T3-03: Restructuring and changing enterprise structures

Mona Aranea, Cardiff University
Sergio González Begega, University of Oviedo
Holm-Detlev Köhler, University of Oviedo

Corporate mergers or acquisition force companies to re-establish or even re-invent the corporate identity that shall give sense and direction to management (Vaara and Tienari, 2011). Despite the widely acknowledged importance of employee co-operation for successful post-merger integration (Edwards and Edwards, 2015), studies on changing employee voice in the post-merger TNC remain limited in number (Edwards et al., 2017).

Our longitudinal case study examines how managerial identity talk (Koveshnikov et al., 2016) affects transnational employee voice during the post-merger integration process. We present empirical evidence from the case of ArcelorMittal, the world’s biggest steel producer, created in 2006 through the merger of the European company Arcelor and the Anglo-Indian corporation Mittal Steel. We explore how ArcelorMittal’s current set of corporate values has come about through a struggle over meaning in the contested social terrain of the global firm.

Our qualitative dates comprises two sets of qualitative interviews with managers and employees of the company, the first carried out between 2002 and 2006, the second conducted between 2014 and 2016. We trace the deconstruction of transnational employee voice institutions in the company back to cultural identity talk and an executive exodus among managers. Our in-depth case study of ArcelorMittal gives insights into the changing nature of managerial identity discourse during and after major corporate mergers and the impact of corporate culture on the quality of employee voice in the global firm.

Key words

Transnational corporations; mergers and acquisitions; cultural distinction drawing; identity talk; ArcelorMittal; employee voice

References

• Edwards, M. R., Lipponen, J., Edwards, T., & Hakonen, M. (2017). Trajectories and antecedents of integration in mergers and acquisitions: A comparison of two longitudinal studies. Human Relations 70(7): 1258–1290.
• Edwards T and Edwards M (2015) Perceptions of employee voice and representation in the post-acquisition period: Comparative and longitudinal evidence from an international acquisition, Human Relations 68(1) 131-156.
• Franca V and Pahor M (2014) Influence of management attitudes on the implementation of employee participation. Economic and Industrial Democracy 35 (1): 115-142.
• Koveshnikov A, Vaara E and Ehrnrooth M (2016) Stereotype-based managerial identity work in multinational corporations. Organization Studies 37 (9): 1353-1379.
• Kristensen PH and Zeitlin J (2005) Local Players in Global Games. The Strategic Constitution of a Multinational Corporation. Oxford: Oxford University Press.
• Melkonian T, Monin P and Noorderhaven NG (2011) Distributive justice, procedural justice, exemplarity, and employee’s willingness to cooperate in M&A integration processes. An analysis of the Air France-KLM merger, Human Resource Management 50 (6): 809-837.
• Vaara E and Tienari J (2011) On the narrative construction of MNCs. An antenarrative analysis of legitimation and resistance in cross-border merger. Organization Science 22 (370-390).

Christine Üyük, Institute for Work, Skills and Training, University of Duisburg-Essen

The paper focuses on transnational protest actions in multinational companies (MNC), because of the globalization and the orientation of modern corporate governance on financial ratios, the com-petition between locations within companies and the occurrence of transnational conflicts (cross-border restructuring, mergers, etc.) is increasing. However, for local and national interest representation there is hardly any point of intervening in transnational restructuring plans. Mostly, they have little influence on the decisions for a pan-European or worldwide restructuring taken at central level. Often, at these levels of action, they can only mitigate the effects of restructuring in form of social plans. This creates a need for collective action on transnational interest representa-tion level. One form of such a cooperation are transnational protest actions in MNC.

The focus of industrial relation research so far has mostly been on single actors, especially European Works Councils. In the last 25 years the formation of EWCs, their structures and practices as well as their impact have been examined extensive. Only in a few studies, have examined the multi-level interest representation system in its entirety. But to focus only on the European Works Council or World Works Council would be in this case not sufficient because the planning, organization and implementation of a transnational protest action requires the cooperation of the whole multi-level system of interest representation with its actors at the local, national and European level. This means in detail that European Works Councils, local works councils (or délégués du personnel or shop stewards), central works councils (or comité d'entreprise or comité de groupe), board-level employee representation, World Works Councils, union coordination groups, national trade unions, European Union Federations and Global Union Federations have to discuss their interests, to agree on a common target and to cooperate with each other. However, numerous obstacles like different languages, different interest representation cultures, different unions, missing interest representation structure in some countries and diverging interests between the countries hinder the cooperation. But despite the complexity of the interest representation system und his numerous obstacles it was possible to organize a transnational protest action in some MNC.

Against this backdrop, the aim of the paper is to focus on the interplay and the interest articulation between the different levels of interest representation in MNC which made a transnational protest action possible. Hereby the interaction, the exchange of interests and cooperation are examined on a horizontal level as well as on a vertical level. Three main questions will be examined: What have been the reasons for carrying out a transnational collective action and what have been the motives to choose transnational protest as a collective form of interest representation? Which factors have been conducive or obstructive in the organization and planning process? Which significance had the protest action in the transnational interest representation work and what effects have been achieved?

