Europe has gone through significant economic change over the past decade. Businesses have had to manage unprecedented challenges posed by the financial crisis, globalisation and a rapidly changing labour market. But fresh challenges do not always require radical new approaches – innovation can be found in the ways new measures and reforms are implemented with employee participation and social dialogue at their heart. Research shows that even the most innovative practice can be implemented in a demoralising way which then negates any positive outcomes of the practice itself.
Companies with a well-embedded culture of trust, tapping into the tacit knowledge of their employees, engaged in well-functioning social dialogue, are better equipped to implement the reforms needed in order to increase their competitiveness, retain or source the necessary skills, boost employee performance and safeguard or increase employment. Companies that develop this close dialogue with employees also prove to be more resilient to challenges posed by competition and changing markets.
Following the financial crisis many companies throughout Europe had to implement reforms in order to retain their competitiveness: these included the reduction of operating costs, incorporating new technologies, changing the scope of their business, outsourcing, changing terms of employment, and changes in work organisation. The success of these measures was often determined by the way in which they were implemented and the existing relationship between management and employees. Companies that register the most positive outcomes, for both organisations and employees, as reported by managers and employee representatives, were engaged in continuous dialogue with employees, sought regular feedback from management and staff on new policies, and provided training to manage modified terms of employment where necessary. In other words, workplace reforms were introduced by fostering new strategies, rather than imposing them.
There is a strong link between social dialogue, workplace well-being and establishment performance.
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Trust is a characteristic of firms which appear to register more mutual benefits for organisations and employees. There is no recipe for creating trust, but there are certain conditions that favour its emergence. These include: mutual recognition and respect for the two parties in charge of finding solutions to common challenges, a timely intervention that allows room for meaningful discussion, transparency, and the involvement of all relevant parties in the development of strategies and objectives. Forward planning from HR and operations managers in preparing an organisation and its workforce for market change was also highlighted as an important factor, as well as providing fair and adequate support for employees who are made redundant.
The European Commission has recognised the importance of social dialogue for Europe’s economy, as well as the deterioration of this in some quarters due to the economic crisis. It is therefore important to showcase the mutual benefits of strong social dialogue within companies, both at national and European level. Company-employee relations can become strained during periods of economic crisis, and with changes in the market and competition. This tension is counter-productive for both sides – positive social dialogue at company level is mutually beneficial, and can reap dividends for workers, businesses, and the broader European economy.
Stavroula Demetriades is Senior Programme Manager in the Working Conditions and Industrial Relations unit at Eurofound, where she is responsible for the planning, development and implementation of workplace developments and social dialogue research projects.