Employee Relations - Tools and Techniques Used to Manage the Human Resources - Essay Example

Employee Relations In Partial Fulfillment of the Requirement for . October, 2007 of .. CONTENTS Introduction 1 Purpose of the Study 1.2 Aims and Objectives of the study 1.3 Rationale for the Study 1.4 Learning Outcomes 2. Literature Review 3. Discussion 4. Conclusion 5. References 1. Introduction Companies and organizations are made for people and by the people, and obviously their effectiveness depends on the behavior and performance of the people running these companies. It is therefore quite logical to say that Human Resource Management is a very crucial and an integral part of any organization. Core areas of HRM include the individual, the organization and the social context of work and how all of these factors shape the relations at work and result in organizational performance. Unlike the machines and computers the human being has certain limitations related to the work and performance. Rights and privileges of workers are put in place taking into account such limitations only. Maintaining good employee relations depends on how the rights and privileges of workers are treated by the organization. Finding good people often proves to be difficult for the organization, it is therefore essential to find ways to retain them as well. Good industrial relations or employee relations form part of such efforts. 1.1 Purpose of the study This study is an effort to analyze the essential tools and techniques used by organizations to manage the human resources in an organization and how the HRM has adapted itself to the changing economic scenario. In particular the objectives of this study are to have an assessment of; i. The impact of liberalization and globalization on industries and organization. ii. The effect of globalization on employee relations and how it has impacted the economies around the world. 1.2 Rationale of the study To get the optimum from a satisfied and participative individual is considered to be the ultimate objective of HRM policies. The global economy has made it almost mandatory for international corporations that an effective strategy is adopted for managing the human resources and the diversity. It is through their behavior that employees give expression to their commitment to work, level of motivation and their attitudes. Behavior includes all actions overt or covert, and verbal or non-verbal. This affects the overall efficiency of the person and the performance of the organization. Some of the organizations encourage Unions and Associations to represent the employees' issues and such organizations have a mechanism which encourages cordial relations between such unions and management as it helps in smooth functioning of the organization. But there are some other organizations which prefer to engage with individual employees for grievance redressal. Such a mechanism generally functions well in smaller organizations having lesser number of employees. The ultimate aim is to have a functioning relation with employees so that the company's functioning is not adversely affected. As a student of human resources management it is very crucial for me that I am fully aware about such a mechanism, the legal positions and how the system has evolved over the years. 1.3 Learning Outcomes We have learnt the basic concepts of human resources management during our study and do have a fair idea about the rules and regulations as well. Through this paper, an effort will be made to look around us and observe the functioning of some of the organizations, search for relevant news items in the contemporary media and sift through other views and findings from similar researches carried out by other scholars. The HR field has many dimensions and it affects almost all aspects of the organization, therefore analyzing all such fields will remain out of the scope of this study. But with the limited resources and the lessons learnt so far, I'll try to make the study as comprehensive as possible, so that I come out enriching my knowledge about the subject. 2. Literature Review For any organisation to work, a number of stakeholders have to pool their efforts. Terry & Franklin (1994) define management as 'a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human beings and other resources'. Similarly Worthington and Cumberpatch (2006) defined management as; 'The roles fulfilled by individuals who manage the organisation' and 'A process which enables an organisation to achieve its objectives'. Management therefore involves a coordinated approach taking care of all the factors affecting the business operations. HRM itself is the new avatar of 'Personnel Management'. Personnel management was largely concerned with the technical aspects of hiring, evaluating, training, and compensating employees. HRM on the other hand leaves scope for career building of the employee, development of a professional relationship and the satisfaction aspect. It is no more a mere "staff" function in the organizations. Multi-National Companies in particular take good care of their employees or, that is the kind of impression they wish to circulate around. The main reason for attempts to avoid bad publicity is because as per a recent study seventy percent of world trade - 'including one-third of all manufacturing exports, three-quarters of all commodity trade, and four-fifths of technical and management services trade' - was accounted for by the 500 largest MNCs (Brown, 2002). Changes in almost every aspect of human life are taking place very rapidly in a pervasive and profound manner. This change is engulfing technologies, products, processes, materials and above all, People. Globalization leads the changing scenario, bringing in newer technologies, a new phenomenon of knowledge worker and of course the competitive era. In view of the competition and globalization companies start exploring avenues for growth within and outside the borderline of their country of origination. This further calls for respecting the laws of the land concerning employees' relations. A survey of 112 HR practitioners by Personnel Today's sister publication IRS Employment Review, shows that respondents hope the Commission for Equality and Human Rights (CEHR) will make things simpler (Crail, 2005). It is worthwhile here to note that implementation of any law in letter and spirit depends on the intentions of the organisation and how seriously it values the corporate social responsibility. Therefore CEHR will have more of a guiding and nudging role in carrying out the tasks. In fact the survey findings also point out that 