is still the need to prove to employers that human beings need investment. Fortunately research such as that mentioned is beginning to provide quantitative proof that investments in human resources pay off, demonstrating that firms with practices designed to increase employees' on-the-job knowledge, skills, and abilities and to reward on-the-job achievements clearly outperform their peers without such practices. The current "crisis" state of human capital The high value of human capital - and the heavy cost of neglecting it is not a matter of emotion or faith, though both of these realms will always give clues in support of human value. Rather, the value of human capital is a matter of hard-and-fast economics. We are at a crossroads. Investments in human capital pay off. The question is: how should these investments be made, and how can return on these investments be measured? The question has become increasingly urgent at this time, when economic fundamentals and current hot business issues point to a scarcity of human capital in the developed world. The job of advisers is to help managers realize the full value of human capital in their organizations. Further information from Brett Walsh: HUMAN CAPITAL: DELIVERING ON THE PROMISE 5

10 Corporate experience of partnership and learning Peter Cressey, University of Bath Introduction Prosperity and employment growth in the modern economies are increasingly dependent upon creating and sustaining a highly skilled and adaptable workiorce. The European approach on the whole has tended to regard high skills, training, good communications and a consensual organizational regime as a part of the competitive advantage of firms. However, within enterprises this is being challenged by contradictory strategies that emphasize deregulatory, hire and fire, low skill and low wage strategies that do not see the central importance of human investment and mechanisms for social dialogue. Hence the arguments about the importance of human capital and how it might best be developed inside organizations are at a crossroads. Underlying the research to be explored here (Cressey & Kelleher, 1999) is the hypothesis that social dialogue can be the decisive factor in the process of the competency development, reskil]ing, training and the development of enterprise's human investment. What is often obscured is the way companies involve the workforce and their representatives, what joint forums are created, and how the necessary transformations are portrayed and achieved. Much evidence gathered from previous research indicates the existence of good examples, icons of social dialogue and partnership. Too often, however, these instances are not generalized and they remain isolated company examples. This EUfunded project looked particularly at those instances where enterprise learning and human resources have been successfully developed in conjunction with the social partners. The project The Partnership & Investment in Europe project (PIE) is part sponsored by the LEONARDO programme of the European Union. The project is led by the European Consortium for the Learning Organisation (ECLO) and the University of Bath with project partners in Germany, Sweden and Italy. The aim of this project was to see how key companies in Europe were developing their human capital. It also wanted to assess the role of the social partners and the part that social dialogue played in the competency development process. From the outset the research has been assisted by the involvement of actors from the social partners in the unions and employers' organizations in the countries specified. The research was case-study based and centred upon three important industries that are currently restructuring their human capital base, that is: banks, telecommunications and automobiles. All of the sectors chosen are undergoing significant transformations in terms of their internal organization, their industrial relations and their skills and competency structures. What follows here is a distillation of some of the main themes emerging in the research and the main lessons we can draw from them. Learning and dialogue as part of a larger transformation Enterprise experience in the past decade has shown the increasing importance of holistic business and cultural change strategies. Increasingly we cannot look at one area of corporate practice without seeing how it fits within the larger strategies and policies of senior management. The 12 cases in this study show the importance of the overall corporate strategies for change and how these bring in and use the concepts of the "learning organization" and "social dialogue" as part of the transformative process. So the concept of the Learning Organization as a thing or an end in itself is not the key aim, CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING 7

11 nor is the creation of mechanisms for social dialogue. Rather it is the role they play in the needed transformation that is crucial. The example of the telecommunications sector is clear here where the old public sector mentality and practices had to change in the light of commercial and competitive realities. The commercialization process in each of the three main telecommunication providers we look at was accompanied by a re-making of the enterprise in the new image - with differing skills, staff orientations and expectations and it is clear that partnership arrangements and new learning structures were central in assisting that shift. Not only in telecommunications but also in the other sectors, the external drivers for change were causing knock-on changes in HRD and industrial relations. Companies indicated how the social dialogue arrangements acted as a lubricant for negotiating through changes in work forms, by