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• Introduction
• Background
• A Framework for Understanding Workplace Change
• Lessons Learned
• The Impacts of Workplace Innovation
• Implications for Stakeholders
• Footnotes

Introduction

This study is part of the Lessons Learned series produced by Human Resources Development Canada (HRDC). The studies use previous evaluations and research findings to identify what works and what does not in the development of public works policies and programs.

During the 1990s, workplace change has become a prominent issue for business, labour, and government. This report strives to highlight what is known about workplace change through use of an analysis based primarily on Canadian case studies¹. The report then synthesizes this evidence within the context of the larger body of knowledge on the subject.

Background

“Workplace change” refers to a broad concept that encompasses strategic, structural, and behavioural dimensions. In its present manifestation, the major thrust of workplace change is primarily employer-initiated and focused above all on enhancing the flexibility of the organization. By the late 1970s, the two employment systems which had become the standards in Canadian workplaces following WWII (the “industrial” model and the “salaried” model), were found to be too rigid. While these two models offered the stability necessary in an era of expanding markets, limited foreign competition, and mass-production technology, this no longer described the modern business environment.

As increased competition and microelectronic technologies have set the pace of production, establishments everywhere have tried to adapt. With “change” as a constant factor of production, “flexibility” has become the watchword of actors wanting to participate in this new environment. “Innovative workplaces” are an attempt to adapt to this new global reality.

The move to more flexible workplaces involves three overlapping areas:

Work organization. Most changes that occur at the workplace are in the name of increased flexibility, be it functional or numerical flexibility. While the former refers to a firm’s ability to reorganize how the work is done, the latter refers to a firm’s ability to control how many are required to do the work.

Human resource management practices. Changes in this area are internally-oriented and can affect both functional and numerical flexibility.

Industrial relations practices. These are any changes that alter the processes between labour and management.

While there is often overlap between these areas, the strategies or practices adopted as part of the change process vary greatly from organization to organization. As such, there can be no “one size fits all” approach to innovation.

A Framework for Understanding Workplace Change

Despite the fact that workplace change occurs under a variety of circumstances, there is a conceptual framework which addresses six key elements related to any such change:

The environment. Most organizational innovations are in response to changes in the organization’s environment. Some of the major changes are: changes in markets (either in terms of increased competition or a change in the nature of the competition); technological change; changing nature of the labour force; and regulatory changes.

Firm characteristics. The structural features of a firm (such as size, industry, etc.) can determine the nature of the change process. In addition, intangible traits such as history and culture can also play a part.

Strategic choices. Organizational change is not simply determined by the environment, but rather, it is also largely affected by the choices made by both labour and management concerning work organization, human resource management, and industrial relations.

Workplace change. The interplay of the three facets mentioned above are part of any change process.

The innovation process. This factor is critical to any change process because it deals with how an organization responds to change through the introduction and implementation of new policies and practices.

Outcomes. Any assessment of a workplace change needs to be long-term, and it needs to evaluate the change from the perspective of various stakeholders. With respect to this latter point, what may be deemed a success by one group, may not necessarily be a success for another.

Lessons Learned

By its very nature, organizational innovation defies the notion of “best practice”. Nevertheless, experience shows that there are “best principles”, the presence of which, can contribute to the likelihood of success. These seven key observations are:

1.	Workplace change can be driven by a variety of forces. The particular source does not necessarily determine whether the change process will be successful or not.

The most common trigger of any workplace change is a crisis, most often a competitive one. Other factors can be destructive labour relations or a proactive corporate culture that has decided to reorganize the workplace. Yet regardless of the triggering event, a successful change is dependant upon other factors.

2.	Senior management commitment is absolutely essential for implementing a sustainable change process.

While senior management does not necessarily have to initiate a change process (even though this is most often the case), the support of senior management is absolutely essential if there is to be a successful conclusion to the change process. Some studies have also noted the importance of having the support of front-line supervisors and middle managers.

3.	There are different interests among the stakeholders in terms of workplace change. One key is to acknowledge these differences and identify workable tradeoffs.

For workplace change to be successful, both labour and management need to consider, from a long-term point of view, the core issues surrounding any change process - competitiveness and security. If the two parties only view things in the short-term, often the tradeoffs will appear too stark to forge a satisfactory and sustainable workplace agreement. To facilitate the process, unions often need to increase their expertise on workplace issues so that they can help define the change agenda which will benefit their members.

4.	There are no “magic recipes” and successful workplace change can look very different in different organizations. “Fit” is a critical consideration.

When it comes to workplace change, there are many routes to success. As so much of what happens in a change process is directly related to the nature of the organization and the environment in which it finds itself, the term “fit” is used to capture this internal and external dimension. The former involves a consistency between work reorganization initiatives which are appropriate for the organization, while the latter refers to the economic, social, and institutional framework within which it operates.

5.	The participation of “third parties” can have a significant influence in either direction on a change initiative.

Consultants, industry groups, governments, mediators, and facilitators may be involved in workplace innovation efforts. If their advice involves a full understanding of the particular workplace environment in question, they may succeed in bringing the specialized information, expertise, and innovation needed for a successful innovation.

6.	Information represents an important dimension at all stages of organizational innovation, from introduction through implementation to evaluation. The lack of information impedes successful innovation and its sustainability.

Organizations often do not have the information they need to launch effective workplace change exercises, either in terms of adapting models that were successful elsewhere or setting and measuring targets for their own innovations that would allow them to assess costs, benefits, and impacts.

7.	Expectations of workplace change must be realistic in terms of goals, timeframes and the impact of unplanned events.

While evidence suggests that workplace innovation may improve productivity, quality, and overall performance for a firm, even successful change processes should not be seen as panaceas for what ails an organization. This latter point may be even more appropriate for workers and unions who have not been as well-documented in the literature. Nevertheless, when there has been organizational innovation, it should be viewed as a long-term investment which will take time to generate returns. This organizational “patience” is even more difficult to maintain when the change is in response to a crisis situation. However, even when all the steps have been taken which favour a successful outcome, there is always an element of chance which may derail the entire process.

The Impacts of Workplace Innovation

The Human Resource Practices Survey (HRMS) and the Workplace Training Survey (WTS) are tools which allow us to identify the most common approaches to organizational and human resource systems and their innovation. From these surveys and from similar American studies, we find that organizations that make workplace changes generally experience benefits in comparison to organizations that have relied solely on traditional workplace systems. These benefits can include better performance and revenue, in addition to improved employer-employee relations.

Implications for Stakeholders

The major theme running through the work on innovative workplaces stresses the diversity inherent in organizational innovation. In this vein, the importance of “fit”, both internally with respect to the firm’s culture and functional abilities, and externally, with respect to the economic and institutional environment, becomes ever greater. As such, the very subject of innovations eludes the notion of “best practice” and it falls more within the idea of “best principles”.

While government and other third parties can play a role in facilitating the change process, they cannot play the central one because that responsibility rests with management and labour. Both management and labour need to lengthen their strategic horizons and actively seek out organizational ideas that will have positive payoffs for both parties. In other words, management and labour need to identify their “community of interests”. A successful identification of such interests hinges on trust, which can be difficult, unfortunately, for some organizations, given their histories.

Despite the fact that workplace change can have positive payoffs, the incidence of cases which can be looked to as representative of a successful change process, remains quite low. This observation underlines the fact that it is difficult to sustain effective innovation once it is launched. There are many obstacles that come into play - for example, information barriers, externalities associated with intangible investments, pressure for immediate benefits, various institutional barriers, and the different interests of the stakeholders. The degree to which these obstacles are overcome will determine the diffusion of effective organizational innovation in the future.

Footnotes

1. The principal sources used were works by the Canadian Market and Productivity Center (CLMPC) and Ekos Research Associates.