Challenge:

Multinationals increasingly launch international workforce initiatives, like global restructurings and divestitures, that affect employees overseas. But these can hit a rigid barrier: information/consultation and bargaining requirements with local employee representatives.

As multinationals continue to globalize worldwide operations, they roll out various kinds of international initiatives that affect workers internationally.

  • Examples of international workforce initiatives include: multi-country restructurings/integrations/reductions-in-force; global mergers/acquisitions/divestitures; international human resources policies/work rules/codes of conduct; global Human Resources Information Systems; international “shared services” centers; and outsourcing/“offshoring” of specific business functions.

Looking from the top (headquarters) down, international workforce initiatives make good business sense. But looking up—from each affected local country—too many of these projects hit an obvious roadblock: information/consultation and bargaining obligations with the multinational’s various local employee representative bodies around the world.

  • Examples of local employee representative bodies include: trade unions; local works councils; European Works Councils; labor/management councils; staff consultation committees; working-environment committees; health and safety committees; and ombudsmen.
  • In many countries, almost all employees are constituents of one—or more—of these representative bodies. So many various worker-advocate voices can sound like a cacophony. At least, that is often the reaction of employers based in the United States, a country where only seven percent of non-government employees participate in organized labor and where law in effect allows just one kind of “employee representative,” the labor union. (Outside the US, the various worker representative bodies other than independent trade unions tend to be employer organized/sponsored, and as such, in the US, would be illegal “employer-dominated labor organizations.” See US Nat’l Lab. Rel. Act Section 8(a)(2); Electromation line of cases, cf. 35 F. 3d 1148 (7th Cir. 1994).)

The problem, in short, is that multinationals’ globalization initiatives keep running into an old, rigid doctrine cobbled together back in the era of parochial, shop-level labor relations: the concept of “mandatory subject of bargaining” or required “information and consultation” with employee representatives in each local workplace. Fast-moving multinationals find themselves powerless to implement—even to make a final decision to implement—a new global initiative until they exhaust varied local processes. These processes can take months to complete: first, pitching a proposal to foreign affiliates’ inevitably skeptical labor representatives; then, considering in good faith the representatives’ counterproposals; finally, reaching agreement with certain local bargaining agents, or reaching impasse and exhausting deadlock resolution procedures.

Pointer:

Streamline local consultation/bargaining obligations and procedures by implementing a top-down global collective bargaining strategy.

This hurdle will not go away. But surmounting it gets easier after a multinational globally aligns an approach to local collective bargaining. Indeed, undertaking a proactive alignment project offers several tangible benefits:

  • advancing corporate goals and enhancing operational flexibility internationally
  • harmonizing local collective agreement provisions/procedures across borders (to the extent possible)
  • engaging a multinational’s own foreign local labor negotiators, motivating them to bargain harder for headquarters initiatives
  • defending against internationally focused trade unions teaming up across borders to wage “international corporate campaigns” against targeted multinationals

To any multinational with complex industrial relations, these benefits are huge. But in practice, to build a top-down global labor relations reporting model/bargaining strategy requires three phases:

Phase 1: Project scope

  • Project team. Assemble an in-house global labor-alignment project team. Project management should be top-down, under the global human resources function or any Global Vice President of Industrial Relations. Identify, enlist and empower foreign local internal labor liaisons—the company’s own human resources people who negotiate with local labor representatives in each jurisdiction. Also identify outside local labor lawyers and consultants.
  • Global philosophy and goals. Articulate an organization-wide labor relations philosophy. Separately, list international collective bargaining goals, including any possible restructuring, divestiture, or other change out on the horizon. (If any big change is imminent, now is too late to align global bargaining structures.)

Global labor relations philosophies lie across a spectrum. At one end are multinationals that champion robust employee involvement, such as Europe-based conglomerates that sign international “framework”/union-neutrality agreements and that voluntarily host “global works councils.” At the other end of this spectrum are US-based multinationals with a “union free” mindset that see no business case for empowering labor representatives. Any such labor philosophy should account for the company’s own supplier (“sweatshop”) code of conduct: Many multinationals impose, on suppliers worldwide, codes with “free association” (union-neutrality) provisions. Can an organization impose a free association restriction on its outside suppliers without granting free association rights to its own staff?

  • Information-gathering. Put together a list of the bodies currently representing employees, by jurisdiction. Include special-topic representatives like health and safety committees. Collect these groups’ existing agreements, formal and informal, including “sectoral” union agreements that apply by force of law rather than contract. For each jurisdiction, collect data about the local bargaining agenda, local grievances/disputes and the tenor of local bargaining relationships (friendly or contentious? proactive or moribund?). Get timetables: When are meetings? How long does it take to implement a new management proposal?  

Phase 2: Analysis

  • Problem spotting. Isolate the cumbersome provisions and procedures in local collective arrangements and other hurdles hindering headquarters.  
  • Benchmarking. Benchmark best practices outside: Do peer employers’ collective agreements offer innovative flexibility-enhancing provisions/procedures?

Phase 3: Implementation  

  • Agenda. Develop a jurisdiction-by-jurisdiction agenda for modifying local collective agreements/procedures, to the extent possible, so as to: advance the philosophy/goals developed in phase 1; resolve the problems identified in phase 2; and speed up and align consultation timelines across jurisdictions.  
  • Execution. Design a communications/involvement strategy to engage and empower the company’s in-country labor negotiators, keeping them focused on implementing headquarters agendas. To facilitate future change initiatives, maintain the project team “pyramid” structure using intranet tools and regular conference calls.

Inflexible foreign labor agreements and cumbersome consultation procedures impede globalization—and, ultimately, profits. No one can eliminate these barriers, but a proactive multinational can lower them by aligning collective bargaining from headquarters down to the overseas local office/“shop floor.” Doing this is a big project. But doing nothing perpetuates rigidity and delays in global restructurings, divestitures, and other international initiatives.