HR manager in particular
Consequently the workers at Patrick’s Port Botany terminal in Sydney began a seven-day strike, after rejecting the company’s latest pay offer. At a mass meeting on the same day, Port Botany workers unanimously endorsed the seven-day stoppage. Massive stoppages and delays were caused by these sensational events (D. Spence, 1998). The purpose of this restructuring of the workforce was the craving for greater efficiency, higher stock turnover and lower labour costs. Basically Patrick Stevedores tried to improve its competitive advantage over its competitors and maximise its profits. There are other political issues involved in this case but they are beyond the scope of this essay. Additional readings will be listed in the bibliography section.
The two HR functions discussed in this essay are recruitment and selection. They are basically the main HR issues in the IR dispute at Patrick Stevedores. As mentioned earlier the basic problem arose when Patrick sacked its unionistic workforce in order to replace them with non-unionised labour. As we know, an organization’s recruitment policy provides the framework for recruiting action and reflects the organization’s recruitment objectives.
It details the overriding principles to be followed by management in general and by the HR manager in particular (Stone, 2002). Patrick decided with government backing to change its recruitment objectives in order to make its workforce more flexible. Patrick mainly wanted individual bargaining agreements with its workers rather than the one for all unionistic approach that was in place at the time. Patrick however was not the first stevedore company to implement such an approach of trying to destabilize union labour. Other organizations have tried the same approach only to realise than in order to achieve competitive advantage; a more ethical approach was needed.
For example, in the early 1990s, a shipyard at Hebburn, on the Tyne, was taken over by Shields Ship repairers. Initially, Shields Ship repairers decided to continue the previous owner’s policy of not recognizing trade unions. But as workers began to circulate between different branches of the company, they started to demand the same employment rights that existed in other yards. The resulting industrial action, along with impending recognition procedures in the Employment Relations Act (1999), led the company to acknowledge that unionisation for manual workers was unavoidable.
In 1999, a ballot was taken among the group’s workforce nationally for recognition of trade unions. But the result was challenged by the trade unions. Following the overwhelming result of a second ballot, an agreement was reached for hourly-paid workers in the group’s UK engineering production facilities to be represented by either the AEEU or the GMB unions. Eventually a partnership agreement between the company, the GMB and the AEEU was achieved, with union leaders and employers supporting the initiative.
Traditional industrial-relations concerns were dealt with in the agreement – such as trade-union recognition and representation, job flexibility, disciplinary and grievance procedures, working time, health and safety. There were repeated references to the commercial needs of the company and the trade unions’ role in supporting these. Forums for joint consultation were established, with employee membership handled through the unions. But agenda setting remained in management hands. A key feature of the agreement was the “no-strike” clause and the introduction of binding arbitration, which reflected the desire for a public acknowledgement of the commitment to solving disputes (McBride at. al., 2002).
Patrick could also have used such an ethically appropriate approach. Instead its new HR recruitment and selection policies were somewhat unethical in its implementation. Through the sacking of the workforce and subsequent external recruitment Patrick may also have broken the law. The cancellation of the labour supply contract and the appointment of administrators on 7th April 1998 were made possible by a complex inter-company transaction that occurred in September 1997. By dividing the functions of employing workers and owning the business between two companies, the Patrick group put in place a structure that made it easier to dismiss the whole workforce. It is arguable, based on the evidence that this was done because the employees were members of the Union.
So there is an arguable case that the Patrick employers acted in breach of s 298K(1) of the Act. As we know s 298 K states that an employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to dismiss an employee, injure an employee in his or her employment or alter the position of an employee to the employee’s prejudice ((ACN 003 621 645) ; Others  378 FCA (21st April 1998). Furthermore in some industries it is customary to use union labour. Trade unions can be a recruiting service for certain types of labour (Stone, 2002, page 187). In industries such stevedoring, the unions have traditionally been involved in supplying workers to employers.
For example the union covering mineworkers in Australia used a list of retrenched employees from which the companies had to hire (P. Maher, 1993, page 69). Hence even if the sacking of the work force was legal, it is unethical in the context of the industry. Furthermore the selection of new employees under the pretext that they do not belong to any union is also illegal and unethical. Now that we have identified the key factors of the discussion; Legal and ethical compliance, HR functions (Recruitment and Selection) and competitive advantage, we must explain how they all interrelate with each other.
As noted earlier Patrick wanted to replace its unionised workforce in order to achieve greater competitive advantage due to current inefficient practices. The HR functions of Recruitment and Selection would be most affected through this. Since Patrick Stevedores perceived the unions as the biggest threat in competitive advantage it could have implemented a form of non union representation and hence make trade unions unnecessary. Instead of sacking its entire workforce Patrick Stevedore should have de unionised its workforce by following the example of what Euro tunnel achieved. Euro tunnel, which has a 50-year lease to operate the Channel Tunnel link between the UK and France, employs 2,300 people, 1,300 of whom are based at Folkestone, Kent. On the UK side of the tunnel, the firm recognizes only the company council for negotiation purposes.
Employees may become trade-union members, but will have no formal representation from their union. The UK company council, which is broadly similar to the enterprise committee set up on the French side of the tunnel, consists of employees who are democratically elected every two years. It is the only form of official employee representation, and carries out bargaining over pay and conditions. The council gives information and consults on matters of common concern to employees and manages the social and welfare budget, which equals 1 percent of payroll. All representatives must be permanent employees with at least one year’s service, and on permanent rather than temporary contracts.
They may, however, be full-time or part-time employees. The company council has Industrial Society membership. This means that representatives can go on courses and get access to advice about working practices, dismissal procedures, employment contracts, maternity and paternity rights and health and safety (P. J. Gollan, 2001). Through such a system the selection and recruitment of non-union members would be encouraged. However since employees belonging to a union are not discriminated against, this approach would be both legally and ethically compliant. This approach would also have limited industrial action as opposed to the drastic step of dismissing all of Patrick’s employees.
This in turn would have lead to no industrial action and overall improvement in efficiency since that was the goal of the new recruitment and selection procedures. The competitive advantage of Patrick’s would have been drastically increased and no negative publicity created. Basically it is safe to say that Patrick’s new polices of recruitment and selection were seriously flawed and that the new method of managing these HR functions did not contribute to competitive advantage.
In conclusion a much more subtle approach to changing the HR functions of selection and recruitment could have been used. It is important to remember that ethical compliance is not the same as legal compliance. Legal compliance is the law and it must be abided by. Ethical compliance however is much harder to measure and even harder to control. Even defining what is ethical and what is not can be difficult since people have different opinions of right and wrong. What Patricks did in its selection and recruitment policies is widely considered unethical. It was also found to be illegal ((ACN 003 621 645) ; Others  378 FCA (21st April 1998)) and clearly in breach of the workplace agreement act. Hence the goal of achieving competitive advantage was not achieved by Patricks due to its poor implementation of new strategies. It has been found that both legal and ethical compliance is necessary for competitive advantage.