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A.2 CSR and company performance

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A.2 CSR and company performance


This is clearly an issue that is critical to the future development of CSR beyond the tokenism evident in many individual examples of CSR initiatives. In order to gather support for CSR, considerable claims have been made by its advocates regarding its (positive) effects on long-term profitability. Certain studies have identified such a positive relationship (for example, Waddock and Graves, 1997). Yet, other studies have identified either no relationship between CSR and financial performance (for example, McWilliams and Siegel, 2000) or a negative relationship (Wright and Ferris, 1997; see also Griffin and Mahon, 1997 for a review of studies). One apparent reason for these contrasting results is that no simple relationship exists between CSR and profitability. Variables affecting the relationship include (i) the nature and scale of the CSR activity; (ii) the financial outlay on the CSR activity; (iii) the economic sector of activity under consideration; (iv) the firm’s underlying profitability/position within its market; and (v) the timescale against which profit-related effects are measured.
Seeking to reflect the different variables affecting the relationship between CSR and financial performance, McWilliams and Siegel (2001) found recently that overall, CSR has a neutral effect on profitability: costs are generally higher in CSR-oriented companies but this is offset by higher profits, resulting in a broadly similar relationship of profitability to costs compared to firms not engaging in CSR.

However, three further points are relevant here which may strengthen the long term positive effect of CSR on profitability, and which have tended to be overlooked in many general discussions. First, CSR can create significant product (or service) differentiation – an important factor in profitability in crowded market segments. The reputation gained by organisations following CSR activities may help their products and services acquire a distinctiveness over the competing products and services within their market. Second, CSR may help to maintain brand reputation and insure against brand disasters that can befall a product or service of a firm that becomes linked to socially unacceptable practices (pollution, exploitation or whatever) (Lake, 2001). Third, following the argument of Herman and Gioia (1998), firms extolling strong CSR principles may be able to attract and retain higher quality and more committed staff who prefer to work for companies with high social approval and a broader agenda than narrowly-defined economic returns.


A.3 The overall status of CSR activity at company level in the UK


To obtain a broad picture of the status of CSR in UK companies three surveys of company documentation were conducted.
1. An examination of the latest company reports from all the companies quoted on the UK stock exchange (approximately 1,100 companies).
2. A more detailed examination of the reports of the UK’s largest companies – those listed in the FTSE 100 index.
3. An examination of the reports of those companies (both quoted and non- quoted companies) that are associated with organisations or listings that have been established specifically to highlight those companies with wider social agenda (such as community involvement or ethical investment practices). Specifically, this involves the 280 companies listed in the FTSE4Good index (see Skorecki, 2001; Taylor, and www.ftse4good.com) and the over 300 companies belonging to the Business in the Community network (www.bitc.org.uk).

A.4 Summary of findings from searches

Overall, 42 quoted plcs made direct reference to CSR activity in their latest annual report. This represents 3.7% of the total number of quoted plcs in the UK. This proportion increases if the search is broadened to include any use of the term ‘social responsibility’, though does not change the picture fundamentally.


Among the FTSE100 largest companies, 20 companies made reference to CSR in their latest annual report.

Among the 280 companies listed in the FTSE4Good index, 30 companies (10.7%) made direct reference to CSR in their latest annual report.

Among the companies on the Business in the Community list, 23 (7.6%) made direct reference to CSR in their latest annual report.
The individual companies are listed in the table below:


