Employee Relations in Contemporary Organisations - Essay Example

 Employee Relations in Contemporary Organisations Employee relations is an important element of human resource management. Blyton and Turnbull (2004) define employee relations as the formal and informal processes of people management in the workplace, which includes all the systems of employer-employee relationships. Employee relations refer to the mechanism through which matters between employees and their employers are resolved to prevent liabilities for the organisation (Ian, 2010). Blyton and Turnbull examined important evolutionary events and their influences on labour in the UK today. The main impetus for employee relations is the need for participation in management and the encouragement of participation as a result of democracy (Blyton and Turnbull, 2004 p276). They state that “participation is by definition a higher-trust and positive-sum activity where emphasis is placed on shared resolution of issues to the mutual benefit and gain of those involved” (Blyton and Turnbull, 2004 p276). This implies that participation is an appropriate means through which both employers and employees can resolve their differences. However, the idea of participation led to the creation of trade unions an the incorporation of trade unionist policies in workplaces (Blyton and Turnbull, 2004). Also, the inclusion of European social policies encouraged bargaining and collective participation. Evolution from the Old Unionism Boxall and Purcell (2003) identify that the old industrial relations of the early 20th century was about control and stability and gaining agreements to keep the production system going and avoiding disruptive conflicts. These arrangements were not legally enforceable. However, the post-war era ushered in a new period where participation of employees in organisations was doen through unions. These unions were representatives of employees through collective bargaining arrangements. Collective bargaining is defined as “a process through which representation of employers and employee organisations act as joint creators of substantive and procedural rules regulating employment” (Blyton and Turnbull, 2004 p226). In other words, these were situations where important and relevant issues between employers and employees were discussed. The most common 'substantive' issue is the demand for fairer wages. Also, it involved the utilisation of a clearly laid down procedure or system whereby employees could assert their demands based on the market value of their collective supply of labour. Most businesses after 1950 had unions. The only exceptions were traditionalist organisations that hated unionism and sophisticated paternalists who had management policies which substituted for the unions' presence (Blyton and Turnbull, 2004 p303). However, towards the 21st century, employee relations evolved after the old system of tripartite negotiations collapsed. In the 1980s, trade unionism and collective bargaining fell because of three main things: 1. There was a reduction the proportion of employees covered by collective bargaining arrangements. 2. There was a growing tendency for those arrangements to be local rather than nation and 3. The narrowing of the scope of collective bargaining. In 1984, 70% of employees were members of collective bargaining groups. However, in the 1980s, the structures of the trade unions were exposed because they were not capable of dealing with the economic restructuring (Blyton and Turnbull, 2004). In 1990, only 52% of workers were members of collective bargaining groups. By 1998, this figure had fallen to 40%. Today, the main framework of employee relations include three main elements; science building, problem solving, ethical systems(Kaufman, 2004 p42) . These elements define and shape the systems of employee relations that exist in the workplace and defines the relationships between employers and employees. After 1996, unionism took a new view. The so called 'new unionism' had three main approaches (Blyton and Turnbull, 2004): 1. Partnership Approach: Here, the business employed core workers from organisations with union experience. The labour systems were such that the employees merged their common interests with management. Representation was democratic and the union was in-house and was seen as a stakeholder unit representing employees. 2. Organising Approach: In this case, the employees were recruited from organisations and workplaces that had limited union activities. The employers and employees used a conflict management approach to resolve issues. Participation was democratic and employees played active roles in the work place. 