creating a climate of trust and by developing a shared mental model to which all employees subscribe. In the banking sector the transformations were just as big with commensurate cultural changes to handle. In the case of the British bank they sought to implant a "new psychological contract" into staff to realize the three (organizational, industrial relations and cultural) transformations that they were attempting. From the case evidence we can argue that, as new and innovative forms of organizational practice mature and become embedded, the distinctions between traditional institutionalized systems such as vocational training and industrial relations become blurred. Previously these were thought of as separate domains with correspondingly different specialisms, strategies and expertise. These separate institutional practices and knowledge break down and attempts are made to embed them into more open and inclusive approaches to organizational change, in new forms of learning networks and in teams. In one very simple sense this means that training, skill development and competency programmes cease to be the sole prerogative of management or particular training departments. Two movements are evident. One is towards the spread of training/learning outside of the traditional training department into intranets, computer-based training, team-based structures, through personal training plans, staff-management discussions of development needs, etc. This makes training/learning a much more embedded, continual and dialogical process than hitherto with the commensurate need for action discussion and involvement. The other is the growing involvement of the trade union and HRM departments in the policies and operation of employee competencies. For trade unions the realization of the importance of skills and employability in a turbulent environment places learning firmly on the unions' agenda. We can see these shifts in more detail below where we discuss the movement from training to learning and the newer forms of dialogue that are being inaugurated. From training to learning The issue and centrality of training/learning has increased and has become a routine element within corporate strategy discussions. Indeed in some variants becoming a "Learning Organization" has led strategy elsewhere in the company. The definition of a "Learning Organization" is not straightforward: instead of being any one thing rather it is a bundle of procedures and practices. (Senge, 1990, Jones & Hendry, 1992.) What distinguishes it more is that in a learning organization developing competence involves a number of levels. The LO discussion recognizes that learning is not just the province of the individual but extends to group or team learning and crucially to how organizations learn, solve problems evaluate solutions and create feedback. These three domains of learning move the debate decisively from the province of qualifications and training, from the effect of external agencies on skills development and from the vocational, educational and training system in general. The LO debate focuses on real corporate needs for the development of individual, group and organizational practices and procedures. Respondents in the companies reported on the changing needs that new employees as individuals need in terms of skill and competence. Much of the language describing this change reflects the transformations alluded to earlier - higher quality demands, adaptability, customer service skills, more responsibility, greater time pressure, etc. When pressed, both management and employee representatives recognized the need to burst out of the concern for narrow qualifications and the matching of them to specific jobs. For the simple reason that there was no guarantee that those jobs would actually be there in the future. In the telecommunications industry a human resource director estimated that 80 per cent of the current jobs will be obsolete in five years time. To train people for a narrow range of tasks or to fit people into restricted job definitions makes little sense in such a context. Instead, a mixture of qualifications and generic skills training is called for that can produce a workforce that is capable of continual learning within new contexts. Hence, we see much emphasis in the cases upon problem-solving capacity, social interaction skills, group working, logical reasoning, adaptability and flexibility of response. It is the ability to know, to solve, or to respond that becomes uppermost. Companies are now thinking about how 8 CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING

12 ENTERPRISE FORUM - A NEW SPIRiT OF ENTERPRISE: ARTICLES AND CASES they get people on to the first rung of learning. For example a number of companies we investigated gave each employee an annual sum of money to spend on any learning area they wanted. This did not need to have a direct connection to the job they did or to the occupational area. Rather the firms wanted to get their employees into the habit of learning irrespective of content. As well as this, companies have begun to revaluate the existing skills their employees possess, recognizing that people who are externally active in charities, artistically creative, administratively adept in outside groupings are in possession of skills that the new context possibly demands. Team and group learning is not as extensive as individual learning; however, there was evidence of a number of innovative and novel approaches to this issue. One finds that teamwork is important in relation to culture change, in its role in quality improvement and in its contribution to personal development and involvement of the staff. Within the team a range of competencies are being developed - for