Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 2003 1 (31)
AUSTRALIAN WORKPLACE AGREEMENTS
AND HIGH PERFORMANCE WORKPLACES:
A CRITIQUE OF MITCHELL AND FETTER
PAUL J. GOLLAN* AND JONATHAN HAMBERGER**
I
n the September 2003 edition of the Journal of Industrial Relations, Mitchell and
Fetter considered the extent to which the introduction of Australian workplace
agreements (AWAs) has helped promote a ‘high performance’ HRM agenda in Australia.
The authors observe that the ‘high performance’ workplace, as defined by Mitchell
and Fetter, has never been sought by the proponents of individualisation, and that
employment contracts are not the vehicle through which such practices would normally
be formally enshrined. In addition, the authors contend that Mitchell and Fetter are unable
validly to draw the conclusions they do from their analysis of the texts of two samples
of AWAs, and that they have ignored significant evidence which points to directly
contradicting conclusions. In particular, the results of a survey of AWA employees is
drawn on to suggest that, at least in larger, private sector workplaces, AWAs are
associated with a number of positive outcomes that would be consistent with AWAs
being used in conjunction with a ‘high trust’ HRM agenda.
INTRODUCTION
While Mitchell and Fetter’s article covers a lot of ground, they themselves
summarised their purpose as assessing the extent to which the individualisation
process, as measured in Australian workplace agreement (AWA) content, has
achieved the (assumed) objective of producing a cultural shift towards ‘high
commitment’ or ‘high performance’ workplaces (Mitchell & Fetter 2003).
They sought to determine this by examining the content of two separate
samples of AWAs. Having in their view found little evidence that AWAs were
being used to achieve this objective they then went on to suggest that AWAs
were being predominantly used to pursue a ‘cost reduction’ strategy, rather than
a ‘productivity-centred’ approach. The former was described as ‘an approach
which attempts to restore high profitability in the short term though cost
reduction methods—wage cuts, greater intensification of work effort, workforce
reductions, increases in casual and temporary employment, and hierarchical
organisation characterised by strong management controls and related high
rewards for managers’.
* Paul J. Gollan is a Lecturer in the Department of Industrial Relations at the London School of
Economics. Email: [email protected] **Jonathan Hamberger is the Employment Advocate.
Comments expressed in this paper do not necessarily reflect the official views of the Office of the
Employment Advocate nor the Australian Government.
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The second approach, on the other hand, was described as ‘productivity
centred, favouring a long term business strategy centred on a highly waged, highly
skilled workforce, collaborative or participative work systems, high levels of
investment in training and skill development and employment security’.
Not only do we contend that Mitchell and Fetter are unable validly to draw
the conclusions they do from their own data—but we also hold that they
have ignored significant evidence which points to contradictory conclusions.
Their conclusions based on OEA commissioned case studies would also seem
contradictory to the findings outlined in the research itself.
In addition, we call into question their assumptions in assessing their research
aims and contend that their research approach and methodology has serious flaws,
calling into question their conclusive findings.
A
PROBLEMATIC STARTING POINT
As acknowledged by Mitchell and Fetter themselves, the term ‘high performance’
workplaces itself is quite inexact. The terms ‘high performance’ (or ‘high commitment’) workplaces come from a number of academic studies (mainly in the
US and the UK) that sought to establish whether there was a correlation
between the adoption of specific human resource management (HRM) practices
and specific outcomes (such as better financial performance). It would be fair
to say that these academic studies are not conclusive, though they certainly do
present some evidence that certain HRM strategies are at least correlated with
relatively positive outcomes.
However, different writers tend to stress different human resource practices.
Certainly there tends to be an emphasis on employee involvement and participation in decision making, but no necessary consensus on what form this
should take. For example, UK academics tend to focus on formal consultative
mechanisms such as joint consultative committees1 whereas academics from the
US (where such arrangements generally do not exist) focus on practices such as
team meetings and quality circles.2 A typical definition (cf. Appelbaum et al. 2000)
refers to establishments that seek a committed labour force relative to other
goals, where employees enjoy a high degree of discretion in carrying out work
assignments, and where non supervisory employees participate substantively
in decisions.
While we question the logic of looking for high performance concepts
such as trust and commitment within a legal document, it is also important to
question to what extent it is reasonable to assume that AWAs were introduced
in order to promote ‘high performance’ workplaces.
While in some of the HRM literature a relationship is drawn between individualising the employment relationship and ‘high performance’ type concepts,
it is worth underlining that this was not a term used either by the Government
or its supporters at the time of the introduction of AWAs. In fact, Mitchell and
Fetter fail to provide us with any examples of the use of the terms ‘high performance’ or ‘high commitment’ by the Australian proponents of individualising
workplace relations either in the period up to, or after, the introduction of
Australian workplace agreements. It is somewhat odd, to say the least, that the
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
523
authors criticise AWAs for allegedly failing to achieve an objective which none
of their proponents ever claimed they were trying to achieve.
What in fact did the proponents of individualising workplace relations say they
were trying to achieve?
A good place to start would be the Minister’s Second Reading Speech
accompanying the legislation that provided for the introduction of AWAs, the
Workplace Relations and other Legislation and Amendment Act 1996 (Reith 1996).
That speech made it very clear that the Government’s purpose was to promote
the negotiation of pay and conditions at the enterprise and workplace level, without ‘uninvited third party’ intervention. ‘Direct dealing’ was clearly not however
an end in itself. The aim of promoting such a development was that this would
in turn help achieve better wages and conditions of employment (and profits)
through increased productivity.
The Second Reading Speech did not generally spell out how this would be
achieved. However, the legislation must be considered in the context of the
arguments being put at the time by some of the key proponents of industrial
relations reform, such as the Business Council of Australia (BCA), in the
period leading up to its introduction. In particular, the BCA did make it
clear that it regarded the introduction of individual agreements as part of a
process of changing management–employee relations, as well as allowing for
changes such as more flexible working time arrangements and greater wage
flexibility.
A typical article by the BCA’s then Executive Director, for example, stressed
the need for ‘a climate in which employers and employees have a genuine sense
of common purpose’. This would most likely be achieved by direct dealing
between employers and employees ‘the key requirement for common purpose
to be established is for all of the terms and conditions of employment to be
settled directly between the parties’ (Barratt 1995).
Individual contracts were regarded by key members of the BCA as a logical
component of a non-adversarial ‘high trust’ strategy, in contrast to the ‘them and
us’ culture associated with traditional collective bargaining.
This ‘high trust’ strategy places a great emphasis on tapping the creativity and
commitment of the workforce, to ensure that products and services consistently
meet or exceed customer expectations (Hamberger 1995).
Comprehensive implementation of this strategy typically involves:
• The provision of extensive and company controlled channels of ‘employee
voice’ like team briefings and employee involvement.
• The use of contingent reward systems, such as skill based pay, performancebased pay and profit sharing or employee share ownership.
• Broadly defined jobs, wide spans of control, flat organisational hierarchies
and extensive use of team and project based work organisation.
• Design and implementation of enterprise-based grievance procedures (e.g.
‘fair people systems’).
• Improved managerial leadership and behaviour.
It should be noted that this sort of strategy was being promoted very much by
larger, private sector employers, especially in the resource sector.
524
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December 2003
While this ‘high trust’ strategy has a lot in common with the notion of
‘high performance’ workplaces, it is perhaps not quite the same, especially when
considering the way that Mitchell and Fetter use the term. For example, they
see provisions in AWAs that increase employer discretion as inconsistent with
‘high performance’ workplaces, yet arguably they are not at all inherently
inconsistent with a ‘high trust’ strategy. Indeed, in one way, making employees
more subject to ‘managerial discretion’ rather than being ‘protected’ by traditional, collectively bargained work rules (for example in relation to performance
indicators, or job descriptions) can be seen as an inherent element of a ‘high trust’
strategy. In relation to employee involvement, the ‘high trust’ strategy focuses
on extensive, but ‘company controlled’, forms of employee voice, such as team
briefings, whereas Mitchell and Fetter seem to stress the need more for formal
consultative mechanisms. Indeed, placing in a formal legal instrument the kinds
of restrictions on managerial flexibility that Mitchell and Fetter seem to regard
as necessary for a ‘high performance’ workplace could be seen as indicative of a
‘low trust’ environment.3
ANALYTICAL
ISSUES WITH THE
AWA
EVIDENCE
How did Mitchell and Fetter come to their conclusion that AWAs were
being predominantly used to pursue a ‘cost reduction’ strategy, rather than a
‘productivity-centred’ approach? Their methodology is based on analysing
the texts of two reasonably random samples of AWAs for five features:
• flexibility in work performance;
• employee empowerment;
• performance-related rewards;
• commitment to quality of service or product; and
• loyalty to the business concern.
It is not entirely clear why Mitchell and Fetter would consider it necessary
for issues that do not relate directly to pay and conditions of employment to be
explicitly dealt with in an AWA. In fact, Mitchell and Fetter themselves appear
to acknowledge that some of the concepts they were looking for, by their very
nature, are unlikely to be directly or explicitly reflected in individual agreements
about pay and conditions:
‘high trust’, ‘flexibility’, ‘commitment’ and ‘participation’ are highly inexact terms,
and the ideas embodied in those values seem rather misplaced in the context of
the relatively fixed rights and obligations expressed in the form of the employment
contract’.
It should hardly come as a surprise therefore that Mitchell and Fetter had
difficulty in finding concepts such as ‘commitment to quality of service or
product’ or ‘loyalty to the business concern’ contained in the texts of the AWAs
they studied. We would suggest that failure to include such specific references
in an AWA tells us nothing about whether such commitment or loyalty exists.
The same is true in relation to the issue of ‘employee empowerment’. The
authors say they found ‘very little evidence of the communication of information
on a non-hierarchical basis—there were very few references to information
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
525
sharing, to consultation, to consultative committees and the like’. However, one
simply cannot infer that these arrangements did not exist in the organisations
concerned, because of their absence from an individual agreement on pay
and conditions. There is simply no obvious reason why an organisation that has
practices such as information sharing and consultation would feel the need to
put it in an AWA.
In relation to the two features that are most directly relevant to pay and
conditions, ‘flexibility in work performance’ and ‘performance related rewards’,
Mitchell and Fetter in fact found that AWAs often contained provisions in
relation to those matters. They seemed however to be concerned that they
tended to provide substantial discretion to management, for example by
permitting management to change employees’ duties or giving management
the ability to determine performance indicators. However, it is hard to see why
this in itself is incompatible either with a ‘high trust’ or a ‘high performance’
workplace.
OTHER
EVIDENCE
As outlined earlier, it is not possible to determine whether AWAs are associated
with either ‘high performance’ or ‘high trust’ workplaces simply by looking at
the texts of the AWAs themselves. There are however a number of legitimate
methods that could be used to answer this question, including surveys and case
studies.
For example, in 2001 the OEA commissioned a survey by one of the authors
(Gollan 2002), which allows a comparison between the perceptions of a random
sample of employees who had signed AWAs and an equivalent random sample
of employees who had not signed AWAs.4 It is worth looking at some of the results
from the weighted data of employees in larger workplaces—in other words the
kinds of workplaces where BCA members are likely to be the employer.5 If
employers in those workplaces were introducing AWAs as part of a ‘high trust’
strategy one might expect employees in AWA workplaces to have a higher level
of trust in management, to be more satisfied with the level of communications
and information, to be more satisfied with levels of employee involvement and
control, and generally to have a more positive attitude to management, compared
to employees under other forms of industrial instruments (which in those
workplaces is most likely to be a collective agreement).
If, on the other hand, AWAs were associated with a ‘cost-cutting’ approach
based on ‘wage cuts, greater intensification of work effort, workforce reductions,
increases in casual and temporary employment, and hierarchical organisation
characterised by strong managerial controls . . . ’ as claimed by Mitchell and Fetter,
one would surely expect employees on AWAs to be more negative in their
responses on these sorts of issues than employees without AWAs.
In fact, the AWA employees consistently had much more positive responses
than the non-AWA employees.6 On the issue of trust for example, AWA
employees had a higher level of trust in management than their non-AWA
counterparts. Forty-three per cent of AWA employees agreed with the proposition that ‘management can be trusted to tell things the way they are’, while
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only 24 per cent disagree. In contrast, only 34 per cent of non-AWA employees
trusted management, while 45 per cent distrusted it.
AWA employees were also more likely to answer positively on issues of
employee participation and control—central issues when considering whether
AWAs are associated with ‘High Performance’ work systems. Thirty-seven per
cent of AWA employees agreed that management gave them a say in how things
were run, compared to 31 per cent who did not agree, while 33 per cent of
non-AWA employees thought management gave them a say in how things
were run, and 43 per cent disagreed. Even more starkly, 64 per cent of AWA
employees agreed that ‘management gives me a say in the way I do my job’ while
14 per cent disagreed. Of non-AWA employees, 49 per cent agreed with the
proposition, while 23 per cent disagreed.
