Machiavelli and Macho Management

Originally posted October 2013

As a young HR professional, I cut my teeth on what were known in those days as “industrial relations”, and spent many a happy hour (well, many an hour anyway) locked in negotiations with trade unions. Big industrial disputes (like big hair and shoulder pads) went out of fashion by the end of the 1980s, so it was with a mixture of professional interest and nostalgia that I watched how the Grangemouth dispute last week played out.  (If you missed the story, the background is here).

Depending on your viewpoint, it was a classic case of old-fashioned politically motivated trade unions attempting to resist change by an employer, or bully-boy tactics by a company using a pretext to drive down workers terms and conditions. Either way – and there seems to have been elements of both extremes at work – the dispute reached a head when Ineos announced that the plant would close with the loss of 800 jobs; the next day the union accepted the company proposals; and the following day the company said the plant would in fact stay open and that £300m would be invested in it.

A resounding defeat for the unions and a victory for macho management? I don’t think so. A wise old manager once told me “even if you’ve won your point, always give the union something to take back to their members. Trying to humiliate them will just lead  to resentment and they’ll look for an opportunity to gain revenge at some later date”. In fact that view goes all the way back to Machiavelli, who – although he advised Princes to kill or banish their opponents, since being merciful and magnanimous in victory would lead to a constant fear of plots and rivalry –  also counselled against trying to rule people (which in this case means the employees) by fear to the point of hatred.

So I’m going to indulge in a bit of crystal-ball gazing.

Grangemouth will reopen with the staff on worse terms and different work patterns, and Ineos will begin its investment. But as staff begin to resent the things they conceded “at gunpoint” the plant will be characterised for the next few years by “low level” industrial disputes, not necessarily formal action or even make the news but those which take up a lot of managerial time and effort. At some point, when the union feels on much stronger ground (probably after the investment is completed, or the economy is stronger), there’ll be another big dispute. Ineos will then be faced with a choice: play the “nuclear” card of threatening to shut the plant again (and risk looking like the boy who cried wolf); back down to the union demands; or decide to cut their losses and sell a troublesome plant to a competitor.  Whichever they chose, their significant investment won’t yield much of a return, and I wouldn’t fancy being one of their shareholders over the next few years.*

 

(*Note – this blog is not intended as financial advice. Shares in Ineos may go up, down, loop the loop or defy the ground. Past performance is not a guide to the future, as any football fan will tell you).

 

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