Annual Hours Contracts

Annual Hours Contracts

WORKING TIME

TRANSFORMATION

Jon Pasfield

Preface

This book has been written for everyone who has influence on how people spend their working time, and how they are rewarded for it. This obviously includes General and Operating Managers and Directors who have to take the strategic decisions and their Human Resources, Financial and Planning advisers. It is also for all those who have to take the tactical decisions that must be made all the time, or who take part in discussions or negotiations. This includes all grades of organisational Managers and Trade Union officials. Indeed, it includes anyone who is in any way interested in the topic.

I am a practising business consultant, and I think like one. I gratefully recognise the tuition of those who have gone before me and launched the whole area of Working Time Transformation, but I have taken nothing as effective unless I have proved it or seen it proved for myself. My knowledge is based on many years of practical experience in all types of organisations in all types of industries. This is a practical guide to the thinking and action that I have found to be effective. The ideas I describe are my own; though my colleagues share many of them, have made their own way to them, and also have different ideas of their own.

The start of change

The main change in thinking came in the Swedish paper industry in 1976 under the pressure of the need to meet new working time constraints.

As a result of changes made there, the new thinking was introduced in paper mills in the UK. Philip Lynch, who was then working as a personnel adviser in the UK paper industry, was involved in this change. He realised both the possibility of application of the new ideas to other industries, and the possibility for further development of the concepts. He was pivotal in setting up a consultancy to specialise in this subject. For many years, as part of their consulting practice, Philip Lynch Associates, of which I am now a partner, have been organising seminars and working in businesses and other similar organisations in Britain and Europe, to introduce them to the concepts for transforming working time systems and contracts.

I spent 20 very enjoyable years of my working life as an operating or general manager or director, mostly in the brewing and food manufacturing industries, before joining Philip Lynch in 1991. The years since then have been very satisfying. We have been leading the development and introduction of new employment contracts and systems, and many of the ideas in this book were developed by us with the help of our clients. We feel that we are bringing a quiet revolution to the working world. I have introduced the type of change covered in this book to more than two dozen companies. I hope my enthusiasm comes out in the text.

It seems to me that the time has come for a book to be written about the work that we do. In the last decade the ideas have become so extensive and so well developed and used in so many different situations by many people, that I think they should be laid out in a formalised way. This book cannot give comprehensive details, because, as will become clear, each project is different from all others, and the detail is only useful if the particular situation is very well understood. However, the main outlines are now clear and I hope that I will, at least, give a feeling for them.

The ideas are clear and compelling and there have been many successes. I hope this book will help the more rapid spread and development of these ideas. I am confident that the changes are well worth making.

As you will see, we have made considerable progress in Working Time Transformation systems, but the opportunity exists for much more development. The thinking is not restrictive; managers and staff in all types of organisations, profit and non-profit, large and small, have an opportunity to have new ideas and to contribute to and benefit from the process. And also learn a lot and enjoy themselves while they do it.

Structure of the Book

I have therefore not written an academic book. It is not based on previously published work, of which there is little. It does not have references for the points made, nor for further reading, except for some surveys, where they are relevant.

The order in which I have tackled the elements of the topic reflects an approach that I have developed from practical experience of talking to meetings of different sizes and with participants from different backgrounds. I have tried many approaches, and the method I now use seems to work best. It enables the greatest proportion of those new to the topic to understand the logical structure that is before them. This preamble may seem unnecessarily protracted, but one of the great interests of the topic is that it is complicated. As ever; complicated situations need complicated approaches, but the understanding must be commenced in clear ways. There are three particular complications to be dealt with in my exposition.

The first and most intellectually challenging, is that the concept exists on two different planes. There are a set of verbal descriptions which can explain parts of the area, and a set of mathematical and symbolic descriptions that explain other parts of the area. Neither set covers the whole, but if the full significance of the ideas are to be well understood, at least the basics of both approaches have to be appreciated. The practical consequence of this is that those readers who find mathematics and symbolic logic easy to understand, will have an easier time in grasping the basic concept. For those who find maths difficult, the philosophical ideas can be understood easily, but the ultimate logic is harder to come by. In a way this mirrors the reality and interest of business as a whole; philosophical ideas mixed with hard mathematical measurements.