Companies with CSR in their Annual Report

Business in the Community

FTSE4Good

FTSE100


3I Group







Yes

Airtours

Yes







AMEC

Yes







Astrazeneca

Yes

Yes

Yes

BG Group

Yes

Yes

Yes

Body Shop International










Boots

Yes

Yes

Yes

British Airways


Yes

Yes

Yes

British American Tobacco

Yes




Yes

CadburySchweppes

Yes

Yes

Yes

Carillion

Yes

Yes




Friends Ivory and Sime




Yes




GlaxoSmithKline

Yes

Yes

Yes

Great Universal Stores

Yes

Yes

Yes

Imperial Tobacco







Yes

Innogy Holdings

Yes

Yes

Yes

J Sainsburys

Yes

Yes

Yes

JD Wetherspoon


Yes





JJB Sports




Yes




John Laing

Yes

Yes




Kelda Group




Yes




Kidde




Yes




Lasmo

Yes







Marks and Spencer

Yes

Yes

Yes

Mears Group










Pace Micro Technology




Yes




Pennon Group




Yes




Premier Oil










Peterhouse




Yes




Phytopharm




Yes




Powergen

Yes




Yes

Prudential Corporation

Yes

Yes

Yes

RM




Yes




Shaftsbury




Yes




South African Breweries




Yes




Tandem










Tesco

Yes

Yes

Yes

Unilever

Yes

Yes

Yes

United Utilities

Yes

Yes

Yes

Vodafone




Yes

Yes

WPP

Yes

Yes

Yes

Yorkshire Water

Yes







42 companies

23

30

20

Many of the companies reporting on CSR have established a CSR Committee or Team (see for example, annual reports of Marks and Spencer, J. Sainsbury, Innogy Holdings, GlaxoSmithKilne, BG and Tesco). A number have also produced some form of CSR or social performance report (for example, Vodafone, Premier Oil, Sainsbury’s and Tesco) or an environmental report (for example, Great Universal Stores).


In the main, the emphasis in the reporting of CSR activities is on ‘good citizenship’ issues rather than internal working conditions and employee issues. Good citizenship includes greater respect for the environment (e.g. recycling issues, sustainability, reductions in water and energy consumption, packaging reductions, pollution, etc), community-based projects (relating for example to local economic regeneration, charity support, educational initiatives), ethical behaviour on investment, and issues relating to supplier relations/ ‘fair trading’, etc.

This overall emphasis on external rather than internal issues notwithstanding, a number of companies with a CSR policy also make reference to internal relations with employees. In some cases these references are limited to rather general statements. In others, more detailed comment is given. In the latter the main emphasis falls on two areas: diversity/equal opportunities issues, and health and safety matters (see for example annual reports of 3i and Peterhouse Group). Following these two areas, the next most referred to areas are: training /skill development issues, and communication/involvement practices (see for example reports of AstaZeneca, Boots, Pace Micro Technology, Pennon Group, Body Shop International, BG and Great Universal Stores).

One of the issues in the above list relating to CSR and working conditions is the extent to which on certain topics (equal opportunities and health and safety), the companies are doing more than complying with legislation. On the issue of social dialogue or employee involvement, however, the UK does not give employees statutory rights to involvement other than over certain issues (see below).
In terms of the focus of the present study, there is very little direct reference to CSR and either restructuring issues or sub-contracting decisions. These issues would presumably fall within the general framework of consultation and involvement practices in several of the above companies. In these, however, the reporting of involvement mechanisms are largely not discussed in terms of the substantive issues that are consulted over, but rather in processual terms of the mechanism being in place to consult on a wide range of topics.

A.5 Review

This overview of CSR among UK companies indicates an overall restricted development of CSR activities to date, particularly in relation to internal working conditions issues. Less than one in twenty five companies included comment on CSR in their latest reports to shareholders, and most of these concentrated on external rather than internal CSR issues. Where internal issues have been addressed, these have primarily focussed on equal opportunity and health and safety issues, along with training and employee involvement. The substantive issues of corporate restructuring and subcontracting figure little in accounts of corporate CSR activity in the UK. However, there are signs of growing interest in CSR activities and the two cases reported below provide good examples of recent developments in employee and trade union involvement.

Before examining the cases in more detail, however, a brief description is given of the legal context for the handling of restructuring decisions (and particularly relating to potential redundancies and sub-contracting) within UK companies.


