Patterns of employee relations governance in a large British multinational food retailer:An unusual case of a longstanding partnership?

Mike Geppert (Friedrich Schiller University of Jena), Karen Williams(Swansea University), Michael Wortmann (FAST e.V. Berlin)

Corresponding author: Dr Karen Williams, School of Management, Swansea University,Singleton Park, Swansea SA2 8PP, k.williams@swansea.ac.uk, tel: 01792-295569

Keywords: employee relations, Europe, food retail, hypermarkets, multinationalcompanies, partnership

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The paper will be published in Competition and Change, 18(2), in May 2014.

Patterns of employee relations governance in a large British multinational food retailer:An unusual case of a longstanding partnership?

1. Introduction

The paper focuses on employee relations (ER) governance in a big box1 European food retail MNC based in the UK whilst also providing some insights into governance in the food retail sector more generally froma European based comparative study of ER in the industry. In line withcriticism of Varieties of Capitalism (V o C) research our paper goes beyond the narrow ‘firm-centrism’ of this research stream, which downplays and neglects labour (see e.g. Bruff and Horn 2012). Instead of the focus on corporate governance we concentrate on issues of ER governance with a central focus on the functioning and social interactions related to the partnership agreement of the largest British food retailer. Our analysis also sheds some light on current self-critical debates of V o C scholars (see e.g. Wood and Lane, 2012:24), who emphasise that sectoral regimes explain institutional and organizational diversity within the ideal-types of liberal and coordinated forms of capitalism.

Previous work on liberal market economies (LMEs) and coordinated market economies (CMEs) in the V o C and national business systems (NBS) literature (Hall and Soskice, 2001 and Whitley, 1999) points to very different forms of ER governance in these two types of systems. In LMEs employer-employee interdependence is expected to be low in a context of competitive labour markets and weak unions whilst in CMEs, with their greater degree of collaboration and coordination, there will be more coordinated decision making, greater employer dependence on the skills base of employees and stronger unions (Whitley, 1999). Accordingly, our research findings, from the Europe focused study thispaper refers to, did find a statutory based works council framework to1 Typical big box food retail formats are superstores and hypermarkets with a sales area of over 5000 square metres and catering primarily for car-borne shoppers. While hypermarkets also carry a large non-food assortment, superstores focus primarily on food.

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manage relations with employees in the German food retailing MNC, as expected in line with V of C and NBS literature. There was, however, no direct transfer of similar practices to the management of subsidiaries in Europe (see authors, forthcoming, for more information). This reflects the fact that management in CMEs has more restricted choice of ER governance forms in the home country operations due to extensive external regulation of ER and stronger unions but choice in the ER management of subsidiaries depending on the host country context. In the UK MNC of our sample we found – unexpectedly in terms of V o C studies - a longstanding partnership agreement in place between HQ management and the Union of Shop, Distributive and Allied Workers (USDAW). The partnership operates across all the MNC’s formats in the UK and was also being transferred to the European stores we investigated.

This paper tries to shed more light on the reasons we found for this variance in the case of the UK MNC from V o C and NBS literature expectations, i.e. the operation of the partnership agreement in an LME and in a sector, food retail, which is generally viewed as providing a weak context for cooperative forms of ER governance when compared to the manufacturing sector. The weakness of the sector-specific institutions in food retail is further enhanced by the highlyTaylorist application of technology to work organisation and management, the relatively low skilled nature of most of the work and the high level of part time workers who are often from sections of thelabour market with low labour power such as working mothers, immigrants, retirees and young people. Trade union membership levels among such workers are traditionally low and employer policies towardsany form of collective representation usually hostile.

Theoretical frameworks for investigating partnership in LMEs focus on political economy and institutional approaches. Whilst political economy perspectives emphasize the ongoing antagonism between capital and labour due to divergent interests, the institutional approaches such as the V of C literature above focus on the institutionalising ofthis conflict in different national settings. A feature of LMEs is themore extensive choice open to management in the form of ER governance selected due to the low level of external regulation in comparison to

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CMEs. Factors influencing the choices management make include the sizeof the business in terms of employment and investment, which may require some form of indirect employee representation. We have explored this matter in more depth in a comparative study of industrial relations in European hypermarkets, which includes an analysis of the similarities between the UK and German and French based MNCs despite the differences in their home country NBS (authors,2014). The market position of the company may also expand the range ofchoices available to management although the UK MNC made its partnership choice at home, before its major international and domestic expansion programme. The partnership can indeed be seen as a necessary stabilising factor to support these expansion activities. Another influence on managerial choice is the history of relations with unions, a relationship perceived as beneficial by both parties and finally, the strength of the union also seems to play an importantpart when management seek to create a collectively based partnership approach. This points to the importance of unions continuing to pursuestrong organising strategies as part of a partnership approach rather than seeing it as an either/or option. These issues will be discussed in more detail below.

In the next section we look at theoretical approaches to the study of ER governance forms, particularly to partnerships, and focus on a political economy approach, Ramsay’s cycles of control, to investigatethe MNC-USDAW partnership. We then look briefly at key findings from the literature on partnerships, which have been predominantly conducted in the manufacturing sector, and compare and contrast conditions for partnership in the food retail sector. The empirical section then investigates the case of the MNC-USDAW partnership in thelight of the conceptual approaches introduced and the following discussion comments on their usefulness in a food retail context. Our paper finishes with concluding comments regarding the partnership approach we investigated, which can be seen as a corporate attempt to institutionalise conflict and engage the energies of the employees in achieving corporate goals in an MNC where the union is in a strong position in terms of membership density and recognition within the industry.

