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Workplace Innovationand the ICD

Roy Green

‘Meeting the Challenge of Change –Irish Labour Market Issues in a Global Economy’

LRC Symposium, November 11 2004

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What is the ICD?

• EU directive will provide new information and consultation rights in undertakings (50+) or establishments (20+)

• Consultation will be with employee/union representatives – covering the economic situation, employment issues, work organisation changes etc

• Deadline for transposing into legislation, with sanctions, is March 2005

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Why here, why now?

• In the past, a strong moral case has been proposed for involving employees in decisions that affect them, addressing the ‘democratic deficit’ at the workplace

• Now this moral case has been joined, if not superseded, by the economic, social and technological imperatives of (1) the EU single market and (2) the knowledge-based economy

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Lisbon update

• Europe’s aim was to be the world’s most competitive and dynamic knowledge-based economy by 2010

• However, implementation required major structural reforms across the EU combined with ‘greater social cohesion’

• The Lisbon strategy has been reviewed and reinvigorated by the Wim Kok report and last week’s European Council

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Productivity gap

• The Kok report, drawing on EU Economy 2004 analysis, highlights concern about the decline in EU labour productivity growth from the mid-1990s, compared with increases in the US

• These reports criticise Europe’s failure to meet the Lisbon targets, particularly those relating to the development of ‘national innovation capacity’ and key factors in competitiveness

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“The problem is… that the Lisbon strategy has become too broad to be understood as an interconnected narrative. Lisbon is about everything and thus about nothing. Everybody is responsible and thus no one. The end result of the strategy has sometimes been lost. An ambitious and broad reform agenda needs a clear narrative…”

(High Level Group, Facing the Challenge, 2004)

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Irish narrative?

• Ireland’s narrative is still evolving but is beginning to focus more clearly on the need to build national innovation capacity – and to create higher skill jobs

• While Ireland’s exports now embody the highest R&D intensity of any OECD country, the technology for the most part originated not here but in the home base of inward investors

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Technology Balance of Payments (% of GDP)

-9

-8

-7

-6

-5

-4

-3

-2

-1

0

1

IrelandKoreaGermanyAustraliaFinlandJapanUSDenmarkSwitzer

OECD TBP Database, 2003

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New enterprise model

“Whereas in the past, products manufactured in Ireland were designed elsewhere, in the future, more of the ideas, the designs and the technology must originate here. Companies in Ireland will have to innovate and gain leadership positions in their target markets”

(Enterprise Strategy Group, Ahead of the Curve, 2005)

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This emerging innovation narrative is not just about technology but also institutional support and, crucially, effective delivery at the organisational level.

Sources of innovation

Technological Institutional Organisational

NCPP Forum on the Workplace of the Future, 2004

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Organisational innovation

“Few countries have developed a coordinated and focused policy for organisational innovation: this is an area where Ireland, with its positive experience of social partnership, can gain early mover advantage”

(Enterprise Strategy Group, Ahead of the Curve, 2004)

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Research evidence

• International evidence on ‘high performance work systems’ and their characteristics (Osterman, Ichniowski, Weinstein & Kochan)

• Link between ‘bundles’ of high performance work practices and economic performance (Macduffie, Huselid, Ichniowski)

• Key role in high performance work systems of ‘employee voice’ (Applebaum, Boxall & Purcell, Dundon, Marchington)

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‘Intensity of collaboration’

“the role and impact of consultative schemes in improving workplace performance was found to be directly related to the ‘intensity’ of collaboration between management and workforce”(Alexander & Green, ‘Workplace productivity and joint consultation’, 1992)

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Employees consulted prior to decisions affecting their work (%)

27

2124

1513

0

10

20

30

40

50

Almost always Often Sometimes Rarely Almost Never

ESRI survey of 5,198 employees

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4137 40

58

4252

0

10

20

30

40

50

60

70

80

90

100

Competition Intro newprod/serv

Intro newtech

Re-orgcompany

Change workpract

Sales/Profits

Percentage of Private Sector Employees 'Hardly Ever' Receiving Information from Management in 6 Areas of Work

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44

26 2936 33

0

10

20

30

40

50

60

70

80

90

100

Budget ImproveServices

Intro new tech ReorganiseService

Change workpractices

Percentage of Public Sector Employees 'Hardly Ever' Receiving Information from Management in 5 Areas of Work

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‘Readiness’ for ICD

• CISC case study analysis of 15 public and private sector organisations in 2002/03, with union and non-union workforces

• Analysis based on interviews with senior management, employee representatives and employee focus groups

• Steering Group for research comprising DETE, LRC, NCPP and Forfás

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Representation gap

• Mix of ‘direct’ and ‘indirect’ mechanisms for employee participation (including JCC, EWC, collective bargaining, upward problem-solving, communications)

• Balance towards ‘shallow’ level of participation, based on trust, informality and employer initiative

• The full report may be accessed at www.nuigalway.ie/cisc

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People create knowledge

“Knowledge creation and diffusion are at the core of economic activity. Knowledge is embodied in people, and it is the quality of the human resources that will determine the success or otherwise of firms and economies in the years ahead.”

(Enterprise Strategy Group, Ahead of the Curve, 2004)

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Way forward

• For ICD legislation to provide an effective catalyst for change, its rationale as part of the ‘innovation narrative’ must be robust, well-communicated and understood

• This will not be achieved by a ‘minimalist’ interpretation of the ICD directive – with a 3 year lead time, Ireland’s social partnership provides a unique opportunity for workplace transformation

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Implementation strategy

• Successful implementation of the ICD at the organisational level will require active policy support, on the model of Finland’s Workplace Development Programme

• It will also require a national training programme, which would encompass initiatives such as the UK’s workplace learning representatives