Operating Rules in Organizations Also by Bénédicte Reynaud LE SALAIRE, LE RÈGLE ET LE MARCHÉ LES THÉORIES DU SALAIRE LES LIMITES DE LA RATIONALITÉ: Les Figures du Collectif Operating Rules in Organizations Macroeconomic and Microeconomic Analyses Bénédicte Reynaud Research Director, Centre National de la Recherche Scientifique CNRS–Cepremap, Paris © Bénédicte Reynaud 2002 Softcover reprint of the hardcover 1st edition 2002 978-0-333-75441-2 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2002 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-41328-7 ISBN 978-1-4039-1442-2 (eBook) DOI 10.1057/9781403914422 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Reynaud, Bénédicte. Operating rules in organizations/Bénédicte Reynaud. p. cm. Includes bibliographical references and index. 1. Industrial management. 2. Industrial organization. 3. Industrial management – France – Case studies. 4. Atelier de maintenance des équipements électroniques (Régie autonome des transports parisiens) I. Title. HD31 .R4694 2002 330’.01–dc21 2002074833 10 9 8 7 6 5 4 3 2 1 11 10 09 08 07 06 05 04 03 02 To Jean-Louis ‘Rules do not follow from an act of comprehension.’ —Ludwig Wittgenstein,Wittgenstein’s Lectures, Cambridge 1932–5 Contents List of Figures xi List of Tables xiii Acknowledgements xv List of Acronyms xvii General Introduction 1 1 Trust and the Wage Relationship 9 The difficulty of establishing trust: the problem of intentions 10 Codes and the establishment of trust 14 The conditions for stabilizing trust 19 Conclusion 23 2 Wage Disindexation in France and the Incompleteness of the Employment Contract 25 The credibility of the disindexation of wages relative to prices 26 Rules as instruments of disindexation 33 Conclusion 43 3 The Introduction of a Wage Bonus in a Workshop of the Paris Métro 45 An interpretative rule 46 Transforming an interpretative rule into a ‘ready-to-use rule’ 50 Conclusion 60 4 Following the Rules: Definition and Practical Implications 61 The incompleteness and plurality of rules 62 Routines in evolutionary literature 68 vii viii Contents Routines and ‘the void at the heart of rules’ 74 Conclusion 78 5 How Rules Operate in Practice: The Team Productivity Bonus, Productivity and Work Quality at AME, 1992–2000 79 The slowdown in labour productivity following the introduction of the team productivity bonus 80 The comparability of the teams 82 EK1: maximizing the bonus through amendments to the team contract 87 EK3: from maximization of WOUs to the forward- looking management of debt sheets 98 The micromechanics team: guaranteeing 50 per cent of the maximum bonus 105 Conclusion 112 6 Rules, Routines and Habitus 117 A critique of the mechanistic concept of rules 117 The interpretation of rules and the power of custom and practice 122 ‘Rule-following’ and the construction of strategies for applying rules 127 Conclusion 132 Notes 135 Annex A-1: The AME Teams in 1992 143 Annex A-2: The DEC Agreement 145 Annex A-3: The Minimum and Maximum DEC Ratios 149 Annex B-1: The Levels of Maintenance in the AME 151 Annex C-1: EK1: Regressions Between Debt Levels and Fault Recurrence Rates 153 Annex C-2: EK1: Number of Amendments Concluded between 1992 and 2000 155 Annex C-3: Content of Amendments Negotiated by EK1 157 Annex C-4: All EK1 Amendments Relate to DEC in t–1 161 Annex C-5: Content of Amendments Negotiated by EK3 163 Contents ix Annex C-6: Evolution of the Fault Recurrence Rate and of the Minimum and Maximum DEC Thresholds (EK3) 165 Annex C-7: EK3: Regressions Between Labour Productivity and Debts 167 Annex C-8: Regressions in the Micromechanics Team 169 Annex C-9: Amendments Negotiated by the Micromechanics Team 171 Annex C-10: Chronology of Changes to Coefficients and Other Parameters Affecting Productivity 173 Annex C-11: Evolution of Labour Productivity in Volume Terms 177 Bibliography 179 Index of Names 189 Index of Subjects 191