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2. Review of relevant literature

2.1. Theoretical frameworks on partnership

Two key theoretical approaches used in the study of partnerships in LMEs have been firstly an institutionalist approach which has traditionally focused on collective bargaining as the key form of ER governance and now on new ER governance forms, such as partnership agreements, due to new globalisation and competitive pressures (Stuartand Martinez Lucio, 2005). The second approach, based on the politicaleconomy perspective, has focused more on the fundamental conflict of interests between capital and labour and, more recently, on how globalisation has weakened the position of trade unions and labour leading to an intensification of the labour process and a change in the power balance between capital and labour. This has in turn privileged corporate–led forms of ER based on unitary management interests of which partnership agreements are often seen as one example (Kelly, 2005: 190). In terms of the actual forms such corporate-led schemes might take, Marchington and Kynighou (2012) point to a shift since the global financial crisis. More direct personal involvement forms with limited degrees of actual involvement at lower levels of the organisation have been found as cost reduction strategies have become dominant (ibid: 3344). Indirect forms based on,for example, trade unions have been susceptible to cutbacks, direct and informal forms involving key workers less so (ibid:3350).

Marchington and Kynighou identify the three current theoretical approaches to partnership and participation forms as business models, human resource (HR) architecture and political economy. The business model approach links participation of employees to quality enhancementand innovation business strategies of management whilst cost reductionstrategies reduce management interest in such schemes. Similarly the HR architecture approach sees a segmentation of the workforce into those who are seen as adding the most value and are given opportunities for participation and those who are not (ibid: 3343). Asindicated earlier, food retail workers operate within an environment of constant cost reduction strategies by employers and are also viewedas a largely disposable and easily replaceable peripheral workforce.

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These factors undermine the applicability of the business model and HRarchitecture explanations for employee participation schemes. The political economy approach, in contrast, explains management interest in participation in terms of the bid to further their control over theworkforce to achieve corporate goals (ibid: 3339).

A good example of this approach is Ramsay’s seminal study on cycles ofcontrol in 1977 which provided an historical overview of management attempts in the UK to counter threats to their authority and engage the cooperation of workers by a variety of models of ‘employee participation’. Such attempts are ‘a means of seeking to create cooperation and integration in order to exert management control over relationships which are actually fundamentally antagonistic’ (ibid: 481). They have ranged from profit sharing schemes, Whitley councils, joint productivity and joint consultation committees and, according toKelly, more recently, partnership agreements (Kelly, 2005).

Employer aims in offering participation to employees according to Ramsay are enterprise consciousness (ibid, 1977:487), the detachment of workers from trade unions, especially militant ones, and class consciousness (ibid: 483), moderating worker demands (ibid: 490), altering the image of the employer to a more benign one, reducing resistance to change and engaging worker efforts in increasing productivity (ibid: 489) by providing ‘feelings of involvement’ but subject to employer control (ibid: 485). The overall aim is to reinforce managerial authority and the integration of the workforce into managerial definitions of the work process and its rewards.

Ramsay comments on the fact that participation terminology inevitably involves much confusion and opacity (ibid:498) due to the differing interests of employers and workers with employers using consensual andunitary language assuming a common interest in management defined profit goals and the managerial agenda and labour viewing participation as an opportunity to advance the control exercised by labour in the workplace. Both sides use the same language but with widely divergent motives. Participation schemes in the UK have been management sponsored and led with employers fiercely rejecting any

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external state and EU led schemes which could give workers genuine decision making rights in the workplace (ibid:494).

Kelly (2005) has taken Ramsay’s survey of participation in the UK beyond the late 1970s in his investigation of the different generations of partnership agreements as the latest manifestation of the management sponsored participation schemes. The first generation agreements in the 1980s focused on single union, no strike deals in manufacturing introduced by employers to gain trade union support for workforce flexibility and to reduce disputes-these were in decline by the late 1980s (ibid:191). The second generation were in mainly heavily unionised companies and the aims were to gain union support torestructure and shed labour as well as the desire for more cooperativerelations. The third generation of agreements from late 1990s are in previously non-union companies which, after trade union recognition legislation passed by the Labour government, recognised a union for bargaining purposes for the first time and used partnerships to encourage them to work together with management (ibid:191). Despite the MNC-USDAW agreement being made during this latter period, its background is very different due to the longstanding bargaining arrangement between the two parties prior to the partnership deal in 1998.

Management sponsored collective forms of participation underline the fact that, despite limited institutional resources in terms of supportive legislation and general employer recognition of their role,trade unions in LMEs such as the UK are able to use organising strategies to boost membership density even in unpromising sectors such as food retail (see Parker and Rees, 2013). This can then lead tomanagement control mechanisms in the form of partnership arrangements to gain workforce support.

2.2. Previous studies on partnership forms of ER governance in the UK and other LMEs

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Sustained workplace compromises are unusual in an LME context as indicated in the previous section and the globalised competitive environment weakens the enabling conditions for sustained cooperation as employers find it increasingly difficult to sustain their partnership obligations and labour power has been greatly weakened (Thompson, 2003). Wider societal Institutional supports promoting cooperation between capital and labour are thus seen as vital (Martinez Lucio et al, 2005: 812) and LMEs are usually contrasted negatively with the more supportive institutional environments for cooperation in CMEs such as Germany.

Much of the research to date on partnership agreements has been focused on manufacturing industry in LMEs (Belanger and Edwards, 2007), whereas conditions are very different in the service sector, not least in the direct role played by customers. In the following section we compare and contrast the two sectors and comment on how applicable findings from manufacturing on partnership are across different industry sectors (ibid: 729), specifically food retail.

