Co-operative Whitegoods makes electric and gas kitchen cookers. It once formed part of Stockton Industries, which also made enamel baths, basins and sanitary wares.
In 1989 Stockton decided to sell the cooker division. However, no buyer responded to Stockton’s offer, at which point it decided to close the division, and sell the factory and land.
The workers investigated the market with a view to forming their own company. Market research showed that prospects were good. So a deal was arranged between the division’s management, the workers and Stockton.
At the end of 1989, the new company was incorporated. More than 50% of the shares in the company were in the hands of management and the directors it elected. However, all workers bought shares. The factory and land were bought through a secured loan from Stockton.
The company employs 430 people, and most are process-workers. About 63% were born outside Australia, and many others are the children of immigrants. The workforce is almost evenly divided between men and women.
The main union covering the blue-collar workers is the Metal Fabricators and Allied Trades Union. The full-time officials are all Anglo-Celtic and anglophone. Recently, the union has hired an ethnic affairs officer, who has arranged for union leaflets to be printed in the workers languages. Nevertheless, many of the workers are not sympathetic to unionism.
Two ethnic shop-stewards were elected about the time of incorporation: Con Tsiglianou, a Greek, and Stanko Miskovic, a Yugoslav. The union supported the creation of Co-operative Whitegoods, as it seemed the only way to keep members jobs.
Ed Satchel is managing director and a major shareholder. His management style is that of a benevolent autocrat. He treats the workers as an extended family.
Meetings of the Management Council have been infrequent and have generally acted as a rubber stamp for policy made elsewhere. Tsiglianou has tried to raise matters brought to his attention by fellow workers, but few of his suggestions have been implemented. Formal minutes of committee meetings have not been kept. There are no formal channels through which workers can make their views known.
In 1996 Miskovic, the Yugoslav shop-steward, was elected to the safety committee. Under him it began to be more independent. It has pointed out that much equipment in the factory is old, and constitutes a safety hazard. Satche’s response was to ask that workers be extra careful in handling certain items of equipment.
Absenteeism has been on the increase.
A survey of workers was recently conducted by officers of the State Government Department of Productivity. The survey revealed that 73% of workers had been with the company since before the new structure was created: a good retention rate. However, alternative job opportunities for semi-skilled and unskilled workers were few. The survey showed that most workers had a positive attitude to the new structure because they saw it as having preserved their jobs.
Yet most indicated that they did not feel more involved in the company than before. Most indicated that they felt their shareholdings were a good investment, but they also expressed reservations about the policy that employees leaving the company had to sell back their shares. Most workers found their work uninteresting, consisting of routine and repetitive tasks.
A need was expressed for multilingual newsletters and more information on company contracts and financial matters. The committees and the council were also seen as being largely ceremonial in nature. The women felt that their special needs were not adequately catered for: the need for child-care facilities was often mentioned.
Soon after the results were presented to management, the company’s financial position began to deteriorate. Sales have fallen and there have been frequent complaints about defective products.
Stockton has written to Satchel threatening to sell its shareholding unless the financial performance improves quickly. The union has made demands for better wages and working conditions.
Analyse why the company is in trouble after such a promising start. Make recommendations to Satchel for resolution of the issues. Try to satisfy Stockton and the union. Justify your recommendations.
Thanks to Stanley Petzall of the school of management at Deakin University for permission to use this material, which comes from his publication on management case studies. Management Today invites readers to submit other Case in Point scenarios
Proposed solution #1
David B. Moore PhD, has a background as a university academic (history and politics) and teacher, in policy advice to the Queensland government, and experience working as a TJA director in Britain. John M. McDonald has worked as a school teacher, a policy adviser to the NSW government and in community development. Both David and John have worked on conflict resolution and organisational growth in manufacturing, the media, banking, mining and transport. They provide training workshops for organisations interested in turning conflict into constructive opportunities for change. They also have experience in conflict resolution in church communities.
The essential problem at Co-operative Whitegoods is one of communication.
The standard assumption of benevolent autocracy, that staff are probably not interested in the bigger picture, is a self-fulfilling prophecy. In fact, the more staff are informed about company contracts and financial matters, the more interested they become.
Morale will also be affected by the forced selling of undervalued share by departing colleagues and lack of identification with finished products.
There are no formal mechanisms for incorporating ideas and feedback from staff and customers.
These problems are exacerbated by the lack of a mechanism for spreading knowledge throughout the organisation, and of another for expressing grievances or gratitude. Absenteeism is a typical symptom. Work is seen as uninteresting, equipment breaks down and conflict arises around differences in gender and ethnicity. If staff are not regularly provided with structured opportunities to share their good and bad stories, the bad stories will dominate.
