PRODUCTIVITY AGREEMENTS
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PART 2
Adescribed last week the operations plan in connection with the Esso productivity bargaining project had two phases. As an example of the work involved in the first phase, the factors which had to be considered relative to double shift working of road tankers were detailed.
Continuing their evidence, Esso said that the first and second phases overlapped in time. The second phase essentially consisted in changing plant and equipment through capital investment, and some of the tasks of this phase would continue for several years.
The second phase plan divided the tasks into nine headings. Each of these might involve up to nine or so separate jobs, allocated to persons by name and on a time basis. Thus under the heading of "Road Transport Development Programme" there were 12 tasks. The overall list of tasks under all nine headings underlined the interconnection between operating practice, sales practice and trade union organization and arrangements.
Pertinently, the evidence continued, there was no advantage in designing new physical facilities and investing in new trucks if the customers were not equipped to receive the products, if the sales effort was not directed towards using this advantage commercially and if the men were not prepared to co-operate in doing the work. Similarly there was no advantage if the plant management were not organized to meet the efforts involved in controlling the work, and if the control systems of the company were not adequate to show what was happening for comparison with the potential. • Regarding control systems the usual procedures were concerned with measuring present against past performance. The need, in the context of productivity bargaining, was to set optimum standards and to compare performance against these.
For example, in road transport, it was possible to calculate an optimum performance where all trucks were double shifted and fully laden for each delivery and where they travelled a substantial distance each time. This may be contrasted with the actual situation where not all the trucks were fully double shifted, where it was necessary to deliver part of the load to one customer and part to another, and where, in order to provide an adequate sales service, some short journeys needed to be made.
Objective Identified
An important part of productivity bargaining, Esso maintained, was to ensure that management identified their own objective and devised methods of ensuring that these were reached and measured.
On the distribution side the objectives were identified as capital utilization, control (locally agreed targets), measurement, planning (to cover both manpower and equipment utilization), flexibility of work, flexibility of hours and manpower control.
In order to measure the improvement a simple performance index had to be devised. The measure for truck productivity was set as miles driven, divided by manpower and work. This provided a sufficient guide to the productivity at the plant level.
However, this in itself was not enough, since the company needed to know that managers at the local levels were seeking realistic targets. Therefore, in addition to the productivity index, there Was a management control tool in the form of a computer analysis of performance against optimum. This was termed RIDE —Reduction In Delivery Expense.
RIDE measured continuously the improvement at each plant against the optimum described above—that is, where all trucks were double shifted, carried full loads for a long distance, and so on. This RIDE programme compared the progress towards the ultimate target in the productivity deal so that the central negotiators could know that the money spent in increased wages and the like was being met by a proportionate increase in productivity.
Necessity for management changes was next dealt with in the evidence. In Esso's view, it was necessary before proceeding with a productivity plan to review the management structure and per sonnel and make any changes necessary.
After instancing changes at Fawley and Milford Haven it was recorded that major changes were made in their marketing department prior to the negotiation of the scheme. This department was divided temporarily into separate sales and operating divisions to make sure that the organization of the plant was functionally directed towards the success of the plan.
Not only the organization, but also management attitudes and thinking had to change. To take the initiative in developing and implementing a productivity plan needed quite a different outlook from that required to administer a detailed and nationally negotiated agreement which had been in force for a number of years.
Trade Union Custom Much effort had to be spent on securing this change of outlook down to first line supervisory level, where involvement in traditional trade union custom and practice was deep and, in consequence, appreciation and understanding of new management attitudes tended to be correspondingly slow and uncertain.
The existing negotiating machinery had also to be reviewed to determine whether it lendecl itself to the making of a productivity bargain. After commenting on the agreements in force at Fawley and Milford Haven, Esso said that in their marketing department the question of the company's membership of the employers' panel of the Oil Companies' Conciliation Committee had to be considered.
Stemming from war-time arrangements the marketing, as distinct from the refining, side of the oil industry had operated since
1940 under an industry-wide agreement in which the employers' Panel negotiated terms and conditions of employment for manual workers in a country-wide network of plants and terminals with a trade union panel.
