Self-interests and group-interests in employee involvement programs: A case study

Self-Interests and Group-Interests in Employee Involvement Programs" A Case Study *

DENIS C O L L I N S

University of Wisconsin-Madison, W1 53706

What happens in a unionized setting when a participatory management system is adopted? This question is examined based on afield study of a union manufacturing facility that has been operating under a gainsharing system for four years. As suggested by the political science literature on transforming political systems from authoritarian rule to democracies, the events resemble a complicated chess game among management, union officers, and union members pursuing their self-interests or group-interests during and after the transitional process. Although gainsharing bonuses have been minimal the democratization of organizational structures and relationships has generated multiple beneficial organizational and individual outcomes for management and union members.

I. Introduction

Juravich, Harris, and Brooks (1993) have appropriately questioned the assumption of "mutual gains" and "win-win" opportunit ies for labor and management f rom employee involvement (El) programs. Based on a diverse sample of 236 El programs in Pennsylvania, Juravich et al. found that managers believed El programs had their greatest impact on social-psychological issues, such as worker morale, union officer/ plant manager relations, and worker/supervisor relations. Union contacts believed that the largest impacts of El program were in terms of product/service quality, safety and health, and union officer/plant manager relations. Due to these perceptual differences, they concluded that "El is considerably more complex than the mutual gains thesis implies" and that "a model explaining the differences between labor and management perceptions is needed" (1993, p~ 18 l).

To better understand the socio-political dynamics and the countervailing forces that arise when organizations democratize their decision-making processes, I con- ducted a field study at a unionized manufacturing facility that adopted a Scanlon-type gainsharing plan. The organization was chosen specifically because management, union officers, and union members spoke favorably about the E1 program, even though financial bonuses were not being earned. The political science literature on transforming political systems from authoritarian rule to democracies is employed to enhance understanding of the many interesting events that occurred during the first four years of the gainsharing plan. Deriving answers to Juravich et al.'s questions demands an in-depth case analysis.

J O U R N A L OF LABOR R E S E A R C H Volume XVI, Number I Win te r 1995

58 JOURNAL OF LABOR RESEARCH

II. Gainsharing

Many management theorists have called for a better understanding of the increas- ingly popular gainsharing systems (Bullock and Lawler, 1984; Hammer, 1988; Leana and Florkowski, 1992). Gainsharing, a derivation of the Scanlon plan, typically con- sists of four features: (I) a formalized suggestion system focused on improving the production process; (2) department teams, composed of a supervisor and three to five elected nonmanagement employees, that evaluate and implement suggestions; (3) a Review Board, composed of upper-level managers and one representative per department team, that evaluates the more costly and complex suggestions; and (4) a group-based financial bonus wherein financial gains related to performance improvements are shared among all company employees (Collins et al., 1993; Graham- Moore and Ross, 1990; Lawler, 1986; O'Dell and McAdams, 1987; Schuster, 1987). Thus, gainsharing is a highly integrated form of EI that typically entails changes in organizational structure, processes, and reward systems. Gainsharing differs from the Scanlon plan in terms of the factors that are included in the group-based bonus calculation.

When appropriately implemented, gainsharing and other EI programs can generate a variety of favorable organizational outcomes in unionized settings (Juravich et ai., 1993; Lawler, 1988 et al., 1985; Voos, 1987, 1989). However, according to review articles, many of the favorable improvements in productivity, satisfaction, commitment, and trust experienced at gainsharing facilities are quite modest (Bullock and Lawler, 1984; Graham-Moore and Ross, 1990; Hammer, 1988; Lawler, 1988; Leana and Florkowski, 1992; Schuster, 1983; White, 1979). Countervailing events that moderate expected desirable outcomes seem to occur when EI plans are implemented.

The political science literature on change from authoritarian rule to democracy - - when power differentials are narrowed between sovereigns and subjects in political settings - - offers a general framework for understanding what occurs when gainsharing is implemented. In this sense, gainsharing represents what Dahl (1989) calls a "middle-range" democratic process. Gainsharing's institutional mechanisms - - in particular the suggestion system, teams, and the group-based financial bonus - - hold managers accountable to nonmanagement employees and vice versa. In unionized settings, this transitional process is controlled by both managers and unions.

III. Transitions from Authoritarian Rule to Democracy

A rich political science literature is being developed to describe what happens when authoritarian right- or left-wing governments adopt democratic principles (Baloyra, 1987; Di Palma, 1990; Diamond et al., 1989; Karl, 1990; Malloy and Seligson, 1987; Morlino, 1987; O'Donnell et al., 1986; Przeworski, 1986; Weiner and Ozbudun, 1987). This transition often resembles a complicated chess game between the former authoritarian rulers and emerging political leaders who claim to represent the interests of the formerly oppressed polity (O'Donnell and Schmitter, 1986; Valenzuela, 1989). Although each country's particular transition is unique, three common patterns have

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emerged from these transitional experiences: (1) the former authoritarian rulers manipulate the transitional process to enhance their own self-interests; (2) power struggles arise among the former authoritarian rulers, among the new political leaders, and between the authoritarian rulers and the new political leaders; and (3) hidden and suppressed social and economic problems surface.

First, the former authoritarian rulers often manipulate the transition by minimiz- ing the diffusion of democratic processes and structures to safeguard their interests (Borzutzky, 1987; Conaghan, 1987; Duncan Baretta and Markoff, 1987; Malloy, 1987; Vacs, 1987).

