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Wage Negotiations

Set the stage for painfree wage negotiations

Fri, 01 Jul 2011 14:30

The current series of protracted wage negotiations that are underway in the country’s mining, manufacturing, steel and engineering and public sectors highlight the need for companies to implement constructive communication channels to prevent damaging effects on their productivity and profitability levels.

This is according to Chris Jacobs, Director at OIM, a leading international business consultancy firm, who says that it is critically important to establish a conducive working culture and environment long before negotiations start through effective communication channels. “If you create the right climate of mutual understanding then wage negotiations will take on a completely different tone.”

He says it is important to regularly communicate common goals, values, personal responsibilities and the company’s performance, so all parties are informed and have realistic expectations by the time it comes to the negotiating table. “Establishing open feedback channels allows for management to address issues as they are raised, creating a constructive negotiating climate that will help avert protracted negotiations and possible strikes. This open climate creates a greater level of trust which is necessary to conduct proper negotiations.”

Jacobs explains that the socio-economic development in South Africa has raised employee wage expectations. At the same time, however, many companies are under pressure from rising costs and an economy which is still not firing on all cylinders.

“As such, there has to be a realistic and responsible way of sharing success. A company’s finances are easily affected by unpredictable changes in the world market and it is critical that employees are made aware of these as and when they occur.

“Therefore, it is vital to create a culture of commonality so that employees understand the business’ objectives and performances and are in-sync with a common future,” says Jacobs.

“This shifts employee attitudes in favour of their responsibilities, causing them to strive towards the values that are communicated to them and become more passionate about the business and its success.

Jacobs says this type of environment is conducive to higher productivity levels, which South Africa is in dire need of. At a recent media briefing, Trevor Manual commented on the low productivity levels in public services, and highlighted unemployment and poor education as South Africa’s key priorities.

Jacobs echoes this sentiment and says that in order to combat poverty and unemployment in South Africa, it is crucial to address the current culture of low productivity levels coupled with high wages.

“Lower than benchmark levels of productivity and comparatively high wages makes our products uncompetitive in the global market. This is contributing to a cycle of more job losses and therefore greater poverty,” he says.

In the same vein, Jacobs points to poor education as a key contributor to a general lack of understanding in and about the business environment. He says this leads to dissatisfaction among workers and makes increasing efficiency a particular challenge.

“By creating a business culture of mutual understanding, you keep people informed and engaged regardless of education level and job title. This culture of understanding establishes an environment where employees know where and how to address grievances or concerns, are up to date and more likely to be motivated to perform at their best levels of productivity,” he explains.

Jacobs recommends the following steps that companies should take to create a culture of mutual understanding: