Employers and Employment Strategies
A comparative perspective

After years of neglect, employers have recently come to occupy centre stage in the industrial relations literature. The unique characteristics of British employers, for example, have been used to explain a variety of features of UK industrial relations. Comparisons with their US counterparts have been used to show that a failure of UK managers to protect the principle of managerial prerogative in the workplace from the incursions of shop stewards has contributed to poor UK productivity. More recently, comparisons of UK and Japanese employers have been used to demonstrate the UK failure to adopt strategies for human resource management. This failure, it is argued, has inhibited employee commitment to the goals of the firm.

The validity of such negative judgements of British management can only ascertained by comparative and historical research. This was the purpose of a CEPR conference on 'Employment Strategies, Enterprise Management and Industrial Relations: Britain in Comparative Perspective, 1870 to the Present', held at Girton College, Cambridge, on 4/6 September. The conference was organized by Alastair Reid (Girton College, Cambridge), Steven Tolliday (Harvard Business School) and CEPR Research Fellow Jonathan Zeitlin (Birkbeck College, London). Financial support was provided by the Commission of the European Communities and the Nuffield Foundation. Alan McKinlay (Aston University) acted as rapporteur.

Over the past decade there has emerged a powerful consensus that the historical development of the division of labour has led to the progressive reduction of skill levels and consequently to more effective employer control over the production process. This consensus has now been called into question by detailed studies of work organization. In his paper, 'Employers' Strategies and Craft Production: The British Shipbuilding Industry, 1870-1940', Alastair Reid argued that, in the shipbuilding industry at least, employers made no sustained attempts to increase their control over production. In part, this was due to the structure of the industry. It was concentrated in two main centres, Clydeside and the North East coast, specializing in passenger liners and general cargo ships respectively, and in addition individual firms tended to specialize in particular types of vessels. As a result, it was difficult for employers, despite the existence of a national employers' organization, to sustain unity except over short-run issues such as wages or working hours, and common approaches towards mechanization or changes in working practices were never achieved. There was also no concerted effort by individual employers to create formal managerial hierarchies inside the firm. Some mechanization was introduced, mostly replace tasks demanding high levels of physical effort rather than of skill, but employers appeared committed to labour-intensive methods of production and a workforce with high levels of skill and considerable discretion over its work. Reid suggested that this may have represented a rational strategy on the part of the shipbuilders to reduce capital investment and hence overheads in times of depression.

The paper by Jonathan Zeitlin, 'The Internal Politics of Employer Organization: The Engineering Employers' Federation, 1896-1939', presented somewhat of a contrast. Lke shipbuilding, the UK engineering industry was subject to wide regional and sectoral differences and was comprised of firms with very diverse capital structures and workforce requirements. Despite these obstacles to national organization, engineering employers initiated two nationwide lock-outs in 1897 and 1922 over the questions of employer sovereignty over production processes. The EEF began as a loose coalition of local employers' associations but the national organization became more cohesive as a result of the success of supportive inter-district action in the 1897 lock-out. This new employer unity was sparked off by union demands for an eight-hour day, which affected all employers alike. Nevertheless, the EEF was aware of the tensions inherent in its organization, hence its stress on negotiation rather than confrontation with the unions before 1914. These tensions were heightened by the demands of the Great War, when full employment and cost-plus contracting triggered intense competition for scarce skilled labour and led to the virtual collapse of employer solidarity in the labour market. The renewed employer solidarity displayed in the 1922 national lock-out was spurred by sharp economic decline and union inability to police agreements, as well as by the unifying force of the EEF's appeal for reassertion of managerial prerogative. The massive defeat of the unions in 1922 ensured for the employers over a decade of unchallenged superiority in industrial relations.

In 'Supervisors, Managers and Employers in the Lancashire Cotton Industry, 1890-1940', Mike Savage (Sussex University) assessed the significant changes in labour structure and enterprise management after 1914. Labour recruitment was critical to enterprise success, since weaving remained a skill-intensive production process. Initially the craft supervisors played a dominant role in the workplace, as a result of their importance in recruitment through family networks, effectively preventing the emergence of managers as a significant force before 1914. This was changed after the Great War, for two reasons. First, the recapitalization of the cotton industry introduced large- scale institutional investment, encouraging the professionalization of mill management. Second, the growth of state Labour Exchanges after 1910 undercut the supervisors' predominant role in recruitment. Although the new breed of mill managers became increasingly assertive in the workplace, however, they made no concerted effort to rationalize production. Savage rejected the conventional argument that ascribes the conservatism of the cotton industry to an anachronistic capital structure or powerful trade unions. Rather, mill managers were able to intervene in the labour market and had no need to reorganize production along the lines of 'scientific' management in order to assert their individual and occupational identity.

Ford of Britain is commonly depicted as distinctive not only because of its financial success but also because of its long-range planning. Steven Tolliday (Harvard Business School), in 'Enterprise Management and the Control of Labour: Collective Bargaining and Labour Management in Ford Motor Co. (Britain), 1937-1987', identified a number of clear phases in the evolution of Ford's industrial relations policies. Having expelled unions from its factories on its arrival in Britain in 1911, Ford remained immune from trade unionism until the end of World War II. Even then, its negotiating agreement with the unions excluded shop stewards and local organizers. The company's strategy was to control shopfloor unionism through bargaining with union leaderships, but subsequent developments made bargaining arrangements more complex without increasing the control of union executives over their shop stewards. Small-scale workplace disputes occurred in 1962, when Ford dismissed shopfloor activists, and Ford's young, restless workforce posed severe disciplinary problems. Tolliday attributed Ford's difficulties to their failure to integrate of industrial relations and production strategies; management became increasingly unable to impose control on the shopfloor, despite a massive job evaluation exercise.

Ford's industrial relations system eventually broke down in 1968- 72, as a result of the growing importance of shop stewards in settling grading grievances and the emergence of radical leaderships in the major metalworking unions. The company responded in the 1970s by bargaining directly with shop stewards, in order to increase the standards' commitment to less volatile industrial relations. But with the emergence of the Japanese competitive advantage in 1978, Ford realized that low levels of factory automation had generated unacceptable rigidities in the labour process, as a result of which their productivity had fallen behind that of Japan. Ford's response was to re-establish strict discipline inside their factories and to extend worker responsibility for quality and the elimination of process inefficiencies. The aim has been to prepare the ground for more cooperative working practices, which blur distinctions between production and supervision. Tolliday judged this to be a major reversal of the 'direct control' policy that Ford had pursued for 50 years.

In 'Fiat and Employer Organization in Italy since 1945', Giovanni Contini (Archivi della Toscana, Firenze) discussed the tension between employer organisations and large dominant firms. After 1945, the industrial strength of companies such as Fiat contrasted with the political weakness of Confindustria, the national organization of Italian industrialists, which had been strongly associated with Mussolini's industrial policies. Confindustria's political influence was further weakened in the 1950s and 1960s by increased state involvement in the booming economy as well as by the electoral failure of the right-wing parties Confindustria funded. By contrast Fiat retained considerable political influence during this period, despite criticism from both Confindustria and the labour movement, by supporting conciliatory politics and encouraging company unionism through wage and hours concessions. Following the industrial relations crisis of 1969, Fiat was instrumental in reorientating Confindustria policy towards building a constructive relationship with the democratic parties and the unions. Confindustria was reorganized into regional and sectoral divisions charged with stabilizing collective bargaining by strengthening official union channels. Since 1980, however, continued workplace conflict and a new generation of Fiat management have brought a more confrontational industrial relations policy. The successful pursuit of this policy has distanced Fiat from Confindustria, which is increasingly interested in small industries and nascent sectors.

Employers' organizations now play no significant role in collective bargaining in the American metal industries, a sharp contrast to their importance between 1900 and 1935. Howell Harris (Durham University) considered the success of one such association in his paper, 'Reassessing the Open Shop Movement: The Philadelphia Metal Manufacturers' Association, 1900-1930'. The foundation of the employers' association in 1903 followed a period of unprecedented union activity, including demands for standard wages and controls over recruitment. This was a serious threat to employers in an industry where production was labour- intensive and demand volatile. The members of the employers' association were predominantly small firms who produced intermediate goods and shared a common labour supply; unlike larger corporations, they lacked the ability individually to resist strikes or manage collective bargaining.