A.6 The Legal Context

It is widely acknowledged that the labour market in the UK has a lower level of statutory regulation than most of its EU member state counterparts, in terms of the legal requirements on employers in their dealings with employees. This has historically been the case, was intensified during the Thatcher governments of the 1980s and has only been very modestly reversed by New Labour since 1997. As a result, the UK has developed a system of labour regulation more akin to the USA than continental Europe, with much of this lack of regulation in the Anglo-American contexts being championed in recent years as labour market ‘flexibility’. Thus, employers’ decisions to hire or fire and the type of employment contract offered to employees (temporary or indefinite) are only loosely circumscribed by a minimum of statutory requirement. This contrasts sharply with systems such as those operating in the Netherlands or Germany where the Social Plan and requirements to consult works councils, together with other regulations significantly circumscribe employers’ discretion over for example redundancy decisions.

The restricted nature of the legal obligation on UK employers is evidenced in both areas at the centre of the present CSR investigation: sub-contracting and restructuring. On the former, the issue of sub-contracting only really becomes subject to employment law if it either involves redundancies (see below) or involves employees being transferred from one employer to another. If this latter is the case, employees are covered by the terms of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (known as TUPE) which preserves employees’ terms and conditions of employment when a business, or part of a business, is transferred to another employer (which represents one means by which an activity may be contracted out). The Regulations require not only protection of employees’ terms and conditions (though certain occupational pension rights are not covered) but also a right of employee representatives to be informed and consulted over any measure that the old or new employer envisages concerning affected employees. These regulations do not apply, however, where the sub-contracting decision involves work formerly undertaken in-house being transferred to an outside contractor using different employees.

Where restructuring (or sub-contracting) involves the threat of redundancies, the employer is required to follow certain procedures (and failure to do so leaves the employer liable to claims of unfair dismissal). These procedures were originally established by the Redundancy Payments Act (1965) and updated by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995. This legally obliges employers to consult whenever they are proposing to make redundant 20 or more employees at one establishment. Where 100 or more employees are to be made redundant, consultation must commence at least 90 days prior to the redundancies occurring; if more than 20 but less than 100 employees are affected, then the minimum consultation period is 30 days. Employers are required to consult on means of avoiding the redundancies; reducing the number of planned redundancies; and mitigating the consequences of the redundancies.
Thus, in the area of restructuring where over twenty redundancies are one likely consequence, the employer is required to consult with representatives of employees. Other than this requirement, however, the law provides little obligation on the employer over restructuring. As a result, beyond this (fairly minimal) legal compliance, there is much scope for variation in how restructuring/redundancy issues are handled: that is, the extent to which firms exercise (or not) social responsibility in the process and outcomes of restructuring
B. The Case Studies

B.1 Corus




B.1.1 Background

The bulk of the UK iron and steel production is undertaken by Corus plc which was formed in October 1999 by a merger between British Steel plc and Dutch steelmaker Koninklijke Hoogovens, with British Steel paying $2.4bn for the Dutch company. British Steel had been the privatised company born out of the de-nationalisation of the former British Steel Corporation in 1988. The merged company is one of the world’s largest steel manufacturers, particularly of carbon steel. Major customers include the automotive, aerospace, rail, packaging and construction industries, including construction machinery.

Internationally, the steel market has continued to suffer from over-capacity and over-production. This has substantially depressed the steel industry in the UK and many other countries in recent years. Total turnover for Corus for 2001 was £7,699m, compared to £9,509m in 2000. If the effect of the deconsolidation of its stainless steel operations (Avesta Sheffield) during this period is taken out, this represents a 5% decrease. The operating loss for 2001 was £385m, compared to £1033m in 2000. Losses are largely put down to exceptional costs including provisions for redundancy, decreasing steel prices, increasing costs of raw materials and consumables and the continuing strength of sterling. Trading conditions have been further hit in recent months with the proposed increases of US tariffs on imported steel, and the future remains difficult for the company.
In 2001 the workforce was 55,600, compared to 64,700 in 2000, a decease of approximately 14%. About 50% of the workforce are employed in the UK, 23% in the Netherlands, and the rest mostly in other Western European countries, the US and Canada. The level of losses has put substantial pressure on Corus management to cut expenditure and undertake major restructuring.
Corus maintains a Social Responsibility policy, which is mainly concerned with environmental issues (such as issues surrounding decommissioning of Corus sites affected by restructuring) and to a lesser extent educational projects, such as producing curriculum support materials in schools, and employee issues, with the focus being on health and safety of its workforce.