81% respondents would be happy if the commission just issued advice on good practice and tools for employers, rather than carrying out investigations (40%) and legal enforcement (31%). The Human Resource environment as such is affected mainly by the following five factors; i. Economic: The economic environment of host country, inflation rates, growth factors and the levels of unemployment affect the HR policies. ii. Demographic: The demographic composition of the workforce like the communities involved, the caste consideration (this becomes a reasonable factor in case of some of the developing economies), the male-female composition, the population density of the country/ region also helps in devising effective HR strategies. iii. Socio-cultural: Religion and culture never tell a person to 'not to work', yet people of some socio-cultural background are found to be less workaholic than others. The effect of family systems like 'Joint family system' or 'Nuclear family system' become crucial factors in forming the habits of individuals and thus formulating of HR policies. iv. Technological: Rapid technological advancements have reduced the dependence on muscle power to a certain extent. Modernization and automation lead to increased accuracy and less redundancy in the output while increasing the comfort level of the workforce. v. Politico Legal: Prevailing political situation in the country, the party in power, the ideology of government functionaries affect the business environment. Whether it's a democracy, autocracy, monarchy, one party system, or a multi-party system gives enough room for strategy planners to devise HR policies accordingly. The law of the land has always to be kept in mind while doing the recruitments or managing the human resources. For example in some countries, formation of 'workers union' is not allowed while in some others it's mandatory. The legal system is often considered quite complicated by the individual as well as the organization, as it involves lengthy procedures in settling the disputes and even minor issues. In a survey carried out by the Chartered Institute of Personnel and Development (CIPD, 2002), it was found out that, 'human resource management professionals are divided on how they perceive the relationship between employment law and business and HR strategies. About half of the respondents expressed the opinion that the legal system in fact comes in the way of effective functioning of their organization. Just about 36% believe that such laws are helpful, while the remaining were of the opinion that the law has no significant effect on their business and HR strategies. Though the legal system has also tried to change with the times, but the rapid pace with which things are changing around us often proves too much for the existing legal system of the country/ region. Often some of the defects get highlighted during high voltage union-management disagreements resulting in extreme steps like the 'Gate Gourmet dispute' of 2005, when the workers of the catering supplier to British Airways (BA) opposed the restructuring moves of the company1. The strike called by the workers resulted in dismissal of hundreds of workers involved, which had cascading action in BA as well. The BA ground staff at Heathrow observed 'sympathy' action in support of the dismissed employees of Gate Gourmet, which resulted in the cancellation of more than 700 flights during the peak business season of the year. This dispute is remembered as one of the most acrimonious in the recent industrial relations history of Britain. Having evolved over the years from personnel management the HR policies of companies though seems to be in line with the trends. Hendry and Pettigrew (1990) observed that, "What HRM did at this point was to provide a label to wrap round the observable changes, while providing a focus for challenging deficiencies - in attitude, scope, coherence and direction - of existing personnel management". This system has progressed well over the years, but making HRM a specialized field in itself has also not gone down well with some of the scholars. Keenoy and Anthony (1992) asserted that HRM can be considered as an "archetypal and unredeemable Jamesonian post-modernist cultural product". But Hart (1993) was much more severe in his criticism for the increasing emphasis being given to the concept of HRM, which he called, "amoral and anti-social, unprofessional, reactive, uneconomic and ecologically destructive". Legge (1995) termed the concept of HRM to be full of internal contradictions. Such criticism notwithstanding the concept of HRM has indeed gone from strength to strength, gaining in acceptance as an integral component of management tool kit. With additions of newer dimensions like psychology, behavioral science etc. HRM is indeed becoming a challenging field. In psychology two schools of thought define the human behavior like; The psychic inner causes of behavior which states that the actions or behavior of a person emanate from the internal psychological structure often called personality. As employees differ in their personality so do they differ in their behavior. It further states that a change in behavior can only be brought about by changing the personality of individuals. The second school of thought states that the behavior of a person is primarily determined by the external situational factors, called the stimuli and the reward's associated with one's response. By bringing about a change in these factors the behavior can be redirected and molded accordingly. In practice however, it is observed that the human behavior is a proportionate mix of these two theories i.e. human behavior is a function of a person in relation to the situation, having 'personality' and 'situation' as the two variables. Motivational factors arouse a need, propelling a person to channelise his efforts and energies in the direction of fulfilling those needs. HR management is supposed to work toward channelising such efforts only. The human element forms the core for the survival of the company and its business. The businesses operate within a complex system of interests and influences. While identifying the stakeholders the company must look beyond the formal structure of the organization. Therefore it is required to have a look at informal and indirect relationships too. The company management has to make a balancing assessment and evaluate all such forces in order to adjust them with company's objectives. While taking crucial corporate decisions, it is necessary to know about the expectations of different stakeholders and to determine the extent to which they