Fairfax Media's Downsizing: An Analysis of Industrial Conflict

This essay analyzes the industrial relations dispute at Fairfax Media, focusing on the company's decision to downsize 1900 employees and transition to digital media. The essay explores the resulting protests and the involvement of trade unions, examining the application of the Fair Work Act 2009 in resolving the conflict. It contrasts the Anglo-American outsider system of management with the insider model, highlighting differing perspectives on employee welfare. The essay concludes by discussing the role of trade unions and non-union employee representation bodies in safeguarding employee rights during organizational restructuring, ultimately detailing the resolution of the dispute and its broader implications for employment relations.

Running Head: INDUSTRIAL RELATIONS
INDUSTRIAL RELATIONS
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR’S NOTE

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The issue of downsizing is a crucial decision for the organization to make. The
organization decides to downsize its existing staffs when it feels that there is a shortage of
financial resources and capital or when the business is not yielding the desired results. The
organization can put forward the process of downsizing by implementing a number of notices as
well as taking some hard choices. The employees who lose their jobs start protests and rebel
against the organization to put forward their grievances. This makes the importance of the trade
unions and the labor unions relevant in the modern context. These bodies have been established
to address the issues and concerns of the employees so that the employees are not exploited
against. The concerns of the employees can be addressed by partially accepting some of the
concerns of the employees. The essay deals with the decision taken by the Fairfax organization
to cut down the jobs of 1900 of its employees and to digitalize the print media platform into
digital media so that he organization can boost its revenues in the market. The decision to
downsize was met with enormous protests and reactions from people belonging from diverse
backgrounds such as media, film and trade unions. The essay elaborates upon the decision to cut
out on the employees and the immediate consequence of such decision. The essay also elaborates
upon the issue of addressing the issue if it occurs again. The essay details about the issue faced
by the Fairfax organization and how it was mitigated by them. The Fair work act is also
elaborated in the essay. The main emphasis of the essay is on addressing the concerns of the
employees and the workers who are constantly worried about the future and outcome of them in
the organization. The process of downsizing involves the proper planning and implementation by
the managerial authorities. If done properly, the process of downsizing can reap great dividends
for the organization in the long run.

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Fairfax Media is considered as one of the largest media corporation operating in Australia
and New Zealand and invests in the print media such as newspaper and magazines as well as
operating in the radio and digital media outlets. John Fairfax who bought the Sydney Morning
Herald in the year 1841 established the company. The Fairfax family has since then had
controlled the administrative and business aspectof the company. The company also possesses
ownership rights for the most prominent Australian newspapers such as The Age, The Australian
Financial Review and holds the majority of the shares in the Domain Group and the Macquarie
Radio Network (Erdogan et al, 2014). The Fairfax Media also has joint ventures in the streamline
sector such as Stan and the online publishing agency HuffPost Australia. The present chairperson
of the group is Nick Falloon while the chief executive officer is Greg Hywood (Johanson &
Matson, 2015). The issue of cutting down the staffs and restructuring the organization is a global
phenomenon and occurs in all the organization from time to time. This is done when the business
of the organization is undergoing a slowdown and the organization decides to cut down its costs
and expenditure by downsizing the employees. Downsizing the employees can result in a
positive impact for the sales productivity as well as the growth of the organization. These
beneficial factors entice the leadership of the organization to downsize a certain number of
employees from the organization. The implementation if done properly can yield excellent
outcomes for the organization in terms of increased sales and revenues and if implemented
poorly, results in a number of unwanted situations and turmoil for the organization which can
even result in the filing of a lawsuit against the organization. In 2012, Fairfax Media decided to
downsize 1900 of its existing staffs and started to digitally convert its operations in publishing
newspapers such as The Sydney Morning Herald and the The Age (Vogt, 2016). The decision to
downsize its existing staffs resulted in a number of protests mainly from the employees who

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were about to lose their existing jobs. The employees were supported by a number of
organizations such as the Australian Manufacturing Workers Union (AMWU), the Media
fraternity, the people in the Entertainment industry, the Arts Alliance (MEAA), the Australian
Services Union (ASU), the United Services Union (USU), the Communications Electrical and
Plumbing Union (CEPU) and the Australian Council of Trade Unions. The Fairfax media’s
decision to cut down on the jobs meant the loss of at least about 1900 people losing their jobs
(Hartwell, 2017). This was a tough decision to make considering the fact that the organization
was running low on capital and financial revenues. The organization had no other option except
to opt for downsizing in order to maximize its revenues and keep the business afloat. The
decision of the Fairfax media to scrap the job of 1900 people also meant the joining of the trade
unions with the different fraternities and the people from diverse backgrounds uniting in order to
manage the problem of downsizing. This issue gained public attention from a large section of the
population.
The main issues in contention during the downsizing process by Fairfax Media, which
resulted in the loss of about 1900 employees losing out on their jobs in the organization. This
issue highlighted the importance of the management and the roles and responsibilities, which
they are supposed to exercise. The Management is the process which involves how to deal with
and control the people (Jacobi et al., 2017). It is the body which serves multi-purpose activities
and coordinates the business by managing the people and the work. It involves the process of
generating work and achieving the desired objectives through the people. In recent years, the
importance of management has increased mainly because it has to balance the employee
relations in accordance with achieving the objectives in an environment of high internal
competition. The Management board has tomaintain the labour costs and flexibility in their

