Disintegrating Democracy at Work

Labor Unions and the Future of Good Jobs in the Service Economy

Virginia Doellgast

• Publisher: ILR Press
• Year: 2012
• ISBN:
  9780801464447
• Topic: Política y relaciones internacionales
• Subtopic: Relaciones laborales e industriales

The shift from manufacturing- to service-based economies has often been accompanied by the expansion of low-wage and insecure employment. Many consider the effects of this shift inevitable. In Disintegrating Democracy at Work, Virginia Doellgast contends that high pay and good working conditions are possible even for marginal service jobs. This outcome, however, depends on strong unions and encompassing collective bargaining institutions, which are necessary to give workers a voice in the decisions that affect the design of their jobs and the distribution of productivity gains.

Doellgast's conclusions are based on a comparative study of the changes that occurred in the organization of call center jobs in the United States and Germany following the liberalization of telecommunications markets. Based on survey data and interviews with workers, managers, and union representatives, she found that German managers more often took the "high road" than those in the United States, investing in skills and giving employees more control over their work. Doellgast traces the difference to stronger institutional supports for workplace democracy in Germany. However, these democratic structures were increasingly precarious, as managers in both countries used outsourcing strategies to move jobs to workplaces with lower pay and weaker or no union representation. Doellgast's comparative findings show the importance of policy choices in closing off these escape routes, promoting broad access to good jobs in expanding service industries.

1

INTRODUCTION

Ronald Dore begins his book British Factory, Japanese Factory with the statement, “Factories look very much alike anywhere . . .” One could easily make the same observation about call centers, often described as the assembly lines of the information age.1 Call center agents use the same tools regardless of what country they are in or task they are performing: a headset, a computer, perhaps reference files and a list of phone numbers. Most call centers are located in large rooms divided into many small cubicles, with slightly larger desks or offices for team leaders and managers. Signs of varying degrees of sophistication, perhaps centrally located, perhaps on the bottom of each agent’s computer screen, flash the number of customers on hold. The technology behind these white collar factories is becoming close to identical, as consultants and suppliers sell common platforms for predicting call volumes, routing calls to different agents and centers, and developing scheduling plans.

However, seemingly identical call center workplaces can be entirely different kinds of places to work. Managers use a range of approaches to organize these jobs and to motivate employees to sell an ever-expanding number of products while still providing efficient (yet high-quality) customer service. The service companies that operate call centers experiment with performance incentives, different ways of splitting up tasks, and team-based or individualized models of work organization. Some call centers rely heavily on electronic monitoring systems that record every key stroke and conversation, while others use more personalized side-by-side coaching. In the course of my research for this book, I interviewed highly skilled call center agents who had been in their jobs for twenty years, were making solid middle-class salaries, and took a great deal of pride in their work. I also met a good share of low-paid and overworked employees who felt they were trapped in dead-end jobs with little control over their day-to-day work.

The present study attempts to make sense of these differences through asking how national and workplace institutions influence management choices in what seem at first glance to be uniformly lower-skilled and easily rationalized service jobs. Under what conditions will employers adopt high-road, or “high-involvement,” employment models in workplaces where there are strong pressures to cut labor costs? Is there evidence of cross-national divergence in these models—and if so, what explains these differences?

Matched case studies of call center workplaces in the United States and Germany provide a first look at the experiences of worker representatives in both countries as they have sought to shape management strategies at the workplace and organizational levels. The first pair illustrates contrasting outcomes from negotiations over work reorganization in two large telecommunication firms. The second shows the increasingly similar challenges unions experience in both countries as a result of the outsourcing strategies adopted by those same firms.

The Diverging Politics of Work Reorganization

A manager steered me through his service and sales call center at a brisk pace, apologizing for the chaos. I was visiting a former regional Bell company, which had been part of the U.S. monopoly AT&T/Bell system before divestiture and deregulation in the 1980s. The company was in the midst of restructuring its call center jobs, in response to recent regulatory changes that had opened up their regional market to competition—putting pressure on management to cut costs.

That day the company was sponsoring an “international party” to promote international long-distance plans. The large open-plan rooms were decked with streamers and balloons, and supervisors milled around in Hawaiian leis, grass skirts, and African headdresses. Each team had made food and decorated its set of cubicles to represent a different country, giving an eerily festive sheen to an otherwise cavernous white room. The center managers were in the process of judging the teams based on their costumes and level of participation, which seemed to roughly translate into the number of team members who had shown the proper amount of enthusiasm in preparing for the competition. They could expect a material payoff for demonstrating that extra team spirit: the members of the winning team would gain points toward their monthly sales bonus, with the tie breaker going to the team that sold the most international long-distance plans.