Second, power struggles arise because of disagreements among all parties over the speed of the transition and its component institutional structures and procedures. Thus, both the former authoritarian rulers and the new political leaders experience fac- tional infighting during the transitional process due to different interests and expectations (Di Palma, 1990; Remmer, 1991). This disunity is particularly obvious among the newly empowered leaders who typically fall into three categories: (1) opportunists who fear a coup and often acquiesce in accepting top-down rules that result in a restricted democracy; (2) maximalists who are combative, reject compromises, and are willing to risk the possibility of a coup which could end the transition; and (3) recalcitrants who recognize coup possibilities and confront and compromise only when their participation is guaranteed (O'Donnell and Schmitter, 1986; Payne, 1991). These leadership patterns can be found among both the former authoritarian rulers and the new political leaders. For instance, Mikhail Gorbachev appears to have been unsuccessful in developing a middle course that was acceptable to the maximalists - - who complained that the reforms were developing too slowly - - and the opportunists and recalcitrants, who complained that the reforms were developing too quickly.

Third, hidden and suppressed social and economic problems surface. The former authoritarian rulers and the new political leaders must appropriately respond to these problems for the transitional process to continue. For instance, democratization in Russia has forced suppressed social and economic problems, such as crime, pollu- tion, and poverty, onto the political agenda. Thus the crafted, rather than imposed, transitional outcomes greatly depend on how the subgroups within both the former authoritarian rulers and the new political leaders respond to the uncertainty that dom- inates each stage of the transitional process (Di Palma, 1990; Karl, 1990; Malloy, 1987; Przeworski, 1986; Weiner and Ozbudun, 1987).

IV. Application to Gainsharing: Go-Getters, Fence-Sitters, and Opponents

As shown in Figure 1, similar patterns are likely to appear in organizations that adopt gainsharing. At one extreme, some companies that adopt gainsharing are evolving from an authoritarian or paternalistic model to a more participatory form of management. At the other extreme, companies adopt gainsharing because it fits the organization's existing management philosophy or structure (Collins et al., 1989). The more


Figure 1

Democratizing the Workplace

Management Employees

Packaged Gainsharing Plan 1) Suggestion System 2) Department Teams 3) Review Board 4) Group Bonus

T Gainsharing Plan 1) Suggestion System 2) Department Teams 3) Review Board 4) Group Bonus

Nonmanagement Employees

Management 1 ) Go-Getters 2) Fence-Sitters 3) Opponents

¢

Organizational ] Outcomes

t- Noflmanagement 1 ) Go-Getters 2) Fence-Sitters 3) Opponents

Individual Outcomes

DENIS COLLINS 61

radical the organizational change to gainsharing the more likely social and political issues will arise.

Most organizations consist of a range of management and nonmanagement employees who are either supportive of, opposed to, or neutral toward organizational change: "go-getters," "opponents," and "fence-sitters," whose attitudes and behaviors parallel those of the political opportunists, maximalists, and recalcitrants, respectively.

Management and nonmanagement go-getters regard gainsharing as a positive change that is beneficial to the organization and themselves. They actively support gainsharing activities and participate in decision-making processes aimed at company operations. Similar to political opportunists, they are more likely to give each other the benefit of the doubt on sensitive or highly contentious issues. Nonetheless, due to existing power differentials, both parties will try to manipulate the gainsharing process to guarantee that their interests are met.

Management and nonmanagement opponents are highly skeptical about gainsharing and may sabotage the system. Adversarial managers regard EI as a threat to their power and fear gainsharing will increase the power of some nonmanagement employees whom they believe are either untrustworthy or unqualified for this added responsibility. In this sense, adversarial managers espouse Aristotle's objections to political democracy: Democratic reforms are likely to result in mediocrity, rule by the uneducated and unskilled, bureaucracy, instability, and lack of accountability (Ross and Collins, 1987). Adversarial nonmanagement employees are highly skeptical of managerial intentions due to their past negative experiences with managers.

Management and nonmanagement fence~sitters take a wait-and-see approach toward gainsharing. They do not intentionally undermine the change nor do they exert their effort to make it work. If the system is beneficial to them and the organization, they support it; if not, they let the system fail on its own accord. The go-getters and opponents compete for their allegiance. Go-getters emphasize the positive aspects of the gainsharing intervention to encourage the fence-sitters to become more involved; opponents emphasize the negative aspects of gainsharing intervention to convince the fence-sitters to refuse to participate. Thus the following two "power game" propositions below. In labelling these propositions in terms of a power game it is important recall that the concept of power is a neutral term describing the relationship between two or more people or groups. It can be obtained, maintained, and distributed in either ethical or unethical ways (Collins, 1992).

Proposition 1: Management and nonmanagement employees will likely manipulate the transitional process based on their own self-interests or group-interests.

Proposition 2: Power struggles will likely arise among and between the go-getters, fence-sitters, and opponents in both management and nonmanagement groups.

Further, after gainsharing is implemented, some hidden and suppressed social and economic problems will demand immediate attention. Nonmanagement employees who are go-getters and fence-sitters may offer suggestions about problems of which


managers were unaware. Adversarial nonmanagement employees may demand that certain perceived work-related injustices be met immediately.

Lastly, the long-term legitimacy of the gainsharing intervention will be a function of whether management and nonmanagement go-getters, fence-sitters, and opponents believe that the intervention fulfills their previously unmet needs. Although it is essential for some nonmanagement employees to receive gainsharing bonuses to ensure their participation, other nonmanagement employees will continue to participate if they believe, for instance, that improvements in health and safety conditions are due to the gainsharing system's suggestion and team process. Thus the following two "outcomes" propositions:

Proposition 3: Hidden and suppressed social and economic problems will surface shortly after gainsharing implementation.

Proposition 4: Management and nonmanagement employees will likely continue to support gainsharing as long as it fulfills some of their monetary or nonmonetary self-interests and group-interests.

V. Methodology

Sample. A list of unionized facilities having a gainsharing system for at least four years was obtained from a leading gainsharing consulting institute. This particular facility was chosen because it a priori represented a situation of countervailing forces. Financial bonuses were not being earned yet union officers, union members, and management spoke favorably about gainsharing.

