1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140 
The implications of the new productivity guidelines
Page 97
Page 98
If you've noticed an error in this article please click here to report it so we can fix it.
THE Prices and Incomes Board has been doing some serious study about the next phase of incomes policy. The Board itself has been under attack in many quarters and the recent decision of Mr Aubrey Jones, its famous chairman, to leave the Board could mean that with a change of Government the PIB would either be abolished or find its powers emasculated.
Because incomes policy is an international problem—massive strikes in Germany and Italy currently bear witness to this—it is highly questionable whether any British Government would respond to sectional pressures for the complete liquidation of the machinery for incomes policy. The prudent course for all employers and trade unions is to assume that incomes policy constraints will be with us for a long time to come. Indeed, there are economists who believe that the country is working steadily towards a national "points rating" system whereby all of us—from dustmen to dukes—will have a job evaluation number determining the income judged by society to be fair.
When the PIE wis set up it was under pressure to produce results quickly. It is not surprising that many of its early reports were concerned with improving the productivity of manual workers—including lorry and bus drivers and ancillary staffs. Too little attention ivas paid to the effect of incentive payment plans benefiting sectional groups. If managements are compelled by the pressure of disgruntled employees to revise pay structures all round, the total increase in costs may then outweigh any increase in productivity yielded by the agreement(s).
Job evaluation Given time, a total re-structuring of. ,tibg wages and salary system using job evaluation "to establish acceptable internal pay relativities among all the work groups" is perhaps the answer. The PIB in the recent Report No 123: Productivity Agreements (HMSO 6s) says that one merit of partial productivity deals is that they take less time to negotiate than comprehensive agreements so that benefits flow sooner, and this helps to convert reluctant sections of a workforce, or indeed of the management, to produ.N:vity negotiations. The load on resources, both of management and of workers' representatives, is spread over time though it may not be reduced.
The PIB details one study—it aimed to secure a more efficient use of labour and vehicles by means of work study and measurement—which ran into trouble when it was sought to obtain company-wide acceptance of the proposals. The management were not deterred: one particular depot was chosen for a pilot scheme and the result was satisfactory to both parties locally. As a result management was able to secure acceptance of work study and more flexible working arrangements and to demonstrate that the results of greater efficiency were beneficial to the depot drivers. The PIB could not say that the initiative would result in the general adoption of work study throughout the other depots of the company but it appears the localized agreement has strengthened the arguments of negotiators on both sides in the industry for realistic productivity plans.
Productivity bargaining A major advantage of applying productivity bargaining to non-manual grades—by inference clerical, technical and supervisory people—is that it meets the feeling of manual workers "that it is they and they alone who are being scrutinized, whose contribution is being assessed and who are being urged to intensify their efforts or to change their working practices".
Many managers may be surprised to learn of this reaction from manual employees: after all, the "carrot" of a productivity agreement is no attraction to drivers and others unless it offers a substantial improvement in pay or status in exchange for more efficient working. Many salaried employees would welcome the chance to be "work studied"—given some prospect of financial betterment if the investigation leads to more efficient working. The tradition in most offices is for changes in organizational methods and practice to be accepted with the ' minimum of resistance. Many would argue that acceptance of salaried status implies a readiness to work flexibly, accepting and indeed welcoming necessary changes. With this background it seems the more strange for maual workers to feel akin to zoo animals under public inspection.
This said, one must record the PIB's belief that non-manual workers feel "that productivity bargaining narrowly conceived places them at a disadvantage, since they have a tradition of co-operation with management and have no 'restrictive practices to which a price tag must be affixed".
Virtually all tasks, whether manual or non-manual, are capable of some form of measurement. If this were not so, as the PIE Points out, it would be impossible for any sizeable firm to know how many employees were needed for a particular task. There are undoubtedly substantial gains to be made in many offices from the close investigation of procedures. Most firms of consultants implementing work measurement schemes for non-manual workers claim productivity increases of from 20 to 25 per cent, i.e. if the workload remains the same 20 to 25 per cent fewer staff are needed.
The PIE suggests that such savings are conservative: "case studies have shown that the gains achieved can range from around 15 per cent to as much as 50 or 60 per cent." The methods used are not always spectacular. More even distribution of work and the elimination of unnecessary clerical tasks leads to the greater utilization of working hours. Some improvement may be possible because of the greater effort expended by individual workers, but it is stressed that "because non-manual processes mainly comprise a mixture of reading, writing and thinking, the scope for increase in the working pace is limited and most of the improvement tends to come from fuller use of the normal working day".
Patented systems
Three patented systems, of measurement for non-manual work are listed by the PIB. They are all especially suitable for jobs with a large element of routine work:
(a) Those that involve the continuous observation of workers (with or without performance rating in terms of Effort, not quality).
(b) Those that involve the intermittent observation of workers.
(e) Those that make use of predetermined standards to arrive at measured time values.
Although there may be a number of jobs in accounts and traffic offices which lend themselves to this type of analysis it is good to know that other methods are being developed to improve efficiency which allow clerical workers to work out suitable controls for their own work in the interests of greater job satisfaction. "These methods are not only more appropriate for certain types of non-manual work where discretion, judgment and creative ability are essential ingre clients but, because they are fairly broadly based and informal, they require little effort and cost. Essentially these techniques depend on the use of simple overall nonfinancial indices and standards which are regularly revised in consultation with the workers."