A perky team leader told me about the many exciting changes they had put in place in the last few years: “We’re really much more about sales now. And that means I have to always come up with new ways to motivate my team.” She held up some plastic hands, and showed me how you could shake them together to make a clapping sound “to show employees we appreciate them, that they’re doing a great job.” As we were talking, one of the center leaders came around to take a team photo. The agents reluctantly got up from their desks and grimaced at the camera as the team leader tried to egg them on: “Come on, smile! Don’t look so gloomy, this is a party!” “Honestly,” she confided later, “the employees we get today just aren’t what they used to be. In my day, we were motivated by doing the job well. Now these kids just come in to make some money, and are out the door next week.”

Along with building team spirit and rewarding sales, managers were trying to enforce stricter rules on this more difficult-to-motivate workforce. The company had just adopted a new monitoring policy to catch fraud as employees racked up huge bonuses selling products that customers never ordered. Those who did not make their sales targets were put on progressive discipline, and dismissals for poor performance had skyrocketed. The company had also started hiring private investigators to catch employees who were taking unfair advantage of paid sick leave. “When employees see a supervisor come out to a desk with a buggy and empty out that desk, they might think twice next time.”

Union representatives complained that these policies combining tough discipline and individual sales incentives were undermining their work. They were processing a constant stream of grievances against unfair dismissals and several attempts at partnership had fallen flat. Moreover, this new high turnover, sales-focused workforce was proving to be difficult to convince to get active in the union. Union representatives felt their ability to influence management decisions or protect workers was restricted to filing grievances, along with regular fights during formal bargaining to keep in place some negotiated rules about how and when managers could monitor performance or change schedules.

“Team spirit” was also the buzzword among managers and team leaders at Deutsche Telekom’s service and sales centers. Deutsche Telekom was seeking to adjust to growing competition in Germany’s fixed-line markets, where they had only recently lost their monopoly. As at the regional Bell, these changes were accompanied by new pressures to cut costs and compete for customers. “Sales offensives” and competitions had become just as much a part of their new culture. Large posters announced how many DSL and long-distance packages teams had sold each day, and how far they had to go to meet their goal for the week. “Employees can add a mark when they sell something—that helps build team solidarity, gives them the feeling they’re moving toward something.” The company sponsored special win-back offensives, with prizes or bonuses for the winning team. Team leaders admitted they had gotten the competitive bug as well: “I look and see, ah, this week I’m number three, and last week I was number ten in the rankings, good job!”

Also similar to their counterparts at the former regional Bell, Deutsche Telekom’s managers were seeking to transform the culture in their call centers, trying to encourage workers to move from their traditional focus on customer service to more of a sales orientation. They had introduced performance-based pay, were teaching selling techniques, and had set up competitions and prizes. Still, call centers belonging to the two companies looked completely different. There were no clappers, balloons, or streamers at Deutsche Telekom. Employees dressed more professionally and tended to be older, making it difficult to tell the team leaders from the agents. Team leaders discussed their employees respectfully, instead of like a parent explaining the challenges of disciplining unruly children. “It is impossible to do this job without the trust of your team. They have a certain expectation of us as well: that we will help them to develop, that we will give them some room to use their skills and not look over their shoulder every minute.”

Scratch beneath the surface and these differences widen. While the former regional Bell made heavy use of individual bonuses, all sales incentives at Deutsche Telekom were group based. While the U.S. managers constantly monitored their employees, Deutsche Telekom managers had to rely on “mystery calls” to evaluate service quality and could only report results at the team level. Most striking was how much more control employees had over their work and working time. Disciplining agents for poor performance was extremely difficult, break times were flexible, and “working time accounts” meant employees could take time off when they needed it within certain negotiated boundaries. A joint labor-management committee decided on sales goals, and employees could formally challenge these goals if they believed they were unfair. There was also practically no turnover and minimal fraud.

The Company Principles hung on every wall announcing Deutsche Telekom’s goal to match customer orientation and professional service: (1) Quality of life in an open information community; (2) We impress customers through innovative solutions and individual service. In one room, a team leader had put up a Goethe quote: “Es hört doch jeder nur, was er versteht” (Each hears only what he understands). In addition to regular training on selling techniques and product updates, employees and supervisors attended special seminars at the company’s training centers to develop “professional competence.”

At one point during a site visit, I was standing in the hall with a group of call center agents on a smoke break. I listened to their complaints about the new competitions and incentives, growing pressure to make sales goals, constant reorganization in the company, and downsizing. As in many of my visits to German call centers, the employees were curious about whether I observed any differences in the United States. “What is it like there? Aren’t all call centers the same?” I told them that supervisors could listen to agents without their knowledge and fire them for poor performance. Several mouths dropped open. “How can they work under those conditions? Aren’t they afraid all the time? Does the works council just let that happen?” And then I explained that there are no works councils in the United States and that unions do not have the legal right to block remote monitoring or decide on the appropriate criteria for evaluating performance. This was a revelation for them: workers in the United States did not have codetermination rights even where they had a union. They conceded that while they may have troubles, conditions were probably worse for their American colleagues.