The employers' panel laid great stress on the observence of standardized terms and conditions of employment, and on tit( necessity of dealing by joint action with any problem that arose This limitation was inevitable during the last war and immediat post-war years. But by the end of the 1950s, when competitioi was becoming more acute, increasing difficulty was experience■ by the employers' panel in reaching agreements.
Various attempts were made from time to time to endeavou to relate wage increases to improve methods of working, bu with only limited success. One example of this difficulty was to b found when the attempt by the employers' panel to negotiate settlement based on the Government's decision to raise the max mum speed limit for heavy goods vehicles from 20 m.p.h. to 3 m.p.h. ,
Given wide differences in operating patterns and a trade unio insistence on the national settlement that was the same for a workers throughout the country, irrespective of the way the individual earnings were affected by the higher speeds, it was reall not surprising that the eventual compromise satisfied very fe, people.
Comparing this experience on the marketing side with the rel; tive freedom Esso had experienced at Fawley in direct discussior with their own employees and their representatives, they decide that a similar solution for truck drivers and plant operatives wer only to be found in direct negotiation. It was for this reason th; Esso decided to resign from the employers' panel in 1964 whe their ideas about the form of a productivity deal for distributio workers had begun to take shape. A criticism of their action in withdrawing from the employers' panel and of their Fawley agreement was that increases in wages negotiated in a productivity agreement would compel other employers to match the increases, even though they may not be in a position to secure a corresponding increase in productivity.
Clearly, Esso admitted in their evidence, there was a danger that this might happen. Any company contemplating such a productivity negotiation should, in its own interest as well as its neighbours or competitors, inform them of its intentions.
The answer, however, in Esso's view was to attempt to stimulate the growth of a climate of opinion in which the claiming or granting of increases obviously unrelated to productivity were likely to be questioned, as indeed they were now being questioned through the National Board for Prices and Incomes.
If there were risks in attempting independent action, Esso continued, there were also dangers in industry-wide bargaining. It was certainly easier to agree to a claim if an industry-wide agreement ensuring that all competitors' costs were increased to the same extent. It was their experience that it was by no means inevitable that the effects of a productivity deal compelled unjustified increases elsewhere.
To support this contention Esso then gave examples of the reactions of employees at their distribution plant at Hythe (which is separated from Fawley refinery only by a wire fence) after the introduction of the original Fawley scheme.
In the simple wage bargaining situation in which a union makes a claim, the employer makes a counter offer and so on, the union officials concerned could speak with some authority. Any arguments between them and their members would only be as to their adequacy on the final settlement.
In productivity bargaining, however, the position of the trade union side was not so simple. The arguments were about working methods and practices, some of which may have been developed by the men themselves and in which they had a direct concern. Shop stewards were involved and local officials, both lay and full time, were interested. Finally, national officials might well be concerned because local agreements might appear to involve basic union principles.
Thus, whether the productivity bargain stems from a purely local settlement on the Fawley or Milford Haven pattern, or whether it is country-wide as in the case of the marketing agreement, the whole mosaic of trade unionism was involved. That being so, a real effort had to be made to understand and help with the complexities and difficulties on the trade union side. Without this, the union signature put to an agreement in complete good faith might not be worth having.
In Esso's experience there were severe limitations to a union official's ability to respond to a call to "discipline his men". To get this understanding required the habit of discussion between supervisors and their men and between supervisors of all grades and management.
It was their experience that there was a tremendous fund of interest in, and knowledge of, work practice throughout an organization, which was the task of management to release and use. But they had found that this task was one of considerable difficulty and sometimes of relative novelty, often requiring a considerable revision of ideas about "management prerogative".
Finally they had this to say about training. To the extent that a productivity agreement involved changes in work, the elimination of categories and the acceptance of new tasks, job training would be required and much of the success of an agreement would depend on this instruction. In all three of their productivity agreements, a considerable degree of training and retraining had been involved.
On the distribution side, the previous practice of instructing drivers verbally by supervisors who had not had any formal training in job instruction was very soon seen to be inadequate. The new rules in truck operations that had been developed by operational research methods required a more sophisticated approach, and a programmed instruction manual was drawn up so as to facilitate teaching the new rules to the dispatcher in such a way as to help him accept them as well as merely to know them.