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.