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operations so that the business results in the generation of profit (Veblen, 2017). The external
constraints force the Management board to take some hard decisions which sometimes prove
unfavorable for the employees. Management policies and application are in a great need to be
comprehended in the wider framework of business objectives. The Management is dependent on
the aspects as to who governs its policies and frames the laws and rules regarding its work. This
separation of ownership from the control is based on the two models of Management which are
followed and practiced in different parts of the world accordingly. The first form of ownership
control model is known as the Anglo-American outsider system. In this model, the management
process is in alignment with the very intent with which the business is run which is to
concentrate solely on profit maximization. This model emphasizes on the fact that in all
likelihood, the external stakeholders who have substantive amount of stakes in the company have
every right to protect and safeguard their interests and seek ways to profit maximization even if it
leads to the point wherein they have to take some hard and unfavorable decisions (Galbraith,
2015). This model is followed in the United States of America, the Western countries of Europe
and Australia. The critics of this model argue that this model of management undermines the
value and investment done towards the employees and other capital stock and taking any
decision which results in the loss of these investments is totally unethical and against the
principle of justice. The employees and the workers are also investing some amount of time and
energy in the running of t he organization’s business so in a way, they are also shareholders. In
contrast, the insider model holds the view that the leadership of the organization have the
responsibility to nurture and take the important decisions for the organization more than that of
the external stakeholders. This form of management model is followed in the Asian countries
particularly in Japan (Carriger, 2017). This management model emphasizes on the fact that the

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employees and the workers are a crucial part of the organization and the organization has every
right and obligation to protect the rights and privileges of the employees and the workers.
The Fair Work Act 2009 is an important Australian legal document which was passed by
the government of Australia. The main aspect of this law was the reformation of the system of
industrial relations in Australia. The former Work Choices Act was replaced by the enactment
and passing of this Act. The core principle of Fair Work Act of 2009 was to promote the Good-
faith Bargaining among the dissenting groups which arises mainly due to industrial conflict
involving the different viewpoints of the employees and the management board. The Fair Work
Act attempts to evaluate and consider the concerns of all the members involved in the conflict
and solve them in a way so that the majority of the concerns can be addressed by them. The Fair
Work Act 2009 is based on the principle of Good-faith bargaining, in which the parties involved
take sincere and honest steps to negotiate with each other so that they can arrive at a common
stand point (Carrera, 2016). The parties involved here were the management board of the Fairfax
organizations and the employees of the organization who were supported by the various media
and trade unions. The Trade Unions are a form of employee representation and the Trade Unions
are established with the purpose of safeguarding the rights and concerns of the workers and the
employees of the organizations so that no injustice is inflicted upon them. The labour unions
were established in Australia from as early as 1911 (Clibborn, Lansbury & Wright, 2016). The
initial purpose of establishing labour unions were to spread awareness among the workers
regarding their rights and duties. The leaders of these labor unions realized the fact that union
must enter into alliances with the different organizations at both the state and the international
level to maintain a productive relationship with the workers and the employees (Preston, 2018).
The prime function of the trade unions and the labor unions is to provide a platform for the

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employees as well as the employers in order to allow both the parties to enter into a positive
relation with each other and make dedicated, conscious and constructive agreements for the
employees’ welfare. In Australia, the Australian Council of Trade Unions (ACTU) is the largest
representation of trade unions and labour unions and it had 46 registered unions and 9 trading
and labour councils. The Australian Council of Trade Unions has membership in the
International Trade Union Confederation (Axelsson & Easton, 2016) . Besides the trade unions,
the non-union employee representation bodies are also gaining significant attention due to the
constraints witnessed in the employment relations and the enlarged representation gaps (Kalev,
2014). With the ever growing decline in union membership, the non-union representational
bodies have emerged as a viable alternative due to its flexibility and efficiency. Their main focus
is on addressing the concerns and grievances of the employees and that the employees get proper
and fair treatment from the employers. The employees are to be safeguarded against any form of
exploitation whatsoever. However, the establishment of non-union representational bodies has
been severely constrained by the present Australian regulatory system which emphasizes on
promoting a union substitute.
The dispute was resolved by the slashing of 1900 employees who lost their jobs as a
result of the downsizing process by the Fairfax organization. The amount of panic created by the
decision to downsize the number of employees resulted in the outburst of reactions from a large
section of the population across different working groups. This issue was supported by the media
fraternity, the trade unions as well as the people employed in the printing industry. The main
outcome of the decision of the organization to digitalize its print media platforms such as the
Sydney Morning Herald as well as The Age resulted in the loss of all the people who were
employed in printing of the papers (Beharrell & Philo, 2016). The downsizing of the existing