This facility, located in a rural midwestern town, was established in 1938 and purchased by a publicly-held corporation in 1947. Nonmanagement employees are members of the United Auto Workers. Elections are held every three years for union officers. When gainsharing was implemented in July 1988, the company had 95 percent of the domestic market for a particular type of truck clutch and about 35 percent of the international market. The facility was producing approximately 400 clutches a day with average monthly sales of $7 million. In 1988, 450 employees worked the three daily shifts. Union members earned an average of $17 an hour, the best wages in the local labor market. Due to increased competitiveness, its North American market share has steadily declined to a 1992 level of 80 percent. The field study was con- ducted in July 1992.

Data Collection and Presentation of Events. The field study analysis is based on 13 semi-structured interviews, five with managers and eight with union members, that lasted approximately 45 minutes each, and archival research. The managers were chosen on the basis of their key positions on different levels of the organization's hierarchy - - the plant manager, plant controller, regional controller, supervisor, and the management-appointed gainsharing coordinator.

The union members represented go-getters, fence-sitters and opponents. The two gainsharing coordinators (one appointed by management, one appointed by the union) were asked to group union members into three categories - - those who submitted a

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high number of suggestions (probably go-getters), those who submitted a moderate number of suggestions (probably fence-sitters), and those who vocally refused to submit suggestions (probably opponents). The gainsharing coordinators agreed on three high suggestion-givers, two moderate suggestion-givers, and two low suggestion- givers, whom they believed were representative of their respective groups. The eighth union worker interviewed was the union-appointed gainsharing coordinator.

Each interviewee was asked to describe (1) company operations prior to gainsharing implementation, (2) the rationale for implementation, (3) the effectiveness of the plan, (4) the evolution of trust or mistrust between management and union members during the plan, and (5) employee attitudes and reactions toward the financial bonuses, suggestion system, team meetings, and other gainsharing outcomes.

Additional information about the facility's gainsharing experience was gathered from the gainsharing suggestion logs, minutes of gainsharing meetings and other company documents. I attended the company's plant review team meeting, several staff meetings, and a steering committee meeting to observe how managers and union members interacted.

VI. Analysis: The Power Game Propositions

Pre-lmplementation Issues. Gainsharing implementation in July 1988 was an out- growth of several prior events. During the mid-1980s, the company's virtual monopoly on North American sales was threatened by the entry of two large competitors. Simultaneously, one of the company's major customers demanded a 5 percent price reduction over five years to reduce the cost of its trucks.

In 1985, a new plant manager arrived with three primary agenda items to reduce "nonwage" costs: (1) adopt a Just-in-Time (JIT) inventory system to reduce inventory costs; (2) transform the quality circles into work ceils to improve product quality; and (3) switch the bonus system from a 40 year-old piece-rate incentive system to a group-based gainsharing bonus. The three ideas, listed from low to high according to management's perception of union resistance, represented radical changes. Adopting a JIT inventory system and work cells would dramatically change work processes. Gainsharing would also drastically change decision-making processes and the union members' compensation scheme. Although management argued that these changes would allow the same number of union members to produce 25 percent more truck clutches, union officers believed that, because the company would soon lose market share, these improvements would more likely result in a 25 percent reduction in the union work force.

The adoption of a JIT inventory system required very little union assistance and was accomplished in early 1986. In December 1987 and January 1988, management moved 450 new machines into the building to form work cells. Small cells of union members were now responsible for organizing themselves to produce an entire product from start to finish. The adoption of gainsharing followed a more complicated path,


During the Summer of 1987, a gainsharing steering committee of four managers and four union members was formed to consider the feasibility of implementing a gainsharing plan that could be linked to the soon-to-be-formed work cells. A piece- rate bonus system did not make sense for rewarding appropriate work cell behaviors, such as rotating jobs and attending meetings. The union president privately agreed to support management efforts to explore gainsharing as a pay alternative, but he would neither publicly support nor condemn the effort because of its negative financial effects on union members who were currently earning substantial piece-rate bonuses. The union vice president agreed to shoulder the praise or blame for gainsharing.

Two people were chosen as gainsharing coordinators: one appointed by the union, the other by management. Whereas nonunion companies have only one gainsharing coordinator, most union facilities have two to oversee daily operations. Typi- cally, this is because neither side initially fully trusts the other side (Ross and Collins, 1987). The union's gainsharing coordinator is in a particularly delicate position: management never fully accepts the person because he or she is a union member, while fellow union members may reject the person for becoming "too close" to management. Union officers chose an electrician who, in addition to being an eighteen- year member, was a manager for one year. The plant manager chose the quality circle manager who worked well with the union gainsharing coordinator.

Three important issues were raised at the gainsharing steering committee meetings: (1) management commitment to gainsharing, (2) the nature of the bonus calculation, and (3) voting rules for adopting gainsharing. First, union members believed that they were taking all of the risks. They had heard stories about other companies whose adversarial managers sabotaged the gainsharing system by not allowing nonmanagement employees the time needed to write suggestions or hold gainsharing meetings. Management used this opportunity to substitute the gainsharing bonus for already existing managerial bonuses that were linked to schooling and extra hours worked, a change they were planning to make a few years later.

The second issue pertained to the basis for calculating the group-based bonus. Gainsharing consultants typically recommend simple calculations using factors that nonmanagement employees directly control or affect. Management proposed several narrow financial measures, such as labor hours and scrap. The union countered with a broad and ambiguous financial measure - - Return-On-Investment (ROI). Manage- ment argued against ROI because it contained too many items beyond the control of union members (such as sales volume, market fluctuations, etc.). Simply put, ROI is not a meaningful measure of daily improvements in the work process, but the union leaders remained adamant and ROI was adopted as the measure.

