Maintaining Trust and Developing Competencies in Challenging Business Times

Business responses to challenging economic times are difficult to predict in advance. Particularly uncertain is how a business downturn will affect management—employee relations. Sometimes when the abyss appears on the horizon, managers and employees are ‘shocked’ into leaving behind mutual mistrust and suspicion. New cooperative relations are forged to secure the viability of the organization. On other occasions, the opposite is true, with managers and employees who enjoyed trust relations suddenly at loggerheads, disagreeing over the scale and nature of any consolidation plan to address the decline in sales and profits. And as each side remains emphatic about the strength of their own position, the trust and cooperation that once prevailed evaporates before their eyes. Of course, some organizations might be in the fortunate position of having adopted a challenging business strategy in advance of a turndown which ensures that organizational routines are not disrupted too much even if business conditions easier are tougher. In this chapter, following on from the last, three case studies are presented of how organizations in quite contrasting organizational and business contexts, have rooted their responses to the recession in maintaining and even deepening trust relations inside the organization even if the strategies used to do so are distinctive in each case. Surviving Through Partnership At Superquinn Context

Superquinn is a privately owned grocery retail chain with 23 stores and approximately 3000 employees. Until 2005 it was a family run business founded by Fergal Quinn in 1960. Fergal Quinn had a ‘hands-on,’ paternalistic management style. He spent a portion of each week working on the shop floor of his stores, and he was well known by both employees and customers. Under Quinn's leadership Superquinn developed a reputation for quality fresh food, customer care and service excellence, in addition to being recognized as a pioneer in service provision. In its constant search for ways to create and sustain a good relationship with its customers, Superquinn created a significant competitive advantage for the organization. Superquinn was the first Irish retail organization to acquire the Q mark for quality and service excellence. It also pioneered the idea of in-store food preparation (bakeries and delicatessens) and was the first Irish supermarket chain to introduce online shopping.

In terms of its approach to the management of employee relations, Superquinn operates a closed shop and recognizes three trade unions: SIPTU (Services, Industrial, Professional and Technical Union), which represents the butchers employed by Superquinn; the BFAWU (Bakers Food and Allied Workers' Union), which represents the bakers; and Mandate, which represents the majority of employees (2,400) including sales assistants and administrative staff. Traditionally, management and unions enjoyed a good relationship, and Superquinn maintained what could be described as a benign arm's-length relationship with the trade unions. Management operated from what is, in essence, a traditional pluralist perspective in which unions were viewed as adversaries and were kept at a distance but were treated with respect and trust. Management acknowledged that differences of interest would arise between the company and employees, and accepted that unions could play a legitimate role in helping to resolve conflict. However, although the relationship could be categorized as adversarial, neither side adopted a rigid adversarial stance.

The nature of the working relationship between management and unions was very clearly illustrated by the way in which the vexed issue of extended opening hours was handled in the 1990s. Until the summer of 1994, none of the major multiples opened on Sunday with the exception of the Sundays immediately prior to Christmas on which staff were paid triple time. During the summer of 1994, some of Superquinn's competitors began to experiment with Sunday trading and to extend opening hours during the week. This prompted conflict between the unions and management in relation to the appropriate rates of pay for Sunday trading and the ratio of part-time to full-time staff working on the shop floor. One of Superquinn's main competitors, Dunnes Stores, argued that it could not afford to pay premium rates for Sunday working because extended opening hours would not result in an increase in turnover but simply spread existing sales over seven rather than six days. Therefore, in the summer of 1994, Dunnes opened some of its shops on Sundays and paid a flat rate to all staff for hours worked. This initiated a series of disputes that culminated in a long and bitter strike during the summer of 1995. Eventually, with the assistance of the Labour Court, Dunnes Stores and Mandate reached an agreement, and the Labour Court's recommendation became the blueprint for agreements on extended opening hours. Once the Dunnes Stores dispute was settled, other retailers such as Quinnsworth (now Tesco) and Marks & Spencers reached agreement with Mandate, and so all of Superquinn's major competitors operated extended opening hours. However, it was not until five years later that Superquinn extended opening hours during the week, and it did not commence Sunday trading until the spring of 2001. Through this period, Feargal Quinn made it clear that he was opposed to adopting a confrontational approach to the management of employee relations and would only introduce extended opening hours when his employees were readily willing to support such an initiative.