It is necessary in these situations to deal first with issues of communicative style, rather than structure. We would begin by identifying how people feel about their circumstances. Preliminary interviews would identify incidents in which disputes had not adequately been resolved. Over time, consequent resentments will have fostered habits that damage the workplace.
We would recommend a Workplace Conference, lasting the best part of a day, to focus on the most pressing conflicts. Those accepting some responsibility for allowing the situation to develop would talk about what has happened. Others would respond by talking of how they have been affected. All participants learn the consequences of the damaging behavior or decisions and then have an opportunity to make peace, and to decide how to prevent the problems from recurring. Any agreement they reach is signed by the key participants. It specifies what needs to be done, by whom and by when, and stands as a detailed record of what the group democratically agreed had to happen.
We might alternatively advise Co-operative Whitegoods to put aside a few days to work more comprehensively through the issues uncovered. This Transition Workshop would aim at providing participants with the new language they need to conceptualise and communicate requirements for change, and with the structure to design a practical reform program.
As we see it, the transition to more democratic governance at Co-operative Whitegoods cannot begin until some intervention with this degree of intensity addresses directly the styles of communication within the company. Then, when the workforce are ready to take on the responsibility of more democratic governance, a representative sample of the workforce is assembled and in a position to begin designing and implementing the appropriate structures.
Proposed solution #2
Alistair Henderson is an independent adult facilitator based in Canberra. He conducts a range of development programs for AIM in Sydney and Canberra, including Certificate IV in Workplace Training Category Two. His areas of speciality include team building, leadership, communication, adult learning and the Shared Values ProcessTM Operating System
The recent survey of staff at Co-operative Whitegoods found big problems: shaky staff loyalty (dependent solely on their having kept their jobs when it seems they had little chance of employment elsewhere); the existing consultative mechanisms being seen as ceremonial and ineffectual; increased absenteeism; poor quality; and rapid deterioration in the company’s financial position.
It seems that the management-worker committees and the Management Council are operating without a clearly agreed sense of purpose. There is a perceived gap between management and worker interests.
My recommendations to resolve the difficulties include the building of a culture of consensus on the basis of shared values. This simply means seeking core agreement as to what the company as an entity is trying to achieve, how the members of the entity can work together, and what values will guided them to achieve their shared interests.
Willingness to listen to each other’s input in this way has the potential to encourage mutual responsibility-taking and identity-building across the extended company family of workers and management.
A further element in achieving the desired end is self-managing work teams.
These teams form a powerful vehicle for embedding shared values by making everyone aware of the purpose and context of the whole task, ensuring that all parties are involved and consulted, drawing on a wide pool of expertise, including supervisors, encouraging appropriate responsibility-taking, giving staff the training, resources and permission to use their creativity, and encouraging joint solution-building within and between teams.
Management patience, support and resourcing at all levels is crucial to success.
With a view to improving consultative mechanisms, the number of committees should be reduced or replaced altogether with periodic meetings of team representatives to discuss common issues. Whichever option is chosen, members of self-managing work teams should seek, or be invited to have, rotational representation on an expanded Management Council. Managers should also show more visible interest in what is happening by visiting the shop floor more frequently and perhaps even taking part in process-improvement projects, at the invitation of teams.
Members of committees, or cross-team plenary meetings, should always adhere to meeting protocols such as consensual decision-making; ensuring minutes of meetings are circulated for comment; and inviting team representatives to report on successful innovations and major process improvements in order to promote mutual learning and consistency of approach.
As well as obvious areas, such as work design and process improvement, committees or meetings of team representatives could directly consider the particular needs of working parents (including child-care options), female workers and workers with a first language other than English (a multi-lingual newsletter might be helpful).
A more co-ordinated approach to overlapping problems has the potential to reap multiple benefits for the company. Consider the widespread positive effect of a decision to invest now in new equipment; enhancing the occupational health and safety of workers, reducing possible legal implications, and increasing productivity, quality, morale, cashflow and share dividends.
Staff, management and union representatives could all benefit from company-sponsored training in meeting process and protocols, negotiation and presentation skills, conflict-resolution skills, process improvement, and open-book management.
Rationale for recommendations: These recommendations, if properly implemented, will enhance performance, productivity and quality, reduce absenteeism, lift morale, promote team cohesion, meet the union’s requirements for progress towards full industrial democracy, unleash the inherent creativity of the workforce, and, over time, dramatically improve the financial performance of the company.