Why did the union members on the gainsharing steering committee lobby so strongly for ROI? Although the company's stock is publicly traded, each facility's ROI was kept confidential. Union officers suspected that the facility's ROI was quite high but weren't sure. They wanted this number to improve their collective bargaining strategy and management's willingness to share ROI would be a sign of good

DENIS COLLINS 65

faith. None of this was explicitly stated at the meetings. Instead, the union simply maintained that ROI would be the most appropriate measure and management con- ceded. From management's perspective, if the union members wanted to rely on an ambiguous factor, such as ROI, they were willing to give it a try; when the union realized that it was not an appropriate measure, some other measure could be adopted. Management had no idea that this was a collective bargaining ploy by the union until, with the union's permission, I told the new plant manager five years later (he laughed).

Third, what percentage of the vote should be necessary to adopt gainsharing? Union and management agreed that two separate votes should be taken, one for abandoning the piece-rate incentive system and the other for adopting gainsharing. Each required a different voting criteria. The issue of abandoning piece-rate incentives would be decided by a simple majority vote, while the adoption of gainsharing would require approval by 75 percent of the voters. Both union officers and management believed that without overwhelming support from union members participation would be too low for gainsharing to succeed. If the first issue passed, but the second failed, the union could suggest an alternative team decision-making process and financial bonus system. To obtain the 75 percent majority vote, the steering committee believed it was necessary to educate union members about gainsharing. A task force composed of 25 union members, who had followings within the facility, and 5 managers was created to discuss the gainsharing plan line by line. The task force visited other gainsharing facilities, including several other facilities operated by the company.

On April 18, 1988, the first issue passed as 60 percent of the union members voted in favor of switching from the piece-rate to the day-rate incentive. The second issue failed because the majority vote was not large enough, 218 in favor (63.5 percent) and 125 opposed. Union members who voted against gainsharing were very surprised that they were in the minority. They had expected most to oppose gainsharing as well as the day-rate incentive. Some union members thought that the 63 percent vote should be sufficient to implement gainsharing, but the plant manager disagreed. He believed taking another vote in a few months was an opportunity to get the union more active either in supporting gainsharing or offering an alternative plan.

Shortly after the April vote, the steering committee met to discuss why 37 percent of the union members opposed gainsharing. The list of reasons included: (1) some union members did not trust management, particularly the plant manager; (2) some questioned the fairness of the bonus calculation; (3) some did not think other union members would work hard under a group bonus plan so they wanted a different individual incentive system; (4) some resented the fact that union members were lobbying on management 's behalf; and (5) some believed that gainsharing would cause union members to be co-opted by "hanging out too much with a bad crowd (management)."

The steering committee decided that more education about gainsharing was needed. Many union members were surprised that the steering committee did not


give up when the gainsharing vote was cast, indicating the seriousness of both the union and management. Many also believed that gainsharing, now an extra financial incentive to the new day-rate, could increase their wages, and thus not hurt them in any way. Pro-gainsharing union members emphasized that if gainsharing was a management sham there was a clause wherein the union could back out of the agreement after giving 60-days notice. A second vote on gainsharing was taken on July 8, 1988 that would make the plan effective retroactive to July 1. The vote was 78 percent in favor of gainsharing implementation.

Structurally, 22 quality circles were immediately collapsed into I5 gainsharing "cell teams" for the three shifts. Five "cell review teams" also were created to communicate ideas among work cells that performed the same tasks but operated during different shifts. These teams had one person from each shift. Lastly, a "plant review team" was established consisting of the plant manager, controller, cell supervisors, union president, chief steward, one elected union member from each cell team, all gainsharing steering committee members, and the two gainsharing coordinators.

Post-Implementation Issues. As expected, many of the quality circle leaders won the first set of elections for gainsharing cell team representatives. The teams received a large number of initial suggestions, many of them "comfort" suggestions. In addition to immediate changes in work processes, union members wanted better work seats and more lighting, tools, fans, and floor mats. Over 350 suggestions were submitted by union members during the first four months of gainsharing. Soon a suggestion backlog developed and some union members refused to submit additional suggestions until the first wave were reviewed and implemented. Those most reluc- tant to get involved were the older, senior union members. In their fifties and with over thirty years seniority, they were accustomed to the old work relationships. In addition, they did not think that their jobs were at risk if they did not change their work methods.

Immediately after implementation the financial bonus calculation was severely negatively affected by a new product warranty problem. Warranty costs for the facility had typically been about $20,000 a month. In early 1988 there was a major design flaw in a new clutch and by June warranty costs had risen to $50,000 a month, a problem not anticipated by management. In July, just as gainsharing started, warranties increased to $150,000 a month and rose steadily until they stabilized at $400,000 a month by the end of the year. Over the next two years the faulty product design became a $12 million warranty problem. While some of the warranty problems were questionable, management accepted all returns because of the two new competitors entering the market.

These warranty costs made it impossible for union members to earn a financial bonus. Based on historical standards the facility had to earn an ROI of more than 24 percent before union members earned a gainsharing bonus. ROI for September 1988 dipped to 20 percent and it declined to 14.3 percent in July 1989, one year after gainsharing had been implemented. According to management, if warranties were not

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included in RO1, or if some other calculation had been used, a bonus would have been earned. But this was not the case.

Some union members began to withhold their suggestions because they were working better yet no gainsharing bonus was being earned. Adversarial union members told other union members that management knew beforehand about the new warranty problem and plotted to take money earned through gainsharing to pay for the excessive warranty costs. Union leaders did not try to diffuse this false perception.