The difficult market conditions facing the UK steel industry have led both to full and partial plant closures (such as at Ebbw Vale and Llanwern in South Wales), and substantial restructuring elsewhere. In the part of Corus dealing with construction and industrial steels (centred at the two large works of Scunthorpe and Teesside both located in the north of England and in combination employing over 8,000 personnel), this restructuring has entailed a 15% reduction in manpower, together with a major reorganisation of work and the introduction of teamworking.


B.1.2 The restructuring process at the Scunthorpe and Teesside sites

The management of these two works agreed, however, that the reduction in manpower would be sought by means of voluntary redundancies if at all possible, rather than resorting to compulsory redundancies. The management also pursued a policy of devolving the task of identifying areas for employment reduction down to departmental levels, rather than seeking to identify areas for cutbacks centrally.


It is this aspect of the restructuring process – the ways in which work patterns were analysed and conclusions drawn on where job cuts might be achieved and how work might be reorganised to accommodate the reduced employment, that is the focus of attention here. Whilst this practice was fairly new in the UK steel context, it bears some comparison with the process that would be required in the Dutch context where the employer is legally obliged to consult over restructuring and potential redundancies, to a much greater extent than in the UK.
This process was undertaken separately in each department at the two UK works (covering 28 departments in all), and in each case was handled by a joint union-management team. This process, known as Key Task Analysis (KTA) involved


  • A detailed study of all tasks within a specified area, including plant operations, unplanned work arising, breakdown-related tasks, routines (e.g. inspection) and maintenance

  • How these tasks were currently configured, who currently held responsibility for them, how long the different tasks normally took and what skills were required for the different tasks.

  • This research by the joint management-union team then formed the basis of an analysis to identify
  • How tasks might be more effectively organised and distributed within a new team structure


  • How many personnel would be needed to accomplish the work

  • What training requirements (and any capital expenditure) would be needed to achieve the new work organisation

Typical departmental KTA Reports ran to over fifty pages of analysis and conclusions, with the whole process taking several months to complete. In the course of this activity all, or a substantial majority, of departmental employees, were consulted by the KTA team to establish the precise nature of activities and the time and skills required to undertake them. The resulting reports were produced to a high quality, with separate sections on objectives, methods, analysis of core and ancillary activities (including utilisation of available personnel, configuration of tasks, extant skills and training) together with proposed reconfiguration of jobs and plant, team composition, skill and training requirements, and work rotas.


Subsequently these documents formed the basis of negotiations between management and unions for the negotiation of teamworking structures (negotiations over teamworking at both works were conducted at two levels –separate works-wide enabling agreements were signed by management and unions at the Scunthorpe and Teesside sites, followed after the KTA process by departmental negotiations and agreements on teamworking, concentrating specifically on teamworking structures and the earnings levels for team leaders and team members. The KTA process also formed the basis for matching identified areas for manpower reductions with volunteers for redundancy, and identifying any training requirements where this matching involved retained employees being transferred into new work areas.

The KTA process was not viewed or discussed in the terminology of corporate social responsibility (CSR) (within the company this expression, if used at all, is largely confined to external responsibility, such as to the environment). However, what nevertheless makes this example of social dialogue particularly useful for the present CSR discussion is:


        1. How the recommendations for restructuring were the result of a detailed and joint analysis by a team of management and unions at local level, these groups in turn consulting widely within the different departments on ways of restructuring jobs.

        2. This enabled a joint identification of areas for job reduction rather than cutbacks being identified more centrally by management, as had occurred elsewhere in the past.

        3. The KTA activity in turn facilitated subsequent negotiations over work restructuring without compromising these negotiations, particularly important from a union point of view (as evidenced by the lengthy negotiations which occurred over earnings levels).



B.1.3 Internal views of the process

From a series of interviews and discussions held with departmental managers and union representatives involved in the KTA teams at the two sites, the majority reaction to the process was positive.



