Breaking down the P5 Standard for Sustainability in Project Management: Labor-Management Relations

The GPM P5 Standard for Sustainability in Project Management is a valuable resource for project managers and organizations. The P5 Standard focuses on understanding and managing the potential impacts of your project on the environment, society, and economy. Although its practices are clear and straightforward, we often receive requests for additional context. Therefore, we have launched a 49-part series aimed at dissecting each element of the standard, providing practical explanations one element at a time.

#2 Labor-Management Relations

Labor-management relations are a fundamental aspect of the GPM P5 Standard. This element focuses on fostering a harmonious and productive working environment across all levels of the project organization, from project managers to team members. In essence, it’s about building trust, understanding, and cooperation among all project stakeholders.

The basis of effective labor-management relations lies in respecting each other’s opinions, actively resolving conflicts, communicating clearly, and ensuring that everyone is aware of their roles and responsibilities. The project team should recognize and support both legal and human rights for everyone involved in the project and define and implement approaches for addressing disputes.

Two Examples: When it goes right.

Consider a large-scale construction project, like building a new hospital. In this scenario, the project management team (representing the hospital board and the construction company) and the labor unions (representing the construction workers) negotiate a Project Labor Agreement (PLA), which is a pre-hire collective bargaining agreement that sets out the terms and conditions of employment for the duration of the project. It covers areas such as wages, work hours, health and safety standards, dispute resolution mechanisms, and other labor-related issues.

In this example, effective labor-management relations are crucial to the success of the project. Both parties need to work together to ensure the project is completed on time, within budget, and to the required quality standards. They also need to resolve any disputes or conflicts that arise quickly and amicably to prevent delays or disruptions to the project.

This collaboration and mutual respect between labor and management contribute to a positive working environment, which can boost worker morale and productivity. Moreover, it can enhance the reputation of the construction company and the hospital board, making them more attractive to potential employees and partners in the future.

In this example, labor-management relations aren’t just a focal point – they’re a critical factor in the project’s success.

When it goes wrong.

Now imagine you are a project manager hired to manage  the construction of a new manufacturing facility for a multinational company. The project has a solid business case and on paper everything looks to be on track. Once underway, it turned into a labor-management nightmare due to the company’s bad corporate culture and lack of proper policies.

The rigid hierarchy and top-down decision-making of the company disregarded workers’ voices and concerns, leading to frustration and disengagement. With no clear labor-management policies and weak practices, workers felt undervalued and excluded from decision-making. The project team looks to you to solve the issue.

What would you do?

The P5 Standard says: 

Labor/management relations in the project context means building trust, understanding, and cooperation among project and other managers, organizational staff, and project team members. It involves respecting each other’s opinions, resolving conflicts proactively, communicating clearly, and ensuring that everyone is aware of their roles and responsibilities.

According to the Standard, the project team should:

  • Recognize and support both legal and human rights for everyone involved in the project.
  • Define and implement approaches for addressing disputes.
  • Regardless of position or rank in the company, treat all workers fairly.
  • Be consistently constructive when providing feedback.
  • Be open to learning from all members of the team.

By performing a P5 Impact Analysis the project team can assess the state of labor management relations and establish a Sustainability Management Plan (SMP) that includes interventions to safeguard the project, workers, and outcome.

Three examples of organizations that get it right.

  1. Toyota Motor Corporation (mentioned earlier):
    • Toyota involves employees in decision-making processes through quality circles, where workers can suggest improvements and offer feedback on production processes.
    • The company maintains open communication channels with labor unions, discussing issues, concerns, and potential solutions regularly.
    • Toyota’s approach to continuous improvement encourages employees to identify and resolve problems, leading to increased job satisfaction and productivity.
  2. Southwest Airlines:
    • Southwest has a profit-sharing program that distributes a portion of the company’s profits to all employees, fostering a sense of ownership and shared success.
    • The airline encourages a friendly and respectful work environment, where employees feel valued and appreciated for their contributions.
    • Southwest actively involves employees in decision-making through regular meetings and forums to discuss operational matters and potential improvements.
  3. General Electric (GE):
    • GE has a strong commitment to workforce training and development, providing employees with opportunities to enhance their skills and knowledge.
    • The company has a history of negotiating fair labor agreements with unions, addressing employees’ concerns while ensuring the company’s long-term sustainability.
    • GE promotes a culture of transparency and inclusivity, encouraging open dialogue between management and employees.

When labor and management work hand-in-hand, it’s a whole lot easier to keep those quality standards high – and that’s key to nailing a project. And hey, let’s not forget the rep boost an organization gets when it’s known for great labor-management relations. It makes the place a magnet for potential employees and partners, setting up a solid foundation for future projects. Bottom line? Positive labor-management relations don’t just help hit those project goals; they’re also a big win for worker satisfaction and can really put the pedal to the metal on organizational growth.

To learn more about Sustainable Project Management, check out our training opportunities!

Michael Young

Michael is the GPM Vice President for Membership and Research. As a program and portfolio management consultant, he specializes in sustainability, working with C-level executives around the world to reduce risk, save money and improve their reputation. Over the past 20 years, he has lead the development of national and international standards in project, program, and portfolio management standards for ISO, IPMA, AIPM and PMI. He has authored over 50 articles, papers, book chapters and edited books and my work has been featured in Business Review Weekly, Australian Financial Review, The Sydney Morning Herald and the Age. Michael has also been recognized as a winner of the Australian Business Awards in innovation, sustainability and project management, the Telstra Business Awards, Project Management Achievement Awards and the awards.

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