British labour relations have a well-deserved reputation for being terrible. It is only a few short years ago that Arthur Scargill and his fanatic band of followers did everything possible to ruin the British coal industry and the miners union. This episode, which brought Britain close to the brink of industrial chaos, was yet another reminder of the destructiveness of labour relations that are inspired by the class conflict dogma.

Similarly, stories about wasteful work practices, endless strikes, and the declining automobile industry in Britain are still all too familiar. The "British disease" and perpetual conflict between bosses and unionized workers, egged on by militant shop stewards, were thought to be one and the same thing.

The good news for Britain is that there are obvious signs of change for the better, even in some automobile plants. The "Business in Britain Survey" in The Economist (May 20,1989) paints a positive picture of labour relations in the British car industry. What is the key to this improvement? A number of factors undoubtedly play a role, including the inroads of Japanese companies with a decidedly more cooperative approach to labour relations, the emergence of more pragmatic and less militant trade union leaders, the trends to less fragmentation of bargaining units, the prod of horrendous financial losses, poor quality and declining sales. But perhaps the single most important factor is the change in management style. Whereas management at one time was authoritarian and far removed from the shopfloor, some managements are now working hard at recognizing employees as important, if not essential, to the success of their companies. Consider the fortunes of Peugeot-Talbot.

Back in 1979 Peugeot bought the Chrysler subsidiary in Britain for $1.00. Chrysler was anxious to dump a money-losing business plagued by disputes and strikes. For example, in 1978 there were 700 separate disputes at Chrysler's Ryton and Linwood plants. The first thing facing Peugeot's new manager George Turnbull in 1979 was a 14-week strike. That also turned out to be this company's last lengthy strike. In the first three months of 1989 there were only two brief work stoppages, which were resolved after management explained its position to the workers.

Some of the changes were obviously painful. One plant (Linwood) was closed with a loss of 5,000 jobs. Total employment was reduced so that by 1983 there were only 4,500 employees left from a 1979 high of 24,000. Various other components were sold off. By 1985 things began to turn around, and Peugeot-Talbot had reached a break-even point (compared to a loss of £102.3 million in 1980). The quality and looks of Peugeot automobiles began to improve remarkably, sales picked up and new workers were hired to a total of 7,500 by 1988. Management continued to improve its relationship with its employees. What did it do differently? As The Economist puts it, "With hindsight, the secret is simple: treat them as adults."

Treating them as Adults

One obvious aspect of treating employees as adults is to keep them well-informed of the company's policies and fortunes. Management began a process of regular meetings with all the workers. When first told that the line would stop half an hour per month for such meetings, the unions were skeptical. However, once these meetings began, the workers realized that management was serious about treating them differently. All public announcements made by management are now first conveyed to the workers before they are passed on to the press. The company's newspaper is used to improve communication between management and employees. In addition, collective bargaining sessions have been conducted via one joint negotiating committee for all manual workers, and management's pay offers are directly conveyed to the employees.

This does not mean that the company is trouble free. Recently a strike appeared imminent, but the workers voted in favour of a settlement when the terms and conditions were fully explained. The Economist asks: "Could the bad old days return?" No doubt they could, but it is nevertheless evident that some hard lessons have been learned in at least certain sectors of British industry. The Economist article concludes: "It is not machinery that makes the difference: it is how you use it." To put it differently, management's treating employees with respect and some imagination, instead of as just a nuisance factor of production, greatly improves a workplace atmosphere.