Neoliberal Employment Relationship Is Relevant to Understanding Colgate-Palmolive Workplace Change - Case Study Example

Neoliberal Employment Relationship is relevant to understanding Colgate-Palmolive (Australian subsidiary) Workplace Change Industrial relations refer to a multidisciplinary field that entails the study of all aspects of work and employment relationship (Gall, Wilkinson and Hurd, 2012). Industrial relations has been dominated by pluralism frame of reference. This frame has been challenged by Marxism, feminism and neo-liberalism employment relationship orientations. This essay agrees that neoliberal employment relationship is relevant in the understanding of Colgate-Palmolive (Australian subsidiary) workplace change (Burgess, 2008). The essay begins with an overview of employment relations and is followed by a brief discussion of the dominant frame of reference, pluralism. The third section provides an overview of neoliberal frame of reference that is considered to be relevant to the change that took place at Colgate-Palmolive. A relation between neoliberal and contemporary HRM practices is then discussed. The next section briefly describes the change that took place at Colgate-Palmolive. This is followed by a discussion on the relevancy of neoliberal frame of reference to the change at the firm. A counter-argument on the relevancy of the frame on the change is then discussed. Finally, a conclusion is then made. The overall performance of a firm can be impacted significantly by employment relations changes and the employment relationship quality. Moreover, the lives and wellbeing of employees are directly affected by terms and conditions of employment (Plehwe, 2007). Consequently, debates on matters of equity and efficiency have dominated boardroom discussions in recent times. These debates have resulted in emergence of divergence views on effective way to manage industrial relations (Perkins, Shortland, Perkins, Shortland and Shortland, 2006). Moreover, divergent views have emerged on how governments ought to devise laws and policies that promote equitable employment relations and efficiency at the firms (Burgess, 2008). Thus, the roles of government policies, the labor unions regulations and the management have formed the basis of industrial relation debate on employer and employee interests. Various explanations for industrial relations exist but the most dominant one is pluralism. Pluralism frame of reference provides a standard way for the evaluation of industrial relation. It is often used for policy development (Barry and Wilkinson, 2011). This frame of reference is based on the fact that employers’ and employees’ interests are the two guiding principles of industrial relation (Kabasakal, 2006). Pluralism believes that these interests often conflict each other (Plehwe, 2007). The frame further believes that there exists power imbalance at workplace where the employer wages more power than the employee. Moreover, the frame argues that workers need to join unions in order to increase their power (Gall, Wilkinson and Hurd, 2012). Finally, the frame believes that unions and regulations serve the interests of the employees and the general public. Although, pluralism has dominated industrial relation it has been challenged by Marxism, feminism and neo-liberalism employment relationship orientations. In recent years, labor policy development in Australia has increasingly been guided by neoliberal frame of reference. The neoliberal employment relationship is one of the orientations that have challenged the beliefs of pluralism. Countries such as Britain, New Zealand, Australia and USA have policies, which reflect the beliefs of neoliberal orientation. This frame of reference belief that employees’ interests are legitimate. The frame further believe that management hierarchy and competitive markets can bar inefficiencies. The frame further argues that control and competition help to keep producer interests in check (Plehwe, 2007). Moreover, proponents of neoliberal frame of reference are opposed to trade unions’ actions of advocating for increase in employee wages and opposition to management prerogative (Burgess, 2008). As such, neoliberals argue that labor unions cannot correct employment relationship power imbalance since the ownership of shares, self-employment, second job and ownership of other property makes employees less dependent on one employer (Perkins et al., 2006). Moreover, neoliberals argue that regulations aimed at having a minimum wage are unnecessary since most employees hail from households that have multi-income (Gall, Wilkinson and Hurd, 2012). Neoliberals also argue that minimum wage laws are unnecessary since they transfer employment into non-formal sector. Another argument against minimum wage put forward by neoliberals is that union bargains for wage increase often result in displacement of employment into non-union economy. Neoliberals moreover argue that regulations often destroy jobs of those they are intended to protect through unionization or legislation. The neoliberals argue that jobs of unionized employees can be destroyed through downsizing, lower production and export of production to other states or countries (Burgess, 2008). Neoliberals also point out that regulations destroy national competitiveness through increased cost of education and make it impossible for ill-equipped individuals such as uneducated to compete effectively in such markets (Perkins et al., 2006). As consequence, neoliberals advocate for deregulation of industrial relations (Gall, Wilkinson and Hurd, 2012). They argue that there is need to withdraw or weaken legislation that inhibit managers from responding to market signals or interfere with market forces. They further advocate for soft laws where deregulation is not possible (Barry and Wilkinson, 2011). Advocates of neoliberal frame of reference argue that unions’ roles need to be restricted to provision of information and skills to their members to promote efficiency in labor markets (Plehwe, 2007). Neoliberals advocate for re-alignment of shareholders’, managers’ and employees’ interests in order to alleviate main workplace problems. Proponents of this frame of reference thus advocate for merit and incentive pay. They also propose profit sharing and employee share ownership. The neoliberal frame of reference is the underlying factor in the contemporary HRM practices. The neoliberal frame of reference lays focus on the creation of policies which benefit both employers and employees. HRM model variants such as hierarchical, high commitment, strategic or paternalistic approaches may be employed by firms using neoliberal employment relations (Plehwe, 2007). These HRM models have several features that are common which attempt to align the interests of employers and employees. Some commonly used HR policies in the neoliberal employment relation framework include training and development opportunities; supervision methods that are respectful; and compensation that rewards performance and which are above a living wage. Others include benefits, which promote individual growth, work life balance and security; reliable and valid hiring and promotion procedures for employees; and dispute resolution that embrace both formal and informal procedures. In recent years, many firms have been seen to adopt these new HRM models. One of such firms that changed its HRM models is Colgate-Palmolive, which adopted the High Commitment Work System (HCWS) in its Australian subsidiary (Plehwe, 2007). Colgate-Palmolive is an American multinational company that has a subsidiary in Australia. The firm is involved in the manufacture-packaged goods. Prior to 1990s, the firm had two manufacturing facilities in Sydney. One of the facility was involved in the production of detergents while the other produced toothpaste. Employees at the firm were represented by over fourteen labor unions (Plehwe, 2007). The relations between the labor unions and the management of the firms were adversarial (Gall, Wilkinson and Hurd, 2012). On the other hand, management and employee relations were characterized by both defiance and compliance. These relations resulted in frequent strikes at the firms and unreliable production flows (Burgess, 2008). As a consequent of this, the firm instituted change in industrial relations that resulted in the adoption of the HCWS in late 1980s. The firm also relocated its facilities to Greenfield site in Queensland (Perkins et al., 2006). The introduction of the HCWS at Colgate-Palmolive was intended to enable the firm meet the challenges that characterized the competitive environment. According to Colgate-Palmolive, High Commitment Work System is a work design that allows employees to utilize their full potential in the fulfilment of the firm’s objectives through tapping their skills, talents, commitment and ideas (Barry and Wilkinson, 2011). The firm further asserts that the design provides the basis for driving continuous improvement through initiatives that are aimed at encouraging preventative maintenance, productivity and quality (Kabasakal, 2006). To some extent, neoliberal employment relation can explain the new industrial relation that emerged from the change that took place at Colgate-Palmolive. From the Colgate Palmolive case, it is apparent that the neoliberals’ argument that regulations often destroy jobs of those they are intended to protect through unionization or legislation is true. It is likely that the firm relocated from Sydney to Greenfield in order to avoid union interference. This resulted in many people losing their jobs (Plehwe, 2007). Thus, the firm opted to move to Queensland where it could institute changes without the interference from unions. In this case, jobs of unionized employees were lost through relocation to another state (Perkins et al., 2006). Various characteristics of the change undertaken at the firm confirm that neoliberal frame of reference guided the change process. According to neoliberal employment relationship, the interests of employees and employers can be aligned through right employment policies and practices (Burgess, 2008). The introduction of the HCWS at the firm was aimed at reducing the costs and improving performance and margins of the firm. These objectives were mainly aimed at fulfilling the interests of employers. Another objective that the system aimed to fulfil was to win over the commitment of the employees through aligning individual, team and the firm’s goals (Barry and Wilkinson, 2011). This implies that the management was interested in the employee interests. By fulfilling the interests of employees, the employers of the firm were able to win the commitment of employees (Plehwe, 2007). To ensure commitment from employees, the management sort and incorporated ideas from employees and gave employees some autonomy to make some decisions. This is a characteristic of neoliberal employment relations (Gall, Wilkinson and Hurd, 2012). Another characteristic that exemplifies neoliberal employment relation in the new system adopted at Colgate-Palmolive is the reduction in the number of labor unions representing workers of the firm (Barry and Wilkinson, 2011). Prior to introduction of the change, the firm’s employees were represented by over 14 labor unions. However, after the initiation of change, the management of the firm negotiated for a single union to represent its labor force (Burgess, 2008). The management opted to have its workforce covered by a single union to avoid demarcation problems that previously plagued the firm (Perkins et al., 2006). Moreover, the firm wanted a single union to fight off other trade unions and to have a union whose interests were similar to those of the firm. The interference of unions at the firm has since ceased since the firm adopted the HCWS (Plehwe, 2007). This is in spite all employees at the firm being covered by a union. This has allowed the firm to attempt to initiate new employee relations without fearing the interference of the unions. Thus, the firm has