The mathematical concepts came first in historical development. So I have included the maths near the beginning, in their historical context.

The second and most interesting complication, is that the new ideas started at a point, but have spread out in many different directions. These various directions do not necessarily have much in common, and indeed have different philosophical bases. They are also actively expanding in unexpected ways. They cannot be wrapped up in any neat envelope, but can only be examined one by one. However, they all interact with one another, and an overall idea of the balance between them must somehow be built up. It is therefore only after the various strands have been explored that the balance can be truly discerned.

The third and most exciting complication is that, for historical reasons, many people do not appreciate that this is an area where there can be alternative ways of thinking. It is necessary first to show that current practices are based on a set of assumptions that people do not even realise that they are making. Until the present world is deconstructed to some extent, it is not possible to demonstrate and define those assumptions, and thus question and change them. Again, it is the maths which does the basic job of deconstruction, and doubtless some readers will have to take it on trust. I have always taken the view that the greatest leaps forward come in areas where old assumptions are shown to be invalid; and this is clearly one such area.

In my approach, I start by describing the problems that arise from current practices, and identify the single basic condition that causes them. I then map out the areas of change that we are looking for and business situations where this change is most important. I then move on to concrete examples and show how the maths can deconstruct current practices and rebuild them in a much more useful way; as was done first historically. Once this break has been made and the assumptions recognised as being only assumptions, not laws of nature, I move on to the more philosophical and motivational aspects. Alternative methods of thought can then be explored.

When this structure of thoughts has been described, I discuss the practicalities of working with them, evaluating them and bringing them into use in real organisations with real people.

Also in this book I have had to face another interesting presentational question. It is of a type not normally faced by books covering business theory and practice. In most such books, the author sets out to explain a specific set of ideas which are largely self-contained. The concept, normally identified by a descriptive name, has an internal logic which does not impinge onto other business concepts.

In the case of Working Time Transformation, this is not so. Although it has a distinct and clear logic, it actually achieves much of its power because of the effect that it has on other well-known and widely practised business techniques. It has never surprised me that this should be so; the various systems used in a business are almost bound to affect each other. What is more surprising is that authors seem artificially to steer clear of recognising such interactions. They seem to set out to show that their particular idea subsumes all related ideas. For example, I have recently read a book on Just-in-Time procedures where it was claimed that the redesign of a product to make it easier to manufacture was a clear example of JIT, a book on Total Quality Management which claimed that this process was a clear example of TQM, and a book on Business Process Re-engineering which claimed that it was a clear example of BPR. This does not seem to me to be a helpful approach. Although each technique has a clear and powerful central idea, it is not sensible to stretch it to cover all related areas.

In the case of Working Time Transformation, the interactions with other techniques are a very important part of the whole process, and must be covered.

This raises the question of how to handle the interactions. I can and do explain the whole background and development of Working Time Transformation. But I cannot reasonably cover the whole of the other techniques that it interacts with. Take for example the matter of self-managing teams. The interactions here are very important. But most reasonable descriptions of the topic cover a full length book on their own. And how about TQM and JIT? All have important interactions and all could fill a book each.

I think it best not to assume that my readers have a good knowledge of these topics. They may not. More importantly, the interaction is really only with one special aspect of each topic, and it may be an aspect that even experts have not had reason to think through. I therefore have provided a very short commentary on those particular aspects of the techniques that I need to explain. This leaves me with very short and partial explanations of business techniques other than Working Time Transformation. I regret this, and will surely annoy experts in each technique; but it cannot be helped.

Who benefits?

