Keeping workers in loop is now the law

INTERNAL COMMUNICATIONS with employees is a legal requirement for all organisations with more than 50 employees since the final phase of the Employees (Provision of Information and Consultation) Act 2006 came into force last week.

The act is based on an EU directive establishing a general framework for information and consultation which was agreed in March 2002.

This legislation gives employees new rights to be informed and consulted about issues that affect their employment and the prospects of the business, but the record among Irish managers seems poor. It was a thorny subject in the past, and attempts had been made to introduce mandatory employee consultation since the late 1970s.

In reality, much of the requirements would already be met by well-managed organisations with good people-management structures. Prior consultation can often head off potential grievances and enhance employee commitment.

The legislation came into force in July 2006, though it was intended to take effect from March 2005. Ireland, along with Britain, was granted later implementation dates for smaller companies.

From 2006, only organisations with 150 or more employees were covered. Organisations with 100 or more members of staff had until April 2007 before the legislation applied to them, and it has applied to those with 50 or more employees since March 23rd.

There is a serious risk that failure to abide by the procedures may lead to delays, or even court injunctions, preventing implementation of strategic repositioning or mergers and acquisitions, as the Health Service Executive found out at the Labour Court over its financial retrenchment plans.

Obligations to inform and consult employees are not new. It has been a requirement under the Protection of Employment Act 1977 in relation to collective redundancies and since 2003 for the transfer of undertakings such as takeovers and mergers.

Many organisations will be familiar with the requirements under the Safety, Health and Welfare at Work Act, 2005, for collaborative sharing of information and consultation on workplace health and safety issues with safety representatives.

The benefits of employee involvement is evident in research published this month by NUI Galway. The study of 165 top-performing companies in Ireland concludes that the best-performing firms are "those that apply sophisticated HRM [ human-resource management] to the vast majority of their workforce".

The performance management and innovation survey, undertaken by Dr Tony Dundon from NUIG's centre for innovation and structural change, suggests a moderate to low take-up of a full-blown high-performance work system model, but the study shows that this model can benefit organisational performance, innovation, HR performance and employees.

This HR category was identified as the most significant of all HR practices in explaining a high-performing innovator. Organisations with practices in place to nurture transparent work teams and involvement and consultation mechanisms were found to have a positive influence in promoting creativity and innovation.

This finding may bode well for Ireland's partnership approach in union and non-union enterprises.

The available evidence suggests that Irish managers are not very effective at ensuring dialogue and communication takes place in their organisations.

In the first national employer and employee survey, undertaken by the Economic and Social Research Institute in 2004 on behalf of the National Centre for Partnership and Performance, 5,000 Irish employees were asked about consultation in their workplaces. The results were less than reassuring.

Firstly, employees were asked to record whether they "hardly ever" receive information from management on a range of items regarding the organisation:

Some 36 per cent said they "hardly ever" received information on the introduction of new products or services.

Some 42 per cent said the same for changes in work practices.

More than half "hardly ever" received financial information, such as sales and profit figures.

Secondly, when asked about management consultation with employees regarding decision-making and change issues in the workplace, the responses were even more negative:

Just over one-quarter of employees were "almost always" consulted before decisions were made which affected their work.

As many as 27 per cent indicated that they were "rarely" or "almost never" consulted.

Only half of employees felt their views were considered.

Just over half said they were given the reasons for change "almost always" or "often".

Some 22 per cent said they were "rarely" or "almost never" given reasons for changes.

The results show that many employees feel excluded from information and consultation processes.

The Chartered Institute of Personnel and Development (CIPD), which has more than 6,000 members in Ireland mainly working in human resources and people management, believes that the Employees (Provision of Information and Consultation) Act 2006 will help promote productive employee relations through improved dialogue.

"Problems can arise if the focus of information and consultation is entirely on frontline or operational staff or on unionised sections of the organisation. Sometimes middle managers, section heads or specialists can feel excluded and left 'in the dark' about strategic plans or initiatives disclosed through the agreements," says CIPD Ireland's Michael McDonnell.

"Research shows that organisations that involve and engage their employees in matters that affect their employment experience are likely to benefit through increased motivation and commitment."

According to McDonnell, the 2003 CIPD report, Understanding the People and Performance Link: Unlocking the Black Box, revealed that "HR policies that foster staff engagement through involvement in decision-making, job influence, performance appraisal and team working are linked to job satisfaction and motivation".

Gerald Flynn is an employment specialist with Align Management Solutions, Dublin. gflynn@alignmanagement.net