Although there was clearly a sense of trust and mutual respect between management and the trade unions in Superquinn, a partnership-style arrangement did not exist. Management did not routinely share business-related information with unions, and the role of trade unions was limited to handling disciplinary issues and grievances. The good relationship that management traditionally enjoyed with trade unions in Superquinn was to some extent sustained by the national Joint Labour Committee (JLC) structure, which covers the grocery retail trade in Ireland. The JLC consists of an independent chairperson, employer and trade union representatives who agree, through a process of negotiation, the rates of pay and conditions such as hours of work, overtime rates, annual leave and sick pay, for groups of workers in the industry covered by their JLC. The existence of a JLC for the grocery sector meant that bargaining about contentious issues such as pay was done outside the workplace and this factor, combined with management's benign attitude toward trade unions, helps to explain the relatively positive industrial relations climate in Superquinn. Moreover, from the unions' perspective Superquinn was a relatively good employer, and there was therefore no need to adopt an aggressive or rigid adversarial stance. In an industry associated with low-pay and zero-hours contracts, Superquinn had a contributory pension scheme for all employees over the age of 25 and offered opportunities for training, development and promotion.

Although management did not exchange business-related information with shop stewards or union officials, and trade unions did not have any form of joint decision making role in Superquinn, management did routinely share information and consult directly with employees. A key component of Superquinn's voice management system was the Thursday morning meetings, or ‘huddles.’ Every week, each department in all the stores received a visit from a member of the senior management team. The purpose of these meetings was not only to share information with employees but also to monitor and control commercial performance of every department throughout the organization. The weekly discussions between senior managers and all members of individual departments covered the overall commercial performance of the organization and the results for the individual department. Each week, performance against targets was reviewed using a series of indicators. These meetings served as a very effective mechanism for managing the flow of information around the organization. They provided an opportunity for senior managers to communicate information to employees, and they provided a forum for employees to express their views and communicate with senior managers. Furthermore, the meetings allowed management and employees to engage in problem solving. For example, if sales in a department had declined during the previous week, the group would consider why this had occurred and make suggestions about ways to tackle the problem. From management's perspective, this activity served two purposes. First, staff working in a particular store were best placed to identify local factors that influence local markets, and these meetings gave senior managers access to this information. Second, it gave employees an opportunity to suggest solutions to problems, which made them more comfortable with changes that they would have to implement.

Thus, under Quinn's leadership, Superquinn had a very effective voice management system that placed emphasis on direct employee involvement. Management not only shared information with employees but also actively engaged them in problem solving in relation to the day-to-day operations of the business. The success of Superquinn's voice management strategy was dependent on a human relations—oriented management style and the ability to maintain a relatively benign and arm's-length relationship with trade unions. A series of contingent factors, such as the existence of the JLC structure, limited the sphere of influence of the unions within Superquinn, and as a consequence there was no imperative to involve trade unions in the management of employee voice in any significant sense.

Takeover by Select Retail Holdings

In 2005 the current owners, Select Retail Holdings, a venture capital company, bought the company from its founder, Fergal Quinn. At the time, it was widely believed that they were primarily interested in the property portfolio retained by the business rather than the retail business itself. This speculation appeared to be confirmed when the company entered into a sale and lease back arrangement with Friends First for six of its properties in 2007 (Irish Times, August 31, 2008; Irish Independent, May 18, 2007). Since the takeover, there has been ongoing speculation that Select Retail Holdings will sell the retail business. For example, in 2008 there was widespread speculation that a number of bidders including BWG (which owns SPAR), Musgraves (which owns SuperValu), Asda (owned by Walmart) and Sainsburys were interested in buying the retail business ( Industrial Relations News, 2008).

Following the takeover, most of the senior management team were replaced, and Select Retail Holdings introduced a series of cost-reducing initiatives including, for example, the elimination of staff canteen facilities. These factors, combined with a concern for employment prospects in the event of the business being sold, meant that the takeover altered the industrial relations climate within the organization.