Harris argued that the purpose of the association was not to centralize bargaining but to reduce trade union influence. The Association's Labor Bureau not only served as a clearing house for skilled labour, essential in the unregulated chaos of the Philadelphia labour market, but also restrained the growth of union influence, excluded known activists and provided a reservoir of competent non-union labour during strikes. The association proved successful in strike-breaking, notably during the war. But the erosion of its industrial base in the 1920s and the increasing role of the state in industrial relations in the 1930s undermined the Association's role as a strike-breaking agency. It was forced to extend its role in labour market regulation in order to retain the support of its existing members and attract the increasingly important mass-production companies, which tended to rely on their own internal labour markets rather than external recruitment. Harris concluded that the absence of state intervention had initially underpinned the open shop movement, but this basis was removed by the 'New Deal' and the rise of effective trade unionism.

Another example of a localized industry labour market was studied by Heidrun Homburg (Universita{^p^h4}t Bielefeld) in her paper, 'Personnel Management: Constraints, Intentions, Achievements. The Case of Siemens from the 1890s to the 1930s'. German metalworking was concentrated in Berlin, whose metalworkers were not only highly mobile but well organized in Germany's most powerful industrial union. From 1890 the Berlin employers' association attempted to regulate the labour market through obligatory labour exchanges and blacklists. In 1906 Siemens went further by founding a company union which rewarded loyalty with job security and welfare benefits, but the labour shortages of the First World War undermined such attempts. Siemens's response was to reverse the company's prewar refusal to recognize trade unions, and to encourage cooperation among employers in industrial bargaining, based on standardized time studies to avoid inter-firm wage differentials. Siemens's intimate involvement in the development of the employers' collective organization was paralleled by its own increasingly sophisticated industrial relations policies. Ultimately, however, these techniques as well as employer cooperation failed to curtail labour turnover and trade unionism, and Homburg argued that this encouraged tacit support for the Nazi regime which promised to abolish worker resistance.

In their paper, 'Employers' Associations and the Reconstruction of Industrial Relations in Post-War Germany', Werner Plumpe and Ulrich Kreidinger (Ruhr-Universita{^p^h4}t Bochum) investigated the reconstruction of labour relations in the decade after 1945, based on a model of social partnership which was sanctioned by law and the occupying powers. While German employers maintained their unconditional right to manage at plant level, they were prepared to accept trade unions as partners in negotiations over a strictly defined set of issues. The legal vacuum created by repeal of Nazi labour laws was filled by industrial laws based on the experiences of the Allied powers and the Weimar period. Trade union demands that works councils should form the basis of a comprehensive system of social and industrial planning at all levels of the economy challenged proprietorial sovereignty inside the factory. The result was a series of ad hoc arrangements designed to meet specific difficulties rather than thoroughgoing reform, and even in iron and steel the unions had little real influence at plant level. Nevertheless the works councils remained a cornerstone of the conciliatory industrial relations which were established in the two decades after 1945 and which were a prerequisite for the modernization of German industry.