Studies argue that a key factor in the effectiveness of more cooperative mutual gains based governance structures such as partnerships is the extent to which institutions exist to protect company and workplace compromises from market pressures (Belanger and Edwards, 2007: 728). These protections make it easier for management to provide the gains expected by employees in return for their willingness to change and be open to the needs of the business. Institutional regulations such as works council legislation in Germany, for example, provide a constitution for the workplace and a counterbalance to the power asymmetry in favour of employers. In LMEs,in contrast, traditional forms of state based and associational regulative supports are weak (Martinez Lucio et al., 2004:411). Deakinet al (2002) have investigated the effects on partnership of the structure of corporate governance in LMEs and did find some examples of ‘mature and enduring partnerships’ in the UK (ibid: 343) pointing out that other forms of regulation can help to promote a more long term view of the business such as customer service standards (ibid: p.346). Generally, however, high trade union density and strong workplace representation are seen as the key factors supporting the

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resilience of workplace partnerships in manufacturing in the UK (Oxenbridge and Brown, 2004:401; Butler et al., 2011). This is reflected in the case study in USDAW’s deliberate strong organising strategy to maintain high membership density and provide an incentive for management to sustain the partnership and reach compromises with the union.

Technology can also influence management views on cooperative forms ofER in the workplace (Belanger and Edwards, 2007) and provide more or less favourable conditions for employee control over work in terms of job autonomy and working conditions more generally. Dobbins and Gunnigle (2009:564-565), for example, argue that continuous process technology is the most empowering form of technology especially as itprecludes management using outsourcing as a threat. In the case of thefood retail sector, however, technology is being applied in a Tayloristic way which is reducing the scope for job autonomy, even forthe managers of stores, as well as promoting deskilling and the replacement of staff by technology (Grugulis et al., 2011). Both the low skill levels of the majority of employees and Tayloristic work practices allow limited scope for employee involvement and personal and group initiative-taking. This may help to explain the focus on a more centralised trade union based form of partnership at corporate level in our case study company.

Product markets also provide elements of stability and predictably to allow for some job security as a management quid pro quo basis for labour compromises. Deakin et al (2002), for example, argue that partnerships are much more difficult where markets are volatile, open and price sensitive, particularly where there is an oversupply, as this makes it harder for management to take, and encourage shareholders to take, a more long term view of the business (ibid:348). Large investments which need to be operated over time in the same location to recoup costs can also provide a measure of marketimmunity and employment stability to support partnerships (Belanger and Edwards, 2007:720). In addition a corporate emphasis on quality and customer service in the business strategies of management can helpinsulate the workplace to a certain extent from market pressures and cost minimisation strategies. In terms of market conditions and

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product markets, food retail in the UK is concentrated in four key retailers who have made large scale investments in big-box stores and supermarkets, although they are subject to increasing pressure from foreign owned low cost discounters. Unlike manufacturing, where many operations have been outsourced to other countries with lower wages and working conditions to reduce costs, food retailers have to base their retail operations in the UK to serve local customers in the local marketplace. In addition, the customer service ethos is important, at least rhetorically, in the big box food retailers. Thesefactors may help to interrupt what Thompson sees as the capitalist bias against continuity of employment and thus the instability of workplace bargains such as partnerships (2003:367), although the MNC investigated is the only food retailer with a union based partnership relationship in the UK.

In LME contexts in particular the development of partnership style agreements entail both benefits and risks for employers and employees and a certain level of coherency and stability of both parties is needed to encourage risk sharing (Martinez Lucio et al, 2005: 812 and 802). Capitalism, however, poses a constant challenge to the capacity of such arrangements to keep on producing mutual gains for both sides due to competitive market pressures (Edwards and Belanger 2006:132 andThompson, 2003: 362). Potential gains for employers include the opportunity to shift relations from zero-sum to more positive sum through recognising a legitimate voice for employees and their representatives in the business and also to forestall external state/EU involvement to enforce employee voice (Martinez Lucio et al.,2004: 410-124). The High Performance Workplace literature based on manufacturing industry further argues an association between high involvement practices for employees (rather than their collective organisations) with high performance for companies partly via greater trust generation. The TUC underlined some of the benefits for both sides in a report on partnership (1999) which included trust building,better lines of communication, greater job security and a better trained workforce. There is, however, limited evidence that firms in the UK are actually using high trust, high involvement practices apartfrom a very few exceptional companies (Martinez Lucio et al., 2004:414) and, despite the theories of mutual gains outlined above,

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there is widespread scepticism in the literature on manufacturing about the practice of partnerships in LMEs.

Key risks to unions and employees from partnership agreements with employers include their use to undermine the trade union’s role in theworkplace and collective bargaining activity. There is also evidence of limited workplace improvements for employees as a result of partnerships (see Martinez Lucio et al., 2005:800 and 2002:255; Jenkins 2007 and 2008). Management opportunism is an important driver of partnership agreements in LMEs and short term tactical arrangementstend to dominate which provide immediate benefits for management rather than for employees (Oxenbridge and Brown, 2002 and 2004; Edwards et al., 2006). Such agreements often involve restrictions on the negotiating rights of trade unions and a reduction in trade union control over communications with the workforce (Oxenbridge and Brown, 2004:388), although there may be some extension of consultation into some new areas associated with change management. Views about the benefits of this for unions are mixed (ibid, 2004:393) since the focusis more often than not on direct employee involvement practices as themain mechanism for employee voice rather than indirect forms of involvement via organised labour and joint regulation (Martinez Lucio et al 2004:415).

An effective social compromise is seen as one where both management and labour view the results as positive in terms of control issues (the ability to influence prevailing arrangements in the workplace) and developmental issues (the longer term objectives including the viability of the productive unit or business in terms of profits and growth as well as good wages and working conditions and job security for employees): this is rare in practice in LMEs (Belanger and Edwards(2007)2.