maintenance, planning, training, work flexibility, cost control, staff utilization and the physical environment. Developments such as the use of primary and secondary roles within the team enable a coverage of the range of management functions, and reduces first line supervision, allowing middle management to take on a new more "facilitative" role. In the Swedish telecoimnunications company the team had multiple functions: these were sales and business support, order administration, product and business management, market support and training functions. Furthermore, the boundaries of the team were not fixed within the unit and extended down the supply chain. Hence teams were really cross-boundary task groups and the competency development process was designed to support learning in the new value chains. Organizational learning structures were particularly well represented in the studies of the creation of feedback ioops and mechanisms for shared information, and problem-solving is fundamental to a learning organization. Corporate learning, as management in the car sector defined it, was: "The process by which the business identifies, acquires, disseminates, retains, shares and updates useful knowledge." The kind of sentiments expressed above are those that drive companies to create corporate learning formats. They also have functional alms in that they want to avoid duplication of effort either by having to solve similar problems in different places across the Group or rediscovering solutions already in place somewhere else. A key corporate aim is the embedding of procedures that fix "best practice", allow for learning transfers and enable faster information dispersal. We find in the different sectors a host of corporate and organizational learning structures such as intranets and IT learning structures with very sophisticated use of information technology to provide staff with information, documents on-line, diagnostic tools and problemsolving forums including corporate universities that combines both learning structures and central information systems. Also learning loop structures emerge that partly use IT but are structural creations to enhance knowledge flows. These are created in order to tap into that vast store of formal and informal information that existed in the design, production and sales facilities. In the Italian car company there was a "technical memory" project, a significant example of knowledge conversion that stemmed from the need to treasure the knowledge that might get lost because its owners left, the need to consolidate accumulated experience, to avoid past mistakes or duplicate solutions and to identify and formalize the best existing practices. In contrast to intranets and structured learning loops, we can also see the creation of learning inteiface roles. These are new positions within organizations that exist to pick up learning and knowledge needs and match them to the business requirements. In two of the UK companies they used "relationship managers" - people who had both a functional role in the organization and responsibility for interfacing between discrete elements of the company and by so doing identifying new learning needs and knowledge transfers. Social dialogue - Its scope and form The research has tended to use an inclusive definition of social dialogue, the one stipulation we used prior to undertaking the cases was that we wanted to look at forms of social dialogue that involved the trade unions. The disadvantages are that it limits the scope of social dialogue to the more formal aspects of employee involvement and as we will see can miss some important aspects of employee-employer dialogue in the training/hrd area. In the cases here, as in the wider research, we see the social dialogue inputs making a real difference to the processes, quality and productivity levels. With trade union and workforce representatives intimately involved in change programmes as active agents in relation to innovation, quality and product development. What is as important although more intangible are the effects on the workforce and their willingness to use/share their expertise, the commitment they give to the enterprise and their preparedness to be flexible. In this sense from both the CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING 9

13 main social partners participation/dialogue is valued not so much for the extension of influence of the trade unions in decision-making but for the value added it results in. This active participation on and about competency development signifies a sea change for many unions in terms of orientation and attitudes. This results in some particular changes in orientation from the trade unions being evident, an acceptance of the changed competitive environment and the need for strategies of dialogue based on added value rather than power redistribution means a refashioning of the formal social dialogue relationship. For many this translates into seeking dialogue that is not institutional or committee based Leading cases sought "strategic dialogue" with the employers before decisions were made and at a point where they could have maximum impact. It was accepted that such dialogue is not easy, nor does it wipe away any of the conflicts of interest that arise from time to time. A trade union concern for the "employability" of their members rather than narrow job security bring them into forms of dialogue that were unique. Hence management and the trade unions are becoming involved in training and competency development programmes that were not exclusively designed for the existing company needs but included future and in some cases wider social needs based on the local or regional dimension. The outcomes are potentially positive for the company, the