3. The Frontline Approach: Here, the employers recognized limited union presence. The employers issue direct concern with frontline workers. This centralised system ensured that there could be civilised interactions between employers and emloyees which brought results. Background of Labour Relations in the UK Britain was the first country to industrialise and thus the first to set up industrial relations institutions (Singh, 2009 p50). This is because the industrial revolution in Britain put the country ahead of its contemporaries and thus the need to create systems and structures to handle grievances of workers first happened in the United Kingdom. It can be logically inferred that the growth of industrial relations systems and structures in Britain had links to protests of individual workers who felt they were treated like slaves or had to endure harsh conditions similar to the workhouses that existed in the early 1800s. In the early 20th Century, Britain's Industrial relations was based on challenges of the industry like conflicts over wages etc (Singh, 2009 p50). Thus workers sought to argue for fairer distribution of wealth and fair treatment. The contrast between this era and the 21st Century lies in the fact that a lot have changed, in terms of rules and regulations at work. Additionally, managers do a lot more to align individual worker interests with business interests. After the Second World War, the post war economy put pressures on employees to work hard to rebuild the nation which had gone through a lot of destruction under Nazi bombing. Under immense pressure, employees had to stick together and argue for fairer treatments from employers and the government so unionism increased. Cole and Ohanian (2001) identify that GDP fell by 1% between 1913 and 1930 in Britain due to the Great Depression. There was a further fall of 7% after the Second World War ended due to war time damages (Cole and Ohanian, 2001). The earlier depression of 1913 to 1930 created the impetus for trade unionism (Carruth and Disney, 1988). However, it was after the Second World War that led to the increase in the members hip of the trade unions in Britain (Carruth and Disney, 1988). The emergence of the trade unions centralised the case for a strong collective bargaining power for employees. This built the foundation for industrial relations. This is because there was a compelling case for employers and the government to listen to the collective demands of the trade unions. The government had to remain sensitive to the demands of the trade unions. In order to ensure their rights, governments that came to power after the Second World War had to make laws that guaranteed the rights of these unions. The Donovan report of 1968 showed that trade unionism and employee organizations were focused on industry level and little concentration on firm level (Singh, 2009 p50). This is because workers saw a stronger synergistic potential if they stuck together rather than work as individuals arguing with firms for better conditions. On the other hand, the average British person of the 1960s and 1970s had a strong sense of belonging so the workers had to stick together and make demands on the industrial level rather than on an individual level. This was mainly induced by the regulations that were put in place to grant certain rights and privileges to trade unions. As such, the need for bargaining on the firm or industrial level was effectively eliminated. Employee relations in the UK evolved from industrial and commercial sector concerns and it involves conflict and conformity (Pettinger, 1999 p1). This involved conflicts and demands by trade union groups against employers. The government had to intervene at different points in time in order to resolve this. In most instances, pluralism was employed to resolve stakeholder issues in a win-win manner and satisfy all the parties viz employees, unions and employers and government (Blyton & Turnbull 2004 p32 – 3:Pettinger, 1999 p1). Employee Relations 30 Years Ago As Singh identified, by the late 1970s, relations between employers and employees were based on industry level and not firm level. Political The 1974 reforms of the British government resulted in statutory right to trade union recognition (Singh, 2009 p51). Workers were granted a set of individual rights to improve collective bargaining. There was an extension procedure permitting trade unions to use legislation to force employers to bargain. This was because the Arbitrary court system had a legal right to ensure that the employees were heard and there were appropriate systems through which individual workers could negotiate collectively through trade unions (Gross & Companance, 2009 p141). Economic However, it appeared that there were a lot of unrests that these reforms brought to the British economy. This is because the employees used techniques like strikes and lock-ins to ensure that employers yielded to their demands (Smith, 2006). There were numerous industrial chaos and strikes that resulted in serious financial crises and challenges. In the 1970s, the strikes caused an annual average loss of 12.9 million days in labour (Aldcroft and Oliver, 2000). The conflict in this period was such that the demands of employees via the unions required these tough measures. This is because the employers also had their interests to protect. As such, collective bargaining was the tool through which employees and the unions could seek their interests... During the Margaret Thatcher period, the government came up with the Employment Relations Act of 1979. Although this limited the power of the trade unions, workers' representation in the UK remained on the basis of industries. This effectively limited the chaos and abuse of powers of the trade unions and limited their collective strengths and abilities (Singh, 2009 