Catalysts for the management choice of a partnership in LMEs can include a merger and acquisition or competitive and/or financial difficulties (ibid, p.265) as well as new owners or managers. HR or personnel managers in particular can provide a drive for change arguing the case for involvement of the trade union for aspired 2 We return to this in section 4.5 when discussing the factors supporting the longevity of the MNC-USDAW partnership

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organisational changes with senior management (chief executive and HR director) vision and strategy as key factors supporting the initiationand longer term viability of partnerships (Oxenbridge and Brown, 2002). Trade union leadership plays a key role in persuading the membership and lay officials to support a partnership approach and Deakin et al (2002) underline the importance of trade union independence and ability to support proactive management strategies onpartnership (ibid:351). Supporting mechanisms for on-going cooperationinclude careful management selection and coaching, especially of line managers (Oxenbridge and Brown 2004:396) and the equivalent on the trade union side together with careful succession planning (Dobbins and Gunnigle, 2009:562). The formalisation of the partnership structure and operation in the workplace is a further safeguard against its dismantling in harder times.

The low level of state ER regulation, particularly regulation promoting cooperative forms of ER, has led in the UK to a broad spectrum of partnership and non-partnership ER governance strategies (Oxenbridge and Brown, 2002: 274). In contrast, in CMEs, such as Germany, the societal framework supporting works councils means that management choices in terms of ER governance are more restricted especially in larger business operations (see also authors, 2014). Howlarge retailers operate these in practice within the legal boundaries is, however, influenced by the specific choices of management and workplace representatives in the particular companies investigated in our project (see next section for more information on these).

In the absence of a strong supporting institutional infrastructure in the UK, our paper sheds some light on the specific choices of management and unions and the historical pattern of their social relations built up over time in the explanation of long standing partnership arrangements in LMEs. In UK manufacturing, weak forms of cooperative relations are said to predominate (Martinez Lucio et al, 2005:808), which soon collapse due to limited management commitment aswell as low local management discretion (Jenkins, 2007 and 2008). Given that manufacturing has a more supportive industry context for cooperative forms of ER based on technology and workforce skills in

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particular than food retail, our investigation of the longstanding partnership between the MNC and USDAW is of particular interest.

To sum up: key factors we have identified in the relevant literature for the sustaining of strong partnerships include high trade union density and strong workplace representation, market stability and an assessment by management and unions of positive outcomes in terms of control and developmental interests. Key risks for unions include the undermining of their role in the workplace as management controlled forms of communication and consultation are instituted in place of previously trade union based systems.

3. Methodology

Our paper draws on findings from a large international study on ‘Work and employment relations of European multinational food retailers: discounters and hypermarkets’ funded by the German-based Hans Böckler Foundation for three years from May 2010 to April 2013. Our project concentrated, amongst other considerations, on the study and comparison of three multinationals from France, Germany and the UK operating the hypermarket format plus the German firm Lidl, the biggest European food retailer operating the hard discounter format. The companies we investigated in our comparative study are all multinational companies with subsidiary operations throughout the world. Our research focused on ER governance patterns in the country of origin and their transfer to host country operations in their European subsidiaries. The latter refers to the fact that patterns of ER governance in the home operations have wider effects, i. e. the UK food retailing MNC, as mentioned previously, sought to transfer its UKER governance pattern to its European subsidiaries. This form of direct transfer of ER governance practices, however, was not found in the German and French MNCs as predicted in the V o C literature (see also authors, 2014). MNCs originating from CMEs are more likely to transfer work organization and production-related aspects of their business models rather than specific industrial and employment relations features, either because these are seen as highly context-

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specific or because they would increase labour costs in the host countries (Edwards, 2004).

The data on the MNCs was collected through documentary analysis ofcountry, sector company specific information and semi-structuredinterviews. Altogether we conducted 153 interviews with headquarters’managers, store managers, store employees, union officials, workscouncils in stores, representatives of employer associations andindustry experts in eight countries (Finland, France, Germany,Ireland, Poland, Spain, Turkey and the UK)3. For The UK MNC we haveconducted 51 interviews so far in Ireland, Poland, Turkey and the UK(Please see table 1 for an overview). Selected managers and unionofficials were interviewed two or three times to obtain furtherinformation. The interview guidelines, used in our expert interviews,were developed, intensively discussed and fine-tuned during fourmeetings of our international research team. They cover the followingthree main topics: a) company-specific in-store management structuresand skills b) company-specific part-time and working time arrangementsand c) the specifics of national employment relations regimes. Ouropen-ended interviews lasted between 30 minutes and 3 hours and werein parts transcribed and translated into English.

For the purpose of this paper relevant secondary data and interviewtranscripts were content analysed (Duriau et al., 2007) in order tomakes sense of the historical development and various interpretationsof key actors, especially of the headquarters managers, storemanagement and union officials. During our content analysis weconcentrated on key events and the specifics of the partnershipapproach of the MNC UK.

Table 1:

3 Interviewing is still on-going in order to develop our UK food sector analysis, with a specific focus on our MNC in relation to the other three major UK food retailers.

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Interviews at the UK MNC

Position of Interviewees

UK IRE PL TK

Headquarters Management

4 -   3

Store Level Management and Employees

7 15 7 7

Company Union Officials and Works Councils

5   3  

Total Number of Interviews

16 15 10 10

In our empirical investigation of the single case study of the UK MNC we next focus on the question of why this company decided to promote atrade union based partnership approach in an LME context. This is an unusual approach in terms of the V o C literature. We therefore we believe that our research has some relevance for future comparative institutionalist research. We see potential for further empirical studies which have been so far been neglected in main stream V o C studies to investigate sector- and company-specific contingencies and how they come into play in terms of workforce size and investment level, the market position of the MNC and the history of the MNC-unionrelations

4. Empirical Findings

4.1. Introduction

The MNC in our investigation is the largest food retailer in the UK interms of market share and profitability. It is also the only UK food retailer with stores all over the world, particularly in less