community and the workers who have been displaced. From ritualism to real influence. A point made forcibly by some of the trade union representatives in the studies is that in the face of production system changes and the reorientation of basic functions new social mechanisms for agreement and feedback have to be inaugurated. The existence of a committee, a works council or a formally organized joint consultation structure does not signal the existence of trade union influence or real and vital participation any more. Hence these twelve cases highlight again the trends in social dialogue towards more direct forms, more integrated dialogue that is active and valueadded. They also show how access to strategic and policy levels in many corporate settings is deemed more important than de jure formats. They also indicate a movement towards bringing employability into the social dialogue in a central way with innovative schemes for this that extends the format of dialogue outside the two main social partners. The overall movement identified by both parties is towards a less formal, less structured but more significant dialogue. Underlining this is the existence of the trappings and structures for employee participation which do not in any sense guarantee the existence or vitality of dialogue within them. Hence the search is being continued to locate a format that does provide for a vital and real social dialogue. Changng context - Chcinging roles Reflecting on the research and the responses of the actors in the different sectors and countries to their roles inside the enterprise is also interesting. Whilst there is no unambiguous line on the nature of change at the level of the enterprise there is evidence of role change, role dissonance and even role crisis for some of the actors. The research did focus on industries undergoing change and hence in need of transformations in their structural, organizational and competency regimes. What we find, however, is at each level of actor different challenges face them and are being resolved. These reorientations apply at the senior management level, for middle management, for the trade unions and for the employees. Senior management In the group the most significant reorientation was in the realization of corporate strategy. The admitted practice of senior management in most enterprises was of close control over policy with little involvement of the trade unions or employees. In case after case it was recognized that if the rhetoric of the learning organization meant anything, if indeed one could obtain competitive advantage and value added practice through better use of human resources, then a shift from closed to open strategy discussions was vital. Such sentiments litter the case studies and form the basis of the shift towards partnership arrangements found in all of the case studies. This new form of engagement has also influenced a desire to break with top-down, controloriented planning where trade unions and employees are brought into the loop at the point of policy implementation rather than policy formulation. That this is a difficult transition is seen in a number of the cases with notable "discontinuities" in the partnership process. However, in virtually all of them the partnership path was re-established as the only one to take given senior management's aims for wholesale culture change and the establishment of a new competency regime. Middle management This case revealed surprising unanimity amongst respondents about the areas where partnership and open-learning relationships have penetrated least. The main barrier to thoroughgoing change was repeatedly identified as lower to middle 10 CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING

14 management. Senior management, the personnel! HR managers, trade union officers, shop stewards and others all identified this stratum as the one in need of attention. Two main arguments were forthcoming: many of these supervisory actors are unhappy with individual and team "empowerment" as it appeared to be an abdication of managerial control. The second point is related to the first: it is the problem of instilling a new occupational role for supervisors and middle management when both the role and function they represented were being erased. The analysis of the actors did point to the need for more resources in training and management terms to be devoted here and for greater follow-up efforts to be made to ensure that the required new occupational roles were adhered to. Trade unions The cumulative evidence drawn from the senior trade union representatives indicates a move from reactivity to proactivity. The involvement of the union officials in partnership arrangements is premised on a changed relationship towards a format of participative rather than conflict-based representation. The reality of such a change means a profound change in the abilities, tasks and orientation of the trade unions. To engage in the highest level of strategy development, to make decisive inputs into the planning process and to be adding value to the enterprise demands of them much more intellectual input than the previous defensive positions. They have to do this and at the same time balance their members demands for "bread and butter" issues to be safeguarded.' As we see from the research the loss of jobs and members throw up contradictory messages and lead in some cases to membership criticism of the perhaps "too cosy" partnership arrangements. The structural differences between countries does come into play here, the more deregulated and less statutory systems can innovate and shift roles quicker than the more formal and legalistic ones. The past cultural climate will aid developments too as past consensus has allowed new