With the exception of elected team representatives, attendance at gainsharing cell team meetings was voluntary. Initially, most union members, except a few opponents, attended the meetings out of curiosity. When no bonuses were earned, adversarial union members began to attend the gainsharing meetings to find out what was going on. Although they did not disrupt the meetings, their presence was felt. They would sit in a comer, say nothing during the meeting, and disparage meeting events on the shop floor afterwards. If a manager attending the meeting said something that demonstrated his ignorance about some aspect of the production process, the adversarial union members would spread jokes at the manager's expense.

As work cells and gainsharing evolved, it became obvious to upper management that supervisors had to be taught how to manage employee participation. Supervisors were told to allow the gainsharing cell teams to implement even those suggestions that seemed trivial or inappropriate. If teams felt constrained in implementing small suggestions they would never advance to the stage of developing and implementing the major ones. In addition, it was important for work cell employees to believe they could stop production to discuss work-related issues. Supervisors would simply have to trust, within reason, that discussions among union members were related to work rather than question them whenever they stepped away from their production task.

On the other hand, some union members were just slacking off. This had a negative impact on the other union members who began to wonder why they should continue to work hard while others slacked off and still got the same weekly pay. Before gainsharing, a union member suspected of slacking off would be subjected to a time- study and an increase in his or her hourly production targets. With gainsharing, there was no piece-rate incentive to modify and it was much more difficult for supervisors to quantify employee productivity, especially since lower than usual hourly production totals could be the result of a team meeting or a new cell assignment. Some area managers and supervisors quit because they could not tolerate the ambiguity.

The experience of Buddy is representative of the dynamics associated with these changes for union members. Buddy, a reliable production employee who had been earning high piece-rate bonuses, would malign management and encourage other union members to get involved in activities detrimental to efficient production, such as rigging the fire hoses so they would spray unsuspecting people. However, he viewed the new work cells and gainsharing as a constructive opportunity to change the way he worked. He ran for the position of team representative and won because the go-getters, fence-sitters and opponents all trusted him. He made suggestions,


encouraged others to make suggestions, implemented work process changes, and occasionally annoyed managers just for the fun of it.

Buddy experienced "culture shock" at the plant review team meetings. First, he had little interest in the financial and production data with which the meetings began. Second, he wasn't sure that the meetings were legitimate since the view about them on the shop floor was negative: The meetings were thought to consist of union members either doing management's job or rubber stamping management decisions.

Buddy concluded that, contrary to popular opinion, many of the union members and managers actively participating in gainsharing activities were very sincere. He dedicated himself to being a good work cell leader and gainsharing cell team representative, finding these activities very fulfilling. Then some of his union adversarial friends accused him of "sucking up" to management. Whenever he argued a point that gave management the benefit of the doubt somebody would sniff his clothes and say: "You smell like management." When he stopped work to attend meetings he was accused of "goofing off" and trying to get out of production work. It didn't help that no bonuses were being earned due to the warranty problem.

After six months, Buddy declared "I don't need this" and resigned his gainsharing duties and went back to just doing his job. Realizing that his job was more fun when he was involved, he ran for team representative again, and was re-elected. This time he assigned a few opponents, including the union steward who was a member of his work cell, to several decision-making teams. According to Buddy, "I had to figure out if what was said was sincere or just bull and who was just bitching for the sake of bitching." The new team members were surprised to see union members trying to solve work process problems, even without managers in attendance.

Gainsharing was the key campaign issue for the 1989 union elections. The public positions of the five incumbent union officers on gainsharing were: president - - neutral; vice president - - strong supporter; chief steward - - mild supporter; treasurer - - strong supporter; and secretary - - neutral. When two union members strongly opposed to gainsharing ran for president and vice president, respectively, the incumbent president responded by making several very public anti-gainsharing statements. In turn, the incumbent vice president created a pro-gainsharing ticket, running with a friend for president and vice president. Two anti-gainsharing union members ran for the offices of chief steward and treasurer, while the incumbent neutral secretary ran unopposed.

The incumbent won the presidential election with 60 percent of the vote, com- pared to 25 percent for the anti-gainsharing challenger and 15 percent for the pro- gainsharing challenger. Anti-gainsharing candidates won the offices of vice president and chief steward. In a very close race, the pro-gainsharing incumbent treasurer was re-elected. Union members were surprised by the closeness of this particular vote because the incumbent had been an excellent treasurer for the past nine years and was much more qualified than the anti-gainsharing challenger. The newly elected

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union officers interpreted the results as a signal that union members wanted to retain their distance from management.

A company-wide employee attitude survey taken one year after gainsharing implementation showed that, contrary to management's expectations, trust between management and union members had actually declined. A survey administered to thirteen union leaders in October 1987, when gainsharing was initially being explored, asked them whether they strongly agreed (scored a "5") or strongly disagreed (scored a "1") with the statement "Employees here trust management." The average score was 2.2. In the June 1989, this score declined to 1.8. The gainsharing steering committee discussed the employee attitude survey results and decided to take "warranty" out of the ROI calculation.

With declining sales further reducing ROI, and with the introduction of a new "continuous improvement" program for all corporate facilities, a new plant manager was put in charge. Although union officers interpreted the 1989 election results as a sign to reduce team-building interactions with managers, the new plant manager pushed in the opposite direction, asking the gainsharing steering committee to develop policies that would increase trust between management and union members. A task team visited other production facilities with progressive management-labor relationships and recommended four major changes where were soon implemented. First, all management staff meetings were opened to union officers. Second, managers discarded their ties and reserved parking spaces. Third, new company letterhead included both union and company insignias. Fourth, the gainsharing bonus calculation was revised a second time.