p50). Social At that time, there were numerous social conditions and systems that supported industrial based unionism. First of all, the educational and career development system was made it convenient for that to happen. We notice that the right of women were gradually improving in Britain at that time so it is apparent that working men were the bread winners of the families so there was the need for them to make demands and request for wages that would fairly satisfy their needs as providers for their individual homes. Also, the methods of employment were different. Typically, people were employed to work from 8am to 5pm. Thus workers had their lives tied to their employers so they had come together and make demands that would enable them to get the best results for their actions and efforts. Also, job security was much more enshrined. People with qualifications for specific jobs were often limited so they had more rights and could demand more especially in industries that required rare skills like engineers. Additionally, the public sector structure was very predominant in the UK thirty years ago. The state in 1979 can be described today as more of a welfare state than a capitalist state (Svallfors and Taylor Gooby, 2002). The system of industrial relations, which was influenced by the trade unions ensured that employers in both the public and private sector had to remain cautious of the demands of employees.. In this situation, employees had a sense of belonging which was entrenched in their rights and abilities to get their interest honoured through collective bargaining. They therefore sought to use the legal and judicial advantages they had to demand more rights in a collective manner rather than single efforts. It is worthy to know that at that time, there were few entities that operate as private firms do in the 21st Century, where unionism is fairly uncommon in private businesses. Most employees in all sectors belonged to unions. Workers in both the private and public sectors came together to demand the common rights of all employees. Technological Technologically, there was a limit to the commercialisation of methods of production and systems. Only few people could afford to set up systems and structures that supported production. Again, this was very different from today's Britain where technology and outsourcing allows people to form businesses in a fairly easy fashion. In the 1970s, the government and major entrepreneurs were very dominant so the only way they could be challenged was through industrial based lobbying groups like trade unions. This is because the production systems were extremely expensive to set up and they were not easily maintained. Also, production was centralised. In other words, a producer for a given product or service had to handle the entire processes unlike today where various stages of production are outsourced and there are numerous firms that share the various stages of the process. Due to this, the government and entrepreneurs were extremely powerful thirty years ago and they had a lot of ability to manipulate things to their advantage. Thus the only way the average worker in the 1970s Britain could get his needs heard and attended to with the seriousness it deserved could only be attained if all the workers came together to make demands and ask entrepreneurs and the government to be sensitive to their needs. Therefore solidarity and unity was very essential for the various workers in the United Kingdom. In the 21st Century, work functions have been decentralised through the process of outsourcing and the proliferation of technology. As such, there is a lot of competition and employees are more like partners rather than adversaries. As such, the collective system of industrial relations is no more relevant. This has created a gap that has been filled with the more co-operative employee relations system. Status of Stakeholders Employers/Management: As identified earlier, employers were typically powerful individuals who controlled wealth and rare production systems that could not be easily duplicated. Management who represented entrepreneurs also had a lot of power to decide a wider range of things that could affect the average worker. In today's world, businesses do not wield the powers they controlled four decades ago. There is decentralised authority and employees are more on a similar level in negotiations than they were in the 1970s. Unlike today where employers and management need to be sensitive to numerous stakeholder needs, employers thirty years ago had fewer restrictions in their quest for profits. It is apparent that a lot of laws have evolved over the past twenty years that demand the people charged with running organisations to be more considerate and compliant with rules that demand management to focus on things other than profitability. In the 1970s, there was the temptation for employers to ignore the needs and desires of employees since they had the power to ensure that employees could not do much against them. So employers were not so much moved by the actions of individual employees or smaller firm-based employee unions. However, in the UK today, there are many corporate governance laws that ensure that employers comply with relevant laws. This means that individual employee demands and firm-based collective bargaining power is significant in getting employers to yield to employee demands. Trade Unions/Employees: The miners strikes of 1974 and 1979 gave the impetus for workers in Britain to build up collective industrial bargaining power (Debroy and Kaushik, 2005). This was best organized if the workers of a given sector or industry came together to make demands. In this vein, they could lay down their tools and businesses that needed their services would have no other option but to get to the negotiation table to speak with them and meet their demands. Thus trade unionism was the main element of these individuals in their fight against powerful employers and the state. Government: The UK government, being democratic in nature and based on party politics is strongly connected to workers. The encouragement of trade unionism was one of the methods of parties gaining popularity with workers. Thus the liberals who preceded the Thatcher administration had to encourage unionism. This is because there were few laws that encouraged negotiations before strikes. Also, the pre-Thatcher administrations had a limited legal framework that gave room for cooperation before the use of radical methods like strikes and lock-ins. However, the period after 1979 marked an era where the consolidation of labour laws to promote co-operation between the unions and employers began (Gennard and Judge, 2005) This gave way for the consolidation of the Trade Union and Employments Rights Act of 1993. This encouraged trade unions and other employers to undertake direct negotiations that sought to prevent inflation and other forms of threats that could cause the UK economy to grind to a halt any time the unions threatened to strike (Gennard & Judge, 2005 p10). Changes in Employee Relations In 1998 Work Place Employee Relations Survey revealed that only 47% of workplaces had union members (Gennard & Judge, 2005 p10). This clearly shows that the use of industrial based bargaining and trade unionism had shrunk exceedingly in the 1990s. There were numerous factors that can be identified and connected directly to this trend. Political: Politically, the UK's membership of the European Union in 1973 created a situation where fundamental rights of people, particularly the right to freedom of association was guaranteed. This gave room for the unions to work together to attain their ends. However, the European Union membership meant that the UK government had to make changes to its public sector. International financial pressures like the need to maintain a strong British Pound required that efficiency was put ahead of adversarial conflicts. There were also some rules like competition rules from the European Union which ensured that small businesses could be formed and this made it inappropriate for unionism to become the main way through which employee relations could be discharged. Economic: The pressure on businesses and the UK government shifted from one of welfare to one where value for money was the main focus. This therefore implies that the focus changed from just doing business to create wealth for owners but also to find ways of cutting down costs and improving systems and structures. This therefore changed the way employers related with employees. Employees were seen as partners who supported employers to attain some economic objectives. Due to the differences in the economic objectives of businesses, individual workers in companies and public sector entities had to make demands at a local firm level rather than the industrial approach whereby salaries were often similar. There is a huge diversity in the potential salaries that people will attain in different firms so it is not very positive for individuals to use a trade union approach. Social: Socially, there has been a change in the social system. Now more women are working and the family system is no more the traditional type that existed in the 1970s. In the 1970s, families were made of a man and his wife and children [usually more than two]. The social structures were much more tight and close knit. However, in the world today, people are more individualistic than ever. Marriages are somewhat optional. Childbearing is not a must as it used to be. As such, demands are more individualistic and this does not encourage the collectivism that trade unionism seeks to attain. Secondly, there is an increase in competition on the labour markets. This therefore means that if you refuse to work, another person would take up your job. This is because there are now many universities and a lot of people who are qualified with different skills and abilities. In the 1970s, jobs were extremely specialized. Educational systems were very specific in nature and there were strict demands on people entering professions. Forty years ago, degree holders were relatively rare in the UK society. However, education and career progression appears to be a little more flexible in the 21st Century. This is made more serious and pronounced by the fact that there have been the elimination of restrictions on international barriers on workers entering the UK. The European Union has allowed a wide array of potential employees from various parts of