Therefore, the paper is based on Giddens’ theory of structuration with which the different levels of interest representation can be seen as “action fields”. In the action fields the actors are subject to different rules, different resources and different interpretation frames which they can use to assert their interests. The results are based on six company case studies from different sectors (food industry, mechanical engineering industry, construction materials industry, the airline industry and on one multi industry group as well as one additional case from the white goods industry). Each case is based on five to seven qualitative interviews with Works Councils, Group Works Councils, European Works Councils and Union Representatives from different representation levels and countries.

An empirical examination of the role of trade unions at a UK steel firm

Chris McLachlan, University of Leeds
Mark Stuart, University of Leeds

This paper explores the connection between responsible restructuring and integrative bargaining at a UK steel firm. Through a qualitative case study of the negotiation process between management and trade unions, and drawing on Walton and McKersie’s (1965) seminal framework of labour negotiations, the paper argues that trade unions are able to induce management into more responsible forms of employment restructuring by realising the ‘integrative potential’ when bargaining over restructuring.

Research by Pulignano and Stewart (2012; 2013) highlights two distinct union responses to job loss, described as confrontation based on job protection and cooperation based on job transition. Findings suggest these strategies point to both the positive role unions can play in addressing the social and economic effects of restructuring for affected employees. For instance, unions may cooperate with management in the early stages and bargain around issues such as redeployment, retraining and severance payments. Alternatively, unions may take a confrontational approach that refuses redundancies initially yet uses this as a platform for subsequent negotiations. Although much of the prevailing research tends to accept that unions engage with management to shape the outcomes of restructuring, caution has been raised around whether this reduces unions’ independence from the actions of management and their ability to contest managerial initiatives (Martinez Lucio and Stuart, 2005; MacKenzie, 2009; Rodriguez-Ruiz, 2005).

Recent debates in industrial relations literature have highlighted the relationship between trade union activity and Corporate Social Responsibility (CSR), suggesting unions are well placed as key stakeholders to engage with CSR initiatives in order to improve outcomes for their members and wider society (Harvey et al, 2017; Preuss et al, 2014). Nonetheless, there has been little empirical research on the role of trade unions in relation to specifically responsible practices. With regards to restructuring processes, the term responsible restructuring represents a range of practices implemented by organisations in order to ameliorate the consequences of redundancy for affected employees (Forde et al, 2009). Responsible restructuring has thus been viewed as connected to an organisation’s CSR agenda, with research suggesting ways in which a more ethical approach to restructuring may also bring strategic benefits (Tsai and Shih, 2013; Rydell and Wigbald, 2013). Moreover, a burgeoning consistency has been identified between responsible restructuring and integrative bargaining, whereby unions may engage with management when bargaining over restructuring in order to seek a quid pro quo when agreeing concessions in relation to job losses (Walton and McKersie, 1965; Teague and Roche, 2014; Garaudel et al, 2008). That is, in an era where restructuring and redundancy is considered inevitable, unions may acknowledge certain complementary interests with management in times of restructuring and utilise these in the negotiation process.  Garaudel et al (2008) refer to this as ‘integrative potential’, where by unions engagement in restructuring processes may help mitigate some of the negative social and economic effects of redundancy for employees.

A key point of departure in this paper is thus to explore burgeoning claims in the literature that integrative concession bargaining may offer a strategy for unions to induce management into implementing more responsible forms of restructuring and redundancy (Teague and Roche 2014; Garaudel et al, 2008; Ahlstrand, 2015; Rodriguez-Ruiz, 2015; Kirov and Thill, 2018; Harvey et al, 2017). In particular, Teague and Roche (2014) have pointed to a consistency between integrative concession bargaining and the management practice of responsible restructuring, though in the specific context of responding to recessionary pressures. The authors suggest that greater union involvement may be mutually beneficial as unions can secure certain ‘institutional gains’ related to extended recognition or representation rights, whereas for management union involvement in restructuring programmes can bestow a legitimacy upon the process amongst the workforce. Research into partnership arrangements between union and management has also demonstrated this, where union presence in restructuring processes, and wider workplace change initiatives, afford management a ‘legitimizing rhetoric’ and help consolidate employee consent (Butler et al, 2011; Martinez Lucio and Stuart, 2004; 2005; Butler and Tregaskis, 2018).

Through an examination of a restructuring process at a UK steel firm (SteelCo), this paper explores the dynamics of management and trade unions bargaining over restructuring. Through interview and ethnographic data, the analysis highlights contextual conditions and critical moments that were indicative of an integrative bargaining approach between management and trade unions and hence shaped management’s claims to have implemented a responsible restructuring process. Three critical stages in the bargaining process are identified. First, the early engagement between senior management and senior trade union officials six months prior to the restructuring is considered. Second, the establishment of an internal redeployment process (cross-matching) shortly after the restructuring announcement which was jointly managed by the HR team and senior trade union officials. Third, contentious incidents in the subsequent delivery of the restructuring are explored. Each of these stages is analysed in relation to three criteria: how legitimacy between management and unions was established; areas of integrative potential; and the outcomes and tensions for each party. There is a specific conceptual focus on understanding an integrative bargaining approach in the restructuring process. Attention is afforded in the findings to analysing the interactions in the negotiations, the concessions sought from either party, critical moments that shaped the bargaining process and implications for trade unions’ role in the implementing of responsible restructuring. The paper concludes with an extended discussion on the subsequent implications for trade union strategy in relation to responding to restructuring processes more widely.