The evolution of non-union employee representation in Australia

by External17 Oct 2013

Professor Paul Gollan outlines how new research by Macquarie University has revealed what two prominent and very different companies have done to support non-union employee representation.

Australia can lay claim to a long history of various forms of non-union employee representation (NER); however, little is known about their long-term successes and failures.

But new research by Macquarie University has revealed what two prominent and very different companies have done to support non-union employee representation. The research delves into the approach used by medical manufacturer Cochlear and general insurance, banking, life insurance and superannuation brand, Suncorp Group.

The research comes as union membership drops to 18 per cent, with approximately 41 per cent of the workforce in the public sector unionised and only 14 per cent in the private sector, according to Australian Bureau of Statistics figures.

The Suncorp Group story

Suncorp Group has around 16,000 employees, relationships with 9 million customers and is a top 20 ASX-listed company. It undergoes constant organisational change, with large-scale mergers, acquisition and restructuring resulting in a complex employment relations environment.

Many of its employees have experienced redundancies, redeployment, relocation and changed working conditions. Complicating matters are situations where retrenched employees have had to train people coming in to do the role from the outsourced or partnering companies.

Union membership at Suncorp dropped from around 13 per cent in 2004 to 4 per cent in 2009 and essentially remained at this lower level until 2012. Instead, the company has a Suncorp Group Employee Council (SGEC), which is made up of 25 councillors that represent various business units. It meets quarterly to canvas and promote employee views and opinions and lobby management on behalf of employees.

And while the SGEC so far has limited influence on organisational decision-making, as an NER employer for 25 years, it has been effective in increasing employee voice and maintaining a more cooperative relationship between employees and management.

In 2000, the SGEC handled around 60 cases entrusted by Suncorp employees, which grew to 330 by mid-2004. This grew to around 1,000 cases in 2009, at a time when a merger between Suncorp and Promina was taking place.

Because of the enterprise-specific focus of the council and its service, employees tend to approach the council for assistance before it escalates into a formal dispute with management.

Interestingly, this early intervention often results in satisfactory resolution of matters, with management engaging in extensive consultation. Buoyed by these results, the SGEC has made employee voice their strategic focus for the next couple of years.

NER at Suncorp Group is a unique case, resembling the European Works Council model, and is an organisation-based NER model with its committee members elected by employees.

Union avoidance by management could be seen as a motive for its establishment. However, it is legally a separate entity and it is entirely funded by the company, which may potentially jeopardise its independence and representing power.

The Cochlear story

Australian medical manufacturer Cochlear produces devices for the hearing impaired. It is a world-leader in its field, capturing over 60 per cent of market share.

The company’s non-union arrangements, known as the Employee Consultative Committee (ECC), were initiated around 2006 during a period of radical change. The company was aligned with lean manufacturing principles and also multi-skilling staff to ensure people could work in all areas of the business. The ECC was used to address short term communication needs during a period of significant organisational change.

Prior to the creation of the ECC, and up until 2007, the terms and conditions for Cochlear employees were governed by Enterprise Partnership Agreements (EPA). However in 2007, Cochlear applied to the Australian Industrial Relations Commission for the termination of EPA, intending to move to individual agreements.

This move sparked action from The Australian Manufacturing Workers Union (AMWU) which began campaigning to get Cochlear to change its mind about individual agreements. In 2012, the Cochlear communicated resentment toward AMWU representatives using the company training room, suggesting it was a ploy to access the lunch room to recruit new members.

Despite a challenging relationship with the AMWU, Cochlear’s relationship with staff appears to be strong. For instance, in times of company adversity such as product recalls, staff has been willing to work overtime and leverage skills in other areas of the business to help out during such a challenging period.

Since its inception the ECC has gone through changes. Initially the majority of topics that are discussed focus on the social aspect of work, such as the annual and very popular ping-pong competition, lunch room cleanliness and parking.

Over time it was identified the group also needed to focus on important issues, including concerns about team leaders showing favouritism to some operators, thus disadvantaging others. However, despite this any achievements as a representative body remain highly questionable.

Macquarie University delved into these two operations as case studies given their unique approaches to non-union representation. These case studies show the answer lies in unions realising they need to broaden their focus on collective bargaining to be a true agency of employee voice. In other words, from the ‘us and them’ approach, to true partners in the business focusing on growing the cake, as opposed to increasing the share of the cake.

About Paul Gollan

Professor Paul J. Gollan is the Associate Dean for the Faculty of Business and Economics at Macquarie University.  His key areas of expertise are in employment relations, industrial relations, HR and employer branding.

About Macquarie University’s Faculty of Business & Economics (FBE)

Macquarie University’s Faculty of Business and Economics offers undergraduate and postgraduate courses in addition to strong academic research in the fields of accounting and finance, actuarial studies, business, marketing, economics and business law.