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CHAPTER 5: EMPLOYEE RELATIONS


Case study: Employee relations in Royal Mail
Royal Mail represents an almost classic case of change in personnel and employee relations. The company, in its early development as part of the Post Office has frequently been cited as an early example of a bureaucratic but paternalistic organisation with considerable attention being paid to what we would now associate with quite sophisticated people management policies (Grint). For much of its history the organisation has been under State control a Government Department until 1969, and from then on a public corporation. As a result it has many of the characteristics of public sector employee relations highly unionised with a long tradition of negotiation and consultation over a wide range of issues; clear job and pay grades; pay linked to seniority and length of service; and a strong commitment to public service. However, for much of the past 20 years it has also been one of the most conflict-prone organisations in the UK, in part because the very policies applauded by commentators in the past have been under threat as a direct result of management attempts to deal with a changed operating environment. The table below indicates the scale of the difficulties Royal Mail has had in trying to secure accepted changes in employee relations. While there has been some agreement at national level (in practice at the company level) over a range of issues, locally it has proved far more difficult to secure agreement on issues so that local, unofficial disputes have been a common feature of employee relations in the company. In 20002001 over half the working days lost due to strikes in the UK were due to action by postal workers; of these 57,000 postal days lost, 55,000 were unofficial. In October 2003, workers in the South East of England walked off the job in protest at management plans to enforce new working practices, at an estimated cost to the company of 40 million (Arrowsmith, 2007). Recent significant local disputes include a ballot for industrial action conducted in December 2006 in the regional centre
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Bristol, over the terms of introducing new sorting machines; while a similar dispute was also ongoing in Birmingham. There was a national stoppage in 2007 and in 2009 a number of highly publicised local disputes in response to what the Communication Workers Union (CWU) has described as cuts to jobs and services. By the end of the 1990s the Royal Mail had become a by-word for poor employment relations, with days lost through industrial action in the period since the late 1980s outstripping that of any other organisation or sector. Indeed, for part of the early 1990s the Royal Mail accounted for around half of all days lost through industrial disputes in the UK (IRS 793). Gregor Gall (IRS 2004) notes that these problems continued with national or semi-national strikes in 1988, 1996, 2001 and 2003, and major regional strikes in 1994, 1995, 2000 and 2001, making Royal Mail the single most strike-prone organisation-cum-industry in Britain. Furthermore, the significance of industrial action in Royal Mail is its immediate visibility and impact.

Year 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04

Working days lost (000) 90 74 50 64 1100 30 18.75 12.5 37.5 17.5 42 63 811 50 16 22 66 53 5.8 85

Source: Gall, G., 2003, The Meaning of Militancy: Postal Workers and Industrial Relations, Aldgate: Ashgate.

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The key problem for Royal Mail is that its core Post Office business is in decline (Arrowsmith, 2007). In January 2006 the Royal Mail lost its 350-year monopoly of postal delivery in the UK and this has contributed significantly to the worsening of employee relations in the company. As Arrowsmith notes,

In terms of competition, there are now (2006) 20 licensed operators for mail services, including Royal Mail and major private courier/logistics companies such as ANC, DHL, Lynx Mail, Securicor and TNT.
(Arrowsmith, 2007) It has been this change and the general threat of increased competition that has meant that employee relations in Royal Mail have been dominated by issues of restructuring. The resolution of the 2006 pay dispute was seen as heralding a new working arrangement between the main union (the CWU) and management, with the prospect of partnership working on issues including negotiating and implementing new working practices (Arrowsmith, 2007). The CWU also appeared to have accepted that developments such as the mechanisation of sorting could lead to job losses, but has been aware of the need to modernise work organisation given increased competition. The 2006 agreement committed the parties to work together to ensure that we become the most efficient, customer-focused and flexible company in the market place, and at the same time raise the value and status of postal workers (Arrowsmith, 2007). For the independent research organisation IRS, the implications of this are stark. In their view the full implementation of the (2006) agreement will lead to a complete overhaul of industrial relations and indeed the Royal Mails business plan forecasts up to 40,000 job losses as a result of its desired changes; the union has secured a guarantee of no compulsory redundancies.

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The continuing problems at Royal Mail are particularly concerning in the light of the attempts by the company and the CWU to address these. The main initiative has been through the establishment of a review body to investigate the problems affecting the company and to make recommendations for action. This was followed by the implementation of the recommendations of the review body report following publication in July 2001. This entailed the establishment of: Partnership boards a national partnership board (NPB) (comprised

of a Chair, four senior management representatives, seven union officers and a TUC representative) to meet monthly, and 14 area partnership boards (APBs). The APBs comprise four managers and eight area-level union representatives with an external chairman, meeting monthly. These, in turn, would support the work of local partnership boards (LPBs). In practice the APBs and LPBs were piloted in a number of regions with a planned roll-out over the next few years to all regions. Royal Mail and the CWU to find ways of developing and improving joint

employee communications. The report recommended more consultation, sharing strategic thinking and operational planning information and seeking common ground. Royal Mail to improve management training methods and procedures,

concentrating on the development of good leadership skills. The CWU to look at ways in which it can enforce the authority of its

executive and national officials over branches or members who break rules, including disciplinary measures. An enforced strike-free period; a breathing space for structural

changes to be made. This took place in August 2001 and was extended into September. The partnership approach was set to run alongside traditional collective bargaining arrangements. However, the distinctions between these became blurred at the end of 2001 when the company consulted over an employee
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share ownership programme. The CWU saw this as having the potential to affect pay and conditions and wanted the scheme to be negotiable. Failing to secure assurances from management led the CWU to withdraw from involvement in the partnership initiative at the end of 2001 although some LPBs continued to operate. The CWU view was that the actions of Royal Mail indicated that it was not committed to the principles of partnership. It has recently been suggested that the partnership approach was asked to do too much, too quickly (IRS 793). That the volume of structural change was too great for the fledgling partnership structure to cope with, and both sides reverted to tradition: imposition on one side and threats of action on the other (IRS Employment Review 793, p.17). A consequence is that no formal partnership agreement exists between the company and the union and partnership remains fragile. The structures are in place; the NPB has continued to meet, as have some APBs but the roll-out of LPBs has been postponed for the time being. Furthermore, the NPB has continued to produce six-monthly reports and local boards appeared to be working well where they remained in existence. In addition the Partnership Support team based at Head Office (union and management reps) that assists and advises the partnership boards through analysing training needs has had some successes. This has been significant as a concern has been the lack of local expertise; reps on both sides used to negotiations have found it difficult to perform a consultative role that requires skills that may be different to those involved in bargaining. In practice this lack of experience of consultation and of an integrative and high trust agenda requires both a new skills set and a substantial shift in approach from both sides. Moreover, evidence of ongoing employee relations tensions suggests that the changes introduced fall some way short of marking a more permanent shift in the employee relations culture and climate at Royal Mail. (Adapted from Arrowsmith, J., 2007, Industrial Relations in the Postal Sector,

EIROnline; IRS Employment Review 793)

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