What happened to 'best practice' and valuing the workers?

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Back in the hopeful early nineties, the
Hawke Government introduced the Australian Best Practice Demonstration
Program to hasten the arrival of an era of enlightened
worker-management relationships.

The
businesses that succeeded in this new era would be those that built
co-operative relationships of mutual trust and respect with their
workforces. It would create, in the argot of the period, win-win
outcomes.

Over several years, the Federal Government spent about
$25 million funding Australian companies to undertake projects that
reflected the best aspects of the new era and in promoting these models
through books, magazines, seminars etc. to the rest of the Australian
corporate world.

Between 1992 and 1996, I helped to manage this
program on behalf of the Federal Department of Industrial Relations and
jointly with the Australian Manufacturing Council and its Secretariat.

It
was an exciting time, culminating in a 1994 visit to ‘exemplary’
factories in the USA and a meeting with Representative Richard A.
Gephardt (then House majority Leader) in Washington who was interested
in replicating our little program in the home of capitalism itself.

Not
long after our visit, the 1994 mid-term congressional elections brought
a sea-change in US politics which saw Newt Gingrich lead the
Republicans to control over the House of Representatives, bringing with
him an agenda that had little time for notions of business-union
co-operation.

Australia got the term ‘best practice’ from a
late-eighties study by the Massachusetts Institute of Technology (MIT)
which looked at how the sagging American manufacturing sector might be
re-energised and rebuilt.

A key conclusion of the MIT study
was the need for better quality control, based on Japanese ideas and
practices that had grown up after WW2 and which were heavily influenced
by the ideas of American quality guru, W. Edwards Deming.

At the
core of Deming’s approach is the idea that people are not the problem.
The problem is almost always the management and process systems within
which they are required to work. The way to improve business
performance is to change systems to suit people; trying to do the
reverse is stupid, pointless and bound to end in conflict.

Most
managers, however, have always had more confidence in their systems
than in the people they employ. Much twentieth century management
theory and practice was taken up with ideas on how to take the human
element out of work. Deming proposed to put it back at the centre of
everything in business.

In the West, the last twenty years has
brought an obsession with swelling shareholder returns which has seen
companies shrink middle management, downsize, outsource and offshore.
First in blue collar manufacturing areas and then more recently in
service and IT industries.

Ideas about worker-management
co-operation, valuing human assets and upskilling are still talked
about, and no doubt used in a few workplaces, but the experience of
most employees is vastly different.

So much so, that our
attitudes to the merits of being an employee are changing. Talented and
ambitious young people now typically see being an employee as something
you do before you set up your own business. Young people see being a
member of a union as something losers do, probably because it means
committing to being an employee for the longer-term. For those who do
stay as employees, the prospects are looking increasingly grim.

The
most successful company in America today, perhaps in the world, is
Wal-Mart. In an article ‘Inside the Leviathan’ in the 16 December issue
of the New York Review of Books, Simon Head says: ‘With 1.4 million
employees worldwide, Wal-Mart’s workforce is now larger than that of
GM, Ford, GE, and IBM combined. At $258 billion in 2003, Wal-Mart’s
annual revenues are 2 per cent of US GDP, and eight times the size of
Microsoft’s. In fact, when ranked by its revenues, Wal-Mart is the
world’s largest corporation.’

What’s scary about this is that
Wal-Mart’s business strategy is based around a combination of
technology and low wages. Unlike our best practice models a decade ago,
Wal-Mart has no desire to share the benefits of business success with
its employees. Head again: ‘While its workforce has one of the best
productivity records of any US corporation, it has kept the
compensation of its rank-and-file workers at or barely above the
poverty line.’

Productivity improvements are often achieved at
Wal-Mart in ways that hark back to the ideas of Blake’s ‘dark satanic
mills’ rather than forward to a modern ‘civilised’ form of capitalism.

Wal-Mart
‘owns’ its employees and it does not see them as valued individuals:
‘The pervasive understaffing at Wal-Mart gives rise to one of the most
common employee infractions at the company, "time theft." With each
employee having more work to do, managers assume that whenever they see
an employee not working, she must be shirking her duties, or "stealing
time" from the corporation, a punishable offence. ‘I recommend you read
the whole of Head’s article, available online at The New York Review of
Books and one of the most important, and disturbing, articles I’ve read
for awhile.

But here’s the punchline – in 2003, Fortune
magazine cited Wal-Mart as its ‘most admired company’. A decade ago,
especially in the Accord era, we could think that ‘tooth and claw’
capitalism was being modified by the realisation that working with your
employees in a climate of respect and dignity would lead to those
lovely win-wins.

Now, Wal-Mart is the global business star
with a business strategy that clearly puts exploitation at the top of
its HR priority list. We should worry about the damage the re-birth of
that philosophy will do to our society.

New Matilda

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