The other kind of trade union cuts battle: saving cost within Unite

by Richard Horton

At the end of this month, Len McCluskey will officially become general secretary of Unite. The Simpson-Woodley or Woodley-Simpson era of joint leadership will pass. It will be the end of the union’s first post-merger era.

At face value, McCluskey will be inheriting a financially robust organisation. In 2009, the union recorded an operating surplus of £9,384,000 from the income it receives from its members. However, Unite has not been able to shield itself from the rigours of the credit crunch. It has been affected by the recession as much as any other body. For instance, in 2008 it had to write down the value of its properties and investments to the extent that it recorded a deficit of £28,114,000. While even now the union’s cash flow is being negatively impacted by an increase in its net pension liability – which is affecting almost every organisation that sponsors final salary pension schemes.

The merger of amicus and the T&G in 2007 was heralded as a means of generating greater industrial and political benefits for the membership of the two unions. Cost savings would be captured through the merging of two sets of staff, two sets of properties and two sets of campaigning operations. Beyond anything, cost savings would be captured through the sheer scale of the new union. Unite would be more efficient as an organisation and therefore more efficient in campaigning for its membership.

There is considerable evidence that cost savings have been made throughout the union and especially within the old amicus section. Most of these saving have come from the rationalisation of back office departments and the amalgamation of the “officer force”. However, it is also clear that much more needs to be done. Not least because of Unite’s pension obligations, but also because the union is seeing a decline in revenue caused by a renewed loss of membership. As the recession bites union members have lost their jobs and Unite has lost their subs.

Cost savings, no matter how great, don’t automatically equate to improved operational efficiency and better services for members. Few private companies are able to sustain their cost-saving initiatives beyond two to three years as staff become tired of a working environment where the only thing that is constant is change. This is a charge often made in relation to NHS restructuring – too much change leads to a culture of scepticism and resistance among staff. The merger of amicus and the T&G with its necessary amalgamation of officer roles and staff positions may have already eaten away a great deal of staff and officer goodwill.

The Economist Intelligence Unit estimated in 2005 that up to 37% of all potential cost savings can be eroded simply through an organisation’s lack of readiness and accountability for change. It may seem straightforward, but many organisations fail to identify, prioritise and then assess the resources (the people, the time and the processes they need in place) to actually deploy a cost-saving initiative. They simply cut. Leaving organisations not knowing if they’ve cut too much, too little or whether an individual initiative will have a knock on effect on another part of the business or workplace.

If Len McCluskey is to realise the industrial and political promise of the merged union, he will have to understand and articulate how Unite will further restructure in order to reduce cost when most organisations, both private and public, fail to achieve their cost-reduction objectives. To ensure that Unite is successful, the new general secretary will need to quickly define exactly how the union wants to use its organisational scale and begin to align existing resources to ensure that there is real accountability for change. That means quite simply that people and processes are put into place to manage the change and more importantly that time is given over to achieving the overarching ambitions that Unite has set out.

Once these elements are successfully in place, McCluskey and other senior Unite officials will have to engage staff and members to ensure that any pre-existing cultural resistance to change within the union does not become a significant hurdle. That might seem simple enough, but Unite is faced with another challenge: McCluskey himself. Despite his years of experience as a T&G activist and senior official, he will be new to the job of general secretary. According to Management Review, forty percent of new executives fail in some way within a year and a half of starting the job.

To overcome these challenges, McCluskey needs to set out his organisational vision for Unite; a vision that will inspire staff and officers and truly transform the union. His interview on Today last week and his piece in the Guardian before Christmas provided a political vision for Unite’s role in the years ahead.

The new GS now needs to create a framework for comprehensive transformation such that the union as an organisation can fulfil its potential. Only then will it be able to truly fulfil its political and industrial aspirations. Unite cannot merely look for cost savings in its HR and finance departments or in how it runs its post room. Instead, it needs a broader approach to change that empowers its staff and officers to improve the organisation – an approach that is owned and promoted by Len McCluskey, the first general secretary of a united Unite.

Richard Horton is a business strategy analyst and Labour party activist.

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One Response to “The other kind of trade union cuts battle: saving cost within Unite”

  1. William says:

    Unite is General Motors ,without shareholders.The products are 50 years old,the revenue stream is in in decline,and the internet has escaped the notice of the dynosaurs that front the charade that pretends to be democratic.

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