Any employers contemplating a streamlining of office procedures should note the strictures of the NB on where most resistance is likely: "The greatest resistance to clerical work measurement is commonly found amongst the lower ranks of middle management, which may not understand how the technique operates and cannot visualize how it will help. In many cases the managers concerned regard the use of the technique as a threat to their position, and the likely reduction in staff as a diminution of their importance and responsibilities."
The moral is clear: the introduction of productivity arrangements for non-manual staffs cannot be rushed. It requires a coherent personnel policy at the highest level —and this is something that very few road transport concerns aspire to.
Difficuhies The PIB lists a number of reasons whycompanies trying to introduce productivity arrangements for non-manual workers ran into difficulties. Departmental managers were seldom consulted early enough, or fully enough, to gain their support. Middle management hostility to unions was an obstacle in one company. In many establishments there was a breakdown in communications leaving departmental management "alienated from the exercise and therefore inept in its implementation of it".
Sometimes consultants were a source of friction between management and workers. The selection of the right firm of consultants is crucially important and their terms of reference would seem to be another major factor, for the report refers to the need for adequate control of consultants by domestic management.
It is extraordinary to read that in one company studied the consultants suggested that a new salary structure should be presented without previous preparation! No wonder the results were unfortunate. The management concerned later concluded that the consultants' recommendations should be processed through two parallel committees, one concerned with the technical aspects and linking the consultant to departmental managers, and the other handling industrial relations aspects. Clearly, if there was adequate staff and middle management representation on the two committees—why not one committee covering both technical and industrial relations matters?---the difficulties would have been eased_
Reading this report one is surprised that there is not more trouble from industrial disputes in Britain. Consider this sentence by the NB: "There was observable a tendency to keep the amount of information
given to the staff and its representatives to a minimum."
There follows the curious sentence: "It is doubtful in retrospect whether this reticence was wise." Why "in retrospect"? Any employer seeking to introduce work measurement must look for the co-operation of the staff: why expect co-operation to be forthcoming if information is withheld or appears to be withheld? No wonder the NB concludes: "The unions involved in the agreements which we studied were more often than not dissatisfied with the amount of information forthcoming, and in some cases were adamant that better provision of information was a condition for their combined participation."
Adequate consultative machinery is surely a prerequisite for any worthwhile productivity bargaining. No wonder some of the agreements took so long to hammer out if one side or the other was less than candid in the objectives sought. Many of the agreements studied "showed a high correlation between employee dissatisfaction with the attempt at measurement and departmental managers' reluctance to keep the staff fully informed and there seem to be clear indications that effective unions can greatly assist management to introduce acceptable productivity changes, particularly where these involve substantial changes in working methods".
A useful by-product of applying work measurement to non-manual workers is the resulting stimulus to management. ". . managements become more aware of salary costs and the application of reasonable manning standards and acquire greater control over forward costs."
Despite its general unpopularity an "incomes" policy may be a vital element in persuading people on both sides of industry to change their attitudes. Frustration over earnings as the cost of living rises certainly generates anger but it may also generate a willingness to consider changes in working practices. The PIB—adrnittedly an interest' ed party—has not changed its view in the last two years that the very existence of a Government "restraint" in increases in income has had a propelling effect on changes in working practice.
Advisory service Discussing the contribution of trade associatitats to productivity bargaining, the report says "many associations have little more than a secretariat to support a negotiating committee consisting of representatives from companies in the industry. Others play a much more active role and are strongly staffed by officials with a wide range of experience and expertise. Where this is the case, the basis exists for an effective and influential advisory service; it is in the creation of this that the future of many employers' associations appear to lie, and it is on this that the success of industrywide productivity framework agreements will largely depend".
An interesting section of the report deals with the evaluation of the cost saving resulting from productivity agreements. The true measure of the gain is the difference between what a firm's costs would be with, or without, an agreement. Labour cost savings must be evaluated in conjunction with the possibly much varied use of capital equipment, vehicles, premises, etc. Without an assessment of changes in capacity utilization the total benefits cannot be quantified.
Consultants' fees, it is stressed, can often offset a high proportion of savings during the first year of an agreement, but "we think it would be reasonable to spread introductory costs, such as the employer's share of redundancy payments and consultants' fees, over a number of years, so long as the changes in question are still yielding cost savings". And, of course, it is necessary to allow for the management costs of monitoring the actual working of the agreement.
Negotiators of productivity or efficiency agreements from now on would be well advised to study report No 123 closely. The revised guidelines (accompanied by explanatory notes, in chapter 9 of the report) seem likely to be Holy Writ for some time to come. Here they are:
Guideline No, 1: It should be shown that the workers are contributing towards the achievement of constantly rising levels of efficiency. Where appropriate, major changes in working practice or working methods should be specified in the agreement.
No. 2: Measurements of efficiency should be based on the application of relevant indices of performance or work standards. No. 3: A realistic calculation of all the relevant costs of the agreement and of the gains attributable to the workers' contribution should normally show that the effect is to reduce the total cost of output or the cost of providing a given service.
No. 4: There should be effective controls to ensure that projected increases in efficiency are achieved and that higher pay or other improvements are made only when such increases are assured.
No. 5: There should be clear benefits to the consumer by way of a contribution to stable or lower prices.
No. 6: An agreement applying to one group of workers only should bear the cost of consequential increases to other groups, if any have, to be granted.
No. 7: Negotiators should avoid setting levels of pay or conditions which might have undesirable repercussions elsewhere.