Likewise AWA employees were more likely than non-AWA to be satisfied with
the level of communication and information (51 per cent as opposed to 42 per
cent), with the amount of training received (49 per cent compared to 41 per cent)
and to think they had influence over decisions which affect them at work (75 per
cent compared to 70 per cent) with AWA employees more likely to think
they have ‘significant’ influence. In addition to this, AWA employees were far
more satisfied with recognition of work and effort at their workplace (51 per cent
compared to 33 per cent of random employees) and they were much more
likely to say that they were comfortable in raising issues with their supervisor
(93.8 per cent compared to 83.4 per cent for random employees).
While the results of any single survey cannot be conclusive, it seems strange,
to say the least, that employees subject to an HRM strategy based on ‘cost
cutting’ appear to be more positive about these matters than those who have
not been.
CONCLUSION
The concept of ‘high performance’ or ‘high commitment’ work systems is an
interesting one, though it could be argued that it was a somewhat different
‘high trust’ model that motivated some of the key proponents of AWAs. However,
examining the texts of AWAs simply cannot be used to assess whether employers
are using AWAs in conjunction with such a high trust approach to HRM. In fact,
at face value, it appears that AWA employees in larger, private sector workplaces
do have a higher level of trust in management, and perceive that they have
more control over their work than non-AWA employees. This is, at the very least,
consistent with the proposition that key features of the ‘high trust’ model are
more common in AWA workplaces than elsewhere.
Furthermore, Mitchell and Fetter’s methodological approach of analysis
centred on the content and text of AWAs, draws conclusions that would seem
underdeveloped in addressing their research questions.
Finally, it is worth noting that Mitchell and Fetter make a logical leap from
their assertion that AWAs are not associated with high performance workplaces
to claiming that they involve ‘wage cuts’, ‘workforce reductions’ and ‘greater
intensification of work effort’. It is worth noting that the first proposition, even
if it were true, does not lead on to the other propositions, for which they
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
527
simply provide no evidence whatsoever. While there is in fact limited evidence
available either way about these issues, it is worth pointing out that, according
to the ABS, employees on federal registered individual agreements receive significantly higher pay than those on registered collective agreements, in both the
public and private sectors, even when the number of hours worked is accounted.7
What can be drawn from Mitchell and Fetter’s evidence is at best inconclusive.
Reviewing selective data sources and using a narrow methodological approach
by examining the text of AWAs can be regarded incomplete. More comprehensive
findings could have been achieved by using other existing public sources of data
to yield more valid results.
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
See for example Cully et al. (1999) who used the lack of formal structures representing
employees’ interests to indicate the low incidence of ‘high commitment’ management
practices.
See for example Lawler et al. (1998) who, in assessing whether an organisation was a high
performance one, focused on forms of employee involvement such as information sharing,
employee participation groups, self managing work teams and job enrichment.
Consider for example the following statement made by the advocate for Comalco during
hearings in the Australian Industrial Relations Commission during the Weipa dispute in 1995:
‘ . . . the employee ceases to be in a work environment in which improvements in work have
a tradeable value in the collective context and are therefore to be loaded up and sold in
collective negotiation . . . In a staff relationship . . . the inbuilt constraints on the free flow
of work improvements are removed because each individual knows that he or she will be
subjectively judged on his or her work performance’
Additional cross tabs have been run for this article. The full SPSS Dataset is available from
the Office of the Employment Advocate.
Workplaces with 500 or more employees
It is acknowledged that the random sample may include a small proportion of employees on
AWAs, however this would have a negligible effect on the results.
Australian Bureau of Statistics, Employee Earnings and Hours, May 2003 (Cat. No. 6203.0),
unpublished data.
REFERENCES
Appelbaum E, Bailey T, Berg P, Kalleberg AL (2000) Manufacturing Advantage: Why High
Performance Work Systems Pay Off. Ithaca: Cornell University Press.
Barratt P (1995) Weekend Australian 7–8 January 1995.
Cully M, Woodland S, O’Reilly A, Dix G (1999) Britain at Work. London: Routledge.
Mitchell R, Fetter J (2003) Human resource management and individuals in Australian labour law.
Journal of Industrial Relations 45(3) pp 292–325.
Gollan P (2002) Australian Workplace Agreements Employee Attitudinal Survey (weighted findings).
Office of the Employment Advocate, Commonwealth of Australia, Sydney, October.