Europe to compete with employees. There is also a huge pool of immigrants from other parts of the world who can take up jobs. This has affected the nationalistic British-based collective approach to employee relations in the United Kingdom today. Technological: In this era, technology is easier and cheaper to set up. Individuals can easily pool resources and set up new production systems and structures. This therefore allows numerous production systems to be set up with little hindrance. This therefore makes it easy for aggrieved workers to set up their own businesses rather than engage in collective bargaining in some sectors like the service industry. On the other hands, the presence of cheap technology enables investors to enter the markets and set up competing firms. Since labour is one of the factors of production, it is only natural that workers will be able to move freely with little emphasis on the need to engage in collective bargaining. On the other hand, the proliferation of businesses also makes it more appropriate for employers to negotiate with their employees at a firm level and this has been the basis of employee relations in the 21st Century. Impact on Stakeholders Employers/Management: In business today, the success of the business shapes the way employers relate with their employees. Employers are now more responsible for their employees due to corporate governance systems which require them to respect labour laws. As such, employees have more options in getting their employers to listen to their pleas on an organisational level. This therefore means it is not really necessary to join unions to attain this end. Trade Unions/Employees: Currently, employees seek job satisfaction, job security and involvement in decision making. Due to this, employees seek to find ways of balancing their personal interests with the demands of management. As such, it might not be very appropriate to bargain from the national level.. Rather, they seek to contribute to their employers for a longer period of time and for the best possible returns. They therefore try their best to ensure that they get the best of their partnership with their employers rather than get unionism. In spite of this popular trend though, trade unionism continues to exist in the UK and is supported by the European Union Court of Human Right rulings allowing freedom of association (Gross & Compalance, 2009 p141). Government: Trade Union Reform & Employment Act of 1993 removed ACAS' statutory duty to encourage collective bargaining to improving industrial relations by settling disputes (Towers, 2004p11). This therefore means that the government can have less responsibility towards the demands and collective activities of individual workers. Thus the government typically comes in to intervene in the public sector and extremely large businesses. However, it is not at the volume it was thirty years ago. Conclusion Industrial relations has undergone the evolution to employee relations over the past forty year. Industrial relations was the main source of bargaining because in the 1970s, employers had a lot of power and control over their employees. The only way employees could assert their needs was to come together and bargain with governments and employees. However, changes in social systems, employee focus and other factors have led employees to negotiate on the firm level rather than through unions. This has become the basis for employee relations which exists today. References: Aldcroft, D. H and Oliver, M. J. (2000) Trade Unions and the Economy 1870 – 2000 London: Ashgate Publishing. Blyton, P. and Turnbull, P. (2004) The Dynamics of Employee Relations Basingstoke: Macmillan Carruth, A and Disney, R. (1988) “Where Have Two Million Trade Union Members Gone?”Economic Vol. 55 No. 217 pp1 – 19 Cole, H. L. and Ohanian, L. E. (2001) “The Great UK Depression: A Puzzle and Possible Resolution” Federal Reserve Bank of Minneapolis: Research Department Staff 295. Debroy, B and Kaushik, P. D. (2005) Reforming the Labour Market London: Academic Foundation Press. Gennard, J. & Judge G. (2005) Employee Relations CIPD Publishing Gross J. A. & Compalance A. (2009) Human Rights in Labor & Employment Relations Cornell University Press. Ian Clive (2010) Employee Relations Available online at: http://hr.toolbox.com/wiki/index.php/Employee_relations Accessed: 25th October, 2011. Kaufman, B. E. (2004). The Global Evolution of Industrial Relations New York: International Labour Office. NASA’s Goddard Space Flight Center Office of Human Relations. (2001). What is Employee Relations? Available online at: http://ohr.gsfc.nasa.gov/employee_relations/whatis.htm Accessed: 25th October, 2011. Pettinger R. (1999) Effective Employee Relations: A Guide to Policy & Practice in the Workplace London: Kogan Page. Singh P. N. (2009) Employee Relations Management Pearson Education India. Smith, P., Morton, G. (2006), ‘Nine Years of New Labour: Neoliberalism and Workers’ Rights’, British Journal of Industrial Relations, 44 (3) Svallfors, S. and Taylor-Gooby, P. (2002) The End of the Welfare State?: Responses to State Retrenchment London: Taylor and Routledge. Towers, Brian (2004) The Handbook of Employment Relations: Law & Practice London: Kogan Page Publishers Read More