It was obvious to everyone on the steering committee that the ROI measure had to be abandoned in favor of measures more directly related to daily production. Four historical bonus factors were constructed: (1) operating expense to sales - - 29 percent; (2) inventory days - - 30 days; (3) scrap parts per million - - 55,000; and (4) attendance - - 96.7 percent. A financial bonus would be earned in any month that any one of these measures improved. For instance, each employee would earn a $30 bonus in a month that achieved the following goals: (1) a 27 percent operating- expense-to-sales-ratio, (2) 27 inventory days, (3) 50,000 parts per million of scrap, and (4) 97.4 percent attendance. Management also agreed to continue to report ROI at the monthly plant review team meetings.

Shortly after the new bonus calculation took effect, a few bonuses were earned. However, they were so small that some union members joked that "the monthly bonus payout is convenient because you can put it into the coffee machine." The steering committee decided to change the payout system from a monthly to a semi- annual distribution.

The recession, along with the new competition and warranty problem, negatively impacted the facility. Sales, which had been $7 million a month, steadily declined to a low of $4.4 million in July 1991. In 1990 management began a series of layoffs


based on seniority, followed by a series of "bumpings" initiated by union members wanting more desirable shifts. As a result, there were tremendous changes in team dynamics, particularly those led by younger union members who were either laid-off or bumped. When business picked up and jobs were added, another round of team turnovers occurred when previously bumped union members requested jobs on the more desirable shifts as they became available. Thus, the work cells and gainsharing cell teams were constantly in flux.

In December 1990, the plant manager implemented major cost-cutting measures across facility operations, including an indefinite cancellation of gainsharing cell team meetings. In early spring the plant manager had second thoughts about his decision. Due to reduced communications, obvious and necessary changes were not being made by frustrated union members. He rescheduled the gainsharing cell team meetings for June 1991.

One of the first suggestions at the June meetings was the need to clean the facility. Maintenance problems had been delayed and work areas were not appropriately organized. Management devised a "housekeeping" contest wherein the cleanest work cell won a pizza. Two hours prior to a "surprise" audit, a well-connected supervisor encouraged one of his work cells to close down operations and clean in order to win the contest; later they worked two hours overtime to make up for the lost production time. When that work cell won the award, union members complained the contest was contrary to both union and gainsharing philosophies as the whole was sacrificed so a few people could win a pizza. Management cancelled the contest. Some managers were struck by how quickly gainsharing had become identified with union solidarity.

Union members have debated the consistency of having individual awards linked to the gainsharing program. For instance, in November 1991, management began a monthly "beyond the call of duty" award where managers and union members nominated others for providing extra assistance. The gainsharing steering committee members voted on which of four levels of awards, if any, should be given. The highest level award offered a choice among 200 lottery tickets, a portable color television, 10 shares of company stock, a $500 savings bond or a $200 charitable contribution. One of the first union winners declined the award because, as a self- proclaimed opponent, he viewed it as a bribe from management that was "pro-individual" and "anti-brotherhood." The gainsharing cell teams debated this issue and concluded that the awards were welcomed by a large majority of union members. They remain in effect.

Sales increased in early 1992 and by March had reached the July 1988 level of $7 million a month. At the time of the 1992 field study, managers believed the facility had entered a recovery stage. Yet, due to complaints by adversarial union members about the lack of gainsharing bonuses, some managers argued for their elimination. However, a majority of managers believed that this would generate additional ill feel- ings among other union members, most of whom wanted to keep the bonus.

DENIS COLLINS 71

As a result of the bonus problem, the gainsharing steering committee was reviewing additional factors that could be part of the bonus calculation. For instance, they were exploring ways to include aspects of division operations affected by union members. Gainsharing was not an issue during the 1992 union elections. At the time of the field study, an estimated 25 percent of the union members were strongly involved in gainsharing activities and 10 percent were opponents. The remaining 65 percent were fence-sitters.

As demonstrated by the list of events summarized in Table 1, there is evidence supporting the two power game propositions. As predicted by the first proposition, gainsharing implementation resulted in several power games between management and union members during the transitional process. As predicted by the second proposition, power struggles did arise among and between both management and nonmanagement go-getters, fence-sitters, and opponents.

VII. Analysis: The Outcomes Propositions

There was a strong consensus among management and union members, even those who were still adversarial, that gainsharing was essential to the company. Both management and union members benefitted directly and indirectly from four years of gainsharing. Table 2 provides a list of these many inter-related benefits.

Direct Benefits to Both Management and Union Members. These include: (1) better production processes, (2) new machinery, (3) improved product quality, (4) more in-house work, (5) improved collective bargaining negotiations, and (6) fewer grievances.

1. Better production processes. Union members have offered and implemented more than 2,000 suggestions that have greatly improved the production process, generated tremendous financial savings for the company, and improved working conditions for union members. For instance, one work cell that filled boxes with scrap and disposed of them in a heat treatment dumper permanently located on the other side of the facility at a cost of at least $60 a shift, purchased a $4,700 moveable dumper that saved the company at least $50,000 the first year alone and saved the union members a lot of physical aggravation. A new procedure for receiving steel developed by an office team saved the company $12,000 a year. Many similar suggestions have been made.

2. New machinery. Using their gainsharing cell team's monthly budget, union members have purchased many new machines and the best available tools to improve product quality and reduce production time.

3. Improved product quality. Many team discussions pertain to making a high quality product on the first try. Shoddy work is likely to be detected earlier and eliminated, rather than passed on to the next group or to the customer.

4. More in-house work. A union member suggested the purchase of a machine that would permit the facility to produce its own materials rather than purchase them

72 J O U R N A L O F L A B O R R E S E A R C H

T a b l e 1

Chronology o f Power Games

Summer 1987 Union president privately supports gainsharing but was publicly neutral. Union vice president agrees to shoulder the praise and blame for gainsharing.

Fall 1987 Management appeases union objections by substituting the gainsharing bonus for already existing managerial bonuses they wanted to eliminate anyway. Union is adamant about using ROI improvements as the gainsharing bonus, even though this probably will not generate bonuses, to improve its collective bargaining strategy. Management accepts ROI improvements as the bonus factor although it probably will not generate bonuses.