  • Most viewed the process to have been a cooperative and open one

  • Having both managers and union representatives in the KTA teams was widely seen to have encouraged a higher level of employee participation in the process than would have been the case if it had been organised more as a ‘work study’ exercise conducted by management

  • Managers in particular commented on the extent to which the KTA analyses facilitated subsequent negotiations over teamworking – in particular that the KTA broadly identified the team structures, leaving the negotiations to concentrate primarily on earnings issues arising from the changes in the grading structure
  • The extent to which both managers and employees gained a greater knowledge of the taken-for-granted activities of the department


  • The process generated a large number of ideas about reconfiguring the tasks

As several of those interviewed commented, the key factor making for a positive atmosphere during the KTA analysis was the knowledge that adequate numbers of volunteers existed to prevent employees being made compulsorily redundant as a result of any work restructuring recommendations by the KTA teams.


Not all reactions were positive in each department, however. The two main areas of criticism (both expressed by union representatives) were

  • That in a small number of cases not enough emphasis was given to communicating the purposes of the KTA, leading to suspicion on the shop-floor and employees seeking to protect their positions by not cooperating fully with the KTA research

  • A minority of cases where the report did not form the basis of subsequent teamworking negotiations, but instead further personnel reductions were sought by management than had been identified by the KTA analysis.

Overall, however, both managers and union representatives viewed the process as a successful joint activity for accommodating the need for workplace restructuring with the involvement of union representatives and employees in identifying ways of effecting the restructuring.



B.1.4 External views of the process

In addition to the interviews and discussion with those involved in the KTA analyses, comments were also sought from managers and union representatives elsewhere in the company where restructuring had not been undertaken via the use of KTA teams. These comments expressed a number of both positive and more critical views of the KTA activity at Scunthorpe and Teesside.


Summarising the positive comments first:
  • Both union representatives and managers saw how the KTA activity eased the negotiations over teamworking – negotiations which at other plants had spread over a much longer period than was the general norm within the Scunthorpe and Teesside departments.


  • In addition, union representatives commented on the role that KTA gave the unions in drawing up proposals for work reorganisation, rather than having these imposed by management.

This union role was also seen as a potentially negative aspect of the process, however, with the threat of unions losing their independence if they had been part of the activity from the outset. Other criticism of the KTA centred on:



  • That it could be a lengthy activity to identify what was already known (i.e. The nature of current work activities).

  • That it was often the case that not enough time was available for the KTA activity prior to job restructuring decisions being taken.

  • That the KTA at Scunthorpe and Teesside worked well only because there were sufficient volunteers for redundancy. In the absence of this, cooperation from employees would have been much less and any union involvement in the whole process made much more problematic.



B.1.5 Conclusions from the Corus case

Reflecting on both the comments made by those involved in the process at the two sites and those comments from other plants where KTA had not been used, a series of concluding points can be made.

1. KTA appears a good practice on industrial restructuring via joint activity, seeking optimum ways of restructuring work and matching work reorganisation and job reduction with skill and training requirements.

2. The absence of the threat of compulsory redundancy was critical to the success of the activity.

3. Having sufficient time to undertake the process fully was critical to its success.

4. Communicating what the process’ objectives were, and what was entailed in terms of the research activity, was also critical. In those instances where this was not communicated fully, suspicions were evident, resulting in a partial and less accurate analysis.

5. The willingness of management to act on the results of the joint activity was critical. In those minority of instances where management sought to impose a different structure than that recommended in the KTA report created considerable disillusionment on the value of the joint process.


B.2 Tesco




B.2.1 Background

Tesco is the UK’s, and one of the world’s, largest food retailers. The company operates more than 900 stores worldwide, with the majority, over 750, in the UK. It employs over 240,000 people worldwide, over 190,000 of these in the UK. It was founded in 1932 by Sir Jack Cohen, and grew rapidly, largely through the acquisition of other grocery chains. During the 1990s the company grew rapidly and expanded into other European and Asian markets, opening over 200 stores since 1993. Sales continue to expand: in 2001, group sales grew by 12.7% to £25,654m, and 55 new stores were opened in the UK alone. Group profits increased in 2001 by 14.1% to £1,221m.


