Labor-Management Relationships Key To Any Solid Business

laborSnart executives suggest that the trend toward more outsourcing and partnerships will have even broader impacts in the future. Managing those relationships will be key.

To work well, all these relationships – all dynamic and subject to change – will require thoughtful planning and constant attention. Many executives anticipate their organization becoming more “virtual” in the coming years, but they also see some obstacles to getting there, such as the difficulty of managing people effectively and the problem of maintaining clear and frequent communications.

A company must decide what its core competencies are – meaning the root business it is in and its primary functions in that business. These are often what the company handles internally, while support systems, secondary markets, and allied products and services are handled through outsourcing or partnerships.

Companies that once handled everything internally now find they must concentrate on their core competencies, so they outsource much more than they once did. Competitors, too, sometimes become vendors for each other in some areas. They can even become partners in joint ventures or temporary alliances where they can accomplish more together than alone.

Moreover, many of the new relationships are international. In 1995, the Institute for the Future in Menlo Park, California, found that the number of international joint ventures had grown 25% a year since 1990.

Swapping Partners

Alliances may end when circumstances change. Some airlines, for example, agree to share booking codes so that passengers can use the same ticket when switching from one airline to another. United Airlines was able to offer service to London through an agreement with British Airways. When it got its own route to London, however, United broke the alliance. British Airways then linked up with U.S. Air (now U.S. Airways) – until it started talking to American Airlines.

“The possibility of a close alliance with the bigger American Airlines made U.S. Air feel spurned, so it promptly began a lawsuit against British Airways,” the report notes.

In such an environment, employees are as mobile as their employers, which means that offering training or other career enhancements may be necessary to recruit and retain good workers. “Assurances of long-term employment or defined career paths within the organization are far less important to employees in this environment than career paths they can control, and individual training that enhances their career potential,” the report comments.

That suggests a dual reality for employers: They must value their workers’ knowledge and skills, while at the same time acknowledging that today’s employee may work for someone else tomorrow. Japanese business culture, for example, tends to value personal relationships – and thereby the tacit knowledge in individuals-even more than Western culture does. As enterprises work more through alliances than through their own internal organization, the ability to manage networks of people may be as key to future success as the core competencies of the partners involved.

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