Hamberger J (1995) Individual Contracts: Beyond Enterprise Bargaining? ACIRRT Working Paper
No. 39 Sydney: Australian Centre for Industrial Relations Research and Training.
Lawler EE, Mohrman SA, Ledford GE Jr (1998) Strategies for High Performance Organisations.
San Francisco: Jossey-Bass.
Reith P (1996) Workplace Relations and Other Legislation Amendment Bill 1996: Second Reading
Speech. House of Representatives, Parliament of Australia, Parliamentary Debates, 23 May 1996
pp. 1295–1305.
AND HIGH PERFORMANCE WORKPLACES:
A CRITIQUE OF MITCHELL AND FETTER
PAUL J. GOLLAN* AND JONATHAN HAMBERGER**
I
n the September 2003 edition of the Journal of Industrial Relations, Mitchell and
Fetter considered the extent to which the introduction of Australian workplace
agreements (AWAs) has helped promote a ‘high performance’ HRM agenda in Australia.
The authors observe that the ‘high performance’ workplace, as defined by Mitchell
and Fetter, has never been sought by the proponents of individualisation, and that
employment contracts are not the vehicle through which such practices would normally
be formally enshrined. In addition, the authors contend that Mitchell and Fetter are unable
validly to draw the conclusions they do from their analysis of the texts of two samples
of AWAs, and that they have ignored significant evidence which points to directly
contradicting conclusions. In particular, the results of a survey of AWA employees is
drawn on to suggest that, at least in larger, private sector workplaces, AWAs are
associated with a number of positive outcomes that would be consistent with AWAs
being used in conjunction with a ‘high trust’ HRM agenda.
INTRODUCTION
While Mitchell and Fetter’s article covers a lot of ground, they themselves
summarised their purpose as assessing the extent to which the individualisation
process, as measured in Australian workplace agreement (AWA) content, has
achieved the (assumed) objective of producing a cultural shift towards ‘high
commitment’ or ‘high performance’ workplaces (Mitchell & Fetter 2003).
They sought to determine this by examining the content of two separate
samples of AWAs. Having in their view found little evidence that AWAs were
being used to achieve this objective they then went on to suggest that AWAs
were being predominantly used to pursue a ‘cost reduction’ strategy, rather than
a ‘productivity-centred’ approach. The former was described as ‘an approach
which attempts to restore high profitability in the short term though cost
reduction methods—wage cuts, greater intensification of work effort, workforce
reductions, increases in casual and temporary employment, and hierarchical
organisation characterised by strong management controls and related high
rewards for managers’.
* Paul J. Gollan is a Lecturer in the Department of Industrial Relations at the London School of
Economics. Email: [email protected] **Jonathan Hamberger is the Employment Advocate.
Comments expressed in this paper do not necessarily reflect the official views of the Office of the
Employment Advocate nor the Australian Government.
THE JOURNAL OF INDUSTRIAL RELATIONS, VOL. 45, NO. 4, DECEMBER 2003, 521–527
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December 2003
The second approach, on the other hand, was described as ‘productivity
centred, favouring a long term business strategy centred on a highly waged, highly
skilled workforce, collaborative or participative work systems, high levels of
investment in training and skill development and employment security’.
Not only do we contend that Mitchell and Fetter are unable validly to draw
the conclusions they do from their own data—but we also hold that they
have ignored significant evidence which points to contradictory conclusions.
Their conclusions based on OEA commissioned case studies would also seem
contradictory to the findings outlined in the research itself.
In addition, we call into question their assumptions in assessing their research
aims and contend that their research approach and methodology has serious flaws,
calling into question their conclusive findings.
A
PROBLEMATIC STARTING POINT
As acknowledged by Mitchell and Fetter themselves, the term ‘high performance’
workplaces itself is quite inexact. The terms ‘high performance’ (or ‘high commitment’) workplaces come from a number of academic studies (mainly in the
US and the UK) that sought to establish whether there was a correlation
between the adoption of specific human resource management (HRM) practices
and specific outcomes (such as better financial performance). It would be fair
to say that these academic studies are not conclusive, though they certainly do
present some evidence that certain HRM strategies are at least correlated with
relatively positive outcomes.
However, different writers tend to stress different human resource practices.