innovative arrangements and union roles to become established, extended and more embedded in a regional as well as corporate economic sense. Individual employees For this group the impact of the changing environment and competency regime could be CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING described as from bounded to unbounded roles. Whereas job roles, task boundaries and skill requirements within Tayloristic or bureaucratic regimes were previously settled, they now have become increasingly open and unpredictable. The increasing insecurity of fixed knowledge is particularly acute in the telecommunications and banking sectors and these are the areas where staff interest in retraining and the recreation of themselves in a new and adaptable form is also highest. In the section 'Prom training to learning" it was pointed out that what becomes valued is not the knowledge of a given task but the ability to know, the ability to learn and the ability to adapt in circumstances not yet fully defined. To meet this situation both a wider knowledge base and personal skills base is needed. In addition is the change of attitude towards seeing learning as an on-going and essential part of the work situation itself. Conclusions The research allows us to incorporate current developments and trends surrounding corporate experiences in competency developments. In addition, the project took as its aim the linking of these developments with another EU-stated policy priority - the development of social dialogue. The hitherto compartmentalization of these two issues as separate domains for both research and organizational level practices is increasingly seen by the actors as a hindrance to both corporate performance and human competency development. Organizations in this study appear to have accepted that in both of these issues what might have been previously considered rights/entitlements - to training; to consultation - are now firmly regarded as active parts of firms' business strategies. This change is important because the growing turbulence in business environments now requires a workforce that is adaptive, flexible and responsive as well as mechanisms for establishing consensus and commitment that shape shared mental models. The movements detected in the twelve cases indicate that trade unions can no longer regard training and learning as subject to management prerogative. The changes in work roles and markets can potentially affect unions' capacities for representation, recruitment and retention of membership. This means that their growing activity in this field can be seen as both defensive and proactive. It is defensive in its attempts to stabilize membership losses and unions' existing institutional presence and influence. It is proactive in seeking to extend representation into the new and vital enterprise issues of contemporary concern. It is because of this latter development that unions have become concerned with value-added strategies in addition to the more rights-based agendas that they had pursued hitherto. Whilst the corporate experiences we show here may not be representative of all experience, they do Ii

15 point forward to issues and practices that other companies will have to face or are already having to emulate. The cases represent large and profitable multinationals that are generally further along the road in developing their training/learning and social partnership ideas. They are also important because of their fusion of the two domains that are the focus of the study here. Hence, to get to understand the lessons, we can learn from their experience and unpack what they might mean for a wider corporate, trade union and academic audience is of the greatest significance. Finally, the centrality of social dialogue to enterprise transformation is evident here and whilst this may not be of the same level and character, it is nevertheless making a substantial contribution to changing practice on the ground. Policy developments in this area must take note of the fact that there has been a shift from institutionalized arrangements for social dialogue. In institutional formats, social actor influence is assumed due to the existence of a committee or other formal process; this research indicates that notwithstanding institutionalized frameworks social dialogue can be seen to be emerging around key issues and involving processes of an operational and strategic nature. It is here that institutional forms of social dialogue may give way to more innovative and creative formats hardly mentioned within current EU thinking and this stands as a challenge to policy-makers for the future. Bibliography Cressey, P., & Kelleher, M., Partnership and Investment in Europe - The Role of Social Dialogue in Human Resource Development. Consolidated Report for the LEONARDO Programme. University of Bath. Jones, A.M., & Hendry, C., The Learning Organisation: A Review of Literature and Practice, London, the HRD Partnership. Senge, P., The Fifth Discipline: The art and practice of the Learning Organisation, New York, Doubleday. 12 CORPORATE EXPERIENCE OF PARTNERSHIP AND LEARNING