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developed economies, and the only retailer with an extensive union based partnership. Union member density levels are higher than in other retailers and include also store management membership through abranch of the union called SATA. Wages and working conditions in the company are generally seen as among the best in the food retail sectorand employees have access to a profit sharing scheme based on share ownership. Despite the low level of skills of the majority of the workforce and their high flexibility as part of a cost reduction business strategy, customer service requirements also play a crucial role in competition between the big four food retailers in the UK. From our empirical research it was evident that the importance of maintaining good customer standards in areas such as short waiting times at the tills and good customer service as well as in staff beingtrained to maintain food hygiene requirements etc. were vital to the success of the operations and were being used by union representativesto argue the case for better staffing and higher levels of training for their members in the stores (see also Bozkurt and Grugulis, 2011).Technology, however, is being applied in a centralised and Tayloristicway reducing areas of job autonomy of managers as well as other staff.There is evidence of deskilling and replacement of staff by technologyas in the case of the expansion of self-service checkouts and union representatives argued that it was a constant struggle to protect members’ job security, working conditions and skills in the face of technological innovations. Most retailers have introduced what they term ‘multiskilling’ for shop floor staff and present it is an opportunity for up-skilling as staff take on new and more varied tasks(ibid). The union, however, sees it more as work intensification via increased flexibility requirements, although the ‘multiskilling’ terminology is being used to argue that staff should receive more pay as shown later. Interviews with managers showed that, although they see their own work as changing as central control of operations increases, it is seen as an opportunity to develop the leadership, people management and customer relations side of their job rather thanthe previous focus on technical operations. For example, one store manager stated: ‘there is quite a degree of discretion as long as you do the process, deliver the numbers and do the company way’ giving his scope in ‘deciding what will work here for our customers’ as an indicator of this. The on-going

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development of specialist food areas such as the butchery, fishmonger and bakery is also seen by managers as providing opportunities for staff to develop more in-depth specialised skills. The MNC has apprenticeship schemes for specialist shop floor areas such as bakery and a foundation degree scheme for staff.

In terms of market factors, the MNC is the lead food retailer and forms part of an oligarchic structure of four main companies dominating food retailing in the UK which compete on both cost and on customer service. The big four make use of the rhetoric of a high value added competitive approach emphasising quality of product and staff skills, an approach found to support partnership relations in some manufacturing companies (Butler et al., 2011:668). They are also forced to base their retail operations in the UK to serve their local customers in the local market unlike businesses in the manufacturing sector, where operations have been shifted to other countries with lower wages and working conditions to reduce costs. Our research showed, however, severe pressures to reduce staff costs by cutting staff numbers and delayering middle management, devolving their managerial tasks to team leaders, in the hypermarket stores investigated.

4.2. Historical background of the partnership arrangement in the MNC

Prior to the partnership agreement in the food retailer under investigation, the food industry in the UK had operated since the early 1950s on the basis of a Wages Council which set minimum wages and conditions for the small businesses and multi-employer collective bargaining through a Multiple Food Trade Joint Committee (MFTJC) at national level for the larger companies. The employers were represented by the Multiple Food Retail Employer Association which covered most of the national supermarkets in the UK and recognised USDAW for bargaining purposes (Salamon, 2000:360-61). In the late 1980s our MNC decided to withdraw from the MFTJC since it ‘believed that multi-employer bargaining hindered the development of a more strategic and organisation-specific approach to human resource management and industrial relations as part of a ‘repositioning’ in the marketplace as a high quality supermarket. At the same time it

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felt that greater involvement of shop stewards and line management in organisational level negotiations would enhance employee involvement and commitment’ (ibid: 361). This led to the break-up of the MFTJC andthe formal recognition of USDAW by each of the former member companies. Company level bargaining machinery operated in our MNC fromthe late 1980s to 1998. Currently only our MNC remains from the original MFTJC members4. In 1998 it negotiated a partnership agreementwith USDAW. Martinez Lucio et al (2004) point to the MNC’s need for stability in its UK operations to support its large and on-going international expansion from the late 1990s and domestic restructuringaround the hypermarket format as reasons behind the partnership choice. The company had a longstanding recognition and bargaining relationship for pay and other employment conditions with USDAW prior to the partnership agreement in 1998 and, in contrast to other servicesector unions, USDAW had also been in a position of membership growth in the 1980s and (Upchurch and Donnelly, 1992:60). A recent study by Parker and Rees (2013), however, shows a fall in its annual recruitment after the ending of closed shop agreements by the Conservative government in 1992 which they argue led to greater openness to the idea of a partnership agreement. USDAW now operates only one partnership agreement with our MNC, which is the largest private sector employer in the UK with 250,000 staff, and has a 61% membership density level in the company (ibid:531).

In line with Ramsay’s theory of participation as cycles of management control, the partnership was management initiated. Its aims were to gain union and employees’ support for major changes to business operations. Kelly points out that de-recognition was considered as an option by the company at the time but was not threatened (Kelly, 2005:201). The trade union leadership played a key role in persuading the membership and lay officials to support the management initiated partnership approach and a ballot of the membership in 1997 showed a 4 Of the current big four, Sainsbury was non-union at the time and outside theMFTJC and has limited recognition of trade unions currently. ASDA was never amember of the MFTJC and negotiated with GMB through its parent company Allied Dairies; it has since been taken over by the American MNC Wal-Mart who only recently agreed to recognise the GMB to represent distribution workers. Morrison’s recognises USDAW but does not operate a partnership agreement with them.