Certainly there tends to be an emphasis on employee involvement and participation in decision making, but no necessary consensus on what form this
should take. For example, UK academics tend to focus on formal consultative
mechanisms such as joint consultative committees1 whereas academics from the
US (where such arrangements generally do not exist) focus on practices such as
team meetings and quality circles.2 A typical definition (cf. Appelbaum et al. 2000)
refers to establishments that seek a committed labour force relative to other
goals, where employees enjoy a high degree of discretion in carrying out work
assignments, and where non supervisory employees participate substantively
in decisions.
While we question the logic of looking for high performance concepts
such as trust and commitment within a legal document, it is also important to
question to what extent it is reasonable to assume that AWAs were introduced
in order to promote ‘high performance’ workplaces.
While in some of the HRM literature a relationship is drawn between individualising the employment relationship and ‘high performance’ type concepts,
it is worth underlining that this was not a term used either by the Government
or its supporters at the time of the introduction of AWAs. In fact, Mitchell and
Fetter fail to provide us with any examples of the use of the terms ‘high performance’ or ‘high commitment’ by the Australian proponents of individualising
workplace relations either in the period up to, or after, the introduction of
Australian workplace agreements. It is somewhat odd, to say the least, that the
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
523
authors criticise AWAs for allegedly failing to achieve an objective which none
of their proponents ever claimed they were trying to achieve.
What in fact did the proponents of individualising workplace relations say they
were trying to achieve?
A good place to start would be the Minister’s Second Reading Speech
accompanying the legislation that provided for the introduction of AWAs, the
Workplace Relations and other Legislation and Amendment Act 1996 (Reith 1996).
That speech made it very clear that the Government’s purpose was to promote
the negotiation of pay and conditions at the enterprise and workplace level, without ‘uninvited third party’ intervention. ‘Direct dealing’ was clearly not however
an end in itself. The aim of promoting such a development was that this would
in turn help achieve better wages and conditions of employment (and profits)
through increased productivity.
The Second Reading Speech did not generally spell out how this would be
achieved. However, the legislation must be considered in the context of the
arguments being put at the time by some of the key proponents of industrial
relations reform, such as the Business Council of Australia (BCA), in the
period leading up to its introduction. In particular, the BCA did make it
clear that it regarded the introduction of individual agreements as part of a
process of changing management–employee relations, as well as allowing for
changes such as more flexible working time arrangements and greater wage
flexibility.
A typical article by the BCA’s then Executive Director, for example, stressed
the need for ‘a climate in which employers and employees have a genuine sense
of common purpose’. This would most likely be achieved by direct dealing
between employers and employees ‘the key requirement for common purpose
to be established is for all of the terms and conditions of employment to be
settled directly between the parties’ (Barratt 1995).
Individual contracts were regarded by key members of the BCA as a logical
component of a non-adversarial ‘high trust’ strategy, in contrast to the ‘them and
us’ culture associated with traditional collective bargaining.
This ‘high trust’ strategy places a great emphasis on tapping the creativity and
commitment of the workforce, to ensure that products and services consistently
meet or exceed customer expectations (Hamberger 1995).
Comprehensive implementation of this strategy typically involves:
• The provision of extensive and company controlled channels of ‘employee
voice’ like team briefings and employee involvement.
• The use of contingent reward systems, such as skill based pay, performancebased pay and profit sharing or employee share ownership.
• Broadly defined jobs, wide spans of control, flat organisational hierarchies
and extensive use of team and project based work organisation.
• Design and implementation of enterprise-based grievance procedures (e.g.
‘fair people systems’).
• Improved managerial leadership and behaviour.
It should be noted that this sort of strategy was being promoted very much by
larger, private sector employers, especially in the resource sector.
524
THE JOURNAL
OF
I N D U S T R I A L R E L AT I O N S
December 2003
While this ‘high trust’ strategy has a lot in common with the notion of
‘high performance’ workplaces, it is perhaps not quite the same, especially when
considering the way that Mitchell and Fetter use the term. For example, they
see provisions in AWAs that increase employer discretion as inconsistent with
‘high performance’ workplaces, yet arguably they are not at all inherently
inconsistent with a ‘high trust’ strategy. Indeed, in one way, making employees
more subject to ‘managerial discretion’ rather than being ‘protected’ by traditional, collectively bargained work rules (for example in relation to performance
indicators, or job descriptions) can be seen as an inherent element of a ‘high trust’
strategy. In relation to employee involvement, the ‘high trust’ strategy focuses
on extensive, but ‘company controlled’, forms of employee voice, such as team
briefings, whereas Mitchell and Fetter seem to stress the need more for formal
consultative mechanisms. Indeed, placing in a formal legal instrument the kinds
of restrictions on managerial flexibility that Mitchell and Fetter seem to regard
as necessary for a ‘high performance’ workplace could be seen as indicative of a
‘low trust’ environment.3
ANALYTICAL
ISSUES WITH THE
AWA
EVIDENCE
How did Mitchell and Fetter come to their conclusion that AWAs were
being predominantly used to pursue a ‘cost reduction’ strategy, rather than a
‘productivity-centred’ approach? Their methodology is based on analysing
the texts of two reasonably random samples of AWAs for five features:
• flexibility in work performance;
• employee empowerment;
• performance-related rewards;
• commitment to quality of service or product; and
• loyalty to the business concern.