16 Once more with feeling our greatest asset Manpower People really are A brief reflection on the evolutionary changes that have taken place in business over the last thirty years serves to highlight the central theme of this article - that, as we enter the 21St century, a company's human resource strategies are increasingly its real source of competitive edge. The various stages of business development can be clearly distinguished, each having particular and different measures of competitive success. The fact that many readers will have had experience of all of these stages during their careers, indicates the required pace of change in modem organizations: The efficient firm: succeeds by maintaining tight focus on operational costs and delivering to agreed timescales. The focus is largely internal. The quality firm: competes by providing a better product or service for the price, as perceived by the customer. The flexible firm: has the capacity to adapt in response to changing market conditions and customer demand. The innovative firm: has the capability to constantly develop new products and services, as well as make internal improvements to practice and process. Knowledge management, facilitated by modern telecommunications, is at the heart of this ability. There was a time when excellence on just one of these competitive dimensions was enough. The challenge today is to build the capability to compete on many, if not all, levels at once. Shrinking margins and threats to business survival have shaken the cosy "either - or" view of competitive advantage. So, the "either quality or cost" scenario now becomes "both quality and cost" - a much tougher hurdle to continued business success. The drivers of this new competitive era are well documented - global competition, the fracturing of markets, increased customer choice and sophistication, unpredictability, constant change, surprise competition, variety and variability of demand and world class competitive benchmarks. We expect more from people The various stages of business development also demonstrate the gradual shift in emphasis from financial capital to intellectual capital as the key asset. This is why human resource strategies are increasingly an integral component of the business strategy, not merely an afterthought. The capabilities needed to compete cannot be "acquired" but are built step by step, over time. They are not easily replicated and so constitute not just competitive advantage but sustained competitive advantage. To achieve such a level of capability, human resource strategies must play a crucial role in both the formulation and the implementation of long-term business plans. Behind all of this lies a major change of attitude towards the people factor in business success. Too often, people have been looked at as the "messy" bit of managing, difficult to control and burdensome in terms of time and money. In the "efficient firm" they can be regarded as disruptive to the running of the well-oiled machine. Under the new competitive conditions, smart companies have recognized their dependency on the competence and attitudes of staff at all levels. For them, human resource strategy is no longer the preserve of a single function but an integral part of the management process with responsibility at all levels, not least in the boardroom. More and more top managers are becoming directly involved in the competition for talent and in the creation of conditions that will enable individuals to thrive and innovate. With traditional forms of organization becoming less and less able to respond to new demands, ONCE MORE WITH FEELING - PEOPLE REALLY ARE OUR GREATEST ASSET 13

17 the need to place human resource strategies much higher up the management agenda is strikingly obvious. One typical reaction has been to increase pressure on employees and suppliers for more and more output. This is not denying that business has spent millions on various initiatives to adapt organizations to the new era. Total quality programmes, business process re-engineering, investment in IT, have all, at their best, contributed to performance improvement. Unfortunately, too many of these initiatives have reflected a "cookbook" approach to change - the application of a formula in which the people factor ranks a poor second place to technology and processes, if it has been considered at all. Organizations that manage change successfully have learned that a systems approach is essential. This identifies necessary change in all parts of a system, not least the people factor, which is generally the most critical and the most difficult to deal with. The organizations that most of us work in were not designed to cope with constant change. They were designed for an old era that was characterized by: permanent employment contracts; high fixed cost; regular work scheduling; narrow skill and task boundaries; a tacit contract that exchanged loyalty and commitment, for cradle-to-grave job security. The functional structures and hierarchical management typical of the old style organization cannot produce the speed of decision-making and integrated team effort needed today. The divisive "them and us" view of management and employees focuses energy internally rather than allowing energy to be expended solving customer-related issues. Progressive managers saw the writing on the wall some time ago and are already in the process of reshaping their organizations. Hence, the emergence of organizations which can: flex resources according to demand; react quickly to external markets; keep fixed costs low; focus on core competency; optimize the people contribution. Strategic human resources These new forms of organization require a quite radical rethinking of the roles and responsibilities of senior management, management, trade unions, individual employees and the HR function. However, senior management clearly bears the major responsibility for instigating and driving the changes. Their role is to monitor and evaluate the external environment and anticipate the changes needed to maintain an organization's competitive advantage. This is true not just in what will be made or what services are offered, but also in the kind of organization needed to deliver them. Because of the new market and business drivers, the responsibility for driving organizational change should sit squarely with the most senior management team, rather