Spring 1988 Management rejects union request to accept 63.5 percent majority vote in favor of gainsharing implementation in order to get the union more active in plan development.

Summer 1988 78 percent of union members vote in favor of implementing gainsharing. Gainsharing is implemented.

Fall 1988 Fence-sitters withhold suggestions due to lack of gainsharing bonuses. Union leaders do not diffuse false perception of union members regarding who favored ROI improvements as the bonus calculation. Opponents attend gainsharing cell meetings to obtain information to disparage management. A few union members use gainsharing discussions as an excuse for slacking off. Some supervisors, ambiguous about managing participation, quit. Opponents ridicule former members who become fence-sitters and go-getters.

Spring 1989 Go-getters put fence-sitters and opponents on gainsharing cell teams and task teams to increase their involvement. Anti-gainsharing candidates win union elections.

Summer 1989 Warranty expenses are eliminated from the ROI bonus calculation. All management staff meetings are opened to union officers. Ties and reserved management parking spaces are eliminated. Steering committee designs new letterhead that has both the union's and company's insignias.

Fall 1989 Steering committee develops four new bonus factors to replace ROI. With union's insistence, ROI is still reported at monthly plant review team meetings.

Winter 1990 Plant manager cancels gainsharing cell team meetings indefinitely due to the recession.

Summer 199l Cell team meetings are reinstated. Union members argue that the housekeeping contest is contrary to both union solidarity and gainsharing philosophy.

DENIS COLLINS 73

Table 2

Gainsharing Benefits to M a n a g e m e n t and Union M e m b e r s

Direct Benefits to Both Management and Union Members 1. Better production processes 2. New machinery 3. Improved product quality 4. More in-house work 5. Improved collective bargaining negotiations 6. Fewer grievances

Direct Benefits to Union Members, Indirect Benefits to Management 1. Easier work tasks 2. Greater voice in decision making 3. Better managers 4. Leadership opportunities 5. Improved health and safety

Direct Benefits to Management, Indirect Benefits to Union Members 1. Greater worker identification with company problems 2. An easier decision-making process for tough decisions 3. Greater quantifiability of production factors 4. Direct communication with union members, rather than through union officers 5. Less need for management supervision 6. Recycling and energy savings

from suppliers. The $35,500 machine saved the company $396,000 in vendor costs and brought in additional jobs.

5. Improved collective bargaining negotiations. In 1992, union and management agreed to begin contract negot ia t ions early, and set t led early. Commun ic a t i on is better and more frequent. Because all management staff meetings are open to union officers, some potentially difficult collective bargaining issues are discussed prior to formal negotiations. In particular, this has helped the company in its response to the recent crisis in health care costs, an issue that had already led to a union strike at another company facility. Union officers who at tended managemen t meet ings on health care costs viewed the health care cost problem in the same way as management. A joint management/union team was formed to examine the issue. In addition, the union knows the facil i ty 's ROI numbers, which helps their side of the bargaining.

6. Fewer grievances. Prior to 1988, the facility averaged thirty pending grievances a day. S ince work ce l l s and g a i n s h a r i n g , there have been on ly a b o u t twen ty grievances filed, and none during the last two years. According to one supervisor, the union members "can only really file a grievance against themselves because they organize their own work, set their own schedules, and set their own work quotas."


Rather than writing up a grievance, union members now submit the problem as a gainsharing suggestion and discuss it at the next cell team meeting.

Direct Benefits to Union Members, Indirect Benefits to Management. These include: (1) easier work tasks, (2) greater voice in decision making, (3) better managers, (4) leadership opportunities, and (5) improved health and safety.

1. Easier work tasks. The statement most often made by union members regarding the benefits of gainsharing is that "it makes my job easier." If they do not like the way the work is processed they can change it. If factory ventilation is inadequate they can purchase a fan. If their work is physically stressful they can purchase a pulley. Some managers cringe at this often stated benefit, mistaking the term "easier" for "slacking off."

2. Greater voice in decision making. Gainsharing gives union members another outlet for expression of their opinion on company operations. They can fulfill their own work needs with the team budgets and no longer have to convince supervisors that what is obviously needed ought to be purchased or redesigned. This is particularly important with regard to health and safety improvements.

3. Better managers, According to union members, EI has exposed bad managers because they can no longer hide. These managers must face the union members at team meetings and respond to their concerns. Some of the worst managers have left the company.

4. Leadership opportunities. Prior to gainsharing the only real leadership positions available for union members were within the union. Now they can be team representatives or participate on a variety of task teams. Gainsharing allows some union members, such as Buddy, to take responsibility for their own work rather than relying on a manager.

5. Improved health and safety. Many gainsharing suggestions pertain to health and safety improvements. For instance, teams purchase exhaust fans for better ventilation, rubber mats to cover wet floors, and work station adjustments to prevent back problems and other common health ailments.

Direct Benefits to Management, Indirect Benefits to Union Members, These include: (1) greater worker identification with company problems, (2) an easier decision-making process for tough decisions, (3) greater quantifiability of production factors, (4) direct communications with union members, rather than through union officers, (5) less need for management supervision, and (6) recycling and energy savings.

1. Greater worker identification with company problems. Management believes that union members are much more responsive to a host of organizational problems that they would have previously ignored. For instance, an office employee who knew that a competitor was underpricing them attended a different gainsharing cell team meeting to determine how the work cell could reduce costs to meet the competitor's price. Operators who, prior to gainsharing, would allow a machine to be wrongly

DENIS COLLINS 75

installed and then complain about it to management now take responsibility for installing all new machines.

