How Business Environmental Changes over the Past Two Years - Report Example

Critically assess how business environmental changes over the past two years Table of Contents Introduction 3 Literature Review 4 Discussion and Critical Analysis 9 Conclusion 12 Reference 14 Introduction Changes in the global business environment arising out of excessive international competition coupled with rapid advances in technology and globalization have been some of factors instrumental in changing the nature and operations of the market place. These changes have been putting demands on enterprises and their employers to create and implement new processes, structures and strategies. In this context a significant strategic role is played by the employee relations or industrial relations within the enterprise as to what needs to be done to bring about changes in the current strategies and practices in the areas of human resource management. The rising tension in the global scenario can be mainly attributed to the rapid changes in the political and economic scenario amidst which organizations operate. Employers have been continuously undertaking reform initiatives and developing strategies directed towards improving employment relations and which brings changes in behaviour and attitude at the workplace and addresses the issues of skill development, work organization and flexibility, compensation, cross cultural management etc (Macdonald, 1997, p.3). The project seeks to make an analysis of the changes in the business environment in which organizations operate and the consequent impact on their employment relationships. In this context, particular emphasis is provided on organizations in the UK. A critical analysis is provided in the project which discusses the views and arguments of researchers and practitioners on the subject. This is supported by presenting the outcome of previous researches and surveys. This is followed by a critical discussion of the subject and the data collected for the purpose. Literature Review It is seen that the new approaches adopted in organizations are based on a wide range of HRM and employment relationship practices which are directed towards improving the skills and flexibility of the workforce within the organizational environment which thrives on communication, collaboration, trust and cooperation between managers, workers as well as their representatives. However, the changes have been universally accepted in all organizations. They are predominantly prominent among the industrialized nations of the world. Low growth rates have been the fundamental reason for retarding the progress of technological advancement in Great Britain. It has ill-equipped the nation to adjust to the prevailing economic and political situation. The underutilized and minimally legalized system of regulation coupled with fragmented collective bargaining system, growth of labour organizations, low degrees of centralization, proved to be resistant towards attempts to change the system. Neither the coalition government nor the subsequent state initiatives succeeded in bringing about any structural innovation in the UK organizations (Jacobi, 1986, p.3-9). Significant changes were noticed among the trade unions in the organizations. The export and the modernization oriented growth were accepted willingly by the trade unions. It was believed that it would generate high levels of productivity and performance and this in turn would strengthen the bargaining power of the trade unions. A major emphasis has shifted playing a more protective role by the unions apart from performing their regular functions. Organizations are focussing more on the equitable distribution of social wealth which is reflected through the compensation structures and policies (Jacobi, 1986, p.3-9). This section will present some of the research outcomes conducted by the Labour Force Survey in 2005. The results will bring about the impacts of the economic downturn occurring in 2008 and 2009 compared to the previous years. The economic downturn occurring in 2008/2009 has caused a common problem in mostly all nations, i.e., it has raised the levels of unemployment in nations. Particularly stabilizing roles were played by the European as well as American nations with the aim to raise employment levels and maintain competitive compensation standards in the market (Vroman, 2010, p.2). Employees were compelled to leave their jobs involuntarily in the country. The following would throw light on the degree of unemployment gripping the UK economy after the economic effects of the recession. Figure 1: Percentage of involuntary employee job separation (Department of Business Innovation and Skills, 2005, p.17) The figure shows a high percentage of involuntary job separation in UK. This was primarily due to high redundancies which caused the organizations to remove them. As costs were rising employers could no longer afford to have redundancies and it was wise to remove them to maintain performance in the markets. In order to curtain the problem, employers have made an effective move towards reducing employee redundancies at the workplace. Labour markets have reacted to this change and a remarkably noticeable aspect can be seen that the number of employees who were in the same job since the last twelve months has gone up. There is greater job stability at the workplace as compared to that in the 1990s. The following figure would reflect this improvement in employment stability in 2005 as compared to that in 