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We begin this section by briefly discussing the concept of "workplace change." The term itself is widely used, but at times its meaning is not precise. To complicate things further, other labels — "organizational innovation," "flexible organizations," "high-performance workplaces," to offer just a few examples — are often used interchangeably with workplace change.

"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. As we will see below, this imperative for flexibility is competitiveness-driven and primarily in response to changing markets and new technological opportunities. Organizational flexibility itself can come in many forms. It can relate to the establishment's ability to vary its workforce by hiring and firing, by altering hours of work, by using nonstandard employees, or by subcontracting or outsourcing (i.e., "numerical flexibility"). It can also relate to the establishment's capacity to reorganize how work itself is carried out within the firm (i.e., "functional flexibility").¹ Flexibility strategies can focus on the internal operations of the firm or on the relationships between the firm and external markets and agents.

A key thing to emphasize, and this is evident from the cases, is that workplace change designed to enhance flexibility (or any other objectives for that matter) can take many forms depending, for example, on a host of industry- and firm-level characteristics.² National factors, including history, culture, and institutions also matter. As the Canadian Labour Market and Productivity Centre (1996b) synthesis of European case studies suggests, the nature of workplace change and the innovation process can differ significantly from the Canadian experience even when the motivators and the types of programs and policies themselves are similar. This largely reflects differences in the traditional organizational paradigms.

To illustrate, Canadian firms (and this generally applies to American and British) traditionally have adopted organizational strategies and practices that have emphasized numerical flexibility, relying on labour markets that, by international standards at least, are relatively unregulated. In Europe, where markets have been more regulated but where consensual labour relations systems have accommodated more bipartite negotiation and agreement on workplace issues, organizational systems traditionally have been based much more on well-developed internal employment systems that provided considerable functional flexibility. The differences in the current direction of innovation in the two regions reflect the traditional strengths and weaknesses of each: many Canadian firms, as we will see, are now trying to become more functionally flexible while much of the innovation reported in the European case studies illustrates a drive to establish more external flexibility, especially in the numerical sense.³

The move to more flexible workplaces (or organizational change more generally) involves three overlapping areas:

• Work organization. This involves changes in the production process, how work is organized, job responsibilities, work allocation, and organizational structure. Increasing flexibility (either functional or numerical) is at the core of most work reorganization initiatives. These can be internally-oriented (e.g., more fluid work rules, broader job descriptions, job rotation and multiskilling, work teams, flatter organizational hierarchies, functional integration) or externally-oriented (e.g., sub-contracting, outsourcing).
• Human resource management practices. HRM innovations can cover a range of personnel management areas including hiring and firing, compensation, information-sharing and decision-making, training, and scheduling. Changes are internally-oriented and can affect both functional and numerical flexibility.
• Industrial relations practices. In unionized environments, industrial relations innovations can also represent workplace or organizational changes. These can be new strategies, practices, or institutional structures that alter processes between labour and management.

Three points need to be emphasized in this overview of the concept of workplace change. First, there can be considerable overlap between work reorganization, human resource management change, and changes in industrial relations practices; in fact, it is common to see change occurring on all three fronts. Second, workplace change can involve new strategies, structures, policies and practices, or some combination of these; it is directly observable through tangible innovations in some situations but not in others where, for example, it is purely strategic. Third, there is no uniform model of workplace change that applies across all organizations; there is considerable variation in what is largely an establishment-specific phenomenon.

A Framework for Understanding Workplace Change

A conceptual framework for considering workplace change has been developed.⁴ This is a very generalized framework in order to accommodate the fact that workplace change occurs in diverse settings; that it can encompass a diversity of strategies, structures, and practices; and that it potentially can generate a wide range of outcomes.

View Exhibit 1

As the following indicates, a consideration of workplace change involves six elements:

1. The environment

As we have seen, the organizational innovations reported in most of the case studies have been initiated in response to changes in the organizational environment. Without identifying all of the potentially relevant environmental factors, we have chosen to list a few of the key ones here. A major influence has been changes in markets, including both an intensification of competition (from both domestic and foreign sources) and changes in the nature of the competition which increasingly emphasizes product/service innovation, responsiveness to changing tastes, niche products/services, etc.

Technological change, most notably with respect to information and communications technology, has altered production possibilities and, with them, organizational and human resource requirements. The changing nature of the labour force — specifically trends to older, better educated workers and to a greater female presence — has also been a significant environmental factor driving workplace innovation. Regulatory changes also can be important in stimulating organizational change.

2. Firm characteristics

Characteristics of the organization come into play in a variety of ways: by determining how different sorts of environmental change can affect the organization; by influencing the kinds of workplace responses that might be considered; by affecting how the innovation process will unfold; and by affecting the outcomes. Relevant characteristics include both "structural" features — e.g., its size, industry, workforce composition, technology, unionization, ownership — and more intangible ones, such as organizational history and culture.