It is not entirely clear why Mitchell and Fetter would consider it necessary
for issues that do not relate directly to pay and conditions of employment to be
explicitly dealt with in an AWA. In fact, Mitchell and Fetter themselves appear
to acknowledge that some of the concepts they were looking for, by their very
nature, are unlikely to be directly or explicitly reflected in individual agreements
about pay and conditions:
‘high trust’, ‘flexibility’, ‘commitment’ and ‘participation’ are highly inexact terms,
and the ideas embodied in those values seem rather misplaced in the context of
the relatively fixed rights and obligations expressed in the form of the employment
contract’.
It should hardly come as a surprise therefore that Mitchell and Fetter had
difficulty in finding concepts such as ‘commitment to quality of service or
product’ or ‘loyalty to the business concern’ contained in the texts of the AWAs
they studied. We would suggest that failure to include such specific references
in an AWA tells us nothing about whether such commitment or loyalty exists.
The same is true in relation to the issue of ‘employee empowerment’. The
authors say they found ‘very little evidence of the communication of information
on a non-hierarchical basis—there were very few references to information
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
525
sharing, to consultation, to consultative committees and the like’. However, one
simply cannot infer that these arrangements did not exist in the organisations
concerned, because of their absence from an individual agreement on pay
and conditions. There is simply no obvious reason why an organisation that has
practices such as information sharing and consultation would feel the need to
put it in an AWA.
In relation to the two features that are most directly relevant to pay and
conditions, ‘flexibility in work performance’ and ‘performance related rewards’,
Mitchell and Fetter in fact found that AWAs often contained provisions in
relation to those matters. They seemed however to be concerned that they
tended to provide substantial discretion to management, for example by
permitting management to change employees’ duties or giving management
the ability to determine performance indicators. However, it is hard to see why
this in itself is incompatible either with a ‘high trust’ or a ‘high performance’
workplace.
OTHER
EVIDENCE
As outlined earlier, it is not possible to determine whether AWAs are associated
with either ‘high performance’ or ‘high trust’ workplaces simply by looking at
the texts of the AWAs themselves. There are however a number of legitimate
methods that could be used to answer this question, including surveys and case
studies.
For example, in 2001 the OEA commissioned a survey by one of the authors
(Gollan 2002), which allows a comparison between the perceptions of a random
sample of employees who had signed AWAs and an equivalent random sample
of employees who had not signed AWAs.4 It is worth looking at some of the results
from the weighted data of employees in larger workplaces—in other words the
kinds of workplaces where BCA members are likely to be the employer.5 If
employers in those workplaces were introducing AWAs as part of a ‘high trust’
strategy one might expect employees in AWA workplaces to have a higher level
of trust in management, to be more satisfied with the level of communications
and information, to be more satisfied with levels of employee involvement and
control, and generally to have a more positive attitude to management, compared
to employees under other forms of industrial instruments (which in those
workplaces is most likely to be a collective agreement).
If, on the other hand, AWAs were associated with a ‘cost-cutting’ approach
based on ‘wage cuts, greater intensification of work effort, workforce reductions,
increases in casual and temporary employment, and hierarchical organisation
characterised by strong managerial controls . . . ’ as claimed by Mitchell and Fetter,
one would surely expect employees on AWAs to be more negative in their
responses on these sorts of issues than employees without AWAs.
In fact, the AWA employees consistently had much more positive responses
than the non-AWA employees.6 On the issue of trust for example, AWA
employees had a higher level of trust in management than their non-AWA
counterparts. Forty-three per cent of AWA employees agreed with the proposition that ‘management can be trusted to tell things the way they are’, while
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only 24 per cent disagree. In contrast, only 34 per cent of non-AWA employees
trusted management, while 45 per cent distrusted it.