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staffs meant that the years of investment which were provided to the employees were all wasted
as from now onwards the media information will be printed in digital form. The digital media
would be free for the people to a certain extent after which the charges would start applying in
the digital media applications. Any form of industrial conflict if it arises, can be mitigated by the
consultation of the managerial leadership with the aggrieved employees and workers (Calveley,
2017). The employees who are protesting can be either protesting in a covert or overt manner
depending upon the scale and magnitude of the downsizing policies taken by the organization. In
the case of the Fairfax organization, the protesters were protesting in an overt manner. The
journalist protesting against the downsizing policy of the organization realized that it is time to
invest in journalism instead of editing newspapers as the business of publishing newspapers is
facing a lot of turmoil and low business revenues (Rawling, 2015). Richard Hyman proposed a
theory wherein he stated that the industrial conflict arises as a result of the unhappiness and
inconvenience of the employees and they vent out their anger and frustration by trying to
sabotage the existing functions of the organization (Gore, 2017). The outcome of such a conflict
can be accessed from the fact that the actors who perform the act of protesting which in the case
of the Fairfax organization were the employees and the trade unionists , they protest in order to
put forward their bargaining power. They will call off their protest as soon as the proposal in the
bargain is accepted and the organization accepts to reconcile the employees and the workers
(Brigden & Milner, 2015). This is followed by the arbitration process wherein the employees
demand a rule or a law to safeguard their future in the organization. The main argument of the
employees is to put forward a law which safeguards their laws and rights as employees of the
organization. The employees argue that the investment done by the organization on the
employees must be respected and acknowledged. They agree that it is important for the

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organization to opt for profit maximization but more than that, it is imperative that the
organization acknowledges the time and energy given by the employees in the organization.
Taking a decision to cut out the employment opportunity will be a form of injustice upon the
employees of the organization.
If the dispute still persists, then it is important for the leadership as well as the managerial
board to make a conscious effort to understand the nuances of the industry- employee relations.
The preconceived notion among the managerial boards is that the trade unions increase the costs
and pose a threat to the productivity is embedded in the neoclassical economic theory. It is also
referred to as the monopolistic approach of the trade unions to demand a rise in wages. The
Organization views the trade unions as mischief mongers who are intentionally causing a
misallocation of resources. This leads to the adjustments in employing the right people. Then, the
unions decrease the output by limiting the ability of the management boards. The management
boards can miigate the dispute by taking conscious efforts into the trust-building process. The
trust deficit which exists amongst the employees and the management board can be reduced by
holding meetings of the leaders of the union and the management board. The meetings must be
held with the intent to solve the issues affecting the leadership as well as the work afflicting the
organization. The impact of the protest can also be mitigating by partially accepting the demands
and requests of the aggrieved employees. This can be done by accepting some, if not all of the
demands. Doing this will allow the organization to stop the protest from escalating further to an
enormous scale and magnitude. The protest becomes bigger and gains maximum attention if it is
able to escalate on a lengthy basis. The trade union can influence the organization leaders to take
a conscious decision to accept the demands by making them concerned with the disruption in the
work caused due to the impact of the riots and the protests (Freeman, 2015). The protests are

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afflicting the work of the managerial boards by deflecting them from focusing in the key aspects
of the business and concentrating more in the resolvement of the protests and the disruption of
work. Another way to address the issue is to provide and upgrade the employees with assisting
them by providing them technical assistance and knowledge about the relevant changes in the
technological areas which have taken place in the world. The emphasis of any business is on
innovation and up gradation of the resources, whether it be the manpower or the technical
aspects. The up gradation of the manpower can result in the efficient outcome of the resources
and the chances of employees protesting can be averted way before it happens. There should be
an ideal relationship amongst the employees and the owners of the organization so that the
leaders can assist the employees and gain the maximum output from the employees in order to
generate more output from the employees. The efficiency of the employees can also be increased
if they are motivated at all the time. The motivated employees have the ability to perform at the
best of their potential (Freeman, Doucouliagos & Laroche, 2017). The decision to downsize can
demotivate even those employees who are not to be affected by the downsizing decision.
From the above analysis, it is clear that the organization can benefit from the prospect of
downsizing if it is implemented in the proper fashion. The issue with the organization is that they
take the decision to downsize without ever consulting the employees or at least informing them
about the outcomes of the process of downsizing. The issue of downsizing can be averted if the
organization can make alternative plans regarding the placement of the employees in some other
organization or work. The trade unions are doing a great task in addressing the issues and
concerns of the employees. The trade unions were established based on the principle of offering
the employees some sort of assistance and help in the work front. The trade unions seek to
safeguard the employees from exploitation and extreme difficulty. The trade unions must be

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given more powers so that all the employees and workers can avail of the membership and the
facilities which are provided by the trade unions. The trade unions can also play a dominant role
in mitigating the strained and tumultuous employer-worker relations. The trade unions can foster
a relationship with the workers and the employers by bringing them in the same table and
making them attend the meetings. This process should be held more often so that the relationship
among the two organizational bodies improves. This will enable both the employer and the
workers to understand the concerns and the worries of each other and result in the better
coordination and working of the organizations. The downsizing process can be effectively sorted
out by the process of engaging the workers and the employers in an effective dialogue process
with each other so that the discrepancy and misunderstandings are sorted out and there exists
cordial relation among the two.

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