Public enterprises are subject to shifting political objectives which set the limits to industrial relations strategy. Quite apart from direct political control over pay and redundancy, industrial relations in public enterprises are subject to informal, unacknowledged political constraints. Since 1979 the conflict between the economic objectives of public enterprises and the political constraints under which they operate has become clearer in Britain. In his paper, 'Management Strategy and Industrial Relations in Public Enterprises: British and Spanish Railways', Anthony Ferner (Warwick University) explored the general relationship between industrial relations in public enterprises and the political environment, as well as cross- country differences in this relationship. Until 1979 industrial relations in British Rail were broadly consensual and involved considerable union influence over corporate decision-making. The tacit alliance of management and unions to minimize conflict was based on a shared understanding of the perishability of the product. Since 1979 the Conservative government has established commercial viability as the yardstick for public enterprises. Managerial prerogative was to be asserted at the expense of tripartite political discussions, and further investment in BR was made conditional on changes in working practices even against union opposition. Ferner argued that, while the financial benefits of flexible rostering were minimal, overcoming the 1982 national strike over this issue was essential if management was to retain government support. The shift in political climate activated management's latent desire for increased efficiency, which could be achieved only if trade unions were weakened. In Spain, by contrast, the decades of repression which preceeded Franco's death in 1976 gave way to consensus policies in order to maximize popular support for the new democracy. Public sector management in Spain had been highly politicized at senior levels. After 1976, the coherence of management attempts to increase the railway's commercial efficiency was repeatedly compromised by ad hoc government interventions over policies which threatened to disturb the principle of tripartite bargaining.

There is a large element of discretion in managerial functions such as organizing the production process. Can the competitive advantage enjoyed by Japanese manufacturers over their British counterparts be explained in part by different management priorities in production organization? This was the question explored by the remaining three papers, beginning with Karel Williams (University of Aberystwyth), John Williams (University of Aberystwyth) and Colin Haslam (North East London Polytechnic) on 'Bad Work Practices and Good Management Practices - The Consequences of the Extension of Managerial Control in British and Japanese Manufacturing'. The authors argued that British management's preoccupation with reforming blue-collar working practices was narrow and inappropriate. Apart from ignoring technical and administrative staff (30-40% of the manufacturing workforce), tackling the 'labour problem' on its own yields little benefit, the authors argued. Labour costs are of secondary importance to most manufacturing enterprises relative to purchases of components and services, which account for 60-70% of total production costs. Japanese management strategy aims to identify and eliminate all inefficiencies in production: all inputs should be variable, so that fixed and working capital would have the same flexibility as labour input. This more comprehensive approach is reflected in the use of value added as a measure of productivity, by Japanese managers. British managers on the other hand tend to use crude input-output measures. Thus while major increases in labour productivity elude the British, who pursue them directly, Japanese successes in this field result from their broader approach to production engineering.

The appeal of the Japanese paradigm, the intensification of international competition, and the advent of computerized production techniques have all prompted speculation that the distinctive features of national work organization may gradually be eliminated. This was the issue addressed by Bryn Jones (University of Bath) in 'Technological Convergence and the Limits to Managerial Control'. Computerized manufacturing techniques do not inevitably lead to reductions in skill levels: they can also make possible greater operational flexibility based on versatile skilled labour, product diversification, and marketing strategies based on batch- rather than mass-production techniques. Jones argued that in Britain the conventional management objective of output maximization has obscured the potential of flexible manufacturing systems. Computerized technology has been used to supplement rather than displace established craft skills; in only a minority of cases has new technology served as the basis of comprehensive work reorganization. In the United States, flexible manufacturing systems have been used to achieve conventional cost economies on restricted product lines. Conversely in Japan similar technologies have been assimilated into more autonomous work processes and flexible work roles. Jones observed that, in Japan, there is no equivalent of the Anglo-American craft worker, and there are no established skill hierarchies to resist the introduction of new technology. This diversity of approaches to adapting new technologies led Jones to conclude that contingent historical and institutional factors will continue to give rise to heterogeneous patterns of work organization.

The paper by Keith Sisson (University of Warwick), entitled 'The Structure of Collective Bargaining: Distinguishing Cause and Effect', stressed the importance of the institutional framework of collective bargaining as the most significant single influence on employer behaviour. A single historical event can define the nature and extent of trade union involvement in the employment relationship for a long period. In Britain, for example, the 1897 engineering dispute established precedents for settling industrial disputes which have since been much emulated. Sissons argued that, unlike other countries, Britain's 'common law' model, of voluntary rather than legally binding collective bargaining, has made it very difficult for employers to prevent trade union activity in the workplace. British industrial relations tend to be more prone to vary over time as the balance of political power changes.

Arrangements are being made to publish a selection of the papers presented at this conference in 1988, edited by Steven Tolliday and Jonathan Zeitlin.