One point I would particularly like to make is that the ideas that I describe are neutral as between the people who work and the organisations that employ them. I must recognise that the mainspring that drives Western capitalism is the use of assets to produce a surplus of value, and that value is usually measured in money. I must also recognise that the proactive element in business organisations is primarily representing the owners of the capital. Therefore, if the owners of the capital do not see any advantage to themselves, they are unlikely to make the effort to act. In other words, unless the managers of an organisation can see some benefits in profit, they will not make a change. That profit benefit may be long-term or effectively trying to avoid a decrease in profit, but in most cases it must exist. The consequence of this is that in many cases any change that is made by managers is seen by the employees in the organisation to be to their relative disadvantage.

In this case, that need not be so. Changes can be made which benefit both the owners of the capital and those who work for them. The share of the gain is obviously open to discussion and decision, but there can definitely be benefit for both.

I hope that, by the end, I will have provided a reasonably short and concise commentary of Working Time Transformation, which will provide enough basic information to be understandable by those new to the topic, and enough of the newer thinking to be of interest to those who have longer acquaintance with the topic. As I will show, the nature of my topic means that it is inherently impossible to provide a step-by-step guide for readers to follow and apply. However, everything I say is based on hard practical reality.

Introduction

Working Time Transformation brings a major change in the way people work. It fundamentally changes the way that work is organised and the role of the worker. It strikes at the very core of the relationship between employees and the organisations they work for. It brings the possibility of significant financial improvements for businesses and improved working lives for the great majority of employees.

Britain, which for many years had the reputation, and rightly so, for being reactionary and unwilling to change, is leading this development. That this should be so may be surprising, but is not by chance. The legal framework in this country allows almost any type of working contract for the individual, so long as it is safe. This has allowed room for experimentation and development.

Also, the massive changes in attitudes brought about by the government of Mrs Thatcher in the industrial crisis of the 1970s and early 1980s, have demolished many of the restrictive arrangements which can prevent change. The whole industrial relations scene in Britain is fragmented, both geographically and organisationally, so changes in parts of it are possible without the need for major realignments.

Most other countries in the industrialised world have restrictive working legislation left over from the time of the industrial revolution. This was doubtless seen as benevolent at the time, when work was simple and repetitive, and social security was negligible. It was, I suppose, a way to defend vulnerable workers, who had only their time and strength to sell, against rapacious owner/managers. In the current working world, where operations are multifarious and complicated, it is necessary for all types of workers to bring their intelligence to work and use it.

So the old rules are out of date; they do not meet the need.

Current world situation

It is significant that at present, employment practices in the industrial world are splitting into two major camps.

In continental Europe and Japan, there is little move by organisations away from the old model. This is not generally because the problems of the traditional system have not been recognised, but because the alternative possibilities have not been widely understood. Even where this has been realised, the need for legislative change, which is always slow and contentious, causes an inertia which delays change in actual employment systems. Added to this is a long-standing social consensus and structures of agreement which are very difficult to change without overwhelming agreement on all sides.

In the US there is also very restrictive legislation, the Fair Labor Standards Act, on working and payment systems. The more that I see of it, the more I think that there are ways to avoid the worst effects, but it has been seen as very restrictive and there has been great structural change to get round it. There has been widespread recognition that in large organisations, generic or peripheral tasks can be better and cheaper done by small or new outside organisations; who can benefit from concentrating on what they are doing and often employing staff on less generous contracts. More significantly, there has also been a move to outsource staff from labour agencies for the main operations of the organisation. Agencies have been able to take onto their lists casual staff, and balance them so that they can supply them to organisations on a continuous basis. This has allowed the supply of staff to be less expensive, and probably more important, flexible. The agency only supplies staff when they are needed, therefore cost effectively. Labour agencies are now amongst the largest employers in the US.

Use of agency staff, however has disadvantages. In industry and other organisations, tasks are complicated. Workers do not just bring their muscles and senses to work. Jobs are not just mechanical operations. Judgement is needed in many subtle ways. The motivation of the workers affects their actions, and unless they personally identify with the aims of the business, they will further their interests rather than its. High levels of skill and dedication are needed. It is harder to maintain a trained workforce when they move in and out of the operation. Also, it is harder to motivate temporary staff to identify with the fortunes of the organisation.