room to come up with innovative ways of carrying out its mandate (Gall, Wilkinson and Hurd, 2012). The reduction of labor union role at the firm indicates the limited need for representation of workers by unions when policies at a firm are aligned to the needs of workers. This is one of the characteristics of neoliberal employment relations framework (Perkins et al., 2006). Proponents of neoliberal frame of reference advocate for merit and incentive pay. This can be attained through employee involvement. Employee involvement refers to a range of processes designed to engage the support, understanding, commitment and contribution of employees in the decision making process to attain the objectives of a firm. Employee involvement is thought to be more flexible and to result in a commonality of interests between employees and the management of the firm. Management theorists argue that employee involvement is introduced in a firm for three main reasons: economic, moral and behavioural reasons (Plehwe, 2007). Prior to introduction of the HCWS, Colgate –Palmolive was not interested in skill development of its employees. However, when the system was introduced the firm became committed to training and development of its employees. The training implies that employees are now more involved in the success of the firm than before. To enhance motivation, comprehensive incentives are provided to employees (Mole, 2011). By complementing these two activities with participative structures, opportunity to contribute to the attainment of the goals of the firm is improved (Barry and Wilkinson, 2011). The implementation of the HCWS at the Colgate-Palmolive allowed the firm to restructure its design to an integrated design with team orientation. The firm was also involved in the hiring of multi-skilled workforce that showed high involvement and high commitment (Perkins et al., 2006). The system enabled the management to focus on win/win outcomes during resolution of conflicts. Thus, the new system at Colgate-Palmolive encouraged employee involvement that ensured that inherent knowledge of the employees was utilized in improving the performance of the firm. The involvement of the employees in decision making at Colgate-Palmolive after implementation of the HCWS increased information about optimal policies. Thus, the HCWS implemented at the firm encouraged adoption of features advocated for in the neoliberal employment relations framework in terms of employee involvement. For long, the relevancy of public policy on employment relations in Australia has been undeniable. The most recent legislation is the 2005 WorkChoices (Plehwe, 2007). The Australian government support enterprise bargaining and strategies of employers that enhance flexibility in the labor market. The government also supports union movements that are not involved in effective counter strategy. This implies that the Australian government has little or no direct influence on the firms (Burgess, 2008). Since the policies that were adopted by Colgate Palmolive after implementation of the HCWS advocated for employees’ interests higher than the standards advocated for by the government, the firm rarely comes under direct influence of the government policies. This has seen a dramatic reduction in the intercession of labor conflicts at the firm by industrial tribunals (Perkins et al., 2006). Although neoliberal frame of reference explicitly helps us to understand the change at Colgate Palmolive, it does not provide answers to some issues. For instance, it is not able to explain why the workers at the firm still needed to be represented by a trade union even though it had little or no significant influence on the operations of the firm. This can only be explained by pluralism frame of reference which advocates for unionization of employees. Moreover, the government still has a role in structuring the policies that will shape the labour markets and the employee relations. Thus, neoliberal industrial relation cannot whole enable us to understand the change that took place at Palmolive. The workplace changes that were undertaken at Colgate Palmolive subsidiary in Australia had far reaching impact on its labor relations. Even though neoliberal frame is not able to explain some issues such as the need for unionisation of employees at Colgate Palmolive, from the discussion it is apparent that neoliberal employment relations framework is relevant in explaining the workplace changes that took place at the firm with the introduction of the high commitment workforce system. Like the neoliberal framework, that advocates for reduced union involvement, the system introduced at the firm greatly reduced the interference of labor unions in the firm’s processes. After the introduction of the system at Colgate Palmolive, the firm managed to reduce the number of unions representing the employees from 14 to a single one. Moreover, the impact of government policies were greatly reduced as advocated for by neoliberal employment relation framework. The system introduced at the firm encouraged employee involvement that serves to attain intrinsic rewards and employment fulfilment as advocated for by the neoliberal employment relation framework. The neoliberal system advocates for a balance to be stricken between the management interests and the employee interests. The introduction of the HCWS at the firm was aimed at reducing the costs and improving performance and margins of the firm. These objectives were mainly aimed at fulfilling the interests of employers. Another objective that the system aimed to fulfil was to win over the commitment of the employees through aligning individual, team and the firm’s goals. This implies that the management was interested in the employee interests. Thus, the system can be explained by the neoliberal theory. References Barry, M., and Wilkinson, A. 2011. Research Handbook of Comparative Employment Relations. London: Edward Elgar Publishing Burgess, J. 2008. 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