1995. Figure 2: Employee redundancy rates by gender, 1995 to 2005 (Department of Business Innovation and Skills, 2005, p.19) The following section would reveal the implications of external changes on employment relationships in organizations with particular reference to the working hours and work schedules. The pattern has been studied by various researchers and practitioners and they have come up with different opinions (Department of Business Innovation and Skills, 2005, p.19). According to Bewley, (2006), the scope and coverage of collective bargaining has reduced considerably in the UK since the last three decades. This has happened along with the reduction of union recognition and union memberships. In the year, 1970, 80% of the labour force in UK was under the coverage of collective bargaining; however, the membership has now fallen to 36% in 2003 (SAGE, 2010, p.296). There has been a steady decline in coverage since the 1990s; however, the number of organizations employing more than 10 workers with recognized unions has shown a decline since 1998 till 2004 from 33% to 24% respectively. It is needless to say that the conditions of workers, their pays and working conditions have demonstrated a declining condition during the same phase (SAGE, 2010, p.296). Significant changes have been noted in employee participation at the workplace along with the changes in business environments of firms (Eurofound, 2009). Claydon and Doyle (1996) have put forth the fact that the importance of employee empowerment is the fact that it generates business benefits, through improvement of collective and individual performance, and the satisfaction of employees’ need to have autonomy at the workplace and self-expression too (SAGE, 2010, p.292). Workers participation in the European Union has gone up considerably during recent years. The European Works Council (EWC) Directive, took initiatives to raise national participation of workers in the functioning and operations of organizations. Not only does it offer greater rights for workers to have information, knowledge and consultation rights but also represent more than 15 million employees to become an important and unique institution that compliments the national system of industrial relations (Eurofound, 2009). Researchers have little doubt about the political and socio economic changes in recent years impacting on the work intensity of organizations. Francis Green and Steven McIntosh consider computerised technologies and automation as few of the important factors in work intensification. With the introduction of information technology and advancement in technology, work has become extremely more rationalized and “idle time” has reduced considerably. Consequently the working hours of workers and employees have shown a gradual fall. The following two figures would highlight the same. Figure 3: People in employment according to their usual weekly hours of work (Source: Overell, et al., 2010, p.69) Figure 4: Weekly working hours by industry (Overell, et al., 2010, p.69) Political and economic changes have played the most prominent role in terms of job insecurities on the UK labour market. According to the WERS survey conducted by the Government, there appears to be significant improvement in job security when comparison is made between situations in the 20th and the 21st centuries. It is true that political imbalances and economic turmoil has de-stabilized the position of job securities in the markets; however, the situation is much better when compared to the previous years. The high levels of unemployment and job redundancies at the workplace are some of the factors which have brought about job insecurities in the labour markets (Overell, et al., 2010, p.33). Discussion and Critical Analysis It is apparent that business environments keep changing that consequently causes firms to adapt themselves to the changing environment. Some of the prominent examples of the same have been noted in the country of Britain. This has primarily been attributed to the economic changes in the nation and the world at large. Gradually firms have noted a change in their industrial relations, better known as employment relationships today. The economic recession of 2008 and 2009 is particularly responsible for this change in this context. Some of the key factors associated with the economic changes are high rates of unemployment, changes in temporary employment in the workforce, changes in wage rates, changes in earnings in industries, changes in income distribution etc. It is seen that the economic activities in nations have become highly interconnected that the pressures associated with globalization are felt intensely in nations. These pressures are found to be so overwhelming that they leave little differences in the employment relationship patterns in nations. There have been popular debates with regards to the effects of contemporary changes on aspects like working conditions, relationships between workers and managers etc. There is prediction about the international competition on wages and labour relations and the erosion of the nationally set labour regulations and legislations. It includes those which enhance union securities, or even encourage the pursuit for efficiency or equity (Bamber, et al., 2004, p.30). Till (1995), has put forth his argument that globalization is a threat for the established labour rights as it undermines the nations’ ability to guarantee these rights to organizations and workers. In fact the range of labour