B.2.2 CSR in Tesco

The Tesco supermarket case is an interesting one for a discussion of CSR because the company shows a CSR awareness across a range of external and internal activities. External activities include local regeneration and employment projects (for details see Retail Week, 7/12/2001), a long-running initiative to link sales to donating computers for schools, and establishing ethical trading practices with different suppliers. In part this external CSR activity can be seen as a counter to past criticism of the supermarket sector in the UK that it was forcing suppliers (particularly farmers) to accept very low prices for produce, and then making unreasonably high profits from the sale of that produce in the supermarkets. Whilst subsequent reports have not supported these continuing allegations, supermarkets have taken a variety of steps to gain greater public support.

Tesco recently produced a Corporate Social Responsibility Review for 2001/02, which extends the comments made on CSR in its 2001.02 Annual Report. Within the CSR Review, a strong emphasis is placed on external CSR activities – ‘its environmental and social performance’ as its chief executive terms it. These activities relate particularly to environmental issues (such as energy efficiency measures and recycling efforts) and community activities (most notably Tesco’s ‘computers for schools’ initiative, and working with local authorities in ‘regeneration’ areas to train long term unemployed people for jobs in new stores). Internal CSR activities are noted in such areas as employment diversity, health and safety and the increased availability of an occupational pension scheme.

In terms of handling any issues relating to restructuring, a central mechanism for this is the partnership agreement that Tesco signed in 1998 with its recognised trade union USDAW (Union of Shop, Distributive and Allied Workers). At the time, Bill Connor, USDAW’s General Secretary, called this agreement “the start of a partnership which will offer them the opportunity for more involvement and more consultation than ever before" [The Northern Echo, March 14th 1998]. Likewise, the General Secretary of the TUC, John Monks, declared that poor employers should "come to Tesco and learn that good partnership relations between a union and employer can add value" [The Times, March 14th 1998]. Examples of this partnership approach have been evident in relation both to health and safety and assistance for the unemployed. In 1999, Tesco was praised by the TUC for a health and safety partnership with USDAW which cut staff accidents and sickness. It was the first retailer to sign up to the TUC's safety initiative. More recently, the focus has been on providing jobs and regeneration through partnerships between local authorities, USDAW and Tesco to guarantee jobs in new stores to local unemployed people who completed specially run training courses.

Under this partnership agreement, staff forums have been created in each of its over seven hundred stores, the forums comprising store management (the Store Manager and Personnel Manager), union representatives and elected employee representatives (elected on the basis of one employee representative per fifty employees with a minimum of five representatives per store).
Elected representatives receive training in for example, holding effective meetings and giving briefings. The forums meet four times a year and discuss local store issues but not terms and conditions. The individual store forums in turn send representatives to one of three regional forums, who in turn elect a national forum. The Tesco UK workforce includes over 100,000 USDAW members (up from 80,000 at the time the Partnership Agreement was signed in 1998). This represents the largest unionised workforce of any UK company.
Management thinking behind the agreement was to create greater staff cooperation, resolve local problems, and create a more open style of communication. The five key aspirations it had for the agreement were:


  • to secure high quality representation for staff;

  • to allow USDAW to understand and promote Tesco’s business goals;

  • to guarantee co-operation;

  • to enable USDAW to challenge management; and

  • to allow Tesco to remain flexible enough to retain its leading market position (Allen, 1998).

The union presence is seen by management to give greater legitimacy to the process and the union has been highly supportive of the agreement.

Whilst the partnership relations have not been without criticism, particularly criticism of union incorporation (see for example comments in People Management, 27/4/2000), other commentators have seen advantages in replacing traditional union-management relations with the multi-level forums, particularly in terms of allowing a broadening of the union-management agenda to take more account of issues such as job security, training, and career prospects Allen, 1998). For Allen and others, the result has been an overall increase in trade union and employee input into business decision-making.

The company do not communicate extensively on the nature and activities of the workplace forums. Their existence is noted on their website (in the section on staff, see www.tesco.com) but is not communicated in the company’s Annual Reviews or CSR report.

B.2.3 Views on the workplace forums

The functioning of the workplace forums was discussed with managers and employee representatives at two stores, and in addition with a sample of employees not directly involved in the forum activity.