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4:1 majority supporting it. The work to maintain the legitimacy and viability of such an arrangement continues, however, and it is not without its critics and challenges. There have been calls from some members to review it (Blyton and Turnbull, 2004:252) and USDAW has also been subject to criticism from other unions both in the UK and Europe who interpret the agreement as a no-strike agreement and a sell-out to management. Area representatives interviewed told us that a few members have said they would prefer it not to be called a partnership but just an agreement. They argued, however, that: ‘if we didn’t have it as a partnership each of us would go off in opposite directions’ and pointed out that members were sometimes not aware of how good conditions were in company compared to the retail industry generally. USDAW national leaders also pointed to a new interest in how they operate the agreement, particularly from the European Union movement, as their membership levels have remained high and wages and conditions for low skilled staff have not seen the same level of deterioration found in other retailers.

4.3. The specifics of the partnership agreement

The partnership was, and continues to be, centrally developed and driven by corporate HQ and USDAW national leadership. This poses ongoing challenges in aligning the different levels of cooperation. Area union representatives, for example, pointed out management problems with the partnership at lower levels, particularly with new store managers who do not comprehend or seek to undermine the central partnership ethos: ‘The company is very professional in the way they deal with things at the top and store director levels, sometimes lower management or line managers may not know all the policies and might try to adapt them to their own way but they have to follow it’. Local managers similarly pointed to the problem of local union representatives who do not respect the ethos of cooperation and fairness: ‘Working with USDAW they are really good even if sometimes they can be a bit blinkered in the store, the higher levels of the union have a sensible business rationale behind them’. All interviewees emphasised, however, that eventually local managers and union shop floor representatives come to learn that senior levels in the company and USDAW will not support ‘non-partnership behaviour ‘ and comply.

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Although national and area USDAW representatives interviewed all showed ongoing support for the partnership agreement, they underlined the critical nature of membership density for the viability of the partnership with one national representative stating: ‘the stronger we are, the more people we have on board, the more influence we have in terms of shaping the things that directly impact people’ and, referring to the partnership agreement, ‘I think the membership realises it is not the benevolence of the company ’. Maintaining high density levels are, however, a constant challenge in the industrydue to the part time, low wage nature of the work and part time contracts. The partnership agreement was seen as helping them in this regard: ‘I think it is a job to persuade anyone to join the union and I think we do that successfully in companies like this because we have good access agreements’. USDAW also represents managers in the MNC up to senior levels via a branch of theunion named SATA; density levels among managers in the stores were high but overall density was said to be reduced by the HQ management density being only around 20%. Since 2006 the union has focused its organising strategy on its big four agreements in food retail and has added 84,000 new members with membership recruitment rising faster than employment growth in the companies (Parker and Rees, 2013:521, 532).

The union focus is on employer cooperation rather than antagonistic industrial relations strategies (ibid:525) and many examples were given of how national representatives were able to make use of the partnership terminology in dealings with the MNC. National representatives emphasised their use of business arguments in talks with management: ‘if they want to be number one then they need to be number one in terms of terms and conditions of employment too-it’s a win-win situation for the company and helps them attract the best people’. A regional USDAW representative pointed to the use of the partnership agreement to get the best deal for members:if action is taken against the workforce then the union argues that the company is not acting in the spirit of partnership and has optionsto exert pressure in these ways. None of the union representatives we interviewed saw the agreement as a no-strike deal but underlined how difficult it is in practice to get shop workers out on strike. This may help to explain the union strategy of supporting a partnership approach rather than the traditional collective bargaining route to better pay and conditions for members.

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HR strategy in the MNC has helped to support the partnership agreementwith stable staffing at all levels until recent management changes in the wake of the longstanding CEO’s departure. The company also has a long tradition of upward mobility and long service. National managersinformed us that over 90% of store managers came up through the storesand many to board level. Internal promotion training to support this is extensive including the ‘Options programme’ for in-store managementdevelopment and an Academy and talent management programme for the top500 managers in the MNC.

The formal written partnership agreement was seen as important by union representatives being described by one union area representativeas ‘a constitution…there’s a framework that’s been developed and agreed by the company so it goes out to stores and actually that manager then is obliged to work within that framework’ . The partnership agreement is seen as a structure which the union can use to rein managers in at all levels, which is viewed as positive for members ‘though every agreement could be improved on.’ The formal agreement comprises a partnership agreement, which outlines the ethos of partnership, the roles of management and USDAW including union involvement in all staff inductions to promote union membership as well as the company also promoting union membership to staff with extensive trade union facilities, and the ‘Policy for People’, described as ‘a bigger version of the staff handbook incorporating all the current terms of the national agreement’ between the company and USDAW. The national agreement itself deals with all the traditional areas of working conditions –pay, hours, holidays, premia, the benefits package- and issaid to have an impact beyond the MNC as USDAW uses the terms and conditions negotiated there as a basis for their negotiations in the wider retail sector.

Employee engagement at store-level is via staff forums which focus on improvement of business operations and thus reflect the employer focusof the partnership approach. It is union involvement at national level, however, which is seen by union officials as providing opportunities for union influence on long term strategies through their involvement at an early development stage. According to the national level officials there are 51 USDAW representatives working inthe different national working groups identified by USDAW and the MNC

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as important for meeting future priorities. The union receives regularupdates and is involved in developing national strategies, for example, on training and development and job roles in the company. Their involvement covers a range of information, consultation and bargaining rights. Current union concerns include the competing natureof many of the company’s performance targets and talks are on-going atnational level on this. Both union and store management respondents also referred to the challenges of company cut backs on the overall wage bill year on year.