could and would exert their influence. Johnson & Scholes (1999) define stakeholder as, "Stakeholders are groups or individuals who have a stake in, or expectation of, the organisation's performance." The public sector employees in UK, the important stakeholders in running the public sector units, have been expecting a pay rise this year as well. But the government seems to otherwise. The government of Gordon Brown has decided not to extend the demanded hike as of now (BBC, 2007). The reason extended for holding the pay hike is to keep the inflation in check. Well, this particular has all the ingredients of being a potential dispute and unions are already up in arms against this move. Employee relations in USA and UK have suffered in the recent past on account of the increasing tendency of outsourcing jobs to cheaper destinations like India and China from these countries. While the unions are up against this move, as it is resulting in many job losses in these countries, the governments seem to be least bothered, as it appears unwilling to interfere in the functioning of these companies. But, as of now, the trend towards outsourcing, seems to be unaffected by the noises back home. As per a report compiled by Union-Network International (UNI), a total of 25795 jobs were lost on account of outsourced jobs in European countries2. It appears in all such cases the strengthening of HR issues might have been overshadowed by the profit motives or other similar concerns of these companies. But, these are testing times and test cases for the proponents of HR strategies and as the vision 2020 put forward by the Boston Consultancy Group (BCG) professes that, "The workplace will increasingly focus on the performance of people as a core company asset. Models of flexible working will continue to evolve in response to the changing needs of Baby Boomers and the preferences of Generation Y. The report states that Gen-Y is 'an increasingly distinct group from Generation X' and 'while Generation X directly witnessed the job losses and insecurity of structural reforms in the 1980's and the substantial recession of the early 1990's, Generation Y has grown up in a period of prolonged and relatively undisturbed economic growth.' 3. Discussion The 'Human' element is indeed quite an intriguing and unpredictable element in any business venture. As the studies in previous sections indicate, maintaining good relations is not only a prerequisite for the effective functioning of the company, but it also works wonders for the employees as well. The employee is happier when the management values his contribution and gives due consideration to such contributions by way of granting pay hikes, perks and other privileges. Such gestures definitely result in motivating the employee, which in turn helps the company. In general motivation is found to help in; i. Better performances for the organization ii. Better working environment in the organization iii. Sense of achievement for the organization as well as the employee iv. Honor and recognition for the workaholic employees v. Sense of belongingness and responsibility amongst the employees vi. Advancement of career opportunities for the employee and business opportunities for the organization vii. Overall growth for the organization. Though in modern time's rewards come in many forms like a family day out, night parties, foreign tours, sponsorships etc. but the financial hikes still remain the potent motivator for an individual. The traditional policy of "carrot and stick" still seems to working quite well. Money being the carrot and stick is in the form of physical, financial or social punishments. It is assumed that people will work harder and produce more if substantial financial rewards are placed before them or if they are threatened with dismissal or peer embarrassment or physical punishment. Today we are living in a society dominated by media. Media persons seem to be always snooping around for issues which can form a good copy for them and put the corporate house in a difficult situation. Therefore now a days companies have been trying to come out with good offers for job seekers and allowing the employee relations to flourish in the cool comforts of the fully air-conditioned office complex. Conclusion It is quite apparent from the foregoing discussion that the relations with employees can not be taken for granted by the company. Organizations need to handle such issues with utmost caution, without allowing them to flare up in big controversies. Diversity and disputes consist of visible as well as non-visible factors, which require to be handled with care. Harnessing these differences is bound to create a productive environment in the organization in which everybody feels valued, their talents are fully utilized and organizational goals are met. Therefore, the way to place this on the corporate agenda is to see the concepts of employee's relations as providing both tangible as well as intangible benefits, besides being socially and morally right. References 1. BBC (2007). Brown rejects union pay demands. Available online at http://news.bbc.co.uk/1/hi/uk_politics/6986469.stm (Oct 10, 2007) 2. Brown, Garrett D. (2002). The global threats to workers' health and safety on the job. Summary available online at http://goliath.ecnext.com/coms2/summary_0199-886141_ITM (Oct 7, 2007) 3. Crail, Mark (2005). HR supports government proposals for equality and human rights commission. Personnel Today, 09595848, 5/24/2005. 4. CIPD (2002). Employment Law-Survey Report. Chartered Institute of Personnel Development, London. 5. Eironlie (2005). British Airways' Heathrow flights grounded by dispute at Gate Gourmet. Available online at http://www.eurofound.europa.eu/eiro/2005/09/feature/uk0509106f.htm (Oct 7, 2007). 6. Hart, T. (1993), Human resource management: time to exorcise the militant tendency'', Employee Relations, Vol. 15 No. 3. 7. Hendry, E. and Pettigrew, A. (1990), Human resource management, an agenda for the 1990s. International Journal of Human Resource Management, Vol. 3 No. 3. 8. Johnson, G. & Scholes, K. 1999. Exploring Corporate Strategy. London: Prentice Hall 9. Keenoy, T. and Anthony, P. (1992), HRM: metaphor, meaning and morality'', in Blyton, P. and Turnbull, P. (Eds), Reassessing Human Resource Management, Sage Publications, London. 10. Legge, K. (1995), Human Resource Management: Rhetorics and Realities, Macmillan, London. 11. Terry, George R and Franklin, Stephen G. (1994). Principles of Management. Richard D Irwin Inc. USA 12. UNI (2007). Union Network International. Available online at www.union-network.org/ (Oct 10, 2007) Read More