AWA employees were also more likely to answer positively on issues of
employee participation and control—central issues when considering whether
AWAs are associated with ‘High Performance’ work systems. Thirty-seven per
cent of AWA employees agreed that management gave them a say in how things
were run, compared to 31 per cent who did not agree, while 33 per cent of
non-AWA employees thought management gave them a say in how things
were run, and 43 per cent disagreed. Even more starkly, 64 per cent of AWA
employees agreed that ‘management gives me a say in the way I do my job’ while
14 per cent disagreed. Of non-AWA employees, 49 per cent agreed with the
proposition, while 23 per cent disagreed.
Likewise AWA employees were more likely than non-AWA to be satisfied with
the level of communication and information (51 per cent as opposed to 42 per
cent), with the amount of training received (49 per cent compared to 41 per cent)
and to think they had influence over decisions which affect them at work (75 per
cent compared to 70 per cent) with AWA employees more likely to think
they have ‘significant’ influence. In addition to this, AWA employees were far
more satisfied with recognition of work and effort at their workplace (51 per cent
compared to 33 per cent of random employees) and they were much more
likely to say that they were comfortable in raising issues with their supervisor
(93.8 per cent compared to 83.4 per cent for random employees).
While the results of any single survey cannot be conclusive, it seems strange,
to say the least, that employees subject to an HRM strategy based on ‘cost
cutting’ appear to be more positive about these matters than those who have
not been.
CONCLUSION
The concept of ‘high performance’ or ‘high commitment’ work systems is an
interesting one, though it could be argued that it was a somewhat different
‘high trust’ model that motivated some of the key proponents of AWAs. However,
examining the texts of AWAs simply cannot be used to assess whether employers
are using AWAs in conjunction with such a high trust approach to HRM. In fact,
at face value, it appears that AWA employees in larger, private sector workplaces
do have a higher level of trust in management, and perceive that they have
more control over their work than non-AWA employees. This is, at the very least,
consistent with the proposition that key features of the ‘high trust’ model are
more common in AWA workplaces than elsewhere.
Furthermore, Mitchell and Fetter’s methodological approach of analysis
centred on the content and text of AWAs, draws conclusions that would seem
underdeveloped in addressing their research questions.
Finally, it is worth noting that Mitchell and Fetter make a logical leap from
their assertion that AWAs are not associated with high performance workplaces
to claiming that they involve ‘wage cuts’, ‘workforce reductions’ and ‘greater
intensification of work effort’. It is worth noting that the first proposition, even
if it were true, does not lead on to the other propositions, for which they
AUSTRALIAN WORKPLACE AGREEMENTS: A CRITIQUE
527
simply provide no evidence whatsoever. While there is in fact limited evidence
available either way about these issues, it is worth pointing out that, according
to the ABS, employees on federal registered individual agreements receive significantly higher pay than those on registered collective agreements, in both the
public and private sectors, even when the number of hours worked is accounted.7
What can be drawn from Mitchell and Fetter’s evidence is at best inconclusive.
Reviewing selective data sources and using a narrow methodological approach
by examining the text of AWAs can be regarded incomplete. More comprehensive
findings could have been achieved by using other existing public sources of data
to yield more valid results.
ENDNOTES
1.
2.
3.
4.
5.
6.
7.
See for example Cully et al. (1999) who used the lack of formal structures representing
employees’ interests to indicate the low incidence of ‘high commitment’ management
practices.
See for example Lawler et al. (1998) who, in assessing whether an organisation was a high
performance one, focused on forms of employee involvement such as information sharing,
employee participation groups, self managing work teams and job enrichment.
Consider for example the following statement made by the advocate for Comalco during
hearings in the Australian Industrial Relations Commission during the Weipa dispute in 1995:
‘ . . . the employee ceases to be in a work environment in which improvements in work have
a tradeable value in the collective context and are therefore to be loaded up and sold in
collective negotiation . . . In a staff relationship . . . the inbuilt constraints on the free flow
of work improvements are removed because each individual knows that he or she will be
subjectively judged on his or her work performance’
Additional cross tabs have been run for this article. The full SPSS Dataset is available from
the Office of the Employment Advocate.
Workplaces with 500 or more employees
It is acknowledged that the random sample may include a small proportion of employees on
AWAs, however this would have a negligible effect on the results.
Australian Bureau of Statistics, Employee Earnings and Hours, May 2003 (Cat. No. 6203.0),
unpublished data.
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