4.4. The parties’ assessment of the partnership agreement

In terms of the parties’ assessment of the partnership agreement both union and management respondents questioned argued the superiority of the company’s package of terms and conditions for both shop floor staff and managers in relation to the rest of food retail and the retail sector more generally. The company also offers a range of shareand savings options as well as staff discounts and gives above minimumholiday entitlement. Bank Holiday working is voluntary unlike other retailers and the union resists any extension of Sunday trading from the maximum hours legally allowed as this would end the wage premia and prevent staff from spending time with their families. This was supported also by the store managers we spoke to. Shift rotas were seen as well run by the area representatives with stability of shifts so workers can organise their lives especially in the large stores. Generally the MNC aims to pay better than its local and national competitors and USDAW’s aim is to achieve the same conditions in the other food retailers where they are represented. A key negative factor, however, for both union and managers is staff reductions; fulltime workers who leave are being replaced with 2-3 part time workers on shorter hours contracts. Other key issues according to the area representatives are working hours (too few being given) and increasingflexibility requirements. The national union representatives argued the importance of making sure flexibility works both ways to benefit staff and the company. Partnership is not an easy option for the unionor the company ‘the partnership does work but it does need work…if it was an easy option

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all the other employers would be lining up to sign these kind of agreements…it’s tough for them, it’s tough for us.’ The union cannot, for example, achieve all its aims and had to accept no sick pay for staff for the first three working days in a compromise agreement with management. Thus far the partnership has operated during a long period of rapid expansion of the business. Current sales and returns as well as setbacks in operations overseas indicate that this may be slowing, posing new challenges for both parties to the partnership agreement.

In contrast to research on partnerships in manufacturing workplaces, where collective bargaining rights used to be strong and partnership agreements reduced these by substituting consultation and direct employee involvement based on cooperation with management aims, unionshave traditionally had a much weaker role in the private services sector. Partnership agreements here often extend the union role in theMNC and support organising strategies by provisions for union recruitment and facilities as well as giving unions a voice at national level in areas previously subject to the prerogative of management. Partnership, however, also provides a boost to managerial control by defining the areas and extent of union involvement, diluting it with direct involvement forms and thus entails considerable procedural and substantive risks for trade union organisation (see Hyman, 2005). Although pay determination is still a union prerogative in the MNC investigated with the national pay committee made up exclusively of USDAW representatives from the regions and annual wage negotiations taking place in spring each year,union members no longer have the chance to vote on the management’s pay offer and are simply informed of the pay deal terms by store managers. Although union interviewees argued that they seek to influence all aspects of the employment relationship in negotiations with management and are proactive in making their own recommendations,this process is often hidden from the members. There was some evidencein the interviews of ‘social cohesion’ i.e. trade union solidarity based on a rugged ‘them and us’ perspective (Belanger and Edwards, 2007) rather than just cooperation on management terms: ‘that’s not to say wedon’t have issues with The MNC…but we try to work together to find a solution that suits them and suits us’ (national official). The partnership agreement can thus be viewed both as an opportunity in terms of greater union involvement in issues

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affecting their members in the company and as a potential straightjacket in its setting of clear boundaries to the pursuit of conflict based rhetoric and actions by the union and its emphasis on the company’s role in the provision of benefits to the workforce.

4.5. Discussion on the fit between the MNC’s specific partnership approach and existing conceptual frameworks and studies

Food retail in the UK operates in an LME context with limited support for cooperative forms of ER. Weak domestic economic conditions and increasing global competition have undermined partnership arrangementsin manufacturing as operations have moved overseas to reduce costs. Food retail operations, however, cannot be moved abroad and the size of outlets in the big-box retailers also promotes the need for some form of employee representation in contrast to smaller retail formats,such as hard discounters (see also Authors, forthcoming). Our MNC is, however, the only big box food retailer in the UK which has chosen a trade union based partnership approach. It has also transferred this approach to its subsidiaries in Europe with both company management and union representatives travelling out to advise local unions on thedevelopment of a partnership approach-most recently in Turkey, where the MNC has now recognised the dominant food retail union as its partner in the hypermarket stores (authors, 2014).

The partnership approach was instigated by management and strong pressure put on the union to accept the new approach to ER governance before the company embarked on a major expansion programme at home andabroad. USDAW was in a relatively strong position in terms of density levels and longstanding bargaining relationship with the MNC in 1998 and had a large number of members to protect so the offer of a partnership with greater involvement in the issues affecting their members was appealing to the trade union leadership. The nature of food retail work is low skilled and the workforce seen as easily replaceable thus reducing the credibility of a more antagonistic approach to ER governance and the use of the strike weapon to put pressure on management.

The management aims behind the partnership fit Ramsay’s theory (1977) of unitary management approaches and include the development of an

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‘enterprise consciousness’ in the trade union and the workforce more generally. By opting for a union the company felt it could do businesswith, the threat of a more militant union, such as the GMB, seeking recognition under the new Labour government trade union recognition legislation was averted. The partnership approach also helps moderate union demands to what the management claims the enterprise can bear inthe competitive marketplace and encourages employees and the union to engage cooperatively in the constant process of change and productivity increases. The levels, extent and degree of involvement are largely determined by management, although within these parametersthere is evidence that the union is seeking to shape the terms and conditions of employment for their members. Although the partnership is couched in the unitary language of cooperation in the interests of the company, the interpretations of what this means in practice are contested by the union. Both sides use the partnership rhetoric to influence what is seen as deviant behaviour particularly at store level. Whilst the staff forums reflect management interest in employeeengagement in the business of the enterprise at low levels, the involvement of the union in working groups at national level does allow some scope for union influence on areas of corporate policy as it affects the workforce. The fact that the MNC is claimed to have thebest overall terms and conditions in the food retail sector could point to a reasonable bargaining position of the union, although the position the MNC holds as the leading food retailer by far in the UK has aided their ability to pay at the higher end of the market.