The Converging Politics of Organizational Restructuring

Upstate New York experienced deindustrialization in the 1970s but is still dealing with the problems associated with job loss and social dislocation. Abandoned factories line the roads and waterfronts in many cities and unemployment is persistently high. Buffalo has gone through changes typical of the region. As employment shifted to services, union density and per capita earnings declined. Call centers moved in to take advantage of attractive government subsidies and a large potential pool of workers.

One of Buffalo’s large call center subcontractors, Telespectrum, won a contract in the late 1990s to handle DSL sales and customer service for Verizon. Verizon is a “legacy” telecommunications firm coming out of the former AT&T and regional Bell monopoly, with a long history of collective agreements with the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). The unions had been trying to halt or reverse outsourcing at Verizon for years with some limited success but had no wins from organizing campaigns in its subcontractors. The conventional wisdom held that these companies were impossible to organize, as it was too easy to intimidate the workforce with threats of moving call center jobs to another center or region. Union representatives and workers with any experience trying to organize call centers repeated one phrase like a mantra: “It’s just a matter of flipping a switch, then those jobs are gone.”

However, it seemed like they might have a chance at Telespectrum. The IBEW had a number of unemployed members in Buffalo who were willing to take jobs and organize the workforce at the subcontractor, and the union thought it could use its leverage at Verizon to put pressure on management. These union activists organized an election and won union recognition in 2000—the first successful organizing campaign at a U.S.-based call center subcontractor. After fourteen months of difficult negotiations, management agreed to a contract that raised pay 14 percent, from $8.75 to $10. Although this was still less than half of the average salary in the company’s unionized call centers, it was substantially higher than the typical wage for subcontracted jobs. However, three months later, Verizon withdrew its contract with the company and moved the work to several nonunion subcontractors in southern “right to work” states. The call center closed, and three hundred employees lost their jobs.

A similar chain of events unfolded in Siegen, a small city in the German state of Nordrhein-Westfalen, which is the historic center of West German manufacturing. Like many cities in the region, Siegen has shed population over the past decade due to the decline of the steel industry, and has been steadily losing its remaining manufacturing jobs. Abandoned factories line the main highway through town, and unemployment fluctuates around 10 percent. Similar to Buffalo, the local government sought to attract call centers as part of more service sector–focused economic development strategies. In 1999 T-Online, a subsidiary of Deutsche Telekom, set up a technical support call center in Siegen. The company was attracted to the region by generous training subsidies and relocation assistance, and management easily recruited a skilled workforce for the new, high-paying jobs. The company’s central works council helped to coordinate elections for a local works council, which established a good working relationship with management. In line with the policies across T-Online, the works council negotiated team-based incentives, strict limits on management’s ability to remotely monitor calls, and regular pay increases.

After several years, T-Online sold this center to the U.S.-based subcontractor Sykes as part of a plan to outsource the majority of its call center work. The new company retained the existing workforce, who kept the terms of their former contracts for eighteen months. However, toward the end of that period, management gradually introduced individual performance-based pay and flexible scheduling. New employees were hired on short-term contracts, at two-thirds the pay of tenured agents. While agents continued to handle the same kinds of calls, they were expected to answer a greater number of calls each hour and to take shorter breaks. Cooperative negotiations with management turned into daily fights, and the works council began to go to court regularly to protest labor law violations. Some employees struggled to hold on to the protections they had won in the past, supporting the works council and consulting with local union representatives on their rights. Others felt they should accept the new employment terms, and accused the works council of putting their jobs at risk. Managers fed this fear with threats that they would close the center. After three years of hostile relations, Sykes decided to reroute the calls to a call center in another region with a more “employer-friendly” works council and 25 percent lower pay. As a result, close to two hundred employees lost their jobs.

These two stories look quite similar, despite having taken place in two very different institutional settings. Large telecommunications firms with strong unions outsourced their call center jobs to nonunion subcontractors with lower pay and poor working conditions. Worker representatives then tried to organize resistance to changes or negotiate new collective agreements, relying on what they believed to be a stable base of bargaining power or member support from the unionized company. However, in the end these efforts were unsuccessful. In the U.S. case, the telecommunications firm withdrew the contract and sent the work to other subcontractors that did not have union agreements. In the German case, the subcontractor moved the work to another region where the workforce was more willing to accept management’s terms.

I spent an afternoon in Siegen with several former T-Online works councilors talking with them about their experiences leading up to the closure of the Sykes call center. They described the growing stress and animosity between formerly close colleagues, the daily arguments, and the constant fear of job loss. They continued to engage with management despite all of this based on the persistent belief that it was worth the personal sacrifice to try to maintain high pay and good working conditions for these jobs. The former head of the works council put off meeting with me for several months after the center had closed because she felt she could not talk to anyone about it yet. “I was just so mad, you know, I was depressed and demoralized and felt like it would be too much to go ...