Union members have a better understanding that the facility's profitability ensures their own job security. In response to a management promise not to layoff union members as a result of suggestions that improve the work process, one work cell reorganized itself such that two positions were unnecessary. The two union members, who agreed to this arrangement, were bumped to another shift without any complaints. As a sign of the barriers which have been broken, the plant manager challenges visitors to guess which people attending a meeting are managers and which are union members. At a meeting of eight people, I was wrong about three of them.

Prior to gainsharing management feared what union members would say if they met customers. Now, customers can speak directly with union members manufacturing their product. Recently a team of union members visited a customer and determined that color coding the company ' s parts would greatly reduce mis- communications. Union members now visit suppliers as well, giving advice on how to improve their product.

2. An easier decision-making process for tough decisions. With union officers attending management staff meetings, the union serves as a buffer for tough decisions. For instance, prior to gainsharing management would notify the union just prior to a layoff. Now union officers analyze the financial numbers and they can fore- see when layoffs appear to be inevitable. Union officers can urge members to work harder or smarter to prevent a layoff. If not preventable, the layoff is anticipated. Similarly, as noted earlier, union members are exploring alternative ways of funding health care benefits.

3. Greater quantifiability of production factors. Gainsharing suggestions and the bonus calculation have forced managers to better quantify company operations. Any- thing that union members affect, and that can be measured, may be included in the bonus. For instance, managers are now trying to determine how to quantify customer service and certain shipping factors.

4. Direct communication with union members, rather than through union officers. Prior to gainsharing managers often felt compelled to speak with union officers before suggesting that an employee change his or her work methods. In addition, union members would not perform someone else's job and they would ask the union to clarify new directions from management. Now union members demand that managers communicate directly with them.

5. Less need for management supervision. Gainsharing has given union members who serve as work cell team leaders responsibility for some discipline issues. Because cell members organize themselves, they encourage each other to put in a fair day's work. Supervisors no longer have to constantly monitor behavior. When there is a major discipline problem, union members demand that the supervisor take appropriate action. There is also less need to supervise the implementation of production changes because the union members take responsibility.


6. Recycling and energy savings. Gainsharing has greatly increased recycling company wide. One employee suggested that a baler b e purchased to recycle card- board. Within nine months one department recycled 27,745 sheets, saving $11,000. A union member actively involved in environmental issues determined how to recycle computer paper throughout the facility and where to sell it.

As demonstrated by the list of benefits summarized in Table 2, there is evidence supporting the two outcomes propositions. As predicted by the third proposition, a host of hidden and suppressed social and economic problems surfaced shortly after gainsharing implementation. As predicted by the fourth proposition, management and union members continue to support gainsharing because it fulfills some of their monetary or nonmonetary self-interests and group interests.

VIII. Concluding Comments

Juravich et al. (1993) have appropriately questioned the assumption of "mutual gains" and "win-win" opportunities for labor and management operating under El programs and recommended the need for a more complex understanding of them. This in-depth case study offers insight into both issues.

I developed a socio-political framework that took into account the multilevel events, including countervailing forces and multiple outcomes, that occur when gainsharing is implemented and institutionalized in a union setting. As suggested by the political science literature on countries transforming their political systems from authoritarian rule to democracy, there were different response patterns to the gainsharing plan based on whether a manager or nonmanagement employee associated with the go-getters, fence-sitters or opponents. By democratizing work relationships, power struggles occurred within and among subgroups. Each subgroup was chal- lenged to appropriately respond to hidden and suppressed social and economic problems as they surfaced during the transitional process. Union officers manipulated the gainsharing process the most, pushing for the adoption of a financial bonus calculation that, while making it almost impossible for union members to earn a bonus, made the collective bargaining process easier. It is essential to note that such Machi- avellian power games can be found in all organizations, not just those adopting democratic structures and processes (Collins, 1992).

This analysis also demonstrates the importance of grounding the findings of large empirical data set analysis with case study analysis and vice-versa. If this facility had been included in a large sample of union companies surveyed about the success of EI programs, the results could be positive, ambiguous, or negative, depending on how the researchers operationalize "success." Managers and union members used the EI program to meet particular needs, some of which were mutually held. If the goal of the plan was to improve product quality, it was a tremendous success. If the goal was to improve health and safety conditions, a benefit found in the Juravich et al. study that is rarely mentioned in the participatory management literature, it was a tremendous success. If the goal of the EI program was to improve employee satisfac-

DENIS COLLINS 77

tion, it was a minor success. If the goal was to generate financial bonuses for union members, the plan failed. In this particular case, union officers gave greater priority

to the acquisition of secret ROI numbers for collective bargaining negotiations than to the development of an equitable financial bonus calculation.

Organizations do not make El changes in a socio-political vacuum. As such, results are unpredictable and varied. At this particular facility, there were unforeseen warranty problems, a deep recession, job bumpings, and financial bonus manipula- tions, each of which negatively affected the El experience. In the general scheme of things, El is still but one aspect of organizational life.

From the perspective of union members, including the opponents, gainsharing is a way to address their grievances, improve health and safety conditions, and obtain better tools and machinery. There is greater au tonomy and responsibi l i ty among them. Those who actively want to participate in work-related decisions can do so. From management 's perspective, the facility is operating more efficiently and providing a better quality product at much lower costs. In addition, hidden and suppressed problems have been discussed at team meetings and acted on, union members no longer have to be constantly monitored, and work relations are improving. Nonethe- less, like all evolving democracies, paradise still beckons.

NOTE

*I gratefully acknowledge support from two sources: The Graduate School, University of Wisconsin- Madison and the Association for Quality and Participation and also thank Timothy L. Ross of the Ross Gainsharing Institute for his research help. An earlier version of this paper was presented at the 1993 Annual Conference of the Society for the Advancement of Socio-Economics.

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Self-interests and group-interests in employee involvement programs: A case study