The partnership can be viewed as meeting some of the key control and development aspirations of both the MNC and USDAW (Belanger and Edwards, 2007), which supports its continuation. Both parties mentioned the need for sacrifices to facilitate its continuation reflecting the balancing act needed between the perception of different interests and the maintenance of the legitimacy of the partnership in the eyes of key stakeholders within the changing context of company operations and personnel. Ramsay’s study (1977) identified ‘success’ as one of four possible outcomes of management sponsored participation schemes and argued this was predicated on the reinforcement of management authority and incorporation of the workforce into the management defined ‘common interest’ otherwise the

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schemes would be discarded by management as not fit for purpose. This,however, ignores union assessments of such schemes and their motivation for continuing to support them. In terms of Kelly’s (2005) different generations of partnership agreements, the partnership has most in common with the second generation type associated with high levels of unionisation and the management need to gain support for change, albeit the changes, unlike in manufacturing, did not involve immediate large-scale staff reductions. There has, however, been a gradual erosion of full time staff appointments and a sharp shift to more part time work for most staff members and deterioration in stagesof some working conditions leading to multi-tiering depending on when staff joined the organisation. All these changes have been undertaken during the period of the partnership agreement and reflect a common trend in European food retailing (see e.g. Carre et al. 2010).

Although the UK context lacks the external supports for cooperation found in CMEs such as Germany, our case study partnership indicates the possibility of corporate based cooperative forms of ER governance in the restricted setting of one company, which are relatively long lasting. Although good economic conditions are seen as important during the establishment and stabilisation of such partnerships, and this has aided the employee profit-sharing element of the partnership,Butler et al (2011) argue that a change in economic circumstances neednot necessarily herald the end of such a partnership.

The partnership approach in the MNC investigated has a wider remit than the short term productivity coalitions often found in manufacturing in LMEs (Belanger and Edwards 2007:8) and extends to allthe different formats within the company’s UK operations as well as tosubsidiaries in Europe. Our case study company operates in an oligarchic sector in which it is the lead company in the UK. This context has provided some shelters to develop the partnership option for over the past decade, the test will now be whether both sides havethe ability to ‘absorb the economic pain’ (Butler et al., 2011:682). Recent profit warnings and the slowdown in the company’s expansion in the UK, as well as its recent pulling out of its US and Japanese investments, point to a challenging environment for both parties in sustaining the continuation of the partnership agreement.

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5. Concluding remarks

This paper has investigated the unusual case of a longstanding partnership agreement in the UK food retail industry and identified some of the factors explaining its continuation in an industry sector where workforce and union involvement is generally limited, particularly in LMEs. The limited involvement of the state in regulating workplace relations in LMEs means that management interestsare the main driving force behind the establishment of partnership relations with unions. However, LMEs, unlike CMEs, offer management other alternatives to cooperative forms of ER such as partnerships, which may appear less costly in terms of time and resources. The paperdemonstrates how the decisions of strategic actors at corporate level can lead to a long-term partnership with a union even in a sector withan unpromising industry context such as food retail. We have shown that concepts such as Ramsay’s of cycles of control (1977) still have explanatory value in analysing the history, functioning and reasons for continuation of the partnership between the MNC and USDAW. The partnership meets management aims identified by Ramsay such as enterprise consciousness, moderate business oriented unionism, the acceptance of change and the engagement of the workforce in the productivity goals of management whilst shoring up managerial authority in the definition of work processes and rewards. The union, on the other hand, can still identify sufficient gains from the partnership to justify its continuation to most members. It is, however, dependent on the union maintaining and increasing its membership strength in the company to make it a viable partner for management in the achievement of corporate objectives. Thus, notwithstanding the low level of wider institutional supports in the form of state and associational regulations in LMEs, our study shows that company and union actors may still be able to devise corporate based forms of longer term collaborative relations in specific contexts.

The empirical findings of our paper, focused on employment relations in the food retail sector, also have some relevance for both the self-

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critical internal debates between V o C scholars, who increasingly stress the role of sectoral diversity within national capitalist economies in the context of increased internationalization (Allen and Whitley, 2012), and the more fundamental critique of some scholars whoactually question the explanatory power of key concepts of the V o C approach, particularly the ‘neglect of labour as social and political actors, be it in form of trade unionism or more informal mobilization and organizations’ (Bruff and Horn, 2012: 165). The former authors acknowledge the role of sectoral diversity in UK and German societal contexts but hardly move beyond the traditional typology of Vo C and focus on familiar empirical territory, innovative manufacturing. The latter, more radical, critics, however, suggest that applying an alternative ‘conceptual apparatus’ (ibid: 161) will be necessary in order to capture the new dynamics and related problems of management and labour in contemporary capitalism. Our findings suggest that the development in the latter approach will be more useful especially for the study of industrial sectors which have not been at the core of theory-building in classical V o C studies.

Our paper found much more variety and deviation from what the broad V o C typologies would predict for companies in LMEs like the UK, such as a continuing and, in large part, beneficial collaboration between management and labour. This also holds true when considering the question of how our three international food retailers transfer domestic employment practices to their host-country subsidiaries (see also authors 2014). We expected few barriers to transfer in LMEs like Ireland or LME-like countries like Poland. But we only found evidence for such behaviour in the Polish context; there was a far less clear cut picture in Ireland where unions were more influential than expected and thus the transferred partnerships more developed. In Turkey, despite being a state-organized and more coordinated economy, there are considerable barriers for unions to overcome to gain recognition and opportunities for employer resistance, especially found in the case of the UK MNC. The latter points to varying degrees of strategic options for MNCs, but the trend in all host countries, including Spain, another more coordinated economy, was towards greater permissiveness in regulations to attract MNC investment. There

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was evidence of workforce representation in the subsidiaries across all three MNCs, although the form this takes varies (ibid).

Accordingly, our findings not only call for more in-depth research on ‘deviant’ institutional arrangements, such as lasting collaborative partnership approaches in LMEs, but also for new conceptual approaches, which go beyond the manufacturing bias and firm-centrism of many V o C studies and enable alternative approaches of theory-building on ‘capitalist diversity and diversity within capitalism’ (Lane and Wood, 2012).

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