Developing a European approach

The European Works Council directive requires international firms with more
than 1,000 staff to set up forums where employees request one. Wally Russell,
European employee relations director for Nortel Networks, explains the
challenges this fast-changing and diverse organisation faced when setting up
its first international forum

Nortel Networks can safely be described as a large company. It is a Canadian
multi-national, which provides Internet solutions to businesses through optical
wireless, local and private Internet. There are over 95,000 employees
worldwide, with around 23,000 in Europe.

Within Europe, Nortel operates in 31 countries with over 25 languages and
also has many joint venture relationships. The climate is one of diversity and
complexity and the culture is one of continuous change. The Internet revolution
is changing the world of business and the market place in which companies
operate. With such instant access to the global market and to information,
competition is increasing and rapidly changing.

As a result, Nortel has been going through a period of continuous change.
During 2000 we were making an average of two to three acquisitions per quarter.
This means that organisational restructuring has been ongoing for the past
couple of years, and during 1999 to 2000 some aspects of manufacturing, HR, IS
and other activities were outsourced to third party providers. In this business
climate Nortel Networks believes it needs a flexible, customer-focused
structure, reduced hierarchy and non-bureaucratic processes. It needs to foster
a culture of product innovation, customer orientation, and organisational and
employee adaptability. This culture is one associated with a non-union or
non-representative environment.

Employee representation

Within Nortel one will find the full spectrum of employee representation. It
comprises individuals who are extremely independent and would wish to represent
themselves, to groups of employees who are represented by unions or works
councils. When trying to satisfy employee expectations for both individuals and
groups we must deal with both sets of requirements. And the added requirements
for co-determination, defined by national and European law, leads to another
layer of complexity which can prove a difficult fit given Nortel’s
"up-to-the-minute" work culture. For example, in Nortel a three-month
period is referred to as a Web year.

This only goes to re-enforce a culture of short-term decision making, which
could lead to decisions being made on available information that may not be 100
per cent complete at all times. Reward and recognition is focused on contribution
rather than pure seniority or experience and there is a continuous need for
flexibility and adaptability. Contrast our approach with a representative or
legislative culture where the focus is on having all the facts, and processes
are extremely well defined. Because Nortel is organised on a business basis,
decisions are made by the Business depending on market requirements, customer
orders or R&D funding.

This may result in a situation where multiple businesses making different
decisions exist within one country or even within the same site. Yet
legislation calls for information and consultation to be done on a geographic
or site basis.

It is my belief that such legislation is framed for a style of business
operation that no longer exists.

European forum

In the mid-1990s Nortel would not have been pro-active in the setting up of
a European works council under a voluntary agreement. The prevailing view was
that the national structures we had in place sufficed for any information and
consultation requirements and that a European level would just be an additional
non-value layer of bureaucracy. However, during March 1998 a request was
received from employee representatives in France and Italy for the setting up
of a special negotiation body (SNB) to negotiate a European wide agreement
under the Trans- national Information & Consultation Directive. In the
following months employee representatives, including the UK, were elected or
selected according to national legislation. A meeting was held in September,
which consisted of initial training for representatives and the support of an
external expert of their choice.

This was followed by discussion and negotiation that resulted in an
agreement being reached to set up a joint management-employee European forum.
The agreement outlined the role and scope of the forum body.

The underlying philosophy and principles of the agreement were that it would
be business as well as people focused, it would exclude negotiating and
collective bargaining issues, re-enforce existing local level consultation
structures and maintain and underline management’s right to manage. The
objective of the forum was to create a joint undertaking of the objectives,
strategy, market position, operating environment and performance of Nortel
Networks. In addition it was agreed that the forum could be used as a body to
improve communications and understanding across the Nortel European

How the forum works

Prior to the first meeting of the forum a two-day joint training programme
was held for employee representatives. Topics during training were agreed in
advance and covered such items as understanding financial performance, meeting
effectiveness, an overview of the Nortel business and a detailed review of the
directive which led to the setting up of the forum.

During this time the employee representatives elected three members of their
group who would act as coordinators for the group and be the primary interface
to the management representative. The first forum annual meeting was held in
June 1999, with the second in June 2000.

Additional meetings are held with the forum coordinators two to three times
a year to review topics that have been discussed at the forum meetings or to
highlight any issues, concerns or initiatives. The annual meetings and the
ongoing meetings with employee representative coordinators help the forum to
improve the understanding of all its participants.

Since the forum has been set up, employee representatives have highlighted
concerns in such areas as the effectiveness of the implementation of Nortel’s
performance management tool; working hours; stress management; and issues
associated with restructuring.

There are still many challenges to the overall success of the forum and the
achievement of its objectives. There is a diversity of culture, language, roles
and level in the organisation of the forum members. These differences needs to
be understood and appreciated by all.

Nortel as an organisation is at different stages of development in its different
geographies, and is firmly business focused, rather than geographically
focused. It also has a decision-making process that requires a speedy
resolution, sometimes at variance to the decision-making time line associated
with some information and consultation processes. Some countries, such as
Ireland, UK and Spain, do not have any works council structure. However, we do
have works councils in France, Germany and the Netherlands.

Going forward, the success of the forum will depend on ensuring that there
is ongoing consistency in relationships and an understanding of diverse views.
All participants understand that it is a continuous learning curve and that we
need to work in partnership. Critical to the success in that all parties to the
agreement continue to act in a sprit of cooperation, good faith and mutual

Main points of the agreement

– Agreement reached to hold an annual forum meeting

– Undertaking covered: all Nortel employees in the EU & EEA including
agreed joint ventures

– New acquisitions automatically covered

– Employee representatives nominated or elected according to national law

– Representatives serve a three year term with no more than two consecutive

– Special arrangement for countries with less than 30 employees

– Information to be provided at the annual meeting on Nortel’s financial
performance, market position, strategic development and HR strategy

– Only covers "transnational" issues. These are issues that effect
employee interests and involve company facilities in at least two different EU

– Annual meeting will be preceded by a half-day employee representative

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