3. Strategic choices

The environment, conditioned by characteristics of the organization, represents a set of challenges and opportunities for the firm and its employees. How these stakeholders respond in terms of the strategic choices they make plays a key role in determining the nature of workplace change, the innovation process, and the outcomes. In other words, organizational change is not simply determined by the environment. Management makes choices about business strategy and about production and technology strategy. And, management, with employees and their unions, make choices about work organization and human resource and industrial relations strategies.

4. Workplace change

We have already noted that workplace change involves three interrelated facets: work reorganization, changes in human resource management practices and changes in industrial relations practices.

5. The innovation process

While the workplace change element of the framework focuses on specific structural changes and the adoption of new policies and practices, there is also an important process dimension to consider. This concerns how decisions to initiate change are actually translated into the introduction and implementation of the change. As the case studies demonstrate, this is generally a critical determinant of the outcomes of the innovation.

6. Outcomes

Workplace change can have significant positive outcomes for the firm, its employees and union(s), and for the community. At a more macro level, the cumulative effect of organizational innovation can have impacts on the labour market and society. Thus, a complete assessment requires that various perspectives be incorporated and that the long-run effects are considered. With respect to the first, it is important to acknowledge that the criteria for success are often different for the various stakeholders. For example, employers typically evaluate change in terms of its effect on performance and competitiveness; employees judge change more often in terms of its impact on job security, on job quality including health and safety and access to learning opportunities, and on earnings. It is difficult to empirically incorporate all of these dimensions. There are other reasons, as well, why it is difficult to identify outcomes of workplace change.⁵ The direction of causality is not always clear: for example, are performance improvements the result of workplace changes or do firms performing well simply have the resources to introduce innovations? It is often problematic to isolate the effects of workplace innovation from other changes (e.g., technology) that often occur at the same time. And finally, aggregate effects, while clearly important especially for governments, are very difficult to empirically identify.

Where Are We Coming From?

Understanding where we are coming from provides an important backdrop to interpreting current workplace changes. Over the first half of the 20th century, two employment systems became the standards in Canadian workplaces (and North American workplaces more broadly).

One described "blue-collar" work while the other described "white-collar" work.⁶ It is these systems that have come under challenge in the past 10 to 15 years.

The "industrial" model was typical to blue-collar employment in unionized settings, although the essential features were mimicked in many non-union establishments as well.⁷ This model was characterized by strict work rules, rigid job definitions, seniority-based labour deployment (i.e., pertaining to hiring, promotion, layoffs), and wages attached to jobs (as opposed to workers). In this system, management had the prerogative to unilaterally make production and hiring/layoff decisions within constraints imposed by rules on work organization and staffing that were negotiated with labour. The result of this arrangement was organizations that were flexible in the numerical sense but that were limited in terms of functional flexibility.

The "salaried" model applied to white-collar employees, generally in non-union settings. In comparison to the industrial system, this model offered management much more functional flexibility as job definitions, work rules, and deployment policies were less restrictive. However, the salaried model involved a stronger notion of job security (to employees who had progressed beyond a probationary stage) which imposed some constraints on numerical flexibility (although much less than that experienced by European managers).

These employment systems characterized many Canadian workplaces during the first few decades after World War Two. They fit well with the business environment in this period, offering the stability required in an era of expanding markets, limited foreign competition, and mass-production technology. However, beginning in the late 1970s, that environment underwent dramatic change as competition intensified and as microelectronic technologies created a new "logic" of production. These developments affected establishments in all industrialized countries and, as they accelerated in the 1980s and 1990s, the pressures for organizational change increased everywhere. As we have noted, the thrust of the organizational changes was to enhance flexibility, with the particular innovations in different countries typically reflecting the characteristic rigidities of the traditional systems.

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Footnotes

1	These characterizations of flexibility have been used by the OECD in various publications. See, for example, OECD (1996, Chapter 6).
2	Although we emphasize flexibility as the major driving force behind workplace change, some readers will also expect that other motivations including cost-reduction and enhancing competitiveness through quality or innovation-based strategies also come into play. These motivations obviously are important but they can be seen to fit under the broad rubric of flexibility.
3	For more detail on these regional differences, see the OECD (1997).
4	An extended version of this framework guided the development of the template for the case studies undertaken by Ekos Research for Human Resources Development Canada (see Ekos Research Associates, 1996). Moreover, in a general sense, its basic structure underlies the logic of most case studies of workplace change.
5	For overviews of methodological issues associated with measuring outcomes, see Ichniowski et al. (1996), Huselid (1995), and Betcherman (1997).
6	This is drawn from Osterman (1988).
7	The features of the “industrial” model could also be found in certain white-collar settings where unions represented clerical and administrative staff.