Social dialogue: greater transparency to build trust
The enabling bill authorizing the government to reform the Labor Code through executive orders has just been passed by the National Assembly. However, it will not be until late August that the content of the executive orders is presented to the social partners.
Marie-Anne Verdier, University of Toulouse 3 Paul Sabatier; Christophe Godowski, University of Toulouse 1 Capitole and Emmanuelle Nègre, University of Montpellier
The new government’s stated goal is to decentralize social dialogue to the company level, reserving legislative action solely for fundamental rights. Beyond any doubts that may be raised about the the relevance of such a project, this approach faces a major obstacle: the mistrust that prevails today in many French companies.
A significant proportion of employees do not trust their managers
80% of executives surveyed in a recent study believe that labor-management relations are improving in their company, but less than half of employees share this view. Only 55% of them feel they have a relationship of trust with their managers.
“They keep telling us that business is bad. They’re asking us to tighten our belts. But can we really believe them? We have no way of checking—we’re just being led around by the nose…”
When we surveyed works council members—as we did in a study conducted throughout 2016—this lack of trust is glaringly obvious.
The situation is particularly delicate when workforce reductions are on the agenda, as it quickly turns into a power struggle. Managers have mastered the art of presenting their company’s financial results to justify their labor policies. Jennifer Boutant and Marie-Anne Verdier, from the University of Toulouse, demonstrated in a study published last year that these professionals were able to significantly underreport the company’s results (by an average of 4%) prior to announcing workforce reductions.
Research by Emmanuelle Nègre and Marie-Anne Verdier, co-authored with Charles Cho and Den Patten, highlights the frequent discrepancy between the reasons cited by executives to justify such actions and the company’s actual economic situation.
Employee representatives naturally suspect these manipulations, but generally cannot decipher the financial statements. The resulting mistrust is widespread and immediately reduces the possibilities for constructive social dialogue.
Employees have no control over the company's situation
Since 1945, however, the law has allowed works councils to engage a certified public accountant to gain a clear understanding of the company’s financial situation and to restore the balance of power with management.
Such experts may be consulted not only for specific events, but also on an annual basis as part of the review of the annual financial statements. However, only about one in three works councils makes use of these financial professionals.
How can we explain the low uptake of a program that is, in principle, open to everyone?
The fact that companies must (rightly) bear the cost of these assignments acts as a barrier, particularly for small and medium-sized enterprises, which make up the bulk of the French economy.
Some executives are dragging their feet and are tempted to pressure elected officials. They do not hesitate to resort to a form of blackmail by arguing, for example, that the funds allocated to this expense could be put to better use by paying bonuses.
In such a climate of pressure and conflict, some elected officials prefer to focus on social and cultural activities rather than economic issues. In large companies, it is more common for certified public accountants to advise works councils.
Although management is accustomed to the arrival of such experts, they are not thrilled by this exercise in transparency. That’s a shame. Indeed, when certified public accountants regularly engage with employee representatives, we see that the relationship between employees and management gradually improves.
The former have a better understanding of the economic issues at stake and have certain advantages when it comes to discussing the company’s decisions. The latter may be interested in the insights provided by an independent expert. A certain level of trust then begins to develop, thereby contributing to the establishment of a genuine social dialogue.
Such a development is not out of reach. Viewing the involvement of financial professionals in works councils not as a theoretical right but as a genuine necessity means systematically informing elected representatives of this possibility.
Our research shows that the failure to utilize the expert’s services is sometimes simply due to a lack of awareness of the program. Building the skills of elected officials is now a major priority in efforts to rebalance the power dynamic between management and employees.
Marie-Anne Verdier, Associate Professor, University of Toulouse 3 Paul Sabatier; Christophe Godowski, Associate Professor (HDR) in Management Sciences, IAE Toulouse, University of Toulouse 1 Capitole and Emmanuelle Nègre, Associate Professor of Management Science, Montpellier Research in Management, University of Montpellier
The original version This article was published on The Conversation.