than being delegated away from the boardroom agenda. People strategies should be given the same attention as Product Development, Technology, Marketing, Sales Or Finance. Other groups - management, trade unions, individual employees and the HR function - should not be complacent. Their challenge to change is equally as big. Individual employees, for example, must start to take responsibility for their own career development and skill acquisition. Trade unions and the HR function need to start working as partners to achieve the organization's goals and protect individual employees. Human resource strategies for competitiveness Human resource strategies are set to make the difference between continued excellence and slow but certain decline. What are these strategies and how do they help create the new organizational forms needed to respond to the new business environment? A brief overview of the key HR strategies reveals their depth and complexity. Assuming an organization has a business plan and a clear purpose, mission and objectives agreed with its charterers (those who put it in business), the following human resource strategies are essential: Organization design and development strategy This takes the purpose and the business plan (the WHAT) and designs the vehicle to ensure the business plan is delivered (the HOW). It encompasses structure and culture and the key processes that sustain the business. It identifies the kind of leadership required at all levels. Its overall aim is to continually adapt the organization so that it is fit for the purpose. For example, a business that must build higher levels of creativity will fail unless it can remove the legacy of autocratic, hierarchical systems. 14 ONCE MORE WITH FEELING - PEOPLE REALLY ARE OUR GREATEST ASSET

18 Business impact of poor organization design strategy: Lack of goal clarity. Duplication of effort. Delivery system unable to cope. Cynical and frustrated staff. Poor customer service. Infighting and high staff turnover. a Business impact of poor productivity strategy: Uncompetitive product and service costs. Individual potential underused. Teams operating at less than optimum effectiveness. Poor management decisions due to lack of information. Resourcing strategy This takes the organization design one stage further by deciding which resourcing channel is right for the work required. More and more emphasis is being placed on developing the network of relationships and contracts, internal and external, which will achieve business goals. Few organizations, however, fully understand the range of choices they have or how to evaluate them. How do you decide whether to hire permanent employees, contract non-permanent employees, go to a subcontractor or place an outsourced contract? The wrong choice could add millions to the bottom line and place people in situations they cannot cope with. When, for optimum effectiveness, the resourcing strategy calls for a mixture of all of these, do you have the competence to manage a "blended" workforce? Rigorous recruitment and selection of direct hires and third-party suppliers needs to be backed by sound policies and clear direction. Manpower is so convinced of this need that it is currently piloting a new service to support management in this area. a Business impact of poor resourcing strategy: Millions wasted on wrong choice of resourcing channel. Spend on non-permanent staff not controlled or monitored. Effectiveness reduced due to inappropriate solutions. Reactive and ad hoc resourcing solutions. Work force productivity Within the framework of organization design, strategies are also needed to help maximize workforce productivity. This includes: workforce planning, tracking and reporting; management information and building high performance teams. The design of work itself is key to individual productivity and personal development. So, job design resulting in interesting, varied and stretching work is an important element of this strategy. Performance management This is a collective term covering those processes that translate corporate objectives into departmental and individual objectives, that review the performance against the plan and establish development and training needs. They include: competency (skills, behaviours and knowledge) identification and matching to the work; identification and assessment of potential career management and knowledge management. It is through these processes that judgement capabilities are developed, so that, without being told, individuals know what it means to do a good job. Business impact of poor performance management strategy: Duplication of effort. Wasted energy resulting from unclear goals. No continuous improvement due to lack of feedback. People's potential underused. People ineffective because they lack motivation. Reduced ability to respond quickly to customer situations. Reward strategy This is about aligning processes for remuneration and recognition in order to reinforce the attitudes, behaviours and skills required to achieve the business strategy. It is closely linked to corporate culture and values. This strategy motivates the workforce and makes clear what is expected. It includes: decisions about compensation structure and mechanisms; the mix between base, bonus and long-term incentives; the benefits package; employee choice and the recognition system and process. This is a complex area needing a great deal of discussion and planning, not only with respect to content but also the transparency, consistency and fairness with which policies are administered. To check whether it is worth the time and effort, simply take a look at the payroll cost line! ONCE MORE WITH FEELING - PEOPLE REALLY ARE OUR GREATEST ASSET 15