regulations that have emerged in countries was primarily dependant on the nations’ ability and propensity to discipline their capita resources. Hr eve argues that the representation of labour rights largely depends on the extent to which unions are able to develop transnational strategies in response to the changes in the business environments (Bamber, et al., 2004, p.30). Murray et al. (2000), has provided an example to highlight how the critical political economy approach is operationalised to bring about a relationship between employment relations and globalisation. Employment relationship changes were noted in Canada, when local collective agreements were introduced in a company in the nation competing with companies in the US at the threat of a closure. There was long term collective agreements in which new investments were tied with the unions’ joint resolution to not use strike weapons whole negotiating the contract. There are other perspectives of other researchers on the subject. Giles (2000), maintains that arising out of the liberalist-pluralist perspective, most of the scholars have treated globalization as an external agent in employment relations. This is mainly because of two reasons. This is because there are evidences of other stable and national patterns of employment relationships. He also suggests that economic changes and imbalances are treated as external agents as comparative employment relations emphasizes mainly on national spheres and ignores the foreign or international impacts (Bamber, et al., 2004, p.27). Some of the major aspects which have been noted in the organizations in UK arising out of the changes in their business environments are a reduction in the collective bargaining power of workers, decline in the degree and role played by unions, increase in employee participation, conditions of work etc. Recessions have led to job insecurity in UK organizations as unemployment rates have raised. Previous research also reveals that job redundancies could no longer be afforded by the employers which led to job cuts and organizational restructuring which spread insecurity even more. The role of unions was also feeble as they had declined in number and had very little bargaining power. From the above facts it is understood that economic changes did have a substantial impact on the employment relations in UK. Conclusion It is apparent the organizations remain exposed to the turbulent external business environment which can be caused by both political and economic factors. This project highlights some of the major economic changes which have reflected through the employment relationships in organizations. This is particularly evident from the perspective of the UK organizations. Critical analysis of the subject reveals that different researchers have different opinions on the subject. Some have treated external factors as being independent and as having no impact or influence on employment relations. While some other researchers have felt that with globalization, interactions between nations become more prominent which have caused them to restructure their employment relations in order to maintain competitive standards in the markets. Irrespective of the views of researchers and practitioners, there are evidences of changes in employment relationship conditions in the UK economy and also the world at large. The percentage of workers job separation involuntarily in the UK organizations is high. A vast decline in the workers bargaining power coupled with the decline in union activities and recognition has deteriorated working conditions at the workplace also. Computer technology also triggered unemployment as the same work could be done by less number of workers. The overall employment conditions in the labour market fell which is why government had to intervene to revive employment relationships conditions in organizations. The works of The European Works Council (EWC) can be mentioned in this regard. It was mainly effective in regulating workers conditions and enhancing their participation at the workplace considerably. It was instrumental in bringing back job security in the market. Reference Bamber, G., Lansbury, R. D., & Wailes, N. (2004). International and comparative employment relations: globalisation and the developed market economies. SAGE. Department of Business Innovation and Skills. (2005). Employment relations research series no. 56. [Pdf]. Available at: http://www.bis.gov.uk/files/file27472.pdf. [Accessed on November 18, 2011]. Eurofound. (2009). Industrial relations context. [Online]. Available at: http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/dictionary0.htm. [Accessed on November 18, 2011]. Macdonald, D. (1997). Industrial relations and globalization: challenges for employers and their organizations. Available at: http://www.ilo.org/public/english/dialogue/actemp/downloads/publications/dmirglob.pdf. [Accessed on November 17, 2011]. Overell, S., Mills, T., Roberts, S., Lekhi, R. & Blaug, R. (2010). The employment relationship and the quality of work. [Pdf]. Available at: http://www.goodworkcommission.co.uk/Assets/Docs/ReportsWithCovers/07.EmploymentRelationshipQualityOfWork.pdf. [Accessed on November 18, 2011]. SAGE. (2010). 10 Employment Relations. [Pdf]. Available at: http://www.sagepub.com/wilton/Chapter%2010%20-%20Employment%20Relations.pdf. [Accessed on November 18, 2011]. Vroman, W. (2010). Role of Unemployment Insurance as an Automatic Stabilizer During a Recession. DIANE Publishing. Read More