Among those involved there was general satisfaction expressed that the partnership model, based on the staff forums, was a good idea and fitted well with the company’s overall policy towards employee relations (though an even more tangible aspect of the partnership model was seen to be the significant bonuses paid to staff reflecting the annual profits made by the company). Among the trade union representatives a feeling was evident that the consultative style of employee relations was the only relationship the company was prepared to countenance with USDAW, and that the consequence for the union of not accepting a partnership approach would probably have been de-recognition by Tesco. However, all parties expressed the view that the forums worked reasonably well as an open exchange of views on store-level matters.
At the same time, a number of problems were identified with maintaining the level of forum activity. Two were most evident:

1. Maintaining an adequate agenda. The forum meetings are typically quarterly in frequency and this was widely seen to be too infrequent for day to day issues to be adequately covered. These shorter term issues are more likely to be covered in regular five minute briefings by managers – referred to as Team 5 within Tesco. These briefings have been introduced on a weekly basis and aim to cover all staff. According to the company, currently around two-thirds (65%) of staff say that they are getting a Team 5 briefing each week, and the company’s target is to extend this to cover all staff (Tesco CSR Review, p. 25). Further, there are certain subjects – notably issues relating to employees’ terms and conditions of employment – that cannot be discussed in the forums. This again appeared to concentrate forum discussion on a store management rather than employee agenda.

2. The agenda of the workplace forums appeared also to have been restricted to a degree by the company’s success and continued expansion. Thus, since their introduction in 1998, there had been very little in the area of restructuring for the forums to be concerned with. As a result, emphasis in the forums had been on work arrangements, store organisation, training, customer relations and so on, rather than employees’ internal working conditions. Only if at a future date the company undergoes significant restructuring will the forum system, along with the broader partnership relationship with the union, be tested as to its robustness in dealing with the consequences of restructuring. If this arises, however, both company and union representatives will have enjoyed a significant period of building relations under relatively conducive conditions.

Among the employees not directly involved in the forum process, there was some feeling that the forum activity was not a prominent source of information or consultation for them. The feeling appeared to be that these employees learnt more about what developments were occurring from the management briefings, or informally from their union representative, than from the forums.


B.2.4 Conclusions from the Tesco case

The partnership agreement was welcomed by both the company and the union as a means of developing employee relations within Tesco. During a period which has seen considerable decline in union membership and the coverage of union recognition in the UK, this agreement with USDAW has proved symbolic in illustrating how companies and unions can develop collective relations. At the time, Tesco’s retail manager, Michael Wemms, maintained that this partnership agreement showed “that a unionised company should always be able to do better than non -unionised set-up given a sensible structure” [The Glasgow Herald, March 14th, 1998]. Since the late 1990s, a series of other companies in the UK have likewise forged partnership relations with their main union(s). The fostering of relations with unions rather than seeking to minimise their presence in the company represents an area of CSR that has not to date been adequately considered.

The discussions with those involved in the workplace forums indicated a generally supportive response to this method of social dialogue. Currently in the UK there is no legal requirement to consult with employees at workplace level, other than to deal with specific issues (such as collective redundancies and transfer of undertakings). This will change in the coming period as the European Directive on works councils takes effect. What the Tesco case indicates, however, is that such forums can play a useful consultative role within organisations. However, what the case has also shown is the problem (also evident in other studies of consultative mechanisms) of maintaining an adequate agenda for such consultative bodies, particularly where the meetings are held relatively infrequently, where certain issues (such as terms and conditions) are deemed not suitable for discussion, and where other management briefing systems exist which allow more regular communication of locally-relevant issues. As the discussions with those not directly involved in the forums also highlighted, a persistent problem with such representative mechanisms is to how to keep the constituency informed and involved with the consultative process, rather than this becoming an activity more or less separate from the workforce.

Overall, however, while the company appears to make little of this activity as a form of CSR – indeed, primarily showcases its external, much more than any internal, CSR activity in its communications to its various stakeholders – the forum structure, and more broadly its partnership relationship with its trade union, represents an example of good practice CSR in the field of social dialogue.



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