19 e Business impact of poor reward strategy: Millions wasted due to system driving the wrong goals and behaviours. People ineffective because poorly incentivized and motivated. Loss of key staff and high turnover costs. Inability to recruit in scarce skill areas. Employee relations strategy As the needs of employees and workforce demography change, employee relations continue to require senior management attention. This includes areas such as: employee/union relations; employee representation; work/life balance; welfare, sports and social activities; community relations and corporate social responsibility. A company's reputation as a good employer is often affected by strategies in this area. In the competitive search for scarce skills and talent, the lack of a sound employee relations strategy may well hinder a company being considered the "employer of choice". a Business impact of poor employee relations strategy: Lack of employee involvement means poor implementation and increasing costs. High turnover results in lower productivity and higher recruitment costs. a o Inability to recruit the best talent. Narrows the total pooi of resources that can be attracted into employment. D-uman resource strategies hct add value The new era of competition has highlighted people as the sustainable source of business success. However, in the aftermath of recession and continued job reduction, it will take determined and genuine efforts on the part of management to build a context that generates the best from people. New business drivers result in companies expecting much more from all those employed - permanent and non-permanent, internals or suppliers. Equally, the people themselves expect a different kind of work environment to enable them to deliver what is required. Effective human resource strategies are the key to turning even the most carefully formulated business goals from a "wish list" into reality. They make it happen by harnessing human resource management to business direction. At their best, they marry the aspirations of the individual with the goals of the organization. Top management ignore it at their peril! 16 ONCE MORE WITH FEELING - PEOPLE REALLY ARE OUR GREATEST ASSET

20 The developing workplace Danish Confederation of Trade Unions (LO) The trade union movement in Denmark has a vision and a strategy. A vision for its members - and for Danish society. It's about quality: a good job; high quality products and service; and workplaces which are socially responsible and environmentally sustainable. The vision is called the developing workplace. The vision of the developing workplace can be pictured as a triangle. Three sides, that are all integral parts of the whole: high quality products and services which are socially relevant and sustainable - products which employees and management can be proud of; companies which stand for environmental sustainability and social responsibility, among other things in relation to employment, and by accepting co-responsibility for development of local communities; a good job which provides opportunity for personal development - in a working environment based on fellowship without physical and mental exhaustion - a job in which the employees participate with a high degree of responsibility and competence. The developing workplace goes further The trade union movement's vision of the developing workplace differs from the wide selection of management theories which also revolve around human resources. This is because the goals of these theories are limited to increased efficiency and competitiveness. The developing workplace goes much further - and it is the trade union movement's members who take a central position. In the developing workplace the focus is on employees' own wishes for influence, responsibility and more competence. In addition, the developing workplace does not view the individual workplace in isolation. Because the developing workplace is also about workplaces having a major responsibility to the local community, to society and to the environment. The vision of the developing workplace is intended to be a continuous thread in the activities of the trade union movement. Turning the vision into reality will demand cooperation, cooperation and more cooperation - between members of the trade union movement and company managers; between all parties in the local areas; and between public authorities, the parties in the labour market, organizations and institutions in society. Everyone has a responsibility for development of work content, products, environmental consideration and social responsibility. A vision for winners Both employees, workplaces and society gain from the developing workplace initiative. The employees are the most important resource of the workplace. Competitiveness is to a large extent dependent on the knowledge, competence and commitment of the employees. This applies in the private sector, and it applies in the public sector, where employee qualifications and commitment are crucial to the quality of products and service which the workplaces can provide. Admittedly, many workplaces are experiencing a vital increase in productivity as a result of new technology. But it is the qualifications and commitment of the employees - both while the new technology is being introduced and during its subsequent use in day-to-day working - which determine the size of the return generated by the investment in new technology. The personal resources of the employees are therefore the subject of increasing focus. The workplaces which cope best in the tough international competition are those which have understood how to involve the employees actively in the development of the workplace. THE DEVELOPING WORKPLACE 17

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